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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): April 25, 1999
EVEREN CAPITAL CORPORATION
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(Exact name of Registrant as Specified in Its Charter)
Delaware 1-13940 36-4019175
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
77 West Wacker Drive, Chicago, Illinois 60601
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 312-574-6000
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Item 5. Other Events.
On April 25, 1999 EVEREN Capital Corporation ("EVEREN") and First
Union Corporation ("First Union") entered into an Agreement and Plan
of Merger (the "Merger Agreement") pursuant to which EVEREN will be
merged with and into First Union, with First Union being the surviving
corporation; alternatively, the merger may be structured as a merger
of EVEREN with a wholly owned subsidiary of First Union. In the
merger, each outstanding share of EVEREN common stock (other than
shares held by EVEREN, First Union or other subsidiaries) will be
converted into the right to receive 0.555 shares of First Union common
stock.
The merger is intended to constitute a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended. Consummation
of the merger is subject to various conditions, including receipt of
the necessary approvals of EVEREN's stockholders and receipt of
required regulatory approvals.
As an inducement and condition to First Union's entering into the
Merger Agreement, EVEREN and First Union entered into a Stock Option
Agreement (the "Option Agreement"), whereby, among other things,
EVEREN granted to First Union an option to purchase 19.9% of the
outstanding shares of EVEREN common stock at a price per share of
$28.4375, the closing price of EVEREN common stock on April 26, 1999,
the trading day on which the transaction was announced. The option
only becomes exercisable upon the occurrence of certain events,
generally involving the acceptance by EVEREN of another transaction
proposal or the acquisition by a third party of 25% or more of
EVEREN's common stock.
In connection with the Merger Agreement, EVEREN has entered into an
amendment (the "Rights Agreement Amendment") to its Rights Agreement
dated as of October 1, 1996 in order to render the rights issued
thereunder inapplicable to the Merger Agreement and the Option
Agreement and the transactions contemplated thereby.
Also in connection with the Merger Agreement, and as an inducement and
condition to First Union's entering into the Merger Agreement, James
R. Boris, Chairman and Chief Executive Officer, and four other
executive officers of EVEREN have entered into Voting Agreements (the
"Voting Agreements") agreeing to vote their shares of EVEREN common
stock in favor of the merger and against any competing transaction.
The executives have agreed to vote an aggregate of 1,367,600, or
approximately 3.86%, of the outstanding EVEREN
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shares and any other shares they acquire. The Voting Agreements
terminate upon the termination of the Merger Agreement.
Copies of the Merger Agreement, the Option Agreement, the Voting
Agreements (a form of which is attached as an exhibit to the Merger
Agreement) and the Rights Agreement Amendment are attached hereto as
exhibits, and the foregoing descriptions of such agreements are
qualified in their entirety by reference to the full text of such
exhibits. A joint press release announcing the transaction was issued
on April 26, 1999, and is attached hereto as an exhibit, and the
information contained therein is incorporated herein by reference.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of April 25, 1999,
among EVEREN Capital Corporation and First Union
Corporation.
4.1 First Amendment to Rights Agreement (attached as Exhibit D
to 2.1).
10.1 Stock Option Agreement (attached as Exhibit C to 2.1).
10.2 Form of Voting Agreement (attached as Exhibit B to 2.1).
99 Press Release, dated April 26, 1999, announcing the
execution of the Merger Agreement.
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SIGNATURE
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.
EVEREN CAPITAL CORPORATION
By: /s/Arthur J. McGivern
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Arthur J. McGivern
Senior Executive Vice President
Chief Financial Officer
Dated: May 3, 1999
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EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of April 25, 1999,
among EVEREN Capital Corporation and First Union
Corporation.
4.1 First Amendment to Rights Agreement (attached as Exhibit D
to 2.1).
10.1 Stock Option Agreement (attached as Exhibit C to 2.1).
10.2 Form of Voting Agreement (attached as Exhibit B to 2.1).
99 Press Release, dated April 26, 1999, announcing the
execution of the Merger Agreement.
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of April, 1999 (this
"Plan"), by and between EVEREN CAPITAL CORPORATION (the "Company") and FIRST
UNION CORPORATION ("First Union").
RECITALS:
(A) The Company. The Company is a corporation duly organized and validly
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existing in good standing under the laws of the State of Delaware, with its
principal executive offices located in Chicago, Illinois. As of the date
hereof, the Company has 100,000,000 authorized shares of common stock, each of
$0.01 par value ("Company Common Stock", together with the rights ("Company
Rights") issued pursuant to the Rights Agreement between the Company and Harris
Trust and Savings Bank, dated as of October 1, 1996 (the "Company Rights
Agreement"), attached thereto), and 10,000,000 authorized shares of preferred
stock, each of $0.01 par value ("Company Preferred Stock")(no other class of
capital stock being authorized), of which 35,443,465 shares of Company Common
Stock and no shares of Company Preferred Stock were issued and outstanding as of
March 31, 1999.
(B) First Union. First Union is a corporation duly organized and validly
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existing in good standing under the laws of the State of North Carolina, with
its principal executive offices located in Charlotte, North Carolina. First
Union is a registered bank holding company under the Bank Holding Company Act of
1956, as amended. As of the date hereof, First Union has 2,000,000,000
authorized shares of common stock, each of $3.33 1/3 par value ("First Union
Common Stock", together with the rights ("First Union Rights") issued pursuant
to the Amended and Restated Shareholder Protection Rights Agreement, dated as of
October 15, 1996 (the "First Union Rights Agreement") attached thereto),
40,000,000 authorized shares of Class A Preferred Stock, no-par value ("First
Union Class A Preferred Stock"), and 10,000,000 authorized shares of Preferred
Stock, no-par value ("First Union Preferred Stock") (no other class of capital
stock being authorized), of which approximately 968,139,000 shares of First
Union Common Stock, no shares of First Union Class A Preferred Stock, and no
shares of First Union Preferred Stock, were issued and outstanding as of March
31, 1999.
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(C) Rights, Etc. Except as Previously Disclosed (as hereinafter defined),
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there are no shares of capital stock of the Company authorized and reserved for
issuance, the Company has no Rights (as hereinafter defined) issued or
outstanding and the Company has no commitment to authorize, issue or sell any
such shares or any Rights, except pursuant to this Plan. There are no preemptive
rights in respect of the Company Common Stock.
(D) Approvals. The respective Boards of Directors of each of First Union
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and the Company have determined that it is in the best interests of their
respective companies and their stockholders to consummate the transactions
provided for in this Plan. The Board of Directors of each of the Company and
First Union has approved, at meetings of each of such Boards of Directors, this
Plan and has authorized the execution hereof in counterparts.
(E) Intention of the Parties. It is the intention of the parties that
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the Merger (as hereinafter defined) shall qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
(F) Employment Agreements. In connection with the transactions
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contemplated hereby, certain employees of the Company identified on Annex A
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hereto have entered into employment agreements with First Union.
(G) Voting Agreement. As a condition and inducement to First Union's
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willingness to enter into this Plan, certain individuals have entered into an
agreement with First Union in the form attached hereto as Exhibit B (the "Voting
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Agreement"), pursuant to which such individuals have agreed to vote all shares
of capital stock owned or acquired by them in favor of approval of the
transactions contemplated by this Plan at the Meeting (as hereinafter defined).
(H) Retention Program. First Union and the Company have agreed, in
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connection with the transactions contemplated hereby, to establish a retention
program on substantially the terms described herein, the purposes of which is to
retain the services of certain employees of the Company and the Company
Subsidiaries
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(as hereinafter defined) following the consummation of the transactions
contemplated hereby.
(I) Stock Option Agreement. As a condition and inducement to First
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Union's willingness to enter into this Plan, concurrently with the execution and
delivery of this Plan, the Company has executed and delivered a Stock Option
Agreement with First Union (the "Stock Option Agreement") in substantially the
form attached hereto as Exhibit C, pursuant to which the Company is granting to
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First Union an option to purchase, under certain circumstances, shares of
Company Common Stock.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions thereof
and the manner and basis of carrying it into effect, which shall be as follows:
I. THE MERGER.
1.01. The Merger. At the Effective Time:
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(A) The Continuing Corporation. The Company shall merge with and into
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First Union (the "Merger"), the separate existence of the Company shall
cease and First Union (sometimes hereinafter referred to as the "Continuing
Corporation") shall survive the Merger and the name of the Continuing
Corporation shall be "First Union Corporation". The Continuing Corporation
shall continue to be governed by the laws of the State of North Carolina,
and the separate corporate existence of the Continuing Corporation with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in
the Delaware General Corporations Law (the "DGCL") and the North Carolina
Business Corporations Act (the "NCBCA").
(B) Articles of Incorporation; Bylaws; Directors; Officers. The
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Articles of Incorporation and Bylaws of the Continuing Corporation shall be
those of First Union, as in effect immediately prior to the Effective Time.
The directors and officers of First Union in office immediately prior to
the Effective Time (as hereinafter defined) shall be the directors and
officers of the Continuing Corporation,
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together with such additional directors and officers as may thereafter be
elected, who shall hold office until such time as their successors are duly
elected and qualified.
1.02. Effective Date. Subject to the conditions to the obligations of the
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parties to effect the Merger as set forth in Article VI, the effective date (the
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"Effective Date") of the Merger shall be such date as the parties hereto
mutually agree upon; provided, however, that if the parties are not able to
agree upon such date, such date shall be the date as First Union shall notify
the Company in writing not less than five days prior thereto, which date shall
not be more than 15 days after such conditions have been satisfied or waived in
writing, excluding those conditions that are to be satisfied by written
instrument dated as of the Effective Date. On or prior to the Effective Date,
First Union and the Company shall execute and deliver to the Secretary of State
of the States of North Carolina and Delaware, Articles of Merger or a
Certificate of Merger, as applicable, in accordance with applicable law
specifying the time at which the Merger shall become effective. The time on the
Effective Date at which the Merger becomes effective is referred to as the
"Effective Time".
1.03. Integration of Legal Entities. The parties hereto currently intend
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to effectuate, or cause to be effectuated, no earlier than the day following the
Effective Time, the combination (the "Subsidiary Combination") of EVEREN
Securities, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("EVEREN Securities"), with and into First Union Capital Markets Corp.,
a North Carolina corporation and a wholly owned subsidiary of First Union. The
parties hereto shall, and shall cause their subsidiaries to, cooperate and take
all requisite actions, including, without limitation, executing all requisite
documentation, as may be reasonably required by First Union prior to or
following the Effective Time to consummate the Subsidiary Combination. The
parties also agree to, and shall cause their subsidiaries to, cooperate and take
all requisite additional action as may be reasonably required prior to or
following the Effective Time to merge or otherwise consolidate legal entities
following the Effective Time to the extent desirable for regulatory or other
reasons. Notwithstanding the foregoing, no actions contemplated by this Section
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1.03 shall be taken if such actions would adversely affect the tax treatment to
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the Company's
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stockholders as a result of receiving the Merger Consideration or prevent the
parties from obtaining the opinions of counsel referred to in Sections 6.02(C)
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and 6.03(C).
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1.04. Reservation of Right to Revise Structure. At First Union's
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election, the Merger may alternatively be structured so that (A) the Company is
merged with and into any direct wholly-owned subsidiary of First Union, or (B)
any direct wholly-owned subsidiary of First Union is merged with and into the
Company; provided however, that no such change shall (1) alter or change the
amount or kind of the consideration to be issued to the Company's stockholders
in the Merger as set forth in Article II hereof (the "Merger Consideration") or
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the treatment of the holders of the Company Options (as hereinafter defined),
(2) adversely affect the tax treatment to the Company's stockholders as a result
of receiving the Merger Consideration or prevent the parties from obtaining the
opinions of counsel referred to in Sections 6.02(C) and 6.03(C), (3) materially
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impede or delay consummation of the Merger, or (4) release First Union from any
of its obligations hereunder. In the event of such an election, the parties
agree to execute appropriate documentation to reflect such election.
II. CONSIDERATION.
2.01. Merger Consideration. Subject to the provisions of this Plan, at
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the Effective Time, automatically by virtue of the Merger and without any action
on the part of any party or stockholder:
(A) Outstanding First Union Common Stock. Each share of First Union
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Common Stock (and each attached First Union Right) issued and outstanding
immediately prior to the Effective Time shall be unchanged and shall remain
issued and outstanding.
(B) Outstanding Company Common Stock. Each share (excluding shares
--------------------------------
held by the Company or any Company Subsidiaries (as defined herein) or by
First Union or any of its subsidiaries, in each case other than in a trust,
fiduciary or nominee capacity or as a result of debts previously contracted
("Treasury Shares")) of Company Common Stock issued and outstanding
immediately prior to the
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Effective Time shall become and be converted into 0.555 shares (subject to
possible adjustment as set forth in Section 2.05, the "Exchange Ratio") of
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First Union Common Stock (including the attached First Union Rights).
(C) Treasury Shares. Each Treasury Share immediately prior to the
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Effective Time shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
2.02. Stockholder Rights; Stock Transfers. At the Effective Time, holders
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of Company Common Stock shall become record holders of the shares of First Union
Common Stock to which they are entitled hereunder (subject to Section 2.04(C)),
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and shall cease to be, and shall have no rights as, stockholders of the Company,
other than to receive any dividend or other distribution with respect to the
Company Common Stock with a record date occurring prior to the Effective Time,
subject to the provisions of Section 5.17, and the consideration provided under
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this Article II. After the Effective Time, there shall be no transfers on the
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stock transfer books of the Company or the Continuing Corporation of shares of
Company Common Stock.
2.03. Fractional Shares. Notwithstanding any other provision hereof, no
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fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, First Union shall pay to each holder of Company Common Stock who would
otherwise be entitled to a fractional share an amount in cash (without interest)
determined by multiplying such fraction by the last sale price of First Union
Common Stock, as reported by the New York Stock Exchange (the "NYSE") Composite
Transactions tape (as reported in The Wall Street Journal (National Edition) or,
-----------------------
if not reported therein, in another authoritative source), for the last NYSE
trading day immediately preceding the Effective Date.
2.04. Exchange Procedures.
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(A) As promptly as practicable after the Effective Date, First Union
shall send or cause to be sent to each former holder of shares (other than
Treasury Shares) of Company Common Stock of record immediately prior to the
Effective Time transmittal materials for use in exchanging
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such stockholder's certificates formerly representing Company Common Stock
("Old Certificates") or effecting any necessary book-entry transfers in the
case of uncertificated shares of Company Common Stock for the Merger
Consideration. The certificates representing the shares of First Union
Common Stock ("New Certificates") into which shares of such stockholder's
Company Common Stock are converted at the Effective Time and any checks in
respect of a fractional share interest or dividends or distributions which
such person shall be entitled to receive will be delivered to such
stockholder only upon delivery to First Union National Bank, as Exchange
Agent (the "Exchange Agent") of Old Certificates or evidence of any
necessary book-entry transfers in the case of uncertificated shares
representing all of such shares of Company Common Stock (or indemnity
reasonably satisfactory to First Union and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) owned by such stockholder.
No interest will be paid on any such cash to be paid in lieu of fractional
share interests or dividends or distributions which any such person shall
be entitled to receive pursuant to this Article II upon such delivery. Old
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Certificates or evidence of any necessary book-entry transfers in the case
of uncertificated shares surrendered for exchange by any Affiliate (as
referred to in Section 5.10) of the Company shall not be exchanged for New
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Certificates until First Union has received a written agreement from such
person as specified in Section 5.10.
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(B) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Common Stock
for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(C) No dividends or other distributions with a record date occurring
after the Effective Time shall be paid to the holder of any unsurrendered
Old Certificates or uncertificated shares in book-entry form representing
Company Common Stock until such Old Certificates or evidence of
uncertificated shares in book-entry form have been surrendered for exchange
for New Certificates. After becoming so entitled in accordance with this
Section 2.04,
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the record holder thereof also shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of First Union Common
Stock such holder had the right to receive upon surrender of the Old
Certificate(s) or evidence of uncertificated shares in book-entry form.
2.05. Anti-Dilution Provisions. In the event First Union changes (or
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establishes a record date for changing) the number of shares of First Union
Common Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend (including but not limited to, the First Union
Rights becoming separable, distributable, unredeemable or exercisable),
recapitalization or similar transaction with respect to the outstanding First
Union Common Stock and the record date therefor shall be prior to the Effective
Date, the Exchange Ratio shall be proportionately adjusted .
2.06. Options.
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(A) From and after the Effective Time, all employee and director stock
options to purchase shares of Company Common Stock (each, a "Company
Option"), which are then outstanding and unexercised, shall, without any
further action on the part of the holders thereof, be converted into and
become options to purchase shares of First Union Common Stock, and First
Union shall assume each such Company Option in accordance with the terms of
the applicable Previously Disclosed Compensation and Benefit Plans (as
hereinafter defined) and related agreements by which it is evidenced,
including but not limited to the accelerated vesting of such Company
Options which shall occur in connection with and by virtue of the Merger as
and to the extent required by such Previously Disclosed Compensation and
Benefit Plans; provided, however, that from and after the Effective Time
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(i) each such Company Option assumed by First Union may be exercised solely
to purchase shares of First Union Common Stock, (ii) the number of shares
of First Union Common Stock purchasable upon exercise of such Company
Option shall be equal to the number of shares of Company Common Stock that
were purchasable under such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio and
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rounding to the nearest whole share, and (iii) the per share exercise price
under each such Company Option shall be adjusted by dividing the per share
exercise price of each such Company Option immediately prior to the
Effective Time by the Exchange Ratio, and rounding to the nearest whole
cent. The terms of each Company Option shall, in accordance with its terms,
be subject to further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization, merger, reorganization or other similar
transaction with respect to First Union Common Stock on or subsequent to
the Effective Date. Notwithstanding the foregoing, the number of shares and
the per share exercise price of each Company Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall
be adjusted in accordance with the requirements of Section 424 of the Code.
Accordingly, with respect to any incentive stock options, fractional shares
shall be rounded down to the nearest whole number of shares and where
necessary the per share exercise price shall be rounded up to the nearest
cent.
(B) Prior to the Effective Time, First Union shall reserve for
issuance the number of shares of First Union Common Stock necessary to
satisfy First Union's obligations under Section 2.06(A). Promptly after
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the Effective Time, First Union shall file with the SEC a registration
statement on an appropriate form under the Securities Act with respect to
the shares of First Union Common Stock subject to options to acquire First
Union Common Stock issued pursuant to Section 2.06(A) hereof, and shall use
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its reasonable best efforts to maintain the current status of the
prospectus contained therein, as well as comply with any applicable state
securities or "blue sky laws", for so long as such options remain
outstanding.
III. ACTIONS PENDING CONSUMMATION.
3.01. Forebearances of the Company. From the date hereof until the
----------------------------
Effective Time, except as expressly contemplated by this Plan, as Previously
Disclosed, or as required by applicable law or regulation, without the prior
written consent of First Union, which consent shall not be unreasonably
withheld,
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the Company will not, and will cause each of the Company Subsidiaries not to:
(A) Ordinary Course. Conduct the business of the Company and the
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Company Subsidiaries other than in the ordinary and usual course or fail to
use reasonable efforts consistent with past practice to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with clients, customers, suppliers,
employees and business associates, or take any action reasonably likely to
have a material adverse effect on the Company's ability to perform any of
its material obligations under this Plan, or engage in any new lines of
business.
(B) Capital Stock. Other than pursuant to Rights Previously Disclosed
-------------
and outstanding on the date hereof or as permitted by Section 3.01(D)(4),
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(i) issue, sell or otherwise permit to become outstanding, or authorize the
creation of, any additional shares of capital stock of the Company or any
Rights, (ii) enter into any agreement with respect to the foregoing, or
(iii) permit any additional shares of capital stock of the Company to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights; provided, however, if any
-----------------
such shares are issued pursuant to such Rights, the Company agrees that
such shares shall be purchased in the open market and shall not be treasury
or original issue shares unless otherwise agreed to by First Union.
(C) Dividends, Etc. (1) Make, declare, pay or set aside for payment
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any dividend (other than dividends from wholly owned Company Subsidiaries
to the Company or another wholly owned Company Subsidiary, or regular
quarterly cash dividends on Company Common Stock payable at a rate not to
exceed $0.07 per share) on or in respect of, or declare or make any
distribution on, any shares of capital stock of the Company or (2) directly
or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock.
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(D) Compensation; Employment Agreements; Etc. Enter into, amend,
----------------------------------------
modify or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of the Company or
any Company Subsidiary, or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus payments), except (1)
for normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, (2) for other
changes that are required by applicable law, (3) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof, or (4)
for employment arrangements for, or grants of awards to, newly hired
employees in the ordinary course of business consistent with past or
previously announced practice.
(E) Benefit Plans. Except for amendments to the Company's 401(k) and
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Employee Stock Ownership Plan (the "KSOP") and related trust agreement of
which First Union has received notice as of the date hereof, enter into,
establish, adopt, amend or terminate (except (i) as may be required by
applicable law or (ii) to satisfy Previously Disclosed contractual
obligations existing as of the date hereof) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer, employee
of, or independent contractor with respect to, the Company or any of the
Company Subsidiaries, or take any action to accelerate the vesting,
exercisability, payment or funding of stock options, restricted stock or
other compensation or benefits payable thereunder.
(F) Dispositions. Except (i) as Previously Disclosed or (ii) with
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respect to securities or other investments or assets in the ordinary course
of business consistent with past practice, sell, transfer, mortgage, lease,
encumber or otherwise dispose of or discontinue any of its assets, business
or properties.
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(G) Acquisitions. Except (i) as Previously Disclosed or (ii) with
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respect to securities or other investments or assets in the ordinary course
of business consistent with past practice, merge, consolidate with, or
acquire any assets, business, or properties of any other entity.
(H) Governing Documents. Amend the Company's Certificate of
-------------------
Incorporation, by-laws or the articles of incorporation or by-laws (or
similar governing documents) of any of the Company Subsidiaries.
(I) Accounting Methods. Implement or adopt any change in its
------------------
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(J) Contracts. Except in the ordinary course of business consistent
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with past practice, enter into or terminate any material contract or amend
or modify in any material respect any of its existing material contracts.
(K) Claims. Settle any claim, action or proceeding, except for any
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claim, action or proceeding involving solely money damages in an amount not
to exceed $250,000 for any individual matter, and in the aggregate for all
such settlements, not more than $500,000 per month, and which, in the
judgment of First Union, is not reasonably likely to establish an adverse
precedent or basis for subsequent settlements.
(L) Adverse Actions. (1) Take any action while knowing that such
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action would, or is reasonably likely to prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (a) any of its representations and warranties set forth
in this Plan being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (b) any of the conditions to the Merger
set forth in Article VII not being satisfied or (c) a material violation of
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any provision of this Plan except, in each case, as may be required by
applicable law or regulation.
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(M) Indebtedness. Incur any indebtedness for borrowed money other
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than in the ordinary course of business.
(N) Capital Expenditures. Authorize or make any capital expenditures,
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other than in the ordinary course of business consistent with past practice
in amounts not to exceed $500,000 individually or $2,000,000 in the
aggregate.
(O) Risk Management. Except as required by applicable law or
---------------
regulation, implement or adopt any change in the risk management policies,
procedures or practices of the Company, which, individually or in the
aggregate with all such other changes, would be reasonably likely to result
in a Material Adverse Effect on the Company.
(P) New Activities. (1) Initiate any new business activity that would
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be impermissible for a "bank holding company" under the Bank Holding
Company Act of 1956, as amended, or acquire or permit any of the Company
Subsidiaries to acquire, other than in a bona fide fiduciary capacity or
other than in the ordinary course of business with a view towards resale,
in the aggregate, ownership or control of 5% or more of any class of an
issuer's voting securities or 25% or more of an issuer's equity (treating
subordinated debt as equity) or (2) with respect to EVEREN 1999 Capital
Fund LLC (the "Fund"), permit the Fund to make any portfolio investments,
issue any capital calls, or take any other material action not required to
be taken by its limited liability company agreement, other than the
termination of the Fund in accordance with its terms.
(Q) Tax Matters. Make or change any material tax election, change any
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annual tax accounting period, adopt or change any method of tax accounting,
file any amended Company Tax Return (as hereinafter defined), enter into
any material closing agreement, settle any material Tax (as hereinafter
defined) claim or assessment, surrender or compromise any right to claim a
material Tax refund, consent to any extension or waiver of the limitations
period applicable to any material Tax claim or assessment, in each case,
other than any of the foregoing actions that would not be reasonably likely
to have a Material Adverse Effect on
13
<PAGE>
the Company and which are taken in the ordinary and usual course of
business consistent with past practice.
(R) Commitments. Agree, commit to or enter into any agreement to take
-----------
any of the actions referred to in Section 3.01(A) through (Q).
--------------- ---
3.02. Forebearances of First Union. From the date hereof until the
----------------------------
Effective Time, except as expressly contemplated by this Plan, without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, First Union will not, and will cause each of its subsidiaries not to:
(A) Dividends. Make, declare, pay or set aside for payment any
---------
dividend or similar distribution, other than regular dividends on First
Union Common Stock or First Union Preferred Stock consistent with past
practice; provided, however, the foregoing shall not apply to increases in
the quarterly dividend rate payable on First Union Common Stock in the
ordinary course of business consistent with past practices or the payment
of dividends on any preferred stock (now or hereafter outstanding) in
accordance with the terms thereof.
(B) Adverse Actions. (1) Take any action while knowing that such
---------------
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (a) any of its representations and warranties set forth
in this Plan being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (b) any of the conditions to the Merger
set forth in Article VI not being satisfied or (c) a material violation of
any provision of this Plan except, in each case, as may be required by
applicable law or regulation.
(C) Commitments. Agree, commit to or enter into any agreement to take
-----------
any of the actions referred to in Section 3.02(A) or (B).
--------------- ---
IV. REPRESENTATIONS AND WARRANTIES.
14
<PAGE>
4.01. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to First Union as follows, in all cases except as
Previously Disclosed:
(A) Recitals. The facts set forth in the Recitals of this Plan with
--------
respect to it are true and correct.
(B) Organization, Standing and Authority. The Company and each
------------------------------------
Company Subsidiary is duly qualified to do business and is in good standing in
the States of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company. The Company and each of the Company Subsidiaries has in effect all
federal, state, local, and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted, except for such authorizations, the absence of which,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company. EVEREN Securities is duly registered, qualified
to do business and in good standing as a broker-dealer with the Securities and
Exchange Commission (the "SEC"), and is a member in good standing of or
registered with the National Association of Securities Dealers, Inc. (the
"NASD"), the New York Stock Exchange, Inc. (the "NYSE"), the American Stock
Exchange, Inc. (the "AMEX"), the Commodity Futures Trading Commission (the
"CFTC"), the National Futures Association (the "NFA"), and all other securities
and commodities exchanges in which the conduct of its business requires
membership or registration.
(C) Shares. The outstanding shares of Company Common Stock are
------
validly issued and outstanding, fully paid and nonassessable, and are subject to
no, and have not been issued in violation of any, preemptive or similar rights.
As of the date hereof, except as Previously Disclosed, there are no shares of
Company Common Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with respect to Company Common Stock, and
the Company does not have any commitment to authorize, issue or sell any Company
Common Stock or Rights, except pursuant to this Plan. The number of
15
<PAGE>
shares of Company Common Stock which are issuable and reserved for issuance upon
exercise of Company Options as of the date hereof are Previously Disclosed. No
shares of Company Common Stock have been issued from March 31, 1999, to the date
of this Plan, except pursuant to Rights Previously Disclosed.
(D) Company Subsidiaries. The Company has Previously Disclosed a
--------------------
list of all the Company Subsidiaries, including the states in which such Company
Subsidiaries are organized, and if any of such Company Subsidiaries is not
wholly-owned by the Company or a Company Subsidiary, the percentage owned by the
Company or any Company Subsidiary and the names, addresses and percentage
ownership by any other individual or corporation, partnership, joint venture,
business trust, limited liability corporation or partnership, association or
other organization (each, a "Business Entity"). No equity securities of any of
the Company Subsidiaries are or may become required to be issued (other than to
the Company or a wholly-owned Company Subsidiary) by reason of any Rights with
respect thereto. There are no contracts, commitments, understandings or
arrangements by which any of the Company Subsidiaries is or may be bound to sell
or otherwise issue any shares of its capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of the
Company to vote or to dispose of such shares. All of the shares of capital
stock of each Company Subsidiary are fully paid and nonassessable and subject to
no preemptive rights and, except as Previously Disclosed, are owned by the
Company or a Company Subsidiary free and clear of any liens, encumbrances,
charges, security interests, restrictions (including restrictions on voting
rights or rights of disposition), defaults or equities of any character or
claims or third party rights of whatever nature (collectively, "Liens"). Each
Company Subsidiary is in good standing under the laws of the jurisdiction in
which it is incorporated or organized, and is duly qualified to do business and
in good standing in each jurisdiction where its ownership or leasing of property
or the conduct of its business requires it to be so qualified, except for any
case in which the failure to be duly qualified is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Except as Previously Disclosed, the Company does not own beneficially,
directly or indirectly, any equity securities or similar interests of any
Business Entity. The term "Company Subsidiary" means any
16
<PAGE>
Business Entity in which the Company, directly or indirectly, owns or controls
50% or more of any class of such entity's voting securities.
The Company has Previously Disclosed a list of all equity securities
it or a Company Subsidiary holds for its own account and not in a bona fide
fiduciary capacity, as of the date hereof, involving, in the aggregate,
ownership or control of 5% or more of any class of the issuer's voting
securities or 25% or more of the issuer's equity (treating subordinated debt as
equity). The Company has Previously Disclosed a list of all partnerships, joint
ventures or similar entities, in which it or any Company Subsidiary owns or
controls an interest.
(E) Corporate Power. The Company and each of the Company Subsidiaries
---------------
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its material properties and assets.
(F) Corporate Authority. Subject to any necessary receipt of approval
-------------------
by its stockholders referred to in Section 6.01(A), each of this Plan and the
---------------
Stock Option Agreement and the transactions contemplated hereby and thereby has
been authorized by all necessary corporate action of the Company and is a valid
and binding agreement of the Company enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(G) No Defaults. Subject to the approval by the holders of at least a
-----------
majority of the outstanding shares of Company Common Stock, the required
regulatory approvals Previously Disclosed, the Previously Disclosed required
filings under federal and state securities and insurance laws and the Previously
Disclosed approvals of the NYSE and any other applicable exchange of the Merger
and the other transactions contemplated hereby, the execution, delivery and
performance of this Plan and the consummation by the Company of the transactions
contemplated hereby, does not and will not (1) constitute a breach or violation
of, or a default under, or cause or allow the acceleration or creation of a Lien
(with or without the giving of notice, passage of time or both) pursuant to, any
law, rule or
17
<PAGE>
regulation or any judgment, decree, order, governmental or non-governmental
permit or license, or agreement, indenture or instrument of it or of any of the
Company Subsidiaries or to which the Company or any of the Company Subsidiaries
or its or their properties is subject or bound, which breach, violation, default
or Lien is reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company, (2) constitute a breach or violation of,
or a default under, the Certificate of Incorporation, Bylaws, or similar
governing documents of the Company or any Company Subsidiary, or (3) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental or non-governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument,
other than any such consent or approval, which if not obtained, would not be
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company.
(H) Company Reports. Except as Previously Disclosed, since January 1,
---------------
1996, the Company has timely filed all material reports, registrations,
statements and other filings, together with any amendments required to be made
with respect thereto, that were required to be filed with (1) the SEC and the
CFTC, (2) any applicable federal, state, local or foreign governmental
authorities and (3) the NASD, the NYSE, the AMEX, the Chicago Mercantile
Exchange (the "CME"), the Chicago Board of Trade (the "CBOT"), the Municipal
Securities Rulemaking Board (the "MSRB") or any non-governmental self-regulatory
agency, commission or authority (a "Self-Regulatory Body") (all such reports and
statements, including the financial statements, exhibits and schedules thereto,
being collectively referred to herein as the "Company Reports"), including
without limitation, all material reports, registrations, statements and filings
required under the Investment Company Act of 1940 (together with the rules and
regulations thereunder, the "Investment Company Act"), the Investment Advisers
Act of 1940 (together with the rules and regulations thereunder, the "Investment
Advisers Act"), the Securities Exchange Act of 1934 (together with the rules and
regulations thereunder, the "Exchange Act"), the Securities Act of 1933
(together with the rules and regulations thereunder, the "Securities Act") and
any applicable state securities or "blue sky" laws. As of their respective
dates (and without giving effect to any amendments or modifications filed after
the date of
18
<PAGE>
this Plan with respect to Company Reports filed before the date of this Plan),
each of the Company Reports complied in all material respects with the statutes,
rules, regulations and orders enforced or promulgated by the Regulatory
Authority with which they were filed and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(I) Financial Statements. The Company's (a) Annual Report on Form 10-
--------------------
K for the fiscal year ended December 31, 1998, and all other documents filed or
to be filed by the Company or any Company Subsidiary subsequent to December 31,
1998, under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed with the SEC (in each such case, the "Company Financial Reports"), did not
and will not as of their respective dates contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in or
incorporated by reference into the Company Financial Reports (including the
related notes and schedules thereto) fairly presents in all material respects
and will fairly present in all material respects the financial position of the
entity or entities to which it relates as of its date and each of the statements
of income and changes in stockholders' equity and cash flows or equivalent
statements in the Company Financial Reports (including any related notes and
schedules thereto) fairly presents in all material respects and will fairly
present in all material respects the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles applied
consistently during the periods involved, except as may be noted therein,
subject to normal and recurring year-end audit adjustments in the case of
unaudited statements.
(J) Absence of Undisclosed Liabilities. Except as disclosed in the
----------------------------------
Company Financial Reports prior to the date hereof, none of the Company or the
Company Subsidiaries has any obligation or liability whatsoever (whether
accrued, contingent
19
<PAGE>
or otherwise), including liabilities under Environmental Laws (as hereinafter
defined), that, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company.
(K) Absence of Certain Changes. Since December 31, 1998, except as
--------------------------
Previously Disclosed or as specifically contemplated by this Plan, the business
of the Company and the Company Subsidiaries has been conducted in the ordinary
and usual course, consistent with past practice and there has not been:
(1) any event, occurrence, development or state of circumstances
or facts which has had or would reasonably be expected to constitute or
result in a Material Adverse Effect on the Company; or
(2) any event, occurrence, development or state of circumstances
or facts which would result in a violation of the covenants set forth in
Article III of this Plan had such events, occurrences, developments or
-----------
state of circumstances or facts occurred after the date hereof.
(L) Properties; Securities. Except as specifically reserved against
----------------------
or otherwise disclosed in the Company Financial Reports (including the related
notes and schedules thereto) and except for those properties and assets that
have been sold or otherwise disposed of in the ordinary course of business, and
except as Previously Disclosed, the Company and the Company Subsidiaries have
good and marketable title, free and clear of all Liens, to all of the properties
and assets, tangible and intangible, reflected in the Company Financial Reports
as being owned by the Company or the Company Subsidiaries as of the dates
thereof, other than those failures to have such title and Liens that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. The Company and the Company Subsidiaries do not
have a fee interest in any real property not used in the ordinary course of
their business, except as Previously Disclosed. All buildings and all fixtures,
equipment, and other property and assets which are held under leases or
subleases by any of the Company or the Company Subsidiaries are held under valid
leases or subleases enforceable in accordance with their respective terms,
except for instances where the failure to be so enforceable is not reasonably
likely,
20
<PAGE>
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Each of the Company and the Company Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent business practices to secure
obligations of each of the Company or any of the Company Subsidiaries, and
except for such other Liens as are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. All such securities
are valued on the books of the Company or the Company Subsidiaries in accordance
with generally accepted accounting principles.
(M) Litigation; Regulatory Action. Except as disclosed in the Company
-----------------------------
Financial Reports and except as Previously Disclosed, (1) no litigation,
proceeding or controversy ("Litigation") before any court, arbitrator, mediator
or Regulatory Authority (as hereinafter defined) is pending against the Company
or the Company Subsidiaries which, individually or in the aggregate, has or is
reasonably likely to have a Material Adverse Effect on the Company, and, to the
Company's knowledge, no such Litigation has been threatened; (2) neither the
Company nor any of the Company Subsidiaries or properties is a party to or is
subject to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, any federal,
state or municipal governmental agency or authority or Self-Regulatory Body (the
"Regulatory Authorities") charged with the supervision or regulation of broker-
dealers, securities underwriting or trading, stock exchanges, commodities
exchanges, investment companies, investment advisers or insurance agents and
brokers (including, without limitation, the SEC, the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"), the CFTC, the NYSE, the
NASD, the AMEX, the CME, the CBOT, the MSRB, and the Federal Trade Commission)
or the supervision or regulation of the Company or any of the Company
Subsidiaries; and (3) neither the Company nor any of the Company Subsidiaries
has been advised by any such Regulatory Authority that such Regulatory Authority
is contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum or
understanding, commitment letter or similar submission.
21
<PAGE>
Previously Disclosed is a true and complete list, as of the date hereof, of all
Litigation pending or, to the Company's knowledge, threatened in writing,
arising out of any state of facts relating to the sale of investment products by
the Company, the Company Subsidiaries or any employees thereof (including,
without limitation, equity or debt securities, mutual funds, insurance
contracts, annuities, partnership and limited partnership interests, interests
in real estate, investment banking services, securities underwritings in which
the Company or any Company Subsidiary was a manager, co-manager, syndicate
member or distributor, Derivatives Contracts (as hereinafter defined) or
structured notes).
(N) Compliance with Laws. Except as Previously Disclosed, each of the
--------------------
Company and the Company Subsidiaries:
(1) in the conduct of its business (including without limitation,
municipal securities and NASDAQ market-making activities), is in compliance
in all respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
and the rules of all Self-Regulatory Bodies applicable thereto, except for
such instances of noncompliance which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company;
(2) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit it to
own and operate its businesses in all material respects as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to their knowledge, no
suspension or cancellation of any of them is threatened or reasonably
likely;
(3) has received no notification or communication from any
Regulatory Authority (a) asserting that any of them is not in compliance
with any of the statutes, rules, regulations, or ordinances which such
Regulatory Authority
22
<PAGE>
enforces, or has otherwise engaged in any unlawful business practice which,
as a result of such noncompliance in any such instance, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on
the Company, (b) threatening to revoke any license, franchise, permit, seat
on any stock or commodities exchange, or governmental authorization which
revocation, individually or in the aggregate, is reasonably likely to have
a Material Adverse Effect on the Company, (c) requiring any of them
(including any of the Company's or the Company Subsidiary's directors or
controlling persons) to enter into any order, decree, agreement, memorandum
of understanding or similar arrangement (or requiring the board of
directors thereof to adopt any resolution or policy) or (d) restricting or
disqualifying the activities of the Company or any of the Company
Subsidiaries (except for restrictions generally imposed by rule, regulation
or administrative policy on broker-dealers generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Regulatory Authority against the
Company, any Company Subsidiary or any officer, director or employee
thereof, except for such investigation, review or disciplinary proceedings
which are not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on the Company;
(5) is not, nor to the Company's knowledge, is any "affiliated
person" (as defined in the Investment Company Act) with it, ineligible
pursuant to Section 9(a) or 9(b) of the Investment Company Act to serve as
an investment advisor (or in any other capacity contemplated by the
Investment Company Act) to an Investment Company. Neither the Company, nor
any "associated person" (as defined in the Investment Advisers Act)
thereof, is ineligible pursuant to Section 203 of the Investment Advisers
Act to serve as an investment advisor or as an associated person to a
registered investment advisor;
(6) is not, nor to the Company's knowledge, is any affiliate of
any of them, subject to a "statutory disqualification" as defined in
Section 3(a)(39) of the
23
<PAGE>
Exchange Act or is subject to a disqualification that would be a basis for
limitations on the activities, functions or operations of, or suspension or
revocation of the registration of any broker-dealer Company Subsidiary as a
broker-dealer, municipal securities dealer, government securities broker or
government securities dealer under Section 15, Section 15B or Section 15C
of the Exchange Act and, to the Company's knowledge, there is no reasonable
basis for, or proceeding or investigation, whether preliminary or
otherwise, that is reasonably likely to result in, any such limitations,
suspension or revocation;
(7) is not required to be registered as an investment company,
commodity trading advisor, commodity pool operator, futures commission
merchant, introducing broker, insurance agent, or transfer agent under any
federal, state, local or foreign statutes, laws, rules or regulations;
(8) in the conduct of its business with respect to employee
benefit plans (other than employee benefit plans of the Company
contemplated by Section 4.01(Q)) subject to Title I of ERISA, has not (a)
---------------
breached any applicable fiduciary duty under Part 4 of Title I of ERISA
which would subject it to liability under Sections 405 or 409 of ERISA, and
(b) engaged in a "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975(c) of the Code which would subject the Company to
liability or Taxes under Sections 409 or 501(i) of ERISA or Section 4975(a)
of the Code, except for such instances of the foregoing which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company; and
(9) is not subject to regulation under the Investment Advisers Act
or the Investment Company Act. The Company and the Company Subsidiaries are
and, except for instances of noncompliance which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company, each of their employees which are or who are required to be
registered as a broker-dealer, an investment advisor, a registered
representative, an insurance agent or a sales person (or in similar
capacity) with the SEC, the securities commission of any state or
24
<PAGE>
foreign jurisdiction or any Self-Regulatory Body are duly registered as
such and such registrations are in full force and effect. All federal,
state, local and foreign registration requirements have been complied with
in all material respects and such registrations as currently filed, and all
periodic reports required to be filed with respect thereto, are accurate
and complete in all material respects. The Company has made available to
First Union true and correct copies of (a) each Form G-37/G-38 filed with
the MSRB since January 1, 1996, and (b) all records required to be kept by
the Company under Rule G-8(a)(xvi) of the MSRB. There has been no
contributions or payments, and there is not any other information, that
would be required to be disclosed by the Company or any of the Company
Subsidiaries under MSRB rules and regulations, except for noncompliance of
the foregoing which is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(O) Material Contracts.
------------------
(1) Except as Previously Disclosed, as of the date hereof,
neither the Company nor any Company Subsidiary is a party to, or is
otherwise bound by, any material contract (as defined in Item 601(b)(10) of
Regulation S-K under the Securities Act) to be performed after the date
hereof that has not been filed or incorporated by reference in the Company
Financial Reports filed on or prior to the date hereof.
(2) Except as Previously Disclosed, none of the Company or the
Company Subsidiaries is in default under any contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to
which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective
assets, business, or operations receives benefits (each, a "Contract"),
which default, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company, and there has not occurred
any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. Neither the Company nor any Company
Subsidiary is subject to or
25
<PAGE>
bound by any exclusive dealing arrangement or other contract or arrangement
containing covenants which limit the ability of the Company or any Company
Subsidiary to compete in any line of business or with any person or which
involve any restriction of geographical area in which, or method by which,
the Company or any Company Subsidiary may carry on its business (other than
as may be required by law or any applicable Regulatory Authority). True and
complete copies of all such Previously Disclosed Contracts and all
amendments thereto have been supplied or made available to First Union.
There are no Contracts between any affiliate of the Company (other than the
Company, the Company Subsidiaries, First Union and First Union's
affiliates), on the one hand, and the Company or any Company Subsidiary, on
the other hand.
(3) Contracts with Clients. Except for instances of
----------------------
noncompliance with the following representations (Section 4.01(O)(3)(a-b))
-----------------------
which would not be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company:
(a) Each of the Company and the Company Subsidiaries is in
compliance with the terms of each Contract with any customer to whom
the Company or any Company Subsidiary provides services under any
Contract (a "Client"), and each such Contract is in full force and
effect with respect to the applicable Client. There are no disputes
pending or, to the Company's knowledge, threatened with any Client
under the terms of any such Contract or with any former Client. The
Company has provided or made available to First Union true and
complete copies of the standard form of all advisory, sub-advisory and
similar agreements with Clients; and
(b) Each extension of credit by the Company or any of the
Company Subsidiaries to any Client (i) is in full compliance with
Regulation T of the Federal Reserve Board or any substantially similar
regulation of any Regulatory Authority, (ii) is fully secured, and
(iii) the Company or a Company Subsidiary, as the case
26
<PAGE>
may be, has a first priority perfected security interest in the
collateral securing such extension.
(P) No Brokers. All negotiations relative to this Plan and the
----------
transactions contemplated hereby have been carried on by it directly with First
Union and no action has been taken by it that would give rise to any valid claim
against any party hereto for a brokerage commission, finder's fee or other like
payment, excluding a fee to be paid to Morgan Stanley & Co. Incorporated, a copy
of the engagement letter for which has been provided or made available to First
Union.
(Q) Employee Benefit Plans.
-----------------------
(1) Previously Disclosed is a complete list of all bonus,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment, "change of control" or
severance contracts, all medical, dental, health and life insurance plans,
all other employee benefit plans, contracts or arrangements maintained or
contributed to by it or any of the Company Subsidiaries for the benefit of
employees, former employees, directors, former directors or their
beneficiaries (the "Compensation and Benefit Plans"). True and complete
copies of all Compensation and Benefit Plans, including, but not limited
to, any trust instruments and/or insurance contracts, if any, forming a
part thereof, and all amendments thereto have been supplied or made
available to First Union.
(2) All "employee benefit plans" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of Section
3(37) of ERISA ("Multiemployer Plans"), covering employees or former
employees of it and the Company Subsidiaries (the "ERISA Plans"), to the
extent subject to ERISA, are in compliance with ERISA in all material
respects. Except as Previously Disclosed each ERISA Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified, under Section
401(a) of the Code, has received a favorable
27
<PAGE>
determination letter from the Internal Revenue Service with respect to
"TRA" (as defined in Section 1 of Internal Revenue Service Revenue
Procedure 93-39), and it is not aware of any circumstances reasonably
likely to result in the revocation or denial of any such favorable
determination letter or the inability to receive such a favorable
determination letter. There is no pending or, to its knowledge, threatened
(in writing) litigation relating to the ERISA Plans. Neither it nor any of
the Company Subsidiaries has engaged in a transaction with respect to any
ERISA Plan that would subject it or any of the Company Subsidiaries to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA in an amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by it or any of the Company Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with it under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither it nor any of the
Company Subsidiaries presently contributes to a Multiemployer Plan, nor
have they contributed to such a plan within the past five calendar years.
No notice of a "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived, other
than an event contemplated by this Plan, has been required to be filed for
any Pension Plan or by any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA. Neither it nor any of the Company Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code.
28
<PAGE>
(5) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the plan's most recent actuarial valuation) did
not exceed the then current value of the assets of such plan, and there has
been no material change in the financial condition of such plan since the
last day of the most recent plan year.
(6) Neither it nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any plan, except as
Previously Disclosed. Under the terms of the applicable plans, there are
no restrictions on the rights of it or any of the Company Subsidiaries to
amend or terminate any such plan without incurring any liability under the
terms of the applicable plans. In addition, the Company is not aware of
any restriction on the rights of it or any of the Company Subsidiaries to
amend or terminate any such plan without incurring any liability thereunder
under current case law.
(7) Except as Previously Disclosed, neither the execution and
delivery of this Plan nor the consummation of the transactions contemplated
hereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of it or any of the Company
Subsidiaries under any Compensation and Benefit Plan or otherwise from it
or any of the Company Subsidiaries, (b) increase any compensation or
benefits otherwise payable under any Compensation and Benefit Plan, or (c)
result in any acceleration of the time of payment, funding or vesting of
any such compensation or benefit.
(R) No Knowledge. It knows of no reason why the regulatory approvals
------------
referred to in Section 6.01(B) should not be obtained without the imposition of
---------------
any condition of the type referred to in the proviso following such Section
-------
6.01(B).
- -------
29
<PAGE>
(S) Labor Relations. Each of the Company and the Company Subsidiaries
---------------
is in compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform and Control Act, the
Worker Adjustment and Retraining Notification Act, and any such laws relating to
employment discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation, employee
benefits, severance payments, labor relations, employee leave issues, wage and
hour standards, occupational safety and health requirements and unemployment
insurance and related matters to the extent that non-compliance with any such
laws would not be reasonably likely to have a Material Adverse Effect on the
Company. None of the Company nor any of the Company Subsidiaries is engaged in
any unfair labor practice and there is no unfair labor practice complaint
pending or, to the Company's knowledge, threatened against any of the Company or
the Company Subsidiaries before the National Labor Relations Board except for
such complaints which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. Neither it nor any
of the Company Subsidiaries is a party to, or is bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is it or any of the Company Subsidiaries the
subject of a proceeding seeking to compel it or such subsidiary to bargain with
any labor organization as to wages and conditions of employment, nor is there
any strike or other labor dispute involving it or any of the Company
Subsidiaries, pending or, to the Company's knowledge, threatened, nor is it
aware of any activity involving its or any of the Company Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
(T) Insurance. The Company and the Company Subsidiaries are insured
---------
with reputable insurers against such risks and in such amounts as the management
of the Company reasonably has determined to be prudent in accordance with
industry practices. All of the insurance policies, binders, or bonds maintained
by the Company or the Company Subsidiaries are in full force and effect; the
Company and the Company Subsidiaries are not in default thereunder; and all
claims thereunder have been filed in due and timely fashion, in each
30
<PAGE>
instance except for cases which would not be reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the Company. Previously
Disclosed is a list of all insurance policies maintained by or for the benefit
of the Company or the Company Subsidiaries or their directors, officers,
employees or agents as of the date hereof.
(U) Affiliates. Except as Previously Disclosed, there is no person
----------
who, as of the date of this Plan, may be deemed to be an "affiliate" of the
Company (each, an "Affiliate") as that term is used in Rule 145 under the
Securities Act.
(V) State Takeover Laws; Articles of Incorporation. It has taken all
----------------------------------------------
necessary action to exempt this Plan, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Plan, the Stock
Option Agreement, and the transactions contemplated hereby and thereby are
exempt from, (1) Section 203 of the DGCL (assuming the accuracy of First Union's
representations in Section 4.02(N)), and (2) any applicable takeover provisions
---------------
in the Company's Certificate of Incorporation or By-laws.
(W) No Further Action. It has taken all action so that the entering
-----------------
into of this Plan, the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby (including without limitation the
Merger) or any other action or combination of actions, or any other
transactions, contemplated hereby or thereby do not and will not (assuming the
accuracy of First Union's representations in Section 4.02(N))(1) require a vote
---------------
of stockholders (other than the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock on this Plan or on any other
actions necessary to facilitate the transactions contemplated hereby), or (2)
result in the grant of any rights to any person under the Certificate of
Incorporation or Bylaws of the Company or any Company Subsidiary or under any
agreement to which the Company or any of the Company Subsidiaries is a party, or
(3) restrict or impair in any way the ability of First Union to exercise the
rights granted hereunder.
(X) Environmental Matters. The Company and the Company Subsidiaries
---------------------
have obtained and maintained in effect all licenses, permits and other
authorizations required under all applicable laws, regulations and other
requirements of
31
<PAGE>
governmental or regulatory authorities relating to pollution or to the
protection of the environment ("Environmental Laws") and is in compliance in all
material respects with all Environmental Laws and with all such licenses,
permits and authorizations, except in instances where the failure to obtain or
maintain such licenses, permits and other authorizations is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company. It has not received notice of liability to any person, governmental
entity or Business Entity under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. (S) 9601 et seq. or any other
------
Environmental Laws with respect to real property owned or leased by the Company
or the Company Subsidiaries.
(Y) Taxes. Except as Previously Disclosed and except as disclosed in
-----
the Company Financial Reports, (1) all material reports and returns with respect
to Taxes (as defined below) and tax related information reporting requirements
that are required to be filed by or with respect to it or the Company
Subsidiaries, including without limitation consolidated federal income tax
returns of it and the Company Subsidiaries (collectively, the "Company Tax
Returns"), have been duly filed, or requests for extensions have been timely
filed and have not expired, and such Company Tax Returns were true, complete and
accurate in all respects, except for such failures to be true, complete and
accurate which are not likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company, (2) all taxes (which shall mean federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
premium, recording, documentary, documentary stamps, real estate transfer,
transfer, back-up withholding or similar taxes, together with any interest,
additions, or penalties with respect thereto, imposed on the income, properties
or operations of it or the Company Subsidiaries, together with any interest in
respect of such additions or penalties, collectively the "Taxes") shown to be
due on the Company Tax Returns have been paid in full or have been adequately
reserved against on the books of the Company or the Company Subsidiaries, (3)
the statute of limitations on assessment or collection of any federal or state
income taxes due from the Company or the Company Subsidiaries has expired for
all taxable years of the Company and the Company Subsidiaries through December
31, 1994, (4) all Taxes due with respect to completed
32
<PAGE>
and settled examinations have been paid in full, (5) no issues have been raised
by the relevant taxing authority in connection with the examination of any of
the Company Tax Returns which are reasonably likely, individually or in the
aggregate, to result in a determination that would have a Material Adverse
Effect on the Company, except as reserved against in the Company Financial
Reports prior to the date of this Plan, (6) none of the Company, the Company
Subsidiaries, First Union or any direct or indirect subsidiary of First Union,
as a consequence of the Company's actions prior to the Effective Time, will be
obligated to make a payment to an individual that would be a "parachute payment"
as such term is defined in Section 280G of the Code without regard to whether
such payment is to be performed in the future, (7) neither the Company nor any
of the Company Subsidiaries will be required, as a result of (A) a change in
accounting method for a Tax period beginning on or before the Effective Time, to
include any adjustment under Section 481(c) of the Code (or any similar
provision of state, local or foreign law) in taxable income for any Tax period
beginning on or after the Effective Date, or (B) any "closing agreement" as
described in Section 7121 of the Code (or any similar provision of state, local
or foreign Tax law), to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Effective Date, (8)
neither the Company nor any of the Company Subsidiaries has, since September 13,
1995, been a member of an affiliated, combined, consolidated or unitary Tax
group for purposes of filing any Tax Return, other than a group of which the
Company or Kemper Corporation, a Delaware corporation, was the common parent,
and (9) since September 13, 1995, no closing agreements, private letter rulings,
technical advance memoranda or similar agreement or rulings have been entered
into or issued by any taxing authority with respect to the Company or any of the
Company Subsidiaries.
(Z) Accuracy of Information. The statements with respect to the
-----------------------
Company and the Company Subsidiaries contained in this Plan, the Schedules and
any other written documents executed and delivered by or on behalf of it
pursuant to the terms of this Plan are true and correct in all material
respects.
(AA) Derivatives. All exchange-traded or over-the-counter swap,
-----------
forward, future, option, cap, floor or collar financial contract or any other
similar arrangement, whether
33
<PAGE>
entered into for the Company's account, or for the account of one or more of the
Company Subsidiaries or their customers (except for transactions entered into by
the Company or the Company Subsidiaries on listed options effected on an agency
basis for customers), were entered into (1) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory policies
and (2) with counterparties believed to be financially responsible at the time;
and each of them constitutes the valid and legally binding obligation of the
Company or Company Subsidiary, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and are in full force and effect, except to the extent the failure
of any of the foregoing is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. Neither the Company
nor a Company Subsidiary, nor to the Company's knowledge any other party
thereto, is in material breach of any of its obligations under any such
agreement or arrangement except for such instances which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company. As of their respective dates, the Company's Financial Reports
disclose the value of such agreements and arrangements on a mark-to-market basis
in accordance with generally accepted accounting principles and, since December
31, 1998, there has not been a change in such value that, individually or in the
aggregate, has resulted or is reasonably likely to result in a Material Adverse
Effect on the Company.
(BB) Accounting Controls. Each of the Company and the Company
-------------------
Subsidiaries has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, that all material transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles consistently applied
with respect to broker-dealers or any other criteria applicable to such
statements.
(CC) Proprietary Rights. The Company and the Company Subsidiaries
------------------
have the right to use the names, servicemarks, trademarks and other intellectual
property (collectively, "Intellectual Property") material to the conduct of
their
34
<PAGE>
business, all such Intellectual Property has been Previously Disclosed, such
right of use is free and clear of any Liens and no other person has the right to
use any such Intellectual Property except for instances which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company.
(DD) Reorganization. It is aware of no reason why the Merger would
--------------
fail to qualify as a reorganization under Section 368(a) of the Code.
(EE) Investment Advisory Activities.
------------------------------
(1) None of the Company Subsidiaries provide investment
management, investment advisory, sub-advisory, administration, distribution
or certain other services to persons registered or, to the Company's
knowledge, required to be registered under the Investment Company Act.
(2) Except as Previously Disclosed, none of the Company or any
Company Subsidiary is or has been during the past five years an "investment
adviser" within the meaning of the Investment Advisers Act, required to be
registered, licensed or qualified as an investment advisor under the
Investment Advisers Act or subject to any material liability or disability
by reason of any failure to be so registered, licensed or qualified, except
for any such failure to be so registered, licensed or qualified that would
not, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect on the Company.
(3) The Company and the Company Subsidiaries have in all material
respects operated each of its investment accounts for which it has
investment discretion in accordance with the investment objectives and
guidelines in effect for each such investment account, except when lack of
compliance would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(FF) Company Rights Agreement. The Company has duly adopted an
------------------------
amendment to the Company Rights Agreement in the form of Exhibit D, as a
result of which neither First Union nor any
35
<PAGE>
affiliate or associate of First Union will become an "Acquiring Person" and
no "Distribution Date" (as such terms are defined in the Company Rights
Agreement) will occur, and the rights issued under the Company Rights
Agreement will not become separable, distributable, unredeemable or
exercisable as a result of the approval, execution or delivery of this
Plan, the Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby and the Company Rights will expire at the
Effective Time.
(GG) Year 2000. The Company has adopted a plan of reprogramming and
---------
testing (the "Y2K Plan") for the purpose of assuring that all computer
software and hardware developed or currently used by the Company and the
Company Subsidiaries will be capable of providing uninterrupted millennium
functionality to record, store, process and present calendar dates falling
on or after January 1, 2000 and date-dependent data in substantially the
same manner and with the same functionality as such software records,
stores, processes and presents such calendar dates and date-dependent data
as of the date hereof (such functionality, "Y2K Compliant"). A true and
complete copy of the Y2K Plan has been made available to First Union, and
the Company is in the process of effecting the Y2K Plan in accordance with
the schedule provided for therein, except for instances which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company. To the knowledge of the Company, all such
mission-critical software and hardware will be reprogrammed or replaced and
tested and will be Y2K Compliant within the times provided for in the Y2K
Plan and incurring the costs to implement the Y2K Plan is not reasonably
likely to have a Material Adverse Effect on the Company.
4.02. First Union Representations and Warranties. First Union hereby
------------------------------------------
represents and warrants to the Company, as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan with
--------
respect to it are true and correct.
(B) Corporate Authority. This Plan has been authorized by all
-------------------
necessary corporate action of it and is a valid and binding agreement of it
enforceable against it in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency and other similar laws of general applicability
36
<PAGE>
relating to or affecting creditors' rights and to general equity principles.
(C) No Defaults. Subject to the required approval of the Federal
-----------
Reserve Board, and any required filings under federal and state securities and
insurance laws, and the approvals of the NYSE and the other securities exchanges
referred to in Section 4.01(G), of the Merger and the other transactions
---------------
contemplated hereby, the execution, delivery and performance of this Plan, and
the consummation of the transactions contemplated hereby by it, does not and
will not (1) constitute a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or of any of its
subsidiaries or to which it or any of its subsidiaries or properties is subject
or bound, which breach, violation or default is reasonably likely to have a
Material Adverse Effect on First Union, (2) constitute a breach or violation of,
or a default under, its Articles of Incorporation, Charter or Bylaws, or (3)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, or the consent or approval of any
other party to any such agreement, indenture or instrument other than such
consent or approval, which if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on First
Union.
(D) Financial Reports. Its Annual Report on Form 10-K for the fiscal
-----------------
year ended December 31, 1998, and all other documents filed or to be filed
subsequent to December 31, 1998, under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed with the SEC (in each such case, the "First
Union Financial Reports"), did not and will not as of their respective dates
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading; and
each of the balance sheets in or incorporated by reference into the First Union
Financial Reports (including the related notes and schedules thereto) fairly
presents and will fairly present the financial position of the entity or
entities to which it relates as of its date and each of the statements of income
and changes in stockholders' equity and cash flows or equivalent statements in
the First Union Financial Reports (including any
37
<PAGE>
related notes and schedules thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for the
periods set forth therein, in each case in accordance with generally accepted
accounting principles consistently applied to banks and bank holding companies
during the periods involved, except as may be noted therein, subject to normal
and recurring year-end audit adjustments in the case of unaudited statements.
First Union has provided the Company true and complete copies of First Union's
Articles of Incorporation and By-laws and the First Union Rights Agreement, in
each case as in effect on the date hereof.
(E) No Events. Since December 31, 1998, except as Previously
---------
Disclosed or as specifically contemplated by this Plan, there has not been (1)
any event, occurrence, development or state of circumstances or facts which has
had or would reasonably be expected to constitute or result in a Material
Adverse Effect on First Union, or (2) any event, occurrence, development or
state of circumstances or facts which would result in a violation of the
covenants set forth in Article III of this Plan had such events, occurrences,
-----------
developments or state of circumstances or facts occurred after the date hereof.
(F) No Brokers. All negotiations relative to this Plan and the
----------
transactions contemplated hereby have been carried on by it directly with the
Company and no action has been taken by it that would give rise to any valid
claim against any party hereto for a brokerage commission, finder's fee or other
like payment.
(G) No Knowledge. It is aware of no reason why (1) the regulatory
------------
approvals referred to in Section 6.01(B) should not be obtained without the
---------------
imposition of any condition of the type referred to in the proviso following
such Section 6.01(B) and(2) the Merger would fail to qualify as a reorganization
---------------
under Section 368(a) of the Code.
(H) Shares Authorized. The shares of First Union Common Stock to be
-----------------
issued in exchange for shares of Company Common Stock upon consummation of the
Merger in accordance with Article II of this Plan, have been duly authorized
----------
and, when issued in accordance with the terms of this Plan, and in the case
38
<PAGE>
of shares issued upon the exercise of such Options, the related stock option
plan, will be validly issued, fully paid and nonassessable and subject to no
preemptive rights.
(I) Organization, Standing and Authority. Each of First Union and its
------------------------------------
material subsidiaries is duly qualified to do business and is in good standing
in the States of the United States and foreign jurisdictions where the failure
to be duly qualified, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on First Union. Each of First Union and its
subsidiaries has in effect all federal, state, local and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now conducted, the absence of which, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
First Union.
(J) Corporate Power. Each of First Union and its material
---------------
subsidiaries has the corporate power and authority to carry on its business as
it is now being conducted and to own or lease all its material properties and
assets except for cases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on First Union.
(K) Accuracy of Information. The statements with respect to First
-----------------------
Union contained in this Plan, the Schedules and any other written documents
executed and delivered by or on behalf of First Union pursuant to the terms of
this Plan are true and correct in all material respects.
(L) Litigation; Regulatory Action. No Litigation is pending against
------------------------------
First Union or any of its subsidiaries before any court, arbitrator, mediator or
Regulatory Authority which, individually or in the aggregate, has or is
reasonably likely to have a Material Adverse Effect on First Union and, to its
knowledge, no such Litigation has been threatened; and neither it nor any of its
subsidiaries or any of its or their properties or their officers, directors or
controlling persons is a party to or is the subject of any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any Regulatory Authorities, which is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on First Union and neither it nor any of
39
<PAGE>
its subsidiaries has been advised by any Regulatory Authorities that any such
authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(M) Year 2000. First Union has adopted a Y2K Plan for the purpose of
---------
assuring that all computer software and hardware developed or currently used by
First Union and its subsidiaries will be Y2K Compliant. To First Union's
knowledge, all such software and hardware will be reprogrammed or replaced and
tested and will be Y2K Compliant within the times provided for in the Y2K Plan
and incurring the costs to implement the Y2K Plan is not reasonably likely to
have a Material Adverse Effect on First Union.
(N) Ownership of Company Common Stock. Neither First Union, nor any
---------------------------------
of its subsidiaries, or to First Union's knowledge, affiliates or associates (as
such terms are defined under the Exchange Act), beneficially owns directly or
indirectly, or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, more than 1% of the
outstanding shares of Company Common Stock (other than shares held in a bona
fide fiduciary or investment advisory capacity).
(M) First Union Rights Agreement. As a result of the consummation of
----------------------------
the transactions contemplated by this Plan, neither the Company nor any
affiliate or associate of the Company will become an "Acquiring Person" and
no "Distribution Date" (as such terms are defined in the First Union Rights
Agreement) will occur, and the rights issued under the First Union Rights
Agreement will not become separable, distributable, unredeemable or
exercisable as a result of the approval, execution or delivery of this Plan
or the consummation of the transactions contemplated hereby.
V. COVENANTS.
The Company hereby covenants to First Union, and First Union hereby
covenants to the Company, as applicable, that:
40
<PAGE>
5.01. Efforts. Subject to the terms and conditions of this Plan, it
-------
shall, and shall cause its subsidiaries to, use reasonable best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as reasonably
practicable and to otherwise enable consummation of the transactions
contemplated hereby and shall cooperate fully with each other to that end (it
being understood that any amendments to the Registration Statement (as
hereinafter defined) or a resolicitation of proxies as a consequence of an
acquisition agreement by First Union or any of its subsidiaries shall not
violate this covenant). Without limiting the generality of the foregoing, the
Company agrees to use its commercially reasonable efforts, and to cause the
Company Subsidiaries to use commercially reasonable efforts, to obtain (A) any
consents of Clients necessary in connection with the "assignment" of the
Contracts pursuant to which the Company or any Company Subsidiary provides
investment advisory, sub-advisory or management services to a Client within the
meaning of the Investment Advisers Act ("Advisory Agreements") resulting from
the consummation of the Merger; provided that First Union agrees that other than
with respect to any Advisory Agreement which by its terms expressly requires
written consent to its assignment, effective consent to such "assignment" of an
Advisory Agreement may be obtained for all purposes hereunder and under
applicable law by requesting written consent from the Client and informing such
Client of (1) the intention to complete the Merger, which may result in a deemed
assignment of such Advisory Agreement, (2) the Company's intention to continue
the advisory services pursuant to the existing Advisory Agreement with such
Client after the Effective Date if such Client does not terminate such agreement
prior to the Effective Date, and (3) that the consent of such Client will be
deemed to have been granted if such Client continues to accept such advisory
services for at least 40 days after receipt of such notice without termination,
and (B) the consent or approval of all persons party to a Contract with the
Company, to the extent such consent or approval is required in order to
consummate the Merger and for the Continuing Corporation to receive the benefits
thereof.
5.02. Company Proxy/Registration Statement; Stockholder Approval. The
----------------------------------------------------------
Company and First Union shall prepare a proxy
41
<PAGE>
statement/prospectus (the "Proxy Statement") to be mailed to the holders of
Company Common Stock in connection with the transactions contemplated hereby and
to be filed by First Union in a registration statement (the "Registration
Statement") with the SEC. The Company shall call a special meeting (the
"Meeting") of the holders of Company Common Stock to be held as soon as
practicable for purposes of voting upon the approval of this Plan and the
Company shall use its reasonable best efforts to solicit and obtain votes of the
holders of Company Common Stock in favor of the approval of this Plan, and the
Board of Directors of the Company shall recommend approval of this Plan by such
holders, subject to the directors' fiduciary duties under applicable laws and
the provisions of Section 5.07.
------------
5.03. Registration Statement; Compliance with Securities Laws. When the
-------------------------------------------------------
Registration Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such effectiveness, up to
and including the date of the Meeting, such Registration Statement and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by or on behalf of the Company relating to
the Company or the Company Subsidiaries and by or on behalf of First Union
relating to First Union or its subsidiaries, (A) will comply in all material
respects with the provisions of the Securities Act and the Exchange Act and any
other applicable statutory or regulatory requirements, and (B) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading; provided, however, in no event shall any party hereto be
-------- -------
liable for any untrue statement of a material fact or omission to state a
material fact in the Registration Statement made in reliance upon, and in
conformity with, written information concerning another party furnished by or on
behalf of such other party specifically for use in the Registration Statement.
5.04. Registration Statement Effectiveness. First Union will advise the
------------------------------------
Company, promptly after First Union receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed (after providing drafts in advance to the Company and its counsel
for review and comment), of the issuance of any stop order or the
42
<PAGE>
suspension of the qualification of the First Union Common Stock for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information.
5.05. Press Releases. The Company will not, without the prior approval
--------------
of First Union (which approval shall not be unreasonably withheld or delayed),
and First Union will not, without the prior approval of the Company (which
approval shall not be unreasonably withheld or delayed), issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by law.
5.06. Access; Information. (A) Subject to applicable law and any binding
-------------------
confidentiality agreement, upon reasonable notice, the Company and First Union
shall afford the other party and its officers, employees, counsel, accountants
and other authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its properties,
books, contracts, data processing system files, commitments and records and,
during such period, and upon request shall furnish promptly to the other party
(1) a copy of each material report, schedule and other document filed by it and
its subsidiaries with any Regulatory Authority, and (2) all other information
concerning the business, properties and personnel of it and its subsidiaries as
the other party may reasonably request, provided that no investigation pursuant
--------
to this Section 5.06 shall affect or be deemed to modify or waive any
------------
representation or warranty made by the parties or the conditions to the
obligations of the parties to consummate the transactions contemplated by this
Plan; and (B) First Union will not use any information obtained pursuant to this
Section 5.06 for any purpose unrelated to the consummation of the transactions
- ------------
contemplated by this Plan and, if this Plan is terminated, will hold all
information and documents obtained pursuant to this paragraph in confidence (as
provided in the confidentiality provisions contained in the Confidentiality
Agreement between the Company and First Union, dated as of April 21, 1999 (the
"Confidentiality Agreement")).
43
<PAGE>
5.07. Acquisition Proposals. In the case of the Company, it shall not,
---------------------
and it shall cause the Company Subsidiaries not to, solicit or encourage
inquiries or proposals with respect to, or furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, the Company or any of the Company Subsidiaries
or any merger or other business combination with the Company or any of the
Company Subsidiaries (an "Acquisition Proposal") other than as contemplated by
this Plan; it shall instruct its and the Company Subsidiaries' officers,
directors, agents, advisors and affiliates to refrain from taking any action
that would violate or conflict with any of the foregoing; and it shall notify
First Union immediately if any such inquiries or proposals are received by, or
any such negotiations or discussions are sought to be initiated with, the
Company or any of the Company Subsidiaries. However, if the Company is not
otherwise in breach or violation of this Section 5.07, until the stockholder
------------
approval contemplated by Section 6.01(A) shall have been obtained, the Company
---------------
Board of Directors may, directly or indirectly through representatives: (a)
provide information to and request information from a person (a "Bidder") that
submits, after the date hereof, a bona fide Acquisition Proposal that the
Company Board of Directors in good faith determines is reasonably likely to
constitute a Superior Proposal (as hereinafter defined), and engage in
discussions with the Bidder for the sole purpose of ascertaining whether such
Acquisition Proposal is in fact a Superior Proposal; and (b) engage in
negotiations or discussions concerning such Acquisition Proposal, if the Company
Board of Directors determines in good faith, after consultation with and based
on the advice of outside counsel and a nationally recognized financial advisor
that such Acquisition Proposal constitutes a Superior Proposal. For purposes of
this Plan, a "Superior Proposal" means an Acquisition Proposal made by a third
party which, in the good faith judgment of the Company Board of Directors,
taking into account, to the extent deemed appropriate by the Company Board of
Directors, the various legal, financial and regulatory aspects of the proposal
and the person making such proposal, (x) if accepted, is reasonably likely to be
consummated, and (y) if consummated, is reasonably likely to result in a more
favorable transaction than the transaction contemplated hereunder considering,
among other things, and to the extent deemed appropriate in good faith by the
44
<PAGE>
Company Board of Directors, the long-term prospects and interests of the Company
and its stockholders and other relevant constituencies. The Company shall
immediately notify First Union of the receipt of any Acquisition Proposal and
shall promptly notify First Union of any significant actions taken or other
developments related thereto. The Company also agrees immediately to cease and
to cause to be terminated any activities, discussions or negotiations conducted
on or prior to the date of this Plan with any parties other than First Union,
with respect to any of the foregoing.
5.08. Blue-Sky Filings. In the case of First Union, it shall use its
----------------
reasonable best efforts to obtain all necessary state securities laws or "blue
sky" permits and approvals, provided that First Union shall not be required by
--------
virtue thereof to submit to general jurisdiction in any state.
5.09. State Takeover Laws; Articles of Incorporation. It shall not take
----------------------------------------------
any action that would cause the transactions contemplated by this Plan to be
subject to any state takeover statute applicable to such party and shall take
all necessary steps to exempt (or ensure the continued exemption of) the
transactions contemplated by this Plan from (A) any applicable state takeover
law, as now or hereafter in effect, and (B) any applicable takeover provisions
in the its Certificate of Incorporation or By-laws.
5.10. Affiliate Agreements. In the case of the Company, it will use
--------------------
reasonable efforts to cause each person who may be deemed to be an Affiliate of
the Company (other than the KSOP) to execute and deliver to First Union on or
before the mailing of the Proxy Statement for the Meeting an agreement in the
form attached hereto as Exhibit E restricting the disposition of the shares of
---------
First Union Common Stock to be received by such Affiliate in exchange for such
Affiliate's shares of Company Common Stock.
5.11. Shares Listed. In the case of First Union, it shall use its
-------------
reasonable best efforts to list, prior to the Effective Date, on the NYSE, upon
official notice of issuance, the shares of First Union Common Stock (and related
First Union Rights) to be issued to the holders of Company Common Stock pursuant
to this Plan.
45
<PAGE>
5.12. Regulatory Applications. In the case of First Union, subject to the
-----------------------
cooperation of the Company, (A) it shall promptly prepare and submit
applications to the appropriate Regulatory Authorities for approval of the
Merger, and (B) promptly make all other appropriate filings to secure all other
approvals, consents and rulings which are necessary for the consummation of the
Merger by First Union. First Union will provide copies of such applications and
responses to the Company and its counsel prior to submitting such applications
and responses to the applicable Regulatory Authorities to permit the Company and
such counsel to comment thereon. In the case of the Company, it agrees, upon
request, to furnish First Union with information concerning itself, the Company
Subsidiaries, its and their directors, officers and stockholders and such other
matters as may be necessary or advisable in connection with any filing, notice
or application made by or on behalf of First Union or any of its subsidiaries in
connection with the Merger and the other transactions contemplated in this Plan.
5.13. Current Information.
-------------------
(A) During the period from the date of this Plan to the Effective
Time, each of the Company and First Union shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) The Company shall promptly notify First Union of (1) any material
change in the business or operations of the Company or any Company Subsidiary,
(2) any material complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority
relating to the Company or any Company Subsidiary, (3) the institution or the
threat of material Litigation involving or relating to the Company or any
Company Subsidiary, or (4) any event or condition that might be reasonably
expected to cause any of the Company's representations or warranties set forth
herein not to be true and correct as of the Effective Time or prevent the
Company from fulfilling its obligations hereunder; and in each case shall keep
First Union informed with respect thereto.
(C) First Union shall notify the Company of (1) any event or
condition that might reasonably be expected to cause any
46
<PAGE>
of First Union's representations or warranties set forth herein not to be true
and correct as of the Effective Date or prevent First Union from fulfilling its
obligations hereunder, (2) the institution or the threat of material Litigation
involving or relating to First Union, and (3) notify the Company immediately of
any denial of any application filed by First Union with any Regulatory Authority
with respect to this Plan, and in each case shall keep the Company informed with
respect thereto.
5.14. Retention Program.
-----------------
(A) Retention Pool. At the Effective Time, First Union will establish
--------------
a retention pool (the "Retention Pool"), consisting of 1,581,818 restricted
shares of First Union Common Stock, to be used to retain key employees of the
Company. The individuals eligible for inclusion in the Retention Pool and the
respective allocations will be determined by the Chief Executive Officer of the
Company, in consultation with and subject to the prior approval of First Union,
prior to the Effective Time.
(B) Vesting. The restricted shares of First Union Common Stock in the
-------
Retention Pool shall vest, and shall be issued to the participants in the
Retention Pool then eligible to receive such shares, in the installments as set
forth in Annex B hereto. Such shares shall vest pursuant to the terms set forth
-------
on Annex B.
-------
(C) Eligibility. Eligibility to participate in the Retention Pool
-----------
shall require an individual to be employed by First Union as of the dates and
subject to the terms and conditions set forth in such Annex B.
-------
(D) Adjustment. If an employee of the Company who has been selected
----------
to participate in the Retention Pool shall forfeit the right to receive the
restricted shares of First Union Common Stock thereunder, as set forth in Annex
-----
B, the restricted shares of First Union Common Stock allocated to that
- -
individual shall be cancelled and the number of restricted shares of First Union
Common Stock in the Retention Pool shall be adjusted accordingly.
5.15. Indemnification/Liability Coverage.
----------------------------------
47
<PAGE>
(A) For six years after the Effective Date, First Union shall cause
the Continuing Corporation to, indemnify, defend and hold harmless the present
and former directors, officers and employees of the Company and the Company
Subsidiaries (each, an "Indemnified Party") against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Date (including,
without limitation, the transactions contemplated by this Plan) to the extent
such persons are indemnified under the Delaware General Corporation Law and the
Company's Certificate of Incorporation and Bylaws as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any litigation.
(B) First Union shall use its reasonable best efforts to maintain the
Company's existing directors' and officers' liability insurance policy (or a
policy, including First Union's existing policy, providing comparable coverage
amount on terms no less favorable) covering persons who are currently covered by
such insurance for a period of six years after the Effective Date; provided,
--------
that First Union shall not be obligated to make an annual premium payment in
respect of such policy (or replacement policy) which exceeds, for the portion
related to the Company's directors and officers, 200% of the annual premium
payment on the Company's current policy in effect as of the date of this Plan;
provided, further, that if such coverage can only be obtained upon the payment
- -----------------
of an annual premium in excess of 200% of the annual premium payment of the
Company's current policy, First Union shall obtain such coverage as can
reasonably be obtained by paying a premium of 200% of the annual premium payment
of the Company's current policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim indemnification under
Section 5.15(A), upon learning of such claim, action, suit, proceeding or
- ---------------
investigation, shall promptly notify First Union thereof; provided, that the
--------
failure so to notify shall not affect the obligations of First Union and the
Continuing Corporation under Section 5.15(A) (unless such failure materially
---------------
increases First Union's liability under such Section). In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Date), (1) First Union or the Continuing Corporation shall
have the right to assume the defense thereof, if it so elects, and
48
<PAGE>
First Union or the Continuing Corporation shall pay all reasonable fees and
expenses of counsel for the Indemnified Parties promptly as statements therefor
are received; provided, however, that First Union shall be obligated pursuant to
-------- -------
this subsection (C) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction for any single action, suit or proceeding or any
group of actions, suits or proceedings arising out of or related to a common
body of facts, (2) the Indemnified Parties will cooperate in the defense of any
such matter, and (3) First Union shall not be liable for any settlement effected
without its prior written consent.
5.16. Dividend Coordination. The Company shall coordinate with First Union
---------------------
regarding the record dates for any dividends in respect of Company Common Stock
and First Union Common Stock, it being the intention of the parties that holders
of Company Common Stock shall not receive two dividends, or fail to receive one
dividend, for any single calendar quarter with respect to their shares of
Company Common Stock and the First Union Common Stock that they receive in the
Merger.
5.17. No Rights Triggered.
-------------------
(A) It shall take all reasonable steps necessary to ensure that the
entering into this Plan and the consummation of the transactions contemplated
hereby and any other action or combination of actions contemplated hereby and
thereby do not and will not result in the grant of any Rights to any person
under its Certificate of Incorporation or By-laws.
(B) The Company shall take all actions necessary or required to
ensure that the entering into this Plan and the consummation of the transactions
contemplated hereby will not cause First Union or any affiliate or associate of
First Union to become an "Acquiring Person" for purposes of the Company Rights
Agreement, and a "Distribution Date" under the Company Rights Agreement will not
occur, and the rights issued under the Company Rights Agreement will not become
separable, distributable, unredeemable or exercisable.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
49
<PAGE>
6.01. Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each of First Union and the Company to consummate the
Merger is subject to the fulfillment or written waiver by First Union and the
Company prior to the Effective Time of each of the following conditions:
(A) Stockholder Approvals. This Plan and the Merger shall have been
---------------------
duly adopted by the requisite vote of the stockholders of the Company.
(B) Regulatory Approvals. All regulatory approvals required to
--------------------
consummate the Merger, shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions, restrictions or
requirements which would reasonably be expected to (1) following the Effective
Time, have a Material Adverse Effect on the Company and the Company Subsidiaries
(treating them collectively as a corporate organization) or (2) adversely affect
First Union and its subsidiaries in a material way.
(C) No Injunction. No Regulatory Authority of competent jurisdiction
-------------
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Plan.
(D) Registration Statement. The Registration Statement shall have
----------------------
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(E) Blue Sky Approvals. All permits and other authorizations under
------------------
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of First Union Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
50
<PAGE>
(F) Listing. The shares of First Union Common Stock to be issued in
-------
the Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
6.02. Conditions to Obligation of the Company. The obligation of the
---------------------------------------
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(A) Representations and Warranties. The representations and
------------------------------
warranties of First Union set forth in this Plan shall be true and correct in
all material respects as of the date of this Plan and as of the Effective Date
as though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Plan or some other
date shall be so true and correct as of such date), and the Company shall have
received a certificate, dated the Effective Date, signed on behalf of First
Union by an executive officer of First Union to such effect.
(B) Performance of Obligations of First Union. First Union shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and the Company shall have
received a certificate, dated the Effective Date, signed on behalf of First
Union by an executive officer of First Union to such effect.
(C) Opinion of the Company's Tax Counsel. The Company shall have
------------------------------------
received an opinion of Simpson Thacher & Bartlett, special counsel to the
Company, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368(a) of the Code
and (ii) no gain or loss will be recognized by stockholders of the Company who
receive shares of First Union Common Stock in exchange for shares of Company
Common Stock, except with respect to cash received in lieu of fractional share
interests. In rendering its opinion, Simpson Thacher & Bartlett, may require
and rely upon representations contained in letters from the Company and First
Union.
51
<PAGE>
6.03. Conditions to Obligation of First Union. The obligation of First
---------------------------------------
Union to consummate the Merger is also subject to the fulfillment or written
waiver by First Union prior to the Effective Time of each of the following
conditions:
(A) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Plan shall be true and correct in
all material respects as of the date of this Plan and as of the Effective Date
as though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Plan or some other
date shall be so true and correct as of such date), and First Union shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(B) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and First Union shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(C) Opinion of First Union's Tax Counsel. First Union shall have
------------------------------------
received an opinion of Sullivan & Cromwell, counsel to First Union, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
under Section 368(a) of the Code. In rendering its opinion, Sullivan & Cromwell
may require and rely upon representations contained in letters from the Company
and First Union.
(D) Accountants' Letters. Deloitte & Touche LLP, independent auditors
--------------------
for the Company, shall have delivered to First Union letters, dated the date of
or shortly prior to (A) the mailing of the Proxy Statement, and (B) the
Effective Date, in form and substance reasonably satisfactory to First Union,
with respect to the Company's consolidated financial position and results of
operations, which letters shall be based upon "agreed upon procedures"
undertaken by such firm in accordance with the Statement on Financial Accounting
Standards No. 72.
52
<PAGE>
(E) Employment Agreements. At least two of the employment agreements
---------------------
referred to in Recital (F) of this Plan (one of which shall be James R. Boris)
-----------
shall be in effect (other than as a consequence of death or disability).
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before or
after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First Union and the
--------------
Company.
7.02. Breach. By First Union or the Company, in the event of (A) a breach
------
by the other party of any representation or warranty contained herein, which
breach cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching party of such breach, or (B) a breach by the
other party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach (provided that a party may
terminate this Plan pursuant to this Section 7.02 only with respect to a breach
------------
or breaches that would permit such party not to consummate the Merger under the
standards set forth in Section 6.02(A) or (B) or Section 6.03(A) or (B), as the
--------------- --- --------------- ---
case may be).
7.03. Delay. By First Union or the Company, in the event that the Merger
-----
is not consummated by December 31, 1999; provided that the terminating party is
not then in material breach of this Plan; provided further, to the extent such
delay directly results from First Union's participation in an acquisition
transaction not contemplated by this Plan, First Union may not terminate the
Plan hereunder during such delay.
7.04. No Stockholder Approval. By the Company or First Union, in the
-----------------------
event that any stockholder approval contemplated by Section 6.01(A) is not
---------------
obtained at the Meeting, including any adjournment or adjournments thereof.
7.05. Failure to Recommend, Etc. At any time prior to the stockholder
-------------------------
approval contemplated by Section 6.01(A), by
---------------
53
<PAGE>
First Union if (A) the Company Board of Directors shall have failed to make its
recommendation referred to in Section 5.02, withdrawn such recommendation or
------------
modified or changed such recommendation in a manner adverse in any respect to
the interests of First Union (whether in accordance with Section 5.07 or
------------
otherwise) or (B) the Company's Board of Directors participates in (or
authorizes the participation in) negotiations described in Section 5.07(b).
---------------
7.06. Superior Proposal. At any time prior to the stockholder approval
-----------------
contemplated by Section 6.01(A), by the Company upon three business days written
---------------
notice to First Union if (i) the Company is not then in violation of Section
-------
5.07, and (ii) the Company Board of Directors contemporaneously with the
- ----
effectiveness of such termination is entering into definitive binding
documentation giving effect to a Superior Proposal.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all representations,
--------
warranties, agreements and covenants contained in this Plan, except for Sections
--------
5.14, 5.15, 8.04 and 8.09, shall not survive the Effective Date. If this Plan
- ---------------- ----
is terminated prior to the Effective Date, the agreements and representations of
the parties in Sections 4.01(Q) and 4.02(E), Section 5.06(B), and Sections 8.01,
-----------------------------------------------------------------
8.03, 8.04, 8.05, 8.06, 8.07, 8.09, 8.11 and 8.12 shall survive such
- -------------------------------------------------
termination.
8.02. Waiver; Amendment. Prior to the Effective Date, subject to
-----------------
compliance with applicable law and Section 1.04, any provision of this Plan may
------------
be (A) waived in writing by the party benefiting by the provision, or (B)
amended or modified at any time by an agreement in writing among the parties
hereto approved by their respective Boards of Directors and executed in the same
manner as this Plan, except that, after adoption of this Plan by the
stockholders of the Company, no such amendment or modification may be made which
by law or in accordance with the rules of any relevant stock exchange required
further approval by such stockholders without such further approval.
8.03. Counterparts. This Plan may be executed in one or more
------------
counterparts, each of which shall be deemed to constitute an
54
<PAGE>
original. This Plan shall become effective when one counterpart has been signed
by each party hereto.
8.04. Governing Law. This Plan shall be governed by, and interpreted in
-------------
accordance with, the laws of the State of North Carolina, except, in the case of
the Company, to the extent that the DGCL is applicable.
8.05. Expenses. Each party hereto will bear all expenses incurred by it
--------
in connection with this Plan and the transactions contemplated hereby, except
Proxy Statement printing, filing, mailing and solicitation expenses which shall
be shared equally between the Company and First Union.
8.06. Confidentiality. Each of the parties hereto and their respective
---------------
agents, attorneys and accountants will maintain the confidentiality of all
information provided in connection herewith which has not been publicly
disclosed in accordance with the terms of the Confidentiality Agreement
pertaining to confidentiality.
8.07. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to First Union,
to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Edward E. Crutchfield
Chairman and Chief Executive Officer
Copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704)374-3425
Attention: Marion A. Cowell, Jr.
55
<PAGE>
General Counsel
If to the Company,
to: EVEREN Capital Corporation
77 West Wacker Drive
Chicago, Illinois 60601-1694
Telecopy Number: 312/574-6959
Attention: James R. Boris
Chairman and Chief Executive Officer
and Janet L. Reali
General Counsel
Copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopy Number: 212/455-2502
Attention: Charles I. Cogut and
Mario A. Ponce
8.08. Definitions. Any term defined anywhere in this Plan shall have the
-----------
meaning ascribed to it for all purposes of this Plan (unless expressly noted to
the contrary). In addition:
(A) the term "Material Adverse Effect", when applied to a party, shall
mean an event, occurrence or circumstance (including, without limitation,
any breach of a representation or warranty contained herein by such party)
which (1) has a material adverse effect on the financial condition, results
of operations, or business of such party and its subsidiaries, taken as a
whole, or (2) would materially impair any party's ability to timely perform
its obligations under this Plan or the consummation of any of the
transactions contemplated hereby; provided, that a Material Adverse Effect
--------
with respect to a party shall not include (x) events, occurrences or
circumstances relating to, arising out of or resulting from the departure
of securities professionals of the Company or the Company Subsidiaries to
the extent such departures can reasonably be demonstrated to arise from
this Plan or the transactions contemplated hereby, or (y) events or
conditions generally
56
<PAGE>
affecting the securities or banking industry or effects resulting from
general economic conditions (including changes in interest rates), changes
in accounting practices or changes to statutes, regulations or regulatory
policies, that do not have a materially more adverse effect on such party
than that experienced by similarly situated financial services companies;
(B) the term "individually or in the aggregate" as used in Article IV
----------
of this Plan includes all events, occurrences and circumstances described
in any paragraph of Article IV, and is not linked to any specific
----------
paragraph;
(C) the term "Previously Disclosed" by a party shall mean information
set forth in a Schedule, correspondingly enumerated to the representation,
warranty or covenant to which it relates (which information shall also be
deemed to apply to any other representation, warranty or covenant to which
such information reasonably appears on its face to be relevant), that is
delivered by such party to the other party contemporaneously with the
execution of this Plan and specifically designated as information
"Previously Disclosed" pursuant to this Plan (it being understood that
notwithstanding any other provision herein such information shall be
disclosed in light of the particular standard of "materiality" set forth in
the representation, warranty or covenant to which such information
relates); and
(D) the term "Rights" means securities or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or
acquire, or any options, calls or commitments relating to, shares of
capital stock (and shall include stock appreciation rights).
8.09. Entire Understanding; No Third Party Beneficiaries. This Plan and
--------------------------------------------------
all schedules hereto represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersede any and all
other oral or written agreements heretofore made. Nothing in this Plan,
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Plan, except that Section 5.16 is
------------
57
<PAGE>
intended to confer on the persons named therein those rights expressly stated in
such Section.
8.10. Benefit Plans.
-------------
(A) As soon as administratively practicable after the Effective Time,
employees of the Company or the Company Subsidiaries immediately prior to the
Effective Time who remain employed with First Union or its subsidiaries
following the Effective Time (the "Continued Employees") shall be generally
entitled to participate in the pension, benefit, welfare, incentive
compensation, sick pay, vacation, fringe benefit and similar plans of First
Union on substantially the same terms and conditions applied to employees of
First Union and its subsidiaries. For the purpose of determining eligibility to
participate in such plans and the vesting of benefits under such plans (but not
for the accrual of benefits under such plans), First Union shall give effect to
years of service with the Company or the Company Subsidiaries, as the case may
be, as if such service had been with First Union or its subsidiaries.
(B) First Union shall honor in accordance with their terms all
individual compensation contracts Previously Disclosed, the Employment
Agreements entered into by First Union with the individuals set forth on Annex
-----
A, and all provisions for vested benefits or other vested amounts earned or
- -
accrued through the Effective Time under any of the Compensation and Benefit
Plans.
(C) Severance. During the period commencing at the Effective Time and
---------
ending on the first anniversary thereof, First Union shall provide severance
benefits to Continued Employees (including those who transfer to First Union or
its subsidiaries) who terminate employment subsequent to the Effective Time but
prior to the first anniversary thereof in accordance with the formulae used to
determine the duration (or equivalent lump sum value) of salary continuation
under the severance policies covering such employees as of the date hereof, but
utilizing the policies, procedures and practices First Union uses under its
severance plan. At the discretion of First Union, such benefits may be provided
under the First Union severance plan. No employees, including Continued
Employees who transfer to First Union or its subsidiaries, shall be entitled to
any severance benefits pursuant to this provision unless their employment with
58
<PAGE>
such entity is terminated prior to the first anniversary of the Effective Date.
If the Continued Employees terminate employment after the first anniversary of
the Effective Date, they will be entitled to severance benefits, if any, in
accordance with the provisions of First Union's then current severance plan.
For the purposes of determining the applicability of this Section 8.10(C) only,
---------------
the date of an employee's termination will be defined as the date the affected
employee is given formal written notification his or her job will be eliminated
under the terms of the First Union severance plan.
(D) Certain Employee Agreements. Neither the Company nor any of the
---------------------------
Company Subsidiaries shall terminate the employment of any employee identified
on Annex A hereto (each, an "Identified Employee") without the prior written
-------
consent of First Union and, subject to the terms and conditions of this Plan,
the Company shall use its reasonable best efforts (a) to maintain the continued
employment of each Identified Employee with the Company or the Company
Subsidiaries until the Effective Time and (b) not in any way to encourage (or
permit the encouragement of) any Identified Employee to breach or violate any
employment agreement or other arrangement such Identified Employee may have with
the Company or any of the Company Subsidiaries, or First Union or any of its
subsidiaries.
(E) KSOP. First Union shall take all steps reasonably necessary to
----
ensure that the cost basis of Continued Employees in all current and future
employer securities under the Company 401(k) and KSOP will be maintained at all
times following the Effective Time. In addition, all participants in the KSOP
shall become fully vested in their account balances under the KSOP immediately
prior to the Effective Time, as adjusted from time to time in accordance with
the terms of the KSOP.
(F) Retiree Welfare Benefits. With respect to the retiree welfare
------------------------
benefits currently provided by the Company and the Company Subsidiaries, all
currently retired employees (or those who become eligible and elect to retire
prior to the Effective Time under the current terms of the retiree welfare
benefit plans provided by the Company and the Company Subsidiaries) of the
Company or any Company Subsidiary shall continue to be eligible to receive
substantially similar benefits
59
<PAGE>
to the benefits currently in effect subject to First Union's right to amend,
modify or terminate such benefits in the future.
(G) Commissions Schedules. For transactions effected prior to January
---------------------
1, 2001, First Union shall provide compensation opportunities to investment
consultants, investment consultant trainees, and branch managers in accordance
with the Company's commission schedules as in effect on the date hereof, which
include, but are not limited to, current cash compensation, incentive deferred
compensation, and non-cash perquisites. It is understood and agreed that the
foregoing compensation shall not include the granting of any options to
purchase, or shares of, First Union Common Stock or any subsidiaries of First
Union.
(H) 1999 Bonus Payments. For Continued Employees employed by First
-------------------
Union or its subsidiaries on December 31, 1999, bonus payments for 1999 shall be
determined under the terms and conditions established by the Company for bonus
payments to its employees, as in effect on the date hereof (or otherwise agreed
to by First Union), and shall be paid in cash no later than January 31, 2000.
For each Continued Employee whose employment with First Union or its
subsidiaries is terminated prior to December 31, 1999, bonus payments for 1999
shall be determined under the terms and conditions established by the Company
for bonus payments to its employees, as in effect on the date hereof (or
otherwise agreed to by First Union), but shall be prorated based on the number
of days such Continued Employee was employed by First Union, its subsidiaries,
the Company or the Company Subsidiaries in 1999; any such bonus shall be paid in
cash no later than the last day of the month following such Continued Employee's
termination of employment. Notwithstanding anything to the contrary in the
Company's 1996 Restricted Stock Incentive Plan (or any other Compensation and
Benefit Plan), the foregoing bonuses shall be paid entirely in cash without any
adjustment or any additional premium.
8.11. Headings. The headings contained in this Plan are for reference
--------
purposes only and are not part of this Plan.
8.12. Interpretation; Effect. When a reference is made in this Plan to
----------------------
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Plan unless otherwise indicated. Whenever the
words "include",
60
<PAGE>
"includes" or "including" are used in this Plan, they shall be deemed to be
followed by the words "without limitation". No provision of this Plan shall be
construed to require the Company, First Union or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST UNION CORPORATION
By:
----------------------------------------
Name:
Title:
EVEREN CAPITAL CORPORATION
By:
----------------------------------------
Name:
Title:
62
<PAGE>
EXHIBIT INDEX
-------------
Exhibit A [RESERVED]
Exhibit B Form of Voting Agreement
Exhibit C Form of Stock Option Agreement
Exhibit D Rights Agreement Amendment
Exhibit E Form of Affiliates Agreement
Annex A Employees entering into Employment Agreements
Annex B Retention Pool
63
<PAGE>
Exhibit D
AMENDMENT, dated as of ________, 1999 (the "Amendment"), to the
Agreement, dated as of November 1, 1995 (the "Rights Agreement"), between EVEREN
Capital Corporation, a Delaware corporation (the "Company"), and Harris Trust
and Savings Bank, an Illinois banking corporation, as Rights Agent (the "Rights
Agent"), dated as of October 1, 1996.
RECITALS
A. The Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;
B. The Company and First Union Corporation, a North Carolina
corporation (the "Acquiror"), are entering into an Agreement and Plan of Merger,
dated as of April 25, 1999 (as amended, supplemented or replaced from time to
time, the "Merger Agreement") contemplating a business combination between the
Company and the Acquiror (the "Merger");
C. The Company and the Acquiror are also entering into a Stock
Option Agreement, dated as of April 25, 1999 (as amended, supplemented or
replaced from time to time, the "Stock Option Agreement");
D. Pursuant to Section 27 of the Rights Agreement, the Company and
the Rights Agent may from time to time supplement and amend the Rights
Agreement;
E. The Board of Directors of the Company has determined that an
amendment to the Rights Agreement as set forth herein is necessary and desirable
in connection with the foregoing and the Company and the Rights Agent desire to
evidence such amendment in writing; and
F. All acts and things necessary to make this Amendment a valid
agreement, enforceable according to its terms have been done and performed, and
the execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
<PAGE>
1. Amendment of Section 1. (a) The definition of "Acquiring Person"
in Section 1(a) of the Rights Agreement is amended by adding the following
sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, neither the
Acquiror nor any of its Affiliates or Associates shall be deemed to be an
Acquiring Person solely by virtue of (i) the execution of the Merger Agreement
or the Stock Option Agreement, (ii) the consummation of the Merger, (iii) the
consummation of any other transaction contemplated in the Merger Agreement or
the Stock Option Agreement or (iv) Common Stock held in a bona fide fiduciary
capacity."
(b) Section 1 of the Rights Agreement is supplemented by adding the
following definitions in the appropriate locations therein:
"Agreement" shall mean this Rights Agreement between EVEREN
Capital Corporation, a Delaware corporation, and Harris Trust and Savings Bank,
dated as of October 1, 1996, and as may be amended from time to time.
"Merger" shall have the meaning set forth in the Merger
Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of April 25, 1999, between EVEREN Capital Corporation and First Union
Corporation, as it may be amended, supplemented or replaced from time to time.
"Stock Option Agreement" shall mean the Stock Option Agreement,
dated as of April 25, 1999, between EVEREN Capital Corporation and First Union
Corporation, as it may be amended, supplemented or replaced from time to time.
(c) The definition of "Stock Acquisition Date" in Section 1 of the
Rights Agreement is amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the
B2B
<PAGE>
contrary, a Stock Acquisition Date shall not be deemed to have occurred solely
as the result of (i) the execution of the Merger Agreement or the Stock Option
Agreement, (ii) the consummation of the Merger, or (iii) the consummation of any
other transaction contemplated by the Merger Agreement or the Stock Option
Agreement."
2. Amendment of Section 3(a). Section 3(a) of the Rights Agreement
is amended by adding the following proviso at the end of the first sentence:
"provided that, notwithstanding anything in this Agreement to the contrary,
a Distribution Date shall not be deemed to have occurred solely as the result of
(i) the execution of the Merger Agreement or the Stock Option Agreement, (ii)
the consummation of the Merger, (iii) the consummation of any other transaction
contemplated in the Merger Agreement or the Stock Option Agreement, or (iv)
Common Stock held in a bona fide fiduciary capacity."
3. Amendment of Section 7(a). Section 7(a) of the Rights Agreement
is amended and restated in its entirety as follows:
"(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a)(ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a share of Preferred
Stock as to which the Rights are exercised, at any time which is both after the
Distribution Date and prior to the earliest of (i) the close of business on
October 1, 2006, (ii) immediately prior to the time at which the consummation of
the Merger occurs (the earlier of (i) or (ii) being the "Final Expiration
Date"), (iii) the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date") or (iv) the time at which such Rights are
B3B
<PAGE>
exchanged as provided in Section 24 hereof."
4. Amendment of Section 11(a) (ii). Section 11(a) (ii) of the Rights
Agreement is amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, none of (i)
the execution of the Merger Agreement or the Stock Option Agreement, (ii) the
consummation of the Merger or (iii) the consummation of any other transaction
contemplated in the Merger Agreement or the Stock Option Agreement shall cause
the Rights to be adjusted or become exercisable in accordance with this Section
11(a) (ii)."
5. Amendment of Section 13 (a). Section 13(a) of the Rights
Agreement is amended and restated in its entirety as follows:
"Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power. (a) In the event, directly or indirectly, at any time after any
Person has become an Acquiring Person, (i) the Company shall merge with and into
any other Person, (ii) any Person shall consolidate with the Company, or any
Person shall merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed into or exchanged for
stock or other securities of any other Person (or of the Company) or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then upon the first occurrence of such event, proper provision
shall be made so that: (A) each holder of record of a Right (other than Rights
which have become void pursuant to Section 11(a)(ii)) shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a share of
Preferred Stock for which a Right
B4B
<PAGE>
was exercisable (whether or not such Right was then exercisable) immediately
prior to the time that any Person first became an Acquiring Person (each as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c),
11(h), 11(i) and 11(m)), in accordance with the terms of this Agreement and in
lieu of Preferred Stock, such number of validly issued, fully paid and non-
assessable and freely tradeable shares of Common Stock of the Principal Party
(as defined herein) not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one one-hundreths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to the time that any Person first became an Acquiring Person as
subsequently adjusted thereafter pursuant to Sections 11(a)(i), 11(b), 11(c),
11(h), 11(i) and 11(m)) and (2) dividing that product by 50% of the then current
per share market price of the Common Stock of such Principal Party (determined
pursuant to Section 11(d)(i) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; provided that the Purchase Price and
the number of shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided in Section 11(f) of
this Agreement to reflect any events occurring in respect of such Principal
Party after the date of the such consolidation, merger, sale or transfer; (B)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and (D) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of its shares of Common Stock in accordance with Section 9
hereof) in connection with such consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights; provided that, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary transaction in respect of such Principal Party, each
holder
B5B
<PAGE>
of a Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property; and
provided further that, notwithstanding anything in this Agreement to the
contrary, none of (i) the execution of the Merger Agreement or the Stock Option
Agreement, (ii) the consummation of the Merger or (iii) the consummation of any
other transaction contemplated in the Merger Agreement or the Stock Option
Agreement shall be deemed an event of the type described in clauses (a)(i),
(a)(ii) or (a)(iii) of this Section 13 and shall not cause the Rights to be
adjusted or exercisable in accordance with the terms of this Agreement."
6. Amendment of Section 29. Section 29 of the Rights Agreement is
amended by adding the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder of Rights
or any other Person any legal or equitable rights, remedies or claims under this
Rights Agreement by virtue of the execution of the Merger Agreement or the Stock
Option Agreement or by virtue of any of the transactions contemplated by the
Merger Agreement or the Stock Option Agreement."
7. Effectiveness. This Amendment shall be deemed effective as of the
date first written above, as if executed on such date. Except as amended hereby,
the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
8. Miscellaneous. This Amendment shall be deemed to be a contract
made under the laws of the State of
B6B
<PAGE>
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such state applicable to contracts to be made and performed
entirely within such state. This Amendment may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument. If any provision, covenant or restriction of this Amendment is
held by a court of competent jurisdiction or other authority to be invalid,
illegal or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
* * *
B7B
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
Attest: EVEREN CAPITAL CORPORATION
By: By:
------------------- ---------------------
Name: Name:
Title: Title:
Attest: HARRIS TRUST AND SAVINGS BANK
By: By:
------------------- ---------------------
Name: Name:
Title: Title:
B8B
<PAGE>
Exhibit C
---------
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT, dated as of April 25, 1999, between First Union
Corporation, a North Carolina corporation ("Grantee"), and EVEREN Capital
Corporation, a Delaware corporation ("Issuer").
RECITALS
A. Grantee and Issuer have entered into an Agreement and Plan of Merger,
dated as of April 25, 1999 (the "Merger Agreement"), providing for a merger
between Grantee and the Issuer or a wholly-owned subsidiary of the Issuer (the
"Merger").
B. As a condition and an inducement to the willingness of Grantee to
continue to pursue the transactions contemplated by the Merger Agreement, Issuer
has agreed to grant Grantee the Option (as hereinafter defined).
C. The Board of Directors of Issuer has approved the grant of the Option
and the Merger Agreement prior to the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 7,014,357 fully paid and nonassessable shares of the common stock,
par value $0.01 per share, of Issuer ("Common Stock") at a price per share equal
to the last reported sales price per share of Common Stock as reported on the
NYSE on April 26, 1999 (as adjusted pursuant to Section 5(b), the "Option
------------
Price"); provided, further, that in no event shall the number of shares for
which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock. The number of shares of Common Stock that may be
received upon the exercise of the Option and the payment of the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common
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<PAGE>
Stock are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Section 5(a) hereof), the number of shares of Common Stock
-----------
subject to the Option shall be increased so that, after such issuance, such
number together with any shares of Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
-----------
Agreement shall be deemed to authorize Issuer to issue shares in breach of any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
---------
six (6) months following such Subsequent Triggering Event (or such later period
as provided in Section 10). Each of the following shall be an Exercise
----------
Termination Event: (i) the Effective Time of the Merger; (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of any Initial Triggering Event or Subsequent
Triggering Event; or (iii) the passage of twelve (12) months (or such longer
period as provided in Section 10) after termination of the Merger Agreement if
----------
such termination occurs simultaneously with or following the occurrence of any
Initial Triggering Event or a Subsequent Triggering Event. The term "Holder"
shall mean the holder or holders of the Option. Notwithstanding anything to the
contrary contained herein, (i) the Option may not be exercised at any time when
Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 7.02 thereof and (ii) this
------------
Agreement shall automatically terminate upon the proper termination of the
Merger Agreement by Issuer pursuant to Section 7.02 thereof as a result of the
------------
material breach by Grantee of its covenants or agreements contained in the
Merger Agreement.
C-2
<PAGE>
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (each an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction (as hereinafter defined) with any person (the term
"person" for purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the rules and regulations thereunder) other than Grantee
or any of its Subsidiaries (each a "Grantee Subsidiary"), or the Board of
Directors of Issuer (the "Issuer Board") shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction other than
as contemplated by the Merger Agreement or the trustee for the Issuer's 401(k)
and Employee Stock Ownership Trust (the "Plan Trustee") shall have determined to
vote shares over which it exercises discretion against the Merger Agreement
after the Plan Trustee is aware that any person (other than Grantee or any
Grantee Subsidiary) shall have made, or disclosed an intention to make, a bona
fide proposal to engage in an Acquisition Transaction, or in favor of any
Acquisition Transaction other than as contemplated in the Merger Agreement. For
purposes of this Agreement, (a) "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer or the
Issuer Subsidiary (other than mergers, consolidations or similar transactions
(A) involving solely Issuer and/or one or more wholly-owned Subsidiaries of the
Issuer, or (B) in which the voting securities of Issuer outstanding immediately
prior thereto continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any such
transaction) at least 60% of the combined voting power of the voting securities
of the Issuer or the surviving entity outstanding immediately after the
consummation of such merger, consolidation, or similar transaction, provided,
any such transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition of all or any substantial
part of the assets or deposits of Issuer or the Issuer Subsidiary, or (z) a
purchase or other acquisition
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<PAGE>
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 15% or more of the voting power of Issuer or the Issuer
Subsidiary and (b) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act;
(ii) Any person other than the Grantee, any Grantee Subsidiary
or the Issuer's 401(k) or Employee Stock Ownership Trust (the "Plan") shall have
acquired beneficial ownership or the right to acquire beneficial ownership of
15% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) The stockholders of Issuer shall have voted and failed to
adopt the Merger Agreement at a meeting which has been held for that purpose or
any adjournment or postponement thereof, or such meeting shall not have been
held in violation of the Merger Agreement or shall have been cancelled prior to
termination of the Merger Agreement if, prior to such meeting (or if such
meeting shall not have been held or shall have been cancelled, prior to such
termination), any person (other than Grantee or any of its Subsidiaries) shall
have made, or disclosed an intention to make, a bona fide proposal to engage in
an Acquisition Transaction;
(iv) The Issuer Board shall fail to recommend or shall have
withdrawn or modified (or publicly announced its intention to withdraw or
modify) in any manner adverse in any respect to Grantee its recommendation that
the shareholders of Issuer adopt the Merger Agreement, or Issuer or any Issuer
Subsidiary shall have engaged in negotiations concerning an Acquisition
Transaction pursuant to Section 5.07(b) of the Merger Agreement;
--------------
(v) Issuer shall have knowingly breached any covenant or
obligation, or knowingly breached any representation or warranty, contained in
the Merger Agreement in anticipation of engaging in, or after the making of any
proposal by a person (other than Grantee or any Grantee Subsidiary) to engage in
an Acquisition Transaction, and following such breach Grantee would be entitled
to terminate the Merger Agreement (whether
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<PAGE>
immediately or after the giving of notice or passage of time or both); or
(vi) Issuer shall have terminated the Merger Agreement pursuant
to Section 7.06 of the Merger Agreement or entered into an agreement effecting a
------------
Superior Proposal (as defined in the Merger Agreement).
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary or the Plan) of beneficial ownership of 25% or more of the
then outstanding Common Stock;
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (z) of the second sentence thereof shall be 25%; or
(iii) Issuer shall have entered into an agreement effecting a
Superior Proposal (as defined in the Merger Agreement).
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and business day not earlier than three business days nor later than 60
business days from the Notice Date for the closing of such purchase (the
"Closing Date"); provided, that if prior notification to or approval of the
applicable Regulatory Authority is required in connection with such purchase,
the Holder shall promptly file the required notice or application for approval,
shall promptly notify Issuer of such filing, and shall
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<PAGE>
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall (i) pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of a stock option agreement, dated as of April 25,
1999, with the Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be
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removed by delivery of substitute certificate(s) without such reference if the
Holder shall have delivered to Issuer a copy of a letter from the staff of the
SEC, or an opinion of counsel, in form and substance reasonably satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
Securities Act; (ii) the reference to the provisions of this Agreement in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not require the
retention of such reference in the opinion of counsel to the Holder; and (iii)
the legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record at the close of business on
the Closing Date of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer; and
(iii) promptly to take all action as may from time to time be required
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(including complying with all applicable premerger notification, reporting and
waiting period requirements required by the applicable Regulatory Authority
which may be necessary before the Option may be exercised, and cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the applicable Regulatory Authority as it may require) in order
to permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
---------
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
---------
(a) In the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of shares
or the like, the type and number of shares of Common Stock purchasable upon
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exercise hereof shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are to be
issued or otherwise become outstanding as a result of any such change (other
than pursuant to an exercise of the Option), the number of shares of Common
Stock that remain subject to the Option shall be increased so that, after such
issuance and together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the foregoing
changes in the Common Stock), it equals 19.9% of the number of shares of Common
Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
---------
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the written request of
Grantee delivered within twelve (12) months (or such later period as provided in
Section 10) of such Subsequent Triggering Event (whether on its own behalf or on
- ----------
behalf of any subsequent holder of this Option (or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the Securities Act covering any shares
issued and issuable pursuant to this Option and shall use its reasonable best
efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations.
The Issuer shall bear the costs of such
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registrations (including, but not limited to, Issuer's attorneys' fees, printing
costs and filing fees, except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto). The obligations of Issuer hereunder to file a registration statement
and to maintain its effectiveness may be suspended for one or more periods of
time not exceeding 90 days in the aggregate if the Issuer Board of Directors
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect Issuer. The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
---------
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to twenty-
four (24) months. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. In connection with any such registration, Issuer and each requesting
Holder shall provide the other and any underwriter with customary
representations, warranties, indemnities and other agreements. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
---------
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
---------
prepaid, to the address of record of the persons entitled to receive such
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copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the written request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section 10),
----------
Issuer (or any successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised and (ii) at
the written request of the owner of Option Shares from time to time (the
"Owner"), delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
----------
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated; provided that the
--------
Issuer shall not be required to pay more than $35 million pursuant to this
Section 7. The term "market/offer price" shall mean the highest of (i) the price
- ---------
per share of Common Stock at which a tender or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any third party
pursuant to an Acquisition Transaction agreement with Issuer, (iii) the highest
closing price for shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, or (iv) in the event of a sale of all or any substantial part
of Issuer's assets, the sum of the net price paid in such sale for such assets
and the current market value of the remaining net assets of Issuer as determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the time of such sale.
In determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
selected by the Holder or Owner, as the case may be, and reasonably acceptable
to
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Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
---------
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
- ---------
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto, Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
---------
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its reasonable best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as practicable
in order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option and/or the Option Shares whether in whole or
to the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the
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Holder and/or the Owner, as appropriate, that portion of the Option Repurchase
Price and/or the Option Share Repurchase Price that Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the Holder, a
new Agreement evidencing the right of the Holder to purchase that number of
shares of Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior to
the date of the notice by Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Holder shall
nonetheless have the right to exercise the Option until the expiration of such
30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
---------
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary or the Plan) of beneficial ownership of 50% or more of the
then outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described in
Section 2(b)(i) hereof, except that the percentage referred to in clause (z)
shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
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<PAGE>
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer Subsidiary's assets to any person,
other than Grantee or a Grantee Subsidiary, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) the Issuer in a merger or plan of exchange in which Issuer is
the continuing or surviving or acquiring person, and (iv) the transferee of all
or a substantial part of Issuer's assets (or the assets of the Issuer
Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
---------
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be
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<PAGE>
computed with respect to a share of common stock issued by the person merging
into Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
appropriately adjusted, provided that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to the Holder. The issuer
of the Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Agreement (after giving effect for such purpose to the provisions of Section 9),
---------
which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
------------
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
------------
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder and
reasonably satisfactory to the
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Substitute Option Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
---------
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At any time after the occurrence of a Repurchase Event, the
written request of the holder of the Substitute Option (the "Substitute Option
Holder"), delivered prior to the Exercise Termination Date, the Substitute
Option Issuer shall repurchase the Substitute Option from the Substitute Option
Holder at a price (the "Substitute Option Repurchase Price") equal to the amount
by which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the
exercise price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be exercised,
and at the written request of the owner (the "Substitute Share Owner") of shares
of Substitute Common Stock (the "Substitute Shares"), delivered prior to the
Exercise Termination Date, the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective rights to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
---------
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to
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repurchase the Substitute Option and/or the Substitute Shares in accordance with
the provisions of this Section 9. As promptly as practicable and in any event
---------
within five business days after the surrender of the Substitute Option and/or
certificates representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall deliver or cause to
be delivered to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Substitute Option and/or the Substitute Shares in
part or in full, the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and thereafter
deliver or cause to be delivered, from time to time, to the Substitute Option
Holder and/or the Substitute Share Owner, as appropriate, the portion of the
Substitute Option Repurchase Price and/or the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five (5)
business days after the date on which the Substitute Option Issuer is no longer
so prohibited; provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to subsection (b) of this
Section 9 prohibited under applicable law or regulation, or as a consequence of
- ---------
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its reasonable best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order to
accomplish such repurchase), the Substitute Option Holder and/or Substitute
Share Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to the
Substitute Option Holder or Substitute Share Owner, as appropriate, that portion
of the Substitute Option Repurchase Price or the Substitute Share
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Repurchase Price that the Substitute Option Issuer is not prohibited from
delivering; and (ii) deliver, as appropriate, either (A) to the Substitute
Option Holder, a new Substitute Option evidencing the right of the Substitute
Option Holder to purchase that number of shares of the Substitute Common Stock
obtained by multiplying the number of shares of the Substitute Common Stock for
which the surrendered Substitute Option was exercisable at the time of delivery
of the notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof theretofore
delivered to the Substitute Option Holder and the denominator of which is the
Substitute Option Repurchase Price, and/or (B) to the Substitute Share Owner, a
certificate for the Substitute Option Shares it is then so prohibited from
repurchasing. If an Exercise Termination Event shall have occurred prior to the
date of the notice by the Substitute Option Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period.
10. The specified periods for exercise of certain rights under Sections 2,
-----------
6, 7, 9, 12 and 14 shall be extended: (i) to the extent necessary to obtain all
- ------------------
regulatory approvals for the exercise of such rights (for so long as the Holder,
Owner, Substitute Option Holder or Substitute Share Owner, as the case may be,
is using commercially reasonable efforts to obtain such regulatory approvals),
and for the expiration of all statutory waiting periods; (ii) during the
pendancy of any temporary restraining order, injunction or other legal bar to
exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
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Issuer Board prior to the date hereof and no other corporate proceedings on the
part of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") has approved an
application by Grantee to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf or (iv) any other manner approved by the Federal Reserve Board.
13. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including, without limitation, applying to the
Federal Reserve
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Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
14. (a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
----------
issued to and then owned by Grantee or Grantee's Subsidiaries) to Issuer in
exchange for a cash fee equal to the Surrender Price (as hereinafter defined);
provided, however, that Grantee may not exercise its rights pursuant to this
Section 14 if Issuer has repurchased the Option (or any portion thereof) or any
- ----------
Option Shares pursuant to Section 7. The "Surrender Price" shall be equal to $35
---------
million (i) plus, if applicable, Grantee's purchase price with respect to any
Option Shares, (ii) minus, if applicable, the excess of (A) the sum of the net
proceeds, if any, received by Grantee pursuant to the arms' length sale of
Option Shares (or any other securities into which such Option Shares were
converted or exchanged) to any unaffiliated party, and the market price at the
time of disposal of any Option Shares disposed of by Grantee other than in such
arms' length sale, over (B) Grantee's purchase price of such Option Shares, and
(iii) minus, if applicable, any amounts paid pursuant to Sections 7 and 9.
---------- -
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
----------
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and
C-20
<PAGE>
thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 14 is prohibited
----------
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 14(c) (during which period Grantee may exercise any
-------------
of its rights hereunder, including any and all rights pursuant to this Section
-------
14).
- --
15. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
16. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer is not permitted to
repurchase pursuant to Section 7, the full number of shares of Common Stock
---------
provided in
C-21
<PAGE>
Section l(a) hereof (as adjusted pursuant to Section l(b) or Section 5 hereof),
- ------------ ------------ ---------
it is the express intention of Issuer to allow the Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible,
without any amendment or modification hereof.
17. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
18. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law).
19. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
20. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
21. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
C-22
<PAGE>
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
C-23
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
EVEREN CAPITAL CORPORATION
By:
------------------------
Name:
Title:
FIRST UNION CORPORATION
By:
------------------------
Name:
Title:
C-24
<PAGE>
Exhibit B
---------
AGREEMENT, dated as of April 25, 1999, by and between the individual
stockholder of EVEREN Capital Corporation indicated on the signature page hereto
(the "Stockholder"), and First Union Corporation ("First Union").
WHEREAS, the Stockholder is the beneficial owner of and has the right to
vote _________ shares of Common Stock, each of $0.01 par value of EVEREN Capital
Corporation (the "Company") (the "Shares");
WHEREAS, First Union and the Company have entered into an Agreement and
Plan of Merger (the "Plan"), pursuant to which First Union will acquire the
Company (the "Acquisition"), subject to the terms and conditions of the Plan;
WHEREAS, the Stockholder believes it is in the best interests of the
Company and all of the Company's stockholders for the Acquisition to be
consummated on the terms set forth in the Plan, and as a condition and
inducement to First Union's willingness to enter into the Plan, the Stockholder
has agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
1. The Stockholder agrees to vote (including by proxy or written consent)
all the Shares, any additional Shares acquired by the Stockholder after the date
hereof and any other shares of stock of the Company owned or controlled by him
(other than in a fiduciary capacity), in favor of the Plan and the transactions
contemplated thereby at the meeting of stockholders of the Company called for
that purpose.
2. The Stockholder agrees that he will not sell or transfer any Shares
owned by him to any other party unless such party enters into an agreement,
satisfactory to First Union, to abide by all the terms of this Agreement.
3. The parties hereto agree that this Agreement shall terminate and be of
no further force and effect if the Plan is terminated in accordance with its
terms.
B-1
<PAGE>
4. This Agreement shall not affect the Stockholder's fiduciary
obligations, to the extent the Stockholder serves in such capacity, as a
director or officer of the Company.
5. The Stockholder represents and warrants to First Union as follows:
(i) the Stockholder has good title to the Shares and owns the Shares free
and clear of any rights, claims, encumbrances, liens, interests or restrictions
of any nature whatsoever, including, without limitation, any restrictions on the
voting of the Shares or any rights of others to vote, or to participate
(including by consultation) in the voting of, the Shares;
(ii) this Agreement is a valid and legally binding agreement enforceable
against the Stockholder in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(iii) the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby by the Stockholder, do not
and will not constitute a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of the Stockholder or to which
the Stockholder is subject or bound, or require any consent or approval under
such law, rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such agreement,
indenture or instrument.
6. The Stockholder hereby agrees that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed by the
Stockholder in accordance with its specific terms or were otherwise breached.
Accordingly, the Stockholder agrees that First Union shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by the
Stockholder and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which First Union may be entitled at law or in
equity.
7. This Agreement shall bind and benefit the successors, assigns,
executors, trustees and heirs of the parties hereto.
B-2
<PAGE>
This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware without regard to any applicable conflicts of law rules.
Any term hereof which is invalid or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without affecting the remaining terms or their validity or
enforceability in any other jurisdiction.
8. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original. This Agreement shall become
effective when one counterpart has been signed by each party hereto.
B-3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
as of the day and year first above written.
FIRST UNION CORPORATION
By:
---------------------------
Name:
Title:
---------------------------
(the Stockholder)
B-4
<PAGE>
Exhibit 99
Monday
April 26, 1999
FIRST UNION TO ACQUIRE EVEREN
- -----------------------------
Move Will Create One of Nation's Largest Securities Firms
- ---------------------------------------------------------
CHARLOTTE - In a move to create one of the nation's premier securities firms,
First Union (FTU) has signed a definitive agreement to acquire EVEREN Capital
Corporation (EVR), a full-service brokerage and asset management firm based in
Chicago. This action will provide First Union with a nationwide brokerage
distribution platform and augment its equity capital markets capabilities.
The transaction has a fixed exchange rate of .555 shares of First Union common
stock for each EVEREN share, which values the acquisition at $1.1 billion, or
$30.53 per EVEREN share, based on First Union's closing price of $55.00 per
share on April 23, 1999. This excludes the present value of an employee
retention pool that First Union has agreed to establish. The employee retention
pool of approximately $87 million in restricted shares of First Union common
stock (based on $55.00 per share) will be issued over a three-year period to a
number of EVEREN employees. The purchase price is equivalent to 2 1/2 times
EVEREN's book value. The transaction will not affect First Union's previously
announced stock buyback program. Separate from that program, First Union expects
to repurchase on the open market a number of shares equivalent to those issued
to pay for the transaction.
-- more -
<PAGE>
FIRST UNION TO ACQUIRE EVEREN/page 2
- ------------------------------------
On a pro forma basis, the combined entities would have $147 billion in brokerage
assets and 3 million total brokerage customer accounts. This transaction will
create a national retail distribution powerhouse. In particular, the markets
that EVEREN adds west of the Mississippi complement First Union's strong East
Coast presence. The combined company will form the nation's sixth largest
securities brokerage firm with 6,259 registered representatives (2,800 Series 6
and 3,459 Series 7 licensed brokers). Brokerage services will be provided
through 2,391 registered bank locations, 152 Wheat First locations and 167
EVEREN locations, or in total 2,710 retail offices in 41 states. In addition,
this transaction will add critical mass to First Union's investment banking and
equity sales, trading and research capabilities, and depth in key specialized
industries.
EVEREN has offices in 28 states and more than 1,800 investment consultants. Its
highest concentrations of offices are in Illinois, California, Wisconsin, Ohio,
Texas and Colorado. First Union's securities brokerage operations are
concentrated largely in the eastern half of the United States.
"This is an excellent partnership that gives First Union a nationwide securities
business. This transaction will substantially strengthen our distribution
capabilities for equity capital markets activities as well as retail investment
products and wealth management activities," said Ken Thompson, First Union vice
chairman and head of its Capital Markets Group.
-- more -
<PAGE>
FIRST UNION TO ACQUIRE EVEREN/page 3
- ------------------------------------
"EVEREN is a great strategic fit and ideal partner for First Union on every
level," said Don McMullen, EVP and head of First Union's Capital Management
Group. "It is a dynamic company poised for higher growth and profitability. We
have excellent potential for deepening relationships as a result of an expanded
selection of products and services. With the new markets and strong
relationships added by EVEREN, we will have a solid platform for nationwide
development."
James R. Boris, EVEREN chairman and chief executive officer, said, "We believe
First Union is the finest partner we could have in a rapidly consolidating
financial services industry. Most important to us, both of our companies place
the highest value on building long-term client relationships and on developing
the knowledge and skills of our employees to better serve our clients' needs.
Combined, we have excellent potential for continued growth in recurring fee
income through the increased product selection, expanded client base and the
depth of talent available to us in both companies."
Everen has been independently owned since an employee buyout from Kemper
Corporation in September 1995. EVEREN employees own approximately 60 percent of
the company.
-- more --
<PAGE>
FIRST UNION TO ACQUIRE EVEREN/page 4
- ------------------------------------
The acquisition will be accounted for as a purchase and is expected to close in
the third quarter of 1999, subject to EVEREN shareholder and regulatory
approvals and other conditions of closing.
In connection with the execution of the acquisition agreement, EVEREN granted an
option to First Union to purchase, under certain conditions, up to 19.9 percent
of the outstanding shares of EVEREN common stock.
Media Contact at First Union is Laurie Hedrick at 704-374-6092 (office) or 704-
358-9568 (home.) Media Contact at EVEREN is Jeff Leshay at 312-574-5788.
Investor Contact at First Union is Herb Althouse at 704-374-2310.
This press release contains various forward-looking statements with respect to
First Union, EVEREN Capital and the combined organization following consummation
of the acquisition, which have various risks and uncertainties. Various factors
that could cause actual results to differ materially from those contemplated by
such statements are set forth in First Union's and EVEREN's 1998 Annual Reports
on Form 10-K and 1999 Current Reports on Form 8-K filed with the Securities and
Exchange Commission.
