Exhibit 2(c)
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
UNITED CAROLINA BANCSHARES CORPORATION
and
SOUTHERN NATIONAL CORPORATION
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS..............................................................................................1
ARTICLE II
THE MERGER...............................................................................................6
2.1 Merger..........................................................................................6
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2.2 Filing; Plan of Merger..........................................................................6
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2.3. Effective Time..................................................................................6
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2.4 Closing.........................................................................................6
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2.5 Effect of Merger................................................................................7
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2.6 Further Assurances..............................................................................7
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2.7 Merger Consideration............................................................................7
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2.8 Conversion of Shares; Payment of Merger Consideration...........................................8
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2.9 Dissenting Shares...............................................................................9
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2.10 Conversion of Stock Options.....................................................................9
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2.11 Merger of Subsidiary...........................................................................11
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2.12 Anti-Dilution..................................................................................11
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCB...................................................................11
3.1 Capital Structure..............................................................................11
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3.2 Organization, Standing and Authority...........................................................12
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3.3 Ownership of Subsidiaries......................................................................12
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3.4 Organization, Standing and Authority of the Subsidiaries.......................................12
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3.5 Authorized and Effective Agreement.............................................................12
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3.6 Securities Filings.............................................................................13
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3.7 Financial Statements; Minute Books.............................................................13
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3.8 Material Adverse Change........................................................................14
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3.9 Absence of Undisclosed Liabilities.............................................................14
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3.10 Properties.....................................................................................14
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3.11 Environmental Matters..........................................................................14
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3.12 Allowance for Loan Losses......................................................................15
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3.13 Tax Matters....................................................................................15
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3.14 Employees; Compensation; Benefit Plans.........................................................16
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3.15 Certain Contracts..............................................................................20
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3.16 Legal Proceedings; Regulatory Approvals........................................................20
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3.17 Compliance with Laws...........................................................................21
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3.18 Brokers and Finders............................................................................21
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3.19 Loans..........................................................................................21
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3.20 Repurchase Agreements..........................................................................21
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3.21 Deposit Accounts...............................................................................22
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3.22 Related Party Transactions.....................................................................22
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3.23 Certain Information............................................................................22
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3.24 Accounting, Tax and Regulatory Matters.........................................................22
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3.25 State Takeover Laws............................................................................23
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3.26 Derivatives Contracts..........................................................................23
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3.27 Fairness Opinion...............................................................................23
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SNC..................................................................................................23
4.1 Capital Structure of SNC.......................................................................23
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4.2 Organization, Standing and Authority of SNC....................................................23
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4.3 Authorized and Effective Agreement.............................................................24
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4.4 Organization, Standing and Authority of SNC Subsidiaries.......................................24
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4.5 Securities Documents...........................................................................25
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4.6 Financial Statements...........................................................................25
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4.7 Material Adverse Change........................................................................25
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4.8 Legal Proceedings; Regulatory Approvals........................................................25
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4.9 Absence of Undisclosed Liabilities.............................................................26
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4.10 Allowance for Loan Losses......................................................................26
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4.11 Tax Matters....................................................................................26
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4.12 Compliance with Laws...........................................................................26
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4.13 Certain Information............................................................................27
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4.14 Accounting, Tax and Regulatory Matters.........................................................27
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4.15 Share Ownership................................................................................27
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ARTICLE V
COVENANTS...............................................................................................27
5.1 Shareholders' Meetings.........................................................................27
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5.2 Registration Statement; Joint Proxy Statement/Prospectus.......................................28
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5.3 Plan of Merger; Reservation of Shares..........................................................28
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5.4 Additional Acts................................................................................29
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5.5 Best Efforts...................................................................................29
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5.6 Certain Accounting Matters.....................................................................29
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5.7 Access to Information..........................................................................29
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5.8 Press Releases.................................................................................30
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5.9 Forbearances of UCB............................................................................30
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5.10 Employment Agreements..........................................................................33
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5.11 Affiliates.....................................................................................33
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5.12 Employee Benefit Plans.........................................................................33
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5.13 Directors and Officers Protection..............................................................34
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5.14 Forbearances of SNC............................................................................35
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5.15 Assumption of Agreement by Acquiror............................................................35
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5.16 Reports........................................................................................36
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5.17 Exchange Listing...............................................................................36
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ARTICLE VI
CONDITIONS PRECEDENT....................................................................................36
6.1 Conditions Precedent --SNC and UCB.............................................................36
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6.2 Conditions Precedent -- UCB....................................................................38
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6.3 Conditions Precedent -- SNC ...................................................................38
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT.......................................................................40
7.1 Termination....................................................................................40
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7.2 Effect of Termination..........................................................................43
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7.3 Survival of Representations, Warranties and Covenants..........................................43
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7.4 Waiver.........................................................................................43
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7.5 Amendment or Supplement........................................................................44
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ARTICLE VIII
MISCELLANEOUS...........................................................................................44
8.1 Expenses.......................................................................................44
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8.2 Entire Agreement...............................................................................44
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8.3 No Assignment..................................................................................45
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8.4 Notices........................................................................................45
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8.5 Captions.......................................................................................46
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8.6 Counterparts...................................................................................46
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8.7 Governing Law..................................................................................46
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8.8 Predecessor Agreement..........................................................................46
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization
Agreement" or "Agreement"), dated as of November 1, 1996, between UNITED
CAROLINA BANCSHARES CORPORATION ("UCB"), a North Carolina corporation having its
principal office at Whiteville, North Carolina, and SOUTHERN NATIONAL
CORPORATION ("SNC"), a North Carolina corporation having its principal office at
Winston-Salem, North Carolina;
R E C I T A L S:
- - - - - - - -
The parties desire that UCB shall be merged with and into SNC (said
transaction being hereinafter referred to as the "Merger") pursuant to a plan of
merger (the "Plan of Merger") substantially in the form set forth in Articles of
Merger attached as Annex A hereto ("Articles of Merger"), and the parties desire
to provide for certain undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
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When used herein, the capitalized terms set forth below shall have the
following meanings:
"Bank Holding Company Act" shall mean the Bank Holding Company Act of 1956,
as amended.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"Closing Date" shall mean the date specified pursuant to Section 2.4 as the
date on which the parties hereto shall close the transactions contemplated
herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in a Securities Document filed with the
Commission or in the UCB Disclosure Letter.
"Effective Time" shall mean the time specified in Section 2.3 as the
Effective Time of the Merger.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from
the presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" means all applicable federal, state and local laws and
regulations, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, that relate to pollution or protection of
human health or the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Statements" shall mean (a) with respect to SNC, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
SNC as of December 31, 1995, 1994, and 1993, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1995, 1994, and 1993, as filed by SNC in Securities Documents and (ii) the
consolidated balance sheets of SNC (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by SNC with respect to periods ended subsequent to
December 31, 1995, and (b) with respect to UCB, (i) the consolidated balance
sheets (including related notes and schedules, if any) of UCB as of December 31,
1995, 1994, and 1993, and the related consolidated statements of income, changes
in shareholders' equity and cash flows (including related notes and schedules,
if any) for each of the three years ended December 31, 1995, 1994, and 1993 as
filed by UCB in Securities Documents and (ii) the consolidated balance sheets of
UCB (including related
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notes and schedules, if any) and the related consolidated statements of income,
changes in shareholders' equity and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by UCB with respect to
periods ended subsequent to December 31, 1995.
"Joint Proxy Statement/Prospectus" shall mean the joint proxy statement and
prospectus, together with any supplements thereto, sent to shareholders of UCB
and the shareholders of SNC to solicit their votes in connection with this
Agreement and the Plan of Merger.
"Material Adverse Effect" on SNC or UCB shall mean an event, change, or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse effect on (i) the financial condition,
results of operations, business or business prospects of SNC and the SNC
Subsidiaries, taken as a whole, or UCB and the Subsidiaries, taken as a whole,
or (ii) the ability of SNC or UCB to perform its obligations under this
Agreement or to consummate the Merger and the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) actions and omissions of a party (or any of its
affiliates) taken with the prior informed consent of the other party in
contemplation of the transactions contemplated hereby, and (b) the direct
effects of compliance with this Agreement on the operating performance of the
parties, including expenses incurred by the parties in consummating the
transactions contemplated by this Agreement.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"NCBCA" shall mean the North Carolina Business Corporation Act as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Registration Statement" shall mean the registration statement of SNC with
respect to the SNC Common Stock to be issued in the Merger as declared effective
by the Commission under the Securities Act.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests, and stock appreciation
rights, performance units and similar stock-based rights whether or not they
obligate the issuer thereof to issue stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws.
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"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939 as amended; and the rules and
regulations of the Commission promulgated thereunder.
"SNC Common Stock" shall mean the shares of common stock, par value $5.00
per share, of SNC.
"SNC Option Agreement" shall mean the Option Agreement dated as of even
date herewith under which SNC has an option to purchase shares of UCB, which
shall be executed immediately following execution of this Reorganization
Agreement.
"SNC Subsidiaries" shall mean the Subsidiaries of SNC, which shall include
any corporation, bank, savings association, or other organization acquired as a
Subsidiary of SNC in the future and held as a Subsidiary by SNC at the Effective
Time.
"Stock Option Plan" shall mean, collectively or singularly, UCB's 1986 Key
Employee Stock Option Plan; 1995 Stock Option and Incentive Award; Stock Option
Policy for Nonemployee Directors of Triad Bank; Triad Bank Employees' Stock
Option Plan (Non-qualified); Seaboard Savings Bank, Inc., SSB 1993 Nonstatutory
Stock Option Plan for Directors; Seaboard Savings Bank, Inc., SSB 1993 Incentive
Stock Option Plan; and Bank of Iredell 1987 Employee Nonqualified Stock Option
Program.
"Stock Option" shall mean, collectively, any option, granted under the
Stock Option Plan and unexercised on the date hereof, to acquire shares of UCB
Common Stock, aggregating 357,577 shares.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either owns or controls 50% or
more of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (provided, there shall
not be included any such entity the equity securities of which are owned or
controlled in a fiduciary capacity).
"TILA" shall mean the Truth in Lending Act, as amended.
"UCB Common Stock" shall mean the shares of common stock, par value $4.00
per share, of UCB.
"UCB Disclosure Letter" shall mean the written information entitled "UCB
Disclosure Letter" dated the date of this Agreement and delivered not later than
ten days after the execution of this Agreement by UCB to SNC, and describing in
reasonable detail the matters contained therein. Each disclosure made therein
shall be in existence on the date of this Agreement and shall specifically
reference each Section of this Agreement under which such disclosure is made.
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Information disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced.
"UCB Option Agreement" shall mean the Option Agreement dated as of even
date herewith under which UCB has an option to purchase shares of SNC, which
shall be executed immediately following execution of this Reorganization
Agreement.
"UCB Subsidiaries" shall mean the Subsidiaries of UCB, which shall include
any corporation, bank, savings association, or other organization acquired as a
Subsidiary of UCB in the future and held as a Subsidiary by UCB at the Effective
Time.
1.2 Terms Defined Elsewhere
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The capitalized terms set forth below are defined in the following
sections:
Agreement Introduction
Articles of Merger Recitals
Average Closing Price Section 7.1(i)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7
Constituent Corporations Section 2.1
Determination Date Section 7.1(i)
Dissenting Shareholder Section 2.9
Dissenting Shares Section 2.9
Employee Section 5.12
Exchange Ratio Section 2.7
Index Group Section 7.1(i)
Maximum Amount Section 5.13(b)
Merger Recitals
Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Reorganization Agreement Introduction
SNC Introduction
SNC Option Plan Section 2.10(c)
SNC Ratio Section 7.1(A)(2)
Surviving Corporation Section 2.1(a)
UCB Introduction
UCB-SC Section 3.4
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ARTICLE II
THE MERGER
2.1 Merger
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SNC and UCB are constituent corporations (the "Constituent Corporations")
to the Merger as contemplated by the NCBCA. At the Effective Time:
(a) UCB shall be merged with and into SNC in accordance with the
applicable provisions of the NCBCA, with SNC being the surviving corporate
entity (hereinafter sometimes referred to as the "Surviving Corporation").
(b) The separate existence of UCB shall cease and the Merger shall in all
respects have the effect provided for in Section 2.5.
(c) The Articles of Incorporation of SNC at the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of SNC at the Effective Time shall become the Bylaws of the
Surviving Corporation.
2.2 Filing; Plan of Merger
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The Merger shall not become effective unless this Agreement and the Plan
of Merger are duly approved by a vote of a majority of the outstanding shares of
each of UCB (subject in the case of UCB to the provisions of Article X of its
Articles of Incorporation) and SNC entitled to be voted. Upon fulfillment or
waiver of the conditions specified in Article VI and provided that this
Agreement has not been terminated pursuant to Article VII, the Constituent
Corporations will cause the Articles of Merger to be executed and filed with the
Office of the Secretary of State of North Carolina. The Plan of Merger is
incorporated herein by reference, and adoption of this Agreement by the Boards
of Directors of the Constituent Corporations and approval by the shareholders of
the Constituent Corporations shall constitute adoption and approval of the Plan
of Merger.
2.3 Effective Time
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The Merger shall be effective at the day and hour specified in the
Articles of Merger filed with the Secretary of State of North Carolina (herein
sometimes referred to as the "Effective Time").
2.4 Closing
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The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the executive offices of SNC, BB&T Financial
Center, 200 West Second Street, Winston-Salem, North Carolina, at 11:00 a.m. on
the Business Day designated by SNC which is within thirty
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days following the satisfaction of the conditions to Closing set forth in
Article VI, or such later date as the parties may otherwise agree (the "Closing
Date").
2.5 Effect of Merger
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From and after the Effective Time, the separate existence of UCB shall
cease, and the Surviving Corporation shall thereupon and thereafter, to the
extent consistent with its Articles of Incorporation, possess all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all other choses
in action, and all and every other interest of or belonging to or due to each of
the Constituent Corporations shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and the title
to any real estate or any interest therein vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
The Surviving Corporation shall thenceforth be responsible and liable for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim existing or action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
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If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in law
or any other actions are necessary, desirable or proper to vest, perfect or
confirm of record or otherwise, in the Surviving Corporation, the title to any
property or rights of the Constituent Corporations acquired or to be acquired by
reason of, or as a result of, the Merger, the Constituent Corporations agree
that such Constituent Corporations and their proper officers and directors shall
and will execute and deliver all such proper deeds, assignments and assurances
in law and do all things necessary, desirable or proper to vest, perfect or
confirm title to such property or rights in the Surviving Corporation and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized and
directed in the name of the Constituent Corporations or otherwise to take any
and all such actions.
2.7 Merger Consideration
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As used herein, the term "Merger Consideration" shall mean the whole shares
of SNC Common Stock to be exchanged for each share of UCB Common Stock issued
and outstanding as of the Effective Time, and cash (without interest) to be
payable in exchange for any fractional share
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of SNC Common Stock which would otherwise be exchanged for a share of UCB Common
Stock. The number of shares of SNC Common Stock to be issued in exchange for
each issued and outstanding share of UCB Common Stock shall be in the ratio of
1.135 shares of SNC Common Stock for each share of UCB Common Stock issued and
outstanding (subject to possible adjustment pursuant to Section 7.1(h), the
"Exchange Ratio"). The value of any fractional share shall be determined by
multiplying the fractional part of such share of SNC Common Stock by the market
value of one share of SNC Common Stock at the Effective Time, which shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by SNC) on the first trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a shareholder in respect of any fractional shares.
2.8 Conversion of Shares; Payment of Merger Consideration
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(a) At the Effective Time, by virtue of the Merger and without any action
on the part of UCB or the holders of record of UCB Common Stock, each share of
UCB Common Stock issued and outstanding immediately prior to the Effective Time
shall be converted into and shall represent the right to receive, upon surrender
of the certificate representing such share of UCB Common Stock (as provided in
paragraph (d) below), the Merger Consideration.
(b) Each share of the common stock of SNC issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of UCB Common Stock shall be
deemed upon the Effective Time for all purposes to represent only the right to
receive the Merger Consideration as described in this Section 2.8. No interest
will be paid or accrued on the Merger Consideration upon the surrender of the
certificate or certificates representing shares of UCB Common Stock. With
respect to any certificate for UCB Common Stock that has been lost or destroyed,
the Surviving Corporation shall pay the Merger Consideration attributable to
such certificate upon receipt of a surety bond or other adequate indemnity and
evidence reasonably satisfactory to it of ownership of the shares represented
thereby. After the Effective Time, no transfer of the shares of UCB Common
Stock outstanding immediately prior to the Effective Time shall be made on the
stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, SNC shall cause to be delivered or
mailed to each UCB shareholder a form of letter of transmittal and instructions
for use in effecting the surrender of the certificates which, immediately prior
to the Effective Time, represented any shares of UCB Common Stock in exchange
for the Merger Consideration. Upon surrender of such certificates, together
with such letter of transmittal duly executed and completed in accordance with
the instructions thereto, and such other documents as may be reasonably
requested, SNC shall promptly cause the transfer to the persons entitled thereto
of the Merger Consideration.
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(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by UCB in respect of shares of UCB Common Stock in accordance
with the terms of this Agreement and which remain unpaid at the Effective Time.
To the extent permitted by law, former shareholders of record of UCB shall be
entitled to vote after the Effective Time at any meeting of SNC shareholders the
number of whole shares of SNC Common Stock into which their respective shares of
UCB Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing UCB Common Stock for certificates
representing SNC Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by SNC on the
SNC Common Stock, the record date for which is at or after the Effective Time,
the declaration shall include dividends or other distributions on all shares of
SNC Common Stock issuable pursuant to this Agreement, but after the Effective
Time no dividend or other distribution payable to the holders of record of SNC
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate until such holder surrenders such certificate
for exchange as provided in this Section 2.8. Upon surrender of such
certificate, both the SNC Common Stock certificate and any undelivered dividends
and cash payments payable hereunder (without interest) shall be delivered and
paid with respect to each share represented by such certificate.
2.9 Dissenting Shares
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Any UCB shareholder who shall have dissented from the Merger in accordance
with the NCBCA and who has properly exercised such shareholder's rights to
demand payment of the value of the Shareholder's shares (the "Dissenting
Shares") as provided in the NCBCA (the "Dissenting Shareholder") shall
thereafter have only such rights, if any, as are provided a Dissenting
Shareholder in accordance with the NCBCA and shall have no rights under Sections
2.7 and 2.8; provided, however, that if a Dissenting Shareholder shall withdraw
(in accordance with the NCBCA) the demand for such appraisal or shall become
ineligible for such appraisal, then such Dissenting Shareholder's Dissenting
Shares automatically shall cease to be Dissenting Shares and shall be converted
into and represent only the right to receive from the Surviving Corporation the
Merger Consideration provided for in Section 2.7 upon surrender of the
certificate representing the Dissenting Shares.
2.10 Conversion of Stock Options
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(a) At the Effective Time, each Stock Option then outstanding, whether or
not then exercisable, shall be converted into and become rights with respect to
SNC Common Stock, and SNC shall assume each Stock Option, in accordance with the
terms of the Stock Option Plan and stock option agreement, or other agreement,
by which it is evidenced, except that from and after the Effective Time (i) SNC
and its Compensation Committee shall be substituted for UCB and the Committee of
UCB's Board of Directors administering the Stock Option Plan, (ii) each Stock
Option assumed by SNC may be exercised solely for shares of SNC Common Stock,
(iii) the number of shares of SNC Common Stock subject to such Stock Option
shall be the number of whole shares of SNC (omitting any fractional share)
determined by multiplying the number of shares of UCB
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Common Stock subject to such Stock Option immediately prior to the Effective
Time by the Exchange Ratio, and (iv) the per share exercise price under each
such Stock Option shall be adjusted by dividing the per share exercise price
under each such Stock Option by the Exchange Ratio and rounding up to the
nearest cent. In addition, notwithstanding the provisions of clauses (iii) and
(iv) of the first sentence of this Section 2.10(a), each Stock Option which is
an "incentive stock option" shall be adjusted as required by Section 424 of the
Code, and the Regulations promulgated thereunder, so as to continue as an
incentive stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the option, within the
meaning of Section 424(h) of the Code. SNC and UCB agree to take all necessary
steps to effectuate the foregoing provisions of this Section 2.10.
(b) As soon as practicable after the Effective Time, SNC shall deliver to
the participants in the Stock Option Plan an appropriate notice setting forth
such participant's rights pursuant thereto, and the grants pursuant to such
Stock Option Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 2.10(a) after giving effect to
the Merger). SNC shall comply with the terms of the Stock Option Plan to ensure,
to the extent required by and subject to the provisions of such Stock Option
Plan, that Stock Options which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, SNC shall take all corporate
action necessary to reserve for issuance sufficient shares of SNC Common Stock
for delivery upon exercise of Stock Options assumed by it in accordance with
this Section 2.10. As soon as practicable after the Effective Time, SNC shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of SNC
Common Stock subject to Stock Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, SNC shall administer the
Stock Option Plan assumed pursuant to this Section 2.10 in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to the extent
necessary to preserve for such individuals the benefits of Rule 16b-3 to the
extent such benefits were available to them prior to the Effective Time. UCB
hereby represents that the Stock Option Plan in its current form complies with
Rule 16b-3 to the extent, if any, required as of November 1, 1996.
(c) Notwithstanding the foregoing provisions of this Section 2.10, SNC may
at its election substitute as of the Effective Time options under the Southern
National Corporation 1995 Omnibus Stock Incentive Plan (the "SNC Option Plan")
for all or a part of the Stock Options, subject to the following conditions: (i)
the requirements of Section 2.10(a)(iii) and (iv) shall be met; (ii) such
substitution shall not constitute a modification, extension or renewal of any of
the Stock Options which are incentive stock options; (iii) the substituted
options shall continue in effect on the same terms and conditions as the Stock
Option Plan or other document granting the Stock Option; and (iv) each grant of
a substitute option shall have been specifically approved in advance by the full
Board of Directors of SNC or by a committee consisting solely of "non-employee"
directors as defined in
10
Rule 16b-3. As soon as practicable following the Effective Time, SNC shall
deliver to the participants receiving substitute options under the SNC Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto. SNC has reserved under the SNC Option Plan adequate shares of SNC
Common Stock for delivery upon exercise of any such substituted options. SNC
hereby represents that the SNC Option Plan in its current form complies with
Rule 16b-3 to the extent, if any, required as of November 1, 1996.
2.11 Merger of Subsidiary
--------------------
In the event that SNC shall request, UCB shall cooperate in taking such
actions, and shall cooperate in causing the UCB Subsidiaries to take such
actions, as may be required in order to effect, at the Effective Time, the
merger of one or more of the UCB Subsidiaries with and into, in each case, one
of the SNC Subsidiaries.
2.12 Anti-Dilution
-------------
In the event SNC changes the number of shares of SNC Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend or other similar recapitalization, and the record date thereof (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCB
Except as otherwise Disclosed, UCB represents and warrants to SNC as
follows:
3.1 Capital Structure
-----------------
The authorized capital stock of UCB consists of 40,000,000 shares of UCB
Common Stock, and 2,000,000 shares of preferred stock, par value $10.00 per
share. As of the date hereof, 24,266,175 shares of UCB Common Stock are issued
and outstanding, and no other shares of capital stock of UCB, common or
preferred, are issued and outstanding. All outstanding shares of UCB Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. No other classes of capital stock of UCB are authorized. No
shares of capital stock have been reserved for any purpose, except for (i)
357,577 shares of UCB Common Stock in connection with the Stock Option Plan,
(ii) 4,828,960 shares of UCB Common Stock in connection with the SNC Option
Agreement, (iii) 2,500,000 shares of UCB Common Stock in connection with its
401(k) plan; and (iv) 900,000 shares of UCB Common Stock in connection with its
Long-Term Incentive Plan. Except as set forth herein, there are no Rights
authorized, issued or outstanding with respect to the capital stock of UCB.
Holders of UCB Common Stock do not have preemptive rights.
11
3.2 Organization, Standing and Authority
------------------------------------
UCB is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets. UCB is not required to be qualified to do business in any
other state of the United States or foreign jurisdiction. UCB is registered as
a bank holding company under the Bank Holding Company Act.
3.3 Ownership of Subsidiaries
--------------------------
Except as Disclosed in the UCB Disclosure Letter, UCB does not own,
directly or indirectly, any outstanding capital stock or other voting securities
or ownership interests of any corporation, partnership, joint venture, or other
organization which would constitute a Subsidiary, except for the UCB
Subsidiaries. The outstanding shares of capital stock of the UCB Subsidiaries
are validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by UCB free and clear of all liens,
claims and encumbrances or preemptive rights of any person. No Rights are
authorized, issued or outstanding with respect to the capital stock of the UCB
Subsidiaries, and there are no agreements, understandings or commitments
relating to the right of UCB to vote or to dispose of said shares. None of the
shares of capital stock of the UCB Subsidiaries has been issued in violation of
the preemptive rights of any person.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each UCB Subsidiary which is an insured depository institution is a state-
chartered, non-member commercial bank. Each of the UCB Subsidiaries is validly
existing and in good standing under the laws of its state of organization. Each
of the UCB Subsidiaries has full power and authority to carry on its business as
now conducted, and is duly qualified to do business in its state of
organization. No UCB Subsidiary is required to be qualified to do business in
any other state of the United States or foreign jurisdiction other than such UCB
Subsidiary's state of organization, or is engaged in any activities that have
not been Disclosed.
3.5 Authorized and Effective Agreement
----------------------------------
(a) UCB has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary governmental approvals and the receipt of
approval of the UCB shareholders of this Agreement and the Plan of Merger) to
perform all of its obligations under this Reorganization Agreement, the Articles
of Merger, the UCB Option Agreement and the SNC Option Agreement. The execution
and delivery of this Reorganization Agreement, the Articles of Merger and said
Option Agreements, and consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
in respect thereof, except in the case of this Agreement and the Plan of Merger,
the approval of UCB shareholders pursuant to and to the extent required by
applicable law. This Agreement and the Plan of Merger constitute legal, valid
and binding obligations of UCB, and each is enforceable against UCB in
accordance with its
12
terms, in each such case subject to (i) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship, receivership, or other
similar laws from time to time in effect relating to or affecting the
enforcement of rights of creditors of FDIC insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity, and except that the availability of equitable remedies or injunctive
relief is within the discretion of the appropriate court.
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger, the UCB Option Agreement or the SNC Option Agreement, nor consummation
of the transactions contemplated hereby or thereby, nor compliance by UCB with
any of the provisions hereof or thereof, shall (i) conflict with or result in a
breach of any provision of the articles of incorporation or by-laws of UCB or
any UCB Subsidiary, (ii) subject to receipt of any required consents or
approvals, constitute or result in a breach of any term, condition or provision
of, or constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of UCB or any UCB
Subsidiary pursuant to, any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation, or (iii) subject to receipt of all required
governmental approvals, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to UCB or any UCB Subsidiary.
3.6 Securities Filings
------------------
UCB has timely filed all Securities Documents required by the Securities
Laws since December 31, 1993. UCB shall Disclose to SNC a true and complete
copy of each Securities Document filed by UCB with the Commission after December
31, 1993 and prior to the date hereof, which are all of the Securities Documents
that UCB was required to file during such period. As of their respective dates
of filing, such Securities Documents complied in all material respects with the
Securities Laws as then in effect, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.7 Financial Statements; Minute Books
----------------------------------
The Financial Statements of UCB fairly present or will fairly present, as
the case may be, the consolidated financial position of UCB and the UCB
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and statements of cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to
normal year-end audit adjustments that are not material in amount or effect) in
conformity with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis. The minute books of UCB and each of
the UCB Subsidiaries contain or will contain at Closing legally sufficient
records of all meetings and other corporate actions of its shareholders and
Board of Directors (including committees of its Board of Directors).
13
3.8 Material Adverse Change
-----------------------
Since December 31, 1995, UCB and the UCB Subsidiaries have not incurred any
material liability except as disclosed in the most recent UCB Financial
Statements, or entered into any transactions with affiliates, other than in the
ordinary course of business consistent with past practices, nor has there been
any change, or any event involving a prospective change, in the business,
financial condition or results of operations of UCB and the UCB Subsidiaries
which has had, or is reasonably likely to have, a Material Adverse Effect on
UCB.
3.9 Absence of Undisclosed Liabilities
----------------------------------
Neither UCB nor any UCB Subsidiary has any liability (contingent or
otherwise) that is material to UCB on a consolidated basis or that, when
combined with all other similar liabilities, would be material to UCB on a
consolidated basis, except as disclosed in the most recent Financial Statements
of UCB and except for liabilities made in the ordinary course of its business
since the date of UCB's most recent Financial Statements.
3.10 Properties
----------
(a) UCB and the UCB Subsidiaries have good and marketable title, free and
clear of all liens, encumbrances, charges, defaults or equitable interests, to
all of the properties and assets, real and personal, reflected on the
consolidated balance sheet included in the Financial Statements of UCB as of
December 31, 1995 or acquired after such date, except (i) liens for current
taxes not yet due and payable, (ii) pledges to secure deposits and other liens
incurred in the ordinary course of banking business, (iii) such imperfections of
title, easements and encumbrances, if any, as are not material in character,
amount or extent, or (iv) dispositions and encumbrances for adequate
consideration in the ordinary course of business.
(b) All leases and licenses pursuant to which UCB or any UCB Subsidiary, as
lessee or licensee, leases or licenses rights to real or personal property, are
valid and enforceable in accordance with their respective terms.
3.11 Environmental Matters
---------------------
Except as Disclosed:
(a) UCB and the UCB Subsidiaries are in compliance with all Environmental
Laws. Neither UCB nor any UCB Subsidiary has received any communication alleging
that UCB or the UCB Subsidiary is not in such compliance, and there are no
present circumstances that would prevent or interfere with the continuation of
such compliance.
(b) UCB has not received notice of any pending, and there are no pending
or, to the best of UCB's knowledge, threatened, legal, administrative, arbitral
or other proceedings, asserting
14
Environmental Claims or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that could result in the
imposition of, any liability arising under any Environmental Laws upon (i) UCB
or any UCB Subsidiary, (ii) any person or entity whose liability for any
Environmental Claim UCB or any UCB Subsidiary has or may have retained or
assumed, either contractually or by operation of law, (iii) any real or personal
property owned or leased by UCB or any UCB Subsidiary, or any real or personal
property which UCB or any UCB Subsidiary has or is judged to have managed or
supervised or participated in the management of, or (iv) any real or personal
property in which UCB or any UCB Subsidiary holds a security interest securing a
loan recorded on the books of UCB or any UCB Subsidiary. Neither UCB nor any
UCB Subsidiary is subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
(c) UCB and the UCB Subsidiaries are in compliance in all material
respects with all recommendations contained in any environmental audits,
analyses and surveys relating to all real and personal property owned or leased
by UCB or any UCB Subsidiary and all real and personal property which UCB or any
UCB Subsidiary has or is judged to have managed or supervised or participated in
the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Laws against UCB or any UCB Subsidiary or against any person or entity whose
liability for any Environmental Claim UCB or any UCB Subsidiary has or may have
retained or assumed, either contractually or by operation of law.
3.12 Allowance for Loan Losses
-------------------------
The allowance for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of UCB is or will be in the opinion
of UCB's management adequate in all material respects as of their respective
dates, under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
3.13 Tax Matters
-----------
(a) UCB and the UCB Subsidiaries, and each of their predecessors,
have timely filed (or requests for extensions have been timely filed and any
such extensions have been granted and have not expired) all federal, state and
local (and, if applicable, foreign) tax returns required by applicable law to be
filed by them (including, without limitation, estimated tax returns, income tax
returns, information returns, and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective
15
Time, will have paid, or where payment is not required to have been made, will
have set up an adequate reserve or accrual for the payment of, all taxes for any
subsequent periods ending on or prior to the Effective Time. Neither UCB nor
any UCB Subsidiary will have any material liability for any such taxes in excess
of the amounts so paid or reserves or accruals so established.
(b) Except as Disclosed, all federal, state and local (and, if
applicable, foreign) tax returns filed by UCB and the UCB Subsidiaries are
complete and accurate in all material respects. Neither UCB nor any UCB
Subsidiary is delinquent in the payment of any tax, assessment or governmental
charge. No deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against UCB or any UCB
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to UCB or any UCB Subsidiary to extend the
period of limitations for the assessment or collection of any tax. No audit
examination or deficiency or refund litigation with respect to such returns is
pending.
3.14 Employees; Compensation; Benefit Plans.
--------------------------------------
(a) Compensation. UCB shall have Disclosed a complete and correct
------------
list of the name, age, position, rate of compensation and any incentive
compensation arrangements, bonuses or commissions or fringe or other benefits,
whether payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of UCB and of each UCB Subsidiary and each
other person (other than an employee as such) to whom UCB or any UCB Subsidiary
pays or provides, or has an obligation, agreement (written or unwritten), policy
or practice of paying or providing, retirement, health, welfare or other
benefits of any kind or description whatsoever.
(b) Employee Benefit Plans.
----------------------
(i) UCB shall have Disclosed an accurate and complete
list of all Plans, as defined below, contributed to, maintained
or sponsored by UCB or any UCB Subsidiary, to which UCB or any
UCB Subsidiary is obligated to contribute or has any liability or
potential liability, whether direct or indirect, including all
Plans contributed to, maintained or sponsored by each member of
the controlled group of corporations, within the meaning of
Sections 414(b), 414(c), 414(m) and 414(o) of the Code, of which
UCB or any UCB Subsidiary is a member. For purposes of this
Agreement, the term "Plan" shall mean a plan, arrangement,
agreement or program described in the foregoing provisions of
this Section 3.14(b)(i) and which is: (A) a profit-sharing,
deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, whether or not funded
and whether or not terminated, (B) an employment agreement, (C) a
personnel policy or fringe benefit plan, policy, program or
arrangement providing for benefits or perquisites to current or
former employees, officers, directors or agents, whether or not
funded, and whether or not terminated, including without
limitation benefits relating to automobiles, clubs, vacation,
child care, parenting, sabbatical, sick leave,
16
severance, medical, dental, hospitalization, life insurance and
other types of insurance, or (D) any other employee benefit plan
as defined in Section 3(3) of ERISA, whether or not funded and
whether or not terminated.
(ii) Except as Disclosed, neither UCB nor any UCB
Subsidiary contributes to, has an obligation to contribute to or
otherwise has any liability or potential liability with respect
to (A) any multiemployer plan as defined in Section 3(37) of
ERISA, (B) any plan of the type described in Sections 4063 and
4064 of ERISA or in section 413 of the Code (and regulations
promulgated thereunder), or (C) any plan which provides health,
life insurance, accident or other "welfare-type" benefits to
current or future retirees or former employees or directors,
their spouses or dependents, other than in accordance with
Section 4980B of the Code or applicable state continuation
coverage law.
(iii) Except as Disclosed, none of the Plans obligates UCB
or any UCB Subsidiary to pay separation, severance, termination
or similar-type benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change
in control," as such term is used in Section 280G of the Code
(and regulations promulgated thereunder).
(iv) Each Plan has been maintained, funded and
administered in compliance in all respects with its own terms and
in compliance in all respects with all applicable laws and
regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings,
hearings, examinations, investigations, audits or demands with
respect to the Plans (other than routine claims for benefits) are
pending or threatened, and there are no facts which could give
rise to or be expected to give rise to any actions, suits,
claims, complaints, charges, proceedings, hearings, examinations,
investigations, audits or demands. No Plan that is subject to the
funding requirements of Section 412 of the Code or Section 302 of
ERISA has incurred any "accumulated funding deficiency" as such
term is defined in such Sections of ERISA and the Code, whether
or not waived, and each Plan has always fully met the funding
standards required under Title I of ERISA and Section 412 of the
Code. No liability to the Pension Benefit Guaranty Corporation
("PBGC") (except for routine payment of premiums) has been or is
expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is
defined in Section 4043 of ERISA) has occurred with respect to
any such Plan, and the PBGC has not commenced or threatened the
termination of any Plan. None of the assets of UCB or any UCB
Subsidiary is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code,
17
neither UCB nor any UCB Subsidiary has been required to post any
security pursuant to Section 307 of ERISA or Section 401(a)(29)
of the Code, and there are no facts which could be expected to
give rise to such lien or such posting of security. No event has
occurred and no condition exists that would subject UCB or any
UCB Subsidiary to any tax under Sections 4971, 4972, 4977 or 4979
of the Code or to a fine or penalty under Section 502(c) of
ERISA.
(v) Each Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a
part thereof, has received a favorable determination letter from
the Internal Revenue Service as to the qualification under the
Code of such Plan and the tax exempt status of such related
trust, and nothing has occurred since the date of such
determination letter that could adversely affect the
qualification of such Plan or the tax exempt status of such
related trust.
(vi) No underfunded "defined benefit plan" (as such term
is defined in Section 3(35) of ERISA) has been, during the five
years preceding the Closing Date, transferred out of the
controlled group of corporations (within the meaning of Sections
414(b), (c), (m) and (o) of the Code) of which UCB or any UCB
Subsidiary is a member or was a member during such five-year
period.
(vii) As of the Closing Date, the fair market value of the
assets of each Plan that is a tax qualified defined benefit plan
equals or exceeds the present value of all vested and non-vested
liabilities thereunder determined in accordance with reasonable
actuarial methods, factors and assumptions applicable to a
defined benefit plan on an ongoing basis. With respect to each
Plan that is subject to the funding requirements of Section 412
of the Code and Section 302 of ERISA, all required contributions
for all periods ending prior to or as of the Closing Date
(including periods from the first day of the then-current plan
year to the Closing Date and including all quarterly
contributions required in accordance with Section 412(m) of the
Code) shall have been made. With respect to each other Plan, all
required payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the Closing
Date shall have been made. No tax qualified Plan has any material
unfunded liabilities.
(viii) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt
under Section 408 of ERISA or Section 4975 of the Code, whether
by statutory, class or individual exemption) has occurred with
respect to any Plan which would result in the
18
imposition, directly or indirectly, of any excise tax, penalty or
other liability under Section 4975 of the Code or Section 409 or
502(i) of ERISA. Neither UCB, nor to the best knowledge of UCB
any UCB Subsidiary, nor any trustee, administrator or other
fiduciary of any Plan, nor to the best knowledge of UCB any agent
of any of the foregoing has engaged in any transaction or acted
or failed to act in a manner which could subject UCB or any UCB
Subsidiary to any material liability for breach of fiduciary duty
under ERISA or any other applicable law.
(ix) With respect to each Plan, all reports and
information required to be filed with any government agency or
distributed to Plan participants and their beneficiaries have
been duly and timely filed or distributed.
(x) UCB and each UCB Subsidiary has been and is
presently in compliance with all of the requirements of Section
4980B of the Code.
(xi) Neither UCB nor any UCB Subsidiary has a liability
as of December 31, 1995, under any Plan that, to the extent
disclosure is required under generally accepted accounting
principles, is not reflected on the consolidated balance sheet
included in the Financial Statements of UCB as of December 31,
1995 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A)
UCB's or any UCB Subsidiary's obligation to make contributions or
any other payments to fund benefits accrued under the Plans as of
the date of this Agreement or (B) the benefits accrued or payable
with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting).
(xiii) With respect to each Plan, UCB has Disclosed or made
available true, complete and correct copies of (A) all documents
pursuant to which the Plans are maintained, funded and
administered, including summary plan descriptions, (B) the three
most recent annual reports (Form 5500 series) filed with the
Internal Revenue Service (with attachments), (C) the three most
recent actuarial reports, if any, (D) the three most recent
financial statements, (E) all governmental filings for the last
three years, including without limitation, excise tax returns and
reportable events filings, and (F) all governmental rulings,
determinations, and opinions (and pending requests for
governmental rulings, determinations, and opinions) during the
past three years.
19
3.15 Certain Contracts
-----------------
(a) Except as Disclosed, neither UCB nor any UCB Subsidiary is a
party to, is bound or affected by, or receives benefits under (i) any agreement,
arrangement or commitment, the default of which would have a Material Adverse
Effect, whether or not made in the ordinary course of business (other than loans
or loan commitments made or certificates or deposits received in the ordinary
course of the banking business), or any agreement restricting its business
activities, including without limitation agreements or memoranda of
understanding with regulatory authorities, (ii) any agreement, indenture or
other instrument relating to the borrowing of money by UCB or any UCB Subsidiary
or the guarantee by UCB or any UCB Subsidiary of any such obligation, which
cannot be terminated within less than 30 days after the Closing Date by UCB or
any UCB Subsidiary (without payment of any penalty or cost, except with respect
to Federal Home Loan Bank advances), (iii) any agreement, arrangement or
commitment relating to the employment of a consultant or the employment,
election or retention in office of any present or former director or officer,
which cannot be terminated within less than 30 days after the Closing Date by
UCB or any UCB Subsidiary (without payment of any penalty or cost), or that
provides benefits which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving UCB of the nature
contemplated by this Agreement or the SNC Option Agreement, (iv) any contract,
agreement or understanding with a labor union, in each case whether written or
oral, or (v) any agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the SNC Option Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement or the SNC Option Agreement. Each agreement,
arrangement and commitment Disclosed pursuant to this Section 3.15(a) is in full
force and effect.
(b) Neither UCB nor any UCB Subsidiary is in default, which default
would have a Material Adverse Effect or would adversely affect the transactions
contemplated herein, under any agreement, commitment, arrangement, lease,
insurance policy, or other instrument, whether entered into in the ordinary
course of business or otherwise and whether written or oral, and there has not
occurred any event that, with the lapse of time or giving of notice or both,
would constitute such a default.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or threatened against UCB or any UCB Subsidiary
or against any asset, interest, or right of UCB or any UCB Subsidiary, or
against any officer, director or employee of any of them that in any such case,
if decided adversely, would reasonably be expected to have a Material Adverse
Effect. There are no actions, suits or proceedings instituted, pending or
threatened against any present or former director or officer of UCB or any UCB
Subsidiary that would reasonably be expected to give rise to a claim against UCB
or any UCB Subsidiary for indemnification. There are no actual or
20
threatened actions, suits or proceedings which present a claim to restrain or
prohibit the transactions contemplated herein or in the SNC Option Agreement.
To the best knowledge of UCB, no fact or condition relating to UCB or any UCB
Subsidiary exists (including without limitation noncompliance with the CRA) that
would prevent UCB or SNC from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.17 Compliance with Laws
--------------------
Each of UCB and each UCB Subsidiary is in compliance in all material
respects with all statutes and regulations (including, but not limited to, the
CRA, TILA and regulations promulgated thereunder, and other consumer banking
laws) applicable and material to the conduct of its business, and neither UCB
nor any UCB Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation which violation would reasonably be expected to have a Material
Adverse Effect on UCB, (ii) threatening to revoke any license, franchise, permit
or government authorization, or (iii) restricting or in any way limiting its
operations. Neither UCB nor any UCB Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment, and none of them has received any communication
requesting that it enter into any of the foregoing.
3.18 Brokers and Finders
-------------------
Neither UCB nor any UCB Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein, in the Plan of Merger or in the SNC Option
Agreement, except for fees to accountants and lawyers and an obligation to Wheat
First Butcher Singer as Disclosed for investment banking services.
3.19 Loans
-----
To the best of UCB's knowledge, substantially all of the loans on the
books and records of the UCB Subsidiaries are valid and properly documented.
Neither the terms of such loans, nor any of the loan documentation, nor the
manner in which such loans have been administered and serviced, violates in any
material respect any federal, state or local law, rule, regulation or ordinance
applicable thereto, including without limitation, the TILA, Regulations O and Z
of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as
amended, and state laws, rules and regulations relating to consumer protection,
installment sales and usury.
3.20 Repurchase Agreements
---------------------
With respect to all agreements currently outstanding pursuant to which
UCB or any UCB Subsidiary has purchased securities subject to an agreement to
resell, UCB or the UCB Subsidiary has a valid, perfected first lien or security
interest in the securities or other collateral securing such
21
agreement, and the value of such collateral equals or exceeds the amount of the
debt secured thereby. With respect to all agreements currently outstanding
pursuant to which UCB or any UCB Subsidiary has sold securities subject to an
agreement to repurchase, neither UCB nor the UCB Subsidiary has pledged
collateral materially in excess of the amount of the debt secured thereby.
Neither UCB nor any UCB Subsidiary has pledged collateral materially in excess
of the amount required under any interest rate swap or other similar agreement
currently outstanding.
3.21 Deposit Accounts
----------------
The deposit accounts of the UCB Subsidiaries that are insured depository
institutions are insured by the FDIC to the maximum extent permitted by federal
law, and the UCB Subsidiaries have paid all premiums and assessments and filed
all reports required to have been paid or filed under the FDIA.
3.22 Related Party Transactions
--------------------------
UCB has Disclosed all transactions, investments and loans, including loan
guarantees, to which UCB or any UCB Subsidiary is a party with any director,
executive officer or 5% shareholder of UCB or any person, corporation, or
enterprise controlling, controlled by or under common control with any of the
foregoing. All such transactions, investments and loans are on terms no less
favorable to UCB than could be obtained from unrelated parties.
3.23 Certain Information
-------------------
When the Joint Proxy Statement/Prospectus is mailed, and at the time of
the meeting of shareholders of UCB to vote upon the Plan of Merger, the Joint
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by UCB, (i) shall comply
in all material respects with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
3.24 Accounting, Tax and Regulatory Matters
--------------------------------------
Neither UCB nor any UCB Subsidiary has taken or agreed to take any action
which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to be accounted for as a pooling-of-
interests (except to the extent actions taken pursuant to the terms of this
Agreement could have such affect) or not to constitute a reorganization under
Section 368 of the Code, or (ii) materially impede or delay receipt of any
consents of regulatory authorities referred to in Section 5.4(b) or result in
failure of the condition in Section 6.3(b).
22
3.25 State Takeover Laws
-------------------
UCB and each UCB Subsidiary have taken all necessary action to exempt the
transactions contemplated by this Agreement from any applicable moratorium, fair
price, business combination, control share or other anti-takeover laws included
in Sections 55-9-101 et seq. and 55-9A-01 et seq. of the NCBCA.
3.26 Derivatives Contracts
---------------------
Neither UCB nor any UCB Subsidiary is a party to or has agreed to enter
into an exchange-traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial contract, or any other interest rate or foreign
currency protection contract not included on its balance sheets in the Financial
Statements, which is a financial derivative contract (including various
combinations thereof), except as Disclosed.
3.27 Fairness Opinion
----------------
UCB has received from Wheat First Butcher Singer an opinion that, as of
November 1, 1996, the Exchange Ratio is fair to the shareholders of UCB from a
financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SNC
SNC represents and warrants to UCB as follows:
4.1 Capital Structure of SNC
------------------------
The authorized capital stock of SNC consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which no shares are issued and
outstanding, and (ii) 300,000,000 shares of SNC Common Stock, of which
109,112,010 shares were issued and outstanding on September 30, 1996. All
outstanding shares of SNC Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable. The shares of SNC Common Stock reserved as
provided in Section 5.3 are free of any Rights and have not been reserved for
any other purpose, and such shares are available for issuance as provided
pursuant to the Plan of Merger. Holders of SNC Common Stock do not have
preemptive rights.
4.2 Organization, Standing and Authority of SNC
-------------------------------------------
SNC is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the
23
states of the United States where its ownership or leasing of property or the
conduct of its business requires such qualification and where failure to so
qualify would have a Material Adverse Effect. SNC is registered as a bank
holding company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
(a) SNC has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals and receipt of
required approval of shareholders of SNC of this Agreement and the Plan of
Merger) perform all of its obligations under this Agreement, the SNC Option
Agreement and the UCB Option Agreement. The execution and delivery of this
Reorganization Agreement, the Articles of Merger and said Option Agreements, and
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of SNC, except in the case of this Agreement and the Plan of Merger,
the approval of SNC shareholders pursuant to and to the extent required by
applicable law or regulation. This Agreement and the Plan of Merger attached
hereto constitute legal, valid and binding obligations of SNC, and each is
enforceable against SNC in accordance with its terms, in each case subject to
(i) bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws in effect from time to time relating to or
affecting the enforcement of the rights of creditors; and (ii) general
principles of equity, and except that the availability of remedies or injunctive
relief is within the discretion of the appropriate court.
(b) Neither the execution and delivery of this Agreement, the SNC Option
Agreement or the UCB Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by SNC with any of the provisions
hereof or thereof shall (i) conflict with or result in a breach of any provision
of the articles of incorporation or bylaws of SNC or any SNC Subsidiary, (ii)
constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of SNC or any SNC
Subsidiary pursuant to any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation, which would have a material adverse effect on
the business, operations or financial condition of SNC and the SNC Subsidiaries
taken as a whole, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to SNC or any SNC Subsidiary.
4.4 Organization, Standing and Authority of SNC Subsidiaries
--------------------------------------------------------
Each of the SNC Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. SNC owns, directly or indirectly, all of
the stock of each of the SNC Subsidiaries. Each of the SNC Subsidiaries (i) has
full power and authority to carry on its business as now conducted and (ii) is
duly qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification and where failure to so qualify would have
a Material Adverse Effect on SNC.
24
4.5 Securities Documents
--------------------
SNC (and BB&T Financial Corporation prior to its merger with SNC) has
timely filed all Securities Documents required by the Securities Laws since
December 31, 1993. As of their respective dates of filing, such Securities
Documents complied in all material respects with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.6 Financial Statements
--------------------
The Financial Statements of SNC fairly present or will fairly present, as
the case may be, the consolidated financial position of SNC and the SNC
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to
normal year-end audit adjustments that are not material in amount or effect) in
conformity with generally accepted accounting principles applicable to financial
institutions applied on a consistent basis.
4.7 Material Adverse Change
-----------------------
Since December 31, 1995, SNC and the SNC Subsidiaries have not incurred any
material liability except as disclosed on the most recent SNC Financial
Statements, or entered into any transactions with affiliates, other than in the
ordinary course of business consistent with past practices, nor has there been
any change, or any event involving a prospective change, in the business,
financial condition or results of operations of SNC and the SNC Subsidiaries
which has had, or is reasonably likely to have, a Material Adverse Effect on
SNC.
4.8 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or threatened against SNC or any SNC Subsidiary
or against any asset, interest, or right of SNC or any SNC Subsidiary, or
against any officer, director or employee of any of them that in any such case,
if decided adversely, would reasonably be expected to have a Material Adverse
Effect. There are no actions, suits or proceedings instituted, pending or
threatened against any present or former director or officer of SNC or any SNC
Subsidiary that would reasonably be expected to give rise to a claim against SNC
or any SNC Subsidiary for indemnification. There are no actual or threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein, in the Plan of Merger or the UCB Option
Agreement. To the best knowledge of SNC, no fact or condition relating to SNC
or any SNC Subsidiary exists (including without limitation noncompliance with
the CRA) that would prevent UCB or SNC from obtaining all of the federal and
state regulatory approvals contemplated herein.
25
4.9 Absence of Undisclosed Liabilities
----------------------------------
Neither SNC nor any of the SNC Subsidiaries has any liability (contingent
or otherwise) that is material to SNC on a consolidated basis or that, when
combined with all similar liabilities, would be material to SNC on a
consolidated basis, except as disclosed in the Financial Statements of SNC and
except for liabilities made in the ordinary course of its business since the
date of SNC's most recent Financial Statements.
4.10 Allowance for Loan Losses
-------------------------
The allowance for loan losses reflected on the consolidated balance sheets
included in the Financial Statements of SNC is or will be in the opinion of
SNC's management adequate in all material respects as of their respective dates,
under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
4.11 Tax Matters
-----------
(a) SNC and the SNC Subsidiaries, and each of their predecessors, has
timely filed all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns, and
withholding and employment tax returns) and have paid, or have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid as
shown on such returns and, as of the Effective Time, will have paid, or where
payment is not required to have been made, will have set up an adequate reserve
or accrual for the payment of, all taxes for any subsequent periods ending on or
prior to the Effective Time. SNC will not, to SNC's knowledge, have any
material liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by SNC and the SNC Subsidiaries are complete and accurate in all material
respects. Neither SNC nor any SNC Subsidiary is delinquent in the payment of
any tax, assessment or governmental charge, and has not failed to file any tax
return which is currently past due. No deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed (tentatively or
otherwise) against SNC or any SNC Subsidiary which have not been settled and
paid. There currently are no agreements in effect with respect to SNC or any
SNC Subsidiary to extend the period of limitations for the assessment or
collection of any tax.
4.12 Compliance with Laws
--------------------
Each of SNC and the SNC Subsidiaries is in compliance with all statutes and
regulations (including, but not limited to, the CRA, TILA and regulations
promulgated thereunder and other consumer banking laws) applicable and material
to the conduct of its business, and neither SNC nor
26
any of the SNC Subsidiaries has received any notification that has not lapsed,
been withdrawn or abandoned from any agency or department of federal, state or
local government (i) asserting a violation or possible violation of any such
statute or regulation, and which violation would reasonably likely have a
Material Adverse Effect on SNC, (ii) threatening to revoke any license,
franchise, permit or government authorization, or (iii) restricting or in any
way limiting its operations. Neither SNC nor any of the SNC Subsidiaries is
subject to any regulatory or supervisory cease and desist order, agreement,
directive or memorandum of understanding, and none of them has received any
communication requesting that they enter into any of the foregoing.
4.13 Certain Information
-------------------
When the Joint Proxy Statement/Prospectus is mailed, and at all times
subsequent to such mailing up to and including the time of the meeting of
shareholders of SNC to vote on the Merger, the Joint Proxy Statement/Prospectus
and all amendments or supplements thereto, with respect to all information set
forth therein relating to SNC, (i) shall comply in all material respects with
the applicable provisions of the Securities Laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
4.14 Accounting, Tax and Regulatory Matters
--------------------------------------
Neither SNC nor the SNC Subsidiaries have taken or agreed to take any
action which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to be accounted for as a pooling of
interests or not to constitute a reorganization under Section 368 of the Code,
or (ii) materially impede or delay receipt of any consents of regulatory
authorities referred to in Section 5.4(b) or result in failure of the condition
in Section 6.3(b).
4.15 Share Ownership
---------------
As of the date of this Agreement, SNC does not own (except in a fiduciary
capacity) any shares of UCB Common Stock.
ARTICLE V
COVENANTS
5.1 Shareholders' Meetings
----------------------
UCB shall submit this Reorganization Agreement and the Plan of Merger to
its shareholders for approval at a meeting to be held as soon as practicable,
and by approving execution of this Agreement the Board of Directors of UCB
agrees that it shall, at the time the Joint Proxy Statement/Prospectus is mailed
to the shareholders of UCB, recommend that UCB's shareholders vote for such
approval; provided, that the Board of Directors of UCB may withdraw or refuse to
make such recommendation only if the Board of Directors shall determine in good
faith that such
27
recommendation would violate its fiduciary duty to its shareholders following
(i) the consideration of written advice of legal counsel that making such
recommendation or the failure to withdraw or modify such recommendation would
constitute a breach of the fiduciary duties of such Board to shareholders of
UCB, and (ii) the withdrawal by Wheat First Butcher Singer in writing of its
opinion referred to in Section 3.27 or delivering to the UCB Board of Directors
of written advice from Wheat First Butcher Singer that the Exchange Ratio is not
fair or is inadequate to the shareholders of UCB from a financial point of view.
SNC shall submit this Reorganization Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and by
approving execution of this Agreement the Board of Directors of SNC agrees that
it shall, at the time the Joint Proxy Statement/Prospectus is mailed to the
shareholders of SNC, recommend that SNC's shareholders vote for such approval.
5.2 Registration Statement; Joint Proxy Statement/Prospectus
--------------------------------------------------------
As promptly as practicable after the date hereof, SNC shall prepare and
file the Registration Statement with the Commission. UCB will furnish to SNC the
information required to be included in the Registration Statement with respect
to its business and affairs before it is filed with the Commission and again
before any amendments are filed, and shall have the right to review and consult
with SNC on the form of, and any characterizations of such information included
in, the Registration Statement prior to the filing with the Commission. SNC
shall use its best efforts to cause such Registration Statement to be declared
effective under the Securities Act. Such Registration Statement, at the time it
becomes effective and on the Effective Time, shall in all material respects
conform to the requirements of the Securities Act and the applicable rules and
regulations of the Commission. SNC shall take all actions required to register
or obtain exemptions from such registration for the SNC Common Stock to be
issued in connection with the transactions contemplated by this Agreement and
the Plan of Merger under applicable state "Blue Sky" securities laws, as
appropriate. The Registration Statement shall include the form of Joint Proxy
Statement/Prospectus. SNC and UCB shall use their best efforts to cause the
Joint Proxy Statement/Prospectus to be approved by the SEC for mailing to the
UCB and SNC shareholders, and such Joint Proxy Statement/Prospectus shall, on
the date of mailing, conform in all material respects to the requirements of the
Securities Laws and the applicable rules and regulations of the SEC thereunder.
SNC and UCB shall cause the Joint Proxy Statement/Prospectus to be mailed to
shareholders in accordance with all applicable notice requirements under the
Securities Laws and the NCBCA.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In this connection, SNC undertakes and agrees to pay or cause to
be paid when due the number of shares of SNC Common Stock to be distributed
pursuant to Section 2.7 and any cash required to be paid for fractional shares.
SNC has reserved for issuance such number of shares of SNC Common Stock as shall
be necessary to pay the consideration to be distributed to the UCB shareholders
as contemplated in Section 2.8, required in connection with the UCB Option
Agreement, and as
28
otherwise required herein. If at any time the aggregate number of shares of SNC
Common Stock available for issuance hereunder shall not be sufficient to effect
the Merger, SNC shall take all appropriate action as may be required to increase
the amount of the authorized SNC Common Stock.
5.4 Additional Acts
---------------
(a) UCB agrees to cooperate in taking such actions as may be reasonably
necessary to modify the structure of, or to substitute parties to (so long as
such substitute is SNC or a SNC Subsidiary) the transactions contemplated
hereby, provided that such modifications do not adversely affect the economic
benefits of such transactions or otherwise abrogate the covenants and other
agreements contained in this Agreement.
(b) As promptly as practicable after the date hereof, SNC and UCB shall
submit notice or applications for prior approval of the transactions
contemplated herein to the Federal Reserve Board, and any other federal, state
or local government agency, department or body to which notice is required or
from which approval is required for consummation of the Merger and the other
transactions contemplated hereby. UCB and SNC each represents and warrants to
the other that all information concerning it and its directors, officers and
shareholders and concerning any SNC Subsidiary included (or submitted for
inclusion) in any such application shall be true, correct and complete in all
material respects as of the date presented.
5.5 Best Efforts
------------
SNC and UCB shall use, and shall cause each of their respective
Subsidiaries to use, its best efforts in good faith to (i) furnish such
information as may be required in connection with and otherwise cooperate in the
preparation and filing of the documents referred to in Sections 5.2 and 5.4 or
elsewhere herein, and (ii) take or cause to be taken all action necessary or
desirable on its part to fulfill the conditions in Article VI and to consummate
the transactions herein contemplated at the earliest practicable date. Neither
SNC nor UCB shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially delay or impair the prospects of
completing the Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
--------------------------
UCB shall cooperate with SNC concerning accounting and financial matters
necessary or appropriate to facilitate the Merger (taking into account SNC's
policies, practices and procedures), including without limitation issues arising
in connection with record keeping, loan classification, valuation adjustments,
levels of loan loss reserves and other accounting practices.
5.7 Access to Information
---------------------
UCB and the UCB Subsidiaries will keep SNC advised, and SNC and the SNC
Subsidiaries will keep UCB advised, of all material developments relevant to
their business and to consummation
29
of the Merger. Upon reasonable notice, UCB and the UCB Subsidiaries shall
afford to representatives of SNC, and SNC and the SNC Subsidiaries shall afford
to representatives of UCB, access, during normal business hours during the
period prior to the Effective Time, to all of their respective properties,
books, contracts, commitments and records and, during such period, shall make
available all information concerning their business as may be reasonably
requested. No investigation pursuant to this Section 5.7 shall affect or be
deemed to modify any representation or warranty made by, or the conditions to
the obligations hereunder of, either party hereto. As of the date hereof, UCB
and SNC have entered into confidentiality agreements relating to the information
to be provided pursuant to this Agreement.
5.8 Press Releases
--------------
SNC and UCB shall agree with each other as to the form and substance of any
press release related to this Agreement and the Plan of Merger or the
transactions contemplated hereby and thereby, and consult with each other as to
the form and substance of other public disclosures related thereto; provided,
that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the opinion
of its counsel is required by law.
5.9 Forbearances of UCB
-------------------
Except with the prior written consent of SNC, between the date hereof and
the Effective Time, UCB shall not, and shall cause each of the UCB Subsidiaries
not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, or
establish or acquire any new Subsidiary or engage in any new activity;
(b) declare, set aside, make or pay any dividend or other distribution
in respect of its capital stock, other than regularly scheduled quarterly
dividends of $.18 per share of UCB Common Stock payable on record dates and
in amounts consistent with past practices; provided that any dividend
declared or payable on the shares of UCB Common Stock for the quarterly
period during which the Effective Time occurs shall, unless otherwise
agreed upon in writing by SNC and UCB, be declared with a record date prior
to the Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of SNC Common Stock is before
the Effective Time;
(c) issue any shares of its capital stock, except pursuant to the Stock
Option Plan and the SNC Option Agreement;
(d) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
30
(e) amend its articles of incorporation or bylaws; impose or permit
imposition, of any lien, charge or encumbrance on any share of stock held
by it in any UCB Subsidiary, or permit any such lien, charge or encumbrance
to exist; or waive or release any material right or cancel or compromise
any debt or claim other than in the ordinary course of business;
(f) merge with any other entity or permit any other entity to merge into
it, or consolidate with any other entity; acquire control over any other
entity; or liquidate, sell or otherwise dispose of any assets or acquire
any assets, other than in the ordinary course of its business consistent
with past practices;
(g) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of
its business;
(h) increase the rate of compensation of any of its directors, officers
or employees, or pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers or
employees, except in the ordinary course of business consistent with past
practices;
(i) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees; provided, that this subparagraph shall not prevent renewals of
any of the foregoing consistent with past practice, except for contemplated
changes in UCB's Flexible Benefit Plan;
(j) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, UCB or any
UCB Subsidiary or any business combination with UCB or any UCB Subsidiary
other than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of UCB or any UCB Subsidiary to do any of the
above; or fail to notify SNC immediately if any such inquiries or proposals
are received, any such information is requested or required, or any such
negotiations or discussions are sought to be initiated; provided, that this
paragraph (j) shall not apply to furnishing information, negotiations or
discussions following an unsolicited offer if, as a result of such offer,
UCB is advised in writing by legal counsel that the failure so to furnish
information or negotiate would constitute a breach of the fiduciary duties
of UCB's Board of Directors to its shareholders;
(k) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any agreement, indenture or
other instrument not made in the ordinary course of business relating to
the borrowing of money by UCB or a UCB
31
Subsidiary or guarantee by UCB or a UCB Subsidiary of any obligation, (iii)
any agreement, arrangement or commitment relating to the employment or
severance of a consultant or the employment, severance, election or
retention in office of any present or former director, officer or employee
(this clause shall not apply to the election of directors by shareholders
in the normal course, and the election of officers by directors in the
normal course terminable at will except to the extent otherwise provided in
an agreement, arrangement or commitment Disclosed); or (iv) any contract,
agreement or understanding with a labor union;
(l) change its lending, investment or asset liability management
policies in any material respect, except as may be required by applicable
law, regulation, or directives, and except that after approval of the
Agreement and the Plan of Merger by its shareholders UCB shall cooperate in
good faith with SNC to adopt policies, practices and procedures consistent
with those utilized by SNC, effective on or before the Closing Date;
(m) change its methods of accounting in effect at December 31, 1995,
except as required by changes in generally accepted accounting principles
concurred in by SNC's independent certified public accountants, which
concurrence shall not be unreasonably withheld, or change any of its
methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its federal income tax returns
for the year ended December 31, 1995, except as required by changes in law
or regulation;
(n) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $250,000, for any one expenditure, or
$2,000,000, in the aggregate;
(o) incur any indebtedness other than deposits from customers or
otherwise in the ordinary course of business;
(p) take any action which would or could reasonably be expected to (i)
cause the business combination contemplated hereby not to be accounted for
as a pooling of interests or not to constitute a reorganization under
Section 368 of the Code, in either case as determined by SNC, (ii) result
in any inaccuracy of a representation or warranty herein which would allow
for a termination of this Agreement, or (iii) cause any of the conditions
precedent to the transactions contemplated by this Agreement to fail to be
satisfied;
(q) dispose of any material assets other than in the ordinary course of
business; or
(r) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
32
SNC shall enter into employment agreements with those UCB employees and on
the terms as agreed by SNC and UCB prior to the date hereof, which shall
supersede presently existing employment agreements.
5.11 Affiliates
----------
UCB shall use reasonable efforts to cause all persons who are affiliates of
UCB to deliver to SNC promptly following this Agreement a written agreement
providing that such person will not dispose of SNC Common Stock received in the
Merger except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and except as consistent with qualifying the
transactions contemplated hereby for pooling of interests accounting treatment,
and in any event shall cause such affiliates to deliver to SNC such written
agreement prior to the Effective Time.
5.12 Employee Benefit Plans
----------------------
(a) Each employee of UCB and UCB Subsidiaries at the Effective Time (herein
"Employee") shall become an employee of SNC or a SNC Subsidiary immediately
following the Effective Time, upon substantially the same terms and conditions
as in effect immediately preceding the Effective Time. Each Employee, as an
employee of SNC or one of the SNC Subsidiaries shall be eligible to receive
bonus or incentive, retirement, severance, group hospitalization, medical, life,
disability and other benefits comparable to those provided to similarly situated
employees of SNC or the SNC Subsidiary. For purposes of administering all plans
and benefits of SNC or a SNC Subsidiary, service with UCB and the UCB
Subsidiaries by each Employee shall be deemed to be service with SNC or the SNC
Subsidiaries for participation and vesting purposes only (subject to paragraph
(c) of this Section 5.12).
(b) SNC shall cause the 401(k) plan of UCB to be merged with the 401(k)
plan maintained by SNC and the SNC Subsidiaries, and the account balances of the
Employees who are participants in the UCB plan shall be transferred to the
accounts of such Employees under the SNC 401(k) plan. Following such merger and
transfer, such accounts shall be governed and controlled by the terms of the SNC
401(k) plan as in effect from time to time (and subject to SNC's right to
terminate such plan).
(c) The parties anticipate that SNC shall cause the tax qualified defined
benefit pension plan of UCB to be merged with the tax qualified defined benefit
plan of SNC. If such merger occurs, the SNC pension plan will provide future
benefit accruals under the SNC pension plan for the Employees which will not be
less than the benefits which would be accrued under the "fresh start formula
without wear away" as described in Treasury Regulation (S) 1.401(a)(4)-
13(c)(4)(i) (that is, the accrued benefit of each Employee who becomes a
participant in the SNC pension plan incident to such plan merger will equal the
sum of the benefit accrued to the Effective Time under the UCB pension plan plus
the future benefit accrued under the SNC pension plan). For purposes of
applying the SNC pension plan following such merger, service with UCB of an
Employee shall be deemed
33
to be service with SNC for the purposes of determining eligibility and vesting,
but not for the purpose of determining benefit accruals following the Effective
Time.
(d) UCB's Long Term Incentive Plan, Director Deferred Compensation Plan and
Triad Bank Long Term Incentive Plan shall be frozen as of the Effective Time,
and SNC shall assume as of the Effective Time all obligations under such plans
as then accrued. SNC shall following the Effective Time administer such plans
in accordance with their respective terms, except that no further rights or
benefits shall accrue to participants and no further employees or directors
shall be permitted to participate in either or both of such plans. SNC shall
assume and continue in effect the UCB Supplemental Retirement Plan for the
benefit of current participants therein.
5.13 Directors and Officers Protection
---------------------------------
(a) SNC shall indemnify, defend, and hold harmless the present and former
directors, officers, employees, and agents of UCB and the UCB Subsidiaries
(each, an "Indemnified Party") against all liabilities arising out of actions or
omissions arising out of the Indemnified Party's service or services as
directors, officers, employees, or agents of UCB or, at UCB's request, of
another corporation, partnership, joint venture, trust, or other enterprise
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement) to the fullest extent permitted under North
Carolina Law and by UCB's Articles of Incorporation and Bylaws as in effect on
the date hereof, whether or not SNC is insured against any such matter. Without
limiting the foregoing, in any case in which approval by SNC is required to
effectuate any indemnification, SNC shall direct, at the election of the
Indemnified Party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between SNC and the Indemnified Party.
(b) SNC shall use its reasonable efforts to (i) cause the directors and
officers of UCB immediately prior to the Effective Time to be covered under its
then existing directors' and officers' liability insurance policy providing full
coverage for acts occurring prior to the Effective Time; or (ii) to maintain in
effect for a period of three years after the Effective Time UCB's existing
directors' and officers' liability insurance policy (provided that SNC may
substitute therefor (A) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less advantageous or
(B) with the consent of UCB given prior to the Effective Time, any other policy)
with respect to claims arising from facts or events which occurred prior to the
Effective Time and covering persons who are currently covered by such insurance;
provided, that neither SNC nor the Surviving Corporation shall be obligated to
make annual premium payments for such three year period in respect of such
policy (or coverage replacing such policy) which exceed, for the portion related
to UCB's directors and officers, 150% of the annual premium payments on UCB's
current policy in effect as of the date of this Agreement (the "Maximum
Amount"). If the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, SNC shall use its reasonable
efforts to maintain the most advantageous policies of directors' and officers'
liability insurance obtainable for a premium equal to the Maximum Amount.
34
(c) If SNC or the Surviving Corporation or any successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving person of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successor and assigns of SNC or the
Surviving Corporation shall assume the obligations set forth in this Section
5.13.
(d) The provisions of this Section 5.13 are intended to be for the benefit
of and shall be enforceable by, each indemnified director and officer and their
respective heirs and representatives.
5.14 Forbearances of SNC
-------------------
Except with the prior written consent of UCB, which consent shall not be
arbitrarily or unreasonably withheld, between the date hereof and the Effective
Time, neither SNC nor any SNC Subsidiary shall:
(a) exercise the UCB Option Agreement other than in accordance with its
terms, or dispose of the shares of UCB Common Stock issuable upon exercise of
the option rights conferred thereby other than as permitted or contemplated by
the terms thereof; or
(b) enter into a merger or other business combination transaction with any
other corporation or person in which SNC would not be the surviving or
continuing entity after the consummation thereof;
(c) sell or lease all or substantially all of the assets and business of
any SNC Subsidiary;
(d) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(e) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of its
business; or
(f) take any action which would or might be expected to (i) cause the
business combination contemplated hereby not to be accounted for as a pooling-
of-interest or not to constitute a reorganization under Section 368 of the Code,
(ii) result in any inaccuracy of a representation or warranty herein which would
allow for termination of this Agreement, or (iii) cause any of the conditions
precedent to the transactions contemplated by this agreement to fail to be
satisfied.
5.15 Assumption of Agreement by Acquiror
-----------------------------------
It shall be a condition precedent to SNC entering into any agreement
whereby SNC shall (i) consolidate with or merge into any other entity and shall
not be the continuing or surviving person of such consolidation or merger, or
(ii) transfer all or substantially all of its assets to any entity, that
35
proper provision shall be made so that the successor and assigns of SNC shall
specifically agree to assume SNC's obligations under this Agreement.
5.16 Reports
-------
Each of UCB and SNC shall file (and shall cause the UCB Subsidiaries and
the SNC Subsidiaries, respectively, to file), between the date of this Agreement
and the Effective Time, all reports required to be filed by it with the
Commission and any other regulatory authorities having jurisdiction over such
party, and shall deliver to SNC or UCB, as the case may be, copies of all such
reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the Commission, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with generally accepted accounting procedures (subject in
the case of interim financial statements to normal recurring year-end
adjustments that are not material). As of their respective dates, such reports
filed with the Commission will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to a regulatory authority other than the Commission shall be prepared in
accordance with requirements applicable to such reports.
5.17 Exchange Listing
----------------
SNC shall use its reasonable efforts to list, prior to the Effective Time,
on the NYSE, subject to official notice of issuance, the shares of SNC Common
Stock to be issued to the holders of UCB Common Stock pursuant to the Merger,
and SNC shall give all notices and make all filings with the NYSE required in
connection with the transactions contemplated herein.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent -- SNC and UCB
-----------------------------------
The respective obligations of SNC and UCB to effect the transactions
contemplated by this Agreement shall be subject to satisfaction or waiver of
the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Reorganization Agreement and the Plan of Merger,
the UCB Option Agreement and the SNC Option Agreement, and consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken, including without
36
limitation the approval of the shareholders of SNC and UCB of the Agreement
and the Plan of Merger, in each case as set forth in Section 2.2;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, and SNC shall have
received all state securities or "Blue Sky" permits or other
authorizations, or confirmations as to the availability of an exemption
from registration requirements as may be necessary, and no proceedings
shall be pending or to the knowledge of SNC threatened by the Commission or
any state "Blue Sky" securities administration to suspend the effectiveness
of such Registration Statement; and the SNC Common Stock to be issued as
contemplated in the Plan of Merger shall have either been registered or be
subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Reorganization
Agreement, all notice periods and waiting periods required after the
granting of any such approvals shall have passed, and all such approvals
shall be in effect;
(d) None of SNC, any of the SNC Subsidiaries, UCB or any of the UCB
Subsidiaries shall be subject to any order, decree or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits consummation
of the transactions contemplated by this Reorganization Agreement;
(e) UCB and SNC shall have received an opinion of SNC's legal counsel,
in form and substance satisfactory to UCB and SNC, substantially to the
effect that the Merger will constitute one or more reorganizations under
Section 368 of the Code and that the shareholders of UCB will not recognize
any gain or loss to the extent that such shareholders exchange shares of
UCB Common Stock for shares of SNC Common Stock;
(f) SNC shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective
Time, addressed to SNC, in form and substance reasonably satisfactory to
SNC, from Arthur Andersen, LLP to the effect that the transactions
contemplated herein will qualify for pooling-of-interest accounting
treatment; and
(g) The shares of SNC Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
6.2 Conditions Precedent -- UCB
---------------------------
The obligations of UCB to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by UCB pursuant to
Section 7.4:
37
(a) All representations and warranties of SNC shall be assessed as of
the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by UCB. The representations and warranties of SNC
set forth in Section 4.1 shall be true and correct (except for inaccuracies
which are de minimis in amount). The representations and warranties of SNC
set forth in Section 4.14 shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of SNC set forth in this Agreement (including the
representations and warranties set forth in Sections 4.1 and 4.14) such
that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on SNC; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" shall be
deemed not to include such qualifications;
(b) SNC shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement;
(c) SNC shall have delivered to UCB a certificate, dated the Closing
Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.2(a) and 6.2(b), to the extent applicable to SNC, have
been satisfied and that there are no actions, suits, claims, governmental
investigations or procedures instituted, pending or, to the best of such
officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on SNC or that present a claim to restrain or
prohibit the transactions contemplated herein or in the Plan of Merger;
(d) UCB shall have received opinions of counsel to SNC in the form
reasonably acceptable to UCB's legal counsel; and
(e) All approvals of the transactions contemplated herein from the
Federal Reserve Board and any other state or federal government agency,
department or body, the approval of which is required for the consummation
of the Merger, shall have been received and all waiting periods with
respect to such approvals shall have expired.
6.3 Conditions Precedent -- SNC
---------------------------
The obligations of SNC to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by SNC pursuant to
Section 7.4:
(a) All representations and warranties of UCB shall be assessed as of
the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or
consented to in writing
38
by SNC. The representations and warranties of UCB set forth in Section 3.1
shall be true and correct (except for inaccuracies which are de minimis in
amount). The representations and warranties of UCB set forth in Section
3.24 shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of UCB set forth
in this Agreement (including the representations and warranties set forth
in Sections 3.1 and 3.24) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on UCB; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications;
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of
SNC, would so materially adversely affect the business or economic benefits
to SNC of the transactions contemplated by this Agreement as to render
consummation of such transactions inadvisable or unduly burdensome;
provided, that (i) SNC has used its reasonable efforts to cause such
conditions or restrictions to be removed or modified as appropriate; (ii)
notwithstanding the foregoing, in the event that such consent is
conditioned or restricted as a result of a regulatory or legal issue
resulting from other acquisitions by SNC, whether announced before or after
the date of this Agreement, or otherwise unrelated to UCB, SNC shall not be
entitled to refuse to consummate the Merger on the basis set forth in this
sentence; and (iii) any required disposition of deposits shall be deemed
acceptable if the dollar amount of deposits required to be divested does
not exceed the upper range of estimates first disclosed to the public by
SNC following the execution of this Agreement;
(c) UCB shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement;
(d) UCB shall have delivered to SNC a certificate, dated the Closing
Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the
extent applicable to UCB, have been satisfied and that there are no
actions, suits, claims, governmental investigations or procedures
instituted, pending or, to the best of such officer's knowledge, threatened
that reasonably may be expected to have a Material Adverse Effect on UCB or
that present a claim to restrain or prohibit the transactions contemplated
herein or in the Plan of Merger;
(e) SNC shall have received opinions of counsel to UCB in the form
reasonably acceptable to SNC's legal counsel;
(f) SNC shall have received the written agreements from affiliates as
specified in Section 5.11; and
(g) The holders of no more than 9.0% of the UCB Common Stock shall have
given written notice of their intent to demand payment for their shares and
shall not have voted for the Merger, pursuant to Article 13 of the NCBCA.
39
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
inaccuracy would provide the nonbreaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 6.2(a)
in the case of UCB and Section 6.3(a) in the case of SNC; and, in the case of
(i) or (ii), if such breach has not been cured by the earlier of 30 days
following written notice of such breach to the party committing such breach or
the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
breach of any of its representations, warranties, covenants or undertakings
herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 are denied, and the
time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders
of SNC or of UCB do not approve the Agreement and the Plan of Merger.
(f) At any time following September 30, 1997, by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to 11:59 p.m. on January 10, 1997 by SNC in
writing, if SNC determines in its sole good faith judgment, through review of
information Disclosed by UCB, the performance of its due diligence or otherwise,
that the financial condition, results of operations, business or business
prospects of UCB and of the UCB Subsidiaries, taken as a whole, are materially
adversely different from SNC's reasonable expectations with respect thereto
based on information that has been Disclosed in a Securities Document filed with
the Commission since January 1, 1996 and its knowledge of the operations of
banks; provided that SNC shall inform UCB upon such
40
termination as to the reasons for SNC's determination; and, provided further,
that this Section 7.1(g) shall not limit in any way the due diligence
investigation of UCB and the UCB Subsidiaries which SNC may perform or otherwise
affect any other rights which SNC has after the date hereof under the terms of
this Agreement.
(h) By UCB, if its board of directors determines by a vote of a majority
of the members of its entire board, at any time during the ten-day period
commencing two days after the Determination Date, if either:
(A) both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than $28.50; and
(2) (i) the quotient obtained by dividing the Average Closing
Price by $33.50 (such number being referred to herein as the "SNC
Ratio") shall be less than (ii) the quotient obtained by dividing the
Index Price on the Determination Date by the Index Price on the
Starting Date and subtracting 0.15 from the quotient in this clause
(A)(2)(ii); or
--
(B) the Average Closing Price shall be less than $27.00;
subject, however, to the following four sentences. If UCB refuses to consummate
the Merger pursuant to this Section 7.1(h), it shall give prompt written notice
thereof to SNC, which notice shall specify which of clauses (A) or (B) is
applicable (or if both would be applicable, which clause is being invoked);
provided, that such notice of election to terminate may be withdrawn at any time
within the aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, SNC shall have the option, in the case of a
failure to satisfy the condition in clause (A), to elect to increase the
Exchange Ratio to equal the quotient obtained by dividing $32.35 by the Average
Closing Price. During such five-day period, SNC shall have the option, in the
case of a failure to satisfy the condition in clause (B), to elect to increase
the Exchange Ratio to equal the quotient obtained by dividing $30.65 by the
Average Closing Price. The election contemplated by either of the two preceding
sentences shall be made by giving notice to UCB of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
Section 7.1(h) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section 7.1(h).
For purposes of this Section 7.1(h), the following terms shall have the
meanings indicated:
41
"Average Closing Price" shall mean the average of the daily closing sales
prices per share of SNC Common Stock as reported on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as chosen by SNC) for the ten consecutive
full trading days in which such shares are traded on the NYSE ending at the
close of trading on the Determination Date.
"Determination Date" shall mean the date on which SNC shall receive consent
to the Merger from the Federal Reserve Board.
"Index Group" shall mean the 19 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which have been determined based upon the number of shares of outstanding
common stock) redistributed proportionately for purposes of determining the
Index Price. The 19 bank holding companies and the weights attributed to them
are as follows:
Bank Holding Companies % Weighting
----------------------------------- -----------
AmSouth Bancorporation 2.41
Barnett Banks, Inc. 8.12
CoreStates Financial Corp 9.38
Comerica Incorporated 4.56
First Bank System, Inc. 5.75
Fifth Third Bancorp 4.50
First of America Bank Corp. 2.57
Firstar Corporation 3.19
Huntington Bancshares Inc. 6.13
Mellon Bank Corporation 5.49
Mercantile Bancorporation, Inc. 2.55
National City Corporation 9.45
Northern Trust Corporation 2.37
Regions Financial Corporation 2.66
SouthTrust Corporation 4.08
SunTrust Banks, Inc. 9.48
42
Summit Bancorp. 3.89
U.S. Bancorp 6.41
Wachovia Corporation 7.01
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
sales prices of the companies composing the Index Group (reported as
provided with respect to the Average Closing Price).
"Starting Date" shall mean November 1, 1996.
If any company belonging to the Index Group or SNC declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and
the Determination Date, the prices for the common stock of such company or
SNC shall be appropriately adjusted for the purposes of applying this
Section 7.1(h).
7.2 Effect of Termination
---------------------
In the event this Agreement and the Plan of Merger is terminated pursuant
to Section 7.1, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for an uncured
breach of the covenant, agreement, understanding, representation or warranty
giving rise to such termination. The SNC Option Agreement and the UCB Option
Agreement shall be governed by their own terms.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or the Plan
of Merger or in any instrument delivered pursuant hereto or thereto shall expire
on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time,
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive SNC or UCB (or any director,
officer or controlling person thereof) of any defense at law or in equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either SNC or UCB,
the aforesaid representations, warranties and covenants being material
inducements to consummation by SNC and UCB of the transactions contemplated
herein.
43
7.4 Waiver
------
Except with respect to any required regulatory approval, each party hereto,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of the Agreement and the Plan of Merger
by the UCB shareholders) extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement, the Plan of Merger or any document delivered pursuant hereto
or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of the other party, or satisfaction of any of the conditions
precedent to its obligations, contained herein or in the Plan of Merger, or
(iii) the performance by the other party of any of its obligations set out
herein or therein; provided that no such extension or waiver, or amendment or
supplement pursuant to Section 7.5, executed after approval by the UCB
shareholders of this Agreement and the Plan of Merger shall reduce either the
number of shares of SNC Common Stock into which each share of UCB Common Stock
shall be converted in the Merger or the payment terms for fractional interests.
7.5 Amendment or Supplement
-----------------------
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of SNC and UCB, subject to the proviso to
Section 7.4.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
--------
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and the
printing costs incurred in connection with the Registration Statement and the
Joint Proxy Statement/Prospectus shall be borne 70% by SNC and 30% by UCB.
8.2 Entire Agreement
----------------
This Agreement, the SNC Option Agreement and the UCB Option Agreement
contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all
arrangements or understandings with respect thereto, written or oral, entered
into on or before November 1, 1996, other than documents referred to herein or
therein, and a certain letter agreement dated the date hereof between the
parties. The terms and conditions of this Agreement and said Option Agreements
shall inure to the benefit of and be binding upon the parties hereto and thereto
and their respective successors. Nothing in this Agreement or said Option
Agreements, expressed or implied, is intended to confer upon any party, other
than the parties hereto and thereto, and their respective successors, any
rights, remedies, obligations or liabilities.
44
8.3 No Assignment
-------------
Neither of the parties hereto may assign any of its rights or obligations
under this Reorganization Agreement to any other person, except upon the prior
written consent of the other party.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
If to UCB:
Ronald C. Monger
Executive Vice President
Chief Financial Officer
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1330
With a required copy to:
Howard V. Hudson, Jr.
General Counsel and Secretary
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1276
and
Frank M. Conner, III
Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Fax No.: 202-508-3333
45
If to SNC:
Southern National Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: Scott E. Reed
Fax No.: 910-733-0340
With a required copy to:
Womble Carlyle Sandridge & Rice
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: Mr. William A. Davis, II
Fax No.: 910-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Captions
--------
The captions contained in this Agreement are for reference only and are not
part of this Agreement.
8.6 Counterparts
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina applicable to agreements made and entirely
to be performed within such jurisdiction, except to the extent federal law may
be applicable.
8.8 Predecessor Agreement
---------------------
On November 1, 1996, the parties hereto executed Agreement and Plan of
Reorganization (the "Predecessor Agreement"). Following execution of the
Predecessor Agreement, the parties have agreed to certain changes, all of which
are reflected in this Amended and Restated Agreement. This Amended and Restated
Agreement amends and supersedes the Predecessor Agreement in its entirety from
the date of its execution, and the Predecessor Agreement shall have no further
force and effect.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Amended and Restated Agreement to be executed in
counterparts by their duly authorized officers, all as of the day and year first
above written.
SOUTHERN NATIONAL CORPORATION
By
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Title:
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UNITED CAROLINA BANCSHARES CORPORATION
By
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Title:
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