AGREEMENT AND PLAN OF MERGERS
AGREEMENT AND PLAN OF MERGERS, dated as of the 4th day of August, 1997
(this "Plan"), by and among COVENANT BANCORP, INC. (the "Company"), COVENANT
BANK (the "Bank"), FIRST UNION CORPORATION ("First Union"), and FIRST UNION
NATIONAL BANK ("FUNB").
RECITALS:
(A) The Company. The Company is a corporation duly organized and
existing in good standing under the laws of the State of New Jersey, with its
principal executive offices located in Haddonfield, New Jersey. The Company is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended ("BHCA"). As of the date hereof, the Company has 25,000,000 authorized
shares of common stock, each of $5.00 par value ("Company Common Stock"), and
1,000,000 authorized shares of preferred stock, each of $25.00 par value
("Company Preferred Stock" and, together with the Company Common Stock, "Company
Stock"), of which 138,300 shares have been authorized and designated as Series A
Preferred Stock ("Series A Preferred Stock") and 161,700 shares have been
authorized and designated as Series B Preferred Stock ("Series B Preferred
Stock") (no other class of capital stock being authorized), of which 3,057,193
shares of Company Common Stock, 138,300 shares of Series A Preferred Stock and
161,700 shares of Series B Preferred Stock are issued and outstanding.
(B) The Bank. The Bank is a commercial bank duly organized and existing
in good standing under the laws of the State of New Jersey, with its principal
executive offices located in Haddonfield, New Jersey. As of June 30, 1997, the
Bank had capital of $30,812,000, divided into common stock of $14,682,000,
preferred stock of $7,500,000, surplus of $10,702,000, undivided profits (loss),
including retained earnings, of $(1,500,000), and net unrealized gain (loss) on
investment securities of $(572,000). All of the issued and outstanding shares of
capital stock of the Bank ("Bank Capital Stock") are owned by the Company.
(C) First Union. First Union is a corporation duly organized and
existing in good standing under the laws of the
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Xxxxx xx Xxxxx Xxxxxxxx, with its principal executive offices located in
Charlotte, North Carolina. First Union is a registered bank holding company
under the BHCA. As of the date hereof, First Union has 750,000,000 authorized
shares of common stock, each of $3.33 1/3 par value ("First Union Common
Stock"), 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 280,488,704 shares of First Union
Common Stock (without giving effect to the two-for-one First Union Common Stock
split paid on July 31, 1997 to holders of record of First Union Common Stock on
July 1, 1997), no shares of First Union Class A Preferred Stock, and no shares
of First Union Preferred Stock, were issued and outstanding as of June 30, 1997.
(D) FUNB. FUNB is a national banking association duly organized and
existing under the laws of the United States, with its principal executive
offices located in Avondale, Pennsylvania. As of June 30, 1997, FUNB had capital
of $2,267,270,516, divided into common stock of $452,155,620, preferred stock of
$160,540,000, surplus of $1,300,079,773, undivided profits, including capital
reserves, of $353,444,727, and net unrealized holding gains on available for
sale securities of $1,050,396. All of FUNB's issued and outstanding shares of
capital stock are owned by First Fidelity Incorporated ("FFI"), a wholly-owned
subsidiary of First Union Corporation of New Jersey ("FUNC-NJ"), a wholly-owned
subsidiary of First Union.
(E) Rights, Etc. Except as Previously Disclosed (as hereinafter
defined)in Schedule 4.01(C), there are no shares of capital stock of the Company
or the Bank authorized and reserved for issuance, neither the Company nor the
Bank has any Rights (as defined below) issued or outstanding and neither the
Company nor the Bank has any commitment to authorize, issue or sell any such
shares or any Rights, except pursuant to this Plan. 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). There are no preemptive rights in respect of the Company
Stock.
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(F) Approvals. The Board of Directors of each of the Company, the Bank,
First Union and FUNB has approved, at meetings of each of such Boards of
Directors, this Plan and has authorized the execution hereof in counterparts.
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 MERGERS.
1.01. The Corporate Merger. On the Effective Date (as hereinafter
defined):
(A) The Continuing Corporation. The Company shall merge with
and into First Union (the "Corporate Merger"), the separate existence
of the Company shall cease and First Union (the "Continuing
Corporation") shall survive and the name of the Continuing Corporation
shall be "First Union Corporation."
(B) Effect of the Corporate Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VI in
accordance with the terms of this Plan, the Corporate Merger shall
become effective upon the filing in the offices of the Secretary of
State of the States of North Carolina and New Jersey of Articles of
Merger and a Certificate of Merger, as applicable, or such later date
and time as may be set forth in such Articles of Merger and Certificate
of Merger, in accordance with applicable law.
(C) Rights, Etc. The Continuing Corporation shall thereupon
and thereafter possess all of the rights, privileges, immunities and
franchises, of a public as well as of a private nature, of each of the
merging corporations; and all property, real, personal and mixed, and
all debts due on whatever account, and all other choses in action, and
all and every other interest, of or belonging to or due to each of the
corporations so merged, shall be deemed to be vested in the Continuing
Corporation without further act or deed; and the title to any real
estate or any interest therein, vested in each of such corporations,
shall not
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revert or be in any way impaired by reason of the Corporate
Merger.
(D) Liabilities. The Continuing Corporation shall thenceforth
be responsible and liable for all the liabilities, obligations and
penalties of each of the corporations so merged, in accordance with
applicable law.
(E) Articles of Incorporation; Bylaws; Directors; Officers.
The Articles of Incorporation and Bylaws of the Continuing Corporation
shall be those of First Union, as in effect immediately prior to the
Corporate Merger becoming effective. The directors and officers of
First Union in office immediately prior to the Corporate Merger
becoming effective 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 elected and qualified.
1.02. The Bank Merger. Following the Corporate Merger on the Effective
Date or as soon thereafter as First Union may deem appropriate:
(A) Contribution of Bank Capital Stock. First Union shall
contribute the Bank Capital Stock to FUNC-NJ and shall cause FUNC-NJ to
contribute the Bank Capital Stock to FFI.
(B) The Continuing Bank. Following the contribution of the
Bank Capital Stock to FUNC-NJ and from FUNC-NJ to FFI and at least one
day following the Effective Date, the Bank shall be merged with and
into FUNB (the "Bank Merger" and together with the Corporate Merger,
the "Mergers"), the separate existence of the Bank shall cease and FUNB
(the "Continuing Bank") shall survive; the name of the Continuing Bank
shall be "First Union National Bank"; and the Continuing Bank shall
continue to conduct the business of a national banking association at
FUNB's main office in Avondale, Pennsylvania and at the legally
established branches of the Bank and FUNB.
(C) Rights, Etc. The Continuing Bank shall thereupon and
thereafter possess all the rights, privileges,
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immunities and franchises, of a public as well as of a private nature,
of each of the banks so merged; and all property, real, personal and
mixed, and all debts due on whatever account, and all other choses in
action, and all and every other interest, of or belonging to or due to
each of the banks so merged, shall be taken and deemed to be
transferred to and vested in the Continuing Bank without further act or
deed, including appointments, designations and nominations and all
other rights and interests in any fiduciary capacity; and the title to
any real estate or any interest therein, vested in each of such banks,
shall not revert or be in any way impaired by reason of the Bank
Merger.
(D) Liabilities, Etc. The Continuing Bank shall thenceforth be
responsible and liable for all the liabilities, obligations and
penalties of the banks so merged (including liabilities arising out of
the operation of any trust departments). All rights of creditors and
obligors and all liens on the property of each of the Bank and FUNB
shall be preserved unimpaired.
(E) Charter; Bylaws; Directors; Officers. The Charter and
Bylaws of the Continuing Bank shall be those of FUNB, as in effect
immediately prior to the Bank Merger becoming effective. The directors
and officers of FUNB in office immediately prior to the Bank Merger
becoming effective shall be the directors and officers of the
Continuing Bank, together with such additional directors and officers
as may thereafter be elected, who shall hold office until such time as
their successors are elected and qualified.
(F) Outstanding Stock of the Continuing Bank. The amount of
the capital stock of the Continuing Bank shall be not less than
$612,695,620 and shall consist of not less than 22,727,147 issued and
outstanding shares of common stock, each of $20.00 par value, and
160,540 issued and outstanding shares of preferred stock, each of $1.00
par value, and such issued and outstanding shares shall remain issued
and outstanding as shares of FUNB, each of $20.00 par value and $1.00
par value, as applicable, and the holders thereof shall retain their
rights therein.
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(G) Outstanding Stock of the Bank. Promptly after the Bank
Merger becomes effective, FFI shall deliver all of the issued and
outstanding shares of the capital stock of the Bank to the Continuing
Bank for cancellation.
1.03. Effective Date and Effective Time. Subject to the conditions to
the obligations of the parties to effect the Corporate Merger as set forth in
Article VI, the parties shall cause the effective date of the Corporate Merger
(the "Effective Date") to occur on such date as the Company and First Union
mutually agree upon, or if such parties cannot agree on such date, such date
shall be the fifth business day to occur after the last of the conditions set
forth in Sections 6.01, 6.02, 6.03, 6.10, 6.11 and 6.13 shall have been
satisfied or waived in accordance with the terms of this Plan (or, at the
election of First Union, on the last business day of the month in which such day
occurs); provided, however, that such date shall be after December 31, 1997,
unless the parties mutually agree otherwise. The time on the Effective Date when
the Corporate Merger shall become effective is referred to as the "Effective
Time".
II. CONSIDERATION.
2.01. Corporate Merger Consideration. Subject to the provisions of this
Plan, on the Effective Date:
(A) Outstanding First Union Common Stock. The shares of First
Union Common Stock (together with the rights ("First Union Rights")
issued pursuant to an Amended and Restated Shareholder Protection
Rights Agreement, dated December 18, 1990, and as amended and restated
as of October 15, 1996, attached thereto), issued and outstanding
immediately prior to the Effective Time shall, on and after the
Effective Time, remain as issued and outstanding shares of First Union
Common Stock.
(B) Outstanding Company Common Stock. Each share (excluding
shares held by the Company or any of the Company Subsidiaries (as
hereinafter defined) or by First Union or any of its subsidiaries, in
each case other than in a fiduciary capacity or as a result of debts
previously contracted ("Excluded Shares")) of Company Common Stock
issued and outstanding immediately prior to the Effective
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Time shall, by virtue of the Corporate Merger, automatically and
without any action on the part of the holder thereof, become and be
converted into the right to receive .3813 shares of First Union Common
Stock (the "Exchange Ratio")(together with the attached First Union
Rights), subject to possible adjustment as set forth in Section 2.08
(upon any such adjustment any reference in this Plan to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as
adjusted).
(C) Outstanding Series A Preferred Stock. If, immediately
prior to the Effective Time, there shall be issued and outstanding any
shares of Series A Preferred Stock, then each such share (excluding
Excluded Shares)of Series A Preferred Stock shall become and be
converted into the right to receive the number of shares of First Union
Common Stock equal to the result of the product of the Exchange Ratio
and 3.976, the conversion number for the Series A Preferred Stock
provided for in the Company's Certificate of Incorporation, as amended
(the "Company Certificate").
(D) Outstanding Series B Preferred Stock. If, immediately
prior to the Effective Time, there shall be issued and outstanding any
shares of Series B Preferred Stock, then each such share (excluding
Excluded Shares)of Series B Preferred Stock shall become and be
converted into the right to receive the number of shares of First Union
Common Stock equal to the result of the product of the Exchange Ratio
and 3.147, the conversion number for the Series B Preferred Stock
provided for in the Company Certificate.
2.02. Stockholder Rights; Stock Transfers. At the Effective Time,
holders of Company Common Stock and Company Preferred Stock shall cease to be,
and shall have no rights as, stockholders of the Company, other than to receive
the consideration provided under this Article II, without interest. After the
Effective Time, there shall be no transfers on the stock transfer books of the
Company or the Continuing Corporation of the shares of Company Stock which were
issued and outstanding immediately prior to the Effective Time.
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2.03. Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of First Union Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Corporate Merger; instead, First Union shall pay to each holder of Company 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 on the last trading day prior to the Effective Date, as
reported by the New York Stock Exchange, Inc. (the "NYSE") Composite
Transactions tape (as reported in The Wall Street Journal).
2.04. Exchange Procedures. As promptly as practicable after the
Effective Date, First Union will send or cause to be sent to each former
stockholder of the Company of record immediately prior to the Effective Time,
transmittal materials for use in exchanging such stockholder's certificates for
Company Stock for the consideration set forth in this Article II. The
certificates representing the shares of First Union Common Stock into which
shares of such stockholder's Company Stock are converted on the Effective Date,
any fractional share check which such stockholder shall be entitled to receive,
and any dividends paid on such shares of First Union Common Stock for which the
record date for determination of stockholders entitled to such dividends is on
or after the Effective Date, will be delivered to such stockholder only upon
delivery to First Union National Bank (the "Exchange Agent") of the certificates
representing all of such shares of Company Stock (or indemnity satisfactory to
First Union and the Exchange Agent, in their judgment, if any of such
certificates are lost, stolen or destroyed). No interest will be paid on any
such fractional share check or dividends which the holder of such shares shall
be entitled to receive upon such delivery. Certificates surrendered for exchange
by any person constituting an Affiliate (as hereinafter defined) of the Company
shall not be exchanged for certificates representing First Union Common Stock
until First Union has received a written agreement from such person as specified
in Section 5.10.
2.05. Excluded Shares. Each of the Excluded Shares of Company Stock
shall be canceled and retired at the Effective Time, and no consideration shall
be issued in exchange therefor.
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2.06. Reservation of Right to Revise Transaction. First Union may at
any time change the method of effecting the acquisition of the Company and the
Bank (including without limitation the provisions of this Article II) if and to
the extent it deems such change to be desirable; provided, however, that no such
change shall (A) alter or change the amount or kind of consideration to be
issued to holders of Company Stock as provided for in this Plan, (B) adversely
affect the intended tax-free treatment to the Company's stockholders as a result
of receiving such consideration, or (C) materially impede or delay receipt of
any approval referred to in Section 6.02 or the consummation of the transactions
contemplated by this Plan.
2.07. Stock Options. From and after the Effective Time, all employee
and director stock options to purchase shares of Company Common Stock ("Stock
Options"), which are then outstanding and unexercised (whether vested or
unvested), shall be converted into and become options with respect to First
Union Common Stock, and First Union shall assume each such Stock Option in
accordance with the terms of the plan and agreement by which it is evidenced;
provided, however, that from and after the Effective Time, (A) each such Stock
Option assumed by First Union may be exercised solely for shares of First Union
Common Stock, (B) the number of shares of First Union Common Stock subject to
such Stock Option shall be equal to the number of shares of Company Common Stock
subject to such Stock Option immediately prior to the Effective Time, multiplied
by the Exchange Ratio and rounded down to the nearest whole share, and (C) the
per share exercise price under each such Stock Option shall be adjusted by
dividing such price by the Exchange Ratio and rounding to the nearest cent. The
Company represents and warrants that the number of shares of Company Common
Stock which are issuable upon exercise of Stock Options as of the date hereof
are Previously Disclosed in Schedule 4.01(C).
2.08. Anti-Dilution Provisions. In the event First Union changes 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, recapitalization or
similar transaction with respect to the outstanding First Union Common Stock and
the record date therefor shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
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III. ACTIONS PENDING CONSUMMATION.
From the date hereof until the Effective Time, except as expressly
contemplated by this Plan, without the prior written consent of First Union,
each of the Company and the Bank will not, and will cause each of the Company
Subsidiaries not to, agree to:
3.01. Ordinary Course. Conduct its and each of the Company
Subsidiaries' business other than in the ordinary and usual course consistent
with past practice or fail to use its best efforts to maintain and preserve
intact its and each of the Company Subsidiaries' business organization and
assets and maintain its rights, franchises and existing relations with
customers, suppliers, employees and business associates.
3.02. Capital Stock. Except as Previously Disclosed in Schedule
4.01(C), (A) issue, sell or otherwise permit to become outstanding any
additional shares of capital stock of the Company or the Company Subsidiaries,
or any Rights with respect thereto, (B) enter into any agreement with respect to
the foregoing, or (C) permit any additional shares of Company Common Stock to
become subject to new grants of employee stock options, stock appreciation
rights or similar stock based employee compensation rights or take any action
that permits the acceleration of Stock Options.
3.03. Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, cash or stock (other than dividends payable on Company Preferred Stock
at a rate not exceeding the rate provided for in the terms thereof, and
dividends from Company Subsidiaries to the Company or the Bank, as applicable),
on or in respect of or declare or make any distribution on, or directly or
indirectly combine, split, redeem, reclassify (except as Previously Disclosed in
Schedule 3.03), purchase or otherwise acquire, any shares of the capital stock
of the Company or the Company Subsidiaries or, other than as permitted in or
contemplated by this Plan, authorize the creation or issuance of, or issue, any
additional shares of such capital stock or any Rights with respect thereto.
3.04. Indebtedness; Liabilities; Etc. Other than in the ordinary course
of business consistent with past practice, incur
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any indebtedness for borrowed money or assume, guarantee, endorse or otherwise
as an accommodation become liable for the obligations of any other individual or
corporation, bank, partnership, limited liability company, joint venture,
business trust, association or other organization (each, a "Business Entity").
3.05. Operating Procedures; Capital Expenditures; Etc. Except as may be
directed by applicable law or regulation, (A) change its or any of the Company
Subisidiaries' lending, investment, liability management or other material
banking or other policies in any material respect, except such changes as are in
accordance and in an effort to comply with Section 5.11, (B) incur or commit to
incur any capital expenditures beyond those Previously Disclosed in Schedule
3.05, other than in the ordinary course of business and not exceeding the
Company's current budget for such expenditures as set forth in Schedule 3.05, or
(C) implement or adopt any change in accounting principles, practices or
methods, other than as may be required by generally accepted accounting
principles.
3.06. Liens. Impose, or permit or suffer the imposition, on any shares
of capital stock of any of the Company Subsidiaries, or on any of its or the
Company Subsidiaries' other assets, any Liens (as hereinafter defined), other
than Liens on such other assets that, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect (as hereinafter defined) on
the Company.
3.07. Compensation; Employment Agreements; Etc. Except as Previously
Disclosed in Schedule 3.07, enter into or amend any employment, consulting,
severance or similar agreement or arrangement with any of its directors,
officers, employees or consultants, or grant any salary or wage increase, amend
the terms of any Stock Option or increase any employee benefit (including
incentive or bonus payments), except normal individual increases in regular
compensation to employees in the ordinary course of business consistent with
past practice.
3.08. Benefit Plans. Except as Previously Disclosed in Schedule 3.08,
enter into, establish, adopt or modify (except as may be required by applicable
law) any pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred
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compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees, including without limitation taking any action that accelerates the
vesting or exercise of any benefits payable thereunder (other than any such
acceleration or vesting that results from this Plan or the transactions
contemplated herein).
3.09. Acquisitions and Dispositions. (A) sell, transfer or otherwise
dispose of any portion of its assets, deposits, business or properties, except
for any such dispositions which taken together are not material to the Company
and the Company Subsidiaries taken as a whole, or discontinue or terminate any
existing line of business, (B) merge or consolidate with, or acquire all or any
portion of the business or property of, any other entity except for any such
transaction that is in the ordinary course of business and which is not material
to the Company and the Company Subsidiaries taken as a whole (except
foreclosures or acquisitions by the Bank in a fiduciary capacity, in each case
in the ordinary course of business consistent with past practice) or (C) make
any material investment either by purchase of stock or securities, contributions
to capital, property transfers, or purchase of any property or assets of any
person or Business Entity other than from wholly-owned Company Subsidiaries and
other than the purchase or sale of loans or marketable securities in the
ordinary course of business consistent with past practices.
3.10. Governing Documents. Amend its Certificate of Incorporation,
Charter or Bylaws.
3.11. Claims. Settle any claim, action or proceeding involving
liability for any material money damages in an amount greater than $ 25,000 or
any restrictions upon the operations of the Company or any of the Company
Subsidiaries, or forgive or compromise any material amount of debt of any person
or Business Entity, other than from wholly-owned Company Subsidiaries.
3.12. Contracts. Enter into, terminate or make any change in any
material contract, agreement or lease, except in the ordinary course of business
consistent with past practice with respect to such contracts, agreements and
leases that are
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terminable by it without penalty on not more than 60 days prior written notice.
3.13. Other Actions. Take any actions that would (A) impede or delay
the receipt of any approval referred to in Section 6.02 without the imposition
of a condition or restriction of the type referred to in the proviso to such
Section or (B) adversely affect the ability of any party to perform its
obligations under this Plan.
3.14. Agreements. Authorize, commit or enter into any agreement to take
any of the actions referred to in Sections 3.01 through 3.13.
IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of the Company and the Bank. Each
of the Company and the Bank hereby represents and warrants to First Union and
FUNB as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan
with respect to it are true and correct.
(B) Organization, Standing and Authority. It 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. Each of the Company and 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, the absence of which, individually
or in the aggregate, is reasonably likely to have a Material Adverse Effect on
the Company.
(C) Shares. The outstanding shares of it are duly authorized,
validly issued and outstanding, fully paid and nonassessable, and are subject to
no, and have not been issued in violation of any, preemptive rights. Except as
Previously Disclosed in Schedule 4.01(C), there are no shares of capital
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stock or other equity securities of the Company or the Bank outstanding and no
outstanding Rights with respect thereto.
(D) Company Subsidiaries. The Company has Previously Disclosed
in Schedule 4.01(D) a list of all the Company Subsidiaries, including the state
of organization and principal business activities of each such Company
Subsidiary. Each of the Company Subsidiaries that is a bank is an "insured
depository institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder. 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 or the
Bank, as applicable, to vote or to dispose of such shares. All of the shares of
capital stock of each Company Subsidiary held by the Company or a Company
Subsidiary are fully paid and nonassessable and subject to no preemptive rights
and are owned by the Company or a Company Subsidiary free and clear of any
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 and in which the failure to be duly qualified is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. Except as Previously Disclosed in Schedule 4.01(D), the Company does
not own beneficially, directly or indirectly, any equity securities or similar
interests of any Business Entity. The Bank is a member of the Bank Insurance
Fund (the "BIF") of the Federal Deposit Insurance Corporation (the "FDIC"). The
Bank is a member in good standing of the Federal Home Loan Bank of New York (the
"FHL Bank"). The term "Company Subsidiary" means any Business Entity (including
the Bank), five percent or more of the equity interests of which are owned
directly or indirectly by the Company.
(E) Corporate Power. It and each of the Company Subsidiaries
has the corporate power and authority to carry on
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its business as it is now being conducted and to own or lease all its material
properties and assets and it has the corporate power and authority to execute,
deliver and perform its obligations under this Plan, and to consummate the
transactions contemplated hereby.
(F) Corporate Authority. Each of this Plan and the
transactions contemplated hereby and, subject to any necessary receipt of
approval by its stockholders referred to in Section 4.01(Y), consummation of the
Corporate Merger, has been authorized by all necessary corporate action of it
and is a valid and binding agreement of it enforceable against it in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency and other
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(G) No Defaults. Subject to the approval by its stockholders
referred to in Section 6.01, the required regulatory approvals referred to in
Section 6.02, and the required filings under federal and state securities laws,
and except as Previously Disclosed in Schedule 4.01(G), the execution, delivery
and performance of this Plan and the consummation of the transactions
contemplated hereby, do 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 it or any of the Company
Subsidiaries or its or their properties is subject or bound, which breach,
violation, default or Lien is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company, (2) constitute a
breach or violation of, or a default under, its Certificate of Incorporation,
Charter or Bylaws, 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.
FULNC:38907-1
15
(H) Financial Reports. As to (1) the Company, its Registration
Statement on Form S-4, dated March 13, 1997, as amended, filed under the
Securities Act of 1933, as amended (together with the rules and regulations
thereunder, the "Securities Act"), and all other documents filed or to be filed
subsequent to the date hereof, under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "Exchange Act"), in the form filed with the
Securities and Exchange Commission (the "SEC") (in each such case, the "Company
Financial Reports"), and (2) the Bank, (i) its Call Reports for the fiscal year
ended December 31, 1996, and all other Call Reports filed or to be filed
subsequent to December 31, 1996, in the form filed with the FDIC and (ii) its
Annual Report on Form F-2 for the fiscal year ended December 31, 1996, as
amended, and all other documents filed subsequent to December 31, 1996 under
Section 13, 14 or 15(d) of the Exchange Act, in the form filed with the FDIC (in
each case, the "Bank Financial Reports" and together with the Company Financial
Reports, the "Company/Bank 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/Bank 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 Company/Bank Financial Reports (including any
related notes and schedules thereto) fairly presents and will fairly present the
results of operations, changes in stockholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the periods set
forth therein, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal and recurring year-end audit
adjustments in the case of unaudited statements.
(I) Absence of Undisclosed Liabilities. Except as disclosed in
the Company/Bank Financial Reports prior to the date
FULNC:38907-1
16
hereof, none of the Company or the Company Subsidiaries has any obligation or
liability (contingent or otherwise) that, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company.
(J) No Events. No events have occurred, or circumstances have
arisen, since March 31, 1997, which, individually or in the aggregate, have had
or are reasonably likely to have a Material Adverse Effect on the Company.
(K) Properties. Except as specifically reserved against or
otherwise disclosed in the Company/Bank 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 in Schedule 4.01(K), the Company and the Company
Subsidiaries have good and marketable title, free and clear of all 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"), to all of the properties and assets, tangible and intangible,
reflected in the Company/Bank Financial Reports as being owned by the Company or
the Company Subsidiaries as of the dates thereof, other than those Liens that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect on the Company. 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.
(L) Litigation; Regulatory Action. Except as Previously
Disclosed in Schedule 4.01(L), no litigation, proceeding or controversy before
any court or governmental agency is pending which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the Company
or which alleges claims under any fair lending law or other law relating to
discrimination, including, without limitation, the Truth in Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Housing
Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, and,
to the best of its knowledge, no such litigation, proceeding or controversy has
been
FULNC:38907-1
17
threatened; and except as Previously Disclosed in Schedule 4.01(L), neither it
nor any of the Company Subsidiaries or any of its or their material properties
or their officers, directors or controlling persons is a party to or is subject
to any order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment or supervisory letter or similar submission to
or from, any federal or state governmental agency or authority charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits (together with any and all agencies or departments of federal, state
or local government (including, without limitation, the FHL Bank, the Federal
Reserve Board, the FDIC and any other federal or state bank, thrift or other
financial institution, insurance or securities regulatory authorities (including
the SEC, the "Regulatory Authorities")) and neither it nor any of the Company
Subsidiaries has been advised by any of the 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 of understanding, commitment or supervisory letter or similar
submission.
(M) Compliance with Laws. Except as Previously Disclosed in
Schedule 4.01(M), each of the Company and the Company Subsidiaries:
(1) has all permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and
registrations with, all Regulatory Authorities that are required in
order to permit it to conduct its business as presently conducted and
that are material to the business of the Company and the Company
Subsidiaries taken as a whole; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to
the best of its knowledge, no suspension or cancellation of any of them
is threatened; and all such filings, applications and registrations are
current;
(2) has received no notification or communication
from any Regulatory Authority or the staff thereof (a) asserting that
any of the Company or the Company Subsidiaries is not in compliance
with any of the statutes,
FULNC:38907-1
18
regulations or ordinances which such Regulatory Authority enforces,
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 or governmental authorization, which
revocation, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on the Company, or (c) requiring any of
the Company or the Company Subsidiaries (or any of their officers,
directors or controlling persons) to enter into a cease and desist
order, agreement or memorandum of understanding (or requiring the board
of directors thereof to adopt any material resolution or policy);
(3) is in compliance in all material respects with
all fair lending laws or other laws relating to discrimination,
including, without limitation, the Truth in Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Housing
Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act and similar federal and state laws and regulations.
(N) Material Contracts. Except as Previously Disclosed in
Schedule 4.01(N), none of the Company or the Company Subsidiaries, nor any of
its respective assets, business or operations, is a party to, or is bound or
affected by, or receives benefits under, any contract or agreement or amendment
thereto that in each case (1) is required to be filed as an exhibit to an
Exchange Act or Securities Act report filed by the Company or as an exhibit to
an Annual Report on Form F-2 filed by the Bank that has not been filed as an
exhibit to the Company's Exchange Act or Securities Act reports or the Bank's
Annual Report on Form F-2 filed for the fiscal year ended December 31, 1996, or
(2) which provides for annual payments by the Company or a Company Subsidiary of
$100,000 or more. True and correct copies of such contracts, and any agreements
or amendments thereto, have been supplied to First Union. Except as Previously
Disclosed in Schedule 4.01(N), 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 any of its respective assets, business or operations
FULNC:38907-1
19
receives benefits, which default, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company, and there
has not occurred any event that, with lapse of time or giving of notice or both,
would constitute such a default. Except as Previously Disclosed in Schedule
4.01(N), neither the Company nor any Company Subsidiary is subject to, or bound
by, any contract containing covenants which (i) limit the ability of the Company
or any Company Subsidiary to compete in any line of business or with any person,
or (ii) 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).
(O) Reports. Since January 1, 1994, each of the Company and
the Company Subsidiaries has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (1) the SEC, (2) the FDIC, the New Jersey Department of Banking, the
FHL Bank and (3) any other applicable Regulatory Authorities. As of their
respective dates (and without giving effect to any amendments or modifications
filed after the date of this Plan with respect to reports and documents filed
before the date of this Plan), each of such reports and documents, including the
financial statements, exhibits and schedules thereto, complied in all material
respects with all of the statutes, rules and regulations 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 necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(P) No Brokers. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with the
other parties hereto 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 previously disclosed to First Union
to be paid to Berwind Financial, L.P.
(Q) Employee Benefit Plans.
FULNC:38907-1
20
(1) Schedule 4.01(Q) contains 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 or severance
contracts, all medical, dental, health and life insurance plans, all
other employee benefit plans, contracts or arrangements and any
applicable "change of control" or similar provisions in any plan,
contract or arrangement 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 to First Union.
Neither it nor any of the Company Subsidiaries has any commitment to
create any additional Compensation and Benefit Plan or to modify or
change any existing Compensation and Benefit Plan.
(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 substantial
compliance with ERISA. Except as Previously Disclosed in Schedule
4.01(Q) 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 Internal
Revenue Code of 1986, as amended (the "Code"), has received a favorable
determination letter from the Internal Revenue Service, 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
material pending or, to its knowledge, threatened litigation relating
to the ERISA Plans. Neither it nor any of the Company Subsidiaries has
engaged in a transaction with respect to any ERISA Plan that would
subject it or any of the Company
FULNC:38907-1
21
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,
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.
FULNC:38907-1
22
(6) Neither it nor any of the Company Subsidiaries
has any obligations for retiree health and life benefits under any
plan, except as set forth in Schedule 4.01(Q). 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
thereunder.
(7) Except as Previously Disclosed in Schedule
4.01(Q), 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 benefits otherwise payable under
any Compensation and Benefit Plan, (c) result in any acceleration of
the time of payment or vesting of any such benefit, or (d) result in
the imposition to the recipient of any excise tax pursuant to Section
4999 of the Code.
(8) Neither the Company nor any of the Company
Subsidiaries maintains any compensation plans, programs or arrangements
the payments under which would not reasonably be expected to be
deductible as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder. Except as Previously
Disclosed in Schedule 4.01(Q), as a result, directly or indirectly, of
the transactions contemplated by this Plan (including, without
limitation, as a result of any termination of employment prior to or
following the Effective Time), none of First Union, the Company or the
Continuing Corporation, or any of their respective subsidiaries will be
obligated to make a payment that would be characterized as an "excess
parachute payment" to an individual who is a "disqualified individual"
(as such terms are defined in Section 280G of the Code), without regard
to whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
(R) No Knowledge. It knows of no reason why the regulatory
approvals referred to in Section 6.02 should not be
FULNC:38907-1
23
obtained without the imposition of any condition of the type referred to in the
proviso following such Section 6.02.
(S) Labor Agreements. 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 asserting that it or any such Company Subsidiary has committed an
unfair labor practice (within the meaning of the National Labor Relations Act)
or 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 best of its 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) Asset Classification. It has Previously Disclosed in
Schedule 4.01(T) a list, accurate and complete in all material respects, of the
aggregate amounts of loans, extensions of credit or other assets of the Company
and the Company Subsidiaries that have been classified by it as of June 30, 1997
(the "Asset Classification"); and no amounts of loans, extensions of credit or
other assets that have been classified as of June 30, 1997 by any Regulatory
Authority as "Other Loans Specially Mentioned", "Substandard", "Doubtful",
"Loss", or words of similar import are excluded from the amounts disclosed in
the Asset Classification, other than amounts of loans, extensions of credit or
other assets that were charged off by the Company or a Company Subsidiary prior
to June 30, 1997.
(U) Allowance for Possible Loan Losses. The allowance for
possible loan losses shown on the consolidated balance sheets of the Bank
included in the March 31, 1997 Bank Financial Reports was, and the allowance for
possible loan losses to be shown on subsequent Company/Bank Financial Reports,
will be, adequate, in the opinion of the Board of Directors and management of
the Company, determined in accordance with generally accepted accounting
principles, to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans
FULNC:38907-1
24
outstanding (including accrued interest receivable) as of the date thereof.
(V) Insurance. Each of Company and the Company Subsidiaries
has taken all requisite action (including without limitation the making of
claims and the giving of notices) pursuant to its directors' and officers'
liability insurance policy or policies in order to preserve all rights
thereunder with respect to all matters that are known to it, except for such
matters which, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on the Company. Set forth in Schedule 4.01(V) 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.
(W) Affiliates. Except as Previously Disclosed in Schedule
4.01(W), 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.
(X) State Takeover Laws; Articles of Incorporation. It has
taken all necessary action to exempt this Plan and the transactions contemplated
by hereby from, and this Plan, and the transactions contemplated hereby are
exempt from,(a) any applicable state takeover laws, including, without
limitation, the provisions of Article 14A:10A of the New Jersey Business
Corporation Act ("NJBCA"),(b) any applicable takeover provisions in the Company
Certificate, and (c) any takeover provisions set forth in any agreement to which
the Company is a party or may be bound and which provides for the issuance of
any Rights in connection with a takeover.
(Y) No Further Action. It has taken all action so that the
entering into of this Plan and the consummation of the transactions contemplated
hereby (including without limitation the Mergers) or any other action or
combination of actions, or any other transactions, contemplated hereby do not
and will not (1) require a vote of stockholders(other than the affirmative vote
of the holders of a majority of the votes cast by the holders of shares of
Company Common Stock, Series A Preferred Stock and Series B Preferred Stock,
each voting as a separate
FULNC:38907-1
25
class, on this Plan, and the approval of the Company in its capacity as sole
stockholder of the Bank, which approval has been given), or (2) result in the
grant of any rights to any person under the Company Certificate, Charter 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 or FUNB to exercise the rights
granted hereunder.
(Z) Environmental Matters.
(1) To its knowledge, it and each of the Company
Subsidiaries, the Participation Facilities and the Loan/Fiduciary
Properties (each as defined below) are, and have been, in compliance
with all Environmental Laws (as defined below), except for instances of
noncompliance which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company or have
been Previously Disclosed in Schedule 4.01(Z).
(2) There is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency or board or
other forum in which it or any of the Company Subsidiaries or any
Participation Facility has been, or with respect to threatened
proceedings, reasonably would be expected to be, named as a defendant
or potentially responsible party (a) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or (b)
relating to the release or threatened release into the environment of
any Hazardous Material (as defined below), whether or not occurring at
or on a site owned, leased or operated by it or any of the Company
Subsidiaries or any Participation Facility, except for such proceedings
pending or threatened that are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on the Company or
have been Previously Disclosed in Schedule 4.01(Z).
(3) There is no proceeding pending or, to its
knowledge, threatened before any court, governmental agency or board or
other forum in which any Loan/Fiduciary Property (or it or any of the
Company Subsidiaries in respect of any Loan/Fiduciary Property) has
been, or with respect to
FULNC:38907-1
26
threatened proceedings, reasonably would be expected to be, named as a
defendant or potentially responsible party (a) for alleged
noncompliance (including by any predecessor) with any Environmental
Law, or (b) relating to the release or threatened release into the
environment of any Hazardous Material, whether or not occurring at or
on a Loan/Fiduciary Property, except for such proceedings pending or
threatened that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company or have
been Previously Disclosed in Schedule 4.01(Z).
(4) To its knowledge, there is no reasonable basis
for any proceeding of a type described in subsections (2) or (3) above,
except as has been Previously Disclosed in Schedule 4.01(Z).
(5) To its knowledge, during the period of (a) its or
any of the Company Subsidiaries' ownership or operation of any of their
respective current properties, (b) its or any of the Company
Subsidiaries' participation in the management of any Participation
Facility, or (c) its or any of the Company Subsidiaries' holding of a
security or other interest in a Loan/Fiduciary Property, there have
been no releases of Hazardous Material in, on, under or affecting any
such property, Participation Facility or Loan/Fiduciary Property,
except for such releases that are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company
or have been Previously Disclosed in Schedule 4.01(Z).
(6) To its knowledge, prior to the period of (a) its
or any of the Company Subsidiaries' ownership or operation of any of
their respective current properties, (b) its or any of the Company
Subsidiaries' participation in the management of any Participation
Facility, or (c) its or any of the Company Subsidiaries' holding of a
security or other interest in a Loan/Fiduciary Property, there were no
releases of Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan/Fiduciary Property, except for
such releases that are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company or have
been Previously Disclosed in Schedule 4.01(Z).
FULNC:38907-1
27
(7) The following definitions apply for purposes of
this Section 4.01(Z): "Loan/Fiduciary Property" means any property
owned or controlled by it or any of the Company Subsidiaries or in
which it or any of the Company Subsidiaries holds a security or other
interest, and, where required by the context, includes any such
property where Company or any of the Company Subsidiaries constitutes
the owner or operator of such property, but only with respect to such
property; "Participation Facility" means any facility in which it or
any of the Company Subsidiaries participates in the management and,
where required by the context, includes the owner or operator or such
property, but only with respect to such property; "Environmental Law"
means (a) any federal, state and local law, statute, ordinance, rule,
regulation, code, license, permit, approval, order, judgment, decree,
injunction, or agreement with any governmental entity, relating to (i)
the protection, preservation or restoration of the environment,
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource), or to human
health or safety, or (ii) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Material, in
each case as amended and as now in effect and includes, without
limitation, the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the federal Solid Waste Disposal
and the federal Toxic Substances Control Act, and the Federal
Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970, each as amended and as now in effect,
and (b) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; "Hazardous
Material"
FULNC:38907-1
28
means any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated,
under any Environmental Law, whether by type or quantity, and includes,
without limitation, any oil or other petroleum product, toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, special waste or petroleum or any derivative or by- product
thereof, radon, radioactive material, asbestos, asbestos containing
material, urea formaldehyde foam insulation, lead and polychlorinated
biphenyl.
(8) For purposes of this Section 4.01(Z), the term
"knowledge" means the actual knowledge of the directors and officers of
the Company and the Company Subsidiaries.
(AA) Taxes. Except as Previously Disclosed in Schedule
4.01(AA), (1) all 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 material respects,
(2) all taxes (which shall mean federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, employment, premium, recording, documentary,
documentary stamps, real estate transfer, transfer, back-up withholding or
similar taxes, together with any interest, additions, or penalties with respect
thereto, imposed on the income, properties or operations of it or the Company
Subsidiaries, together with any interest in respect of such additions or
penalties, collectively the "Taxes") shown to be due on the Company Tax Returns
or otherwise imposed on the income, properties or operations of the Company or
Company Subsidiaries have been paid in full, (3) the Company Tax Returns have
been examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority or the period for assessment of the Taxes in respect of
which such Company Tax Returns were required to be filed has expired, (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
FULNC:38907-1
29
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/Bank Financial Reports filed prior to the
date of this Plan, (6) no waivers of statutes of limitations (excluding such
statutes that relate to years under examination by the Internal Revenue Service)
have been given by or requested with respect to any Taxes of it or the Company
Subsidiaries, and (7) the bank holding company formation completed on June 13,
1997 (the "Transaction") constituted a tax-free transaction under the Code;
neither the Company, the Bank, the Company's stockholders nor any other holders
of beneficial ownership interest in any party to the Transaction were required
to recognize any gain or loss for purposes of the Code by virtue of the
Transaction.
(BB) 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, and such statements and documents do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(CC) Derivatives Contracts; Structured Notes; Etc. None of the
Company or the Company Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter swap, forward, future, option, cap, floor or
collar financial contract or any other contract not included on the balance
sheet which is a derivative contract (including various combinations thereof)
(each a "Derivatives Contract") or owns securities that (1) are referred to as
"structured notes", "high risk mortgage derivatives", "capped floating rate
notes", or "capped floating rate mortgage derivatives," or (2) are likely to
have changes in value as a result of interest rate changes that significantly
exceed normal changes in value attributable to interest rate changes, except for
those Derivatives Contracts and other instruments legally purchased or entered
into in the ordinary course of business and Previously Disclosed in Schedule
4.01(CC), including a list, as applicable, of any Company or Company Subsidiary
assets pledged as security for each such instrument.
FULNC:38907-1
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(DD) Accounting Controls. Each of the Company and the Company
Subsidiaries has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, in the judgment of the Board of
Directors of the Company, that (1) all material transactions are executed in
accordance with management's general or specific authorization; (2) all material
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with generally accepted accounting principles
consistently applied with respect to banks or any other criteria applicable to
such statements, (3) access to the material property and assets of the Company
and the Company Subsidiaries is permitted only in accordance with management's
general or specific authorization; (4) the recorded accountability for items is
compared with the actual levels at reasonable intervals and appropriate action
is taken with respect to any differences; and (5) there are no violations of the
Bank Secrecy Act.
(EE) No Dissenters' Rights. The holders of Company Stock have
no dissenters' or appraisal rights in connection with the execution of this Plan
or the consummation of any of the transactions contemplated hereby.
4.02. First Union and FUNB Representations and Warranties. Each of
First Union and FUNB hereby represents and warrants to the Company and the Bank,
as follows:
(A) Recitals. The facts set forth in the Recitals of this Plan
with respect to it are true and correct.
(B) Corporate Authority. Subject to the required regulatory
approvals referred to in Section 6.02, this Plan has been authorized by all
necessary corporate action of it and is a valid and binding agreement of it
enforceable against it in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(C) No Defaults. Subject to the required regulatory approvals
referred to in Section 6.02, and the required filings under federal and state
securities' laws, the execution, delivery and performance of this Plan, and the
consummation of the
FULNC:38907-1
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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.
(D) Financial Reports. In the case of First Union, its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, and all other
documents filed or to be filed subsequent to December 31, 1996 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 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.
FULNC:38907-1
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(E) No Events. No events have occurred, or circumstances have
arisen, since March 31, 1997, which, individually or in the aggregate, have had
or are reasonably likely to have a Material Adverse Effect on First Union.
(F) No Brokers. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with the
other parties hereto 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 knows of no reason why the regulatory
approvals referred to in Section 6.02 should not be obtained without the
imposition of any condition of the type referred to in the proviso following
such Section 6.02.
(H) Shares Authorized. In the case of First Union, the shares
of First Union Common Stock to be issued (1) in exchange for shares of Company
Stock upon consummation of the Corporate Merger in accordance with Article II of
this Plan, and (2) upon exercise of outstanding Stock Options pursuant to
Section 2.07, have been duly authorized and, when issued in accordance with the
terms of this Plan, will be validly issued, fully paid and nonassessable and
subject to no preemptive rights.
(I) Organization, Standing and Authority. It is duly qualified
to do business and is in good standing in the States of the United States and
foreign jurisdictions where the failure to be duly qualified, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on First
Union. Each of First Union and its subsidiaries has in effect all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now
conducted, the absence of which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on First Union.
(J) Corporate Power. First Union and FUNB each 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.
FULNC:38907-1
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(K) Accuracy of Information. The statements with respect to
First Union and FUNB contained in this Plan, the Schedules and any other written
documents executed and delivered by or on behalf of First Union or FUNB pursuant
to the terms of this Plan are true and correct in all material respects, and
such statements and documents do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
(L) Litigation; Regulatory Action. Neither First Union nor any
of its subsidiaries is a party to any litigation, proceeding or controversy
before any court or governmental agency which, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect on First Union and, to
the best of its knowledge, no such litigation, proceeding or controversy has
been threatened; and neither it nor any of its subsidiaries or any of its or
their material 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) Absence of Undisclosed Liabilities. None of First Union or
its subsidiaries has any obligation or liability (contingent or otherwise) that,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it, except as reflected in the First Union Financial Reports
prior to the date of this Plan.
V. COVENANTS.
Each of the Company and the Bank hereby covenants to First Union and
FUNB, and each of First Union and FUNB hereby covenants to the Company and the
Bank, that:
FULNC:38907-1
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5.01. Efforts. Subject to the terms and conditions of this Plan, it
shall use its 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 Corporate Merger on the Effective Date and to otherwise enable
consummation of the transactions contemplated hereby and shall cooperate fully
with the other parties hereto 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), including,
without limitation, cooperating in developing and implementing a plan relating
to data processing and any other systems conversions, and the sending of notices
and other communications to employees, customers or others.
5.02. Company Proxy/Registration Statement. The Company and First Union
shall prepare a proxy statement/prospectus (the "Proxy Statement") to be mailed
to the holders of Company Stock in connection with the transactions contemplated
hereby and to be filed by First Union (after providing drafts in advance to the
Company and its counsel for review and comment) in a registration statement (the
"Registration Statement") with the SEC as provided in Section 5.08, which shall
conform to all applicable legal requirements. The Company shall call a special
meeting (the "Meeting") of the holders of Company Stock to be held as soon as
practicable for purposes of voting upon the approval of this Plan and the
Company shall use its best efforts to solicit and obtain votes of the holders of
Company Stock in favor of the approval of this Plan, and, subject to the
exercise of its fiduciary duties under applicable law (based upon the advice of
outside counsel), the Board of Directors of the Company shall recommend approval
of this Plan by such holders.
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
FULNC:38907-1
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Subsidiaries and by or on behalf of First Union relating to First Union or its
subsidiaries, (A) will comply in all material respects with the provisions of
the Securities Act and the Exchange Act and any other applicable statutory or
regulatory requirements, and (B) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading; provided,
however, in no event shall any party hereto be liable for any untrue statement
of a material fact or omission to state a material fact in the Registration
Statement made in reliance upon, and in conformity with, written information
concerning another party furnished by or on behalf of such other party
specifically for use in the Registration Statement.
5.04. Registration Statement Effectiveness. First Union will advise the
Company, promptly after First Union receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed (after providing drafts in advance to the Company and its counsel
for review and comment), of the issuance of any stop order or the 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. Neither the Company nor the Bank will, without
the prior approval of First Union (which approval shall not be unreasonably
withheld or delayed), and neither First Union nor FUNB will, 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) Upon reasonable notice, the Company and
the Bank shall afford First Union 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 and the
Company Subsidiaries' properties, books, contracts, data processing system
files, commitments and records and, during such
FULNC:38907-1
36
period, the Company and the Bank shall furnish promptly to First Union (1) a
copy of each material report, schedule and other document filed by the Company
and the Company Subsidiaries with any Regulatory Authority, and (2) all other
information concerning the business, properties and personnel of the Company and
the Company Subsidiaries as First Union may reasonably request, provided that no
investigation pursuant to this Section 5.06 shall affect or be deemed to modify
or waive any representation or warranty made by the Company or the Bank or the
conditions to the obligations of the Company and the Bank 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 Section 8.06) unless and until such time
as such information or documents become publicly available other than by reason
of any action or failure to act by First Union or as it is advised by counsel in
writing that any such information or document is required by law or applicable
published stock exchange rule to be disclosed, and in the event of the
termination of this Plan, First Union will, upon request by the Company, deliver
to the Company all documents so obtained by First Union or destroy such
documents and, in the case of destruction, will certify such fact to the
Company.
5.07. Acquisition Proposals. In the case of the Company, without the
prior written consent of First Union, it shall not, and it shall cause the
Company Subsidiaries not to, initiate, solicit or encourage inquiries or
proposals with respect to, or, except as required by the fiduciary duties of the
Board of Directors of the Company under applicable law (as advised by its
outside counsel), 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 or deposits 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 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
FULNC:38907-1
37
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.
5.08. Registration Statement Preparation. In the case of First Union,
it shall, as promptly as practicable following the date of this Plan, and
subject to the cooperation of the Company, prepare and file the Registration
Statement with the SEC, and shall use its best efforts to cause the Registration
Statement to be declared effective as soon as practicable after the filing
thereof.
5.09. 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.
5.10. Affiliate Agreements. In the case of the Company, it will cause
each person who may be deemed to be an Affiliate of the Company 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 A 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 Stock.
5.11. Certain Modifications. The Company and First Union shall consult
with respect to their accounting, loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
and the Company shall make such modifications or changes to its policies and
practices, if any, and at such date prior to the Effective Time, as may be
mutually agreed upon. No party's representations, warranties and covenants
contained in this Plan shall be deemed to be untrue or breached in any respect
for any purpose as a consequence of any modifications or changes to such
policies and practices which may be undertaken on account of this Section 5.11.
5.12. State Takeover Laws; Certificate of Incorporation. In the case of
the Company, it shall not take any action that would cause the transactions
contemplated by this Plan to be subject to any applicable state takeover statute
and the Company
FULNC:38907-1
38
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, including, without limitation,
Article 14A:10A of the NJBCA, (B) any applicable takeover provisions in the
Company Certificate, and (C) any takeover provisions set forth in any agreement
to which the Company is a party or may be bound and which provides for the
issuance of any Rights in connection with a takeover.
5.13. No Rights Triggered. In the case of the Company, it shall take
all necessary steps to ensure that the entering into of this Plan and the
consummation of the transactions contemplated hereby (including without
limitation the Mergers) and any other action or combination of actions, or any
other transactions contemplated hereby or thereby do not and will not, (A)
result in the grant of any Rights to any person (including directors, officers
and employees of the Company or any Company Subsidiary) (1) under the Company
Certificate or Bylaws of the Company or (2) under any agreement to which the
Company or any of the Company Subsidiaries is a party or (B) restrict or impair
in any way the ability of First Union or FUNB to exercise the rights granted
hereunder.
5.14. Shares Listed. In the case of First Union, it shall use its
reasonable best efforts to list, prior to the Effective Date, on the NYSE, upon
official notice of issuance, the shares of First Union Common Stock to be issued
to the holders of Company Stock and the outstanding Stock Options referred to in
Section 2.07, pursuant to this Plan.
5.15. Regulatory Applications. In the case of First Union and FUNB,
subject to the cooperation of the Company and the Bank, (A) it shall promptly
prepare and submit applications to the appropriate Regulatory Authorities for
approval of the Mergers, and (B) promptly make all other appropriate filings to
secure all other approvals, consents and rulings which are necessary for the
consummation of the Mergers by First Union and FUNB. 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. 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,
FULNC:38907-1
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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 Mergers
and the other transactions contemplated in this Plan.
5.16. Regulatory Divestitures. In the case of the Company, effective on
or before the Effective Date (to the extent required by any Regulatory
Authority), the Company and the Company Subsidiaries shall cease engaging in
such activities as First Union shall advise the Company in writing are not
permitted to be engaged in by First Union under applicable law following the
Effective Date, and to the extent required by any Regulatory Authority as a
conditional approval of the transactions contemplated by this Plan, the Company
shall divest any Company Subsidiary engaged in activities or holding assets that
are impermissible for a bank holding company, on terms and conditions agreed to
by First Union.
5.17. Indemnification/Liability Coverage.
(A) For six years after the Effective Date, First Union shall,
and shall cause the Continuing Corporation to, indemnify, defend and hold
harmless the present and former directors, officers and employees of the Company
and the Company Subsidiaries (each, an "Indemnified Party") against all
liabilities arising out of actions or omissions occurring at or prior to the
Effective Date (including, without limitation, the transactions contemplated by
this Plan) to the extent such persons are indemnified under the NJBCA and the
Company Certificate and Bylaws of the Company 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 three 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
FULNC:38907-1
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Company's directors and officers, 150% 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 150% 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 150% 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 5.17(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 5.17(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.
(D) If First Union or the Continuing Corporation or any of its
successors or assigns shall consolidate with or merge into any other entity and
shall not be the continuing or surviving entity of such consolidation or merger
or shall transfer all or substantially all of its assets to any entity, then and
in each case, proper provision shall be made so that the successors and assigns
of First Union or the Continuing Corporation shall assume the obligations set
forth in this Section 5.17.
FULNC:38907-1
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(E) First Union shall pay, or cause the Continuing Corporation
to pay, all reasonable expenses, including attorneys' fees, promptly as
statements therefor are received, that may be incurred by any Indemnified Party
in enforcing the indemnity and other obligations provided for in this Section
5.17. The rights of each Indemnified Party hereunder shall be in addition to any
other rights such Indemnified Party may have under the Company Certificate or
Bylaws of the Company, under the NJBCA or otherwise.
5.18. Current Information.
(A) During the period from the date of this Plan to the
Effective Date, 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 and the Bank 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 and the Bank's representations or
warranties set forth herein not to be true and correct as of the Effective Time
(except to the extent contemplated by Section 6.09) or prevent the Company or
the Bank from fulfilling its or their obligations hereunder; and in each case
shall keep First Union informed with respect thereto.
(C) First Union shall (1) promptly notify the Company of any
event or condition that might reasonably be expected to cause any of First
Union's and FUNB's representations or warranties set forth herein not to be true
and correct as of the Effective Date (except to the extent contemplated by
Section 6.08), and (2) notify the Company immediately of any denial of any
application filed by First Union or FUNB with any Regulatory Authority with
respect to this Plan, and in each case shall keep the Company and the Bank
informed with respect thereto.
FULNC:38907-1
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5.19. Coordination of Dividends. Until the Effective Time, the Company
and First Union shall coordinate with the other the declaration of any dividends
or other distributions with respect to the Company Preferred Stock and First
Union Common Stock and the record dates and payment dates relating thereto, it
being the intention of the parties that holders of shares of Company Preferred
Stock or First Union Common Stock shall not receive more than one dividend, or
fail to receive one dividend, for any single calendar quarter on their shares of
Company Preferred Stock (including any shares of First Union Common Stock
received in exchange therefor in the Corporate Merger) or First Union Common
Stock, as the case may be.
VI. CONDITIONS TO CONSUMMATION OF THE MERGERS.
Consummation of the Mergers is conditioned upon:
6.01. Shareholder Vote. Approval of this Plan by the requisite vote of
the stockholders of the Company.
6.02. Regulatory Approvals. Procurement by First Union and FUNB, as
applicable, of all required regulatory consents and approvals by the appropriate
Regulatory Authorities and the expiration of the statutory waiting period
relating thereto; provided, however, that no such approval or consent shall have
imposed any condition or requirement which, in the reasonable opinion of First
Union, would so materially and adversely impact the economic or business
benefits to First Union of the transactions contemplated by this Plan so as to
render inadvisable the consummation of the Mergers.
6.03. Third Party Consents. All consents or approvals of all persons
(other than Regulatory Authorities) required for the consummation of the Mergers
shall have been obtained and shall be in full force and effect, unless the
failure to obtain any such consent or approval is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
First Union.
6.04. No Injunction. There shall not be in effect any order, decree or
injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated hereby.
FULNC:38907-1
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6.05. Accountants' Letters. The Company shall cause KPMG Peat Marwick
LLP to deliver 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.
6.06. Legal Opinion. The Company and the Bank shall have received an
opinion, dated the Effective Date, of Xxxxxx X. Xxxxxx, Xx., counsel for First
Union and FUNB in form reasonably satisfactory to the Company and the Bank,
which shall cover the matters contained in the first sentence in Recital (C),
the first sentence in Recital (D), Section 4.02(B), (C), (H) and (I), the first
clause of the first sentence in Section 4.02(L), and Section 5.03.
6.07. Legal Opinion. First Union and FUNB shall have received an
opinion, dated the Effective Date, of Pepper, Xxxxxxxx & Xxxxxxx LLP, counsel
for the Company and the Bank, in form reasonably satisfactory to First Union and
FUNB which together shall cover the matters contained in the first sentence in
Recital (A), the first sentence in Recital (B), Section 4.01 (B) and (C), the
fifth and sixth sentences in Section 4.01(D), Section 4.01(F) and (G), the first
clause of the first sentence in Section 4.01(L), Section 4.01(X), (Y) and (EE)
and Section 5.03.
6.08. Officers' Certificate. (A) Each of the representations and
warranties contained herein of First Union and FUNB shall be true and correct
(in the case of each representation and warranty that contains a materiality
qualification) or true and correct in all material respects (in the case of each
representation and warranty that contains no materiality qualification) as of
the date of this Plan and upon the Effective Date with the same effect as though
all such representations and warranties had been made on the Effective Date,
except for any such representations and warranties made as of a specified date,
which shall be true and correct as of such date, and (B) each and all of the
agreements and covenants of First Union and FUNB to be performed and complied
with pursuant
FULNC:38907-1
44
to this Plan on or prior to the Effective Date shall have been duly performed
and complied with in all material respects, and the Company and the Bank shall
have received a certificate signed by an executive officer of each of First
Union and FUNB, dated the Effective Date, to such effect.
6.09. Officers' Certificate. (A) Each of the representations and
warranties contained herein of the Company and the Bank shall be true and
correct (in the case of each representation and warranty that contains a
materiality qualification) or true and correct in all material respects (in the
case of each representation and warranty that contains no materiality
qualification) as of the date of this Plan and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties made as
of a specified date, which shall be true and correct as of such date, and (B)
each and all of the agreements and covenants of the Company and the Bank to be
performed and complied with pursuant to this Plan on or prior to the Effective
Date shall have been duly performed and complied with in all material respects,
and First Union and FUNB shall have received a certificate signed by the Chief
Executive Officers and the Chief Financial Officers of the Company and the Bank,
dated the Effective Date, to such effect.
6.10. Effective Registration Statement. The Registration Statement
shall have become effective and no stop or other 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
or any other Regulatory Authority.
6.11. Blue-Sky Permits. First Union shall have received all state
securities laws and "blue sky" permits necessary to consummate the Corporate
Merger.
6.12. Tax Opinion. First Union and the Company shall have received an
opinion from Xxxxxxxx & Xxxxxxxx to the effect that (A) the Corporate Merger
constitutes a reorganization under Section 368 of the Code, and (B) no gain or
loss will be recognized by stockholders of the Company who receive shares of
First Union Common Stock solely in exchange for their shares of
FULNC:38907-1
45
Company Stock, except that gain or loss may be recognized as to cash received in
lieu of fractional share interests. In rendering its opinion, Xxxxxxxx &
Xxxxxxxx may require and rely upon representations and agreements contained in
documents executed by officers of First Union, the Company and others.
6.13. NYSE Listing. The shares of First Union Common Stock issuable
pursuant to this Plan shall have been approved for listing on the NYSE, subject
to official notice of issuance.
6.14. Receipt of Affiliate Agreements. First Union shall have received
from each Affiliate of the Company the agreement referred to in Section 5.10.
provided, however, that a failure to satisfy any of the conditions set forth in
the proviso following Section 6.02 or in Sections 6.05, 6.07, 6.09, or 6.14
shall only constitute conditions if asserted by First Union, and a failure to
satisfy any of the conditions set forth in Section 6.06 or 6.08 shall only
constitute conditions if asserted by the Company.
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before
or after receipt of required stockholder approvals:
7.01. Mutual Consent. By the mutual consent of First Union and the
Company.
7.02. Breach. By First Union or the Company, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, 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.
7.03. Delay. By First Union or the Company, if its Board of Directors
so determines by vote of a majority of the
FULNC:38907-1
46
members of its entire Board, in the event that the Corporate Merger is not
consummated by June 30, 1998.
7.04. No Stockholder or Regulatory Approval. By the Company or First
Union, if its Board of Directors so determines by a vote of a majority of the
members of its entire Board, in the event that any stockholder approval
contemplated by Section 6.01 is not obtained at the Meeting, including any
adjournment or adjournments thereof, or in the event that written notice is
received which states that any required regulatory approval contemplated by
Section 6.02 will not be approved or has been denied.
7.05. Voting Agreement. By First Union, if a Voting Agreement between
First Union and certain of the stockholders of the Company, holding an aggregate
beneficial ownership interest of not less than 30% and 12% of the outstanding
shares of Series B Preferred Stock and Series A Preferred Stock, respectively,
in substantially the form of Exhibit B hereto, shall not have been executed and
delivered by such stockholders by the close of business on the day following the
date of execution of this Plan.
7.06. Failure to Recommend, Etc. At any time prior to the Meeting, by
First Union if the Board of Directors of the Company 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 to the interests of
First Union.
7.07. Termination Fee. (A) The Company hereby agrees to pay First Union
and First Union shall be entitled to payment of, a nonperformance fee (the
"Termination Fee") of $3.5 million following the occurrence of a Payment Event
(as defined below, provided that First Union shall have sent written notice of
such entitlement within 90 days after First Union actually becomes aware of such
occurrence. Such payment shall be made in immediately available funds within
five business days after delivery of a notice from First Union requesting such
payment. The right to receive the Termination Fee shall terminate if any of the
following (a "Fee Termination Event") occurs prior to a Payment Event: (i) the
Effective Date, (ii) termination of this Plan in accordance with the provisions
hereof if such termination occurs prior to the occurrence of a Preliminary
Payment Event (as
FULNC:38907-1
47
defined below), except a termination by First Union pursuant to Section 7.02,
(iii) termination of this Plan following the occurrence of a Preliminary Payment
Event and the passage of eighteen (18) months after such termination, or (iv)
termination of this Plan by First Union pursuant to Section 7.02, and the
passage of eighteen (18) months after such termination.
(B) The term "Preliminary Payment Event" shall mean any of the
following events or transactions occurring after the date hereof:
(1) The Company or the Bank without having received First
Union's prior written consent, shall have entered into an agreement to
engage in any Acquisition Transaction (as defined below) with any
person (the term "person" for purposes of this Section 7.07 having the
meaning assigned thereto in Section 3(a)(9) and 13(d)(3) of the
Exchange Act) other than First Union or any of its subsidiaries or
affiliates, or the Board of Directors of the Company shall have
recommended that the stockholders of the Company approve or accept any
Acquisition Transaction with any person other than First Union or any
of its subsidiaries or affiliates. For purposes of this Plan,
"Acquisition Transaction" shall mean (a) a merger or consolidation, or
any similar transaction, involving the Company or the Bank, (b) a
purchase, lease or other acquisition of all or substantially all of the
assets or deposits of the Company or the Bank, (c) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 20% or more of the voting
power of the Company or of the Bank; provided that the term
"Acquisition Transaction" does not include any internal merger or
consolidation involving only the Company and/or any of the Company
Subsidiaries;
(2) (a) any person other than First Union or any of its
subsidiaries or affiliates shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 20% or more of the
outstanding shares of Company Common Stock (the term "beneficial
ownership" for purposes of this Section 7.07 having the meaning
assigned thereto in Section 13(d) of the Exchange Act, or (b) any group
(as such term is defined in Section 13(d)(3) of the Exchange Act),
other than
FULNC:38907-1
48
a group of which any of First Union or any of its subsidiaries or
affiliates is a member, shall have been formed that beneficially owns
20% or more of the Company Common Stock then outstanding;
(3) any person other than First Union or any of its
subsidiaries or affiliates shall have made a proposal to the Company or
its stockholders, by public announcement or written communication that
is or becomes the subject of public disclosure, to engage in an
Acquisition Transaction (including, without limitation, any situation
in which any person other than First Union or any of its subsidiaries
or affiliates shall have commenced (as such term is defined in Rule
14d-2 under the Exchange Act) or shall have filed a registration
statement under the Securities Act, with respect to, a tender offer or
exchange offer to purchase any shares of Company Common Stock such
that, upon consummation of such offer, such person would own or control
20% or more of the then outstanding shares of Company Common Stock
(such offering referred to herein as a "Tender Offer" or an "Exchange
Offer", respectively));
(4) after a proposal is made by a third party to the Company
or its stockholders to engage in an Acquisition Transaction, or such
third party states its intention to the Company to make such a
proposal, the Company shall have breached any representation, covenant
or obligation contained in this Plan and such breach would entitle
First Union to terminate this Plan under Section 7.02 (without regard
to the cure period provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Corporate Merger); or
(5) the holders of shares of Company Stock shall not have
approved this Plan at the Meeting or the Meeting shall not have been
held or shall have been canceled prior to termination of this Plan, in
each case after any person other than First Union or any of its
subsidiaries or affiliates shall have (a) made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction
or (b) commenced a Tender Offer or filed a registration statement under
the Securities Act, with respect to an Exchange Offer.
FULNC:38907-1
49
(C) The term "Payment Event" shall mean either of the
following events or transactions occurring after the date hereof:
(1) the acquisition by any person other than First Union or
any of its subsidiaries or affiliates, alone or together with such
person's affiliates and associates, or any group (as defined in Section
13(d)(3) of the Exchange Act), of beneficial ownership of 25% or more
of the outstanding shares of Company Common Stock; or
(2) the occurrence of a Preliminary Payment Event described in
(x) clause (B)(1) above, except that the percentage referred to in
clause (c) thereof shall be 25%, or (y) clause (B)(5) above.
(D) The Company shall notify First Union promptly in writing
of its knowledge of the occurrence of any Preliminary Payment Event or
Payment Event; provided, however, that the giving of such notice by the
Company shall not be a condition to the right of First Union to the
Termination Fee.
VIII. OTHER MATTERS.
8.01. Survival. If the Effective Date occurs, all representations,
warranties, agreements and covenants contained in this Plan, except for Sections
5.17, 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(P) and 4.02(F), Sections 5.03, 5.06(B), 5.12 and
5.13, and Sections 8.01, 8.03, 8.04, 8.05, 8.06, 8.07, 8.09 and 8.11 shall
survive such termination.
8.02. Waiver; Amendment. Prior to the Effective Date, any provision of
this Plan may be (A) waived in writing by the party benefitting by the
provision, or (B) amended or modified at any time (including the structure of
the transactions contemplated hereby) 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 the vote by the stockholders of
the Company, the consideration to be
FULNC:38907-1
50
received by the stockholders of the Company for each share of Company Stock
shall not thereby be decreased.
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.
8.05. Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Plan and the transactions contemplated hereby, except
printing expenses which shall be shared equally between the Company and First
Union.
8.06. Confidentiality. Except as otherwise provided in Section 5.06(B),
each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
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
or FUNB, 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
or the Bank, to: Covenant Bancorp, Inc.
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
FULNC:38907-1
51
Telecopy Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Xx.
President
Copy to: Pepper, Xxxxxxxx & Xxxxxxx, LLP
3000 Two Xxxxx Square
Xxxxxxxxxx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy Number : (000) 000-0000
Attention: L. Xxxxxxx Xxxxxx, Xx.
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, business or
prospects of such party and its subsidiaries, taken as a whole, or (2)
would materially impair such party's, or any affiliated party's (which
includes, as to the Company, the Bank and as to First Union, FUNB),
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 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 institutions;
(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, or limited by, any specific paragraph; and
FULNC:38907-1
52
(C) the term "Previously Disclosed" by a party shall mean
information set forth in a Schedule 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.
8.09. Entire Understanding; No Third Party Beneficiaries. This Plan and
all schedules hereto represent 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. Except for Section 5.17,
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.
8.10. Benefit Plans. As soon as administratively practicable after the
Effective Time, employees of the Company and the Company Subsidiaries shall be
generally entitled to participate in the pension, benefit, severance and similar
plans of First Union on substantially the same terms and conditions as employees
of First Union and its subsidiaries; without duplication with respect to
pension, benefit, severance and similar plans provided by the Company that
survive the Effective Time. 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. Following
the Effective Time, First Union shall assume and honor in accordance with their
terms the change of control agreements between the Company and any director,
officer or employee that are set forth in Schedule 8.10.
8.11. Headings. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
FULNC:38907-1
53
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: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President
COVENANT BANCORP, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President
COVENANT BANK
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President
FULNC:38907-1
54
BOARD OF DIRECTORS
COVENANT BANK
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
FULNC:38907-1
55
BOARD OF DIRECTORS
FIRST UNION NATIONAL BANK
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
FULNC:38907-1
56
Exhibit A
FORM OF AFFILIATE'S LETTER
_____________, 1997
First Union Corporation
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
Pursuant to the terms of the Agreement and Plan of Mergers, dated as of
the 4th day of August, 1997 (the "Plan"), by and among Covenant Bancorp, Inc.,
Covenant Bank, First Union Corporation ("FUNC"), and First Union National Bank,
Covenant plans to merge with and into FUNC (the "Merger"). As a result of the
Merger, the undersigned may receive shares of FUNC common stock, par value $3.33
1/3 per share ("FUNC Stock"), in exchange for shares of Covenant common stock,
par value $5.00 per share, and/or shares of Covenant preferred stock, par value
$25.00 per share (collectively, "Covenant Stock").
The undersigned hereby represents, warrants and covenants with and to
FUNC that in the event the undersigned receives any FUNC Stock as a result of
the Merger:
(A) The undersigned will not sell, transfer or otherwise
dispose of such FUNC Stock unless (i) such sale, transfer or other
disposition has been registered under the Securities Act of 1933, as
amended (the "Act"), (ii) such sale, transfer or other disposition is
made in conformity with the provisions of Rule 145 under the Act (as
such rule may hereafter from time to time be amended), or (iii) in the
opinion of counsel in form and substance satisfactory to FUNC, or under
a "no-action" letter obtained by the undersigned from the staff of the
Securities and Exchange Commission (the "SEC"), such sale, transfer or
other disposition will not violate or is otherwise exempt from
registration under the Act.
FULNC:38389-1
A-1
(B) The undersigned understands that FUNC is under no
obligation to register the sale, transfer or other disposition of
shares of FUNC Stock by the undersigned or on the undersigned's behalf
under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
(C) The undersigned also understands that stop transfer
instructions will be given to FUNC's transfer agent with respect to the
shares of FUNC Stock issued to the undersigned as a result of the
Merger and that there will be placed on the certificates for such
shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145(d) under the Securities Act of
1933 applies. The shares represented by this certificate may
only be transferred in accordance with the terms of a letter
agreement between the registered holder hereof and FUNC, a
copy of which agreement is on file at the principal offices of
FUNC."
(D) The undersigned also understands that, unless the transfer
by the undersigned of the FUNC Stock issued to the undersigned as a
result of the Merger have been registered under the Act or a sale made
in conformity with the provisions of Rule 145(d) under the Act, FUNC
reserves the right, in its sole discretion, to place the following
legend on the certificates issued to any transferee of such FUNC Stock
from the undersigned:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired
from a person who received such shares in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The
shares have been acquired by the holder not with a view to, or
for resale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise transferred except in
accordance with an exemption from the registration
requirements of the Securities Act of 1933."
FULNC:38389-1
A-2
It is understood and agreed that the legends set forth in
paragraphs (C) and (D) above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have
delivered to FUNC (i) a copy of a "no action" letter from the staff of
the SEC, or an opinion of counsel in form and substance satisfactory to
FUNC, to the effect that such legend is not required for purposes of
the Act, or (ii) evidence or representations satisfactory to FUNC that
the FUNC Stock represented by such certificates is being or has been
sold in a transaction made in conformity with the provisions of Rule
145(d).
(E) The undersigned further represents, warrants and covenants
with and to FUNC that the undersigned will, and will cause each of the
other parties whose shares are deemed to be beneficially owned by the
undersigned pursuant to paragraph (F) below, to use its reasonable best
efforts to have all shares of Covenant Stock owned by the undersigned
or such parties registered in the name of the undersigned or such
parties, as applicable, prior to the effective date of the Merger and
not in the name of any bank, broker-dealer, nominee or clearing house.
(F) The undersigned understands and agrees that this letter
agreement shall apply to all shares of the capital stock of Covenant
and FUNC that are deemed to be beneficially owned by the undersigned
pursuant to applicable federal securities laws.
(G) The undersigned has carefully read this letter and
discussed its requirements and other applicable limitations upon the
undersigned's ability to sell, transfer or otherwise dispose of the
capital stock of Covenant or FUNC, to the extent the undersigned felt
necessary, with the undersigned's counsel or counsel for Covenant.
Very truly yours,
Name: _________________________
FULNC:38389-1
A-3
[add below the signatures
of all registered owners
of shares deemed
beneficially owned by the
affiliate]
Name: _________________________
Name: _________________________
Name: _________________________
Acknowledged this ______ day of ______________, 1997.
FIRST UNION CORPORATION
By:___________________________
Name:
Title:
FULNC:38389-1
A-4
Exhibit B
AGREEMENT, dated as of _________, 1997, by and between the individual
stockholder of Covenant Bancorp, Inc. (the "Stockholder")and First Union
Corporation ("First Union").
WHEREAS, the Stockholder is the beneficial owner of and has the right
to vote _______ shares of Common Stock, _______ shares of Series A Preferred
Stock and/or _______ shares of Series B Preferred Stock of Covenant Bancorp,
Inc. ("Covenant") (collectively, the "Shares");
WHEREAS, First Union and Covenant have entered into an Agreement and
Plan of Mergers (the "Plan"), pursuant to which First Union will acquire
Covenant, subject to the terms and conditions of the Plan;
WHEREAS, as a condition and inducement to First Union's willingness to
enter into the Plan, the Stockholder has agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the parties hereto agree as follows:
1. The Stockholder shall vote all the Shares, and any other shares of
stock of Covenant owned or controlled by him or her entitled to be voted, in
favor of the Plan and the transactions contemplated thereby at the meeting of
stockholders of Covenant called for that purpose.
2. The Stockholder agrees that he/she will not sell or transfer any
Shares to any other party unless such party enters into an agreement,
satisfactory to First Union, to abide by all the terms of this Agreement.
3. The parties hereto agree that this Agreement shall terminate and be
of no further force and effect if the Plan is terminated in accordance with its
terms or if the Board of Directors of Covenant withdraws its recommendation of
the transactions contemplated by the Plan.
4. The Stockholder represents and warrants to First Union as follows:
FULNC:
B-1
(i) the Stockholder has good title to the Shares and owns the Shares
free and clear of any rights, claims, encumbrances, liens, interests or
restrictions of any nature whatsoever, including, without limitation, any
restrictions on the voting of the Shares or any rights of others to vote, or to
participate (including by consultation) in the voting of, the Shares;
(ii) this Agreement is a valid and legally binding agreement
enforceable against the Stockholder in accordance with its terms, subject to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and
(iii) the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby by the Stockholder, do
not and will not constitute a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of the Stockholder or to which
the Stockholder is subject or bound, or require any consent or approval under
such law, rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such agreement,
indenture or instrument.
6. The Stockholder hereby agrees that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed by the
Stockholder in accordance with its specific terms or were otherwise breached.
Accordingly, the Stockholder agrees that First Union shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by the
Stockholder and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which First Union may be entitled at law or in
equity.
6. This Agreement shall be governed and construed in accordance with
the laws of the State of North Carolina without regard to any applicable
conflicts of law rules.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original. This Agreement shall become
effective when one counterpart has been signed by each party hereto.
FULNC:
B-2
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed as of the day and year first above written.
FIRST UNION CORPORATION
By:_____________________
Name:
Title:
_____________________
(the Stockholder)
FULNC:
B-3
