EXHIBIT 2.1
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of April, 1999 (as
amended and restated as of May 27, 1999, this "Plan"), by and between EVEREN
CAPITAL CORPORATION (the "Company"), FIRST UNION CORPORATION ("First Union"),
and FIRST UNION DELAWARE, INC. (the "FUNC Subsidiary").
RECITALS:
(A) The Company. The Company is a corporation duly organized and validly
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existing in good standing under the laws of the State of Delaware, with its
principal executive offices located in Chicago, Illinois. As of the date
hereof, the Company has 100,000,000 authorized shares of common stock, each of
$0.01 par value ("Company Common Stock", together with the rights ("Company
Rights") issued pursuant to the Rights Agreement between the Company and Xxxxxx
Trust and Savings Bank, dated as of October 1, 1996 (the "Company Rights
Agreement"), attached thereto), and 10,000,000 authorized shares of preferred
stock, each of $0.01 par value ("Company Preferred Stock")(no other class of
capital stock being authorized), of which 35,443,465 shares of Company Common
Stock and no shares of Company Preferred Stock were issued and outstanding as of
March 31, 1999.
(B) First Union. First Union is a corporation duly organized and validly
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existing in good standing under the laws of the State of North Carolina, with
its principal executive offices located in Charlotte, North Carolina. First
Union is a registered bank holding company under the Bank Holding Company Act of
1956, as amended. As of the date hereof, First Union has 2,000,000,000
authorized shares of common stock, each of $3.33 1/3 par value ("First Union
Common Stock", together with the rights ("First Union Rights") issued pursuant
to the Amended and Restated Shareholder Protection Rights Agreement, dated as of
October 15, 1996 (the "First Union Rights Agreement") attached thereto),
40,000,000 authorized shares of Class A Preferred Stock, no-par value ("First
Union Class A Preferred Stock"), and 10,000,000 authorized shares of Preferred
Stock, no-par value ("First Union Preferred Stock") (no other class of capital
stock being authorized), of which approximately 968,139,000 shares of First
Union Common Stock, no shares of First Union Class A Preferred Stock, and no
shares of First Union Preferred Stock, were issued and outstanding as of March
31, 1999. The FUNC Subsidiary is a wholly-owned direct subsidiary of First
Union and was organized by First Union solely as a vehicle to effect the Merger
(as hereinafter defined) and has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
(C) Rights, Etc. Except as Previously Disclosed (as hereinafter defined),
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there are no shares of capital stock of the Company authorized and reserved for
issuance, the Company has no Rights (as hereinafter defined) issued or
outstanding and the Company has no commitment to authorize, issue or sell any
such shares or any Rights, except pursuant to this Plan. There are no preemptive
rights in respect of the Company Common Stock.
(D) Approvals. The respective Boards of Directors of each of First Union,
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the FUNC Subsidiary and the Company have determined that it is in the best
interests of their respective companies and their stockholders to consummate the
transactions provided for in this Plan. The Board of Directors of each of the
Company, First Union and the FUNC Subsidiary has approved, at meetings of each
of such Boards of Directors, this Plan and has authorized the execution hereof
in counterparts.
(E) Intention of the Parties. It is the intention of the parties that the
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Merger shall qualify as a reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
(F) Employment Agreements. In connection with the transactions
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contemplated hereby, certain employees of the Company identified on Annex A
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hereto have entered into employment agreements with First Union.
(G) Voting Agreement. As a condition and inducement to First Union's
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willingness to enter into this Plan, certain individuals have entered into an
agreement with First Union in the form attached hereto as Exhibit B (the "Voting
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Agreement"), pursuant to which such individuals have agreed to vote all shares
of capital stock owned or acquired by them in favor of approval of the
transactions contemplated by this Plan at the Meeting (as hereinafter defined).
(H) Retention Program. First Union and the Company have agreed, in
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connection with the transactions contemplated hereby, to establish a retention
program on substantially the terms described herein, the purposes of which is to
retain the services of certain employees of the Company and the Company
Subsidiaries (as hereinafter defined) following the consummation of the
transactions contemplated hereby.
(I) Stock Option Agreement. As a condition and inducement to First Union's
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willingness to enter into this Plan, concurrently with the execution and
delivery of this Plan, the Company has executed and delivered a Stock Option
Agreement with First Union (the "Stock Option Agreement") in substantially the
form attached hereto as Exhibit C, pursuant to which the Company is granting to
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First Union an option to purchase, under certain circumstances, shares of
Company Common Stock.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions thereof
and the manner and basis of carrying it into effect, which shall be as follows:
I. THE MERGER.
1.01. The Merger. At the Effective Time:
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(A) The Continuing Corporation. The FUNC Subsidiary shall merge with
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and into the Company (the "Merger"), the separate existence of the FUNC
Subsidiary shall cease and the Company (sometimes hereinafter referred to
as the "Continuing Corporation") shall survive the Merger and the name of
the Continuing Corporation shall be "EVEREN Capital Corporation". The
Continuing Corporation shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of the Continuing
Corporation with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger. The Merger shall have
the effects specified in the Delaware General Corporations Law (the
"DGCL").
(B) Certificate of Incorporation; Bylaws; Directors; Officers. The
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Certificate of Incorporation and Bylaws of the Continuing Corporation shall
be those of the Company, as in effect immediately prior to the Effective
Time. The directors and officers of the FUNC Subsidiary in office
immediately prior to the Effective Time (as hereinafter defined) shall be
the directors and officers of the Continuing Corporation, together with
such additional directors and officers as may thereafter be elected, who
shall hold office until such time as their successors are duly elected and
qualified.
1.02. Effective Date. Subject to the conditions to the obligations of the
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parties to effect the Merger as set forth in Article VI and subject to the
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second sentence in Section 2.05, the effective date (the "Effective Date") of
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the Merger shall be
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such date as the parties hereto mutually agree upon; provided, however, that if
the parties are not able to agree upon such date, such date shall be the date as
First Union shall notify the Company in writing not less than five days prior
thereto, which date shall not be more than 15 days after such conditions have
been satisfied or waived in writing, excluding those conditions that are to be
satisfied by written instrument dated as of the Effective Date. On or prior to
the Effective Date, the FUNC Subsidiary and the Company shall execute and
deliver to the Secretary of State of the State of Delaware, a Certificate of
Merger, as applicable, in accordance with applicable law specifying the time at
which the Merger shall become effective. The time on the Effective Date at which
the Merger becomes effective is referred to as the "Effective Time".
1.03. Integration of Legal Entities. The parties hereto currently intend
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to effectuate, or cause to be effectuated, no earlier than the day following the
Effective Time, the combination (the "Subsidiary Combination") of EVEREN
Securities, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("EVEREN Securities"), and First Union Capital Markets Corp., a North
Carolina corporation and a wholly owned subsidiary of First Union. The parties
hereto shall, and shall cause their subsidiaries to, cooperate and take all
requisite actions, including, without limitation, executing all requisite
documentation, as may be reasonably required by First Union prior to or
following the Effective Time to consummate the Subsidiary Combination. The
parties also agree to, and shall cause their subsidiaries to, cooperate and take
all requisite additional action as may be reasonably required prior to or
following the Effective Time to merge or otherwise consolidate legal entities
following the Effective Time to the extent desirable for regulatory or other
reasons. Notwithstanding the foregoing, no actions contemplated by this Section
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1.03 shall be taken if such actions would adversely affect the tax treatment to
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the Company's stockholders as a result of receiving the Consideration or prevent
the parties from obtaining the opinions of counsel referred to in Sections
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6.02(C) and 6.03(C).
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1.04. Reservation of Right to Revise Structure. At First Union's
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election, the Merger may alternatively be structured so that the Company is
merged with and into the FUNC Subsidiary; provided however, that no such change
shall (1) alter or change the amount or kind of the consideration to be issued
to the Company's stockholders in the Merger as set forth in Article II hereof
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(the "Merger Consideration"), or the treatment of the holders of the Company
Options (as hereinafter defined), (2) adversely affect the tax treatment to the
Company's stockholders
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as a result of receiving the Merger Consideration or prevent the parties from
obtaining the opinions of counsel referred to in Sections 6.02(C) and 6.03(C),
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(3) materially impede or delay consummation of the Merger, or (4) release First
Union from any of its obligations hereunder. In the event of such an election,
the parties agree to execute appropriate documentation to reflect such election.
II. CONSIDERATION.
2.01. Merger Consideration. Subject to the provisions of this Plan, at
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the Effective Time, automatically by virtue of the Merger and without any action
on the part of any party or stockholder:
(A) Outstanding FUNC Subsidiary Common Stock. The shares of FUNC
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Subsidiary common stock issued and outstanding immediately prior to the
Effective Time shall by virtue of the Merger, become and be converted into
one share of Company Common Stock, which shall be owned by First Union.
(B) Outstanding Company Common Stock. Each share (excluding shares
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held by the Company or any Company Subsidiaries (as defined herein) or by
First Union or any of its subsidiaries, in each case other than in a trust,
fiduciary or nominee capacity or as a result of debts previously contracted
("Treasury Shares")) of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall become and be converted into
the right to receive the number (the "Exchange Ratio") of shares of First
Union Common Stock (including the attached First Union Rights) equal to the
amount obtained by dividing $31.00 by the Average Market Price (as
hereinafter defined) and rounding to the nearest one-one-thousandth
(1/1000) of a share.
(C) Treasury Shares. Each Treasury Share immediately prior to the
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Effective Time shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
(D) For purposes of this Plan, "Average Market Price" shall mean
(subject to possible adjustment as set forth in Section 2.05) the average
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of the daily closing sales prices of First Union Common Stock as reported
on the Composite Transactions tape of the New York Stock Exchange, Inc.
("NYSE") reporting system (as reported in The Wall Street
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Journal (National Edition)) for the ten consecutive full trading days
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beginning on the eleventh trading day prior to the Effective Date and
ending on the second trading day prior to the Effective Date (such period,
the "Pricing Period").
2.02. Stockholder Rights; Stock Transfers. At the Effective Time,
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holders of Company Common Stock shall become record holders of the shares of
First Union Common Stock to which they are entitled hereunder (subject to
Section 2.04(C)), and shall cease to be, and shall have no rights as,
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stockholders of the Company, other than to receive any dividend or other
distribution with respect to the Company Common Stock with a record date
occurring prior to the Effective Time, subject to the provisions of Section
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5.17, and the consideration provided under this Article II. After the Effective
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Time, there shall be no transfers on the stock transfer books of the Company or
the Continuing Corporation of shares of Company Common Stock.
2.03. Fractional Shares. Notwithstanding any other provision hereof, no
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fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, First Union shall pay to each holder of Company Common Stock who would
otherwise be entitled to a fractional share an amount in cash (without interest)
determined by multiplying such fraction by the last sale price of First Union
Common Stock, as reported by the NYSE Composite Transactions tape (as reported
in The Wall Street Journal (National Edition) or, if not reported therein, in
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another authoritative source), for the last NYSE trading day immediately
preceding the Effective Date.
2.04. Exchange Procedures.
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(A) As promptly as practicable after the Effective Date, First Union
shall send or cause to be sent to each former holder of shares (other than
Treasury Shares) of Company Common Stock of record immediately prior to the
Effective Time transmittal materials for use in exchanging such
stockholder's certificates formerly representing Company Common Stock ("Old
Certificates") or effecting any necessary book-entry transfers in the case
of uncertificated shares of Company Common Stock for the Merger
Consideration. The certificates representing the shares of First Union
Common Stock ("New Certificates") into which shares of such stockholder's
Company Common Stock are converted at the Effective Time and any checks in
respect of a fractional share interest or dividends or distributions which
such
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person shall be entitled to receive will be delivered to such stockholder
only upon delivery to First Union National Bank, as Exchange Agent (the
"Exchange Agent") of Old Certificates or evidence of any necessary book-
entry transfers in the case of uncertificated shares representing all of
such shares of Company Common Stock (or indemnity reasonably satisfactory
to First Union and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be
paid on any such cash to be paid in lieu of fractional share interests or
dividends or distributions which any such person shall be entitled to
receive pursuant to this Article II upon such delivery. Old Certificates or
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evidence of any necessary book-entry transfers in the case of
uncertificated shares surrendered for exchange by any Affiliate (as
referred to in Section 5.10) of the Company shall not be exchanged for New
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Certificates until First Union has received a written agreement from such
person as specified in Section 5.10.
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(B) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Common Stock
for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(C) No dividends or other distributions with a record date occurring
after the Effective Time shall be paid to the holder of any unsurrendered
Old Certificates or uncertificated shares in book-entry form representing
Company Common Stock until such Old Certificates or evidence of
uncertificated shares in book-entry form have been surrendered for exchange
for New Certificates. After becoming so entitled in accordance with this
Section 2.04, the record holder thereof also shall be entitled to receive
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any such dividends or other distributions, without any interest thereon,
which theretofore had become payable with respect to shares of First Union
Common Stock such holder had the right to receive upon surrender of the Old
Certificate(s) or evidence of uncertificated shares in book-entry form.
2.05. Anti-Dilution Provisions. In the event First Union changes (or
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establishes a record date for changing) the number of shares of First Union
Common Stock issued and outstanding prior to the Effective Date as a result of a
stock split, stock dividend (including but not limited to, the First Union
Rights becoming separable, distributable, unredeemable or
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exercisable), recapitalization or similar transaction with respect to the
outstanding First Union Common Stock and the record date therefor shall be prior
to the Effective Date and the First Union Common Stock is not trading on the
basis of such transaction being completed during the entire Pricing Period, the
relevant closing prices included in the Average Closing Price calculation shall
be appropriately adjusted. Prior to the Effective Date, First Union will not
fail to publish information known to it that (1) would reasonably be expected to
have a material effect on the Average Market Price and (2) would customarily be
published by First Union consistent with its past practice; provided that if any
such information is published during or after the Pricing Period and before the
Effective Date, the Effective Date shall be delayed so that the entire Pricing
Period occurs after publication.
2.06. Options.
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(A) From and after the Effective Time, all employee and director
stock options to purchase shares of Company Common Stock (each, a "Company
Option"), which are then outstanding and unexercised, shall, without any
further action on the part of the holders thereof, be converted into and
become options to purchase shares of First Union Common Stock, and First
Union shall assume each such Company Option in accordance with the terms of
the applicable Previously Disclosed Compensation and Benefit Plans (as
hereinafter defined) and related agreements by which it is evidenced,
including but not limited to the accelerated vesting of such Company
Options which shall occur in connection with and by virtue of the Merger as
and to the extent required by such Previously Disclosed Compensation and
Benefit Plans; provided, however, that from and after the Effective Time
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(i) each such Company Option assumed by First Union may be exercised solely
to purchase shares of First Union Common Stock, (ii) the number of shares
of First Union Common Stock purchasable upon exercise of such Company
Option shall be equal to the number of shares of Company Common Stock that
were purchasable under such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio and rounding to the nearest
whole share, and (iii) the per share exercise price under each such Company
Option shall be adjusted by dividing the per share exercise price of each
such Company Option immediately prior to the Effective Time by the Exchange
Ratio, and rounding to the nearest whole cent. The terms of each Company
Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
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recapitalization, merger, reorganization or other similar transaction with
respect to First Union Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, the number of shares and the per share
exercise price of each Company Option which is intended to be an "incentive
stock option" (as defined in Section 422 of the Code) shall be adjusted in
accordance with the requirements of Section 424 of the Code. Accordingly,
with respect to any incentive stock options, fractional shares shall be
rounded down to the nearest whole number of shares and where necessary the
per share exercise price shall be rounded up to the nearest cent.
(B) Prior to the Effective Time, First Union shall reserve for
issuance the number of shares of First Union Common Stock necessary to
satisfy First Union's obligations under Section 2.06(A). Promptly after
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the Effective Time, First Union shall file with the SEC a registration
statement on an appropriate form under the Securities Act with respect to
the shares of First Union Common Stock subject to options to acquire First
Union Common Stock issued pursuant to Section 2.06(A) hereof, and shall use
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its reasonable best efforts to maintain the current status of the
prospectus contained therein, as well as comply with any applicable state
securities or "blue sky laws", for so long as such options remain
outstanding.
III. ACTIONS PENDING CONSUMMATION.
3.01. Forebearances of the Company. From the date hereof until the
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Effective Time, except as expressly contemplated by this Plan, as Previously
Disclosed, or as required by applicable law or regulation, without the prior
written consent of First Union, which consent shall not be unreasonably
withheld, the Company will not, and will cause each of the Company Subsidiaries
not to:
(A) Ordinary Course. Conduct the business of the Company and the
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Company Subsidiaries other than in the ordinary and usual course or fail to
use reasonable efforts consistent with past practice to preserve intact
their business organizations and assets and maintain their rights,
franchises and existing relations with clients, customers, suppliers,
employees and business associates, or take any action reasonably likely to
have a material adverse effect on the Company's ability to perform any of
its material obligations under this Plan, or engage in any new lines of
business.
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(B) Capital Stock. Other than pursuant to Rights Previously Disclosed
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and outstanding on the date hereof or as permitted by Section 3.01(D)(4),
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(i) issue, sell or otherwise permit to become outstanding, or authorize the
creation of, any additional shares of capital stock of the Company or any
Rights, (ii) enter into any agreement with respect to the foregoing, or
(iii) permit any additional shares of capital stock of the Company to
become subject to new grants of employee or director stock options, other
Rights or similar stock-based employee rights; provided, however, if any
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such shares are issued pursuant to such Rights, the Company agrees that
such shares shall be purchased in the open market and shall not be treasury
or original issue shares unless otherwise agreed to by First Union.
(C) Dividends, Etc. (1) Make, declare, pay or set aside for payment
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any dividend (other than dividends from wholly owned Company Subsidiaries
to the Company or another wholly owned Company Subsidiary, or regular
quarterly cash dividends on Company Common Stock payable at a rate not to
exceed $0.07 per share) on or in respect of, or declare or make any
distribution on, any shares of capital stock of the Company or (2) directly
or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock.
(D) Compensation; Employment Agreements; Etc. Enter into, amend,
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modify or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of the Company or
any Company Subsidiary, or grant any salary or wage increase or increase
any employee benefit (including incentive or bonus payments), except (1)
for normal individual increases in compensation to employees in the
ordinary course of business consistent with past practice, (2) for other
changes that are required by applicable law, (3) to satisfy Previously
Disclosed contractual obligations existing as of the date hereof, or (4)
for employment arrangements for, or grants of awards to, newly hired
employees in the ordinary course of business consistent with past or
previously announced practice.
(E) Benefit Plans. Except for amendments to the Company's 401(k) and
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Employee Stock Ownership Plan (the "KSOP") and related trust agreement of
which First Union has received notice as of the date hereof, enter into,
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establish, adopt, amend or terminate (except (i) as may be required by
applicable law or (ii) to satisfy Previously Disclosed contractual
obligations existing as of the date hereof) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer, employee
of, or independent contractor with respect to, the Company or any of the
Company Subsidiaries, or take any action to accelerate the vesting,
exercisability, payment or funding of stock options, restricted stock or
other compensation or benefits payable thereunder.
(F) Dispositions. Except (i) as Previously Disclosed or (ii) with
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respec to securities or other investments or assets in the ordinary course
of business consistent with past practice, sell, transfer, mortgage, lease,
encumber or otherwise dispose of or discontinue any of its assets, business
or properties.
(G) Acquisitions. Except (i) as Previously Disclosed or (ii) with
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respect to securities or other investments or assets in the ordinary course
of business consistent with past practice, merge, consolidate with, or
acquire any assets, business, or properties of any other entity.
(H) Governing Documents. Amend the Company's Certificate of
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Incorporation, by-laws or the articles of incorporation or by-laws (or
similar governing documents) of any of the Company Subsidiaries.
(I) Accounting Methods. Implement or adopt any change in its
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accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(J) Contracts. Except in the ordinary course of business consistent
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with past practice, enter into or terminate any material contract or amend
or modify in any material respect any of its existing material contracts.
(K) Claims. Settle any claim, action or proceeding, except for any
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claim, action or proceeding involving solely money damages in an amount not
to exceed $250,000 for any individual matter, and in the aggregate for all
such settlements, not more than $500,000 per month, and which, in
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the judgment of First Union, is not reasonably likely to establish an
adverse precedent or basis for subsequent settlements.
(L) Adverse Actions. (1) Take any action while knowing that such
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action would, or is reasonably likely to prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (a) any of its representations and warranties set forth
in this Plan being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (b) any of the conditions to the Merger
set forth in Article VII not being satisfied or (c) a material violation of
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any provision of this Plan except, in each case, as may be required by
applicable law or regulation.
(M) Indebtedness. Incur any indebtedness for borrowed money other
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than in the ordinary course of business.
(N) Capital Expenditures. Authorize or make any capital expenditures,
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other than in the ordinary course of business consistent with past practice
in amounts not to exceed $500,000 individually or $2,000,000 in the
aggregate.
(O) Risk Management. Except as required by applicable law or
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regulation, implement or adopt any change in the risk management policies,
procedures or practices of the Company, which, individually or in the
aggregate with all such other changes, would be reasonably likely to result
in a Material Adverse Effect on the Company.
(P) New Activities. (1) Initiate any new business activity that would
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be impermissible for a "bank holding company" under the Bank Holding
Company Act of 1956, as amended, or acquire or permit any of the Company
Subsidiaries to acquire, other than in a bona fide fiduciary capacity or
other than in the ordinary course of business with a view towards resale,
in the aggregate, ownership or control of 5% or more of any class of an
issuer's voting securities or 25% or more of an issuer's equity (treating
subordinated debt as equity) or (2) with respect to EVEREN 1999 Capital
Fund LLC (the "Fund"), permit the Fund to make any portfolio investments,
issue any capital calls, or take any other material action not required to
be taken by its limited liability company agreement, other than the
termination of the Fund in accordance with its terms.
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(Q) Tax Matters. Make or change any material tax election, change any
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annual tax accounting period, adopt or change any method of tax accounting,
file any amended Company Tax Return (as hereinafter defined), enter into
any material closing agreement, settle any material Tax (as hereinafter
defined) claim or assessment, surrender or compromise any right to claim a
material Tax refund, consent to any extension or waiver of the limitations
period applicable to any material Tax claim or assessment, in each case,
other than any of the foregoing actions that would not be reasonably likely
to have a Material Adverse Effect on the Company and which are taken in the
ordinary and usual course of business consistent with past practice.
(R) Commitments. Agree, commit to or enter into any agreement to take
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any of the actions referred to in Section 3.01(A) through (Q).
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3.02. Forebearances of First Union. From the date hereof until the
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Effective Time, except as expressly contemplated by this Plan, without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, First Union will not, and will cause each of its subsidiaries not to:
(A) Dividends. Make, declare, pay or set aside for payment any
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dividend or similar distribution, other than regular dividends on First
Union Common Stock or First Union Preferred Stock consistent with past
practice; provided, however, the foregoing shall not apply to increases in
the quarterly dividend rate payable on First Union Common Stock in the
ordinary course of business consistent with past practices or the payment
of dividends on any preferred stock (now or hereafter outstanding) in
accordance with the terms thereof.
(B) Adverse Actions. (1) Take any action while knowing that such
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action would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (2) knowingly take any action that is intended or is reasonably
likely to result in (a) any of its representations and warranties set forth
in this Plan being or becoming untrue in any material respect at any time
at or prior to the Effective Time, (b) any of the conditions to the Merger
set forth in Article VI not being satisfied or (c) a material violation of
any provision of this Plan
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except, in each case, as may be required by applicable law or regulation.
(C) Commitments. Agree, commit to or enter into any agreement to take
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any of the actions referred to in Section 3.02(A) or (B).
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IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of the Company. The Company hereby
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represents and warrants to First Union as follows, in all cases except as
Previously Disclosed:
(A) Recitals. The facts set forth in the Recitals of this Plan with
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respect to it are true and correct.
(B) Organization, Standing and Authority. The Company and each
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Company Subsidiary is duly qualified to do business and is in good standing in
the States of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company. The Company and each of the Company Subsidiaries has in effect all
federal, state, local, and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now conducted, except for such authorizations, the absence of which,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company. EVEREN Securities is duly registered, qualified
to do business and in good standing as a broker-dealer with the Securities and
Exchange Commission (the "SEC"), and is a member in good standing of or
registered with the National Association of Securities Dealers, Inc. (the
"NASD"), the New York Stock Exchange, Inc. (the "NYSE"), the American Stock
Exchange, Inc. (the "AMEX"), the Commodity Futures Trading Commission (the
"CFTC"), the National Futures Association (the "NFA"), and all other securities
and commodities exchanges in which the conduct of its business requires
membership or registration.
(C) Shares. The outstanding shares of Company Common Stock are
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validly issued and outstanding, fully paid and nonassessable, and are subject to
no, and have not been issued in violation of any, preemptive or similar rights.
As of the date hereof, except as Previously Disclosed, there are no shares of
Company Common Stock authorized and reserved for issuance, the Company does not
have any Rights issued or outstanding with
14
respect to Company Common Stock, and the Company does not have any commitment to
authorize, issue or sell any Company Common Stock or Rights, except pursuant to
this Plan. The number of shares of Company Common Stock which are issuable and
reserved for issuance upon exercise of Company Options as of the date hereof are
Previously Disclosed. No shares of Company Common Stock have been issued from
March 31, 1999, to the date of this Plan, except pursuant to Rights Previously
Disclosed.
(D) Company Subsidiaries. The Company has Previously Disclosed a
--------------------
list of all the Company Subsidiaries, including the states in which such Company
Subsidiaries are organized, and if any of such Company Subsidiaries is not
wholly-owned by the Company or a Company Subsidiary, the percentage owned by the
Company or any Company Subsidiary and the names, addresses and percentage
ownership by any other individual or corporation, partnership, joint venture,
business trust, limited liability corporation or partnership, association or
other organization (each, a "Business Entity"). No equity securities of any of
the Company Subsidiaries are or may become required to be issued (other than to
the Company or a wholly-owned Company Subsidiary) by reason of any Rights with
respect thereto. There are no contracts, commitments, understandings or
arrangements by which any of the Company Subsidiaries is or may be bound to sell
or otherwise issue any shares of its capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of the
Company to vote or to dispose of such shares. All of the shares of capital
stock of each Company Subsidiary are fully paid and nonassessable and subject to
no preemptive rights and, except as Previously Disclosed, are owned by the
Company or a Company Subsidiary free and clear of any liens, encumbrances,
charges, security interests, restrictions (including restrictions on voting
rights or rights of disposition), defaults or equities of any character or
claims or third party rights of whatever nature (collectively, "Liens"). Each
Company Subsidiary is in good standing under the laws of the jurisdiction in
which it is incorporated or organized, and is duly qualified to do business and
in good standing in each jurisdiction where its ownership or leasing of property
or the conduct of its business requires it to be so qualified, except for any
case in which the failure to be duly qualified is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Except as Previously Disclosed, the Company does not own beneficially,
directly or indirectly, any equity securities or similar interests of any
Business Entity. The term "Company Subsidiary" means any Business Entity in
which the Company, directly or indirectly,
15
owns or controls 50% or more of any class of such entity's voting securities.
The Company has Previously Disclosed a list of all equity securities
it or a Company Subsidiary holds for its own account and not in a bona fide
fiduciary capacity, as of the date hereof, involving, in the aggregate,
ownership or control of 5% or more of any class of the issuer's voting
securities or 25% or more of the issuer's equity (treating subordinated debt as
equity). The Company has Previously Disclosed a list of all partnerships, joint
ventures or similar entities, in which it or any Company Subsidiary owns or
controls an interest.
(E) Corporate Power. The Company and each of the Company Subsidiaries
---------------
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its material properties and assets.
(F) Corporate Authority. Subject to any necessary receipt of approval
-------------------
by its stockholders referred to in Section 6.01(A), each of this Plan and the
---------------
Stock Option Agreement and the transactions contemplated hereby and thereby has
been authorized by all necessary corporate action of the Company and is a valid
and binding agreement of the Company enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(G) No Defaults. Subject to the approval by the holders of at least a
-----------
majority of the outstanding shares of Company Common Stock, the required
regulatory approvals Previously Disclosed, the Previously Disclosed required
filings under federal and state securities and insurance laws and the Previously
Disclosed approvals of the NYSE and any other applicable exchange of the Merger
and the other transactions contemplated hereby, the execution, delivery and
performance of this Plan and the consummation by the Company of the transactions
contemplated hereby, does not and will not (1) constitute a breach or violation
of, or a default under, or cause or allow the acceleration or creation of a Lien
(with or without the giving of notice, passage of time or both) pursuant to, any
law, rule or regulation or any judgment, decree, order, governmental or non-
governmental permit or license, or agreement, indenture or instrument of it or
of any of the Company Subsidiaries or to which the Company or any of the Company
Subsidiaries or its or their properties is subject or bound, which breach,
violation, default or Lien is reasonably likely, individually or in the
16
aggregate, to have a Material Adverse Effect on the Company, (2) constitute a
breach or violation of, or a default under, the Certificate of Incorporation,
Bylaws, or similar governing documents of the Company or any Company Subsidiary,
or (3) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental or non-governmental permit or license or
the consent or approval of any other party to any such agreement, indenture or
instrument, other than any such consent or approval, which if not obtained,
would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company.
(H) Company Reports. Except as Previously Disclosed, since January 1,
---------------
1996, the Company has timely filed all material reports, registrations,
statements and other filings, together with any amendments required to be made
with respect thereto, that were required to be filed with (1) the SEC and the
CFTC, (2) any applicable federal, state, local or foreign governmental
authorities and (3) the NASD, the NYSE, the AMEX, the Chicago Mercantile
Exchange (the "CME"), the Chicago Board of Trade (the "CBOT"), the Municipal
Securities Rulemaking Board (the "MSRB") or any non-governmental self-regulatory
agency, commission or authority (a "Self-Regulatory Body") (all such reports and
statements, including the financial statements, exhibits and schedules thereto,
being collectively referred to herein as the "Company Reports"), including
without limitation, all material reports, registrations, statements and filings
required under the Investment Company Act of 1940 (together with the rules and
regulations thereunder, the "Investment Company Act"), the Investment Advisers
Act of 1940 (together with the rules and regulations thereunder, the "Investment
Advisers Act"), the Securities Exchange Act of 1934 (together with the rules and
regulations thereunder, the "Exchange Act"), the Securities Act of 1933
(together with the rules and regulations thereunder, the "Securities Act") and
any applicable state securities or "blue sky" laws. As of their respective
dates (and without giving effect to any amendments or modifications filed after
the date of this Plan with respect to Company Reports filed before the date of
this Plan), each of the Company Reports complied in all material respects with
the statutes, rules, regulations and orders enforced or promulgated by the
Regulatory Authority with which they were filed and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
17
(I) Financial Statements. The Company's (a) Annual Report on Form 10-
--------------------
K for the fiscal year ended December 31, 1998, and all other documents filed or
to be filed by the Company or any Company Subsidiary subsequent to December 31,
1998, under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form
filed with the SEC (in each such case, the "Company Financial Reports"), did not
and will not as of their respective dates contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in or
incorporated by reference into the Company Financial Reports (including the
related notes and schedules thereto) fairly presents in all material respects
and will fairly present in all material respects the financial position of the
entity or entities to which it relates as of its date and each of the statements
of income and changes in stockholders' equity and cash flows or equivalent
statements in the Company Financial Reports (including any related notes and
schedules thereto) fairly presents in all material respects and will fairly
present in all material respects the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles applied
consistently during the periods involved, except as may be noted therein,
subject to normal and recurring year-end audit adjustments in the case of
unaudited statements.
(J) Absence of Undisclosed Liabilities. Except as disclosed in the
----------------------------------
Company Financial Reports prior to the date hereof, none of the Company or the
Company Subsidiaries has any obligation or liability whatsoever (whether
accrued, contingent or otherwise), including liabilities under Environmental
Laws (as hereinafter defined), that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company.
(K) Absence of Certain Changes. Since December 31, 1998, except as
--------------------------
Previously Disclosed or as specifically contemplated by this Plan, the business
of the Company and the Company Subsidiaries has been conducted in the ordinary
and usual course, consistent with past practice and there has not been:
(1) any event, occurrence, development or state of circumstances
or facts which has had or would reasonably be expected to constitute or
result in a Material Adverse Effect on the Company; or
18
(2) any event, occurrence, development or state of circumstances
or facts which would result in a violation of the covenants set forth in
Article III of this Plan had such events, occurrences, developments or
-----------
state of circumstances or facts occurred after the date hereof.
(L) Properties; Securities. Except as specifically reserved against
----------------------
or otherwise disclosed in the Company Financial Reports (including the related
notes and schedules thereto) and except for those properties and assets that
have been sold or otherwise disposed of in the ordinary course of business, and
except as Previously Disclosed, the Company and the Company Subsidiaries have
good and marketable title, free and clear of all Liens, to all of the properties
and assets, tangible and intangible, reflected in the Company Financial Reports
as being owned by the Company or the Company Subsidiaries as of the dates
thereof, other than those failures to have such title and Liens that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. The Company and the Company Subsidiaries do not
have a fee interest in any real property not used in the ordinary course of
their business, except as Previously Disclosed. All buildings and all fixtures,
equipment, and other property and assets which are held under leases or
subleases by any of the Company or the Company Subsidiaries are held under valid
leases or subleases enforceable in accordance with their respective terms,
except for instances where the failure to be so enforceable is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company. Each of the Company and the Company Subsidiaries has good and
marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent business practices to secure
obligations of each of the Company or any of the Company Subsidiaries, and
except for such other Liens as are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. All such
securities are valued on the books of the Company or the Company Subsidiaries in
accordance with generally accepted accounting principles.
(M) Litigation; Regulatory Action. Except as disclosed in the Company
-----------------------------
Financial Reports and except as Previously Disclosed, (1) no litigation,
proceeding or controversy ("Litigation") before any court, arbitrator, mediator
or Regulatory Authority (as hereinafter defined) is pending against the Company
or the Company Subsidiaries which,
19
individually or in the aggregate, has or is reasonably likely to have a Material
Adverse Effect on the Company, and, to the Company's knowledge, no such
Litigation has been threatened; (2) neither the Company nor any of the Company
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any federal, state or municipal
governmental agency or authority or Self-Regulatory Body (the "Regulatory
Authorities") charged with the supervision or regulation of broker-dealers,
securities underwriting or trading, stock exchanges, commodities exchanges,
investment companies, investment advisers or insurance agents and brokers
(including, without limitation, the SEC, the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), the CFTC, the NYSE, the NASD, the
AMEX, the CME, the CBOT, the MSRB, and the Federal Trade Commission) or the
supervision or regulation of the Company or any of the Company Subsidiaries; and
(3) neither the Company nor any of the Company Subsidiaries has been advised by
any such Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum or understanding,
commitment letter or similar submission. Previously Disclosed is a true and
complete list, as of the date hereof, of all Litigation pending or, to the
Company's knowledge, threatened in writing, arising out of any state of facts
relating to the sale of investment products by the Company, the Company
Subsidiaries or any employees thereof (including, without limitation, equity or
debt securities, mutual funds, insurance contracts, annuities, partnership and
limited partnership interests, interests in real estate, investment banking
services, securities underwritings in which the Company or any Company
Subsidiary was a manager, co-manager, syndicate member or distributor,
Derivatives Contracts (as hereinafter defined) or structured notes).
(N) Compliance with Laws. Except as Previously Disclosed, each of the
--------------------
Company and the Company Subsidiaries:
(1) in the conduct of its business (including without limitation,
municipal securities and NASDAQ market-making activities), is in compliance
in all respects with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
and the rules of all Self-Regulatory Bodies applicable thereto, except for
such instances of noncompliance which are not reasonably likely,
individually
20
or in the aggregate, to have a Material Adverse Effect on the Company;
(2) has all permits, licenses, authorizations, orders and
approvals of, and have made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit it to
own and operate its businesses in all material respects as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to their knowledge, no
suspension or cancellation of any of them is threatened or reasonably
likely;
(3) has received no notification or communication from any
Regulatory Authority (a) asserting that any of them is not in compliance
with any of the statutes, rules, regulations, or ordinances which such
Regulatory Authority enforces, or has otherwise engaged in any unlawful
business practice which, as a result of such noncompliance in any such
instance, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on the Company, (b) threatening to revoke any
license, franchise, permit, seat on any stock or commodities exchange, or
governmental authorization which revocation, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
Company, (c) requiring any of them (including any of the Company's or the
Company Subsidiary's directors or controlling persons) to enter into any
order, decree, agreement, memorandum of understanding or similar
arrangement (or requiring the board of directors thereof to adopt any
resolution or policy) or (d) restricting or disqualifying the activities of
the Company or any of the Company Subsidiaries (except for restrictions
generally imposed by rule, regulation or administrative policy on broker-
dealers generally);
(4) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Regulatory Authority against the
Company, any Company Subsidiary or any officer, director or employee
thereof, except for such investigation, review or disciplinary proceedings
which are not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on the Company;
(5) is not, nor to the Company's knowledge, is any "affiliated
person" (as defined in the Investment
21
Company Act) with it, ineligible pursuant to Section 9(a) or 9(b) of the
Investment Company Act to serve as an investment advisor (or in any other
capacity contemplated by the Investment Company Act) to an Investment
Company. Neither the Company, nor any "associated person" (as defined in
the Investment Advisers Act) thereof, is ineligible pursuant to Section 203
of the Investment Advisers Act to serve as an investment advisor or as an
associated person to a registered investment advisor;
(6) is not, nor to the Company's knowledge, is any affiliate of
any of them, subject to a "statutory disqualification" as defined in
Section 3(a)(39) of the Exchange Act or is subject to a disqualification
that would be a basis for limitations on the activities, functions or
operations of, or suspension or revocation of the registration of any
broker-dealer Company Subsidiary as a broker-dealer, municipal securities
dealer, government securities broker or government securities dealer under
Section 15, Section 15B or Section 15C of the Exchange Act and, to the
Company's knowledge, there is no reasonable basis for, or proceeding or
investigation, whether preliminary or otherwise, that is reasonably likely
to result in, any such limitations, suspension or revocation;
(7) is not required to be registered as an investment company,
commodity trading advisor, commodity pool operator, futures commission
merchant, introducing broker, insurance agent, or transfer agent under any
federal, state, local or foreign statutes, laws, rules or regulations;
(8) in the conduct of its business with respect to employee
benefit plans (other than employee benefit plans of the Company
contemplated by Section 4.01(Q)) subject to Title I of ERISA, has not (a)
---------------
breached any applicable fiduciary duty under Part 4 of Title I of ERISA
which would subject it to liability under Sections 405 or 409 of ERISA, and
(b) engaged in a "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975(c) of the Code which would subject the Company to
liability or Taxes under Sections 409 or 501(i) of ERISA or Section 4975(a)
of the Code, except for such instances of the foregoing which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company; and
(9) is not subject to regulation under the Investment Advisers
Act or the Investment Company Act. The
22
Company and the Company Subsidiaries are and, except for instances of
noncompliance which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company, each of their
employees which are or who are required to be registered as a broker-
dealer, an investment advisor, a registered representative, an insurance
agent or a sales person (or in similar capacity) with the SEC, the
securities commission of any state or foreign jurisdiction or any Self-
Regulatory Body are duly registered as such and such registrations are in
full force and effect. All federal, state, local and foreign registration
requirements have been complied with in all material respects and such
registrations as currently filed, and all periodic reports required to be
filed with respect thereto, are accurate and complete in all material
respects. The Company has made available to First Union true and correct
copies of (a) each Form G-37/G-38 filed with the MSRB since January 1,
1996, and (b) all records required to be kept by the Company under Rule G-
8(a)(xvi) of the MSRB. There has been no contributions or payments, and
there is not any other information, that would be required to be disclosed
by the Company or any of the Company Subsidiaries under MSRB rules and
regulations, except for noncompliance of the foregoing which is not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
(O) Material Contracts.
------------------
(1) Except as Previously Disclosed, as of the date hereof,
neither the Company nor any Company Subsidiary is a party to, or is
otherwise bound by, any material contract (as defined in Item 601(b)(10) of
Regulation S-K under the Securities Act) to be performed after the date
hereof that has not been filed or incorporated by reference in the Company
Financial Reports filed on or prior to the date hereof.
(2) Except as Previously Disclosed, none of the Company or the
Company Subsidiaries is in default under any contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to
which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective
assets, business, or operations receives benefits (each, a "Contract"),
which default, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company, and there has not occurred
23
any event that, with the lapse of time or the giving of notice or both,
would constitute such a default. Neither the Company nor any Company
Subsidiary is subject to or bound by any exclusive dealing arrangement or
other contract or arrangement containing covenants which limit the ability
of the Company or any Company Subsidiary to compete in any line of business
or with any person or which involve any restriction of geographical area in
which, or method by which, the Company or any Company Subsidiary may carry
on its business (other than as may be required by law or any applicable
Regulatory Authority). True and complete copies of all such Previously
Disclosed Contracts and all amendments thereto have been supplied or made
available to First Union. There are no Contracts between any affiliate of
the Company (other than the Company, the Company Subsidiaries, First Union
and First Union's affiliates), on the one hand, and the Company or any
Company Subsidiary, on the other hand.
(3) Contracts with Clients. Except for instances of
----------------------
noncompliance with the following representations (Section 4.01(O)(3)(a-b))
-----------------------
which would not be reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company:
(a) Each of the Company and the Company Subsidiaries is in
compliance with the terms of each Contract with any customer to whom
the Company or any Company Subsidiary provides services under any
Contract (a "Client"), and each such Contract is in full force and
effect with respect to the applicable Client. There are no disputes
pending or, to the Company's knowledge, threatened with any Client
under the terms of any such Contract or with any former Client. The
Company has provided or made available to First Union true and
complete copies of the standard form of all advisory, sub-advisory and
similar agreements with Clients; and
(b) Each extension of credit by the Company or any of the
Company Subsidiaries to any Client (i) is in full compliance with
Regulation T of the Federal Reserve Board or any substantially similar
regulation of any Regulatory Authority, (ii) is fully secured, and
(iii) the Company or a Company Subsidiary, as the case may be, has a
first priority perfected security interest in the collateral securing
such extension.
24
(P) No Brokers. All negotiations relative to this Plan and
----------
the transactions contemplated hereby have been carried on by it directly with
First Union and no action has been taken by it that would give rise to any valid
claim against any party hereto for a brokerage commission, finder's fee or other
like payment, excluding a fee to be paid to Xxxxxx Xxxxxxx & Co. Incorporated, a
copy of the engagement letter for which has been provided or made available to
First Union.
(Q) Employee Benefit Plans.
-----------------------
(1) Previously Disclosed is a complete list of all
bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock and stock option plans, all employment, "change of control" or
severance contracts, all medical, dental, health and life insurance plans,
all other employee benefit plans, contracts or arrangements maintained or
contributed to by it or any of the Company Subsidiaries for the benefit of
employees, former employees, directors, former directors or their
beneficiaries (the "Compensation and Benefit Plans"). True and complete
copies of all Compensation and Benefit Plans, including, but not limited
to, any trust instruments and/or insurance contracts, if any, forming a
part thereof, and all amendments thereto have been supplied or made
available to First Union.
(2) All "employee benefit plans" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans"), covering employees or
former employees of it and the Company Subsidiaries (the "ERISA Plans"), to
the extent subject to ERISA, are in compliance with ERISA in all material
respects. Except as Previously Disclosed each ERISA Plan which is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("Pension Plan") and which is intended to be qualified, under Section
401(a) of the Code, has received a favorable determination letter from the
Internal Revenue Service with respect to "TRA" (as defined in Section 1 of
Internal Revenue Service Revenue Procedure 93-39), and it is not aware of
any circumstances reasonably likely to result in the revocation or denial
of any such favorable determination letter or the inability to receive such
a favorable determination letter. There is no pending or, to its
knowledge, threatened (in writing) litigation relating to
25
the ERISA Plans. Neither it nor any of the Company Subsidiaries has engaged
in a transaction with respect to any ERISA Plan that would subject it or
any of the Company Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by it or any of the Company Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with it under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither it nor any of the
Company Subsidiaries presently contributes to a Multiemployer Plan, nor
have they contributed to such a plan within the past five calendar years.
No notice of a "reportable event", within the meaning of Section 4043 of
ERISA for which the 30-day reporting requirement has not been waived, other
than an event contemplated by this Plan, has been required to be filed for
any Pension Plan or by any ERISA Affiliate within the past 12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA. Neither it nor any of the Company Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29)
of the Code.
(5) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the plan's most recent actuarial valuation) did
not exceed the then current value of the assets of such plan, and there has
been no material change in the financial condition of such plan since the
last day of the most recent plan year.
26
(6) Neither it nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any plan, except as
Previously Disclosed. Under the terms of the applicable plans, there are
no restrictions on the rights of it or any of the Company Subsidiaries to
amend or terminate any such plan without incurring any liability under the
terms of the applicable plans. In addition, the Company is not aware of
any restriction on the rights of it or any of the Company Subsidiaries to
amend or terminate any such plan without incurring any liability thereunder
under current case law.
(7) Except as Previously Disclosed, neither the execution and
delivery of this Plan nor the consummation of the transactions contemplated
hereby will (a) result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or otherwise)
becoming due to any director or any employee of it or any of the Company
Subsidiaries under any Compensation and Benefit Plan or otherwise from it
or any of the Company Subsidiaries, (b) increase any compensation or
benefits otherwise payable under any Compensation and Benefit Plan, or (c)
result in any acceleration of the time of payment, funding or vesting of
any such compensation or benefit.
(R) No Knowledge. It knows of no reason why the regulatory approvals
------------
referred to in Section 6.01(B) should not be obtained without the imposition of
---------------
any condition of the type referred to in the proviso following such Section
-------
6.01(B).
-------
(S) Labor Relations. Each of the Company and the Company
---------------
is in compliance with all currently applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, the Immigration Reform and Control Act, the
Worker Adjustment and Retraining Notification Act, and any such laws relating to
employment discrimination, disability rights or benefits, equal opportunity,
plant closure issues, affirmative action, workers' compensation, employee
benefits, severance payments, labor relations, employee leave issues, wage and
hour standards, occupational safety and health requirements and unemployment
insurance and related matters to the extent that non-compliance with any such
laws would not be reasonably likely to have a Material Adverse Effect on the
Company. None of the Company nor any of the Company Subsidiaries is engaged in
any unfair labor practice and there is no unfair labor practice complaint
pending or, to the Company's knowledge, threatened against any of the Company or
the Company Subsidiaries before the
27
National Labor Relations Board except for such complaints which are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company. Neither it nor any of the Company Subsidiaries is a party
to, or is bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of the Company Subsidiaries the subject of a proceeding seeking to compel
it or such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of the Company Subsidiaries, pending or, to the Company's
knowledge, threatened, nor is it aware of any activity involving its or any of
the Company Subsidiaries' employees seeking to certify a collective bargaining
unit or engaging in any other organization activity.
(T) Insurance. The Company and the Company Subsidiaries are insured
---------
with reputable insurers against such risks and in such amounts as the management
of the Company reasonably has determined to be prudent in accordance with
industry practices. All of the insurance policies, binders, or bonds maintained
by the Company or the Company Subsidiaries are in full force and effect; the
Company and the Company Subsidiaries are not in default thereunder; and all
claims thereunder have been filed in due and timely fashion, in each instance
except for cases which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. Previously
Disclosed is a list of all insurance policies maintained by or for the benefit
of the Company or the Company Subsidiaries or their directors, officers,
employees or agents as of the date hereof.
(U) Affiliates. Except as Previously Disclosed, there is no person
----------
who, as of the date of this Plan, may be deemed to be an "affiliate" of the
Company (each, an "Affiliate") as that term is used in Rule 145 under the
Securities Act.
(V) State Takeover Laws; Articles of Incorporation. It has taken all
----------------------------------------------
necessary action to exempt this Plan, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Plan, the Stock
Option Agreement, and the transactions contemplated hereby and thereby are
exempt from, (1) Section 203 of the DGCL (assuming the accuracy of First Union's
representations in Section 4.02(N)), and (2) any applicable takeover provisions
---------------
in the Company's Certificate of Incorporation or By-laws.
28
(W) No Further Action. It has taken all action so that the entering
-----------------
into of this Plan, the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby (including without limitation the
Merger) or any other action or combination of actions, or any other
transactions, contemplated hereby or thereby do not and will not (assuming the
accuracy of First Union's representations in Section 4.02(N))(1) require a vote
---------------
of stockholders (other than the affirmative vote of the holders of a majority of
the outstanding shares of Company Common Stock on this Plan or on any other
actions necessary to facilitate the transactions contemplated hereby), or (2)
result in the grant of any rights to any person under the Certificate of
Incorporation or Bylaws of the Company or any Company Subsidiary or under any
agreement to which the Company or any of the Company Subsidiaries is a party, or
(3) restrict or impair in any way the ability of First Union to exercise the
rights granted hereunder.
(X) Environmental Matters. The Company and the Company Subsidiaries
---------------------
have obtained and maintained in effect all licenses, permits and other
authorizations required under all applicable laws, regulations and other
requirements of governmental or regulatory authorities relating to pollution or
to the protection of the environment ("Environmental Laws") and is in compliance
in all material respects with all Environmental Laws and with all such licenses,
permits and authorizations, except in instances where the failure to obtain or
maintain such licenses, permits and other authorizations is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company. It has not received notice of liability to any person,
governmental entity or Business Entity under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ? 9601 et seq. or any other
------
Environmental Laws with respect to real property owned or leased by the Company
or the Company Subsidiaries.
(Y) Taxes. Except as Previously Disclosed and except as disclosed in
-----
the Company Financial Reports, (1) all material reports and returns with respect
to Taxes (as defined below) and tax related information reporting requirements
that are required to be filed by or with respect to it or the Company
Subsidiaries, including without limitation consolidated federal income tax
returns of it and the Company Subsidiaries (collectively, the "Company Tax
Returns"), have been duly filed, or requests for extensions have been timely
filed and have not expired, and such Company Tax Returns were true, complete and
accurate in all respects, except for such failures to be true, complete and
accurate which are not likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company, (2) all taxes
29
(which shall mean federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, premium, recording, documentary, documentary stamps, real
estate transfer, transfer, back-up withholding or similar taxes, together with
any interest, additions, or penalties with respect thereto, imposed on the
income, properties or operations of it or the Company Subsidiaries, together
with any interest in respect of such additions or penalties, collectively the
"Taxes") shown to be due on the Company Tax Returns have been paid in full or
have been adequately reserved against on the books of the Company or the Company
Subsidiaries, (3) the statute of limitations on assessment or collection of any
federal or state income taxes due from the Company or the Company Subsidiaries
has expired for all taxable years of the Company and the Company Subsidiaries
through December 31, 1994, (4) all Taxes due with respect to completed and
settled examinations have been paid in full, (5) no issues have been raised by
the relevant taxing authority in connection with the examination of any of the
Company Tax Returns which are reasonably likely, individually or in the
aggregate, to result in a determination that would have a Material Adverse
Effect on the Company, except as reserved against in the Company Financial
Reports prior to the date of this Plan, (6) none of the Company, the Company
Subsidiaries, First Union or any direct or indirect subsidiary of First Union,
as a consequence of the Company's actions prior to the Effective Time, will be
obligated to make a payment to an individual that would be a "parachute payment"
as such term is defined in Section 280G of the Code without regard to whether
such payment is to be performed in the future, (7) neither the Company nor any
of the Company Subsidiaries will be required, as a result of (A) a change in
accounting method for a Tax period beginning on or before the Effective Time, to
include any adjustment under Section 481(c) of the Code (or any similar
provision of state, local or foreign law) in taxable income for any Tax period
beginning on or after the Effective Date, or (B) any "closing agreement" as
described in Section 7121 of the Code (or any similar provision of state, local
or foreign Tax law), to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Effective Date, (8)
neither the Company nor any of the Company Subsidiaries has, since September 13,
1995, been a member of an affiliated, combined, consolidated or unitary Tax
group for purposes of filing any Tax Return, other than a group of which the
Company or Xxxxxx Corporation, a Delaware corporation, was the common parent,
and (9) since September 13, 1995, no closing agreements, private letter rulings,
technical advance memoranda or similar agreement or rulings have been entered
into or issued by any
30
taxing authority with respect to the Company or any of the Company Subsidiaries.
(Z) Accuracy of Information. The statements with respect to the
-----------------------
Company and the Company Subsidiaries contained in this Plan, the Schedules and
any other written documents executed and delivered by or on behalf of it
pursuant to the terms of this Plan are true and correct in all material
respects.
(AA) Derivatives. All exchange-traded or over-the-counter swap,
-----------
forward, future, option, cap, floor or collar financial contract or any other
similar arrangement, whether entered into for the Company's account, or for the
account of one or more of the Company Subsidiaries or their customers (except
for transactions entered into by the Company or the Company Subsidiaries on
listed options effected on an agency basis for customers), were entered into (1)
in accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (2) with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or Company Subsidiary, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect, except to
the extent the failure of any of the foregoing is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Neither the Company nor a Company Subsidiary, nor to the Company's
knowledge any other party thereto, is in material breach of any of its
obligations under any such agreement or arrangement except for such instances
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company. As of their respective dates, the
Company's Financial Reports disclose the value of such agreements and
arrangements on a xxxx-to-market basis in accordance with generally accepted
accounting principles and, since December 31, 1998, there has not been a change
in such value that, individually or in the aggregate, has resulted or is
reasonably likely to result in a Material Adverse Effect on the Company.
(BB) Accounting Controls. Each of the Company and the Company
-------------------
Subsidiaries has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, that all material transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principles
31
consistently applied with respect to broker-dealers or any other criteria
applicable to such statements.
(CC) Proprietary Rights. The Company and the Company Subsidiaries
------------------
have the right to use the names, servicemarks, trademarks and other intellectual
property (collectively, "Intellectual Property") material to the conduct of
their business, all such Intellectual Property has been Previously Disclosed,
such right of use is free and clear of any Liens and no other person has the
right to use any such Intellectual Property except for instances which are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Company.
(DD) Reorganization. It is aware of no reason why the Merger would
--------------
fail to qualify as a reorganization under Section 368(a) of the Code.
(EE) Investment Advisory Activities.
------------------------------
(1) None of the Company Subsidiaries provide investment
management, investment advisory, sub-advisory, administration, distribution
or certain other services to persons registered or, to the Company's
knowledge, required to be registered under the Investment Company Act.
(2) Except as Previously Disclosed, none of the Company or any
Company Subsidiary is or has been during the past five years an "investment
adviser" within the meaning of the Investment Advisers Act, required to be
registered, licensed or qualified as an investment advisor under the
Investment Advisers Act or subject to any material liability or disability
by reason of any failure to be so registered, licensed or qualified, except
for any such failure to be so registered, licensed or qualified that would
not, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect on the Company.
(3) The Company and the Company Subsidiaries have in all
material respects operated each of its investment accounts for which it has
investment discretion in accordance with the investment objectives and
guidelines in effect for each such investment account, except when lack of
compliance would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
32
(FF) Company Rights Agreement. The Company has duly adopted an
------------------------
amendment to the Company Rights Agreement in the form of Exhibit D, as a result
---------
of which neither First Union nor any affiliate or associate of First Union will
become an "Acquiring Person" and no "Distribution Date" (as such terms are
defined in the Company Rights Agreement) will occur, and the rights issued under
the Company Rights Agreement will not become separable, distributable,
unredeemable or exercisable as a result of the approval, execution or delivery
of this Plan, the Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby and the Company Rights will expire at the
Effective Time.
(GG) Year 2000. The Company has adopted a plan of reprogramming and
---------
testing (the "Y2K Plan") for the purpose of assuring that all computer software
and hardware developed or currently used by the Company and the Company
Subsidiaries will be capable of providing uninterrupted millennium functionality
to record, store, process and present calendar dates falling on or after January
1, 2000 and date-dependent data in substantially the same manner and with the
same functionality as such software records, stores, processes and presents such
calendar dates and date-dependent data as of the date hereof (such
functionality, "Y2K Compliant"). A true and complete copy of the Y2K Plan has
been made available to First Union, and the Company is in the process of
effecting the Y2K Plan in accordance with the schedule provided for therein,
except for instances which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company. To the knowledge of
the Company, all such mission-critical software and hardware will be
reprogrammed or replaced and tested and will be Y2K Compliant within the times
provided for in the Y2K Plan and incurring the costs to implement the Y2K Plan
is not reasonably likely to have a Material Adverse Effect on the Company.
4.02. First Union Representations and Warranties. First Union hereby
------------------------------------------
represents and warrants to the Company, as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan with
--------
respect to First Union and the FUNC Subsidiary are true and correct.
(B) Corporate Authority. This Plan has been authorized by all
-------------------
necessary corporate action of First Union and the FUNC Subsidiary and is a valid
and binding agreement of it enforceable against First Union and the FUNC
Subsidiary in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency and other similar laws of general
33
applicability relating to or affecting creditors' rights and to general equity
principles.
(C) No Defaults. Subject to the required approval of the Federal
-----------
Reserve Board, and any required filings under federal and state securities and
insurance laws, and the approvals of the NYSE and the other securities exchanges
referred to in Section 4.01(G), of the Merger and the other transactions
---------------
contemplated hereby, the execution, delivery and performance of this Plan, and
the consummation of the transactions contemplated hereby by it, does not and
will not (1) constitute a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or of any of its
subsidiaries or to which it or any of its subsidiaries or properties is subject
or bound, which breach, violation or default is reasonably likely to have a
Material Adverse Effect on First Union, (2) constitute a breach or violation of,
or a default under, its Articles of Incorporation, Charter or Bylaws, or (3)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, or the consent or approval of any
other party to any such agreement, indenture or instrument other than such
consent or approval, which if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on First
Union.
(D) Financial Reports. Its Annual Report on Form 10-K for the fiscal
-----------------
year ended December 31, 1998, and all other documents filed or to be filed
subsequent to December 31, 1998, under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, in the form filed with the SEC (in each such case, the "First
Union Financial Reports"), did not and will not as of their respective dates
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading; and
each of the balance sheets in or incorporated by reference into the First Union
Financial Reports (including the related notes and schedules thereto) fairly
presents and will fairly present the financial position of the entity or
entities to which it relates as of its date and each of the statements of income
and changes in stockholders' equity and cash flows or equivalent statements in
the First Union Financial Reports (including any related notes and schedules
thereto) fairly presents and will fairly present the results of operations,
changes in stockholders' equity and changes in cash flows, as the case may be,
of the entity or entities to which it relates for the periods set forth therein,
in each case in accordance with generally
34
accepted accounting principles consistently applied to banks and bank holding
companies during the periods involved, except as may be noted therein, subject
to normal and recurring year-end audit adjustments in the case of unaudited
statements. First Union has provided the Company true and complete copies of
First Union's Articles of Incorporation and By-laws and the First Union Rights
Agreement, in each case as in effect on the date hereof.
(E) No Events. Since December 31, 1998, except as Previously
---------
Disclosed or as specifically contemplated by this Plan, there has not been (1)
any event, occurrence, development or state of circumstances or facts which has
had or would reasonably be expected to constitute or result in a Material
Adverse Effect on First Union, or (2) any event, occurrence, development or
state of circumstances or facts which would result in a violation of the
covenants set forth in Article III of this Plan had such events, occurrences,
-----------
developments or state of circumstances or facts occurred after the date hereof.
(F) No Brokers. All negotiations relative to this Plan and the
----------
transactions contemplated hereby have been carried on by it directly with the
Company and no action has been taken by it that would give rise to any valid
claim against any party hereto for a brokerage commission, finder's fee or other
like payment.
(G) No Knowledge. It is aware of no reason why (1) the regulatory
------------
approvals referred to in Section 6.01(B) should not be obtained without the
---------------
imposition of any condition of the type referred to in the proviso following
such Section 6.01(B) and(2) the Merger would fail to qualify as a reorganization
---------------
under Section 368(a) of the Code.
(H) Shares Authorized. The shares of First Union Common Stock to be
-----------------
issued in exchange for shares of Company Common Stock upon consummation of the
Merger in accordance with Article II of this Plan, have been duly authorized
----------
and, when issued in accordance with the terms of this Plan, and in the case of
shares issued upon the exercise of such Options, the related stock option plan,
will be validly issued, fully paid and nonassessable and subject to no
preemptive rights.
(I) Organization, Standing and Authority. Each of First Union and
------------------------------------
its material subsidiaries (including, but not limited to, the FUNC Subsidiary)
is duly qualified to do business and is in good standing in the States of the
United States and foreign jurisdictions where the failure to be duly qualified,
individually or in the aggregate, is reasonably likely to have a
35
Material Adverse Effect on First Union. Each of First Union and its subsidiaries
has in effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now conducted, the absence of which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on First
Union.
(J) Corporate Power. Each of First Union, its material subsidiaries
---------------
and the FUNC Subsidiary has the corporate power and authority to carry on its
business as it is now being conducted and to own or lease all its material
properties and assets except for cases that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on First
Union.
(K) Accuracy of Information. The statements with respect to First
-----------------------
Union and the FUNC Subsidiary contained in this Plan, the Schedules and any
other written documents executed and delivered by or on behalf of First Union
pursuant to the terms of this Plan are true and correct in all material
respects.
(L) Litigation; Regulatory Action. No Litigation is pending against
------------------------------
First Union or any of its subsidiaries before any court, arbitrator, mediator or
Regulatory Authority which, individually or in the aggregate, has or is
reasonably likely to have a Material Adverse Effect on First Union and, to its
knowledge, no such Litigation has been threatened; and neither it nor any of its
subsidiaries or any of its or their properties or their officers, directors or
controlling persons is a party to or is the subject of any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any Regulatory Authorities, which is
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on First Union and neither it nor any of its subsidiaries has been
advised by any Regulatory Authorities that any such authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum or understanding,
commitment letter or similar submission.
(M) Year 2000. First Union has adopted a Y2K Plan for the purpose of
---------
assuring that all computer software and hardware developed or currently used by
First Union and its subsidiaries will be Y2K Compliant. To First Union's
knowledge, all such software and hardware will be reprogrammed or replaced and
tested and will be Y2K Compliant within the times provided for in the Y2K Plan
and incurring the costs to implement the Y2K Plan is not
36
reasonably likely to have a Material Adverse Effect on First Union.
(N) Ownership of Company Common Stock. Neither First Union, nor any
---------------------------------
of its subsidiaries, or to First Union's knowledge, affiliates or associates (as
such terms are defined under the Exchange Act), beneficially owns directly or
indirectly, or is a party to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of, more than 1% of the
outstanding shares of Company Common Stock (other than shares held in a bona
fide fiduciary or investment advisory capacity).
(M) First Union Rights Agreement. As a result of the consummation
----------------------------
of the transactions contemplated by this Plan, neither the Company nor any
affiliate or associate of the Company will become an "Acquiring Person" and no
"Distribution Date" (as such terms are defined in the First Union Rights
Agreement) will occur, and the rights issued under the First Union Rights
Agreement will not become separable, distributable, unredeemable or exercisable
as a result of the approval, execution or delivery of this Plan or the
consummation of the transactions contemplated hereby.
V. COVENANTS.
The Company hereby covenants to First Union, and First Union hereby
covenants to the Company, as applicable, that:
5.01. Efforts. Subject to the terms and conditions of this Plan, it
-------
shall, and shall cause its subsidiaries to, use reasonable best efforts in good
faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as reasonably
practicable and to otherwise enable consummation of the transactions
contemplated hereby and shall cooperate fully with each other to that end (it
being understood that any amendments to the Registration Statement (as
hereinafter defined) or a resolicitation of proxies as a consequence of an
acquisition agreement by First Union or any of its subsidiaries shall not
violate this covenant). Without limiting the generality of the foregoing, the
Company agrees to use its commercially reasonable efforts, and to cause the
Company Subsidiaries to use commercially reasonable efforts, to obtain (A) any
consents of Clients necessary in connection with the "assignment" of the
Contracts pursuant to which the Company or any Company Subsidiary provides
investment advisory, sub-advisory or management services
37
to a Client within the meaning of the Investment Advisers Act ("Advisory
Agreements") resulting from the consummation of the Merger; provided that First
Union agrees that other than with respect to any Advisory Agreement which by its
terms expressly requires written consent to its assignment, effective consent to
such "assignment" of an Advisory Agreement may be obtained for all purposes
hereunder and under applicable law by requesting written consent from the Client
and informing such Client of (1) the intention to complete the Merger, which may
result in a deemed assignment of such Advisory Agreement, (2) the Company's
intention to continue the advisory services pursuant to the existing Advisory
Agreement with such Client after the Effective Date if such Client does not
terminate such agreement prior to the Effective Date, and (3) that the consent
of such Client will be deemed to have been granted if such Client continues to
accept such advisory services for at least 40 days after receipt of such notice
without termination, and (B) the consent or approval of all persons party to a
Contract with the Company, to the extent such consent or approval is required in
order to consummate the Merger and for the Continuing Corporation to receive the
benefits thereof.
5.02. Company Proxy/Registration Statement; Stockholder Approval. The
----------------------------------------------------------
Company and First Union shall prepare a proxy statement/prospectus (the "Proxy
Statement") to be mailed to the holders of Company Common Stock in connection
with the transactions contemplated hereby and to be filed by First Union in a
registration statement (the "Registration Statement") with the SEC. The Company
shall call a special meeting (the "Meeting") of the holders of Company Common
Stock to be held as soon as practicable for purposes of voting upon the approval
of this Plan and the Company shall use its reasonable best efforts to solicit
and obtain votes of the holders of Company Common Stock in favor of the approval
of this Plan, and the Board of Directors of the Company shall recommend approval
of this Plan by such holders, subject to the directors' fiduciary duties under
applicable laws and the provisions of Section 5.07.
------------
5.03. Registration Statement; Compliance with Securities Laws. When
-------------------------------------------------------
the Registration Statement or any post-effective amendment or supplement thereto
shall become effective, and at all times subsequent to such effectiveness, up to
and including the date of the Meeting, such Registration Statement and all
amendments or supplements thereto, with respect to all information set forth
therein furnished or to be furnished by or on behalf of the Company relating to
the Company or the Company Subsidiaries and by or on behalf of First Union
relating to First Union or its subsidiaries, (A) will comply in all material
38
respects with the Securities Act and the Exchange Act and any other applicable
statutory or regulatory requirements, and (B) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading; provided, however, in no event shall any party hereto be liable for
-------- -------
any untrue statement of a material fact or omission to state a material fact in
the Registration Statement made in reliance upon, and in conformity with,
written information concerning another party furnished by or on behalf of such
other party specifically for use in the Registration Statement.
5.04. Registration Statement Effectiveness. First Union will advise the
------------------------------------
Company, promptly after First Union receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed (after providing drafts in advance to the Company and its counsel
for review and comment), of the issuance of any stop order or the suspension of
the qualification of the First Union Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.05. Press Releases. The Company will not, without the prior approval
--------------
of First Union (which approval shall not be unreasonably withheld or delayed),
and First Union will not, without the prior approval of the Company (which
approval shall not be unreasonably withheld or delayed), issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by law.
5.06. Access; Information. (A) Subject to applicable law and any binding
-------------------
confidentiality agreement, upon reasonable notice, the Company and First Union
shall afford the other party and its officers, employees, counsel, accountants
and other authorized representatives, access, during normal business hours
throughout the period prior to the Effective Date, to all of its properties,
books, contracts, data processing system files, commitments and records and,
during such period, and upon request shall furnish promptly to the other party
(1) a copy of each material report, schedule and other document filed by it and
its subsidiaries with any Regulatory Authority, and (2) all other information
concerning the business, properties and personnel of it and its subsidiaries as
the other party may reasonably request, provided that no investigation pursuant
--------
to this Section
-------
39
5.06 shall affect or be deemed to modify or waive any representation or
----
warranty made by the parties or the conditions to the obligations of the parties
to consummate the transactions contemplated by this Plan; and (B) First Union
will not use any information obtained pursuant to this Section 5.06 for any
------------
purpose unrelated to the consummation of the transactions contemplated by this
Plan and, if this Plan is terminated, will hold all information and documents
obtained pursuant to this paragraph in confidence (as provided in the
confidentiality provisions contained in the Confidentiality Agreement between
the Company and First Union, dated as of April 21, 1999 (the "Confidentiality
Agreement")).
5.07. Acquisition Proposals. In the case of the Company, it shall not,
---------------------
and it shall cause the Company Subsidiaries not to, solicit or encourage
inquiries or proposals with respect to, or furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or a
substantial equity interest in, the Company or any of the Company Subsidiaries
or any merger or other business combination with the Company or any of the
Company Subsidiaries (an "Acquisition Proposal") other than as contemplated by
this Plan; it shall instruct its and the Company Subsidiaries' officers,
directors, agents, advisors and affiliates to refrain from taking any action
that would violate or conflict with any of the foregoing; and it shall notify
First Union immediately if any such inquiries or proposals are received by, or
any such negotiations or discussions are sought to be initiated with, the
Company or any of the Company Subsidiaries. However, if the Company is not
otherwise in breach or violation of this Section 5.07, until the stockholder
------------
approval contemplated by Section 6.01(A) shall have been obtained, the Company
---------------
Board of Directors may, directly or indirectly through representatives: (a)
provide information to and request information from a person (a "Bidder") that
submits, after the date hereof, a bona fide Acquisition Proposal that the
Company Board of Directors in good faith determines is reasonably likely to
constitute a Superior Proposal (as hereinafter defined), and engage in
discussions with the Bidder for the sole purpose of ascertaining whether such
Acquisition Proposal is in fact a Superior Proposal; and (b) engage in
negotiations or discussions concerning such Acquisition Proposal, if the Company
Board of Directors determines in good faith, after consultation with and based
on the advice of outside counsel and a nationally recognized financial advisor
that such Acquisition Proposal constitutes a Superior Proposal. For purposes of
this Plan, a "Superior Proposal" means an Acquisition Proposal made by a third
party which, in the good faith judgment
40
of the Company Board of Directors, taking into account, to the extent deemed
appropriate by the Company Board of Directors, the various legal, financial and
regulatory aspects of the proposal and the person making such proposal, (x) if
accepted, is reasonably likely to be consummated, and (y) if consummated, is
reasonably likely to result in a more favorable transaction than the transaction
contemplated hereunder considering, among other things, and to the extent deemed
appropriate in good faith by the Company Board of Directors, the long-term
prospects and interests of the Company and its stockholders and other relevant
constituencies. The Company shall immediately notify First Union of the receipt
of any Acquisition Proposal and shall promptly notify First Union of any
significant actions taken or other developments related thereto. The Company
also agrees immediately to cease and to cause to be terminated any activities,
discussions or negotiations conducted on or prior to the date of this Plan with
any parties other than First Union, with respect to any of the foregoing.
5.08. Blue-Sky Filings. In the case of First Union, it shall use its
----------------
reasonable best efforts to obtain all necessary state securities laws or "blue
sky" permits and approvals, provided that First Union shall not be required by
--------
virtue thereof to submit to general jurisdiction in any state.
5.09. State Takeover Laws; Articles of Incorporation. It shall not take
----------------------------------------------
any action that would cause the transactions contemplated by this Plan to be
subject to any state takeover statute applicable to such party and shall take
all necessary steps to exempt (or ensure the continued exemption of) the
transactions contemplated by this Plan from (A) any applicable state takeover
law, as now or hereafter in effect, and (B) any applicable takeover provisions
in the its Certificate of Incorporation or By-laws.
5.10. Affiliate Agreements. In the case of the Company, it will use
--------------------
reasonable efforts to cause each person who may be deemed to be an Affiliate of
the Company (other than the KSOP) to execute and deliver to First Union on or
before the mailing of the Proxy Statement for the Meeting an agreement in the
form attached hereto as Exhibit E restricting the disposition of the shares of
---------
First Union Common Stock to be received by such Affiliate in exchange for such
Affiliate's shares of Company Common Stock.
5.11. Shares Listed. In the case of First Union, it shall use its
-------------
reasonable best efforts to list, prior to the Effective Date, on the NYSE, upon
official notice of issuance,
41
the shares of First Union Common Stock (and related First Union Rights) to be
issued to the holders of Company Common Stock pursuant to this Plan.
5.12. Regulatory Applications. In the case of First Union, subject to the
-----------------------
cooperation of the Company, (A) it shall promptly prepare and submit
applications to the appropriate Regulatory Authorities for approval of the
Merger, and (B) promptly make all other appropriate filings to secure all other
approvals, consents and rulings which are necessary for the consummation of the
Merger by First Union. First Union will provide copies of such applications and
responses to the Company and its counsel prior to submitting such applications
and responses to the applicable Regulatory Authorities to permit the Company and
such counsel to comment thereon. In the case of the Company, it agrees, upon
request, to furnish First Union with information concerning itself, the Company
Subsidiaries, its and their directors, officers and stockholders and such other
matters as may be necessary or advisable in connection with any filing, notice
or application made by or on behalf of First Union or any of its subsidiaries in
connection with the Merger and the other transactions contemplated in this Plan.
5.13. Current Information.
-------------------
(A) During the period from the date of this Plan to the Effective
Time, each of the Company and First Union shall, and shall cause its
representatives to, confer on a regular and frequent basis with representatives
of the other.
(B) The Company shall promptly notify First Union of (1) any material
change in the business or operations of the Company or any Company Subsidiary,
(2) any material complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority
relating to the Company or any Company Subsidiary, (3) the institution or the
threat of material Litigation involving or relating to the Company or any
Company Subsidiary, or (4) any event or condition that might be reasonably
expected to cause any of the Company's representations or warranties set forth
herein not to be true and correct as of the Effective Time or prevent the
Company from fulfilling its obligations hereunder; and in each case shall keep
First Union informed with respect thereto.
(C) First Union shall notify the Company of (1) any event or
condition that might reasonably be expected to cause any of First Union's
representations or warranties set forth herein not to be true and correct as of
the Effective Date or prevent
42
First Union from fulfilling its obligations hereunder, (2) the institution or
the threat of material Litigation involving or relating to First Union, and (3)
notify the Company immediately of any denial of any application filed by First
Union with any Regulatory Authority with respect to this Plan, and in each case
shall keep the Company informed with respect thereto.
5.14. Retention Program.
-----------------
(A) Retention Pool. At the Effective Time, First Union will establish
--------------
a retention pool (the "Retention Pool"), consisting of the number of restricted
shares of First Union Common Stock equal to $87 million divided by the Average
Market Price, to be used to retain key employees of the Company. The individuals
eligible for inclusion in the Retention Pool and the respective allocations will
be determined by the Chief Executive Officer of the Company, in consultation
with and subject to the prior approval of First Union, prior to the Effective
Time.
(B) Vesting. The restricted shares of First Union Common Stock in the
-------
Retention Pool shall vest, and shall be issued to the participants in the
Retention Pool then eligible to receive such shares, in the installments as set
forth in Annex B hereto. Such shares shall vest pursuant to the terms set forth
-------
on Annex B.
-------
(C) Eligibility. Eligibility to participate in the Retention Pool
-----------
shall require an individual to be employed by First Union as of the dates and
subject to the terms and conditions set forth in such Annex B.
-------
(D) Adjustment. If an employee of the Company who has been selected
----------
to participate in the Retention Pool shall forfeit the right to receive the
restricted shares of First Union Common Stock thereunder, as set forth in Annex
-----
B, the restricted shares of First Union Common Stock allocated to that
-
individual shall be cancelled and the number of restricted shares of First Union
Common Stock in the Retention Pool shall be adjusted accordingly.
5.15. Indemnification/Liability Coverage.
----------------------------------
(A) For six years after the Effective Date, First Union shall cause
the Continuing Corporation to, indemnify, defend and hold harmless the present
and former directors, officers and employees of the Company and the Company
Subsidiaries (each, an "Indemnified Party") against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Date (including,
without limitation, the
43
transactions contemplated by this Plan) to the extent such persons are
indemnified under the DGCL and the Company's Certificate of Incorporation and
Bylaws as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any litigation.
(B) First Union shall use its reasonable best efforts to maintain the
Company's existing directors' and officers' liability insurance policy (or a
policy, including First Union's existing policy, providing comparable coverage
amount on terms no less favorable) covering persons who are currently covered by
such insurance for a period of six years after the Effective Date; provided,
--------
that First Union shall not be obligated to make an annual premium payment in
respect of such policy (or replacement policy) which exceeds, for the portion
related to the Company's directors and officers, 200% of the annual premium
payment on the Company's current policy in effect as of the date of this Plan;
provided, further, that if such coverage can only be obtained upon the payment
-----------------
of an annual premium in excess of 200% of the annual premium payment of the
Company's current policy, First Union shall obtain such coverage as can
reasonably be obtained by paying a premium of 200% of the annual premium payment
of the Company's current policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim indemnification under
Section 5.15(A), upon learning of such claim, action, suit, proceeding or
---------------
investigation, shall promptly notify First Union thereof; provided, that the
--------
failure so to notify shall not affect the obligations of First Union and the
Continuing Corporation under Section 5.15(A) (unless such failure materially
---------------
increases First Union's liability under such Section). In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Date), (1) First Union or the Continuing Corporation shall
have the right to assume the defense thereof, if it so elects, and First Union
or the Continuing Corporation shall pay all reasonable fees and expenses of
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that First Union shall be obligated pursuant to
-------- -------
this subsection (C) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction for any single action, suit or proceeding or any
group of actions, suits or proceedings arising out of or related to a common
body of facts, (2) the Indemnified Parties will cooperate in the defense of any
such matter, and (3) First Union shall not be liable for any settlement effected
without its prior written consent.
44
5.16. Dividend Coordination. The Company shall coordinate with First
---------------------
Union regarding the record dates for any dividends in respect of Company Common
Stock and First Union Common Stock, it being the intention of the parties that
holders of Company Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to their
shares of Company Common Stock and the First Union Common Stock that they
receive in the Merger.
5.17. No Rights Triggered.
-------------------
(A) It shall take all reasonable steps necessary to ensure that the
entering into this Plan and the consummation of the transactions contemplated
hereby and any other action or combination of actions contemplated hereby and
thereby do not and will not result in the grant of any Rights to any person
under its Certificate of Incorporation or By-laws.
(B) The Company shall take all actions necessary or required to
ensure that the entering into this Plan and the consummation of the transactions
contemplated hereby will not cause First Union or any affiliate or associate of
First Union to become an "Acquiring Person" for purposes of the Company Rights
Agreement, and a "Distribution Date" under the Company Rights Agreement will not
occur, and the rights issued under the Company Rights Agreement will not become
separable, distributable, unredeemable or exercisable.
5.18. Exemption from Liability under Section 16(b). Assuming that the
--------------------------------------------
Company delivers to First Union the Section 16 Information (as defined below) in
a timely fashion, the Board of Directors of First Union, or a committee of Non-
Employee Directors thereof (as such term is defined for purposes of Rule 16b-
3(d) under the Exchange Act), shall adopt a resolution providing that the
receipt by the Company Insiders (as defined below) of First Union Common Stock
in exchange for shares of Company Common Stock, and of options to purchase
shares of First Union Common Stock upon conversion of Company Options, in each
case pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Section 16(b) and Rule 16b-3 under the Exchange Act.
"Section 16 Information" shall mean relevant information accurate in all
respects regarding the Company Insiders, the number of shares of Company Common
Stock held by each such Company Insider and expected to be exchanged for First
Union Common Stock in the Merger, and the number and description of Company
Options held by each such Company Insider and expected to be converted into
45
options to purchase First Union Common Stock in connection with the Merger.
"Company Insiders" shall mean those officers and directors of the Company who
with respect to Company Common Stock are, and upon the Merger shall with respect
to First Union Common Stock become, subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Section 16
Information.
VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
6.01. Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligation of each of First Union and the Company to consummate the
Merger is subject to the fulfillment or written waiver by First Union and the
Company prior to the Effective Time of each of the following conditions:
(A) Stockholder Approvals. This Plan and the Merger shall have been
---------------------
duly adopted by the requisite vote of the stockholders of the Company.
(B) Regulatory Approvals. All regulatory approvals required to
--------------------
consummate the Merger, shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions, restrictions or
requirements which would reasonably be expected to (1) following the Effective
Time, have a Material Adverse Effect on the Company and the Company Subsidiaries
(treating them collectively as a corporate organization) or (2) adversely affect
First Union and its subsidiaries in a material way.
(C) No Injunction. No Regulatory Authority of competent jurisdiction
-------------
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Plan.
(D) Registration Statement. The Registration Statement shall have
----------------------
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(E) Blue Sky Approvals. All permits and other authorizations under
------------------
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the
46
shares of First Union Common Stock to be issued in the Merger shall have been
received and be in full force and effect.
(F) Listing. The shares of First Union Common Stock to be issued in
-------
the Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
6.02. Conditions to Obligation of the Company. The obligation of the
---------------------------------------
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(A) Representations and Warranties. The representations and
------------------------------
warranties of First Union set forth in this Plan shall be true and correct in
all material respects as of the date of this Plan and as of the Effective Date
as though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Plan or some other
date shall be so true and correct as of such date), and the Company shall have
received a certificate, dated the Effective Date, signed on behalf of First
Union by an executive officer of First Union to such effect.
(B) Performance of Obligations of First Union. First Union shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and the Company shall have
received a certificate, dated the Effective Date, signed on behalf of First
Union by an executive officer of First Union to such effect.
(C) Opinion of the Company's Tax Counsel. The Company shall have
------------------------------------
received an opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel to the
Company, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Merger
constitutes a "reorganization" within the meaning of Section 368(a) of the Code
and (ii) no gain or loss will be recognized by stockholders of the Company who
receive shares of First Union Common Stock in exchange for shares of Company
Common Stock, except with respect to cash received in lieu of fractional share
interests. In rendering its opinion, Xxxxxxx Xxxxxxx & Xxxxxxxx, may require and
rely upon representations contained in letters from the Company and First Union.
6.03. Conditions to Obligation of First Union. The obligation of First
---------------------------------------
Union to consummate the Merger is also
47
subject to the fulfillment or written waiver by First Union prior to the
Effective Time of each of the following conditions:
(A) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Plan shall be true and correct in
all material respects as of the date of this Plan and as of the Effective Date
as though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Plan or some other
date shall be so true and correct as of such date), and First Union shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(B) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and First Union shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(C) Opinion of First Union's Tax Counsel. First Union shall have
------------------------------------
received an opinion of Xxxxxxxx & Xxxxxxxx, counsel to First Union, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
under Section 368(a) of the Code. In rendering its opinion, Xxxxxxxx & Xxxxxxxx
may require and rely upon representations contained in letters from the Company
and First Union.
(D) Accountants' Letters. Deloitte & Touche LLP, independent auditors
--------------------
for the Company, shall have delivered to First Union letters, dated the date of
or shortly prior to (A) the mailing of the Proxy Statement, and (B) the
Effective Date, in form and substance reasonably satisfactory to First Union,
with respect to the Company's consolidated financial position and results of
operations, which letters shall be based upon "agreed upon procedures"
undertaken by such firm in accordance with the Statement on Financial Accounting
Standards No. 72.
(E) Employment Agreements. At least two of the employment agreements
---------------------
referred to in Recital (F) of this Plan (one of which shall be Xxxxx X. Xxxxx)
-----------
shall be in effect (other than as a consequence of death or disability).
VII. TERMINATION.
48
This Plan may be terminated prior to the Effective Date, either before or
after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First Union and the
--------------
Company.
7.02. Breach. By First Union or the Company, in the event of (A) a breach
------
by the other party of any representation or warranty contained herein, which
breach cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching party of such breach, or (B) a breach by the
other party of any of the covenants or agreements contained herein, which breach
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching party of such breach (provided that a party may
terminate this Plan pursuant to this Section 7.02 only with respect to a breach
------------
or breaches that would permit such party not to consummate the Merger under the
standards set forth in Section 6.02(A) or (B) or Section 6.03(A) or (B), as the
--------------- --- --------------- ---
case may be).
7.03. Delay. By First Union or the Company, in the event that the Merger
-----
is not consummated by December 31, 1999; provided that the terminating party is
not then in material breach of this Plan; provided further, to the extent such
delay directly results from First Union's participation in an acquisition
transaction not contemplated by this Plan, First Union may not terminate the
Plan hereunder during such delay.
7.04. No Stockholder Approval. By the Company or First Union, in the
-----------------------
event that any stockholder approval contemplated by Section 6.01(A) is not
---------------
obtained at the Meeting, including any adjournment or adjournments thereof.
7.05. Failure to Recommend, Etc. At any time prior to the stockholder
-------------------------
approval contemplated by Section 6.01(A), by First Union if (A) the Company
---------------
Board of Directors shall have failed to make its recommendation referred to in
Section 5.02, withdrawn such recommendation or modified or changed such
------------
recommendation in a manner adverse in any respect to the interests of First
Union (whether in accordance with Section 5.07 or otherwise) or (B) the
------------
Company's Board of Directors participates in (or authorizes the participation
in) negotiations described in Section 5.07(b).
---------------
7.06. Superior Proposal. At any time prior to the stockholder approval
-----------------
contemplated by Section 6.01(A), by the Company upon three business days written
---------------
notice to First Union if
49
(i) the Company is not then in violation of Section 5.07, and (ii) the Company
-----------
Board of Directors contemporaneously with the effectiveness of such termination
is entering into definitive binding documentation giving effect to a Superior
Proposal.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all representations,
--------
warranties, agreements and covenants contained in this Plan, except for Sections
--------
5.14, 5.15, 8.04 and 8.09, shall not survive the Effective Date. If this Plan
---------------- ----
is terminated prior to the Effective Date, the agreements and representations of
the parties in Sections 4.01(Q) and 4.02(E), Section 5.06(B), and Sections 8.01,
-----------------------------------------------------------------
8.03, 8.04, 8.05, 8.06, 8.07, 8.09, 8.11 and 8.12 shall survive such
-------------------------------------------------
termination.
8.02. Waiver; Amendment. Prior to the Effective Date, subject to
-----------------
compliance with applicable law and Section 1.04, any provision of this Plan may
------------
be (A) waived in writing by the party benefiting by the provision, or (B)
amended or modified at any time by an agreement in writing among the parties
hereto approved by their respective Boards of Directors and executed in the same
manner as this Plan, except that, after adoption of this Plan by the
stockholders of the Company, no such amendment or modification may be made which
by law or in accordance with the rules of any relevant stock exchange required
further approval by such stockholders without such further approval.
8.03. Counterparts. This Plan may be executed in one or more
------------
counterparts, each of which shall be deemed to constitute an original. This
Plan shall become effective when one counterpart has been signed by each party
hereto.
8.04. Governing Law. This Plan shall be governed by, and interpreted in
-------------
accordance with, the laws of the State of North Carolina, except, in the case of
the Company, the FUNC Subsidiary and the Merger, to the extent that the DGCL is
applicable.
8.05. Expenses. Each party hereto will bear all expenses incurred by it
--------
in connection with this Plan and the transactions contemplated hereby, except
Proxy Statement printing, filing, mailing and solicitation expenses which shall
be shared equally between the Company and First Union.
8.06. Confidentiality. Each of the parties hereto and their respective
---------------
agents, attorneys and accountants will maintain the confidentiality of all
information provided in connection
50
herewith which has not been publicly disclosed in accordance with the terms of
the Confidentiality Agreement pertaining to confidentiality.
8.07. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to First Union,
to: First Union Corporation
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telecopy Number: (000)000-0000
Attention: Xxxxxx X. Xxxxxxxxxxx
Chairman and Chief Executive Officer
Copy to: First Union Corporation
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telecopy Number: (000)000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
General Counsel
If to the Company,
to: EVEREN Capital Corporation
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Telecopy Number: 312/574-6959
Attention: Xxxxx X. Xxxxx
Chairman and Chief Executive Officer
and Xxxxx X. Xxxxx
General Counsel
Copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy Number: 212/455-2502
Attention: Xxxxxxx X. Xxxxx and
Xxxxx X. Xxxxx
51
8.08. Definitions. Any term defined anywhere in this Plan shall have the
-----------
meaning ascribed to it for all purposes of this Plan (unless expressly noted to
the contrary). In addition:
(A) the term "Material Adverse Effect", when applied to a party, shall
mean an event, occurrence or circumstance (including, without limitation,
any breach of a representation or warranty contained herein by such party)
which (1) has a material adverse effect on the financial condition, results
of operations, or business of such party and its subsidiaries, taken as a
whole, or (2) would materially impair any party's ability to timely perform
its obligations under this Plan or the consummation of any of the
transactions contemplated hereby; provided, that a Material Adverse Effect
--------
with respect to a party shall not include (x) events, occurrences or
circumstances relating to, arising out of or resulting from the departure
of securities professionals of the Company or the Company Subsidiaries to
the extent such departures can reasonably be demonstrated to arise from
this Plan or the transactions contemplated hereby, or (y) events or
conditions generally affecting the securities or banking industry or
effects resulting from general economic conditions (including changes in
interest rates), changes in accounting practices or changes to statutes,
regulations or regulatory policies, that do not have a materially more
adverse effect on such party than that experienced by similarly situated
financial services companies;
(B) the term "individually or in the aggregate" as used in Article IV
----------
of this Plan includes all events, occurrences and circumstances described
in any paragraph of Article IV, and is not linked to any specific
----------
paragraph;
(C) the term "Previously Disclosed" by a party shall mean information
set forth in a Schedule, correspondingly enumerated to the representation,
warranty or covenant to which it relates (which information shall also be
deemed to apply to any other representation, warranty or covenant to which
such information reasonably appears on its face to be relevant), that is
delivered by such party to the other party contemporaneously with the
execution of this Plan and specifically designated as information
"Previously Disclosed" pursuant to this Plan (it being understood that
notwithstanding any other provision herein such information shall be
disclosed in light of the particular standard of "materiality" set forth in
the representation, warranty or covenant to which such information
relates);
52
(D) the term "Rights" means securities or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or
acquire, or any options, calls or commitments relating to, shares of
capital stock (and shall include stock appreciation rights); and
(E) the term "the date hereof", "the date of this Plan" or similar
references means April 25, 1999.
8.09. Entire Understanding; No Third Party Beneficiaries. This Plan and
--------------------------------------------------
all schedules hereto represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersede any and all
other oral or written agreements heretofore made. Nothing in this Plan,
expressed or implied, is intended to confer upon any person, other than the
parties hereto or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Plan, except that Section 5.16 is
------------
intended to confer on the persons named therein those rights expressly stated in
such Section.
8.10. Benefit Plans.
-------------
(A) As soon as administratively practicable after the Effective Time,
employees of the Company or the Company Subsidiaries immediately prior to the
Effective Time who remain employed with First Union or its subsidiaries
following the Effective Time (the "Continued Employees") shall be generally
entitled to participate in the pension, benefit, welfare, incentive
compensation, sick pay, vacation, fringe benefit and similar plans of First
Union on substantially the same terms and conditions applied to employees of
First Union and its subsidiaries. For the purpose of determining eligibility to
participate in such plans and the vesting of benefits under such plans (but not
for the accrual of benefits under such plans), First Union shall give effect to
years of service with the Company or the Company Subsidiaries, as the case may
be, as if such service had been with First Union or its subsidiaries.
(B) First Union shall honor in accordance with their terms all
individual compensation contracts Previously Disclosed, the Employment
Agreements entered into by First Union with the individuals set forth on Annex
-----
A, and all provisions for vested benefits or other vested amounts earned or
-
accrued through the Effective Time under any of the Compensation and Benefit
Plans.
53
(C) Severance. During the period commencing at the Effective Time and
---------
ending on the first anniversary thereof, First Union shall provide severance
benefits to Continued Employees (including those who transfer to First Union or
its subsidiaries) who terminate employment subsequent to the Effective Time but
prior to the first anniversary thereof in accordance with the formulae used to
determine the duration (or equivalent lump sum value) of salary continuation
under the severance policies covering such employees as of the date hereof, but
utilizing the policies, procedures and practices First Union uses under its
severance plan. At the discretion of First Union, such benefits may be provided
under the First Union severance plan. No employees, including Continued
Employees who transfer to First Union or its subsidiaries, shall be entitled to
any severance benefits pursuant to this provision unless their employment with
such entity is terminated prior to the first anniversary of the Effective Date.
If the Continued Employees terminate employment after the first anniversary of
the Effective Date, they will be entitled to severance benefits, if any, in
accordance with the provisions of First Union's then current severance plan.
For the purposes of determining the applicability of this Section 8.10(C) only,
---------------
the date of an employee's termination will be defined as the date the affected
employee is given formal written notification his or her job will be eliminated
under the terms of the First Union severance plan.
(D) Certain Employee Agreements. Neither the Company nor any of the
---------------------------
Company Subsidiaries shall terminate the employment of any employee identified
on Annex A hereto (each, an "Identified Employee") without the prior written
-------
consent of First Union and, subject to the terms and conditions of this Plan,
the Company shall use its reasonable best efforts (a) to maintain the continued
employment of each Identified Employee with the Company or the Company
Subsidiaries until the Effective Time and (b) not in any way to encourage (or
permit the encouragement of) any Identified Employee to breach or violate any
employment agreement or other arrangement such Identified Employee may have with
the Company or any of the Company Subsidiaries, or First Union or any of its
subsidiaries.
(E) KSOP. First Union shall take all steps reasonably necessary to
----
ensure that the cost basis of Continued Employees in all current and future
employer securities under the Company 401(k) and KSOP will be maintained at all
times following the Effective Time. In addition, all participants in the KSOP
shall become fully vested in their account balances under the KSOP immediately
prior to the Effective Time, as adjusted from time to time in accordance with
the terms of the KSOP.
54
(F) Retiree Welfare Benefits. With respect to the retiree welfare
------------------------
benefits currently provided by the Company and the Company Subsidiaries, all
currently retired employees (or those who become eligible and elect to retire
prior to the Effective Time under the current terms of the retiree welfare
benefit plans provided by the Company and the Company Subsidiaries) of the
Company or any Company Subsidiary shall continue to be eligible to receive
substantially similar benefits to the benefits currently in effect subject to
First Union's right to amend, modify or terminate such benefits in the future.
(G) Commissions Schedules. For transactions effected prior to January
---------------------
1, 2001, First Union shall provide compensation opportunities to investment
consultants, investment consultant trainees, and branch managers in accordance
with the Company's commission schedules as in effect on the date hereof, which
include, but are not limited to, current cash compensation, incentive deferred
compensation, and non-cash perquisites. It is understood and agreed that the
foregoing compensation shall not include the granting of any options to
purchase, or shares of, First Union Common Stock or any subsidiaries of First
Union.
(H) 1999 Bonus Payments. For Continued Employees employed by First
-------------------
Union or its subsidiaries on December 31, 1999, bonus payments for 1999 shall be
determined under the terms and conditions established by the Company for bonus
payments to its employees, as in effect on the date hereof (or otherwise agreed
to by First Union), and shall be paid in cash no later than January 31, 2000.
For each Continued Employee whose employment with First Union or its
subsidiaries is terminated prior to December 31, 1999, bonus payments for 1999
shall be determined under the terms and conditions established by the Company
for bonus payments to its employees, as in effect on the date hereof (or
otherwise agreed to by First Union), but shall be prorated based on the number
of days such Continued Employee was employed by First Union, its subsidiaries,
the Company or the Company Subsidiaries in 1999; any such bonus shall be paid in
cash no later than the last day of the month following such Continued Employee's
termination of employment. Notwithstanding anything to the contrary in the
Company's 1996 Restricted Stock Incentive Plan (or any other Compensation and
Benefit Plan), the foregoing bonuses shall be paid entirely in cash without any
adjustment or any additional premium.
8.11. Headings. The headings contained in this Plan are for reference
--------
purposes only and are not part of this Plan.
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8.12. Interpretation; Effect. When a reference is made in this Plan to
----------------------
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Plan unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Plan, they shall be
deemed to be followed by the words "without limitation". No provision of this
Plan shall be construed to require the Company, First Union or any of their
respective Subsidiaries, affiliates or directors to take any action which would
violate applicable law (whether statutory or common law), rule or regulation.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST UNION CORPORATION
By:_______________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
FIRST UNION DELAWARE, INC.
By:_______________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
EVEREN CAPITAL CORPORATION
By:_______________________________
Name:
Title:
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EXHIBIT INDEX
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Exhibit A [RESERVED]
Exhibit B Form of Voting Agreement
Exhibit C Form of Stock Option Agreement
Exhibit D Rights Agreement Amendment
Exhibit E Form of Affiliates Agreement
Annex A Employees entering into Employment Agreements
Annex B Retention Pool
58
