AGREEMENT AND PLAN OF REORGANIZATION
UNITED CAROLINA BANCSHARES CORPORATION
AND
SOUTHERN NATIONAL CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..............................................................................................1
ARTICLE II
THE MERGER...............................................................................................6
2.1 Merger..........................................................................................6
2.2 Filing; Plan of Merger..........................................................................6
2.3. Effective Time..................................................................................6
2.4 Closing.........................................................................................7
2.5 Effect of Merger................................................................................7
2.6 Further Assurances..............................................................................7
2.7 Merger Consideration............................................................................8
2.8 Conversion of Shares; Payment of Merger Consideration...........................................8
2.9 Dissenting Shares...............................................................................9
2.10 Conversion of Stock Options.....................................................................9
2.11 Merger of Subsidiary...........................................................................11
2.12 Anti-Dilution..................................................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCB...................................................................11
3.1 Capital Structure..............................................................................11
3.2 Organization, Standing and Authority...........................................................12
3.3 Ownership of Subsidiaries.....................................................................12
3.4 Organization, Standing and Authority of the Subsidiaries.......................................12
3.5 Authorized and Effective Agreement.............................................................12
3.6 Securities Filings.............................................................................13
3.7 Financial Statements; Minute Books.............................................................13
3.8 Material Adverse Change........................................................................14
3.9 Absence of Undisclosed Liabilities.............................................................14
3.10 Properties.....................................................................................14
3.11 Environmental Matters..........................................................................14
3.12 Allowance for Loan Losses......................................................................15
3.13 Tax Matters....................................................................................15
3.14 Employees; Compensation; Benefit Plans.........................................................16
3.15 Certain Contracts..............................................................................20
3.16 Legal Proceedings; Regulatory Approvals........................................................20
3.17 Compliance with Laws...........................................................................21
3.18 Brokers and Finders............................................................................21
3.19 Loans..........................................................................................21
3.20 Repurchase Agreements..........................................................................21
3.21 Deposit Accounts...............................................................................22
3.22 Related Party Transactions.....................................................................22
3.23 Certain Information............................................................................22
3.24 Accounting, Tax and Regulatory Matters.........................................................22
3.25 State Takeover Laws............................................................................23
3.26 Derivatives Contracts..........................................................................23
3.27 Fairness Opinion...............................................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SNC..................................................................................................23
4.1 Capital Structure of SNC.......................................................................23
4.2 Organization, Standing and Authority of SNC....................................................23
4.3 Authorized and Effective Agreement.............................................................24
4.4 Organization, Standing and Authority of SNC Subsidiaries and Acquisition
Subsidiary.....................................................................................24
4.5 Securities Documents...........................................................................25
4.6 Financial Statements...........................................................................25
4.7 Material Adverse Change........................................................................25
4.8 Legal Proceedings; Regulatory Approvals........................................................25
4.9 Absence of Undisclosed Liabilities.............................................................26
4.10 Allowance for Loan Losses......................................................................26
4.11 Tax Matters....................................................................................26
4.12 Compliance with Laws...........................................................................26
4.13 Certain Information............................................................................27
4.14 Accounting, Tax and Regulatory Matters.........................................................27
4.15 Share Ownership................................................................................27
ARTICLE V
COVENANTS...............................................................................................27
5.1 Shareholders' Meetings.........................................................................27
5.2 Registration Statement; Joint Proxy Statement/Prospectus.......................................28
5.3 Plan of Merger; Reservation of Shares..........................................................28
5.4 Additional Acts................................................................................29
5.5 Best Efforts...................................................................................29
5.6 Certain Accounting Matters.....................................................................29
5.7 Access to Information..........................................................................30
5.8 Press Releases.................................................................................30
5.9 Forbearances of UCB............................................................................30
5.10 Employment Agreements..........................................................................33
5.11 Affiliates.....................................................................................33
5.12 Employee Benefit Plans.........................................................................33
5.13 Directors and Officers Protection..............................................................34
5.14 Forbearances of SNC............................................................................35
5.15 Assumption of Agreement by Acquiror............................................................36
5.16 Reports........................................................................................36
5.17 Exchange Listing...............................................................................36
ARTICLE VI
CONDITIONS PRECEDENT....................................................................................37
6.1 Conditions Precedent --SNC and UCB.............................................................37
6.2 Conditions Precedent -- UCB....................................................................38
6.3 Conditions Precedent -- SNC ...................................................................39
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT.......................................................................40
7.1 Termination....................................................................................40
7.2 Effect of Termination..........................................................................43
7.3 Survival of Representations, Warranties and Covenants..........................................43
7.4 Waiver.........................................................................................44
7.5 Amendment or Supplement........................................................................44
ARTICLE VIII
MISCELLANEOUS...........................................................................................44
8.1 Expenses.......................................................................................44
8.2 Entire Agreement...............................................................................44
8.3 No Assignment..................................................................................45
8.4 Notices........................................................................................45
8.5 Captions.......................................................................................46
8.6 Counterparts...................................................................................46
8.7 Governing Law..................................................................................46
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AGREEMENT AND PLAN OF REORGANIZATION
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 a wholly-owned subsidiary of SNC to be formed
("Acquisition Subsidiary") shall be merged with and into UCB (said transaction
being hereinafter referred to as the "Merger") pursuant to a plan of merger (the
"Plan of Merger") substantially in the form set forth in Articles of Merger
attached as Annex A hereto ("Articles of Merger"), and the parties desire to
provide for certain undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Bank Holding Company Act" shall mean the Bank Holding Company Act of
1956, as amended.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"Closing Date" shall mean the date specified pursuant to Section 2.4 as
the date on which the parties hereto shall close the transactions contemplated
herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
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"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 notes and schedules, if any) and the related consolidated
statements of income, changes in
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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.
"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.
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"SNC Common Stock" shall mean the shares of common stock, par value
$5.00 per share, of SNC.
"SNC Option Agreement" shall mean the Option Agreement dated as of even
date herewith under which SNC has an option to purchase shares of UCB, which
shall be executed immediately following execution of this Reorganization
Agreement.
"SNC Subsidiaries" shall mean the Subsidiaries of SNC, which shall
include any corporation, bank, savings association, or other organization
acquired as a Subsidiary of SNC in the future and held as a Subsidiary by SNC at
the Effective Time.
"Stock Option Plan" shall mean, collectively or singularly, UCB's 1986
Key Employee Stock Option Plan; 1995 Stock Option and Incentive Award; Stock
Option Policy for Nonemployee Directors of Triad Bank; Triad Bank Employees'
Stock Option Plan (Non-qualified); Seaboard Savings Bank, Inc., SSB 1993
Nonstatutory Stock Option Plan for Directors; Seaboard Savings Bank, Inc., SSB
1993 Incentive Stock Option Plan; and Bank of Iredell 1987 Employee Nonqualified
Stock Option Program.
"Stock Option" shall mean, collectively, any option, granted under the
Stock Option Plan and unexercised on the date hereof, to acquire shares of UCB
Common Stock, aggregating 357,577 shares.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (provided, there
shall not be included any such entity the equity securities of which are owned
or controlled in a fiduciary capacity).
"TILA" shall mean the Truth in Lending Act, as amended.
"UCB Common Stock" shall mean the shares of common stock, par value
$4.00 per share, of UCB.
"UCB Disclosure Letter" shall mean the written information entitled
"UCB Disclosure Letter" dated the date of this Agreement and delivered not later
than ten days after the execution of this Agreement by UCB to SNC, and
describing in reasonable detail the matters contained therein. Each disclosure
made therein shall be in existence on the date of this Agreement and shall
specifically reference each Section of this Agreement under which such
disclosure is made. Information disclosed with respect to one Section shall not
be deemed to be disclosed for purposes of any other Section not specifically
referenced.
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"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
The capitalized terms set forth below are defined in the
following sections:
Acquisition Subsidiary Recitals
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
Acquisition Subsidiary and UCB are constituent corporations (the
"Constituent Corporations") to the Merger as contemplated by the NCBCA. At the
Effective Time:
(a) Acquisition Subsidiary shall be merged with and into UCB in
accordance with the applicable provisions of the NCBCA, with UCB being the
surviving corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of Acquisition Subsidiary shall cease and
the Merger shall in all respects have the effect provided for in Section 2.5.
(c) The Articles of Incorporation of UCB at the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of UCB at the Effective Time shall become the Bylaws of
the Surviving Corporation.
2.2 Filing; Plan of Merger
The Merger shall not become effective unless (i) 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 Acquisition Subsidiary entitled to be
voted, and (ii) the issuance of the shares of SNC Common Stock pursuant to the
terms of this Agreement has been approved by a vote of a majority of the votes
cast at the SNC shareholders' meeting held to consider matters related to this
Agreement; provided the total vote cast represents over 50 percent of the shares
of SNC Common Stock entitled to vote. Upon fulfillment or waiver of the
conditions specified in Article VI and provided that this Agreement has not been
terminated pursuant to Article VII, the Constituent Corporations will cause the
Articles of Merger to be executed and filed with the Office of the Secretary of
State of North Carolina. The Plan of Merger is incorporated herein by reference,
and adoption of this Agreement by the Boards of Directors of the Constituent
Corporations and approval by the shareholders of the Constituent Corporations
shall constitute adoption and approval of the Plan of Merger.
2.3. Effective Time
The Merger shall be effective at the day and hour specified in the
Articles of Merger filed with the Secretary of State of North Carolina (herein
sometimes referred to as the "Effective Time").
2.4 Closing
6
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the executive offices of SNC, BB&T Financial
Center, 200 West Second Street, Winston- Salem, North Carolina, at 11:00 a.m. on
the Business Day designated by SNC which is within thirty days following the
satisfaction of the conditions to Closing set forth in Article VI, or such later
date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of
Acquisition Subsidiary shall cease, and the Surviving Corporation shall
thereupon and thereafter, to the extent consistent with its Articles of
Incorporation, possess all the rights, privileges, immunities, and franchises,
of a public as well as of a private nature, of each of the Constituent
Corporations; and all property, real, personal and mixed, and all debts due on
whatever account, and all other choses in action, and all and every other
interest of or belonging to or due to each of the Constituent Corporations shall
be taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and the title to any real estate or any interest
therein vested in either of the Constituent Corporations shall not revert or be
in any way impaired by reason of the Merger. The Surviving Corporation shall
thenceforth be responsible and liable for all the liabilities, obligations and
penalties of each of the Constituent Corporations; and any claim existing or
action or proceeding, civil or criminal, pending by or against either of the
Constituent Corporations may be prosecuted as if the Merger had not taken place,
or the Surviving Corporation may be substituted in its place; and any judgment
rendered against either of the Constituent Corporations may be enforced against
the Surviving Corporation. Neither the rights of creditors nor any liens upon
the property of either of the Constituent Corporations shall be impaired by
reason of the Merger.
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any further deeds, assignments or assurances
in law or any other actions are necessary, desirable or proper to vest, perfect
or confirm of record or otherwise, in the Surviving Corporation, the title to
any property or rights of the Constituent Corporations acquired or to be
acquired by reason of, or as a result of, the Merger, the Constituent
Corporations agree that such Constituent Corporations and their proper officers
and directors shall and will execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized and directed in the name of the Constituent Corporations or
otherwise to take any and all such actions.
2.7 Merger Consideration
7
As used herein, the term "Merger Consideration" shall mean the whole
shares of SNC Common Stock to be exchanged for each share of UCB Common Stock
issued and outstanding as of the Effective Time, and cash (without interest) to
be payable in exchange for any fractional share of SNC Common Stock which would
otherwise be exchanged for a share of UCB Common Stock. The number of shares of
SNC Common Stock to be issued in exchange for each issued and outstanding share
of UCB Common Stock shall be in the ratio of 1.135 shares of SNC Common Stock
for each share of UCB Common Stock issued and outstanding (subject to possible
adjustment pursuant to Section 7.1(h), the "Exchange Ratio"). The value of any
fractional share shall be determined by multiplying the fractional part of such
share of SNC Common Stock by the market value of one share of SNC Common Stock
at the Effective Time, which shall be the closing price of such common stock on
the NYSE-Composite Transactions List (as reported by THE WALL STREET JOURNAL or,
if not reported thereby, any other authoritative source selected by SNC) on the
first trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a shareholder in respect of
any fractional shares.
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of UCB or the holders of record of UCB Common Stock, each
share of UCB Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into and shall represent the right to receive,
upon surrender of the certificate representing such share of UCB Common Stock
(as provided in paragraph (d) below), the Merger Consideration.
(b) Each share of the common stock of Acquisition Subsidiary issued and
outstanding immediately prior to the Effective Time shall be converted into one
share of the Surviving Corporation.
(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, UCB 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
8
instructions thereto, and such other documents as may be reasonably requested,
UCB shall promptly cause the transfer to the persons entitled thereto of the
Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by UCB in respect of such 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 for 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
Any UCB shareholder who shall have dissented from the Merger in
accordance with the NCBCA and who has properly exercised such shareholder's
rights to demand payment of the value of the Shareholder's shares (the
"Dissenting Shares") as provided in the NCBCA (the "Dissenting Shareholder")
shall thereafter have only such rights, if any, as are provided a Dissenting
Shareholder in accordance with the NCBCA and shall have no rights under Sections
2.7 and 2.8; provided, however, that if a Dissenting Shareholder shall withdraw
(in accordance with the NCBCA) the demand for such appraisal or shall become
ineligible for such appraisal, then such Dissenting Shareholder's Dissenting
Shares automatically shall cease to be Dissenting Shares and shall be converted
into and represent only the right to receive from the Surviving Corporation the
Merger Consideration provided for in Section 2.7 upon surrender of the
certificate representing the Dissenting Shares.
2.10 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding, whether
or not then exercisable, shall be converted into and become rights with respect
to SNC Common Stock, and SNC shall assume each Stock Option, in accordance with
the terms of the Stock Option Plan and stock option agreement, or other
agreement, by which it is evidenced, except that from and after the Effective
Time (i) SNC and its Compensation Committee shall be substituted for UCB and the
Committee of UCB's Board of Directors administering the Stock Option Plan, (ii)
each Stock Option
9
assumed by SNC may be exercised solely for shares of SNC Common Stock, (iii) the
number of shares of SNC Common Stock subject to such Stock Option shall be the
number of whole shares of SNC (omitting any fractional share) determined by
multiplying the number of shares of UCB Common Stock subject to such Stock
Option immediately prior to the Effective Time by the Exchange Ratio, and (iv)
the per share exercise price under each such Stock Option shall be adjusted by
dividing the per share exercise price under each such Stock Option by the
Exchange Ratio and rounding up to the nearest cent. In addition, notwithstanding
the provisions of clauses (iii) and (iv) of the first sentence of this Section
2.10(a), each Stock Option which is an "incentive stock option" shall be
adjusted as required by Section 424 of the Code, and the Regulations promulgated
thereunder, so as to continue as an incentive stock option under Section 424(a)
of the Code, and so as not to constitute a modification, extension, or renewal
of the option, within the meaning of Section 424(h) of the Code. SNC and UCB
agree to take all necessary steps to effectuate the foregoing provisions of this
Section 2.10.
(b) As soon as practicable after the Effective Time, SNC shall deliver
to the participants in the Stock Option Plan an appropriate notice setting forth
such participant's rights pursuant thereto, and the grants pursuant to such
Stock Option Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 2.10(a) after giving effect to
the Merger). SNC shall comply with the terms of the Stock Option Plan to ensure,
to the extent required by and subject to the provisions of such Stock Option
Plan, that Stock Options which qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, SNC shall take all corporate
action necessary to reserve for issuance sufficient shares of SNC Common Stock
for delivery upon exercise of Stock Options assumed by it in accordance with
this Section 2.10. As soon as practicable after the Effective Time, SNC shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of SNC
Common Stock subject to Stock Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, SNC shall administer the
Stock Option Plan assumed pursuant to this 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
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Option; and (iv) each grant of a substitute option shall have been specifically
approved in advance by the full Board of Directors of SNC or by a committee
consisting solely of "non-employee" directors as defined in Rule 16b-3. As soon
as practicable following the Effective Time, SNC shall deliver to the
participants receiving substitute options under the SNC Option Plan an
appropriate notice setting forth such participant's rights pursuant thereto. SNC
has reserved under the SNC Option Plan adequate shares of SNC Common Stock for
delivery upon exercise of any such substituted options. SNC hereby represents
that the SNC Option Plan in its current form complies with Rule 16b-3 to the
extent, if any, required as of November 1, 1996.
2.11 Merger of Subsidiary
In the event that SNC shall request, UCB shall cooperate in taking such
actions, and shall cooperate in causing the UCB Subsidiaries to take such
actions, as may be required in order to effect, at the Effective Time, the
merger of one or more of the UCB Subsidiaries with and into, in each case, one
of the SNC Subsidiaries.
2.12 Anti-Dilution
In the event SNC changes the number of shares of SNC Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case of
a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UCB
Except as otherwise Disclosed, UCB represents and warrants to SNC as
follows:
3.1 Capital Structure
The authorized capital stock of UCB consists of 40,000,000 shares of
UCB Common Stock, and 2,000,000 shares of preferred stock, par value $10.00 per
share. As of the date hereof, 24,265,175 shares of UCB Common Stock are issued
and outstanding, and no other shares of capital stock of UCB, common or
preferred, are issued and outstanding. All outstanding shares of UCB Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. No other classes of capital stock of UCB are authorized. No
shares of capital stock have been reserved for any purpose, except for (i)
357,577 shares of UCB Common Stock in connection with the Stock Option Plan,
(ii) 4,828,960 shares of UCB Common Stock in connection with the SNC Option
Agreement, (iii) 2,500,000 shares of UCB Common Stock in connection with its
401(k) plan; and (iv) 900,000 shares of UCB Common Stock in connection with its
Long-Term Incentive Plan. Except as set forth herein, there are no Rights
authorized, issued or outstanding with respect to the capital stock of UCB.
Holders of UCB Common Stock do not have preemptive rights.
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 terms, in each such case subject to (i) bankruptcy,
fraudulent transfer, insolvency, moratorium,
12
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 Environmental Claims or other claims,
causes of action or governmental investigations of any
14
nature, seeking to impose, or that could result in the imposition of, any
liability arising under any Environmental Laws upon (i) UCB or any UCB
Subsidiary, (ii) any person or entity whose liability for any Environmental
Claim UCB or any UCB Subsidiary has or may have retained or assumed, either
contractually or by operation of law, (iii) any real or personal property owned
or leased by UCB or any UCB Subsidiary, or any real or personal property which
UCB or any UCB Subsidiary has or is judged to have managed or supervised or
participated in the management of, or (iv) any real or personal property in
which UCB or any UCB Subsidiary holds a security interest securing a loan
recorded on the books of UCB or any UCB Subsidiary. Neither UCB nor any UCB
Subsidiary is subject to any agreement, order, judgment, decree or memorandum by
or with any court, governmental authority, regulatory agency or third party
imposing any such liability.
(c) UCB and the UCB Subsidiaries are in compliance in all material
respects with all recommendations contained in any environmental audits,
analyses and surveys relating to all real and personal property owned or leased
by UCB or any UCB Subsidiary and all real and personal property which UCB or any
UCB Subsidiary has or is judged to have managed or supervised or participated in
the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Laws against UCB or any UCB Subsidiary or against any person or entity whose
liability for any Environmental Claim UCB or any UCB Subsidiary has or may have
retained or assumed, either contractually or by operation of law.
3.12 Allowance for Loan Losses
The allowance for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of UCB is or will be in the opinion
of UCB's management adequate in all material respects as of their respective
dates, under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
3.13 Tax Matters
(a) UCB and the UCB Subsidiaries, and each of their predecessors, have
timely filed (or requests for extensions have been timely filed and any such
extensions have been granted and have not expired) all federal, state and local
(and, if applicable, foreign) tax returns required by applicable law to be filed
by them (including, without limitation, estimated tax returns, income tax
returns, information returns, and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all taxes for any
subsequent periods ending on or
15
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, severance, medical, dental,
hospitalization, life insurance and other types of insurance,
or (D) any other employee benefit
16
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, 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
17
such posting of security. No event has occurred and no
condition exists that would subject UCB or any UCB Subsidiary
to any tax under Sections 4971, 4972, 4977 or 4979 of the Code
or to a fine or penalty under Section 502(c) of ERISA.
(v) Each Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a
part thereof, has received a favorable determination letter
from the Internal Revenue Service as to the qualification
under the Code of such Plan and the tax exempt status of such
related trust, and nothing has occurred since the date of such
determination letter that could adversely affect the
qualification of such Plan or the tax exempt status of such
related trust.
(vi) No underfunded "defined benefit plan" (as such
term is defined in Section 3(35) of ERISA) has been, during
the five years preceding the Closing Date, transferred out of
the controlled group of corporations (within the meaning of
Sections 414(b), (c), (m) and (o) of the Code) of which UCB or
any UCB Subsidiary is a member or was a member during such
five-year period.
(vii) As of the Closing Date, the fair market value
of the assets of each Plan that is a tax qualified defined
benefit plan equals or exceeds the present value of all vested
and non-vested liabilities thereunder determined in accordance
with reasonable actuarial methods, factors and assumptions
applicable to a defined benefit plan on an ongoing basis. With
respect to each Plan that is subject to the funding
requirements of Section 412 of the Code and Section 302 of
ERISA, all required contributions for all periods ending prior
to or as of the Closing Date (including periods from the first
day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance
with Section 412(m) of the Code) shall have been made. With
respect to each other Plan, all required payments, premiums,
contributions, reimbursements or accruals for all periods
ending prior to or as of the Closing Date shall have been
made. No tax qualified Plan has any material unfunded
liabilities.
(viii) No prohibited transaction (which shall mean
any transaction prohibited by Section 406 of ERISA and not
exempt under Section 408 of ERISA or Section 4975 of the Code,
whether by statutory, class or individual exemption) has
occurred with respect to any Plan which would result in the
imposition, directly or indirectly, of any excise tax, penalty
or other liability under Section 4975 of the Code or Section
409 or 502(i) of ERISA. Neither UCB, nor to the best knowledge
of UCB any UCB Subsidiary, nor any trustee, administrator or
other fiduciary of any Plan, nor to the best
18
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.
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
19
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 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.
20
3.17 Compliance with Laws
Each of UCB and each UCB Subsidiary is in compliance in all material
respects with all statutes and regulations (including, but not limited to, the
CRA, TILA and regulations promulgated thereunder, and other consumer banking
laws) applicable and material to the conduct of its business, and neither UCB
nor any UCB Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation which violation would reasonably be expected to have a Material
Adverse Effect on UCB, (ii) threatening to revoke any license, franchise, permit
or government authorization, or (iii) restricting or in any way limiting its
operations. Neither UCB nor any UCB Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment, and none of them has received any communication
requesting that it enter into any of the foregoing.
3.18 Brokers and Finders
Neither UCB nor any UCB Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein, in the Plan of Merger or in the SNC Option
Agreement, except for fees to accountants and lawyers and an obligation to Wheat
First Butcher Singer as Disclosed for investment banking services.
3.19 Loans
To the best of UCB's knowledge, substantially all of the loans on the
books and records of the UCB Subsidiaries are valid and properly documented.
Neither the terms of such loans, nor any of the loan documentation, nor the
manner in which such loans have been administered and serviced, violates in any
material respect any federal, state or local law, rule, regulation or ordinance
applicable thereto, including without limitation, the TILA, Regulations O and Z
of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as
amended, and state laws, rules and regulations relating to consumer protection,
installment sales and usury.
3.20 Repurchase Agreements
With respect to all agreements currently outstanding pursuant to which
UCB or any UCB Subsidiary has purchased securities subject to an agreement to
resell, UCB or the UCB Subsidiary has a valid, perfected first lien or security
interest in the securities or other collateral securing such agreement, and the
value of such collateral equals or exceeds the amount of the debt secured
thereby. With respect to all agreements currently outstanding pursuant to which
UCB or any UCB Subsidiary has sold securities subject to an agreement to
repurchase, neither UCB nor the UCB Subsidiary has pledged collateral materially
in excess of the amount of the debt secured thereby.
21
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).
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.
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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 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
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(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 the issuance of shares pursuant to
this Agreement) 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 and Acquisition
Subsidiary
(a) 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.
(b) SNC shall cause Acquisition Subsidiary to be duly organized and to
be validly existing and in good standing under the laws of the State of North
Carolina, with full corporate power and authority to participate in the Merger
as contemplated hereby. All of the outstanding
24
shares of Acquisition Subsidiary will at all times through the Effective Time be
owned and controlled by SNC.
4.5 Securities Documents
SNC (and BB&T Financial Corporation prior to its merger with SNC) has
timely filed all Securities Documents required by the Securities Laws since
December 31, 1993. As of their respective dates of filing, such 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
25
limitation noncompliance with the CRA) that would prevent UCB or SNC from
obtaining all of the federal and state regulatory approvals contemplated herein.
4.9 Absence of Undisclosed Liabilities
Neither SNC nor any of the SNC Subsidiaries has any liability
(contingent or otherwise) that is material to SNC on a consolidated basis or
that, when combined with all similar liabilities, would be material to SNC on a
consolidated basis, except as disclosed in the Financial Statements of SNC and
except for liabilities made in the ordinary course of its business since the
date of SNC's most recent Financial Statements.
4.10 Allowance for Loan Losses
The allowance for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of SNC is or will be in the opinion
of SNC's management adequate in all material respects as of their respective
dates, under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for reasonably anticipated losses on
outstanding loans net of recoveries.
4.11 Tax Matters
(a) SNC and the SNC Subsidiaries, and each of their predecessors, has
timely filed all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
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
26
Each of SNC and the SNC Subsidiaries is in compliance with all statutes
and regulations (including, but not limited to, the CRA, TILA and regulations
promulgated thereunder and other consumer banking laws) applicable and material
to the conduct of its business, and neither SNC nor any of the SNC Subsidiaries
has received any notification that has not lapsed, been withdrawn or abandoned
from any agency or department of federal, state or local government (i)
asserting a violation or possible violation of any such statute or regulation,
and which violation would reasonably likely have a Material Adverse Effect on
SNC, (ii) threatening to revoke any license, franchise, permit or government
authorization, or (iii) restricting or in any way limiting its operations.
Neither SNC nor any of the SNC Subsidiaries is subject to any regulatory or
supervisory cease and desist order, agreement, directive or memorandum of
understanding, and none of them has received any communication requesting that
they enter into any of the foregoing.
4.13 Certain Information
When the Joint Proxy Statement/Prospectus is mailed, and at all times
subsequent to such mailing up to and including the time of the meeting of
shareholders of SNC to vote on the Merger, the Joint Proxy Statement/Prospectus
and all amendments or supplements thereto, with respect to all information set
forth therein relating to SNC, (i) shall comply in all material respects with
the applicable provisions of the Securities Laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
4.14 Accounting, Tax and Regulatory Matters
Neither SNC nor the SNC Subsidiaries have taken or agreed to take any
action which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to be accounted for as a pooling of
interests or not to constitute a reorganization under Section 368 of the Code,
or (ii) materially impede or delay receipt of any consents of regulatory
authorities referred to in Section 5.4(b) or result in failure of the condition
in Section 6.3(b).
4.15 Share Ownership
As of the date of this Agreement, SNC does not own (except in a
fiduciary capacity) any shares of UCB Common Stock.
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
27
Agreement the Board of Directors of UCB agrees that it shall, at the time the
Joint Proxy Statement/Prospectus is mailed to the shareholders of UCB, recommend
that UCB's shareholders vote for such approval; provided, that the Board of
Directors of UCB may withdraw or refuse to make such recommendation only if the
Board of Directors shall determine in good faith that such recommendation would
violate its fiduciary duty to its shareholders following (i) the consideration
of written advice of legal counsel that making such recommendation or the
failure to withdraw or modify such recommendation would constitute a breach of
the fiduciary duties of such Board to shareholders of UCB, and (ii) the
withdrawal by Wheat First Butcher Singer in writing of its opinion referred to
in Section 3.27 or delivering to the UCB Board of Directors of written advice
from Wheat First Butcher Singer that the Exchange Ratio is not fair or is
inadequate to the shareholders of UCB from a financial point of view. SNC shall
call a meeting of its shareholders for the purpose of approving the issuance of
shares of SNC Common Stock pursuant to the terms of this Agreement, and shall
recommend approval of such matter to its shareholders.
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
28
contemplated in Section 2.8, required in connection with the UCB Option
Agreement, and as otherwise required herein. If at any time the aggregate number
of shares of SNC Common Stock available for issuance hereunder shall not be
sufficient to effect the Merger, SNC shall take all appropriate action as may be
required to increase the amount of the authorized SNC Common Stock.
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;
(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,
30
or permit any such lien, charge or encumbrance to exist; or waive or
release any material right or cancel or compromise any debt or claim
other than in the ordinary course of business;
(f) merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control
over any other entity; or liquidate, sell or otherwise dispose of any
assets or acquire any assets, other than in the ordinary course of its
business consistent with past practices;
(g) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(h) increase the rate of compensation of any of its directors,
officers or employees, or pay or agree to pay any bonus to, or provide
any other employee benefit or incentive to, any of its directors,
officers or employees, except in the ordinary course of business
consistent with past practices;
(i) enter into or substantially modify (except as may be
required by applicable law or regulation) any pension, retirement,
stock option, stock purchase, stock appreciation right, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in respect of any
of its directors, officers or other employees; provided, that this
subparagraph shall not prevent renewals of any of the foregoing
consistent with past practice, except for contemplated changes in UCB's
Flexible Benefit Plan;
(j) solicit or encourage inquiries or proposals with respect
to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition or purchase of
all or a substantial portion of the assets of, or a substantial equity
interest in, UCB or any UCB Subsidiary or any business combination with
UCB or any UCB Subsidiary other than as contemplated by this Agreement;
or authorize any officer, director, agent or affiliate of UCB or any
UCB Subsidiary to do any of the above; or fail to notify SNC
immediately if any such inquiries or proposals are received, any such
information is requested or required, or any such negotiations or
discussions are sought to be initiated; provided, that this paragraph
(j) shall not apply to furnishing information, negotiations or
discussions following an unsolicited offer if, as a result of such
offer, UCB is advised in writing by legal counsel that the failure so
to furnish information or negotiate would constitute a breach of the
fiduciary duties of UCB's Board of Directors to its shareholders;
(k) enter into (i) any material agreement, arrangement or
commitment not made in the ordinary course of business, (ii) any
agreement, indenture or other instrument not made in the ordinary
course of business relating to the borrowing of money by UCB or a UCB
Subsidiary or guarantee by UCB or a UCB Subsidiary of any obligation,
(iii) any agreement, arrangement or commitment relating to the
employment or severance of a consultant or the employment, severance,
election or retention in office of any present or
31
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;
(1) change its lending, investment or asset liability
management policies in any material respect, except as may be required
by applicable law, regulation, or directives, and except that after
approval of the Agreement and the Plan of Merger by its shareholders
UCB shall cooperate in good faith with SNC to adopt policies, practices
and procedures consistent with those utilized by SNC, effective on or
before the Closing Date;
(m) change its methods of accounting in effect at December 31,
1995, except as required by changes in generally accepted accounting
principles concurred in by SNC's independent certified public
accountants, which concurrence shall not be unreasonably withheld, or
change any of its methods of reporting income and deductions for
federal income tax purposes from those employed in the preparation of
its federal income tax returns for the year ended December 31, 1995,
except as required by changes in law or regulation;
(n) incur any commitments for capital expenditures or
obligation to make capital expenditures in excess of $250,000, for any
one expenditure, or $2,000,000, in the aggregate;
(o) incur any indebtedness other than deposits from customers
or otherwise in the ordinary course of business;
(p) take any action which would or could reasonably be
expected to (i) cause the business combination contemplated hereby not
to be accounted for as a pooling of interests or not to constitute a
reorganization under Section 368 of the Code, in either case as
determined by SNC, (ii) result in any inaccuracy of a representation or
warranty herein which would allow for a termination of this Agreement,
or (iii) cause any of the conditions precedent to the transactions
contemplated by this Agreement to fail to be satisfied;
(q) dispose of any material assets other than in the ordinary
course of business; or
(r) agree to do any of the foregoing.
5.10 Employment Agreements
SNC shall enter into employment agreements with those UCB employees and
on the terms as agreed by SNC and UCB prior to the date hereof, which shall
supersede presently existing employment agreements.
5.11 Affiliates
32
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 ss.
1.401(a)(4)-13(c)(4)(i) (that is, the accrued benefit of each Employee who
becomes a participant in the SNC pension plan incident to such plan merger will
equal the sum of the benefit accrued to the Effective Time under the UCB pension
plan plus the future benefit accrued under the SNC pension plan). For purposes
of applying the SNC pension plan following such merger, service with UCB of an
Employee shall be deemed to be service with SNC for the purposes of determining
eligibility and vesting, but not for the purpose of determining benefit accruals
following the Effective Time.
(d) UCB's Long Term Incentive Plan, Director Deferred Compensation Plan
and Triad Bank Long Term Incentive Plan shall be frozen as of the Effective
Time, and SNC shall assume as of the Effective Time all obligations under such
plans as then accrued. SNC shall following the Effective Time administer such
plans in accordance with their respective terms, except that no further rights
or benefits shall accrue to participants and no further employees or directors
shall be
33
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.
(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.
34
5.14 Forbearances of SNC
Except with the prior written consent of UCB, which consent shall not
be arbitrarily or unreasonably withheld, between the date hereof and the
Effective Time, neither SNC nor any SNC Subsidiary shall:
(a) exercise the UCB Option Agreement other than in accordance with its
terms, or dispose of the shares of UCB Common Stock issuable upon exercise of
the option rights conferred thereby other than as permitted or contemplated by
the terms thereof; or
(b) enter into a merger or other business combination transaction with
any other corporation or person in which SNC would not be the surviving or
continuing entity after the consummation thereof;
(c) sell or lease all or substantially all of the assets and business
of any SNC Subsidiary;
(d) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(e) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of its
business; or
(f) take any action which would or might be expected to (i) cause the
business combination contemplated hereby not to be accounted for as a
pooling-of-interest or not to constitute a reorganization under Section 368 of
the Code, (ii) result in any inaccuracy of a representation or warranty herein
which would allow for termination of this Agreement, or (iii) cause any of the
conditions precedent to the transactions contemplated by this agreement to fail
to be satisfied.
5.15 Assumption of Agreement by Acquiror
It shall be a condition precedent to SNC entering into any agreement
whereby SNC shall (i) consolidate with or merge into any other entity and shall
not be the continuing or surviving person of such consolidation or merger, or
(ii) transfer all or substantially all of its assets to any entity, that proper
provision shall be made so that the successor and assigns of SNC shall
specifically agree to assume SNC's obligations under this Agreement.
5.16 Reports
Each of UCB and SNC shall file (and shall cause the UCB Subsidiaries
and the SNC Subsidiaries, respectively, to file), between the date of this
Agreement and the Effective Time, all reports required to be filed by it with
the Commission and any other regulatory authorities having jurisdiction over
such party, and shall deliver to SNC or UCB, as the case may be, copies of all
such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the Commission, such financial
statements will fairly present the consolidated financial
35
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 limitation the
approval of the shareholders of UCB of the Agreement and the Plan of
Merger and of the shareholders of SNC of the issuance of SNC Common
Stock, 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
36
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:
(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
37
(including the representations and warranties set forth in Sections 4.1 and
4.14) such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Material Adverse Effect on SNC; provided that, for purposes of
this sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications;
(b) SNC shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement;
(c) SNC shall have delivered to UCB a certificate, dated the Closing
Date and signed by its Chairman or President or an Executive Vice President, to
the effect that the conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c),
6.2(a) and 6.2(b), to the extent applicable to SNC, have been satisfied and that
there are no actions, suits, claims, governmental investigations or procedures
instituted, pending or, to the best of such officer's knowledge, threatened that
reasonably may be expected to have a Material Adverse Effect on SNC or that
present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger;
(d) UCB shall have received opinions of counsel to SNC in the form
reasonably acceptable to UCB's legal counsel; and
(e) All approvals of the transactions contemplated herein from the
Federal Reserve Board and any other state or federal government agency,
department or body, the approval of which is required for the consummation of
the Merger, shall have been received and all waiting periods with respect to
such approvals shall have expired.
6.3 Conditions Precedent -- SNC
The obligations of SNC to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by SNC pursuant to
Section 7.4:
(a) All representations and warranties of UCB shall be assessed as of
the date of this Agreement and as of the Effective Time as though made on and as
of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or consented
to in writing by SNC. The representations and warranties of UCB set forth in
Section 3.1 shall be true and correct (except for inaccuracies which are de
minimis in amount). The representations and warranties of UCB set forth in
Section 3.24 shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of UCB set forth in
this Agreement (including the representations and warranties set forth in
Sections 3.1 and 3.24) such that the aggregate effect of such inaccuracies has,
or is reasonably likely to have, a Material Adverse Effect on UCB; provided
that, for purposes of this sentence only, those representations and warranties
which are qualified by references to "material" or "Material Adverse Effect"
shall be deemed not to include such qualifications;
38
(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.
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.
39
(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 UCB do not approve the Agreement and the Plan of Merger or if the
shareholders of SNC do not approve the issuance of shares of SNC Common Stock as
provided herein.
(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 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:
40
(1) the Average Closing Price shall be less than
$28.50; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by $33.50 (such number being referred to herein
as the "SNC Ratio") shall be less than (ii) the quotient
obtained by dividing the Index Price on the Determination Date
by the Index Price on the Starting Date and subtracting 0.15
from the quotient in this clause (A)(2)(ii); or
(B) the Average Closing Price shall be less than $27.00;
SUBJECT, HOWEVER, to the following four sentences. If UCB refuses to
consummate the Merger pursuant to this Section 7.1(h), it shall give
prompt written notice thereof to SNC, which notice shall specify which
of clauses (A) or (B) is applicable (or if both would be applicable,
which clause is being invoked); provided, that such notice of election
to terminate may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt
of such notice, SNC shall have the option, in the case of a failure to
satisfy the condition in clause (A), to elect to increase the Exchange
Ratio to equal the quotient obtained by dividing $32.35 by the Average
Closing Price. During such five-day period, SNC shall have the option,
in the case of a failure to satisfy the condition in clause (B), to
elect to increase the Exchange Ratio to equal the quotient obtained by
dividing $30.65 by the Average Closing Price. The election contemplated
by either of the two preceding sentences shall be made by giving notice
to UCB of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 7.1(h) and
this Agreement shall remain in effect in accordance with its terms
(except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 7.1(h).
For purposes of this Section 7.1(h), the following
terms shall have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily closing sales prices per share of SNC Common Stock as
reported on the NYSE-Composite Transactions List (as reported
by THE WALL STREET JOURNAL or, if not reported thereby,
another authoritative source as chosen by SNC) for the ten
consecutive full trading days in which such shares are traded
on the NYSE ending at the close of trading on the
Determination Date.
"Determination Date" shall mean the date on which SNC
shall receive consent to the Merger from the Federal Reserve
Board.
41
"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
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
42
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.
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.
43
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 prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein or therein, and a certain letter agreement dated
the date hereof between the parties. The terms and conditions of this Agreement
and said Option Agreements shall inure to the benefit of and be binding upon the
parties hereto and thereto and their respective successors. Nothing in this
Agreement or said Option Agreements, expressed or implied, is intended to confer
upon any party, other than the parties hereto and thereto, and their respective
successors, any rights, remedies, obligations or liabilities.
8.3 No Assignment
Neither of the parties hereto may assign any of its rights or
obligations under this Reorganization Agreement to any other person, except upon
the prior written consent of the other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
44
If to UCB:
Ronald C. Monger
Executive Vice President
Chief Financial Officer
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1330
With a required copy to:
Howard V. Hudson, Jr.
General Counsel and Secretary
United Carolina Bancshares
127 West Webster Street
Post Office Box 632
Whiteville, North Carolina 28472
Fax No.: 910-642-1276
and
Frank M. Conner, III
Alston & Bird
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004
Fax No.: 202-508-3333
If to SNC:
Southern National Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: Scott E. Reed
Fax No.: 910-733-0340
45
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.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this 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 /s/ John A. Allison IV
Title: Chairman of the Board
and Chief Executive Officer
46
UNITED CAROLINA BANCSHARES CORPORATION
By /s/ E. Rhone Sasser
Title: Chairman of the Board
and Chief Executive Officer
47