OFFICE OF THRIFT SUPERVISION
Washington, D.C. 20552
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): February 17, 1997
American Federal Bank, FSB
(Exact name of registrant as specified in its charter)
United States 1872 57-0162590
(State or other (OTS Docket (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
300 East McBee Avenue, Greenville, South Carolina 29601
(Address, including zip code, of principal executive office)
(864) 255-7000
(Registrant's telephone number, including area code)
Total Number of Pages 95
Exhibit Index at Page 7
Item 5. Other Events.
On February 17, 1997, CCB Financial Corporation ("CCB")
and American Federal Bank, FSB ("American Federal") entered into an
Agreement and Plan of Reorganization (the "Agreement"), pursuant to
which American Federal will be acquired by CCB. The Boards of
Directors of CCB and American Federal approved the Agreement and
the transactions contemplated thereby at separate meetings held on
February 17, 1997.
In accordance with the terms of the Agreement, CCB will
acquire American Federal pursuant to a merger (the "Merger") of a
newly created, wholly owned subsidiary of CCB (formed as an
"interim" federal savings bank), to be organized under the laws of
the United States, with and into American Federal, with American
Federal as the surviving entity resulting from the Merger.
Upon consummation of the Merger, each share of the $1.00
par value common stock of American Federal ("American Federal
Common Stock") (with certain exclusions) issued and outstanding at
the effective time of the Merger (as described in the Agreement,
the "Effective Time") shall be converted into and exchanged for the
right to receive .445 of a share (the "Exchange Ratio") of the
$5.00 par value common stock of CCB (together with associated
preferred stock purchase rights, "CCB Common Stock").
In addition, at the Effective Time, all rights with
respect to American Federal Common Stock, pursuant to stock options
granted by American Federal under the existing stock plans of
American Federal, which are outstanding at the Effective Time,
whether or not exercisable, shall be converted into and become
rights with respect to CCB Common Stock on a basis that reflects
the Exchange Ratio.
The Merger is intended to constitute a tax-free
reorganization under the Internal Revenue Code of 1986, as amended,
and be accounted for as a pooling of interests.
CCB has also agreed, subject to satisfaction of the
conditions relating to pooling-of-interests and tax-free
reorganization treatments for the Merger, to distribute as soon as
reasonably practicable following the Effective Time, one share of a
new series of CCB non-voting preferred stock, which shall have no
dividend rights (the "CCB Preferred Stock"), for each share of CCB
Common Stock issued and outstanding immediately following the
Effective Time. It is contemplated that the shares of CCB
Preferred Stock would be redeemed upon receipt by CCB (and for a
redemption amount) equal to any cash payment in respect of a final,
nonappealable judgment in, or final settlement of, the goodwill
litigation instituted by American Federal against the United States
after deducting (i) the aggregate expenses incurred by CCB after
the Effective Time in prosecuting the goodwill litigation, (ii) any
income tax liability incurred by CCB as a result of the payment of
the goodwill litigation recovery, and (iii) the expenses incurred
by CCB in connection with the creation, issuance, listing, and
trading of the CCB Preferred Stock, divided by the number of
outstanding shares of such CCB Preferred Stock. CCB has further
agreed to solicit appropriate shareholder approval of an increase
in the authorized preferred stock of CCB to permit implementation
of this provision of the Agreement.
Consummation of the Merger is subject to various
conditions, including: (i) receipt of the approval by the
shareholders of American Federal of appropriate matters relating to
the Agreement and the Merger required to be approved under
applicable law; (ii) receipt of the approval by the shareholders of
CCB of the issuance of shares of CCB Common Stock pursuant to the
Merger and the increase in the authorized preferred stock of CCB as
required to be approved under applicable law; (iii) receipt of all
regulatory approvals required in connection with the transactions
contemplated by the Agreement without the imposition of any
condition or requirement which, in the reasonable opinion of the
parties, would so materially adversely affect the business or
economic benefits of the Merger that had such condition or
requirement been known, such party would not have entered into the
Agreement; (iv) receipt of an opinion of KPMG Peat Marwick LLP as
to the tax-free nature of certain aspects of the Merger;
(v) receipt by CCB of a letter, dated as of the filing date of the
registration statement to be filed with the Securities and Exchange
Commission (the "Commission"), in connection with the Merger and as
of the Effective Time, from KPMG Peat Marwick LLP to the effect
that the transactions contemplated by the Agreement (including, as
applicable, the issuance of the CCB Preferred Stock) will qualify
for pooling-of-interests accounting treatment; (vi) the
representations and warranties of the respective parties shall be
true and accurate under the standards set forth in the Agreement;
(vii) the parties shall have performed in all material respects all
obligations and complied in all material respects with all
covenants required by the Agreement; (viii) the receipt by American
Federal of opinions of Wheat First Butcher Singer and Keefe,
Bruyette & Woods, Inc. as to the fairness, from a financial point
of view, of the Exchange Ratio to the shareholders of American
Federal; (ix) receipt by CCB of an opinion from Merrill Lynch, Inc.
as to the fairness, from a financial point of view, of the Exchange
Ratio to the shareholders of CCB; and (x) satisfaction of certain
other conditions.
The Merger may be terminated by the parties under certain
circumstances including on the basis of (i) a material breach of
any covenant or agreement contained in the Agreement; (ii) an
inaccuracy of any representation or warranty of the other party,
which inaccuracy would provide the nonbreaching party the ability
to refuse to consummate the Merger under the applicable standard
set forth in the Agreement; (iii) the inability to satisfy or
fulfill the conditions precedent to consummation of the Agreement
prior to the closing date; (iv) the failure to obtain the requisite
regulatory approvals; (v) the failure to obtain the requisite
shareholder approvals; and (vi) the failure to consummate the
Merger by December 31, 1997.
Under the Agreement, each of the parties may terminate the
Agreement at any time prior to March 19, 1997 if its Board of
Directors determines in its reasonable good faith judgment that, as
a result of such party's due diligence investigation of the other
party or any of the disclosures in the other party's disclosure
memorandum, any of the financial condition, core operating
performance, or business of the other party, taken as a whole, are
materially adversely different from the terminating party's
reasonable expectation with respect thereto based on the
information publicly disclosed by such party.
American Federal also has the right to terminate the Agreement
at any time during the ten-day period commencing two days after the
"Determination Date," as defined, if either: (A) the "Average
Closing Price" of CCB Common Stock is less than $51.50; or (B) both
of the following conditions are satisfied (i) the Average Closing
Price of CCB Common Stock is less than $53.25 and (ii) (a) the
quotient obtained by dividing the Average Closing Price by $68.00
(such number being referred to herein as the "CCB Ratio") shall be
less than (b) the quotient obtained by dividing the "Index Price"
on the Determination Date by the Index Price on the "Starting Date"
and subtracting 0.17 from the quotient. CCB has the right to elect
to adjust the Exchange Ratio in accordance with the terms of the
Agreement, and thereby eliminate American Federal's right to
terminate the Agreement.
For purposes of the Agreement, the Average Closing Price shall
mean the average of the daily closing sales prices of CCB Common
Stock as reported on the New York Stock Exchange, Inc. ("NYSE") (as
reported by The Wall Street Journal or, if not reported thereby,
another authoritative source as chosen by CCB) for the 30
consecutive full trading days in which such shares are traded on
the NYSE ending at the close of trading on the Determination Date.
For purposes of the Agreement, the Determination Date shall mean
the date on which the approval of the Merger by the Board of
Governors of the Federal Reserve System is received by CCB.
For purposes of the Agreement, the Index Price shall mean the
weighted average of the closing prices of the companies composing
the index group referred to in the Agreement. For purposes of the
Agreement, the Starting Date shall mean February 14, 1997.
In connection with executing the Agreement, CCB and American
Federal entered into a stock option agreement (the "American
Federal Stock Option Agreement"), pursuant to which American
Federal granted to CCB an option to purchase up to 2,188,180 shares
of American Federal Common Stock, at a purchase price of $25.00 per
share, upon certain terms and in accordance with certain
conditions.
The Agreement and the Merger will be submitted for approval at
a meeting of the shareholders of American Federal. Similarly, the
issuance of shares of CCB Common Stock pursuant to the Merger and
an increase in the authorized preferred stock of CCB will be
submitted for approval at a meeting of the shareholders of CCB.
Prior to either shareholders meeting, CCB will file a registration
statement with the Commission registering, under the Securities Act
of 1933, as amended, the offering of the shares of CCB Common Stock
to be issued in exchange for the outstanding shares of American
Federal Common Stock. Such shares of stock of CCB will be offered
to the American Federal shareholders pursuant to a prospectus that
will also serve as a joint proxy statement for separate meetings of
the shareholders of American Federal and CCB.
For additional information regarding the Agreement and
the American Federal Stock Option Agreement, reference is made to
the copies of those documents which are incorporated herein by
reference and included as Exhibits to this Current Report on Form 8-
K. The foregoing discussion is qualified in its entirety by
reference to such documents.
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.
AMERICAN FEDERAL BANK, FSB
(Registrant)
By: /s/ Michael A. Trimble
Michael A. Trimble
Chief Financial Officer and Chief
Operating Officer
Date: February 24, 1997
INDEX TO EXHIBITS
Sequential
Exhibit Page No.
2.1 Agreement and Plan of Reorganization, dated as of
February 17, 1997, by and between CCB
Financial Corporation
and American Federal Bank, FSB. 08
2.2 Stock Option Agreement, dated as of February 17, 1997,
issued by American Federal Bank, FSB to
CCB Financial Corporation 77
99.1 Text of joint press release, dated February 18, 1997,
issued by American Federal Bank, FSB and
CCB Financial Corporation 93
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
CCB FINANCIAL CORPORATION
AND
AMERICAN FEDERAL BANK, FSB
Dated as of February 17, 1997
TABLE OF CONTENTS
Page
PARTIES 1
PREAMBLE 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER 1
1.1 Merger 1
1.2 Time and Place of Closing 2
1.3 Effective Time 2
1.4 Execution of Stock Option Agreement 2
ARTICLE 2 - TERMS OF MERGER 2
2.1 Business of Surviving Association 2
2.2 Assumption of Rights 2
2.3 Assumption of Liabilities 3
2.4 Charter 3
2.5 Bylaws 3
2.6 Directors and Officers 3
ARTICLE 3 - MANNER OF CONVERTING SHARES 3
3.1 Conversion of Shares 3
3.2 Anti-Dilution Provisions 4
3.3 Shares Held by American Federal or CCB 4
3.4 Fractional Shares 4
3.5 Conversion of Stock Options; Restricted Stock 4
ARTICLE 4 - EXCHANGE OF SHARES 6
4.1 Exchange Procedures 6
4.2 Rights of Former American Federal Shareholders 7
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF AMERICAN FEDERAL 8
5.1 Organization, Standing, and Power 8
5.2 Authority; No Breach By Agreement 8
5.3 Capital Stock 9
5.4 American Federal Subsidiaries 10
5.5 SEC Filings; Financial Statements 11
5.6 Absence of Undisclosed Liabilities 11
5.7 Absence of Certain Changes or Events 11
5.8 Tax Matters 12
5.9 Allowance for Possible Loan Losses 13
5.10 Assets 13
5.11 Environmental Matters 14
5.12 Compliance with Laws 15
5.13 Labor Relations 16
5.14 Employee Benefit Plans 16
5.15 Material Contracts 19
5.16 Legal Proceedings 19
5.17 Reports 20
5.18 Statements True and Correct 20
5.19 Accounting, Tax, and Regulatory Matters 20
5.20 State Takeover Laws 21
5.21 Charter Provisions 21
5.22 Derivatives Contracts 21
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF CCB 21
6.1 Organization, Standing, and Power 21
6.2 Authority; No Breach By Agreement 22
6.3 Capital Stock 23
6.4 CCB Subsidiaries 23
6.5 SEC Filings; Financial Statements 24
6.6 Absence of Undisclosed Liabilities 24
6.7 Absence of Certain Changes or Events 24
6.8 Tax Matters 25
6.9 Allowance for Possible Loan Losses 25
6.10 Environmental Matters 26
6.11 Compliance With Laws 27
6.12 Employee Benefit Plans 28
6.13 Legal Proceedings 29
6.14 Reports 29
6.15 Statements True and Correct 30
6.16 Authority of American Federal Interim 30
6.17 Accounting, Tax, and Regulatory Matters 30
6.18 Rights Agreement 31
6.19 Derivatives Contracts 31
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION 31
7.1 Affirmative Covenants of American Federal 31
7.2 Negative Covenants of American Federal 31
7.3 Covenants of CCB 33
7.4 Adverse Changes in Condition 34
7.5 Reports 34
ARTICLE 8 - ADDITIONAL AGREEMENTS 35
8.1 Registration Statement; Joint Proxy Statement;
Shareholder Approval 35
8.2 Exchange Listing 35
8.3 Applications 36
8.4 Filings with the OTS 36
8.5 Agreement as to Efforts to Consummate 36
8.6 Investigation and Confidentiality 36
8.7 Press Releases 37
8.8 Certain Actions 37
8.9 Accounting and Tax Treatment 37
8.10 State Takeover Laws 37
8.11 Charter Provisions 38
8.12 Agreement of Affiliates 38
8.13 Employee Benefits and Contracts 38
8.14 Indemnification 39
8.15 Distribution of Preferred Stock Interests 40
8.16 Goodwill Litigation 41
8.17 Assumption of Agreement 41
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 41
9.1 Conditions to Obligations of Each Party 41
9.2 Conditions to Obligations of CCB 43
9.3 Conditions to Obligations of American Federal 44
ARTICLE 10 - TERMINATION 45
10.1 Termination 45
10.2 Effect of Termination 49
10.3 Non-Survival of Representations and Covenants 49
ARTICLE 11 - MISCELLANEOUS 49
11.1 Definitions 49
11.2 Expenses 59
11.3 Brokers and Finders 59
11.4 Entire Agreement 59
11.5 Amendments 59
11.6 Waivers 60
11.7 Assignment 60
11.8 Notices 60
11.9 Governing Law 61
11.10Counterparts 61
11.11Captions; Articles and Sections 61
11.12Interpretations 62
11.13Enforcement of Agreement 62
11.14Severability 62
SIGNATURES 63
LIST OF EXHIBITS
Exhibit Number Description
1. Form of Affiliate Agreement. ( 8.12, 9.2(g)).
2. Form of American Federal Bank, FSB Stock Option
Agreement. ( 1.4, 11.1).
3. Form of Plan of Merger and Combination.
( 1.1, 11.1).
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made
and entered into as of February 17, 1997, by and between CCB
Financial Corporation ("CCB"), a North Carolina corporation;
and American Federal Bank, FSB ("American Federal"), a federal
stock savings bank.
Preamble
The respective Boards of Directors of American
Federal and CCB are of the opinion that the transactions
described herein are in the best interests of the Parties to
this Agreement and their respective shareholders. This
Agreement provides for the acquisition of American Federal by
CCB pursuant to the merger of American Federal Interim Savings
Bank, FSB ("American Federal Interim"), a newly formed, first
tier subsidiary of CCB, with and into American Federal. At
the effective time of such merger, the outstanding shares of
the capital stock of American Federal shall be converted into
the right to receive shares of the common stock of CCB (except
as provided herein). As a result, shareholders of American
Federal shall become shareholders of CCB and American Federal
shall continue to conduct its business and operations as a
wholly-owned subsidiary of CCB. The transactions described in
this Agreement are subject to the approvals of the
shareholders of American Federal, the shareholders of CCB, the
Board of Governors of the Federal Reserve System, and the
satisfaction of certain other conditions described in this
Agreement. It is the intention of the Parties to this
Agreement that the Merger for federal income Tax purposes
shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code, and for
accounting purposes shall qualify for treatment as a pooling
of interests.
Following the execution and delivery of this
Agreement, as a condition and inducement to CCB's willingness
to enter into this Agreement, American Federal and CCB will
enter into a stock option agreement pursuant to which American
Federal will grant to CCB an option to purchase shares of
American Federal Common Stock.
Certain terms used in this Agreement are defined in
Section 11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and
the mutual warranties, representations, covenants, and
agreements set forth herein, the Parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, American Federal
Interim shall be merged with and into American Federal in
accordance with the provisions of Title 12, United States
Code, Section 1467a(t) (the "Merger"). American Federal shall
be the Surviving Association resulting from the Merger and
shall become a wholly-owned Subsidiary of CCB and shall
continue to be governed by the Laws of the United States. The
Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the
respective Boards of Directors of American Federal and CCB,
and the terms of the Plan of Merger to be entered into by
American Federal and American Federal Interim, upon the
organization of American Federal Interim.
1.2 Time and Place of Closing. The closing of the
transactions contemplated hereby (the "Closing") will take
place at 9:00 A.M. Eastern Time on the date that the Effective
Time occurs (or the immediately preceding day if the Effective
Time is earlier than 9:00 A.M. Eastern Time), or at such other
time as the Parties, acting through their authorized officers,
may mutually agree. The Closing shall be held at such
location as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other
transactions contemplated by this Agreement shall become
effective on the date and at the time of endorsement of the
Articles of Combination reflecting the Merger by the OTS or on
such other date and at such other time as the OTS declares the
Merger effective (the "Effective Time"). Subject to the terms
and conditions hereof, unless otherwise mutually agreed upon
in writing by the authorized officers of each Party, the
Parties shall use their reasonable efforts to cause the
Effective Time to occur on or before the last day of the month
in which occurs the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and
(ii) the date on which the shareholders of American Federal
and CCB approve this Agreement to the extent such approval is
required by applicable Law.
1.4 Execution of Stock Option Agreement.
Immediately following the execution and delivery of this
Agreement by the Parties and as a condition and inducement to
CCB's entering into this Agreement, American Federal shall
execute and deliver to CCB the American Federal Stock Option
Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Business of Surviving Association. The business
of the Surviving Association from and after the Effective Time
shall continue to be that of a federal stock savings bank
organized under the Laws of the United States. The business
shall be conducted from its main office in Greenville, South
Carolina and at its legally established branches, which shall
also include the main office and all branches, whether in
operation or approved but unopened, at the Effective Time.
2.2 Assumption of Rights. At the Effective Time,
the separate existence and corporate organization of American
Federal Interim shall be merged into and continued in the
Surviving Association. All rights, franchises, and interests
of both American Federal and American Federal Interim in and
to every type of property (real, personal, and mixed), and all
chooses in action of both American Federal and American
Federal Interim shall be transferred to and vested in the
Surviving Association without any deed or other transfer. The
Surviving Association, upon consummation of the Merger and
without any order or other action on the part of any court or
otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments,
designations, and nominations, and all other rights and
interests as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates, assignee, receiver, and
committee of estates of incompetent persons, and in every
other fiduciary capacity, in the same manner and to the same
extent as such rights, franchises, and interests were held or
enjoyed by either American Federal or American Federal Interim
at the Effective Time.
2.3 Assumption of Liabilities. All Liabilities and
obligations of both American Federal and American Federal
Interim of every kind and description (including without
limitation the liquidation account established by American
Federal in connection with its conversion to the stock form of
organization, as in existence at the Effective Time) shall be
assumed by the Surviving Association, and the Surviving
Association shall be bound thereby in the same manner and to
the same extent that American Federal and American Federal
Interim were so bound at the Effective Time.
2.4 Charter. The Charter of American Federal in
effect immediately prior to the Effective Time shall be the
Charter of the Surviving Association until duly amended or
repealed.
2.5 Bylaws. The Bylaws of American Federal in
effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Association until duly amended or
repealed.
2.6 Directors and Officers. The directors of
American Federal in office immediately prior to the Effective
Time, together with such additional persons as may thereafter
be elected, shall serve as the directors of the Surviving
Association from and after the Effective Time in accordance
with the Bylaws of the Surviving Association. The officers of
American Federal in office immediately prior to the Effective
Time, together with such additional persons as may thereafter
be elected, shall serve as the officers of the Surviving
Association from and after the Effective Time in accordance
with the Bylaws of the Surviving Association.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions
of this Article 3, at the Effective Time, by virtue of the
Merger and without any action on the part of CCB, American
Federal, American Federal Interim, or the shareholders of any
of the foregoing, the shares of the constituent corporations
shall be converted as follows:
(a) Each share of CCB Capital Stock and
attached CCB Right issued and outstanding immediately
prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of American Federal Interim
Common Stock issued and outstanding immediately prior to
the Effective Time shall cease to be outstanding and shall
be converted into one share of American Federal Common
Stock.
(c) Each share of American Federal Common Stock
(excluding shares held by any American Federal Company or
any CCB Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted)
issued and outstanding immediately prior to the Effective
Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive .445 of a
share of CCB Common Stock (as adjusted pursuant to
Section 3.2 and Section 10.1(j), the "Exchange Ratio").
Pursuant to the CCB Rights Agreement, each share of CCB
Common Stock issued in connection with the Merger upon
conversion of American Federal Common Stock shall be
accompanied by a non-detachable CCB Right.
3.2 Anti-Dilution Provisions. In the event CCB
changes the number of shares of CCB Common Stock issued and
outstanding prior to the Effective Time as a result of a stock
split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in
the case of a stock split or similar recapitalization for
which a record date is not established) shall be prior to the
Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 Shares Held by American Federal or CCB. Each of
the shares of American Federal Common Stock held by any
American Federal Company or by any CCB Company, in each case
other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the
Effective Time and no consideration shall be issued in
exchange therefor.
3.4 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of shares of American
Federal Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a
share of CCB Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such
fractional part of a share of CCB Common Stock multiplied by
the market value of one share of CCB Common Stock at the
Effective Time. The market value of one share of CCB Common
Stock at the Effective Time shall be the closing price of such
common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by CCB) on
the last trading day preceding the Effective Time. No such
holder will be entitled to dividends, voting rights, or any
other rights as a shareholder in respect of any fractional
shares.
3.5 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, each option or
other Equity Right to purchase shares of American Federal
Common Stock pursuant to stock options or stock appreciation
rights ("American Federal Options") granted by American
Federal under the American Federal Stock Plans, which are
outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become rights with respect to CCB
Common Stock, and CCB shall assume each American Federal
Option, in accordance with the terms of the American Federal
Stock Plan and stock option agreement by which it is
evidenced, except that from and after the Effective Time,
(i) CCB and its Compensation Committee shall be substituted
for American Federal and the Committee of American Federal's
Board of Directors (including, if applicable, the entire Board
of Directors of American Federal) administering such American
Federal Stock Plan, (ii) each American Federal Option assumed
by CCB may be exercised solely for shares of CCB Common Stock
(or cash, if so provided under the terms of such American
Federal Option), (iii) the number of shares of CCB Common
Stock subject to such American Federal Option shall be equal
to the number of shares of American Federal Common Stock
subject to such American Federal Option immediately prior to
the Effective Time multiplied by the Exchange Ratio, and
(iv) the per share exercise price under each such American
Federal Option shall be adjusted by dividing the per share
exercise price under each such American Federal Option by the
Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the provisions of clause (iii) of the
preceding sentence, CCB shall not be obligated to issue any
fraction of a share of CCB Common Stock upon exercise of
American Federal Options and any fraction of a share of CCB
Common Stock that otherwise would be subject to a converted
American Federal Option shall represent the right to receive a
cash payment upon exercise of such converted American Federal
Option equal to the product of such fraction and the
difference between the market value of one share of CCB Common
Stock at the time of exercise of such Option and the per share
exercise price of such Option. The market value of one share
of CCB Common Stock at the time of exercise of an Option shall
be the closing price of such common stock on the NYSE-
Composite Transactions List (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative
source selected by CCB) on the last trading day preceding the
date of exercise. In addition, notwithstanding the provisions
of clauses (iii) and (iv) of the first sentence of this
Section 3.5, each American Federal Option which is an
"incentive stock option" shall be adjusted as required by
Section 424 of the Internal Revenue Code, and the regulations
promulgated thereunder, so as not to constitute a
modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. Each
of American Federal and CCB agrees to take all necessary steps
to effectuate the foregoing provisions of this Section 3.5,
including using its reasonable efforts to obtain from each
holder of a American Federal Option any Consent or Contract
that may be deemed necessary or advisable in order to effect
the transactions contemplated by this Section 3.5. Anything
in this Agreement to the contrary notwithstanding, CCB shall
have the right, in its sole discretion, not to deliver the
consideration provided in this Section 3.5 to a former holder
of a American Federal Option who has not delivered such
Consent or Contract.
(b) As soon as practicable after the Effective
Time, CCB shall deliver to the participants in each American
Federal Stock Plan an appropriate notice setting forth such
participant's rights pursuant thereto and the grants subject
to such American Federal Stock Plan shall continue in effect
on the same terms and conditions (subject to the adjustments
required by Section 3.5(a) after giving effect to the Merger),
and CCB shall comply with the terms of each American Federal
Stock Plan to ensure, to the extent required by, and subject
to the provisions of, such American Federal Stock Plan, that
American Federal Options which qualified as incentive stock
options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior
to the Effective Time, CCB shall take all corporate action
necessary to reserve for issuance sufficient shares of CCB
Common Stock for delivery upon exercise of American Federal
Options assumed by it in accordance with this Section 3.5. As
soon as practicable after the Effective Time, CCB shall file a
registration statement on Form S-3 or Form S-8, as the case
may be (or any successor or other appropriate forms), with
respect to the shares of CCB Common Stock subject to such
options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain
the current status of the prospectus or prospectuses contained
therein) for so long as such options remain outstanding. With
respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a)
of the 1934 Act, where applicable, CCB shall administer the
American Federal Stock Plan assumed pursuant to this
Section 3.5 in a manner that complies with Rule 16b-3
promulgated under the 1934 Act to the extent the American
Federal Stock Plan complied with such rule prior to the
Effective Time.
(c) All contractual restrictions or
limitations on transfer with respect to American Federal
Common Stock awarded under the American Federal Stock Plans or
any other plan, program, Contract, or arrangement of any
American Federal Company, to the extent that such restrictions
or limitations shall not have already lapsed (whether as a
result of the Merger or otherwise), and except as otherwise
expressly provided in such American Federal Stock Plan or
other plan, program, Contract, or arrangement, shall remain in
full force and effect with respect to shares of CCB Common
Stock into which such restricted stock is converted pursuant
to Section 3.1.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the
Effective Time, CCB and American Federal shall cause the
exchange agent selected by CCB (the "Exchange Agent") to mail
to each holder of record of a certificate or certificates
which represented shares of American Federal Common Stock
(excluding shares held by any American Federal Company or CCB
Company, in each case other than in a fiduciary capacity or as
a result of debts previously contracted) immediately prior to
the Effective Time (the "Certificates") appropriate
transmittal materials and instructions (which shall specify
that delivery shall be effected, and risk of loss and title to
such Certificates shall pass, only upon proper delivery of
such Certificates to the Exchange Agent). The Certificate or
Certificates of American Federal Common Stock so delivered
shall be duly endorsed as the Exchange Agent may require. In
the event of a transfer of ownership of shares of American
Federal Common Stock represented by Certificates that are not
registered in the transfer records of American Federal, the
consideration provided in Section 3.1 may be issued to a
transferee if the Certificates representing such shares are
delivered to the Exchange Agent, accompanied by all documents
required to evidence such transfer and by evidence
satisfactory to the Exchange Agent that any applicable stock
transfer Taxes have been paid. If any Certificate shall have
been lost, stolen, mislaid, or destroyed, upon receipt of
(i) an affidavit of that fact from the holder claiming such
Certificate to be lost, mislaid, stolen, or destroyed,
(ii) such bond, security, or indemnity as CCB and the Exchange
Agent may reasonably require, and (iii) any other documents
necessary to evidence and effect the bona fide exchange
thereof, the Exchange Agent shall issue to such holder the
consideration into which the shares represented by such lost,
stolen, mislaid, or destroyed Certificate shall have been
converted. The Exchange Agent may establish such other
reasonable and customary rules and procedures in connection
with its duties as it may deem appropriate. After the
Effective Time, each holder of shares of American Federal
Common Stock (other than shares to be canceled pursuant to
Section 3.3) issued and outstanding at the Effective Time
shall surrender the Certificate or Certificates representing
such shares to the Exchange Agent and shall promptly upon
surrender thereof receive in exchange therefor the
consideration provided in Section 3.1, together with all
undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2. To
the extent required by Section 3.4, each holder of shares of
American Federal Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the
Certificate or Certificates, cash in lieu of any fractional
share of CCB Common Stock to which such holder may be
otherwise entitled (without interest). CCB shall not be
obligated to deliver the consideration to which any former
holder of American Federal Common Stock is entitled as a
result of the Merger until such holder surrenders such
holder's Certificate or Certificates for exchange as provided
in this Section 4.1. Any other provision of this Agreement
notwithstanding, neither CCB, the Surviving Association, nor
the Exchange Agent shall be liable to a holder of American
Federal Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar Law.
Adoption of this Agreement by the shareholders of American
Federal shall constitute ratification of the appointment of
the Exchange Agent.
4.2 Rights of Former American Federal Shareholders.
The stock transfer books of American Federal shall be closed
as to holders of American Federal Common Stock immediately
prior to the Effective Time and no transfer of American
Federal Common Stock by any such holder shall thereafter be
made or recognized. Until surrendered for exchange in
accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of American
Federal Common Stock (other than shares to be canceled
pursuant to Section 3.3) shall from and after the Effective
Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.4 in exchange
therefor, subject, however, to the Surviving Association's
obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time
which have been declared or made by American Federal in
respect of such shares of American Federal Common Stock in
accordance with the terms of this Agreement and which remain
unpaid at the Effective Time. To the extent permitted by Law,
former shareholders of record of American Federal shall be
entitled to vote after the Effective Time at any meeting of
CCB shareholders the number of whole shares of CCB Common
Stock into which their respective shares of American Federal
Common Stock are converted, regardless of whether such holders
have exchanged their Certificates for certificates
representing CCB Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other
distribution is declared by CCB on the CCB Common Stock, the
record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on
all shares of CCB Common Stock issuable pursuant to this
Agreement, but after the Effective Time no dividend or other
distribution payable to the holders of record of CCB Common
Stock as of any time subsequent to the Effective Time shall be
delivered to the holder of any Certificate until such holder
surrenders such Certificate for exchange as provided in
Section 4.1. However, upon surrender of such Certificate, both
the CCB Common Stock certificate (together with all such
undelivered dividends or other distributions without interest)
and any undelivered dividends and cash payments payable
hereunder (without interest) shall be delivered and paid with
respect to each share represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF AMERICAN FEDERAL
Except as disclosed in the American Federal
Disclosure Memorandum, American Federal hereby represents and
warrants to CCB as follows:
5.1 Organization, Standing, and Power. American
Federal is a federal stock savings bank duly organized,
validly existing, and in good standing under the Laws of the
United States, and has the corporate power and authority to
carry on its business as now conducted and to own, lease, and
operate its material Assets. American Federal is duly
qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in
which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on American Federal. The minute book
and other organizational documents for American Federal will
be made available to CCB for its review and are true and
complete in all material respects as in effect as of the date
of this Agreement and accurately reflect in all material
respects all amendments thereto and all proceedings of the
Board of Directors (and its committees) and shareholders
thereof. American Federal is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits in which are insured
by the Bank Insurance Fund or the Savings Association
Insurance Fund.
5.2 Authority; No Breach By Agreement.
(a) American Federal has the corporate power
and authority necessary to execute, deliver, and perform its
obligations under this Agreement, the American Federal Stock
Option Agreement, and the Plan of Merger and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery, and performance of this Agreement, the American
Federal Stock Option Agreement, and the Plan of Merger and the
consummation of the transactions contemplated herein and
therein, including the Merger, have been or will be duly and
validly authorized by all necessary corporate action in
respect thereof on the part of American Federal, subject, in
the case of this Agreement and the Plan of Merger, to the
approval of this Agreement and the Plan of Merger by the
holders of two-thirds of the outstanding shares of American
Federal Common Stock, which is the only shareholder vote
required for approval of this Agreement and Plan of Merger and
consummation of the Merger by American Federal. Subject to
such requisite shareholder approval, this Agreement
represents, and, when executed and delivered, the Plan of
Merger will represent, legal, valid, and binding obligations
of American Federal, enforceable against American Federal in
accordance with their respective terms (except in all cases as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement, the American Federal Stock Option Agreement, and
the Plan of Merger by American Federal, nor the consummation
by American Federal of the transactions contemplated hereby or
thereby, nor compliance by American Federal with any of the
provisions hereof or thereof, will (i) conflict with or result
in a breach of any provision of American Federal's Charter or
Bylaws or the certificate or articles of incorporation or
bylaws of any American Federal Subsidiary or any resolution
adopted by the board of directors or the shareholders of any
American Federal Company, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result
in the creation of any Lien on any Asset of any American
Federal Company under, any Contract or Permit of any American
Federal Company, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal, or, (iii) subject to receipt of the
requisite Consents referred to in Section 9.1(b), constitute
or result in a Default under, or require any Consent pursuant
to, any Law or Order applicable to any American Federal
Company or any of their respective material Assets, provided
that this clause (iii) shall not be deemed to apply to the
American Federal Stock Option Agreement.
(c) Other than in connection or compliance
with the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NYSE, and
other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if
not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation
by American Federal of the Merger and the other transactions
contemplated in this Agreement or the Plan of Merger.
5.3 Capital Stock.
(a) The authorized American Federal Capital
Stock consists of (i) 50,000,000 30,000,000 shares of American
Federal Common Stock, of which 10,995,885 shares were issued
and outstanding as of February 12, 1997, and not more than
11,452,335 shares will be issued and outstanding at the
Effective Time, and (ii) 10,000,000 shares of American Federal
Preferred Stock, of which no shares are issued and outstanding
and of which none shall be issued and outstanding as of the
Effective Time. All of the issued and outstanding shares of
American Federal Capital Stock are duly and validly issued and
outstanding and are fully paid and nonassessable. None of the
outstanding shares of American Federal Capital Stock has been
issued in violation of any preemptive rights of the current or
past shareholders of American Federal. American Federal has
reserved 544,900 shares of American Federal Common Stock for
issuance under the American Federal Stock Plans, pursuant to
which options to purchase not more than 456,450 shares of
American Federal Common Stock are outstanding.
(b) Except as set forth in Section 5.3(a), or
as provided in the American Federal Stock Option Agreement,
there are no shares of capital stock or other equity
securities of American Federal outstanding and no outstanding
Equity Rights relating to the American Federal Capital Stock.
5.4 American Federal Subsidiaries. The American
Federal Disclosure Memorandum will disclose all of the
American Federal Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each
jurisdiction in which it is qualified and/or licensed to
transact business, and the number of shares owned and
percentage ownership interest represented by such share
ownership) and all of the American Federal Subsidiaries that
are general or limited partnerships, limited liability
companies, or other non-corporate entities (identifying the
Law under which such entity is organized, each jurisdiction in
which it is qualified and/or licensed to transact business,
and the amount and nature of the ownership interest therein).
American Federal or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other
equity interests) of each American Federal Subsidiary. No
capital stock (or other equity interest) of any American
Federal Subsidiary is or may become required to be issued
(other than to another American Federal Company) by reason of
any Equity Rights, and there are no Contracts by which any
American Federal Subsidiary is bound to issue (other than to
another American Federal Company) additional shares of its
capital stock (or other equity interests) or Equity Rights or
by which any American Federal Company is or may be bound to
transfer any shares of the capital stock (or other equity
interests) of any American Federal Subsidiary (other than to
another American Federal Company). There are no Contracts
relating to the rights of any American Federal Company to vote
or to dispose of any shares of the capital stock (or other
equity interests) of any American Federal Subsidiary. All of
the shares of capital stock (or other equity interests) of
each American Federal Subsidiary held by a American Federal
Company are fully paid and nonassessable under the applicable
Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the American
Federal Company free and clear of any Lien. Each American
Federal Subsidiary is duly organized, validly existing, and in
good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and
authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each
American Federal Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions
where the character of its Assets or the nature or conduct of
its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal. The minute book and other organizational
documents for each American Federal Subsidiary will be made
available to CCB for its review.
5.5 SEC Filings; Financial Statements.
(a) American Federal has timely filed and made
available to CCB all SEC Documents required to be filed by
American Federal since December 31, 1993 (the "American
Federal SEC Reports"). The American Federal SEC Reports
(i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Laws and other
applicable Laws and (ii) did not, at the time they were filed
(or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a
material fact required to be stated in such American Federal
SEC Reports or necessary in order to make the statements in
such American Federal SEC Reports, in light of the
circumstances under which they were made, not misleading. No
American Federal Subsidiaries are registered as a broker,
dealer, or investment advisor, and no American Federal
Subsidiary is required to file any SEC Documents.
(b) Each of the American Federal Financial
Statements (including, in each case, any related notes)
contained in the American Federal SEC Reports, including any
American Federal SEC Reports filed after the date of this
Agreement until the Effective Time, complied as to form in all
material respects with the applicable published rules and
regulations of the OTS with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited
interim statements, as permitted by Form 10-Q of the SEC), and
fairly presented in all material respects the consolidated
financial position of American Federal and its Subsidiaries as
at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which
were not or, to the Knowledge of American Federal, are not
expected to be material in amount or effect.
5.6 Absence of Undisclosed Liabilities. No American
Federal Company has any Liabilities that are reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on American Federal, except Liabilities which are
accrued or reserved against in the consolidated balance sheet
of American Federal as of September 30, 1996, included in the
American Federal Financial Statements delivered prior to the
date of this Agreement or reflected in the notes thereto. No
American Federal Company has incurred or paid any Liability
since September 30, 1996, except for such Liabilities incurred
or paid (i) in the ordinary course of business consistent with
past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on American Federal or (ii) in connection with the
transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since
September 30, 1996, except as disclosed in the American
Federal Financial Statements delivered prior to the date of
this Agreement, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal, and (ii) the American Federal Companies have
not taken any action, or failed to take any action, prior to
the date of this Agreement, which action or failure, if taken
after the date of this Agreement, would represent or result in
a material breach or violation of any of the covenants and
agreements of American Federal provided in Article 7.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or
on behalf of any of the American Federal Companies have been
timely filed or requests for extensions have been timely
filed, granted, and have not expired for periods ended on or
before December 31, 1995, and on or before the date of the
most recent fiscal year end immediately preceding the
Effective Time, and all Tax Returns filed are complete and
accurate in all material respects to the Knowledge of American
Federal. All material Taxes due have been paid except those
contested in good faith and for which reserves have been made
and are reflected in the American Federal Financial
Statements. As of the date of this Agreement, there is no
audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the
aggregate, a Material Adverse Effect on American Federal,
except as reserved against in the American Federal Financial
Statements delivered prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.
(b) None of the American Federal Companies has
executed an extension or waiver of any statute of limitations
on the assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to
become due for any of the American Federal Companies for the
period or periods through and including the date of the
respective American Federal Financial Statements that has been
made and is reflected on such American Federal Financial
Statements is sufficient to cover all such Taxes.
(d) Deferred Taxes of the American Federal
Companies have been provided for in accordance with GAAP.
(e) None of the American Federal Companies has
been a member of an affiliated group filing a consolidated
federal income Tax Return (other than a group the common
parent of which was American Federal) has any Liability for
Taxes of any Person (other than American Federal and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign Law) as a
transferee or successor or by Contract or otherwise.
(f) Each of the American Federal Companies is
in compliance with, and its records contain all information
and documents (including properly completed Internal Revenue
Service Forms W-9) necessary to comply with, all applicable
information reporting and Tax withholding requirements under
federal, state, and local Tax Laws, and such records identify
with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for
such instances of noncompliance and such omissions as are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on American Federal.
(g) None of the American Federal Companies has
made any payments, is obligated to make any payments, or is a
party to any Contract that could obligate it to make any
payments that would be disallowed as a deduction under
Section 280G or 162(m) of the Internal Revenue Code.
(h) There has not been an ownership change, as
defined in Internal Revenue Code Section 382(g), of the
American Federal Companies that occurred during or after any
taxable period in which the American Federal Companies
incurred a net operating loss that carries over to any taxable
period ending after December 31, 1995.
(i) No American Federal Company has or has had
in any foreign country a permanent establishment, as defined
in any applicable Tax treaty or convention between the United
States and such foreign country.
5.9 Allowance for Possible Loan Losses. In the
opinion of management of American Federal, the allowance for
possible loan or credit losses (the "Allowance") shown on the
consolidated balance sheet of American Federal included in the
most recent American Federal Financial Statements dated prior
to the date of this Agreement was, and the Allowance shown on
the consolidated balance sheets of American Federal included
in the American Federal Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of
the dates thereof, adequate (within the meaning of GAAP and
applicable regulatory requirements or guidelines) to provide
for all known or reasonably anticipated losses relating to or
inherent in the loan and lease portfolios (including accrued
interest receivables) of the American Federal Companies and
other extensions of credit (including letters of credit and
commitments to make loans or extend credit) by the American
Federal Companies as of the dates thereof, except where the
failure of such Allowance to be so adequate is not reasonably
likely to have a Material Adverse Effect on American Federal.
5.10 Assets.
(a) Except as disclosed or reserved against in
the American Federal Financial Statements, the American
Federal Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets material
to the operation of their businesses. All tangible properties
used in the businesses of the American Federal Companies are
in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with
American Federal's past practices.
(b) All Assets which are material to American
Federal's business on a consolidated basis, held under leases
or subleases by any of the American Federal Companies, are
held under valid Contracts enforceable in accordance with
their respective terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in
full force and effect.
5.11 Environmental Matters.
(a) To the Knowledge of American Federal, each
American Federal Company, its Participation Facilities, and
its Operating Properties are, and have been, in compliance
with all Environmental Laws and are not subject to Liabilities
under Environmental Laws, except for violations and
Liabilities which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal.
(b) There is no Litigation pending or, to the
Knowledge of American Federal, threatened before any court,
governmental agency, or authority or other forum in which any
American Federal Company or any of its Operating Properties or
Participation Facilities (or American Federal in respect of
such Operating Property or Participation Facility) has been
or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to
the release, discharge, spillage, or disposal into the
environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by
any American Federal Company or any of its Operating
Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on American Federal, nor is there any reasonable basis
for any Litigation of a type described in this sentence,
except such as is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on American
Federal.
(c) During the period of (i) any American
Federal Company's ownership or operation of any of their
respective current properties, (ii) any American Federal
Company's participation in the management of any Participation
Facility, or (iii) any American Federal Company's holding of a
security interest in an Operating Property, (1) there have
been no releases, discharges, spillages, or disposals of
Hazardous Material in, on, under, adjacent to, or affecting
(or potentially affecting) such properties, (2) no Hazardous
Materials have been generated, treated, stored, or disposed of
at, or transported to or from, any Operating Property or
Participation Facility of any American Federal Company at any
time, except in compliance with the Environmental Laws, (3) no
friable asbestos containing material is or has been in use, or
is or has been stored or disposed of on or upon any Operating
Property or Participation Facility of any American Federal
Company, (4) no polychlorinated biphenyls ("PCBs") are or have
been located on or in any Operating Property or Participation
Facility of any American Federal Company in any form or
device, including, without limitation, in the form of
electrical transformers, fluorescent light fixtures with
ballasts, or cooling oils, except in compliance with the
Environmental Laws, and (5) no underground storage tanks are
or have been located on any Operating Property or
Participation Facility of any American Federal Company and
subsequently removed or filled except in compliance with all
Environmental Laws, except such as are not reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on American Federal. Prior to the period of (i) any
American Federal Company's ownership or operation of any of
their respective current properties, (ii) any American Federal
Company's participation in the management of any Participation
Facility, or (iii) any American Federal Company's holding of a
security interest in an Operating Property, to the Knowledge
of American Federal, (1) there were no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under,
or affecting any such property, Participation Facility or
Operating Property, (2) no Hazardous Materials were generated,
treated, stored, or disposed of at, or transported to or from,
any Operating Property or Participation Facility of any
American Federal Company at any time, except in compliance
with the Environmental Laws, (3) no friable asbestos
containing material were used, stored, or disposed of on or
upon any Operating Property or Participation Facility of any
American Federal Company, (4) no PCBs were located on or in
any Operating Property or Participation Facility of any
American Federal Company in any form or device, including,
without limitation, in the form of electrical transformers,
fluorescent light fixtures with ballasts, or cooling oils,
except in compliance with the Environmental Laws, and (5) no
underground storage tanks were located on any Operating
Property or Participation Facility of any American Federal
Company and subsequently removed or filled except in
compliance with all Environmental Laws, except such as are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on American Federal.
5.12 Compliance with Laws. Each American Federal
Company is in compliance in all material respects with all
applicable Laws and has in effect all Permits necessary for it
to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the
absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on American Federal. None of the American
Federal Companies:
(a) is in Default under any of the provisions
of its certificate or articles of incorporation or bylaws
(or other governing instruments);
(b) is in Default under any Orders applicable
to its business or employees conducting its business,
except for Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on American Federal; or
(c) since January 1, 1994, has received any
notification or communication from any agency or
department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting
that any American Federal Company is not in compliance
with any of the Laws, Permits, or Orders which such
governmental authority or Regulatory Authority enforces or
grants, where such noncompliance is reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on American Federal, (ii) threatening to revoke any
Permits, the revocation of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on American Federal, or (iii) requiring any
American Federal Company to enter into or consent to the
issuance of a cease and desist Order, formal agreement,
directive, commitment, or memorandum of understanding, or
to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business or
in any manner relates to its capital adequacy, its credit
or reserve policies, its management, or the payment of
dividends.
5.13 Labor Relations. No American Federal Company is
the subject of any Litigation asserting that it or any other
American Federal Company has committed an unfair labor
practice (within the meaning of the National Labor Relations
Act or comparable state law) or seeking to compel it or any
other American Federal Company to bargain with any labor
organization as to wages or conditions of employment, nor is
any American Federal Company party to any collective
bargaining agreement, nor is there any strike or other labor
dispute involving any American Federal Company, pending or
threatened, or to the Knowledge of American Federal, is there
any activity involving any American Federal Company's
employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) American Federal will disclose in the
American Federal Disclosure Memorandum, and will make
available to CCB copies in each case of, all pension,
retirement, profit-sharing, supplemental retirement, deferred
compensation, stock appreciation right, stock option, employee
stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written or unwritten employee
programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any
American Federal Company or ERISA Affiliate thereof for the
benefit of current or former officers or employees, retirees,
dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate (collectively,
the "American Federal Benefit Plans"), including (i) all
amendments thereto adopted and effective since the most recent
restatement thereof, (ii) with respect to any such American
Federal Benefit Plans or amendments, the most recent
determination letter, if any, issued by the Internal Revenue
Service, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and
summary annual reports prepared for any American Federal
Benefits Plan with respect to the most recent three plan
years, and (iv) the most recent summary plan descriptions (and
any material modifications thereto). Any of the American
Federal Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "American Federal ERISA Plan." Each
American Federal ERISA Plan which is also a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue
Code) is referred to herein as a "American Federal Pension
Plan." No American Federal Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All American Federal Benefit Plans and any
related trust, to the extent applicable, are in compliance
with the applicable terms of ERISA, the Internal Revenue Code,
any other applicable Laws, and the written terms of such
American Federal Benefit Plans, the breach or violation of
which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on American Federal. No
American Federal Company has received notice from any
governmental authority, including the Internal Revenue
Service, questioning or challenging such compliance. Each
American Federal ERISA Plan which is intended to be qualified
under Section 401(a) of the Internal Revenue Code has received
a favorable determination letter from the Internal Revenue
Service, and American Federal is not aware of any
circumstances likely to result in revocation of any such
favorable determination letter. To the Knowledge of American
Federal, no American Federal Company has engaged in a
transaction with respect to any American Federal Benefit Plan
that, assuming the taxable period of such transaction expired
as of the date hereof, would subject any American Federal
Company to a Tax imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts
which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on American Federal.
(c) No American Federal Pension Plan has any
"unfunded current liability," as that term is defined in
Section 302(d)(8)(A) of ERISA, based on actuarial assumptions
set forth for such plan's most recent actuarial valuations.
Since the date of the most recent actuarial valuation, there
has been (i) no material change in the financial position of
any American Federal Pension Plan, (ii) no change in the
actuarial assumptions with respect to any American Federal
Pension Plan, and (iii) no increase in benefits under any
American Federal Pension Plan as a result of plan amendments
or changes in applicable Law which is reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on American Federal or materially adversely affect the
funding status of any such plan. Neither any American Federal
Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any American Federal Company, or the single-
employer plan of any entity which is considered one employer
with American Federal under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of
ERISA, which is reasonably likely to have a Material Adverse
Effect on American Federal. No American Federal Company has
provided, or is required to provide, security to a American
Federal Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Internal
Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no Liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by any
American Federal Company with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate, which Liability is reasonably likely
to have a Material Adverse Effect on American Federal. No
American Federal Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title
IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate), which Liability is reasonably likely to
have a Material Adverse Effect on American Federal. No notice
of a "reportable event," within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any American Federal
Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(e) No American Federal Company has any
Liability for retiree health and life benefits under any of
the American Federal Benefit Plans and there are no
restrictions on the rights of such American Federal Company to
amend or terminate any such retiree health or benefit Plan
without incurring any Liability thereunder, which Liability is
reasonably likely to have a Material Adverse Effect on
American Federal.
(f) Except as disclosed in American Federal
SEC Reports, neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any
American Federal Company from any American Federal Company
under any American Federal Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any
American Federal Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on American Federal.
(g) The actuarial present values of all
accrued deferred compensation entitlements (including
entitlements under any executive compensation, supplemental
retirement, or employment agreement) of employees and former
employees of any American Federal Company and their respective
beneficiaries, other than entitlements accrued pursuant to
funded retirement plans subject to the provisions of
Section 412 of the Internal Revenue Code or Section 302 of
ERISA, have been fully reflected on the American Federal
Financial Statements to the extent required by and in
accordance with GAAP.
(h) There are no unresolved claims or disputes
under the terms of, or in connection with, the American
Federal Benefit Plans other than claims for benefits which are
payable in the ordinary course of business, and no action,
proceeding, prosecution, inequity, hearing, or investigation
has been commenced with respect to any American Federal
Benefit Plan.
(i) All American Federal Benefit Plan
documents and annual reports or returns, audited or unaudited
financial statements, actuarial valuations, summary annual
reports, and summary plan descriptions issued with respect to
the American Federal Benefit Plans are correct and complete in
all material respects, and there have been no changes in the
information set forth therein.
(j) All Liabilities of American Federal or any
American Federal Subsidiary arising out of or related to
American Federal Benefit Plans are reflected in the American
Federal Financial Statements in accordance with GAAP.
(k) All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports,
and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each such American Federal
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Internal Revenue Code Section 4980B
have been met with respect to each such American Federal
Benefit Plan which is an Employee Welfare Benefit Plan and
which is subject to such requirements.
(l) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such American Federal
Benefit Plan which is a American Federal ERISA Plan.
5.15 Material Contracts. Except as disclosed in
American Federal SEC Reports, none of the American Federal
Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in
excess of $150,000, (ii) any Contract relating to the
borrowing of money by any American Federal Company or the
guarantee by any American Federal Company of any such
obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances,
trade payables and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (iii) any
Contract which prohibits or restricts any American Federal
Company from engaging in any business activities in any
geographic area, line of business, or otherwise in competition
with any other Person, (iv) any other Contract or amendment
thereto that would be required to be filed as an exhibit to a
Form 10-K filed by American Federal with the OTS as of the
date of this Agreement that has not been filed as an exhibit
to American Federal's Form 10-K filed for the fiscal year
ended December 31, 1995 (together with all Contracts referred
to in Sections 5.10 and 5.14(a), the "American Federal
Contracts"). With respect to each American Federal Contract:
(i) the Contract is in full force and effect; (ii) no American
Federal Company is in Default thereunder, other than Defaults
which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on American Federal;
(iii) no American Federal Company has repudiated or waived any
material provision of any such Contract; and (iv) no other
party to any such Contract is, to the Knowledge of American
Federal, in Default in any respect, other than Defaults which
are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on American Federal, or
has repudiated or waived any material provision thereunder.
All of the indebtedness of any American Federal Company for
money borrowed is prepayable at any time by such American
Federal Company without penalty or premium.
5.16 Legal Proceedings. There is no Litigation
instituted or pending, or, to the Knowledge of American
Federal, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any
American Federal Company, any American Federal Benefit Plan
(or related trust) or against any director, officer, employee,
or agent (in his or her capacity as an agent of a American
Federal Company) of any American Federal Company, or against
any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on American Federal, nor are there any
Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any American
Federal Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
American Federal. The American Federal Disclosure Memorandum
will contain a summary of all Litigation and Orders as of the
date of this Agreement to which any American Federal Company,
a American Federal Benefit Plan (or related trust, or any
director, officer, employee, or agent (in his or her capacity
as an agent of a American Federal Company) is a party or is
subject and which names a American Federal Company, a American
Federal Benefit Plan (or related trust, or any director,
officer, employee, or agent (in his or her capacity as an
agent of a American Federal Company) as a defendant or cross-
defendant or for which any American Federal Company has any
potential Liability.
5.17 Reports. Since January 1, 1994, or the date of
organization if later, each American Federal Company has
timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it
was required to file with Regulatory Authorities (except, in
the case of state securities authorities, failures to file
which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on American Federal).
As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all
applicable Laws. As of its respective date, each such report
and document did not, in all material respects, 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.
5.18 Statements True and Correct. No statement,
certificate, instrument, or other writing furnished or to be
furnished by any American Federal Company or any Affiliate
thereof to CCB pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains
or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to
be supplied by any American Federal Company or any Affiliate
thereof for inclusion in the Registration Statement to be
filed by CCB with the SEC will, when the Registration
Statement becomes effective, be false or misleading with
respect to any material fact, or omit to state any material
fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any
American Federal Company or any Affiliate thereof for
inclusion in the Joint Proxy Statement to be mailed to each
Party's shareholders in connection with the Shareholders'
Meetings, and any other documents to be filed by any American
Federal Company or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of American
Federal and CCB, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meetings,
be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meetings. All
documents that any American Federal Company or any Affiliate
thereof is responsible for filing with any Regulatory
Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with
the provisions of applicable Law.
5.19 Accounting, Tax, and Regulatory Matters. No
American Federal Company or any Affiliate thereof has taken or
agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the
Merger from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or
(ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) or result
in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
5.20 State Takeover Laws. Each American Federal
Company has taken all necessary action to exempt the
transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination,"
"control share," or other anti-takeover Laws (collectively,
"Takeover Laws").
5.21 Charter Provisions. Each American Federal
Company has taken all action so that the entering into of this
Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any Person under the
certificate or articles of incorporation, bylaws, or other
governing instruments of any American Federal Company or
restrict or impair the ability of CCB or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any American Federal
Company that may be directly or indirectly acquired or
controlled by them.
5.22 Derivatives Contracts. Neither American Federal
nor any of its Subsidiaries is a party to or has agreed to
enter into an exchange-traded or over-the-counter swap,
forward, future, option, cap, floor, or collar financial
contract, or any other interest rate or foreign currency
protection contract not included on its balance sheet which is
a financial derivative contract (including various
combinations thereof) (each a "Derivatives Contract").
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CCB
Except as disclosed in the CCB Disclosure
Memorandum, CCB hereby represents and warrants to American
Federal as follows:
6.1 Organization, Standing, and Power. CCB is a
corporation duly organized, validly existing, and in good
standing under the Laws of the State of North Carolina, and
has the corporate power and authority to carry on its business
as now conducted and to own, lease and operate its material
Assets. CCB is duly qualified or licensed to transact
business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on CCB.
6.2 Authority; No Breach By Agreement.
(a) CCB has the corporate power and authority
necessary to execute, deliver, and perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance
of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in
respect thereof on the part of CCB, subject to the approval of
the (i) issuance of the shares of CCB Common Stock and the
attached CCB Rights pursuant to the Merger and (ii) the
increase in the authorized CCB Preferred Stock as contemplated
by Section 8.15 by a majority of the votes (cast in the case
of proposal (i) and entitled to vote in the case of proposal
(ii)) at the CCB Shareholders' Meeting (assuming for such
purpose that the votes cast in respect of such proposal
represent a majority of the outstanding CCB Common Stock),
which is the only shareholder vote required for approval of
such proposals by CCB. Subject to such requisite shareholder
approval, this Agreement represents a legal, valid, and
binding obligation of CCB, enforceable against CCB in
accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which
any proceeding may be brought).
(b) Neither the execution and delivery of this
Agreement by CCB, nor the consummation by CCB of the
transactions contemplated hereby, nor compliance by CCB with
any of the provisions hereof, will (i) conflict with or result
in a breach of any provision of CCB's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result
in the creation of any Lien on any Asset of any CCB Company
under, any Contract or Permit of any CCB Company, where such
Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CCB, or, (iii) subject to receipt
of the requisite Consents referred to in Section 9.1(b),
constitute or result in a Default under, or require any
Consent pursuant to, any Law or Order applicable to any CCB
Company or any of their respective material Assets.
(c) Other than in connection or compliance
with the provisions of the Securities Laws, applicable state
corporate and securities Laws, and rules of the NYSE, and
other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with
respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if
not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
CCB, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by CCB of the
Merger and the other transactions contemplated in this
Agreement.
6.3 Capital Stock.
(a) The authorized CCB Capital Stock consists
of (i) 50,000,000 shares of CCB Common Stock, of which
15,762,851 shares were issued and outstanding as of
January 31, 1997, and (ii) 5,000,000 shares of CCB Preferred
Stock, of which no shares are issued and outstanding as of the
date of this Agreement. All of the issued and outstanding
shares of CCB Capital Stock are, and all of the shares of CCB
Common Stock to be issued in exchange for shares of American
Federal Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will
be, duly and validly issued and outstanding and fully paid and
nonassessable under the NCBCA. None of the outstanding shares
of CCB Capital Stock has been, and none of the shares of CCB
Common Stock to be issued in exchange for shares of American
Federal Common Stock upon consummation of the Merger will be,
issued in violation of any preemptive rights of the current or
past shareholders of CCB. CCB has reserved 769,054 shares of
CCB Common Stock for issuance under the CCB Stock Plans,
pursuant to which options to purchase not more than
291,792 shares of CCB Common Stock are outstanding.
(b) Except as set forth in Section 6.3(a), or
as provided in the CCB Stock Option Agreement or pursuant to
the CCB Dividend Reinvestment and Stock Purchase Plan or the
CCB Rights Agreement, there are no shares of capital stock or
other equity securities of CCB outstanding and no outstanding
Equity Rights relating to the CCB Capital Stock.
6.4 CCB Subsidiaries. CCB or one of its
Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each CCB
Subsidiary. No capital stock (or other equity interest) of
any CCB Subsidiary is or may become required to be issued
(other than to another CCB Company) by reason of any Equity
Rights, and there are no Contracts by which any CCB Subsidiary
is bound to issue (other than to another CCB Company)
additional shares of its capital stock (or other equity
interests) or Equity Rights or by which any CCB Company is or
may be bound to transfer any shares of the capital stock (or
other equity interests) of any CCB Subsidiary (other than to
another CCB Company). There are no Contracts relating to the
rights of any CCB Company to vote or to dispose of any shares
of the capital stock (or other equity interests) of any CCB
Subsidiary. All of the shares of capital stock (or other
equity interests) of each CCB Subsidiary held by a CCB Company
are fully paid and (except pursuant to N.C. Gen. Stat. 53-42
and comparable, applicable state Law, if any, in the case of
state depository institutions) nonassessable under the
applicable Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the CCB Company
free and clear of any Lien. Each CCB Subsidiary is either a
bank, an interim federal savings bank (in the case of American
Federal Interim Bank upon its formation) or a corporation, and
is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which
it is incorporated or organized, and has the corporate power
and authority necessary for it to own, lease, and operate its
Assets and to carry on its business as now conducted. Each
CCB Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where
the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on CCB. Each CCB
Subsidiary that is a depository institution is an "insured
institution" as defined in the Federal Deposit Insurance Act
and applicable regulations thereunder, and the deposits in
which are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund.
6.5 SEC Filings; Financial Statements.
(a) CCB has timely filed and made available to
American Federal all SEC Documents required to be filed by CCB
since December 31, 1993 (the "CCB SEC Reports"). The CCB SEC
Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities
Laws and other applicable Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such
CCB SEC Reports or necessary in order to make the statements
in such CCB SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for CCB
Subsidiaries that are registered as a broker, dealer, or
investment advisor, no CCB Subsidiary is required to file any
SEC Documents.
(b) Each of the CCB Financial Statements
(including, in each case, any related notes) contained in the
CCB SEC Reports, including any CCB SEC Reports filed after the
date of this Agreement until the Effective Time, complied as
to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was
prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the
SEC), and fairly presented in all material respects the
consolidated financial position of CCB and its Subsidiaries as
at the respective dates and the consolidated results of
operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which
were not or, the Knowledge of CCB, are not expected to be
material in amount or effect.
6.6 Absence of Undisclosed Liabilities. No CCB
Company has any Liabilities that are reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on CCB, except Liabilities which are accrued or
reserved against in the consolidated balance sheet of CCB as
of September 30, 1996, included in the CCB Financial
Statements delivered prior to the date of this Agreement or
reflected in the notes thereto. No CCB Company has incurred
or paid any Liability since September 30, 1996, except for
such Liabilities incurred or paid (i) in the ordinary course
of business consistent with past business practice and which
are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CCB or (ii) in
connection with the transactions contemplated by this
Agreement.
6.7 Absence of Certain Changes or Events. Since
September 30, 1996, except as disclosed in the CCB Financial
Statements delivered prior to the date of this Agreement,
(i) there have been no events, changes, or occurrences which
have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on CCB, and (ii) the
CCB Companies have not taken any action (other than in
connection with the acquisition of Salem Trust Company), or
failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of
this Agreement, would represent or result in a material breach
or violation of any of the covenants and agreements of CCB
provided in Article 7.
6.8 Tax Matters.
(a) All Tax Returns required to be filed by or
on behalf of any of the CCB Companies have been timely filed
or requests for extensions have been timely filed, granted,
and have not expired for periods ended on or before
December 31, 1995, and on or before the date of the most
recent fiscal year end immediately preceding the Effective
Time, and all Tax Returns filed are complete and accurate in
all material respects to the Knowledge of CCB. All material
Taxes due have been paid except those contested in good faith
and for which reserves have been made and reflected in the CCB
Financial Statements. As of the date of this Agreement, there
is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that is reasonably likely to result in a
determination that would have, individually or in the
aggregate, a Material Adverse Effect on CCB, except as
reserved against in the CCB Financial Statements delivered
prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the CCB Companies has executed an
extension or waiver of any statute of limitations on the
assessment or collection of any Tax due (excluding such
statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) The provision for any Taxes due or to
become due for any of the CCB Companies for the period or
periods through and including the date of the respective CCB
Financial Statements that has been made and is reflected on
such CCB Financial Statements is sufficient to cover all such
Taxes.
(d) Deferred Taxes of the CCB Companies have
been provided for in accordance with GAAP.
(e) None of the CCB Companies has been a
member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of
which was CCB) has any Liability for Taxes of any Person
(other than CCB and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law) as a transferee or successor or
by Contract or otherwise.
6.9 Allowance for Possible Loan Losses. In the
opinion of management of CCB, the Allowance shown on the
consolidated balance sheet of CCB included in the most recent
CCB Financial Statements dated prior to the date of this
Agreement was, and the Allowance shown on the consolidated
balance sheets of CCB included in the CCB Financial Statements
as of dates subsequent to the execution of this Agreement will
be, as of the dates thereof, adequate (within the meaning of
GAAP and applicable regulatory requirements or guidelines) to
provide for all known or reasonably anticipated losses
relating to or inherent in the loan and lease portfolios
(including accrued interest receivables) of the CCB Companies
and other extensions of credit (including letters of credit
and commitments to make loans or extend credit) by the CCB
Companies as of the dates thereof, except where the failure of
such Allowance to be so adequate is not reasonably likely to
have a Material Adverse Effect on CCB.
6.10 Environmental Matters.
(a) To the Knowledge of CCB, each CCB Company,
its Participation Facilities, and its Operating Properties
are, and have been, in compliance with all Environmental Laws
and are not subject to Liabilities under Environmental Laws,
except for violations and Liabilities which are not reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on CCB.
(b) There is no Litigation pending or, to the
Knowledge of CCB, threatened before any court, governmental
agency, or authority or other forum in which any CCB Company
or any of its Operating Properties or Participation Facilities
(or CCB in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation,
may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or
(ii) relating to the release, discharge, spillage, or disposal
into the environment of any Hazardous Material, whether or not
occurring at, on, under, adjacent to, or affecting (or
potentially affecting) a site owned, leased, or operated by
any CCB Company or any of its Operating Properties or
Participation Facilities, except for such Litigation pending
or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
CCB, nor is there any reasonable basis for any Litigation of a
type described in this sentence, except such as is not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CCB.
(c) During the period of (i) any CCB Company's
ownership or operation of any of their respective current
properties, (ii) any CCB Company's participation in the
management of any Participation Facility, or (iii) any CCB
Company's holding of a security interest in an Operating
Property, there (1) have been no releases, discharges,
spillages, or disposals of Hazardous Material in, on, under,
adjacent to, or affecting (or potentially affecting) such
properties, (2) no Hazardous Materials have been generated,
treated, stored, or disposed of at, or transported to or from,
any Operating Property or Participation Facility of any CCB
Company at any time, except in compliance with the
Environmental Laws, (3) no friable asbestos containing
material is or has been in use, or is or has been stored, or
disposed of on or upon any Operating Property or Participation
Facility of any CCB Company, (4) no PCBs are or have been
located on or in any Operating Property or Participation
Facility of any CCB Company in any form or device, including,
without limitation, in the form of electrical transformers,
fluorescent light fixtures with ballasts, or cooling oils,
except in compliance with the Environmental Laws, and (5) no
underground storage tanks are or have been located on any
Operating Property or Participation Facility of any CCB
Company or were located on any Operating Property or
Participation Facility of any CCB Company and subsequently
removed or filled except in compliance with all Environmental
Laws, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
CCB. Prior to the period of (i) any CCB Company's ownership
or operation of any of their respective current properties,
(ii) any CCB Company's participation in the management of any
Participation Facility, or (iii) any CCB Company's holding of
a security interest in a Operating Property, to the Knowledge
of CCB, (1) there were no releases, discharges, spillages, or
disposals of Hazardous Material in, on, under, or affecting
any such property, Participation Facility or Operating
Property, (2) no Hazardous Materials were generated, treated,
stored, or disposed of at, or transported to or from, any
Operating Property or Participation Facility of any CCB
Company at any time, except in compliance with the
Environmental Laws, (3) no friable asbestos containing
material were used, stored, or disposed of on or upon any
Operating Property or Participation Facility of any CCB
Company, (4) no PCBs were located on or in any Operating
Property or Participation Facility of any CCB Company in any
form or device, including, without limitation, in the form of
electrical transformers, fluorescent light fixtures with
ballasts, or cooling oils, except in compliance with the
Environmental Laws, and (5) no underground storage tanks were
located on any Operating Property or Participation Facility of
any CCB Company and subsequently removed or filled except in
compliance with all Environmental Laws, except such as are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CCB.
6.11 Compliance with Laws. CCB is duly registered as
a bank holding company under the BHC Act. Each CCB Company is
in compliance in all material respects with all applicable
Laws and has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its
business as now conducted, except for those Permits the
absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
CCB, and there has occurred no Default under any such Permit,
other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
CCB. None of the CCB Companies:
(a) is in Default under its certificate or
articles of incorporation or bylaws (or other governing
instruments); or
(b) is in Default under any Orders applicable
to its business or employees conducting its business,
except for Defaults which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse
Effect on CCB; or
(c) since January 1, 1994, has received any
notification or communication from any agency or
department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting
that any CCB Company is not in compliance with any of the
Laws, Permits, or Orders which such governmental authority
or Regulatory Authority enforces or grants, where such
noncompliance is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on CCB,
(ii) threatening to revoke any Permits, the revocation of
which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on CCB, or
(iii) requiring any CCB Company to enter into or consent
to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management,
or the payment of dividends.
6.12 Employee Benefit Plans.
(a) CCB will deliver or make available to
American Federal copies in each case of all pension,
retirement, profit-sharing, supplemental retirement, deferred
compensation, stock appreciation right, stock option, employee
stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written or unwritten employee
programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans,
including "employee benefit plans" as that term is defined in
Section 3(3) of ERISA, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by any CCB
Company or ERISA Affiliate thereof for the benefit of current
or former officers or employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries and under which employees, retirees, dependents,
spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the
"CCB Benefit Plans"), including (i) all amendments thereto
adopted and effective since the most recent restatement
thereof, (ii) the most recent summary plan descriptions (and
any material modifications thereto). Any of the CCB Benefit
Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to
herein as a "CCB ERISA Plan." Each CCB ERISA Plan which is
also a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code) is referred to herein as a "CCB
Pension Plan." No CCB Pension Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) All CCB Benefit Plans and any related
trust, to the extent applicable, are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, any
other applicable Laws, and the written terms of such CCB
Benefit Plans, the breach or violation of which are reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on CCB. No CCB Company has received notice
from any governmental authority, including the Internal
Revenue Service, questioning or challenging such compliance.
Each CCB ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a
favorable determination letter from the Internal Revenue
Service, and CCB is not aware of any circumstances likely to
result in revocation of any such favorable determination
letter. To the Knowledge of CCB, no CCB Company has engaged
in a transaction with respect to any CCB Benefit Plan that,
assuming the taxable period of such transaction expired as of
the date hereof, would subject any CCB Company to a Tax
imposed by either Section 4975 of the Internal Revenue Code or
Section 502(i) of ERISA in amounts which are reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on CCB.
(c) No CCB Pension Plan has any "unfunded
current liability," as that term is defined in
Section 302(d)(8)(A) of ERISA, based on actuarial assumptions
set forth for such plan's most recent actuarial valuation.
Since the date of the most recent actuarial valuation, there
has been (i) no material change in the financial position of a
CCB Pension Plan, (ii) no change in the actuarial assumptions
with respect to any CCB Pension Plan, and (iii) no increase in
benefits under any CCB Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on CCB or materially adversely affect the
funding status of any such plan. Neither any CCB Pension Plan
nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained
by any CCB Company, or the single-employer plan of any ERISA
Affiliate has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, which is reasonably likely to have a
Material Adverse Effect on CCB. No CCB Company has provided,
or is required to provide, security to a CCB Pension Plan or
to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no Liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by any CCB
Company with respect to any ongoing, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a
Material Adverse Effect on CCB. No CCB Company has incurred
any withdrawal Liability with respect to a multiemployer plan
under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate), which Liability
is reasonably likely to have a Material Adverse Effect on CCB.
No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed
for any CCB Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
6.13 Legal Proceedings. There is no Litigation
instituted or pending, or, to the Knowledge of CCB, threatened
(or unasserted but considered probable of assertion and which
if asserted would have at least a reasonable probability of an
unfavorable outcome) against any CCB Company, any CCB Benefit
Plan (or related trust) or against any director, officer,
employee, or agent (in his or her capacity as an agent of a
CCB Company) of any CCB Company, or against any Asset,
interest, or right of any of them, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse
Effect on CCB, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators
outstanding against any CCB Company, that are reasonably
likely to have, individually or in the aggregate, a Material
Adverse Effect on CCB.
6.14 Reports. Since January 1, 1994, or the date of
organization if later, each CCB Company has filed all reports
and statements, together with any amendments required to be
made with respect thereto, that it was required to file with
Regulatory Authorities (except, in the case of state
securities authorities, failures to file which are not
reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on CCB). As of their respective
dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto,
complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did
not, in all material respects, 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.
6.15 Statements True and Correct. No statement,
certificate, instrument, or other writing furnished or to be
furnished by any CCB Company or any Affiliate thereof to
American Federal pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains
or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to
be supplied by any CCB Company or any Affiliate thereof for
inclusion in the Registration Statement to be filed by CCB
with the SEC, will, when the Registration Statement becomes
effective, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information
supplied or to be supplied by any CCB Company or any Affiliate
thereof for inclusion in the Joint Proxy Statement to be
mailed to each Party's shareholders in connection with the
Shareholders' Meetings, and any other documents to be filed by
any CCB Company or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Joint Proxy
Statement, when first mailed to the shareholders of American
Federal and CCB, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of
the Joint Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Shareholders' Meetings,
be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meetings. All
documents that any CCB Company or any Affiliate thereof is
responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions
of applicable Law.
6.16 Authority of American Federal Interim.
American Federal Interim is, or prior to the Effective Time
will be, an interim federal stock savings bank duly organized,
validly existing, and in good standing under the Laws of the
United States as a wholly-owned, first tier Subsidiary of CCB.
American Federal Interim has, or will have, the corporate
power and authority necessary to execute, deliver, and perform
its obligations under the Plan of Merger and to consummate the
transactions contemplated thereby. The execution, delivery,
and performance of the Plan of Merger and the consummation of
the transactions contemplated therein, including the Merger,
will be duly and validly authorized by all necessary corporate
action in respect thereof on the part of American Federal
Interim. When executed and delivered, the Plan of Merger will
represent a legal, valid, and binding obligation of American
Federal Interim, enforceable against American Federal Interim
in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of
specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be
brought).
6.17 Accounting, Tax, and Regulatory Matters. No CCB
Company or any Affiliate thereof has taken or agreed to take
any action or has any Knowledge of any fact or circumstance
that is reasonably likely to (i) prevent the Merger from
qualifying for pooling-of-interests accounting treatment or as
a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) materially impede or delay
receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) or result in the imposition of a condition
or restriction of the type referred to in the last sentence of
such Section.
6.18 Rights Agreement. Execution of this Agreement
and consummation of the Merger and the other transactions
contemplated by this Agreement, will not result in the grant
of any CCB Rights to any Person under the CCB Rights Agreement
(other than as contemplated by Section 3.1) or require the CCB
Rights to be exercised, distributed, or triggered. No "Stock
Acquisition Date" or "Flip-In Date" (as such terms are defined
in the CCB Rights Agreement) has occurred.
6.19 Derivatives Contracts. Neither CCB nor any of
its Subsidiaries is a party to or has agreed to enter into a
Derivatives Contract.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of American Federal. From
the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, unless the prior
written consent of CCB shall have been obtained, and except as
otherwise expressly contemplated herein, American Federal
shall and shall cause each of its Subsidiaries to (a) operate
its business only in the usual, regular, and ordinary course,
including with respect to loan underwriting and loan and
deposit pricing, (b) preserve intact its business organization
and Assets, use its reasonable efforts to retain the services
of its offices and key employees, and maintain its rights and
franchises, (c) take no action which would (i) materially
adversely affect the ability of any Party to obtain any
Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type
referred to in the last sentences of Section 9.1(b) or 9.1(c),
or (ii) materially adversely affect the ability of any Party
to perform its covenants and agreements under this Agreement,
and (d) consult with CCB prior to (i) approving a new loan
(which shall not include extensions or renewals of loans
outstanding or committed to as of the date of this Agreement)
in excess of 25% of American Federal's legal lending limit, or
(ii) purchasing (or otherwise acquiring), or selling (or
otherwise disposing of) any Asset with a cost or book value in
excess of $250,000.
7.2 Negative Covenants of American Federal. From
the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement, unless the prior
written consent of CCB shall have been obtained, and except as
otherwise expressly contemplated herein or in the Supplemental
Letter, American Federal covenants and agrees that it will not
do or agree or commit to do, or permit any of its Subsidiaries
to do or agree or commit to do, any of the following:
(a) amend the certificate or articles of
incorporation, bylaws, or other governing instruments of
any American Federal Company, or
(b) incur any additional debt obligation or
other obligation for borrowed money (other than
indebtedness of a American Federal Company to another
American Federal Company) in excess of an aggregate of
$250,000 (for the American Federal Companies on a
consolidated basis) except in its ordinary course of the
business consistent with past practices (which shall
include creation of deposit liabilities, purchases of
federal funds, advances from the Federal Reserve Bank or
Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency
securities); or
(c) repurchase, redeem, or otherwise acquire or
exchange (other than exchanges in the ordinary course
under American Federal Benefit Plans), directly or
indirectly, any shares, or any securities convertible into
any shares, of the capital stock of any American Federal
Company, or declare or pay any dividend or make any other
distribution in respect of American Federal Capital Stock,
provided that American Federal may (to the extent legally
and contractually permitted to do so), but shall not be
obligated to, declare and pay regular quarterly cash
dividends on the shares of American Federal Common Stock
at a rate not in excess of $.12 per share with usual and
regular record and payment dates in accordance with past
practice and such dates may not be changed without the
prior written consent of CCB, provided that any dividend
declared or payable on the shares of American Federal
Common Stock for the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon
in writing by CCB and American Federal, be declared with a
record date prior to the Effective Time only if the normal
record date for payment of the corresponding quarterly
dividend to holders of CCB Common Stock is before the
Effective Time; or
(d) except for this Agreement, or pursuant to
the exercise of stock options outstanding as of the date
hereof under the American Federal Stock Plans and pursuant
to the terms thereof in existence on the date hereof, or
pursuant to the American Federal Stock Option Agreement,
issue, sell, pledge, encumber, authorize the issuance of,
enter into any Contract to issue, sell, pledge, encumber,
or authorize the issuance of, or otherwise permit to
become outstanding, any shares of American Federal Capital
Stock or any other capital stock of any American Federal
Company, or any stock appreciation rights, or any option,
warrant, or other Equity Right; or
(e) adjust, split, combine, or reclassify any
capital stock of any American Federal Company or issue or
authorize the issuance of any Equity Rights or other
securities in respect of or in substitution for shares of
American Federal Common Stock, or sell, lease, mortgage,
or otherwise dispose of or otherwise encumber any shares
of capital stock of any American Federal Subsidiary
(unless any such shares of stock are sold or otherwise
transferred to another American Federal Company); or
(f) except for purchases of U.S. Treasury
securities or U.S. Government agency securities, which in
either case have maturities of five years or less,
purchase, agree to purchase or otherwise incur an
obligation to purchase any securities or make any material
investment, either by purchase of stock of securities,
contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly-owned
American Federal Subsidiary, or otherwise acquire direct
or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of
business, (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity, or
(iii) the creation of new wholly-owned Subsidiaries
organized to conduct or continue activities otherwise
permitted by this Agreement; or
(g) grant any increase in compensation or
benefits to the employees or officers of any American
Federal Company, except in accordance with past practice
or as required by Law; pay any retirement or pension
allowance not required by a American Federal Benefit Plan;
pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in
effect on the date of this Agreement; and enter into or
amend any severance agreements with officers of any
American Federal Company; grant any increase in fees or
other increases in compensation or other benefits to
directors of any American Federal Company; or voluntarily
accelerate the vesting of any stock options or other stock-
based compensation or employee benefits or other Equity
Rights; or
(h) enter into or amend any employment Contract
between any American Federal Company and any Person
(unless such amendment is required by Law) that the
American Federal Company does not have the unconditional
right to terminate without Liability (other than Liability
for services already rendered), at any time on or after
the Effective Time; or
(i) adopt any new employee benefit plan of any
American Federal Company or terminate or withdraw from, or
amend, any American Federal Benefit Plan other than any
such change that is required by Law or that, in the
opinion of counsel, is necessary or advisable to maintain
the Tax qualified status of any such plan, or make any
distributions from any American Federal Benefit Plan,
except as required by Law, the terms of such American
Federal Benefit Plan or consistent with past practice; or
(j) make any change in any Tax or accounting
methods or systems of internal accounting controls, except
as may be appropriate to conform to changes in Tax Laws or
regulatory accounting requirements or GAAP; or
(k) commence any Litigation other than in
accordance with past practice, settle any Litigation
involving any Liability of any American Federal Company
for material money damages or restrictions upon the
operations of any American Federal Company; or
(l) except in the ordinary course of business,
enter into, modify, amend, or terminate any material
Contract or waive, release, compromise, or assign any
material rights or claims.
7.3 Covenants of CCB. From the date of this
Agreement until the earlier of the Effective Time or the
termination of this Agreement, unless the prior written
consent of American Federal shall have been obtained, and
except as otherwise expressly contemplated herein, CCB
covenants and agrees that it shall (a) continue to conduct its
business and the business of its Subsidiaries in a manner
designed in its reasonable judgment, to enhance the long-term
value of the CCB Common Stock and the business prospects of
the CCB Companies and to the extent consistent therewith use
all reasonable efforts to preserve intact the CCB Companies'
core businesses and goodwill with their respective employees
and the communities they serve, and (b) take no action which
would (i) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentences of
Section 9.1(b) or 9.1(c), (ii) materially adversely affect the
ability of any Party to perform its covenants and agreements
under this Agreement, or (iii) except (1) for this Agreement,
(2) pursuant to the exercise of stock options outstanding as
of the date hereof under the CCB Stock Plans, (3) pursuant to
the CCB Stock Option Agreement, (4) pursuant to the CCB Rights
Agreement, (5) in connection with the issuance of stock
options or grants under the CCB Stock Plans to employees of
CCB in accordance with past practice, or (6) pursuant to
acquisitions of depository or nondepository institutions where
the effective date of the consummation of such transactions
occurs subsequent to the Preferred Stock Record Date, issue,
sell, pledge, encumber, authorize the issuance of, enter into
any Contract to issue, sell, pledge, encumber, or authorize
the issuance of, or otherwise permit to become outstanding,
any shares of CCB Capital Stock or any other capital stock of
any CCB Company, or any stock appreciation rights or any
option, warrant, or other Equity Right. CCB further covenants
and agrees that it will not, without the prior written consent
of American Federal, which consent shall not be unreasonably
withheld, amend the Articles of Incorporation or Bylaws of CCB
in any manner adverse to the holders of American Federal
Common Stock as compared to rights of holders of CCB Common
Stock generally as of the date of this Agreement.
7.4 Adverse Changes in Condition. Each Party agrees
to give written notice promptly to the other Party upon
becoming aware of the occurrence or impending occurrence of
any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have a material
adverse affect on any of the business, financial condition or
results of operations of such Party, and (ii) would cause or
constitute a material breach of any of its representations,
warranties, agreements, or covenants contained herein, and to
use its reasonable efforts to prevent or promptly to remedy
the same.
7.5 Reports. Each Party and its Subsidiaries shall
file all reports required to be filed by it with Regulatory
Authorities between the date of this Agreement and the
Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If
financial statements are contained in any such reports filed
with the SEC or the OTS, as applicable, such financial
statements will fairly present the consolidated financial
position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes
in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments
that are not material). As of their respective dates, such
reports filed with the SEC or the OTS will comply in all
material respects with the Securities Laws and will not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Any financial statements contained in any other reports to
another Regulatory Authority shall be prepared in accordance
with Laws applicable to such reports. Each Party further
agrees to provide the other Party monthly financial
information in a form reasonably requested by the other Party.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Joint Proxy Statement;
Shareholder Approval. As soon as reasonably practicable after
execution of this Agreement, CCB shall prepare and file the
Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to
become effective under the 1933 Act and take any action
required to be taken under the applicable state Blue Sky or
securities Laws in connection with the issuance of the shares
of CCB Common Stock upon consummation of the Merger. American
Federal shall cooperate in the preparation and filing of the
Registration Statement and shall furnish all information
concerning it and the holders of American Federal Capital
Stock as CCB may reasonably request in connection with such
action. American Federal shall call a Shareholders' Meeting,
to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for
the purpose of voting upon approval of this Agreement and the
Plan of Merger and such other related matters as it deems
appropriate. CCB shall call a Shareholders' Meeting, to be
held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of
voting upon the issuance of shares of CCB Common Stock
pursuant to the Merger and such other related matters as it
deems appropriate. In connection with the Shareholders'
Meetings, (i) American Federal and CCB shall prepare and file
with the SEC a Joint Proxy Statement and mail such Joint Proxy
Statement to their respective shareholders, (ii) the Parties
shall furnish to each other all information concerning them
that they may reasonably request in connection with such Joint
Proxy Statement, (iii) the Boards of Directors of American
Federal and CCB shall recommend to their respective
shareholders the approval of the matters submitted for
approval (subject to the Board of Directors of American
Federal, after having consulted with and considered the advice
of outside counsel, reasonably determining in good faith that
the making of such recommendation, or the failure to withdraw
or modify its recommendation, would constitute a breach of
fiduciary duties of the members of such Board of Directors to
American Federal's shareholders under applicable Law), and
(iv) the Boards of Directors and officers of American Federal
and CCB shall use their reasonable efforts to obtain such
shareholders' approval (subject to the Board of Directors of
American Federal, after having consulted with and considered
the advice of outside counsel, reasonably determining in good
faith that the taking of such actions would constitute a
breach of fiduciary duties of the members of such Board of
Directors to American Federal's shareholders under applicable
Law). CCB and American Federal shall make all necessary
filings with respect to the Merger under the Securities Laws.
8.2 Exchange Listing. CCB shall use its reasonable
efforts to list, prior to the Effective Time, on the NYSE,
subject to official notice of issuance, the shares of CCB
Common Stock and the CCB Rights attached thereto to be issued
to the holders of American Federal Common Stock pursuant to
the Merger, and CCB shall give all notices and make all
filings with the NYSE required in connection with the
transactions contemplated herein.
8.3 Application. CCB shall promptly prepare and
file, and American Federal shall cooperate in the preparation
and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions
contemplated by this Agreement. The Parties shall deliver to
each other copies of all filings, correspondence, and orders
to and from all Regulatory Authorities in connection with the
transactions contemplated hereby.
8.4 Filings with the OTS. Upon the terms and
subject to the conditions of this Agreement, American Federal
shall execute and CCB shall file the Articles of Combination
with the OTS in connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject
to the terms and conditions of this Agreement, each Party
agrees to use, and to cause its Subsidiaries to use, its
reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper,
or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable after the date of
this Agreement, the transactions contemplated by this
Agreement, including using its reasonable efforts to lift or
rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause
to be satisfied the conditions referred to in Article 9;
provided, that nothing herein shall preclude either Party from
exercising its rights under this Agreement or the Stock Option
Agreements. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party
shall keep the other Party advised of all material
developments relevant to its business and to consummation of
the Merger and shall permit the other Party to make or cause
to be made such investigation of the business, operations, and
Assets of it and its Subsidiaries and of their respective
financial and legal conditions as the other Party reasonably
requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No
investigation by a Party shall affect the representations and
warranties of the other Party.
(b) Each Party shall, and shall cause its
advisers and agents to, maintain the confidentiality of all
confidential information furnished to it by the other Party
concerning its and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for
any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is
terminated prior to the Effective Time, each Party shall
promptly return or certify the destruction of all documents
and copies thereof, and all work papers containing
confidential information received from the other Party.
(c) Each Party agrees to give the other Party
notice as soon as practicable after any determination by it of
any fact or occurrence relating to the other Party which it
has discovered through the course of its investigation and
which represents, or is reasonably likely to represent, either
a material breach of any representation, warranty, covenant,
or agreement of the other Party or which has had or is
reasonably likely to have a Material Adverse Effect on the
other Party.
8.7 Press Releases. Prior to the Effective Time,
American Federal and CCB shall consult with each other as to
the form and substance of any press release or other public
disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in
this Section 8.7 shall be deemed to prohibit any Party from
making any disclosure which its counsel deems necessary or
advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this
Agreement and the transactions contemplated hereby, no
American Federal Company nor any Affiliate thereof nor any
Representatives thereof retained by any American Federal
Company shall directly or indirectly solicit any Acquisition
Proposal by any Person. Except to the extent the Board of
Directors of American Federal, after having consulted with and
considered the advice of outside counsel, reasonably
determines in good faith that the failure to take such actions
would constitute a breach of fiduciary duties of the members
of such Board of Directors to American Federal's shareholder
under applicable law, no American Federal Company or any
Affiliate or Representative thereof shall furnish any non-
public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any Contract
with respect to, any Acquisition Proposal, but American
Federal may communicate information about such an Acquisition
Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal
obligations as advised by outside counsel. American Federal
shall promptly advise CCB following the receipt of any
Acquisition Proposal and the details thereof, and advise CCB
of any developments with respect to such Acquisition Proposal
promptly upon the occurrence thereof. American Federal shall
(i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons
conducted heretofore with respect to any of the foregoing, and
(ii) direct and use its reasonable efforts to cause all of its
Affiliates and Representatives not to engage in any of the
foregoing.
8.9 Accounting and Tax Treatment. Each of the
Parties undertakes and agrees to use its reasonable efforts to
cause the Merger, and to take no action which would cause the
Merger not, to qualify for treatment as a pooling of interests
for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for
federal income Tax purposes.
8.10 State Takeover Laws. Each American Federal
Company shall take all necessary steps to exempt the
transactions contemplated by this Agreement from, or if
necessary to challenge the validity or applicability of, any
applicable Takeover Law.
8.11 Charter Provisions. Each American Federal
Company shall take all necessary action to ensure that the
entering into of this Agreement and the American Federal Stock
Option Agreement, and the consummation of the Merger and the
other transactions contemplated hereby and thereby do not and
will not result in the grant of any rights to any Person under
the certificate or articles of incorporation, bylaws, or other
governing instruments of any American Federal Company or
restrict or impair the ability of CCB or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of any American Federal
Company that may be directly or indirectly acquired or
controlled by them.
8.12 Agreement of Affiliates. American Federal will
disclose in the American Federal Disclosure Memorandum all
Persons whom it reasonably believes is an "affiliate" of
American Federal for purposes of Rule 145 under the 1933 Act.
American Federal shall use its reasonable efforts to cause
each such Person to deliver to CCB not later than 30 days
prior to the Effective Time, an Affiliate Agreement providing
that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of American Federal Common Stock held by
such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of CCB Common Stock to be
received by such Person upon consummation of the Merger except
in compliance with applicable provisions of the 1933 Act and
the rules and regulations thereunder and, if the Merger is
accounted for by the pooling-of-interests method of
accounting, until such time as financial results covering at
least 30 days of combined operations of CCB and American
Federal have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial
Reporting Policies. If the Merger is accounted for using the
pooling-of-interests method of accounting, shares of CCB
Common Stock issued to such affiliates of American Federal in
exchange for shares of American Federal Common Stock shall not
be transferable until such time as financial results covering
at least 30 days of combined operations of CCB and American
Federal have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate
has provided the Affiliate Agreement (and CCB shall be
entitled to place restrictive legends upon certificates for
shares of CCB Common Stock issued to affiliates of American
Federal pursuant to this Agreement to enforce the provisions
of this Section 8.12). CCB shall not be required to maintain
the effectiveness of the Registration Statement under the 1933
Act for the purposes of resale of CCB Common Stock by such
affiliates.
8.13 Employee Benefits and Contracts. Following the
Effective Time, CCB shall provide generally to officers and
employees of the American Federal Companies employee benefits
under employee benefit, welfare, and severance plans, on terms
and conditions which when taken as a whole are substantially
similar to those currently provided by the CCB Companies to
their similarly situated officers and employees. For purposes
of participation, vesting, and (except in the case of CCB
retirement plans and the CCB Retiree Medical Plan) benefit
accrual under CCB's employee benefit plans, the service of the
employees of the American Federal Companies prior to the
Effective Time shall be treated as service with a CCB Company
participating in such employee benefit plans. Except as
provided in the Supplemental Letter, CCB also shall cause the
Surviving Association and its Subsidiaries to honor in
accordance with their terms all employment, severance,
consulting, and other compensation Contracts between any
American Federal Company and any current or former director,
officer, or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the
Effective Time under the American Federal Benefit Plans.
8.14 Indemnification.
(a) CCB shall, and shall cause the Surviving
Association to, indemnify, defend, and hold harmless the
present and former directors, officers, employees, and agents
of the American Federal Companies (each, an "Indemnified
Party") against all Liabilities arising out of actions or
omissions arising out of the Indemnified Party's service or
services as directors, officers, employees, or agents of
American Federal or, at American Federal's request, of another
corporation, partnership, joint venture, trust, or other
enterprise occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement) to
the fullest extent permitted under the HOLA and regulations of
the OTS and by American Federal's Charter and Bylaws as in
effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any Litigation
and whether or not any CCB Company is insured against any such
matter. Without limiting the foregoing, in any case in which
approval by the Surviving Association is required to
effectuate any indemnification, the Surviving Association
shall direct, at the election of the Indemnified Party, that
the determination of any such approval shall be made by
independent counsel mutually agreed upon between CCB and the
Indemnified Party.
(b) CCB shall, or shall cause the Surviving
Association to, use its reasonable efforts (and American
Federal shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of three years
after the Effective Time American Federal's existing
directors' and officers' liability insurance policy (provided
that CCB may substitute therefor (i) policies of at least the
same coverage and amounts containing terms and conditions
which are substantially no less advantageous or (ii) with the
consent of American Federal given prior to the Effective Time,
any other policy) with respect to claims arising from facts or
events which occurred prior to the Effective Time and covering
persons who are currently covered by such insurance; provided,
that neither CCB nor the Surviving Association shall be
obligated to make annual premium payments for such three-year
period in respect of such policy (or coverage replacing such
policy) which exceed, for the portion related to American
Federal's directors and officers, 150% of the annual premium
payments on American Federal's current policy in effect as of
the date of this Agreement (the "Maximum Amount"). If the
amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, CCB shall use
its reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.14, upon
learning of any such Liability or Litigation, shall promptly
notify CCB thereof. In the event of any such Litigation
(whether arising before or after the Effective Time), (i) CCB
or the Surviving Association shall have the right to assume
the defense thereof and neither CCB nor the Surviving
Association shall be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if CCB or the
Surviving Association elects not to assume such defense or
counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between
CCB or the Surviving Association and the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to
them, and CCB or the Surviving Association shall pay all
reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are
received; provided, that CCB and the Surviving Association
shall be obligated pursuant to this paragraph (c) to pay for
only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in
the defense of any such Litigation, and (iii) neither CCB nor
the Surviving Association shall be liable for any settlement
effected without its prior written consent; and provided
further that neither CCB nor the Surviving Association shall
have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall determine, and
such determination shall have become final, that the
indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law.
(d) If CCB or the Surviving Association or any
successors or assigns shall consolidate with or merge into any
other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all
or substantially all of its assets to any Person, then and in
each case, proper provision shall be made so that the
successors and assigns of CCB or the Surviving Association
shall assume the obligations set forth in this Section 8.14.
(e) The provisions of this Section 8.14 are
intended to be for the benefit of and shall be enforceable by,
each Indemnified Party and their respective heirs and
representatives.
8.15 Distribution of Preferred Stock. As soon as
reasonably practicable following the Effective Time, CCB,
consistent with the 1934 Act and the NCBCA and the rules of
the NYSE, shall take all action necessary to distribute, and
shall distribute, the New Preferred Stock to holders of record
of CCB Common Stock (irrespective for such purpose of whether
a former holder of American Federal Common Stock has exchanged
such holder's Certificates representing American Federal
Common Stock for certificates representing CCB Common Stock
pursuant to Article 4) at a time and date immediately
following the Effective Time (the "Preferred Stock Record
Date") as agreed upon by the Parties prior to the Closing;
provided, however, that CCB shall be under no obligation to
implement the provisions of this Section 8.15 to the extent
that the distribution of the New Preferred Stock would prevent
the Merger from qualifying for pooling-of-interests accounting
treatment or as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. In connection
with the matters contemplated by this Section 8.15, CCB shall
(i) solicit approval of the CCB shareholders at the CCB
Shareholders' Meeting of an appropriate increase in the
authorized CCB Preferred Stock so as to permit the issuance of
one share of the New Preferred Stock for each share of CCB
Common Stock issued and outstanding on the Preferred Stock
Record Date, (ii) implement such other measures with respect
to such proposal at the Shareholders' Meeting as set forth in
Section 8.1, and (iii) designate such terms of the New
Preferred Stock as are mutually acceptable to the Parties, but
which shall generally provide for the redemption of such
shares of the New Preferred Stock upon receipt by CCB of any
cash payment in respect of a final, nonappealable judgment in,
or final settlement of, the Goodwill Litigation after
deduction of (i) the aggregate expenses incurred by CCB after
the Effective Time in prosecuting the Goodwill Litigation,
(ii) any income Tax liability incurred by CCB as a result of
the payment of the Goodwill Litigation recovery, and (iii) the
expenses incurred by CCB in connection with the creation,
issuance, and trading of the New Preferred Stock.
8.16 Goodwill Litigation. Following the Effective
Time, CCB shall, and shall cause the Surviving Association
(and, subject to clause (iii) hereof, any permitted successor
to the Surviving Association), as applicable, to, (i) take all
actions necessary or desirable to diligently and vigorously
pursue American Federal's claims in the Goodwill Litigation,
(ii) file with applicable Regulatory Authorities such periodic
and other reports as are necessary to furnish and update
information to holders of the New Preferred Stock,
(iii) refrain from taking any action that would violate the
requirements of Title 31, United States Code, Section 3727,
including, without limitation, any action that would cause an
"assignment" (as defined therein) of the claims in the
Goodwill Litigation, and (iv) refrain from taking any action
to dismiss, settle, compromise, or otherwise cease prosecution
of the Goodwill Litigation on terms that do not result solely
in the payment of cash or other readily monetizable
consideration by or on behalf of the United States to the
Surviving Association.
8.17 Assumption of Agreement. CCB agrees that it
shall be a specific, absolute, and unconditional condition
precedent to (i) CCB entering into any binding or nonbinding
agreement, letter of intent, memorandum of understanding, or
similar instrument providing for an Acquisition Proposal or
(ii) the Board of Directors of CCB making a favorable
recommendation with respect to an Acquisition Proposal, that
the third party making the Acquisition Proposal expressly
agrees to assume CCB's obligations under this Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to perform this Agreement
and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant
to Section 11.6:
(a) Shareholder Approval. The shareholders of
American Federal shall have approved this Agreement and
the Plan of Merger, and the consummation of the
transactions contemplated hereby and thereby, including
the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules
of the NYSE. The shareholders of CCB shall have approved
the issuance of shares of CCB Common Stock pursuant to the
Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules
of the NYSE.
(b) Regulatory Approvals. All Consents of,
filings and registrations with, and notifications to, all
Regulatory Authorities required for consummation of the
Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by
Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or
restricted in a manner (including requirements relating to
the disposition of either Assets or deposit Liabilities)
which in the reasonable judgment of the Board of Directors
of either Party would so materially adversely impact the
economic or business assumptions of the transactions
contemplated by this Agreement that, had such condition or
requirement been known, such Party would not, in its
reasonable judgment, have entered into this Agreement;
provided, that CCB has used its reasonable efforts to
cause such conditions or restrictions to be removed or
modified as appropriate, and; provided, further, that
notwithstanding the foregoing, in the event that such
Consent is conditioned or restricted as a result of a
regulatory or legal issue resulting from other
acquisitions by the CCB Companies, whether announced
before or after the date of this Agreement, or otherwise
unrelated to American Federal, CCB shall not be entitled
to refuse to consummate the Merger on the basis set forth
in this sentence.
(c) Consents and Approvals. Each Party shall
have obtained any and all Consents required for
consummation of the Merger (other than those referred to
in Section 9.1(b)) or for the preventing of any Default
under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have,
individually or in the aggregate, a Material Adverse
Effect on such Party.
(d) Legal Proceedings. No court, Regulatory
Authority, or other governmental authority of competent
jurisdiction shall have enacted, issued, promulgated,
enforced, or entered any Law or Order (whether temporary,
preliminary or permanent) or taken any other action which
prohibits, restricts, or makes illegal consummation of the
transactions contemplated by this Agreement.
(e) Registration Statement. The Registration
Statement shall be effective under the 1933 Act, no stop
orders suspending the effectiveness of the Registration
Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to
the issuance or trading of the shares of CCB Common Stock
and attached CCB Rights issuable pursuant to the Merger
shall have been received.
(f) Exchange Listing. The shares of CCB Common
Stock issuable pursuant to the Merger shall have been
approved for listing on the NYSE, subject to official
notice of issuance.
(g) Pooling Letters. CCB shall have received a
letter, dated as of the date of filing of the Registration
Statement with the SEC and as of the Effective Time,
addressed to CCB and copied to American Federal, in form
and substance reasonably acceptable to CCB, from KPMG Peat
Marwick LLP to the effect that the Merger and the
transactions contemplated by this Agreement (including as
applicable the issuance of the New Preferred Stock) will
qualify for pooling-of-interests accounting treatment.
(h) Tax Matters. Each Party shall have
received a written opinion of KPMG Peat Marwick LLP in
form reasonably satisfactory to such Parties (the "Tax
Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, (ii) the
exchange in the Merger of American Federal Common Stock
for CCB Common Stock and attached CCB Rights will not give
rise to gain or loss to the shareholders of American
Federal with respect to such exchange (except to the
extent of any cash received), and (iii) none of American
Federal, American Federal Interim, or CCB will recognize
gain or loss as a consequence of the Merger (except for
amounts resulting from any required change in accounting
methods and any income and deferred gain recognized
pursuant to Treasury regulations issued under Section 1502
of the Internal Revenue Code). In rendering such Tax
Opinion, KPMG Peat Marwick LLP shall be entitled to rely
upon representations of officers of American Federal and
CCB reasonably satisfactory in form and substance to KPMG
Peat Marwick LLP.
9.2 Conditions to Obligations of CCB. The
obligations of CCB to perform this Agreement and consummate
the Merger and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions,
unless waived by CCB pursuant to Section 11.6(a):
(a) Representations and Warranties. For
purposes of this Section 9.2(a), the accuracy of the
representations and warranties of American Federal set
forth in this Agreement shall be assessed as of the date
of this Agreement and as of the Effective Time with the
same effect as though all such representations and
warranties had been made on and as of the Effective Time
(provided that representations and warranties which are
confined to a specified date shall speak only as of such
date). The representations and warranties set forth in
Section 5.3 shall be true and correct (except for
inaccuracies which are de minimis in amount). The
representations and warranties set forth in Sections 5.19,
5.20, and 5.21 shall be true and correct in all material
respects. There shall not exist inaccuracies in the
representations and warranties of American Federal set
forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.19, 5.20, and
5.21) such that the aggregate effect of such inaccuracies
has, or is reasonably likely to have, a Material Adverse
Effect on American Federal; provided that, for purposes of
this sentence only, those representations and warranties
which are qualified by references to "material" or
"Material Adverse Effect" or to the "Knowledge" of any
Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of American
Federal to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed
and complied with in all material respects.
(c) Certificates. American Federal shall have
delivered to CCB (i) a certificate, dated as of the
Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as
relates to American Federal and in Sections 9.2(a) and
9.2(b) have been satisfied, and (ii) certified copies of
resolutions duly adopted by American Federal's Board of
Directors and shareholders evidencing the taking of all
corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, the American
Federal Stock Option Agreement, and the Plan of Merger, as
appropriate, and the consummation of the Merger and the
other transactions contemplated hereby and thereby, all in
such reasonable detail as CCB and its counsel shall
request.
(d) Affiliates Agreements. CCB shall have
received from each affiliate of American Federal the
Affiliate Agreement, to the extent necessary to assure in
the reasonable judgment of CCB that the Merger will
qualify for pooling-of-interests accounting treatment.
(e) Fairness Opinion. CCB shall have received
a letter from Merrill Lynch, Inc. or another financial
adviser selected by CCB dated not more than five days
prior to the date of the Joint Proxy Statement, to the
effect that in the opinion of such firm, the Exchange
Ratio is fair to the shareholders of CCB from a financial
point of view.
(f) Opinion of Counsel. CCB shall have
received an opinion of Alston & Bird, counsel to American
Federal, dated as of the Effective Time, covering such
matters as are typically covered in transactions of this
nature and in a form reasonably acceptable to CCB.
9.3 Conditions to Obligations of American Federal.
The obligations of American Federal to perform this Agreement
and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by American Federal
pursuant to Section 11.6(b):
(a) Representations and Warranties. For
purposes of this Section 9.3(a), the accuracy of the
representations and warranties of CCB set forth in this
Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same
effect as though all such representations and warranties
had been made on and as of the Effective Time (provided
that representations and warranties which are confined to
a specified date shall speak only as of such date). The
representations and warranties set forth in Section 6.3
shall be true and correct (except for inaccuracies which
are de minimis in amount). The representations and
warranties of CCB set forth in Sections 6.17 and 6.18
shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and
warranties of CCB set forth in this Agreement (including
the representations and warranties set forth in
Sections 6.17 and 6.18) such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on CCB; provided that, for
purposes of this sentence only, those representations and
warranties which are qualified by references to "material"
or "Material Adverse Effect" or to the "Knowledge" of any
Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of CCB to be
performed and complied with pursuant to this Agreement and
the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. CCB shall have delivered to
American Federal (i) a certificate, dated as of the
Effective Time and signed on its behalf by its chief
executive officer and its chief financial officer, to the
effect that the conditions set forth in Section 9.1 as
relates to CCB and in Sections 9.3(a) and 9.3(b) have been
satisfied, and (ii) certified copies of resolutions duly
adopted by CCB's Board of Directors and shareholders and
American Federal Interim's Board of Directors and sole
shareholder evidencing the taking of all corporate action
necessary to authorize the execution, delivery, and
performance of this Agreement and the Plan of Merger, as
appropriate, and the consummation of the Merger and the
other transactions contemplated hereby and thereby, all in
such reasonable detail as American Federal and its counsel
shall request.
(d) Fairness Opinion. American Federal shall
have received letters from Wheat, First Securities, Inc.
and Keefe, Bruyette & Woods, Inc. or another financial
adviser selected by American Federal dated not more than
five days prior to the date of the Joint Proxy Statement,
to the effect that in the opinion of the respective firms,
the Exchange Ratio is fair to the shareholders of American
Federal from a financial point of view.
(e) Opinion of Counsel. American Federal shall
have received an opinion of Brooks, Pierce, McLendon,
Humphrey & Leonard, L.L.P., counsel to CCB, dated as of
the Effective Time, covering such matters as are typically
covered in transactions of this nature and in a form
reasonably acceptable to American Federal.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other
provision of this Agreement, and notwithstanding the approval
of this Agreement by the shareholders of American Federal and
CCB or both, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of CCB and American Federal; or
(b) By either Party (provided that the
terminating Party is not then in material breach of any
representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a)
in the case of American Federal and Section 9.3(a) in the
case of CCB or in material breach of any covenant or other
agreement contained in this Agreement) in the event of an
inaccuracy of any representation or warranty of the other
Party contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written
notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the nonbreaching Party the
ability to refuse to consummate the Merger under the
applicable standard set forth in Section 9.2(a) in the
case of American Federal and Section 9.3(a) in the case of
CCB; or
(c) By either Party (provided that the
terminating Party is not then in material breach of any
representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a)
in the case of American Federal and Section 9.3(a) in the
case of CCB or in material breach of any covenant or other
agreement contained in this Agreement) in the event of a
material breach by the other Party of any covenant or
agreement contained in this Agreement which cannot be or
has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By either Party (provided that the
terminating Party is not then in material breach of any
representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a)
in the case of American Federal and Section 9.3(a) in the
case of CCB or in material breach of any covenant or other
agreement contained in this Agreement) in the event
(i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions
contemplated hereby shall have been denied by final
nonappealable action of such Regulatory Authority or if
any action taken by such authority is not appealed within
the time limit for appeal, or (ii) the shareholders of
American Federal or CCB fail to vote their approval of the
matters relating to this Agreement and the transactions
contemplated hereby at the Shareholders' Meetings where
such matters were presented to such shareholders for
approval and voted upon; or
(e) By either Party in the event that the
Merger shall not have been consummated by December 31,
1997, if the failure to consummate the transactions
contemplated hereby on or before such date is not caused
by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By either Party (provided that the
terminating Party is not then in material breach of any
representation or warranty contained in this Agreement
under the applicable standard set forth in Section 9.2(a)
in the case of American Federal and Section 9.3(a) in the
case of CCB or in material breach of any covenant or other
agreement contained in this Agreement) in the event that
any of the conditions precedent to the obligations of such
Party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 10.1(e); or
(g) By American Federal, if CCB (or its
assignee) exercises the American Federal Stock Option
Agreement pursuant to Section 3 thereof or exercises its
repurchase rights pursuant to Section 8 thereof; or
(h) By CCB, at any time prior to 5:00 P.M.
Eastern Standard Time on March 19, 1997, without any
Liability, if its Board of Directors determines in its
reasonable good faith judgment that, as a result of CCB's
due diligence investigation of American Federal or any of
the disclosures in the American Federal Disclosure
Memorandum, any of the financial condition, core operating
performance, or business of the American Federal
Companies, taken as a whole, are materially adversely
different from CCB's reasonable expectation with respect
thereto based on information disclosed in American
Federal's SEC Documents; or
(i) By American Federal, at any time prior to
5:00 P.M. Eastern Standard Time on March 19, 1997, without
any Liability, if its Board of Directors determines in its
reasonable good faith judgment that, as a result of
American Federal's due diligence investigation of CCB or
any of the disclosures in the CCB Disclosure Memorandum,
any of the financial condition, core operating
performance, or business of the CCB Companies, taken as a
whole, are materially adversely different from American
Federal's reasonable expectation with respect thereto
based on information disclosed in CCB's SEC Documents; or
(j) By American Federal, if its Board of
Directors determines by a vote of a majority of the
members of its entire Board, at any time during the ten-
day period commencing two days after the Determination
Date, if either:
(x) both of the following conditions are
satisfied:
(1) the Average Closing Price
shall be less than $53.25; and
(2) (i) the quotient obtained by
dividing the Average Closing Price by $68.00 (such
number being referred to herein as the "CCB Ratio")
shall be less than (ii) the quotient obtained by
dividing the Index Price on the Determination Date by
the Index Price on the Starting Date and subtracting
0.17 from the quotient in this clause (x)(2)(ii) (such
number being referred to herein as the "Index Ratio");
or
(y) the Average Closing Price shall be less
than $51.50;
subject, however, to the following four sentences. If
American Federal refuses to consummate the Merger pursuant
to this Section 10.1(j), it shall give prompt written
notice thereof to CCB, which notice shall specify which of
clauses (x) or (y) is applicable (or if both would be
applicable, which clause is being invoked); provided, that
such notice of election to terminate may be withdrawn at
any time within the aforementioned ten-day period. During
the five-day period commencing with its receipt of such
notice, CCB shall have the option, in the case of a
failure to satisfy the condition in clause (x), to elect
to increase the Exchange Ratio to equal the lesser of
(i) the quotient obtained by dividing (1) the product of
$53.25 and the Exchange Ratio (as then in effect) by
(2) the Average Closing Price, and (ii) the quotient
obtained by dividing (1) the product of the Index Ratio
and the Exchange Ratio (as then in effect) by (2) the CCB
Ratio. During such five-day period, CCB shall have the
option, in the case of a failure to satisfy the condition
in clause (y), to elect to increase the Exchange Ratio to
equal the quotient obtained by dividing (i) the product of
$51.50 and the Exchange Ratio (as then in effect) by
(ii) the Average Closing Price. If CCB makes an election
contemplated by either of the two preceding sentences,
within such five-day period, it shall give prompt written
notice to American Federal of such election and the
revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 10.1(j) and this
Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio as adjusted pursuant to this
Section 10.1(j).
For purposes of this Section 10.1(j), the
following terms shall have the meanings indicated:
"Average Closing Price" shall mean the
average of the daily closing sales prices of CCB Common
Stock as reported on the NYSE-Composite Transactions
List (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as
chosen by CCB) for the 30 consecutive full trading days
in which such shares are traded on the NYSE ending at
the close of trading on the Determination Date.
"Determination Date" shall mean the date
on which the Consent of the Board of Governors of the
Federal Reserve System to the Merger shall be received.
"Index Group" shall mean the 14 bank
holding companies listed below, the common stocks of
all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and
before the Determination Date, any public announcement
of a proposal for such company to be acquired or for
such company to acquire another company or companies in
transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that
any such company or companies are removed from the
Index Group, the weights (which have been determined
based upon the number of outstanding shares of common
stock) redistributed proportionately for purposes of
determining the Index Price. The 14 bank holding
companies and the weights attributed to them are as
follows:
Bank Holding Companies % Weighting
Centura Banks Inc. 5.03
Compass Bancshares Inc. 7.94
Central Fidelity Banks Inc. 11.64
Deposit Guaranty Corp. 7.68
First American Corporation 5.81
First Commerce Corp. 7.63
FirstMerit Corporation 6.26
Jefferson Bankshares, Inc. 2.97
Mercantile Bankshares Corp. 9.30
National Commerce Bancorp. 4.78
One Valley Bancorp Inc. 4.37
Provident Bancorp Inc. 7.97
Signet Banking Corporation 11.78
Trustmark Corporation 6.84
Total 100.00%
"Index Price" on a given date shall mean
the weighted average (weighted in accordance with the
factors listed above) of the closing prices of the
companies composing the Index Group.
"Starting Date" shall mean February 14, 1997.
If any company belonging to the Index Group or CCB
declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares,
or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such
company or CCB shall be appropriately adjusted for the
purposes of applying this Section 10.1(j).
10.2 Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to
Section 10.1, this Agreement shall become void and have no
effect, except that (i) the provisions of this Section 10.2
and Article 11 and Section 8.6(b) shall survive any such
termination and abandonment, and (ii) a termination pursuant
to Sections 10.1(b), 10.1(c), or 10.1(f) shall not relieve the
breaching Party from Liability for an uncured willful breach
of a representation, warranty, covenant, or agreement giving
rise to such termination. The Stock Option Agreements shall
be governed by their own terms as to their termination.
10.3 Non-Survival of Representations and Covenants.
The respective representations, warranties, obligations,
covenants, and agreements of the Parties shall not survive the
Effective Time except this Section 10.3 and Articles 1, 2, 3,
4 and 11 and Sections 8.12, 8.13, 8.14, 8.15, and 8.16, and
the provisions of the Supplemental Letter.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the
capitalized terms set forth below shall have the following
meanings:
"1933 Act" shall mean the Securities Act of
1933, as amended.
"1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
"Acquisition Proposal" with respect to a Party
shall mean any tender offer or exchange offer or any
proposal for a merger, acquisition of all of the stock or
assets of, or other business combination involving the
acquisition of such Party or any of its Subsidiaries or
the acquisition of a substantial equity interest in, or a
substantial portion of the assets of, such Party or any of
its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any
other Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner
of any 10% or greater equity or voting interest of such
Person; or (iii) any other Person for which a Person
described in clause (ii) acts in any such capacity.
"Affiliate Agreement" shall mean the Affiliate
Agreement substantially in the form of Exhibit 1.
"Agreement" shall mean this Agreement and Plan
of Reorganization, including the Exhibits (other than the
American Federal Stock Option Agreement) delivered
pursuant hereto and incorporated herein by reference.
"American Federal Capital Stock"
shall mean, collectively, the American Federal Common
Stock, the American Federal Preferred Stock, and any other
authorized class or series of capital stock of American
Federal.
"American Federal Common Stock" shall mean the
$1.00 par value common stock of American Federal.
"American Federal Companies" shall mean,
collectively, American Federal and all American Federal
Subsidiaries.
"American Federal Disclosure Memorandum" shall
mean the written information entitled "American Federal
Disclosure Memorandum" delivered within ten business days
after the public announcement of the execution of this
Agreement to CCB describing in reasonable detail the
matters contained therein and, with respect to each
disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is
being made. Information disclosed with respect to one
Section shall not be deemed to be disclosed for purposes
of any other Section not specifically referenced with
respect thereto.
"American Federal Financial Statements" shall
mean (i) the consolidated balance sheets (including
related notes and schedules, if any) of American Federal
as of September 30, 1996, and as of December 31, 1995 and
1994, and the related statements of income, changes in
shareholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended
September 30, 1996, and for each of the three fiscal years
ended December 31, 1995, 1994, and 1993, as filed by
American Federal in SEC Documents, and (ii) the
consolidated balance sheets of American Federal (including
related notes and schedules, if any) and related
statements of income, changes in shareholders' equity, and
cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods
ended subsequent to September 30, 1996.
"American Federal Interim Common Stock" shall
mean the $1.00 par value common stock of American Federal
Interim.
"American Federal Preferred Stock" shall mean
the serial preferred stock of American Federal.
"American Federal Stock Option Agreement" shall
mean the stock option agreement of even date herewith
issued to CCB by American Federal, substantially in the
form of Exhibit 2.
"American Federal Stock Plans" shall mean the
existing stock option and other stock-based compensation
plans of American Federal designated as follows: American
Federal's 1988 Stock Option and Incentive Plan and the
1995 Director's Performance Plan.
"American Federal Subsidiaries" shall mean the
Subsidiaries of American Federal, which shall include the
American Federal Subsidiaries described in Section 5.4.
"Articles of Combination" shall mean the
Articles of Combination to be executed by American Federal
and filed by CCB with the OTS relating to the Merger as
contemplated by Section 1.1.
"Assets" of a Person shall mean all of the
assets, properties, businesses, and rights of such Person
of every kind, nature, character and description, whether
real, personal or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in
such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and
records of such Person, and whether or not owned in the
name of such Person or any Affiliate of such Person and
wherever located.
"BHC Act" shall mean the federal Bank Holding
Company Act of 1956, as amended.
"CCB Capital Stock" shall mean, collectively,
the CCB Common Stock, the CCB Preferred Stock, and any
other authorized class or series of capital stock of CCB.
"CCB Common Stock" shall mean the $5.00 par
value common stock of CCB.
"CCB Companies" shall mean, collectively, CCB
and all CCB Subsidiaries.
"CCB Disclosure Memorandum" shall mean the
written information entitled "CCB Disclosure Memorandum"
delivered within ten business days after the public
announcement of the execution of this Agreement to
American Federal describing in reasonable detail the
matters contained therein and, with respect to each
disclosure made therein, specifically referencing each
Section of this Agreement under which such disclosure is
being made. Information disclosed with respect to one
Section shall not be deemed to be disclosed for purposes
of any other Section not specifically referenced with
respect thereto.
"CCB Financial Statements" shall mean (i) the
consolidated balance sheets (including related notes and
schedules, if any) of CCB as of September 30, 1996, and as
of December 31, 1995 and 1994, and the related statements
of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the
nine months ended September 30,1 996, and for each of the
three fiscal years ended December 31, 1995, 1994, and
1993, as filed by CCB in SEC Documents, and (ii) the
consolidated balance sheets of CCB (including related
notes and schedules, if any) and related statements of
income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included
in SEC Documents filed with respect to periods ended
subsequent to September 30, 1996.
"CCB Preferred Stock" shall mean the $5.00 par
value preferred stock of CCB.
"CCB Retiree Medical Plan" shall mean the CCB
Retiree Medical Allowance Plan.
"CCB Rights" shall mean the preferred stock
purchase rights issued pursuant to the CCB Rights
Agreement.
"CCB Rights Agreement" shall mean that certain
Rights Agreement dated February 26, 1990, between CCB and
Central Carolina Bank and Trust Company, as rights agent.
"CCB Stock Plans" shall mean the stock plans of
CCB disclosed in the CCB Disclosure Memorandum.
"CCB Subsidiaries" shall mean the Subsidiaries
of CCB, which shall include the CCB Subsidiaries described
in Section 6.4 and any corporation, bank, savings
association, savings bank, or other organization acquired
as a Subsidiary of CCB in the future and held as a
Subsidiary by CCB at the Effective Time.
"Closing Date" shall mean the date on which the
Closing occurs.
"Consent" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any Contract, Law,
Order, or Permit.
"Contract" shall mean any written or oral
agreement, arrangement, authorization, commitment,
contract, indenture, instrument, lease, obligation, plan,
practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any
Person is a party or that is binding on any Person or its
capital stock, Assets, or business.
"Default" shall mean (i) any breach or violation
of, default under, contravention of, or conflict with, any
Contract, Law, Order, or Permit, (ii) any occurrence of
any event that with the passage of time or the giving of
notice or both would constitute a breach or violation of,
default under, contravention of, or conflict with, any
Contract, Law, Order, or Permit, or (iii) any occurrence
of any event that with or without the passage of time or
the giving of notice would give rise to a right of any
Person to exercise any remedy or obtain any relief under,
terminate or revoke, suspend, cancel, or modify or change
the current terms of, or renegotiate, or to accelerate the
maturity or performance of, or to increase or impose any
Liability under, any Contract, Law, Order, or Permit.
"Environmental Agency" means the United States
Environmental Protection Agency or any other federal,
state, or local agency responsible for regulating or
enforcing laws, relating to (i) the protection,
preservation, or restoration of the environment
(including, without limitation, air, water, vapor, surface
water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life, or any other
natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation,
processing, handling, labeling, production, release, or
disposal of any substance presently listed, defined,
designated, or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, whether
by type or by quantity, including any material containing
any such substance as a component.
"Environmental Law" shall mean any Law, license,
Permit, authorization, approval, Consent, Order, or
agreement with any Environmental Agency relating to
(i) the protection, preservation, or restoration of the
environment (including, without limitation, air, water,
vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life, or
any other natural resource), and/or (ii) the use, storage,
recycling, disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, whether
by type or by quantity, including any material containing
any such substance as a component.
"Equity Rights" shall mean all arrangements,
calls, commitments, Contracts, options, rights to
subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating
to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of a Person
or by which a Person is or may be bound to issue
additional shares of its capital stock or other Equity
Rights or by which a Person is or may be bound to pay cash
by reference to the value, or any increase in the value,
of shares of the capital stock of such Person.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
"Exhibits" 1 through 3, inclusive, shall mean
the Exhibits so marked, copies of which are attached to
this Agreement. Such Exhibits are hereby incorporated by
reference herein and made a part hereof, and may be
referred to in this Agreement and any other related
instrument or document without being attached hereto.
"GAAP" shall mean generally accepted accounting
principles, consistently applied during the periods
involved.
"Goodwill Litigation" shall mean the litigation
in connection with the potential damage award resulting
from the claims asserted by American Federal against the
United State of America in the pending action, American
Federal Bank, FSB v. U.S., In the United States Court of
Federal Claims, Action No. 95-498C.
"Hazardous Material" shall mean solid waste (as
that term is defined under the Resource Conservation and
Recovery Act, 42 U.S.C.A. 6901 et seq. ("RCRA"), and the
regulations adopted pursuant to RCRA), hazardous waste (as
that term is defined under RCRA, and the regulations
adopted pursuant to RCRA), hazardous substances (as that
term is defined in the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.A.
9601, et seq. ("CERCLA"), and the regulations adopted
pursuant to CERCLA), and other pollutants, including,
without limitation, any solid, liquid, gaseous, or thermal
irritant or contaminant, such as smoke, vapor, soot,
fumes, acids, alkalis, or chemicals.
"HOLA" shall mean the Home Owners' Loan Act of
1933, as amended.
"HSR Act" shall mean Section 7A of the Clayton
Act, as added by Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Joint Proxy Statement" shall mean the proxy
statement used by American Federal and CCB to solicit the
approval of their respective shareholders of the
transactions contemplated by this Agreement, which shall
include the prospectus of CCB relating to the issuance of
the CCB Common Stock and the attached CCB Rights to
holders of American Federal Common Stock.
"Knowledge" as used with respect to a Person
(including references to such Person being aware of a
particular matter) shall mean the personal knowledge after
due inquiry of the chairman, president, chief financial
officer, chief accounting officer, chief operating
officer, chief credit officer, general counsel, any
assistant or deputy general counsel, or any senior,
executive or other vice president of such Person and the
knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"Law" shall mean any code, law (including common
law), ordinance, regulation, reporting or licensing
requirement, rule, or statute applicable to a Person or
its Assets, Liabilities, or business, including those
promulgated, interpreted or enforced by any Regulatory
Authority.
"Liability" shall mean any direct or indirect,
primary or secondary, liability, indebtedness, obligation,
penalty, cost or expense (including costs of
investigation, collection and defense), claim, deficiency,
guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented
for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"Lien" shall mean any conditional sale
agreement, default of title, easement, encroachment,
encumbrance, hypothecation, infringement, lien, mortgage,
deed of trust, pledge, reservation, restriction, security
interest, title retention or other security arrangement,
or any adverse right or interest, charge, or claim of any
nature whatsoever of, on, or with respect to any property
or property interest, other than (i) Liens for current
property Taxes not yet due and payable, (ii) for
depository institution Subsidiaries of a Party, pledges to
secure deposits and other Liens incurred in the ordinary
course of the banking business, and (iii) Liens which do
not materially impair the use of, title to, or the ability
to sell or transfer for fair value the Assets subject to
such Lien.
"Litigation" shall mean any action, arbitration,
cause of action, claim, complaint, criminal prosecution,
governmental or other examination or investigation,
hearing, administrative or other proceeding relating to or
affecting a Party, its business, its Assets (including
Contracts related to it), or the transactions contemplated
by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their
Affiliates by Regulatory Authorities; provided such term
shall include notices, demand letters, or requests from
any Environmental Agency.
"Material Adverse Effect" on a Party shall mean
an event, change, or occurrence which, individually or
together with any other event, change or occurrence, has a
material adverse impact on (i) the financial position,
business, or results of operations of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of
such Party to perform its obligations under this Agreement
or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact
of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or
governmental authorities, (b) changes in GAAP or
regulatory accounting principles generally applicable to
banks, savings banks, and their holding companies,
(c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed Consent of the
other Party in contemplation of the transactions
contemplated hereby, and (d) the direct effects of
compliance with this Agreement on the operating
performance of the Parties, including expenses incurred by
the Parties in consummating the transactions contemplated
by this Agreement.
"Material" for purposes of this Agreement shall
be determined in light of the facts and circumstances of
the matter in question; provided that any specific
monetary amount stated in this Agreement shall determine
materiality in that instance.
"NYSE" shall mean the NYSE Stock Market, Inc.
"NYSE National Market" shall mean the National
Market System of the NYSE.
"NCBCA" shall mean the North Carolina Business
Corporation Act.
"New Preferred Stock" shall mean the new series
of CCB Preferred Stock to be distributed by CCB after the
Effective Time whereby one share of the New Preferred
Stock is distributed for each share of CCB Common Stock
issued and outstanding at the Preferred Stock Record Date
in accordance with the provisions of Section 8.15.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Operating Property" shall mean any property
owned, leased, or operated by the Party in question or by
any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest or other interest
(including an interest in a fiduciary capacity), and,
where required by the context, includes the owner or
operator of such property, but only with respect to such
property.
"Order" shall mean any administrative decision
or award, decree, injunction, judgment, order, quasi-
judicial decision or award, ruling, or writ of any
federal, state, local or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"OTS" shall mean the Office of Thrift
Supervision (including its predecessor, the Federal Home
Loan Bank Board).
"Participation Facility" shall mean any facility
or property in which the Party in question or any of its
Subsidiaries participates in the management and, where
required by the context, said term means the owner or
operator of such facility or property, but only with
respect to such facility or property.
"Party" shall mean either American Federal or
CCB, and "Parties" shall mean both American Federal and CCB.
"Permit" shall mean any federal, state, local,
and foreign governmental approval, authorization,
certificate, easement, filing, franchise, license, notice,
permit, or right to which any Person is a party or that is
or may be binding upon or inure to the benefit of Person
or its securities, Assets, or business.
"Person" shall mean a natural person or any
legal, commercial, or governmental entity, such as, but
not limited to, a corporation, general partnership, joint
venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or
person acting in a representative capacity.
"Plan of Merger" shall mean the Plan of Merger
and Combination, to be entered into by American Federal
and, upon its organization, American Federal Interim,
setting forth the terms of the Merger, substantially in
the form of Exhibit 3.
"Registration Statement" shall mean the
Registration Statement on Form S-4, or other appropriate
form, including any pre-effective or post-effective
amendments or supplements thereto, filed with the SEC by
CCB under the 1933 Act with respect to the shares of CCB
Common Stock and the attached CCB Rights to be issued to
the shareholders of American Federal in connection with
the transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean,
collectively, the SEC, the NYSE, the NYSE, the United
States Department of Justice, the Board of the Governors
of the Federal Reserve System, the OTS, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance
Corporation, and all other federal, state, county, local,
or other governmental or regulatory agencies, authorities
(including self-regulatory authorities),
instrumentalities, commissions, boards or bodies having
jurisdiction over the Parties and their respective
Subsidiaries.
"Representative" shall mean any investment
banker, financial advisor, attorney, accountant,
consultant, or other representative engaged by a Person.
"SEC Documents" shall mean all forms, proxy
statements, registration statements, reports, schedules,
and other documents filed, or required to be filed, by a
Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the
HOLA, the 1934 Act, the Investment Company Act of 1940, as
amended, the Investment Advisors Act of 1940, as amended,
the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated
thereunder.
"Shareholders' Meetings" shall mean the
respective meetings of the shareholders of American
Federal and CCB to be held pursuant to Section 8.1,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all those
corporations, associations, or other business entities of
which the entity in question either (i) owns or controls
50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to
each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the
equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships,
serves as a general partner, (iii) in the case of a
limited liability company, serves as a manager or a
managing member, or (iv) otherwise has the ability to
elect a majority of the directors, trustees, managers, or
managing members thereof.
"Supplemental Letter" shall mean the
supplemental letter of even date herewith relating to
certain understandings and agreements in addition to those
included in this Agreement.
"Surviving Association" shall mean American
Federal as the surviving association resulting from the
Merger.
"Tax Return" shall mean any report, return,
information return, or other information required to be
supplied to a taxing authority in connection with Taxes,
including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"Tax" or "Taxes" shall mean any federal, state,
county, local, or foreign taxes, charges, fees, levies,
imposts, duties, or other assessments, including income,
gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental, federal highway use,
commercial rent, customs duties, capital stock, paid-up
capital, profits, withholding, Social Security, single
business and unemployment, disability, real property,
personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other tax or
governmental fee of any kind whatsoever, imposes or
required to be withheld by the United States or any state,
county, local or foreign government or subdivision or
agency thereof, including any interest, penalties, and
additions imposed thereon or with respect thereto.
(b) The terms set forth below shall have the
meanings ascribed thereto in the referenced sections:
Allowance Section 5.9
American Federal Benefit Plans Section 5.14
American Federal Contracts Section 5.15
American Federal ERISA Plan Section 5.14
American Federal Options Section 3.5
American Federal Pension Plan Section 5.14
American Federal SEC Reports Section 5.5(a)
Average Closing Price Section 10.1(j)
CCB Benefit Plans Section 6.12
CCB ERISA Plan Section 6.12
CCB Pension Plan Section 6.12
CCB SEC Reports Section 6.5(a)
Closing Section 1.2
Derivatives Contract Sections 5.22
Determination Date Section 10.1(j)
Effective Time Section 1.3
ERISA Affiliate Section 5.14(b)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Index Group Section 10.1(j)
Maximum Amount Section 8.14
Merger Section 1.1
PCBs Section 5.11
Preferred Stock Record Date Section 8.15
Starting Date Section 10.1(j)
Takeover Laws Section 5.20
Tax Opinion Section 9.1(h)
(c) Any singular term in this Agreement shall
be deemed to include the plural, and any plural term the
singular. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this
Section 11.2, each of the Parties shall bear and pay all
direct costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel,
except that CCB shall bear and pay the filing fees payable in
connection with the Registration Statement and the Joint Proxy
Statement and printing costs incurred in connection with the
printing of the Registration Statement and the Joint Proxy
Statement.
(b) Nothing contained in this Section 11.2
shall constitute or shall be deemed to constitute liquidated
damages for the willful breach by a Party of the terms of this
Agreement or otherwise limit the rights of the nonbreaching
Party.
11.3 Brokers and Finders. Except for Wheat, First
Securities, Inc. and Keefe, Bruyette & Woods, Inc. as to
American Federal and except for Merrill Lynch, Inc. as to CCB,
each of the Parties represents and warrants that neither it
nor any of its officers, directors, employees, or Affiliates
has employed any broker or finder or incurred any Liability
for any financial advisory fees, investment bankers' fees,
brokerage fees, commissions, or finders' fees in connection
with this Agreement or the transactions contemplated hereby.
In the event of a claim by any broker or finder based upon his
or its representing or being retained by or allegedly
representing or being retained by American Federal or CCB,
each of American Federal and CCB, as the case may be, agrees
to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly
provided herein, this Agreement (including the documents and
instruments referred to herein) constitutes the entire
agreement between the Parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral.
Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than
as provided in Sections 8.12 and 8.14 or in the Supplemental
Letter.
11.5 Amendments. To the extent permitted by Law,
this Agreement may be amended by a subsequent writing signed
by each of the Parties upon the approval of each of the
Parties, whether before or after shareholder approval of this
Agreement has been obtained; provided, that after any such
approval by the holders of American Federal Common Stock,
there shall be made no amendment that reduces or modified in
any material respect the consideration to be received by
holders of American Federal Common Stock; and further
provided, that after any such approval by the holders of CCB
Common Stock, the provisions of this Agreement relating to the
manner or basis in which shares of American Federal Common
Stock will be exchanged for shares of CCB Common Stock shall
not be amended after the Shareholders' Meetings in a manner
adverse to the holders of CCB Common Stock without any
requisite approval of the holders of the issued and
outstanding shares of CCB Common Stock entitled to vote
thereon.
11.6 Waivers.
(a) Prior to or at the Effective Time, CCB,
acting through its Board of Directors, chief executive
officer, or another officer authorized to so act by such
Board, shall have the right to waive any Default in the
performance of any term of this Agreement by American Federal,
to waive or extend the time for the compliance or fulfillment
by American Federal of any and all of its obligations under
this Agreement, and to waive any or all of the conditions
precedent to the obligations of CCB under this Agreement,
except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of CCB.
(b) Prior to or at the Effective Time,
American Federal, acting through its Board of Directors, chief
executive officer, or another officer authorized to so act by
such Board, shall have the right to waive any Default in the
performance of any term of this Agreement by CCB, to waive or
extend the time for the compliance or fulfillment by CCB of
any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the
obligations of American Federal under this Agreement, except
any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of
American Federal.
(c) The failure of any Party at any time or
times to require performance of any provision hereof shall in
no manner affect the right of such Party at a later time to
enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained
in this Agreement in one or more instances shall be deemed to
be or construed as a further or continuing waiver of such
condition or breach or a waiver of any other condition or of
the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated
hereby, neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any
Party hereto without the prior written consent of the other
Party. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications
which are required or permitted hereunder shall be in writing
and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-
paid, or by courier or overnight carrier, to the persons at
the addresses set forth below (or at such other address as may
be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
American Federal: American Federal Bank, FSB
300 East McBee Avenue
Greenville, South Carolina 29601
Telecopy Number: (864) 255-7504
Attention: William L. Abercrombie, Jr.
Chairman, President, and
Chief Executive Officer
Copy to Counsel: Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
CCB: CCB Financial Corporation
111 Corcoran Street
Durham, North Carolina 27701
Telecopy Number: (919) 682-1191
Attention: Ernest C. Roessler
Vice Chairman, President, and
Chief Executive Officer
Copy to Counsel: Brooks, Pierce, McLendon, Humphrey &
Leonard, L.L.P
230 North Elm Street
Suite 2000
Greensboro, North Carolina 27401
Telecopy Number: (910) 378-1001
Attention: Robert A. Singer
11.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the Laws of the State of
North Carolina, except to the extent the Laws of the United
States apply to the Merger.
11.10 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one
and the same instrument.
11.11 Captions; Articles and Sections. The captions
contained in this Agreement are for reference purposes only
and are not part of this Agreement. Unless otherwise
indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and
Sections of this Agreement.
11.12 Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved
against any Party, whether under any rule of construction or
otherwise. No Party to this Agreement shall be considered the
draftsman. The Parties acknowledge and agree that this
Agreement has been reviewed, negotiated, and accepted by all
Parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words
used so as fairly to accomplish the purposes and intentions of
all Parties hereto.
11.13 Enforcement of Agreement. The Parties hereto
agree that irreparable damage would occur in the event that
any of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to
an injunction or injunctions to prevent breaches of this
Agreement 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 they are entitled at law or in equity.
11.14 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused
this Agreement to be executed on its behalf and its corporate
seal to be hereunto affixed and attested by officers thereunto
as of the day and year first above written.
ATTEST: CCB FINANCIAL CORPORATION
/s/ Leo P. Pylypec By: /s/ Ernest C. Roessler
Leo P. Pylypec Ernest C. Roessler
Secretary Vice Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: AMERICAN FEDERAL BANK, FSB
/s/ Deborah A. Brady By: /s/ William L. Abercrombie, Jr.
Deborah A. Brady William L. Abercrombie, Jr.
Secretary Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
Exhibit 2.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made
and entered into as of February 17, 1997, by and between
American Federal Bank, FSB, a federal stock savings bank
("Issuer"), and CCB Financial Corporation, a North Carolina
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that
certain Agreement and Plan of Reorganization, dated as of
February 17, 1997 (the "Merger Agreement"), providing for,
among other things, the merger of a wholly-owned Subsidiary of
Grantee with and into Issuer, with Issuer as the surviving
entity; and
WHEREAS, as a condition and inducement to Grantee's
execution of the Merger Agreement, Grantee has required that
Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as defined below);
NOW, THEREFORE, in consideration of the respective
representations, warranties, covenants and agreements set
forth herein and in the Merger Agreement, and intending to be
legally bound hereby, Issuer and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but
not defined herein shall have the meanings ascribed to such
terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and
conditions set forth herein, Issuer hereby grants to Grantee
an irrevocable option (the "Option") to purchase up to
2,188,180 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and
after any transfer of such Option Shares) of common stock,
$1.00 par value per share ("Issuer Common Stock"), of Issuer
at a purchase price per Option Share (subject to adjustment as
set forth herein, the "Purchase Price") equal to $25.00.
3. Exercise of Option.
(a) Provided that (i) Grantee shall not be in
material breach of its agreements or covenants contained in
the Merger Agreement and the Grantee or Holder (as hereinafter
defined) shall not be in material breach of its agreements or
covenants contained in this Agreement), and (ii) no
preliminary or permanent injunction or other order against the
delivery of shares covered by the Option issued by any court
of competent jurisdiction in the United States shall be in
effect, Holder may exercise the Option, in whole or in part,
at any time and from time to time following the occurrence of
a Purchase Event; provided that the Option shall terminate and
be of no further force and effect upon the earliest to occur
of (A) the Effective Time, (B) termination of the Merger
Agreement in accordance with the terms thereof prior to the
occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Merger Agreement by Grantee
pursuant to (i) Section 10.1(b) thereof (but only if such
termination was a result of a willful breach by Issuer) or
(ii) Section 10.1(c) thereof (each a "Default Termination")),
(C) 12 months after a Default Termination, and (D) 12 months
after any termination of the Merger Agreement (other than a
Default Termination) following the occurrence of a Purchase
Event or a Preliminary Purchase Event; provided further, that
any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without
limitation, the Bank Holding Company Act of 1956, as amended
(the "BHC Act") and the Home Owners' Loan Act of 1933, as
amended (the "HOLA"); and provided further, that any
termination of the Merger Agreement by Grantee prior to 5:00
P.M. Eastern Standard Time on March 19, 1997, shall be deemed
for purposes of this Agreement to be effected pursuant to
Section 10.1(h) of the Merger Agreement irrespective of any
other sections of the Merger Agreement referenced by Grantee
in its notice of termination of the Merger Agreement. The
term "Holder" shall mean the holder or holders of the Option
from time to time, and which initially is the Grantee. The
rights set forth in Section 8 shall terminate when the right
to exercise the Option terminates (other than as a result of a
complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of
the following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent,
Issuer shall have authorized, recommended, publicly
proposed or publicly announced an intention to authorize,
recommend or propose, or entered into an expression of
intent or an agreement with any Person (other than Grantee
or any Subsidiary of Grantee) to effect an Acquisition
Transaction (as defined below). As used herein, the term
Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or
any of its Subsidiaries (other than transactions solely
between Issuer's Subsidiaries), (B) except as permitted by
the prior written consent of Grantee, the disposition, by
sale, lease, exchange or otherwise, of Assets of Issuer or
any of its Subsidiaries representing in either case 20% or
more of the consolidated Assets of Issuer and its
Subsidiaries, or (C) the issuance, sale or other
disposition of (including by way of merger, consolidation,
share exchange or any similar transaction) securities
having, or securities convertible into, or exchangeable
for, securities having, 20% or more of the voting power of
Issuer or any of its Subsidiaries (any of the foregoing,
an "Acquisition Transaction"); or
(ii) any Person (other than Grantee or any
Subsidiary of Grantee) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3
promulgated under the 1934 Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is
defined under the 1934 Act), other than a group of which
Grantee or any of its Subsidiaries of Grantee is a member,
shall have been formed which beneficially owns or has the
right to acquire beneficial ownership of, 20% or more of
the then outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event"
means any of the following events:
(i) any Person (other than Grantee or any
Subsidiary of Grantee) shall have commenced (as such term
is defined in Rule 14d-2 under the 1934 Act), or shall
have filed a registration statement under the 1933 Act
with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such Person would own or
control 15% or more of the then outstanding shares of
Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of Issuer Common Stock shall
not have approved the Merger Agreement at the meeting of
such shareholders held for the purpose of voting on the
Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall
have not made, or shall have withdrawn or modified in a
manner adverse to Grantee, a favorable recommendation
with respect to shareholder approval of the Merger
Agreement, in each case after it shall have been publicly
announced that any Person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed
an intention to make, a proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the 1933 Act with
respect to an Exchange Offer, or (C) filed an application
(or given a notice), whether in draft or final form, under
any federal or state statute or regulation (including a
notice filed under the HSR Act and an application or
notice filed under the BHC Act, the Bank Merger Act, or
the Change in Bank Control Act of 1978) seeking the
Consent to an Acquisition Transaction from any federal or
state governmental or regulatory authority or agency.
As used in this Agreement, "Person" shall have the meaning
specified in the Merger Agreement and shall include such
Person's Affiliates (as defined in the Merger Agreement).
(d) In the event Holder wishes to exercise the
Option, 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 Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 15
business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"). If prior
Consent of any governmental or regulatory agency or authority
is required in connection with such purchase, Issuer shall
cooperate with Holder in the filing of the required notice or
application for such Consent and the obtaining of such Consent
and the Closing shall occur immediately following receipt of
such Consent (and expiration of any mandatory waiting
periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to
Issuer, in immediately available funds by wire transfer to a
bank account designated by Issuer, an amount equal to the
Purchase Price multiplied by the number of Option Shares to be
purchased on such Closing Date, and (ii) present and surrender
this Agreement to the Issuer at the address of the Issuer
specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the
delivery of immediately available funds and surrender of this
Agreement as provided in Section 4(a), (i) Issuer shall
deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever
and subject to no pre-emptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase
the balance of the shares of Issuer Common Stock purchasable
hereunder, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable
federal and state Law or of the provisions of this Agreement.
(c) In addition to any other legend that is
required by applicable law, certificates for the Option Shares
delivered at each Closing shall be endorsed with a restrictive
legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, THE HOME OWNERS' LOAN ACT OF
1933, AS AMENDED, AND THE REGULATIONS OF THE OFFICE OF
THRIFT SUPERVISION PROMULGATED THEREUNDER INCLUDED IN 12
C.F.R., PART 563G, AND PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF FEBRUARY 17, 1997. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the above legend shall be
removed by delivery of substitute certificate(s) without such
legend if Holder shall have delivered to Issuer a copy of a
letter from the staff of the OTS, or an opinion of counsel in
form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for
purposes of the 1933 Act or the HOLA.
5. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals referred to herein, to consummate the
transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Issuer.
This Agreement has been duly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate and
other action to authorize and reserve and to permit it to
issue, and, at all times from the date hereof until the
obligation to deliver Issuer Common Stock upon the
exercise of the Option terminates, will have reserved for
issuance, upon exercise of the Option, the number of
shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary
corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 7 upon
exercise of the Option. The shares of Issuer Common Stock
to be issued upon due exercise of the Option, including
all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7,
upon issuance pursuant hereto, shall be duly and validly
issued, fully paid, and nonassessable, and shall be
delivered free and clear of all liens, claims, charges,
and encumbrances of any kind or nature whatsoever,
including any preemptive rights of any shareholder of
Issuer.
6. Representations and Warrants of Grantee. Grantee
hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate
the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee.
This Agreement has been duly executed and delivered by
Grantee.
(b) This Option is not being, and any Option Shares
or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Laws.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common
Stock by reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall
be adjusted appropriately, and proper provision shall be made
in the agreements governing such transaction so that Holder
shall receive, upon exercise of the Option, the number and
class of shares or other securities or property that Holder
would have received in respect of Issuer Common Stock if the
Option had been exercised immediately prior to such event, or
the record date therefor, as applicable. If any additional
shares of Issuer Common Stock are issued after the date of
this Agreement (other than pursuant to an event described in
the first sentence of this Section 7(a)), the number of shares
of Issuer Common Stock subject to the Option shall be adjusted
so that, after such issuance, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, equals
19.9% of the number of shares of Issuer Common Stock then
issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an
agreement: (i) to consolidate with or merge into any Person,
other than Grantee or one of its Subsidiaries, and shall not
be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any Person, other than
Grantee or one of its Subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but,
in connection with such merger, the then-outstanding shares of
Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other Person or
cash or any other property or the outstanding shares of Issuer
Common Stock immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or
otherwise transfer all or substantially all of its assets to
any Person, other than Grantee or one of its Subsidiaries,
then, and in each such case, the agreement governing such
transaction shall make proper provisions so that upon the
consummation of any such transaction and upon the terms and
conditions set forth herein, Holder shall receive for each
Option Share with respect to which the Option has not been
exercised an amount of consideration in the form of and equal
to the per share amount of consideration that would be
received by the holder of one share of Issuer Common Stock
less the Purchase Price (and, in the event of an election or
similar arrangement with respect to the type of consideration
to be received by the holders of Issuer Common Stock, subject
to the foregoing, proper provision shall be made so that
Holder would have the same election or similar rights as would
the holder of the number of shares of Issuer Common Stock for
which the Option is then exercisable).
(c) Issuer shall not enter into any agreement of
the type described in Section 7(b) unless the other party
thereto consents to provide the funding required for Issuer to
pay the Section 8 Repurchase Consideration.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a),
at the request of Holder at any time commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d))
and ending 12 months immediately thereafter, Issuer shall
repurchase from Holder the Option and all shares of Issuer
Common Stock purchased by Holder pursuant hereto with respect
to which Holder then has beneficial ownership. The date on
which Holder exercises its rights under this Section 8 is
referred to as the "Request Date." Such repurchase shall be
at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder
for any shares of Issuer Common Stock acquired by Holder
pursuant to the Option with respect to which Holder then
has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable
Price (as defined below) for each share of Issuer Common
Stock over (y) the Purchase Price (subject to adjustment
pursuant to Section 7), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option
has not been exercised; and
(iii) the excess, if any, of the Applicable
Price over the Purchase Price (subject to adjustment
pursuant to Section 7) paid (or, in the case of Option
Shares with respect to which the Option has been exercised
but the Closing Date has not occurred, payable) by Holder
for each share of Issuer Common Stock with respect to
which the Option has been exercised and with respect to
which Holder then has beneficial ownership, multiplied by
the number of such shares.
(b) If Holder exercises its rights under this
Section 8, Issuer shall, within ten business days after the
Request Date, pay the Section 8 Repurchase Consideration to
Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common
Stock purchased thereunder with respect to which Holder then
has beneficial ownership, and Holder shall warrant that it has
sole record and beneficial ownership of such shares and that
the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the
foregoing, to the extent that prior notification to or Consent
of any governmental or regulatory agency or authority is
required in connection with the payment of all or any portion
of the Section 8 Repurchase Consideration, Holder shall have
the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that
Issuer deliver from time to time that portion of the Section 8
Repurchase Consideration that it is not then so prohibited
from paying and promptly file the required notice or
application for Consent and expeditiously process the same
(and each party shall cooperate with the other in the filing
of any such notice or application and the obtaining of any
such Consent). If any governmental or regulatory agency or
authority disapproves of any part of Issuer's proposed
repurchase pursuant to this Section 8, Issuer shall promptly
give notice of such fact to Holder. If any governmental or
regulatory agency or authority prohibits the repurchase in
part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted
by such agency or authority, determine whether the repurchase
should apply to the Option and/or Option Shares and to what
extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for
which the Option was exercisable at the Request Date less the
sum of the number of shares covered by the Option in respect
of which payment has been made pursuant to Section 8(a)(ii)
and the number of shares covered by the portion of the Option
(if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence
within five business days of receipt of notice of disapproval
of the repurchase.
Notwithstanding anything herein to the
contrary, all of Holder's rights under this Section 8 shall
terminate on the date of termination of this Option pursuant
to Section 3(a).
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of (i) the highest price per share of
Issuer Common Stock paid for any such share by the Person
described in Section 8(d)(i), (ii) the price per share of
Issuer Common Stock received by holders of Issuer Common Stock
in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii), or (iii) the highest closing sales price per share
of Issuer Common Stock quoted on the National Association of
Securities Dealers Automated Quotations System National Market
System ("Nasdaq National Market") (or if Issuer Common Stock
is not quoted on the Nasdaq National Market, the highest bid
price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) during the
60 business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of
Issuer's Assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market
value of the remaining assets of Issuer as determined by an
independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer (which
determination shall be conclusive for all purposes of this
Agreement), divided by the number of shares of the Issuer
Common Stock outstanding at the time of such sale. If the
consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be
determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur
if (i) any Person (other than Grantee or any Subsidiary of
Grantee) shall have acquired actual ownership or control, or
any "group" (as such term is defined under the 1934 Act) shall
have been formed which shall have acquired actual ownership or
control, of 50% or more of the then-outstanding shares of
Issuer Common Stock, or (ii) any of the transactions described
in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) shall be
consummated.
(e) In connection with the application of the
provisions of this Section 8, Grantee acknowledges (i) that
Issuer's ability to fund the Section 8 Repurchase
Consideration in accordance with the provisions of this
Section 8 may be dependent upon the payment by Issuer's
Subsidiaries of a capital distribution or distributions
("Capital Distribution") to Issuer and that any such Capital
Distribution will be subject to the prior approval of the OTS,
and (ii) that, unless there has been an agreement of the type
described in Section 7(b), Issuer's obligations under this
Section 8 do not impose on Issuer an obligation to otherwise
finance the payment of the Section 8 Repurchase Consideration
through the incurrence of indebtedness or the issuance of
capital instruments or securities by Issuer in either case
sufficient in amount to satisfy the payment of the Section 8
Repurchase Consideration. Accordingly, Issuer shall not be
deemed to be in breach of this Section 8 if, after making its
best efforts to obtain regulatory authorization for a Capital
Distribution required to pay the Section 8 Repurchase
Consideration, it is unable to do so.
9. Certain Restrictions.
(a) Following the date hereof and prior to the
Expiration Date (as defined in subparagraph (c) below),
Holder shall not, directly or indirectly, by operation of law
or otherwise, sell, assign, pledge, or otherwise dispose of or
transfer any Restricted Shares beneficially owned by Holder,
other than (i) pursuant to Section 8, (ii) following
termination of the Merger Agreement, pursuant to a merger,
share exchange, tender or exchange offer, or other business
combination that has been approved or recommended, or
otherwise determined to be fair and in the best interests of
the shareholders of Issuer, by a majority of the members of
the Board of Directors of Issuer (which majority shall include
a majority of the directors who were directors prior to the
announcement of such business combination), or (iii) in
accordance with Section 10.
(b) Other than pursuant to the Merger Agreement,
following the date hereof and prior to the Expiration Date,
without the prior written consent of Issuer, Holder shall not,
nor shall Holder permit its Affiliates to, directly or
indirectly, alone or in concert or conjunction with any other
Person or group of Persons, (i) in any manner acquire, agree
to acquire or make any proposal to acquire, any securities of,
equity interest in, or any material property of, the Issuer
(other than pursuant to this Agreement or the Merger
Agreement), (ii) except at the specific written request of
Issuer, propose to enter into any merger, share exchange, or
other business combination involving Issuer or to purchase a
material portion of the Assets of Issuer, (iii) make or in any
way participate in any "solicitation" of "proxies" (as such
terms are used in Regulation 14A promulgated under the 1934
Act) to vote, or seek to advise or influence any Person with
respect to the voting of, any voting securities of Issuer,
(iv) form, join or in any way participate in a group of
Persons acting in concert with respect to any voting
securities of Issuer, (v) seek to control or influence the
management, Board of Directors or policies of Issuer,
(vi) disclose any intention, plan or arrangement inconsistent
with the foregoing, (vii) advise, assist or encourage any
other Person in connection with the foregoing, or
(viii) request Issuer (or its directors, officers, employees
or agents) to amend or waive any provision of this Section
9(b), or take any action which may require Issuer to make a
public announcement regarding the possibility of a business
combination or merger with such party. Issuer shall not adopt
any "Rights Plan" or similar arrangement in any manner which
would cause Holder, if Holder has complied with its
obligations under this Agreement, to become an "Acquiring
Person" under such Rights Agreement solely by reason of the
beneficial ownership of the shares purchasable hereunder.
(c) For purposes of this Agreement, the term
"Expiration Date" with respect to any obligation or
restriction imposed on a party hereunder shall mean the
earlier to occur of (A) the third anniversary of the date
hereof.
10. Registration Rights.
(a) Following termination of the Merger Agreement,
Issuer shall, subject to the conditions of subparagraph (c)
below, if requested by any Holder, including Grantee and any
permitted transferee ("Selling Holder"), as expeditiously as
possible prepare and file an offering circular under the
Securities Laws if necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock
or other securities that have been acquired by or are issuable
to Selling Holder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated
by Holder in such request, including, without limitation, a
"shelf" registration statement under Rule 415 under the 1933
Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale
under any applicable state securities laws.
(b) If Issuer at any time after the exercise of the
Option proposes to register any shares of Issuer Common Stock
under the Securities Laws in connection with an underwritten
public offering of such Issuer Common Stock, Issuer will
promptly give written notice to Holder of its intention to do
so and, upon the written request of Holder given within 30
days after receipt of any such notice (which request shall
specify the number of shares of Issuer Common Stock intended
to be included in such underwritten public offering by Selling
Holder), Issuer will cause all such shares, the Holder of
which shall have requested participation in such registration,
to be so registered and included in such underwritten public
offering; provided, that Issuer may elect to not cause any
such shares to be so registered (i) if the underwriters in
good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement a dividend
reinvestment or similar plan, an employee benefit plan or a
registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit
registrations of resales; provided, further, that such
election pursuant to clause (i) may only be made two times.
If some but not all the shares of Issuer Common Stock, with
respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be
excluded from such registration, Issuer shall make appropriate
allocation of shares to be registered among Selling Holders
and any other Person (other than Issuer or any Person
exercising demand registration rights in connection with such
registration) who or which is permitted to register its shares
of Issuer Common Stock in connection with such registration
pro rata in the proportion that the number of shares requested
to be registered by each Selling Holder bears to the total
number of shares requested to be registered by all Persons
then desiring to have Issuer Common Stock registered for sale.
(c) Issuer shall use all reasonable efforts to
cause each offering circular referred to in subparagraph (a)
above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to
keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required
pursuant to subparagraph (a) above for a period not exceeding
90 days provided Issuer shall in good faith determine that any
such registration would adversely affect an offering or
contemplated offering of other securities by Issuer:
(i) prior to the earliest of (A) termination of
the Merger Agreement pursuant to Section 10.1 thereof,
(B) failure to obtain the requisite shareholder approval
pursuant to Section 9.1(a) of the Merger Agreement, and
(C) a Purchase Event or a Preliminary Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of
a registration referred to in subparagraph (b) above
pursuant to which the Selling Holders concerned were
afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as
requested; and
(v) unless a request therefor is made to Issuer
by Selling Holders holding at least 25% or more of the
aggregate number of Option Shares then outstanding.
In addition to the foregoing, Issuer shall not
be required to maintain the effectiveness of any offering
circular after the expiration of 120 days from the effective
date of such offering circular. Issuer shall use all
reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent
necessary to permit the sale or other disposition of the
Option Shares so registered in accordance with the intended
method of distribution for such shares, provided, that Issuer
shall not be required to consent to general jurisdiction or
qualify to do business in any state where it is not otherwise
required to so consent to such jurisdiction or to so qualify
to do business.
(d) Issuer will pay all expenses (including without
limitation registration fees, qualification fees, blue sky
fees and expenses (including the fees and expenses of
counsel), accounting expenses, printing expenses, expenses of
underwriters, excluding discounts and commissions but
including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses
of any necessary special experts) in connection with each
registration pursuant to subparagraph (a) or (b) above
(including the related offerings and sales by Selling Holders)
and all other qualifications, notifications or exemptions
pursuant to subparagraph (a) or (b) above. Underwriting
discounts and commissions relating to Option Shares and any
other expenses incurred by such Selling Holders in connection
with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under
subparagraph (a) or (b) above Issuer hereby indemnifies the
Selling Holders, and each underwriter thereof, including each
Person, if any, who controls such Holder or underwriter within
the meaning of Section 15 of the 1933 Act, against all
expenses, losses, claims, damages and liabilities caused by
any untrue statement of a material fact contained in any
prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any
such prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance
upon and in conformity with, information furnished in writing
to Issuer by such indemnified party expressly for use therein,
and Issuer and each officer, director and controlling Person
of Issuer shall be indemnified by such Selling Holder, or by
such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue,
or alleged untrue, statement, that was included by Issuer in
any such prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance
upon, and in conformity with, information furnished in writing
to Issuer by such Holder or such underwriter, as the case may
be, expressly for such use.
Promptly upon receipt by a party indemnified
under this subparagraph (e) of notice of the commencement of
any action against such indemnified party in respect of which
indemnity or reimbursement may be sought against any
indemnifying party under this subparagraph (e), such
indemnified party shall notify the indemnifying party in
writing of the commencement of such action, but the failure so
to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party
under this subparagraph (e). In case notice of commencement
of any such action shall be given to the indemnifying party as
above provided, the indemnifying party shall be entitled to
participate in and, to the extent it may wish, jointly with
any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen
by it and satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to
assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be
available to the indemnifying party that may be contrary to
the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of
such action notwithstanding its obligation to bear fees and
expenses of such counsel. No indemnifying party shall be
liable for any settlement entered into without its consent,
which consent may not be unreasonably withheld.
If the indemnification provided for in this
subparagraph (e) is unavailable to a party otherwise entitled
to be indemnified in respect of any expenses, losses, claims,
damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party
otherwise entitled to be indemnified, shall contribute to the
amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect
the relative benefits received by Issuer, all Selling Holders
and the underwriters from the offering of the securities and
also the relative fault of Issuer, all Selling Holders and the
underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action
or claim; provided, that in no case shall any Selling Holder
be responsible, in the aggregate, for any amount in excess of
the net offering proceeds attributable to its Option Shares
included in the offering. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not
joint with other holders.
In connection with any registration pursuant to
subparagraph (a) or (b) above, Issuer and each Selling Holder
(other than Grantee) shall enter into an agreement containing
the indemnification provisions of this subparagraph (e).
(f) Issuer shall comply with all reporting
requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any
Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the OTS
from time to time, including, without limitation, Rules 144
and 144A. Issuer shall at its expense provide Holder with any
information necessary in connection with the completion and
filing of any reports or forms required to be filed by them
under the Securities Laws, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issuer will pay all stamp taxes in connection
with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save
Holder harmless, without limitation as to time, against any
and all liabilities, with respect to all such taxes.
11. Quotation; Listing. If Issuer Common Stock or any
other securities to be acquired upon exercise of the Option
are then authorized for quotation or trading or listing on the
Nasdaq National Market or any other securities exchange or any
automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will
promptly file an application, if required, to authorize for
quotation or trading or listing the shares of Issuer Common
Stock or other securities to be acquired upon exercise of the
Option on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a
self-regulatory organization and will use its best efforts to
obtain approval, if required, of such quotation or listing as
soon as practicable.
12. Division of Option. This Agreement (and the Option
granted hereby) are exchangeable, without expense, at the
option of 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 in the aggregate the
same number of shares of Issuer Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein
include any other 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.
13. Miscellaneous.
(a) Expenses. Except as otherwise provided in
Section 10, 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.
(b) Waiver and Amendment. Any provision of this
Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Agreement
may not be modified, amended, altered or supplemented except
upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary;
Severability. This Agreement, together with the Merger
Agreement and the other documents and instruments referred to
herein and therein, between Grantee and Issuer (a) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties
with respect to the subject matter hereof and (b) is not
intended to confer upon any Person other than the parties
hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section
13(h)) any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or a federal or state
governmental or regulatory agency or authority to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of 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 Option does not permit
Holder to acquire, or does not require Issuer to repurchase,
the full number of shares of Issuer Common Stock as provided
in Sections 3 and 8 (as adjusted pursuant to Section 7), it is
the express intention of Issuer to allow Holder to acquire or
to require Issuer to repurchase such lesser number of shares
as may be permissible without any amendment or modification
hereof.
(d) Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of North Carolina.
(e) Descriptive Headings. The descriptive headings
contained herein are for convenience of reference only and
shall not affect in any way the meaning or interpretation of
this Agreement.
(f) 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 addresses set forth in the Merger
Agreement(or at such other address for a party as shall be
specified by like notice).
(g) Counterparts. This Agreement and any
amendments hereto may be executed in two counterparts, each of
which shall be considered one and the same agreement and shall
become effective when both counterparts have been signed, it
being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder or under the
Option shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written
consent of the other party, except that Grantee may assign
this Agreement to a wholly owned Subsidiary of Grantee and
Grantee may assign its rights hereunder in whole or in part
after the occurrence of a Purchase Event. Subject to the
preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
(i) Further Assurances. In the event of any
exercise of the Option by Holder, Issuer and Holder shall
execute and deliver all other documents and instruments and
take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such
exercise.
(j) Specific Performance. The parties hereto agree
that this Agreement may be enforced by either party through
specific performance, injunctive relief and other equitable
relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision
is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Stock Option Agreement to be signed by their respective
officers thereunto duly authorized, all as of the day and year
first written above.
ATTEST: AMERICAN FEDERAL BANK, FSB
By: /s/ Deborah A. Brady By: /s/ William L. Abercrombie, Jr.
Deborah A. Brady William L. Abercrombie, Jr.
Secretary Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: CCB FINANCIAL CORPORATION
By: /s/ Leo P. Pylypec By: /s/ Ernest C. Roessler
Leo P. Pylypec Ernest C. Roessler
Secretary Vice Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
Exhibit 99.1
NEWS RELEASE
for Further
Information
Please contact:
W. Harold Parker, Jr. of CCB 919-683-7631
Michael Trimble of AMFB Phone: 864-255-7593
CCB Financial Announces Signing of Definitive Agreement
to Acquire American Federal Bank
FOR IMMEDIATE RELEASE February 18, 1997
Durham, North Carolina -- CCB Financial Corporation
(CCB) and American Federal Bank, FSB (AMFB) jointly
announced today the signing of a definitive merger
agreement whereby CCB will purchase AMFB for $325.1
million in stock in a deal that will create the sixth
largest bank in the Carolinas.
The combination of Durham-based CCB and Greenville-
based AMFB will form a financial institution with
approximately $6.9 billion in assets and $5.5 billion in
deposits.
"CCB's announced acquisition strategy is to pursue
very high quality banks and thrifts in our current and
contiguous markets with the ultimate goal of improving
our financial performance and fundamental franchise
value. This merger of AMFB with CCB brings together
strengths of two high-performing organizations and
extends CCB's franchise down the Interstate 85 corridor.
This acquisition will give us the fourth largest market
share in the rapidly growing Greenville/Spartanburg
market," said CCB vice chairman and chief executive
officer Ernest Roessler. "Both institutions have solid
capital positions, excellent credit quality, strong
branch office networks as well as very compatible
corporate cultures," Roessler added.
The 49-year-old president and chief executive
officer of AMFB, Roy Abercrombie will become vice
chairman of CCB. Three other members of AMFB's board of
directors will also be added to the CCB board of
directors, which will be increased to 23 members. Terms
of the agreement call for AMFB to be operated as a wholly-
owned subsidiary of CCB. "We are pleased to have found
such a high-quality merger partner as CCB. Our
employees, customers and communities can look forward to
receiving the same high quality of service that they
expect from us, and they will also have the benefit of
new products and services that CCB can provide," said
Abercrombie.
The merger, unanimously approved by the boards of
directors of both companies, will be accounted for as a
pooling-of-interests, AMFB shareholders will receive
0.445 shares of common stock for each share of AMFB held.
The transaction, which will be structured as a tax-free
exchange, is valued at $28.86 per share based on CCB's
five day average closing stock price through Friday of
$64.85. Under the terms of the agreement, AMFB granted to
CCB an option to purchase up to 19.9% of AMFB outstanding
shares. This option agreement is only exercisable under
certain circumstances.
The merger is subject to due diligence, shareholder
and regulatory approvals and is expected to be completed
by the third quarter of 1997.
Merrill Lynch & Co. served as exclusive financial
advisor to CCB and Wheat First Butcher Singer and Keefe
Bruyette & Woods served as financial advisors to AMER.
CCB currently operates 161 banking offices in 28
counties throughout North Carolina, while AMFB operates
40 banking offices in 12 counties throughout northwest
South Carolina.
Editors Note: CCB and AMFB will participate in a
telephone conference call for reporters and analysts at l0:00
a.m. Eastern Time (ET) on Tuesday, February 18. To participate
in the conference, please call 1-800-289-0730, confirmation
code #313939 by 9:45 a.m. ET. A media briefing will be held in
person at 12:00 noon at the Hyatt Regency in Greenville.
A digital replay of the conference call will be available
following the telephone conference. To access the replay call
1-800-839-4281, confirmation code #313939.
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