REORGANIZATION AGREEMENT
BY AND AMONG
CAROLINA FIRST CORPORATION,
CAROLINA FIRST BANK,
ANCHOR FINANCIAL CORPORATION,
AND
THE ANCHOR BANK
Dated as of January 10, 2000
TABLE OF CONTENTS
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This REORGANIZATION AGREEMENT is entered into as of this 10th day of
January, 2000 among Carolina First Corporation ("CFC"), a corporation organized
and existing under the laws of the State of South Carolina, Carolina First Bank
("CFB"), a state banking corporation organized and existing under the laws of
the State of South Carolina, Anchor Financial Corporation ("AFC"), a corporation
organized and existing under the laws of the state of South Carolina, and The
Anchor Bank ("AB"), a state banking corporation organized and existing under the
laws of the state of South Carolina.
RECITALS
A. AFC is a South Carolina corporation headquartered in Myrtle Beach, South
Carolina, and a registered bank holding company under the Bank Holding Company
Act of 1956, as amended ("BHCA").
B. AB is a state bank headquartered in Myrtle Beach, South Carolina, and a
wholly-owned subsidiary of AFC.
C. CFC is a South Carolina corporation headquartered in Greenville, South
Carolina, and a registered bank holding company under the BHCA.
D. CFB is a South Carolina-chartered, non-member banking corporation
headquartered in Greenville, South Carolina.
E. The parties hereto desire that AFC be merged with and into a
to-be-formed subsidiary of CFC (the "Corporate Merger"), all as more
particularly set forth herein.
F. The Boards of Directors of CFC and AFC have approved and in connection
with the execution of this Reorganization Agreement, CFC and AFC will execute an
agreement in the form attached hereto as Appendix E (the "Stock Option
Agreement") whereby AFC will grant CFC an option to purchase shares of AFC
Common Stock upon the terms and conditions provided in such agreement;
G. Subsequent to the Corporate Merger, the parties desire that AB be merged
with and into CFB (the "Bank Merger"), all as more particularly set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements herein contained, CFC, CFB, AFC and
AB hereby agree as follows:
SECTION I. DEFINITIONS
1.1 Acquisition Proposal. Acquisition Proposal shall have the meaning
assigned to such term in Section 6.10 hereof.
1.2 AB. The Anchor Bank, a state bank organized and existing under the laws
of the state of South Carolina. Where the context permits, AB shall be deemed to
include its subsidiaries.
1.3 AFC. Anchor Financial Corporation, a corporation organized and existing
under the laws of the state of South Carolina. In Section III hereof, where the
context permits, AFC shall include its subsidiaries.
1.4 AFC Benefit Plans. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by AFC or AB or under which
AFC or AB may be obligated.
1.5 AFC Common Stock. The common stock, no par value per share, of AFC.
1.6 AFC Shareholder Approvals. This term shall mean, as the context may
require, the duly authorized written consent of AFC to the Bank Merger and the
approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger.
1.7 AFC Shareholders' Meeting. The meeting of AFC shareholders at which the
Corporate Merger will be voted upon.
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1.8 Articles of Merger. The Articles of Merger to be executed by (i) CFC
and AFC and (ii) CFB and AB and in a form appropriate for filing with the
Secretary of State of South Carolina, and relating to the effective consummation
of the Mergers as contemplated by the Plan of Merger.
1.9 BHCA. The Bank Holding Company Act of 1956, as amended.
1.10 Bank Merger. The merger described in Section 2.2.
1.11 Benefit Plans. All employee benefit plans within the meaning of
Section 3(3) of ERISA and any related or separate contracts, plans, trusts,
annuities, programs, policies, arrangements, practices, customs and
understandings that provide benefits of economic value to any present or former
employee, or current or former beneficiary, dependent or assignee of any such
employee or former employee.
1.12 CERCLA. The Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. 9601 et seq.
1.13 CFB. Carolina First Bank, a South Carolina corporation and a
wholly-owned subsidiary of CFC. Where the context permits, CFB shall be deemed
to include its subsidiaries.
1.14 CFC. Carolina First Corporation, a bank holding company headquartered
in Greenville, South Carolina. Where the context permits, CFC shall be deemed to
include its subsidiaries.
1.15 CFC Benefit Plans. All Benefit Plans, and all other material fringe
benefit plans or programs, sponsored or maintained by CFC or CFB or under which
CFC or CFB may be obligated.
1.16 CFC Common Stock. The common stock, par value $1.00 per share, of CFC.
1.17 CFC Shareholder Approvals. This term shall mean, as the context may
require, the duly authorized written consent of CFC to the Bank Merger and the
approval by the requisite vote of the shareholders of CFC at the CFC
Shareholders' Meeting of the Corporate Merger, all in accordance with this
Reorganization Agreement and the Plan of Merger and the Subsidiary Plan of
Merger.
1.18 CFC Shareholders' Meeting. The meeting of CFC shareholders at which
the Corporate Merger will be voted upon.
1.19 Closing; Closing Date. The terms "Closing" and "Closing Date" shall
have the meanings ascribed to them in Section 2.3 hereof.
1.20 Code. The Internal Revenue Code of 1986, as amended, including, if the
context permits, the applicable regulations promulgated pursuant thereto.
1.21 Confidential Information. The term "Confidential Information" shall
mean all information of any kind concerning a party hereto that is furnished by
such party or on its behalf pursuant to Section 6.1 hereof as a result of the
transactions contemplated herein, except information (i) ascertainable or
obtained from public or published information, (ii) received from a third party
not known to the recipient of Confidential Information to be under an obligation
to keep such information confidential, (iii) which is or becomes known to the
public (other than through a breach of this Reorganization Agreement), (iv) of
which the recipient was in possession prior to disclosure thereof in connection
with the Mergers, or (v) which was independently developed by the recipient
without the benefit of Confidential Information.
1.22 Corporate Merger. The merger described in Section 2.1 hereof.
1.23 Derivative Contract. Any exchangetraded or overthecounter swap,
forward, future, option, cap, floor or collar financial contract or any other
contract not included on a balance sheet which is a derivative contract
(including various combinations thereof).
1.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.25 Effective Time. The date and time which the Mergers become effective
as set forth in the Articles of Merger. Subject to the terms and conditions
hereof, the Effective Time shall be such time on such date as CFC shall notify
AFC in writing not less than five days prior thereto, which date shall not be
more than 30 days after all conditions have been satisfied or waived in writing.
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1.26 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.27 FDIC. The Federal Deposit Insurance Corporation.
1.28 Federal Reserve Board. The Board of Governors of the Federal Reserve
System, or any successor thereto.
1.29 Federal Reserve. The Federal Reserve Bank of Richmond acting under
delegated authority from the Federal Reserve Board, or any successor thereto.
1.30 GAAP. Generally accepted accounting principles consistently applied.
1.31 Interim. CFC Interim, Inc. an interim subsidiary formed to effect the
Corporate Merger.
1.32 IRS. The Internal Revenue Service.
1.33 Knowledge. When used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the executive officers of the
referenced party or parties, as applicable, after reasonable inquiry of the
other executive officers and the directors of the parties and the Persons
responsible for the day-to-day operations of the parties or their subsidiaries
(although this definition shall not give rise to any duty of any independent
verification or confirmation by members of senior management or board of
directors of the entity making the representation or warranty from other
Persons).
1.34 Lien. Any lien, claim, encumbrance, security interest, assessment,
charge, restriction (including restriction on voting rights or rights of
disposition), mortgage, deed of trust, equity of any character, third party
right of whatever nature or other similar or like charge.
1.35 Material Adverse Event; Material Adverse Effect. This shall mean an
event, effect, occurrence or circumstance which, alone or when taken with other
breaches, events, effects, occurrences or circumstances existing concurrently
therewith (including without limitation, any breach of a representation or
warranty contained herein by such party) (i) has or is reasonably expected to
have a material adverse effect on the properties, financial condition, results
of operations, or business of such party and its subsidiaries, taken as a whole,
or (ii) would materially prevent such party's, or any affiliated party's,
ability to perform its obligations under this Reorganization Agreement or the
consummation of any of the transactions contemplated hereby; provided, however,
that in determining whether a Material Adverse Effect or Material Adverse Event
has occurred, there shall be excluded any effect the cause of which is (A) any
change in banking, tax and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, (B) any change in
GAAP or regulatory accounting requirements applicable to the parties hereto, (C)
any action or omission of AFC or CFC or a subsidiary thereof taken with the
prior written consent of CFC or AFC, as applicable, in contemplation of the
transaction contemplated herein, (D) the actions contemplated by Section 6.13,
and (E) any changes in general economic conditions affecting financial
institutions generally, including but not limited to changes in interest rates.
Without limiting the foregoing, a decline in AFC's or CFC's common stock price
shall not, in and of itself, constitute a Material Adverse Event.
1.36 Mergers. The Bank Merger and the Corporate Merger.
1.37 PBGC. The Pension Benefit Guaranty Corporation.
1.38 Person. An individual, a partnership, a corporation, a commercial
bank, an industrial bank, a savings association, a savings bank, a limited
liability company, an association, a joint stock company, a trust, a business
trust, a joint venture, an unincorporated organization, a governmental entity
(or any department, agency, or political subdivision thereof) or other entity.
1.39 Plan of Merger. The Plan of Merger attached to this Reorganization
Agreement as Appendix A.
1.40 Proxy Statement. The joint proxy statement/prospectus included in the
Registration Statement which shall be furnished to the AFC shareholders and the
CFC shareholders in connection with the Shareholders' Meetings and the matters
contemplated hereby.
1.41 Registration Statement. The Registration Statement on Form S-4 to be
filed with the SEC registering the issuance of the CFC Common Stock to be issued
to the AFC shareholders in connection with the Corporate Merger.
1.42 Regulations. The regulations issued by the IRS under the Code.
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1.43 Regulatory Approvals. The order of the Federal Reserve Board (or, if
applicable, of the Federal Reserve acting under delegated authority) approving
the Mergers and the required order, approval, or exemption of the FDIC, the
State Board, or any other Regulatory Authority approving the Corporate Merger
and/or the Bank Merger.
1.44 Regulatory Authority. Any federal or state governmental agency or
authority charged with the supervision or regulation of depository institutions
or engaged in the insurance of deposits (including, without limitation, the
FDIC, and the Federal Reserve Board) and any other federal or state bank, thrift
or other financial institution, insurance or securities regulatory authorities,
and any and all other agencies or departments of federal, state or local
government, including without limitation the SEC.
1.45 Reorganization Agreement. This Reorganization Agreement, including all
schedules, appendices and exhibits attached hereto.
1.46 Rights. Rights shall mean warrants, calls, commitments, options,
rights (whether stock appreciation rights, conversion rights, exchange rights,
profit participation rights, or otherwise), securities or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, and other arrangements or commitments which obligate a
Person to issue, otherwise cause to become outstanding, sell, transfer, pledge,
or otherwise dispose of any of its capital stock or other ownership interests,
or any voting rights thereof or therein, or to pay monetary sums by reference to
the existence or market valuation, or in lieu and place, of any of its capital
stock or ownership interests therein.
1.47 The Securities and Exchange Commission.
1.48 Securities Act. The Securities Act of 1933, as amended.
1.49 State Board. The South Carolina State Board of Financial Institutions.
1.50 Shareholder Approvals. The AFC Shareholders' Approval and the CFC
Shareholders' Approval.
1.51 Shareholders' Meetings. The respective meetings of the shareholders of
AFC and CFC at which the Corporate Merger shall be voted upon.
1.52 Subsidiary Plan of Merger. The Subsidiary Plan of Merger attached to
this Reorganization Agreement as Appendix B.
1.53 Transaction Documents. This Reorganization Agreement, together with
all other documents executed in connection with AFC or AB in connection
herewith, including the Stock Option Agreement attached hereto as Exhibit E.
SECTION II. THE MERGERS
2.1 Corporate Merger. Subject to the terms and conditions of this
Reorganization Agreement, including the Plan of Merger, AFC shall merge with and
into Interim (the "Corporate Merger"), the separate existence of AFC shall
cease, and Interim shall survive and the name of the surviving Corporation shall
be "CFC Interim, Inc". The parties agree that the Corporate Merger will be
effected pursuant to the terms set forth in the Plan of Merger.
2.2 Bank Merger. After the Corporate Merger and liquidation referenced in
Section 2.8 below, and at such time as CFB may deem appropriate, AB shall be
merged with and into CFB (the "Bank Merger"), the separate existence of AB shall
cease and CFB shall survive and the name of the surviving bank shall be
"Carolina First Bank." The parties agree that the Bank Merger will be effected
pursuant to the terms set forth in the Subsidiary Plan of Merger.
2.3 The Closing. The Closing of the transaction contemplated herein shall
be held as soon as reasonably practicable after fulfillment of all conditions
set forth in Section VII and Section VIII hereof (the "Closing Date"), at the
offices of Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A. or at such other place and
time as the parties hereto may mutually agree.
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2.4 Consideration for the Mergers. The manner of converting the shares of
AFC into shares of CFC shall be as set forth in the Plan of Merger. The manner
of converting the shares of AB into shares of CFB shall be as set forth in the
Subsidiary Plan of Merger.
2.5 Shareholder Approvals; Registration Statement. Each of CFC and AFC
shall call their respective Shareholders' Meetings in accordance with the
applicable provisions of South Carolina law, the regulations of the Nasdaq Stock
Market and federal securities laws (as applicable) for the purpose of
considering and voting on this Reorganization Agreement and the transactions
contemplated hereby. The Shareholders' Meetings shall be held as soon as
practicable. The board of directors of each of CFC and AFC shall recommend
(subject to compliance with their legal and fiduciary duties, as advised by
counsel) to their respective shareholders and use their best efforts to obtain
the approval of this Reorganization Agreement and the Mergers, and shall not
withdraw such recommendation without providing five days prior notice to the
other party. CFC shall file the Registration Statement with the SEC and shall
pay the required filing fees. The parties will use their respective best efforts
and cooperate with each other to obtain promptly the effectiveness of the
Registration Statement. CFC shall also take any reasonable action required to be
taken under the blue sky laws in connection with the issuance of CFC Common
Stock in the Corporate Merger. CFC and AFC shall jointly prepare the Proxy
Statement, which shall be reasonably acceptable to all parties. The Proxy
Statement shall be mailed to the AFC and CFC shareholders as soon as reasonably
practicable after the SEC's declaration of effectiveness of the Registration
Statement. AFC shall mail, at its expense, the Proxy Statement to its
shareholders. CFC shall mail, at its expense, the Proxy Statement to its
shareholders.
2.6 Cooperation; Regulatory Filings. Subject to the terms and conditions of
this Reorganization Agreement, CFC and AFC shall cooperate, and shall cause each
of their subsidiaries to cooperate, in the preparation and submission by CFC and
AFC, as promptly as reasonably practicable, of such applications, petitions, and
other documents and materials as any of them may reasonably deem necessary or
desirable to the SEC, the Federal Reserve, the appropriate Regulatory
Authorities of South Carolina, the shareholders of AFC and CFC, and any other
Persons for the purpose of obtaining any approvals or consents necessary to
consummate the transactions contemplated by this Reorganization Agreement. Prior
to the making of any such filings with any Regulatory Authority or the making of
any written disclosures with respect to the transactions contemplated hereby to
shareholders or to any third person (such as mailings to shareholders or press
releases), the parties shall submit to each other the material to be filed,
mailed, or released. Any such materials shall be reasonably acceptable to all
parties prior to the filings with any Regulatory Authorities or the disclosures
to shareholders or to any third person, except to the extent that any person is
legally required to proceed prior to obtaining the approvals of the other
parties. CFC shall be responsible for all filings fees associated with the
Regulatory Approvals.
2.7 Tax Treatment. CFC and AFC intend that the Mergers shall qualify as
tax-free reorganizations under Section 368(a) of the Code.
2.8 Liquidation. Immediately following the Effective Time of the Corporate
Merger, Interim shall be liquidated (such that AB shall become a direct
subsidiary of CFC).
2.9 Formation of Interim. CFC agrees to form Interim in a timely manner and
to take such other steps as may be required to cause Interim to effect the
Corporate Merger as contemplated herein.
2.10 Reservation of Right to Revise Transaction. CFC may at any time change
the method of effecting the acquisition of AFC and AB (including without
limitation the provisions of this Section II) if and to the extent it deems such
change to be desirable; provided, however, that no such change shall (i) alter
the type of consideration to be issued to the holders of AFC Common Stock as
provided for in this Reorganization Agreement, (ii) reduce the value of such
consideration, (iii) adversely affect the intended tax-free treatment to AFC's
stockholders as a result of receiving such consideration or prevent the parties
from obtaining the tax opinion of Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
referred to herein, (iv) materially impair the ability to receive the Regulatory
Approvals, or (v) materially delay the Closing.
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SECTION III. REPRESENTATIONS AND WARRANTIES OF AFC AND AB
Each of AFC and AB hereby represent and warrant to CFC and CFB the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in the representation and warranty given in Section 3.5 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by CFC or CFB, such breach or inaccuracy
must be material, and before any breach of or inaccuracy of any of the other
representations or warranties given in this Section III shall be so actionable
or shall constitute such grounds, such breach or inaccuracy, together with all
other breaches and inaccuracies by AFC and AB, must have a Material Adverse
Effect.
3.1 Organization, Good Standing and Conduct of Business. AFC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, is duly registered as a bank holding company under the
BHCA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by AFC makes such license or qualification necessary. AB is
the sole direct subsidiary of AFC. AB is a state bank, duly organized, validly
existing and in good standing under the laws of the state of South Carolina, and
has full power and authority and all Authorizations necessary to own all of its
properties and assets and to carry on its business as it is presently being
conducted, and is properly licensed, qualified and in good standing as a foreign
corporation in all jurisdictions wherein the character of the properties or the
nature of the business transacted by AB makes such license or qualification
necessary. AB is a state bank and is an "insured depository institution" as
defined in the Federal Deposit Insurance Act and the applicable regulations
thereunder. The deposits of AB are insured by the Bank Insurance Fund of the
FDIC.
3.2 Subsidiaries.
(a) Except for the entities set forth on Schedule 3.2 (collectively,
the "AFC Subsidiaries"), AFC neither owns nor controls, directly or
indirectly five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person. Except as set forth on
Schedule 3.2, AFC or an AFC Subsidiary is the direct, record and beneficial
owner of 100% of the outstanding shares of capital stock of the AFC
Subsidiaries. There are no contracts, commitments, understandings or
arrangements by which AFC is or may be bound to sell or otherwise issue any
shares of the AFC Subsidiaries' capital stock, and there are no contracts,
commitments, understandings or arrangements relating to the rights of AFC
to vote or to dispose of such shares. All of the shares of capital stock of
the AFC Subsidiaries owned by AFC or an AFC Subsidiary are fully paid and
nonassessable and are owned free and clear of any Liens. Except as set
forth on Schedule 3.2, none of the AFC Subsidiaries either owns nor
controls five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person.
(b) Except for the entities set forth and identified as such on
Schedule 3.2 (collectively, the "AB Subsidiaries"), AB neither owns nor
controls five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person. Except as set forth on
Schedule 3.2, AB is the direct, record and beneficial owner of 100% of the
outstanding shares of the AB Subsidiaries. There are no contracts,
commitments, understandings or arrangements by which AB is or may be bound
to sell or otherwise issue any shares of the AB Subsidiaries' capital
stock, and there are no contracts, commitments, understandings or
arrangements relating to the rights of AB to vote or to dispose of such
shares. All of the shares of capital stock of the AB Subsidiaries are fully
paid and nonassessable and are owned by AB free and clear of any Liens.
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3.3 Corporate Authority. The execution, delivery and performance of the
Transaction Documents have been duly authorized by the respective Boards of
Directors of AFC and AB. Other than the AFC Shareholder Approvals, no further
corporate acts or proceedings on the part of AFC or AB are required or necessary
to authorize the Transaction Documents or the Mergers.
3.4 Binding Effect. Subject to receipt of the AFC Shareholder Approvals and
the Regulatory Approvals, when executed, the Transaction Documents will
constitute valid and legally binding obligations of AFC and AB, enforceable
against AFC and AB in accordance with their terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by AFC and/or AB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by AFC and/or AB (as
applicable) and enforceable against AFC and/or AB (as applicable) in accordance
with its terms, subject to the exceptions in the previous sentence.
3.5 Capitalization of AFC. The authorized capital stock of AFC consists
solely of (i) 50,000,000 authorized shares of common stock (no par value), of
which 8,095,271 shares are issued and outstanding as of the date hereof. All of
the issued and outstanding shares of AFC are validly issued and fully paid and
nonassessable. Except as otherwise set forth on Schedule 3.5, there are no
outstanding Rights to purchase or otherwise acquire shares of any class of
capital stock of AFC, nor any outstanding agreements pursuant to which AFC is or
may become obligated to issue any shares of its capital stock. None of the
shares of the AFC Common Stock is subject to any restrictions as to the transfer
thereof, except as set forth in AFC's Articles of Incorporation or Bylaws and
except for restrictions on account of applicable federal or state securities
laws.
3.6 Compliance with Laws; Absence of Defaults.
(a) Neither AFC nor AB is in default under, or in violation of, any
provision of its Articles of Incorporation or Bylaws. Neither AFC nor AB is
in default under, or in violation of, any agreement to which either AFC or
AB is a party.
(b) Except as disclosed in Schedule 3.6, neither AFC nor AB is in
violation of any applicable law, rule or regulation. Neither AFC nor AB has
received any notification or communication from, or consented to or entered
into any memorandum, agreement or order with, any Regulatory Authority (i)
asserting that AFC or AB is not in compliance with any of the statutes,
regulations, rules or ordinances which such Regulatory Authority has
promulgated or enforces, or the internal policies and procedures of AFC or
AB, as applicable, (ii) threatening to revoke any Authorization, (iii)
requiring or threatening to require AFC or AB, or indicating that AFC or AB
may be required, to enter into a cease and desist order, agreement or
memorandum of understanding or any other agreement restricting or limiting
or purporting to restrict or limit in any manner the operations of AFC or
AB, or (iv) directing, restricting or limiting, or threatening to direct,
restrict or limit in any manner the operations of AFC or AB (any such
notification, communication, memorandum, agreement or order described in
this sentence herein referred to as a "Regulatory Agreement").
(c)Each of AFC and AB: (i) is not required to give prior notice to any
federal banking agency regulating financial institutions of the proposed
addition of an individual to its Board of Directors or the employment of an
individual as a senior executive; (ii) is "well capitalized" as defined in
applicable FDIC and Federal Reserve regulations; and (iii) is in compliance
in all material respects with all fair lending laws or other laws relating
to discrimination, including, without limitation, 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.
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3.7 Non-Contravention and Defaults; No Liens. Except as provided on
Schedule 3.7, neither the execution or delivery of the Transaction Documents,
nor the fulfillment of, or compliance with, the terms and provisions thereof,
will (i) result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in a violation of, termination of or
acceleration of the performance provided by the terms of, any material agreement
to which either AFC or AB is a party or by which either of them may be bound,
(ii) violate any provision of any law, rule or regulation, (iii) result in the
creation or imposition of any Lien on any asset of AFC or AB, or (iv) violate
any provisions of AFC's or AB's Articles of Incorporation, or Bylaws. To the
best of AFC's and AB's knowledge, no other party to any material agreement to
which either AFC or AB is a party is in default thereunder or in breach of any
provision thereof. To the best of AFC's and AB's knowledge, there exists no
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
3.8 Necessary Approvals. Each of AFC and AB has obtained all certificates
of authority, licenses, permits, franchises, registrations of foreign ownership
or other regulatory approvals in every jurisdiction necessary for the continuing
conduct of its business and ownership of its assets. Except for those which may
be renewed or extended in the ordinary course of business, no such certificate,
license, permit, franchise, registration or other approval is about to expire or
lapse, has been threatened to be revoked or has otherwise become restricted by
its terms which would, upon such expiration, lapse, revocation or restriction,
have a Material Adverse Effect. Further, there is no reasonable basis for any
such expiration, lapse, revocation, threat of revocation or restriction. Except
for any necessary Regulatory Approvals, no consent, approval, Authorization,
registration, or filing with or by any governmental authority, foreign or
domestic, is required on the part of either AFC or AB in connection with the
execution and delivery of the Transaction Documents or the consummation by AFC
and AB of the transactions contemplated thereby. Except for the Regulatory
Approvals, neither AFC nor AB is required to procure the approval of any Person
in order to prevent the termination of any right, privilege, license or contract
of AFC or AB as a result of this Reorganization Agreement.
3.9 Financial Statements. The audited financial statements of AFC at and
for each of the fiscal years ended December 31, 1996, 1997 and 1998, and the
unaudited quarterly statements subsequent to December 31, 1998 (the "AFC
Financial Statements") all of which have been provided to CFC, are true, correct
and complete in all material respects and present fairly, in conformity with
GAAP, the financial position of AFC at the dates indicated and the results of
its operations for each of the periods indicated, except with respect to the
unaudited statements, normal year end adjustments. The books and records of AFC
have been kept, and will be kept to the Closing Date, in reasonable detail, and
will fairly and accurately reflect in all material respects to the Closing Date,
the transactions of AFC.
3.10 Tax Returns. AFC files its income tax returns and maintains its tax
books and records on the basis of a taxable year ending December 31. AFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by AFC) through the date hereof, and AFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable after the
date hereof. AFC is not delinquent in the payment of any taxes, assessments or
governmental charges and no deficiencies have been asserted or assessed, which
have not been paid or for which adequate reserves have not been established. AFC
does not have in effect any waiver relating to any statute of limitations for
assessment of taxes with respect to any federal, state or local income,
property, franchise, sales, license or payroll tax. AFC does not know, or have
reason to know, of any questions which have been raised or which may be raised
by any taxing authority relating to taxes or assessments of AFC which, if
determined adversely, would result in the assertion of any deficiency.
10
3.11 Undisclosed Liabilities. Except for the liabilities which are
disclosed in the AFC Financial Statements or as set forth on Schedule 3.11, AFC
has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1998, there has been no (i) Material Adverse Event with
respect to AFC or AB, or (ii) any incurrence by or subjection of AFC or AB to
any obligation or liability (whether fixed, accrued or contingent) or commitment
material to AFC or AB not referred to in this Reorganization Agreement, except
such obligations or liabilities as were or may be incurred in the ordinary
course of business and which are reflected on the AFC Financial Statements at
and for the periods subsequent to December 31, 1998.
3.12 Properties, Encumbrances. Each of AFC and AB has good and marketable
title to all of the real property and depreciable tangible personal property
owned by it, free and clear of any Lien, except for any Lien for (i) current
taxes not yet due and payable, (ii) pledges to secure deposits and other Liens
incurred in the ordinary course of the banking business, (iii) such
imperfections of title, easements and other encumbrances, if any, as are not
material in character, amount or extent, or (iv) such items as are set forth on
Schedule 3.12. Set forth on Schedule 3.12 are all business locations of AFC and
AB, including whether such locations are owned or leased and a statement of when
such locations were first occupied by AFC or AB. All buildings and all fixtures,
equipment, and other property and assets which are material to their business
and are held under leases or subleases by either of AFC or AB are held under
valid leases or subleases enforceable in accordance with their respective terms.
3.13 Litigation. Except as shown on Schedule 3.13, there are no claims,
actions, suits or proceedings pending or threatened against AFC or AB, or to its
knowledge affecting AFC or AB, at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and AFC knows of no basis for any of the foregoing.
There is no order, writ, memorandum, agreement, injunction, or decree of any
court, domestic or foreign, or any Federal or state agency affecting AFC
specifically or to which AFC is subject.
3.14 Reports. AFC and AB have duly made all reports and filings required to
be made pursuant to applicable law.
3.15 Brokers. Except as provided in its contracts with The Xxx Group and
with The Xxxxxxxx-Xxxxxxxx Company, LLC (copies of which have been provided to
CFC), AFC has not incurred any liability for any commission or fee in the nature
of a finder's, originator's or broker's fee in connection with the transaction
contemplated herein.
3.16 Expenditures. Schedule 3.16 sets forth any single expenditure of
$100,000 or more proposed to be made by AFC or AB after the date hereof and a
summary of the terms and conditions pertaining thereto. At least 20 business
days prior to the Closing Date, AFC will advise CFC of any changes to Schedule
3.16 reflecting additions or deletions thereto since the date hereof.
3.17 Insurance. Attached hereto as Schedule 3.17 are the policies of fire,
liability, life and other types of insurance held by AFC and AB, setting forth
with respect to each such policy, the policy number, name of the insured party,
type of insurance, insurance company, annual premium, expiration date,
deductible amount, if any, and amount of coverage. AFC management believes that
each such policy is in an amount reasonably sufficient for the protection of the
assets and business covered thereby, and, in the aggregate, all such policies
are reasonably adequate for the protection of all the assets and business of AFC
taking into account the availability and cost of such coverage. To the extent
permissible pursuant to such policies, all such policies shall remain in full
force and effect for a period of at least 90 days following the Closing Date.
There is no reason known to AFC that any such policy will not be renewable on
terms and conditions as favorable as those set forth in such policy.
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3.18 Contracts and Commitments.
(a) Schedule 3.18 attached hereto sets forth each contract or other
commitment of AFC or AB which requires an aggregate payment by AFC or AB
after the date hereof of more than $100,000, and any other contract or
commitment that in the opinion of the AFC management materially adversely
affects the business of AFC or AB. Except for the contracts and commitments
described in this Reorganization Agreement or as set forth in Schedule
3.18, neither AFC nor AB is party to or subject to:
1. Any contracts or commitments which are material to its
business, operations or financial condition other than loans or
agreements with respect thereto entered into in the ordinary course of
business;
2. Any employment contract or arrangement, whether oral or
written, with any officer, consultant, director or employee which is
not terminable on 30 days' notice without penalty or liability to make
any payment thereunder for more than 30 days after such termination;
3. Any plan or contract or other arrangement, oral or written,
providing for insurance for any officer or employee or members of
their families;
4. Any plan or contract or other arrangement, oral or written,
providing for bonuses, pensions, options, deferred compensation,
retirement payments, profit-sharing or other benefits for employees;
5. Any contract or agreement with any labor union;
6. Any contract or agreement with customers for the sale of
products or the furnishing of services, or any sales agency, broker,
distribution or similar contract, except contracts made in the
ordinary course of business;
7. Any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty, conditional
sale, lease-purchase, or otherwise;
8. Any joint venture contract or arrangement or any other
agreement involving a sharing of profits;
9. Any license agreement in which AFC is the licensor or
licensee;
10. Any material contract or agreement, not of the type covered
by any of the other items of this Section 3.18, which by its terms is
either (i) not to be performed prior to 30 days from the date hereof,
or (ii) does not terminate, or is not terminable without penalty to
AFC or AB, or any successors or assigns prior to 30 days from the date
hereof.
3.19 Employee Benefit Plans and Contracts.
(a) Schedule 3.19 contains a complete list of all AFC Benefit Plans.
AFC and AB have delivered to CFC (i) accurate and complete copies of all
AFC Benefit Plan documents and all other material documents relating
thereto, including all summary plan descriptions, summary annual reports
and insurance contracts, (ii) accurate and complete detailed summaries of
all unwritten AFC Benefit Plans, (iii) accurate and complete copies of the
most recent financial statements and actuarial reports with respect to all
AFC Benefit Plans for which financial statements or actuarial reports are
required or have been prepared, (iv) accurate and complete copies of all
annual reports for all AFC Benefit Plans (for which annual reports are
required) prepared within the last two years, and (v) accurate and complete
copies of determination letters from the IRS for any AFC Benefit Plan
maintained or intended to be maintained under Section 401(a) of the Code.
Any AFC Benefit Plan providing benefits that are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the
AFC Benefit Plan on Schedule 3.19.
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(b) All AFC Benefit Plans conform in all material respects to, and are
being administered and operated in material compliance with, all applicable
requirements of ERISA and the Code. All returns, reports and disclosure
statements required to be filed or delivered under ERISA and the Code with
respect to all AFC Benefit Plans have been filed or delivered. There have
not been any "prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, involving any of the AFC Benefit
Plans that could subject AFC to any material penalty or tax imposed under
the Code or ERISA.
(c)Except as set forth in Schedule 3.19, any AFC Benefit Plan that is
intended to be qualified under Section 401(a) of the Code and exempt from
tax under Section 501(a) of the Code has been determined by the IRS to be
so qualified, and such determination is current, remains in effect and has
not been revoked. To the best knowledge of AFC and AB, nothing has occurred
since the date of any such determination that is reasonably likely to
affect adversely such qualification or exemption, or result in the
imposition of excise taxes or income taxes on unrelated business income
under the Code or ERISA with respect to any AFC Benefit Plan.
(d) AFC and AB have adequately reserved for all liabilities accrued
prior to the Effective Time under AFC's and AB nonqualified retirement or
deferred compensation plans.
(e)Except as set forth in Schedule 3.19, neither AFC nor AB has any
current or contingent obligation to contribute to any multiemployer plan
(as defined in Section 3(37) of ERISA). Neither AFC nor AB has any
liability with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) other than with respect to the AFC Benefit Plans.
(f)There are no pending or threatened claims by or on behalf of any
AFC Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any AFC Benefit Plans, alleging any breach of fiduciary
duty on the part of AFC or AB or any of such party's officers, directors or
employees under ERISA, the Code or any applicable regulations, or claiming
benefit payments other than those made in the ordinary operation of such
plans. The AFC Benefit Plans are not the subject of any investigation,
audit or action by the IRS, the Department of Labor or the PBGC. AFC and AB
have made all required contributions under the AFC Benefit Plans, including
the payment of any premiums payable to the PBGC and other insurance
premiums. There is no underfunding liability for any AFC Benefit Plan that
is subject to the funding requirements of Section 412 of the Code.
(g) Neither AFC nor AB maintains any defined benefit plan, and neither
has incurred, or has any reason to expect that it will incur, any liability
to the PBGC or otherwise under Title IV or ERISA (including early
withdrawal liability) or under the Code with respect to any such plan. No
AFC Benefit Plan has been subject to a reportable event for which notice
would be required to be filed with the PBGC, and no proceeding by the PBGC
to terminate any AFC Benefit Plan has been instituted or threatened.
(h) With respect to any AFC Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (in this
subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is
in material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the
meaning of Section 419 of the Code) related to such a Welfare Plan, there
is no disqualified benefit (within the meaning of Section 4976(b) of the
Code) that would result in the imposition of a tax under Section 4976(a) of
the Code, (iii) any AFC Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and
every case has complied, with all of the material requirements of Section
4980B of the Code, ERISA, Title XXII of the Public Health Service Act and
the applicable provisions of the Social Security Act, (iv) such Welfare
Plan may be amended or terminated at any time on or after the Closing Date,
and (v) there are no benefits to be provided to retirees under a group
health plan that are subject to disclosure under Financial Accounting Board
Standard 106.
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(i)Except as set forth on Schedule 3.19, as of the Closing Date, there
will be no contract, agreement, plan or arrangement covering any person
that provides for the payment of an amount that would not be deductible to
CFC by reason of Section 280G or any other provision of the Code.
3.20 Allowance for Loan Losses. The allowance for loan losses (the "AFC
Allowance") shown on the consolidated statements of financial condition of AFC
as of September 30, 1999, included in the AFC Quarterly Report on Form 10-Q as
of such date has been determined, in the opinion of management of AFC in
accordance with GAAP, to be adequate to provide for losses relating to or
inherent in the loan portfolios of AFC and AB.
3.21 Environmental Matters. Each of AFC and AB is in material compliance
with all local, state and federal environmental statutes, laws, rules,
regulations and permits, including but not limited to CERCLA and the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq. Neither AFC nor AB has, nor to
the best of AFC's knowledge have other parties, used, stored, disposed of or
permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by AFC or AB (including, without limitation, the
buildings or structures thereon) (the "Real Property"). Neither AFC nor AB has,
nor to the best of AFC's knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the Real Property. Neither AFC nor AB has, nor to the best of AFC's knowledge
have other parties, installed or used underground storage tanks in or under any
of the Real Property. AFC has provided CFC with copies of all complaints,
citations, orders, reports, written data, notices or other communications sent
or received by it with respect to any local, state or federal environmental law,
ordinance, rule or regulation as any of them relate to AFC or AB.
3.22 AFC Information. The written information with respect to AFC and its
officers, directors, and affiliates which shall have been supplied by AFC (or
any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of AFC and CFC or on the date of the
Shareholders' Meetings, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3.23 Asset Classification. Set forth in Schedule 3.23 is a list, accurate
and complete in all material respects, of the aggregate amounts of loans,
extensions of credit or other assets of AFC and AB that have been classified by
it as of December 31, 1999 (the "Asset Classification"); and no amounts of
loans, extensions of credit or other assets that have been classified as of
December 31, 1999 by any regulatory examiner 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
AFC or AB prior to December 31, 1999.
3.24 Derivatives Contracts, Etc. Neither AFC nor AB is a party to or has
agreed to enter into an exchangetraded or overthecounter 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
(i) are referred to as "structured notes", "high risk mortgage derivatives",
"capped floating rate notes" or "capped floating rate mortgage derivatives", or
(ii) 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 set forth in
Schedule 3.24, including a list, as applicable, of any AFC or AB assets pledged
as security for each such instrument.
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3.25 Labor Matters. No material work stoppage involving AFC or AB is
pending or, to the best knowledge of AFC, threatened. Neither AFC nor AB is
involved in, or, to the best knowledge of AFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of AFC and AB are not represented by any labor union, and, to the best
knowledge of AFC's management, no labor union is attempting to organize
employees of AFC or AB.
3.26 Securities Reports. Within the last two (2) years, AFC has filed on a
timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
3.27 Ownership of CFC Common Stock. No shares of CFC Common Stock are
beneficially owned (as defined in Rule 13d3 under the Exchange Act) by AFC or
AB.
3.28 Resale of CFC Common Stock. AFC knows of no present plan or intention
on the part of its shareholders to sell, assign, transfer or otherwise dispose
of shares of CFC Common Stock to be received by such shareholders in connection
with the Corporate Merger which would reduce said shareholders' holdings of CFC
common stock to a number of shares having, in the aggregate, a value of less
than 50% of the value of AFC Common Stock outstanding as of the Effective Time.
For purposes of this representation, shares of AFC Common Stock sold, redeemed
or otherwise disposed of prior or subsequent to and as part of the Corporate
Merger, will be considered as shares received by shareholders of AFC and then
disposed of by shareholders of AFC.
3.29 All information provided by AFC in connection with the due diligence
investigation by CFC was, at the time that such information was provided, fair,
accurate and complete in all material respects. Since the date of such provision
of information, there have been no changes in such information, which taken in
the aggregate, represent a Material Adverse Event. AFC has not failed to provide
or make available to CFC all material information regarding AFC.
3.30 AFC knows of no reason why the Mergers would not qualify (i) as
tax-free reorganizations under Section 368(a) of the Code or (ii) for
pooling-of-interests accounting treatment under generally accepted accounting
practices.
SECTION IV. REPRESENTATIONS AND WARRANTIES BY CFC AND CFB
Each of CFC and CFB hereby represents and warrants to AFC and AB the
following matters on and as of the date of this Reorganization Agreement and at
the Effective Time; provided, however, that before any breach of or inaccuracy
in the representation and warranty given in Section 4.5 shall be actionable or
shall constitute grounds for termination of or failure to perform under the
terms of this Reorganization Agreement by AFC or AB, such breach or inaccuracy
must be material, and before any breach of or inaccuracy of any of the other
representations or warranties given in this Section IV shall be so actionable or
shall constitute such grounds, such breach or inaccuracy, together with all
other breaches and inaccuracies by CFC and CFB, must have a Material Adverse
Effect.
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4.1 Organization, Good Standing and Conduct of Business. CFC is a
corporation, duly organized, validly existing and in good standing under the
laws of South Carolina, is duly registered as a bank holding company under the
BHCA, and has full power and authority and all governmental and regulatory
authorizations ("Authorizations") necessary to own all of its properties and
assets and to carry on its business as it is presently being conducted, and is
properly licensed, qualified and in good standing as a foreign corporation in
all jurisdictions wherein the character of the properties or the nature of the
business transacted by CFC makes such license or qualification necessary. CFB is
a direct subsidiary of CFC. CFB is a state banking corporation, duly organized,
validly existing and in good standing under the laws of the state of South
Carolina, and has full power and authority and all Authorizations necessary to
own all of its properties and assets and to carry on its business as it is
presently being conducted, and is properly licensed, qualified and in good
standing as a foreign corporation in all jurisdictions wherein the character of
the properties or the nature of the business transacted by CFB makes such
license or qualification necessary. CFB is a state, non-member bank and is an
"insured depository institution" as defined in the Federal Deposit Insurance Act
and the applicable regulations thereunder. The deposits of CFB are insured by
the Bank Insurance Fund of the FDIC.
4.2 Subsidiaries.
(a) Except for the entities set forth on Schedule 4.2 (collectively,
the "Subsidiaries"), CFC neither owns nor controls, directly or indirectly
five percent (5%) or more of the outstanding equity securities, either
directly or indirectly, of any Person. Except as set forth on Schedule 4.2,
CFC or a Subsidiary is the direct, record and beneficial owner of 100% of
the outstanding shares of capital stock of the Subsidiaries. There are no
contracts, commitments, understandings or arrangements by which CFC is or
may be bound to sell or otherwise issue any shares of the Subsidiaries'
capital stock, and there are no contracts, commitments, understandings or
arrangements relating to the rights of CFC to vote or to dispose of such
shares. All of the shares of capital stock of the Subsidiaries owned by CFC
or a Subsidiary are fully paid and nonassessable and are owned free and
clear of any Liens. Except as set forth on Schedule 4.2, none of the
Subsidiaries wholly-owned by CFC (directly or indirectly) either owns nor
controls five percent (5%) or more of the outstanding equity securities,
either directly or indirectly, of any Person.
4.3 Corporate Authority. The execution, delivery and performance of the
Transaction Documents have been duly authorized by the respective Boards of
Directors of CFC and CFB. Other than the CFC Shareholder Approvals, no further
corporate acts or proceedings on the part of CFC or CFB are required or
necessary to authorize the Transaction Documents or the Mergers.
4.4 Binding Effect. Subject to receipt of the CFC Shareholder Approvals and
the Regulatory Approvals, when executed, the Transaction Documents will
constitute valid and legally binding obligations of CFC and CFB, enforceable
against CFC and CFB in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (ii) laws relating to the safety and
soundness of depository institutions, and (iii) general principles of equity.
Each document and instrument contemplated by this Reorganization Agreement, when
executed and delivered by CFC and/or CFB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by CFC and/or CFB (as
applicable) and enforceable against CFC and/or CFB (as applicable) in accordance
with its terms, subject to the exceptions in the previous sentence.
4.5 Capitalization of CFC. The authorized capital stock of CFC consists
solely of (i) 100,000,000 authorized shares of common stock ($1.00 par value),
of which 25,726,055 shares were issued and outstanding as of the date hereof and
(ii) 10,000,000 shares of preferred stock, none of which is outstanding. All of
the issued and outstanding shares of CFC are validly issued and fully paid and
nonassessable. Except as otherwise set forth on Schedule 4.5, there are no
outstanding Rights or any outstanding securities or other instruments
convertible into shares of any class of capital stock of CFC, or pursuant to
which CFC is or may become obligated to issue any shares of its capital stock.
None of the shares of the CFC Common Stock is subject to any restrictions as to
the transfer thereof, except as set forth in CFC's Articles of Incorporation or
Bylaws or its Shareholders' Rights Plan and except for restrictions on account
of applicable federal or state securities laws. The Common Stock to be issued in
connection with this Reorganization Agreement and the Corporate Merger will,
when issued, (i) be validly issued, fully paid and nonassessable, (ii) have been
issued pursuant to an effective registration statement and (iii) have been
properly registered for trading on the Nasdaq National Market.
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4.6 Compliance with Laws; Absence of Defaults.
(a) Neither CFC nor CFB is in default under, or in violation of, any
provision of its Articles of Incorporation or Bylaws. Neither CFC nor CFB
is in default under, or in violation of, any agreement to which either CFC
or CFB is a party.
(b) Except as disclosed in Schedule 4.6, neither CFC nor CFB is in
violation of any applicable law, rule or regulation. Neither CFC nor CFB
has received any notification or communication from, or consented to or
entered into any memorandum, agreement or order with, any Regulatory
Authority (i) asserting that CFC or CFB is not in compliance with any of
the statutes, regulations, rules or ordinances which such Regulatory
Authority has promulgated or enforces, or the internal policies and
procedures of CFC or CFB, as applicable, (ii) threatening to revoke any
Authorization, (iii) requiring or threatening to require CFC or CFB, or
indicating that CFC or CFB may be required, to enter into a cease and
desist order, agreement or memorandum of understanding or any other
agreement restricting or limiting or purporting to restrict or limit in any
manner the operations of CFC or CFB, or (iv) directing, restricting or
limiting, or threatening to direct, restrict or limit in any manner the
operations of CFC or CFB (any such notification, communication, memorandum,
agreement or order described in this sentence herein referred to as a
"Regulatory Agreement").
(c)Each of CFC and CFB: (i) is not required to give prior notice to
any federal banking or thrift agency of the proposed addition of an
individual to its Board of Directors or the employment of an individual as
a senior executive; (ii) at September 30, 1999, was capitalized as set
forth in its Quarterly Report on Form 10-Q for the quarter ended September
30, 1999; and (iii) is in compliance in all material respects with all fair
lending laws or other laws relating to discrimination, including, without
limitation, 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.
4.7 Non-Contravention and Defaults; No Liens. Neither the execution or
delivery of the Transaction Documents, nor the fulfillment of, or compliance
with, the terms and provisions thereof, will (i) result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
a violation of, termination of or acceleration of the performance provided by
the terms of, any material agreement to which CFC or CFB is a party or by which
they may be bound, (ii) violate any provision of any law, rule or regulation,
(iii) result in the creation or imposition of any Lien on any asset of CFC or
CFB, or (iv) violate any provisions of CFC's or CFB's Articles of Incorporation
or Bylaws. To the best of CFC's and CFB's knowledge, no other party to any
material agreement to which CFC or CFB is a party is in default thereunder or in
breach of any provision thereof. To the best of CFC's and CFB's knowledge, there
exists no condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such agreement.
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4.8 Necessary Approvals. Each of CFC and CFB have obtained all certificates
of authority, licenses, permits, franchises, registrations of foreign ownership
or other regulatory approvals in every jurisdiction necessary for the continuing
conduct of its business and ownership of its assets. Except for those which may
be renewed or extended in the ordinary course of business, no such certificate,
license, permit, franchise, registration or other approval is about to expire or
lapse, has been threatened to be revoked or has otherwise become restricted by
its terms which would, upon such expiration, lapse, revocation or restriction,
have a Material Adverse Effect. Further, there is no basis for any such
expiration, lapse, revocation, threat of revocation or restriction. Except for
any necessary Regulatory Approvals (including the filing with the SEC of the
Registration Statement and filings with blue sky authorities), no consent,
approval, Authorization, registration, or filing with or by any governmental
authority, foreign or domestic, is required on the part of CFC or CFB in
connection with the execution and delivery of the Transaction Documents or the
consummation by CFC and CFB of the transactions contemplated thereby. Except for
the Regulatory Approvals, neither CFC nor CFB is required to procure the
approval of any Person in order to prevent the termination of any right,
privilege, license or contract of CFC or CFB as a result of this Reorganization
Agreement.
4.9 Financial Statements. The audited financial statements of CFC at and
for each of the fiscal years ended December 31, 1996, 1997 and 1998, and the
unaudited quarterly statements subsequent to December 31, 1998 (the "CFC
Financial Statements") all of which have been provided to AFC, are true, correct
and complete in all material respects and present fairly, in conformity with
GAAP, the financial position of CFC at the dates indicated and the results of
its operations for each of the periods indicated. The books and records of CFC
have been kept, and will be kept to the Closing Date, in reasonable detail, and
will fairly and accurately reflect in all material respects to the Closing Date,
the transactions of CFC.
4.10 Tax Returns. CFC files its income tax returns and maintains its tax
books and records on the basis of a taxable year ending December 31. CFC has
duly filed all tax reports and returns required to be filed by any federal,
state or local taxing authorities (including, without limitation, those due in
respect of its properties, income, franchises, licenses, sales, payrolls, and
trusts established by CFC) through the date hereof, and CFC has duly paid all
taxes with respect to the periods covered thereby and has established adequate
reserves in accordance with GAAP for the payment of all income, franchises,
property, sales, employment or other taxes anticipated to be payable in respect
of the period subsequent to the period ending after the date hereof. CFC is not
delinquent in the payment of any taxes, assessments or governmental charges and
no deficiencies have been asserted or assessed, which have not been paid or for
which adequate reserves have not been established and which are not being
contested in good faith. CFC does not have in effect any waiver relating to any
statute of limitations for assessment of taxes with respect to any federal,
state or local income, property, franchise, sales, license or payroll tax.
Except as set forth on Schedule 4.10, CFC does not know, or have reason to know,
of any questions which have been raised or which may be raised by any taxing
authority relating to taxes or assessments of CFC which, if determined
adversely, would result in the assertion of any deficiency. (ii) To the best of
CFC's knowledge, all tax information reported by CFC to Federal and state
authorities and other Persons has been accurately and timely reported.
4.11 Undisclosed Liabilities. Except for the liabilities which are
disclosed in the CFC Financial Statements or as set forth on Schedule 4.11, CFC
has no material liabilities or material obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due.
Since December 31, 1998, there has been no Material Adverse Event with respect
to either CFC or CFB.
4.12 Litigation. Except as set forth on Schedule 4.12, there are no claims,
actions, suits or proceedings pending or threatened against or, to its
knowledge, affecting CFC or CFB at law or in equity, before or by any Federal,
state, municipal, administrative or other court, governmental department,
commission, board, or agency, an adverse determination of which could have a
Material Adverse Effect, and neither CFC nor CFB knows of no basis for any of
the foregoing. There is no order, writ, injunction, or decree of any court,
domestic or foreign, or any Federal or state agency affecting CFC or CFB or to
which CFC or CFB is subject, except for (i) agreements between CFC and the
Federal Reserve regarding CFC's ownership interest in Affinity Technology Group,
Inc. and (ii) an agreement between CFC and the Federal Reserve regarding CFC's
ownership interest in Net.B@nk, Inc.
18
4.13 Reports. CFC has duly made all reports and filings required to be made
pursuant to applicable law.
4.14 Employee Benefit Plans and Contracts.
(a) Schedule 4.14 contains a complete list of all CFC Benefit Plans.
CFC and CFB have made available to AFC (i) accurate and complete copies of
all CFC Benefit Plan documents and all other material documents relating
thereto, including all summary plan descriptions, summary annual reports
and insurance contracts, (ii) accurate and complete detailed summaries of
all unwritten CFC Benefit Plans, (iii) accurate and complete copies of the
most recent financial statements and actuarial reports with respect to all
CFC Benefit Plans for which financial statements or actuarial reports are
required or have been prepared, (iv) accurate and complete copies of all
annual reports for all CFC Benefit Plans (for which annual reports are
required) prepared within the last two years, and (v) accurate and complete
copies of determination letters from the IRS for any CFC Benefit Plan
maintained or intended to be maintained under Section 401(a) of the Code.
Any CFC Benefit Plan providing benefits that are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the
CFC Benefit Plan on Schedule 4.14.
(b) Except as set forth in Schedule 4.14, all CFC Benefit Plans
conform in all material respects to, and are being administered and
operated in material compliance with, all applicable requirements of ERISA
and the Code. All returns, reports and disclosure statements required to be
filed or delivered under ERISA and the Code with respect to all CFC Benefit
Plans have been filed or delivered. There have not been any "prohibited
transactions," as such term is defined in Section 4975 of the Code or
Section 406 of ERISA, involving any of the CFC Benefit Plans that could
subject CFC to any material penalty or tax imposed under the Code or ERISA.
(c)Except as set forth in Schedule 4.14, any CFC Benefit Plan that is
intended to be qualified under Section 401(a) of the Code and exempt from
tax under Section 501(a) of the Code has been determined by the IRS to be
so qualified, and such determination is current, remains in effect and has
not been revoked. To the best knowledge of CFC and CFB, nothing has
occurred since the date of any such determination that is reasonably likely
to affect adversely such qualification or exemption, or result in the
imposition of excise taxes or income taxes on unrelated business income
under the Code or ERISA with respect to any CFC Benefit Plan.
(d) CFC and CFB have adequately reserved for all liabilities accrued
prior to the Effective Time under CFC's and CFB nonqualified retirement or
deferred compensation plans.
(e)Except as set forth in Schedule 4.14, neither CFC nor CFB has any
current or contingent obligation to contribute to any multiemployer plan
(as defined in Section 3(37) of ERISA). Neither CFC nor CFB has any
liability with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) other than with respect to the CFC Benefit Plans.
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(f)There are no pending or threatened claims by or on behalf of any
CFC Benefit Plans, or by or on behalf of any individual participants or
beneficiaries of any CFC Benefit Plans, alleging any breach of fiduciary
duty on the part of CFC or CFB or any of such party's officers, directors
or employees under ERISA, the Code or any applicable regulations, or
claiming benefit payments other than those made in the ordinary operation
of such plans. The CFC Benefit Plans are not the subject of any
investigation, audit or action by the IRS, the Department of Labor or the
PBGC. CFC and CFB have made all required contributions under the CFC
Benefit Plans, including the payment of any premiums payable to the PBGC
and other insurance premiums. There is no underfunding liability for any
CFC Benefit Plan that is subject to the funding requirements of Section 312
of the Code.
(g) Neither CFC nor CFB maintains any defined benefit plan, and
neither has incurred, or has any reason to expect that it will incur, any
liability to the PBGC or otherwise under Title IV or ERISA (including early
withdrawal liability) or under the Code with respect to any such plan. No
CFC Benefit Plan has been subject to a reportable event for which notice
would be required to be filed with the PBGC, and no proceeding by the PBGC
to terminate any CFC Benefit Plan has been instituted or threatened.
(h) With respect to any CFC Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (in this
subsection, a "Welfare Plan"), (i) each such Welfare Plan for which
contributions are claimed as deductions under any provision of the Code is
in material compliance with all applicable requirements pertaining to such
deduction, (ii) with respect to any welfare benefit fund (within the
meaning of Section 419 of the Code) related to such a Welfare Plan, there
is no disqualified benefit (within the meaning of Section 4976(b) of the
Code) that would result in the imposition of a tax under Section 4976(a) of
the Code, (iii) any CFC Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and
every case has complied, with all of the material requirements of Section
4980B of the Code, ERISA, Title XXII of the Public Health Service Act and
the applicable provisions of the Social Security Act, (iv) such Welfare
Plan may be amended or terminated at any time on or after the Closing Date,
and (v) there are no benefits to be provided to retirees under a group
health plan that are subject to disclosure under Financial Accounting Board
Standard 106.
4.15 Allowance for Loan Losses. The allowance for loan losses shown on the
consolidated statements of financial condition of CFC as of September 30, 1999,
included in the CFC Quarterly Report on Form 10-Q as of such date has been
determined, in the opinion of management of CFC in accordance with GAAP, to be
adequate to provide for losses relating to or inherent in the loan portfolios of
CFC and CFB.
4.16 Environmental Matters. Each of CFC and CFB is in material compliance
with all local, state and federal environmental statutes, laws, rules,
regulations and permits, including but not limited to CERCLA and the Toxic
Substances Control Act, 15 U.S.C. 2601 et seq. Neither CFC nor CFB has, nor to
the best of CFC's knowledge have other parties, used, stored, disposed of or
permitted any "hazardous substance" (as defined in CERCLA), petroleum
hydrocarbon, polychlorinated biphenyl, asbestos or radioactive material
(collectively, "Hazardous Substances") to remain at, on, in or under any of the
real property owned or leased by CFC or CFB (including, without limitation, the
buildings or structures thereon) (the "CFC Real Property"). Neither CFC nor CFB
has, nor to the best of CFC's knowledge have other parties, installed, used, or
disposed of any asbestos or asbestos-containing material on, in or under any of
the CFC Real Property. Neither CFC nor CFB has, nor to the best of CFC's
knowledge have other parties, installed or used underground storage tanks in or
under any of the CFC Real Property. CFC has delivered to AFC copies of all
complaints, citations, orders, reports, written data, notices or other
communications sent or received by it with respect to any local, state or
federal environmental law, ordinance, rule or regulation as any of them relate
to CFC or CFB.
20
4.17 Asset Classification. Set forth in Schedule 4.17 is a list, accurate
and complete in all material respects, of the aggregate amounts of loans,
extensions of credit or other assets of CFC and CFB that have been classified by
it as of November 30, 1999 (the "Asset Classification"); and no amounts of
loans, extensions of credit or other assets that have been classified as of
November 30, 1999 by any regulatory examiner 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
CFC or CFB prior to November 30, 1999.
4.18 Labor Matters. No material work stoppage involving CFC or CFB is
pending or, to the best knowledge of CFC, threatened. Neither CFC nor CFB is
involved in, or, to the best knowledge of CFC's management, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which might reasonably be expected to have a Material Adverse Effect.
Employees of CFC and CFB are not represented by any labor union, and, to the
best knowledge of CFC's management, no labor union is attempting to organize
employees of CFC or CFB.
4.19 CFC Information. The written information with respect to CFC and its
officers, directors, and affiliates which shall have been supplied by CFC (or
any of its accountants, counsel or other authorized representatives)
specifically for use in soliciting the Shareholder Approvals, or which shall be
contained in the Registration Statement, will not, on the date the Proxy
Statement is first mailed to shareholders of AFC or CFC or on the date of the
Shareholders' Meeting, or in the case of the Registration Statement, at the time
it becomes effective, contain any untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.20 Securities Reports. Within the last two (2) years, CFC has filed on a
timely basis all reports, registrations, and statements, together with any
amendments, required under the Securities Act and the Exchange Act, all of
which, as of their respective dates, were in compliance in all material respects
with the rules and regulations of the SEC.
4.21 Ownership of AFC Common Stock. Except for an immaterial number of
shares, over which the CFB trust department exercises control, no shares of AFC
Common Stock are beneficially owned (as defined in Rule 13d3 under the Exchange
Act) by CFC or CFB.
4.22 All information provided by CFC in connection with the due diligence
investigation by AFC was, at the time that such information was provided, fair,
accurate and complete in all material respects. Since the date of such provision
of information, there have been no changes in such information, which taken in
the aggregate, represent a Material Adverse Event. CFC has not failed to provide
or make available to AFC all material information regarding CFC.
4.23 CFC knows of no reason why the Mergers would not qualify (i) as
tax-free reorganizations under Section 368(a) of the Code or (ii) for
pooling-of-interests accounting treatment under generally accepted accounting
practices.
SECTION V. CONDUCT OF BUSINESS PENDING CLOSING
5.1 Conduct of AFC Pending Closing. During the period commencing on the
date hereof and continuing until the Closing Date, each of AFC and AB covenants
and agrees to the following (except to the extent that CFC shall otherwise
expressly consent in writing, which consent shall not be unreasonably delayed or
withheld); provided, however, that any breach of or inaccuracy in any of the
covenants given in this Section 5.1 (other than any willful breach or
inaccuracy, as to which this proviso does not apply), taken in the aggregate
with all other such breaches and inaccuracies, must have a Material Adverse
Effect before such breach shall be actionable or shall constitute grounds for
termination or failure to perform under this Reorganization Agreement.
21
(a) Each of AFC and AB will carry on its business only in the ordinary
course in substantially the same manner as heretofore conducted and, to the
extent consistent with such business, use all reasonable efforts to
preserve intact its business organization and goodwill, maintain the
services of its present officers and employees and preserve its
relationships with customers, suppliers and others having business
dealings. Neither AFC nor AB shall purchase or otherwise acquire or enter
into a contract to acquire servicing or subservicing rights with respect to
loans not originated by AFC or AB without the written consent of CFC, which
consent shall not be unreasonably withheld.
(b) Neither AFC nor AB will amend its Articles of Incorporation or
Bylaws as in effect on the date hereof, except as may be required by
applicable law or regulation.
(c)AFC will not issue, grant, pledge or sell, or authorize the
issuance of, reclassify or redeem, purchase or otherwise acquire, any
shares of its capital stock of any class or Rights to acquire any such
shares or any shares or Rights to acquire shares of AB; nor will it enter
into any arrangement or contract with respect to the issuance of any such
shares or other Rights to acquire shares; nor will it declare, set aside or
pay any dividends (of any type) or make any other change in its equity
capital structure; provided, however, that it may pay its customary $0.16
per share quarterly cash dividend prior to closing (and further provision
may be made for any necessary changes in the quarterly dividend schedule to
the extent necessary to avoid AFC's shareholders missing a quarterly
dividend because of the time of Closing).
(d) AFC will promptly advise CFC in writing of any change in the
businesses of AFC or AB which is or may reasonably be expected to have a
Material Adverse Effect.
(e)AFC will not take, agree to take, or knowingly permit to be taken
(except as may be required by applicable law or regulation) any action or
do or knowingly permit to be done anything in the conduct of the business
of AFC or AB, or otherwise, which would be contrary to or in breach of any
of the terms or provisions of the Transaction Documents, or which would
cause any of the representations of AFC or AB contained herein to be or
become untrue in any material respect.
(f)Neither AFC nor AB will incur any indebtedness for borrowed money,
issue or sell any debt securities, or assume or otherwise become liable,
whether directly, contingently or otherwise, for the obligation of any
other party, other than in the ordinary course of business.
(g) Except for expenses attendant to the Mergers and current
contractual obligations, neither AFC nor AB will incur any expense in an
amount in excess of $100,000 after the execution of this Reorganization
Agreement without the prior written consent of CFC.
(h) Neither AFC nor AB will grant any executive officers any increase
in compensation (except in the ordinary course of business in accordance
with past practice and only upon prior notice to CFC), or enter into any
employment agreement with any executive officer without the consent of CFC
except as may be required under employment or termination agreements in
effect on the date hereof which have been previously disclosed to CFC in
writing.
22
(i)Neither AFC nor AB will acquire or agree to acquire by merging or
consolidating with, purchasing substantially all of the assets of or
otherwise, any business or any corporation, partnership, association or
other business organization or division thereof.
(j)Except as may be directed by any Regulatory Authority, as may be
undertaken in the ordinary course of business in accordance with past
practices, or as may be reasonably appropriate in view of changes in
economic circumstances, neither AFC nor AB shall (1) change its lending,
investment, liability management or other material banking or other
policies in any material respect, or (2) implement or adopt any change in
accounting principles, practices or methods, other than as may be required
by GAAP.
(k)AFC shall not impose, or permit or suffer the imposition of any
Liens on any shares of capital stock of AB, or (except in the ordinary
course of business) on any of its or AB's assets, other than Liens on such
other assets that, individually or in the aggregate, are not material to
the business, properties or operations of AFC or AB.
5.2 Conduct of CFC Pending Closing. During the period commencing on the
date hereof and continuing until the Closing Date, CFC covenants and agrees to
the following (except to the extent that AFC shall otherwise expressly consent
in writing, which consent shall not be unreasonably delayed or withheld);
provided, however, that any breach of or inaccuracy in any of the covenants
given in this Section 5.2 (other than any willful breach or inaccuracy, as to
which this proviso does not apply), taken in the aggregate with all other such
breaches and inaccuracies, must have a Material Adverse Effect before such
breach shall be actionable or shall constitute grounds for termination or
failure to perform under this Reorganization Agreement.
(a) CFC shall carry on its business in substantially the same manner
as heretofore conducted; provided that, without limiting the foregoing,
this Section 5.2(a) shall not be construed to restrict CFC's ability to
engage in acquisitions.
(b) CFC will not amend its Articles of Incorporation or Bylaws as in
effect on the date hereof in any manner that will adversely affect the AFC
shareholders in any material respect.
(c) CFC will promptly advise AFC in writing of any change in the
businesses of CFC or CFB which is or may reasonably be expected to have a
Material Adverse Effect.
(d) CFC will not take, agree to take, or knowingly permit to be taken
any action or do or knowingly permit to be done anything in the conduct of
its business or otherwise, which would be contrary to or in breach of any
of the terms or provisions of the Transaction Documents, or which would
cause any of the representations of CFC contained herein to be or become
untrue in any material respect.
SECTION VI. COVENANTS OF THE PARTIES
6.1 Access to Properties and Records. Between the date of this
Reorganization Agreement and the Closing Date, the parties will provide to each
other and to their respective accountants, counsel and other authorized
representatives reasonable access, during reasonable business hours and upon
reasonable notice, to their respective premises, properties, contracts,
commitments, books, records and other information and will cause their
respective officers to furnish to the other party and its authorized
representatives such financial, technical and operating data and other
information pertaining to their respective businesses, as the parties shall from
time to time reasonably request.
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6.2 Confidentiality. Each party will and will cause its employees and
agents to hold in strict confidence, unless disclosure is compelled by judicial
or administrative process, or in the opinion of its counsel, by other
requirements of law, all Confidential Information and will not disclose the same
to any Person. The party gaining access to such Confidential Information shall
exercise the same degree of care with respect thereto that any such party uses
to preserve and safeguard its own confidential proprietary information.
Confidential Information shall be used only for the purpose of and in connection
with consummating the transaction contemplated herein. If this Reorganization
Agreement is terminated, each party hereto will promptly return all documents
received by it from each other party containing Confidential Information. Each
party will and will cause its employees and agents to hold in strict confidence,
unless disclosure is compelled by judicial or administrative process, or in the
opinion of its counsel, by other requirements of law, the status of the Mergers.
Each party shall coordinate with the other parties, any public statements
regarding the Mergers.
6.3 Cooperation. Each party shall use its respective, reasonable best
efforts to take any and all necessary or appropriate actions, and to use its
reasonable best efforts to cause its officers, directors, employees, agents, and
representatives to use their reasonable best efforts and to take all steps in
good faith within their power, to cause to be fulfilled those of the conditions
precedent to its obligations to consummate the Mergers which are dependent upon
its or their actions, including but not limited to (i) requesting the delivery
of appropriate opinions and letters from its counsel and (ii) obtaining any
consents, approvals, or waivers required to be obtained from other parties.
6.4 Affiliates' Letters. AFC shall deliver to CFC a letter identifying all
Persons who are, at the time the Corporate Merger is submitted to a vote of the
shareholders of AFC, "affiliates" of AFC for purposes of Rule 145 of the General
Rules and Regulations under the Securities Act and as required for pooling-of-
interests accounting treatment. AFC shall use its reasonable best efforts to
cause each Person who is identified as an "affiliate" in the letter referred to
above to deliver to CFC on or prior to the Effective Time a written agreement,
in form reasonably satisfactory to CFC that such Person shall not sell, pledge,
transfer or otherwise dispose of any capital stock of AFC or any CFC Common
Stock owned by such person or to be received by such person as part of the
consideration except in compliance with the applicable provisions of the
Securities Act.
6.5 Listing of CFC Common Stock. CFC shall cause the shares of CFC Common
Stock to be issued in the transactions contemplated by this Reorganization
Agreement to be approved for quotation on the Nasdaq National Market, subject to
official notice of issuance, prior to the Effective Time. CFC shall give such
notice to the Nasdaq Stock Market as may be required to permit the listing of
the CFC Common Stock issued in connection with the Corporate Merger.
6.6 Letters from Accountants. Prior to the date the Registration Statement
is declared effective and prior to the Effective Time, AFC will deliver to CFC
letters from Xxxxxx Xxxxxxxx LLP addressed to CFC and dated not more than two
business days before the date on which such Registration Statement shall have
become effective and not more than two business days prior to the Effective
Time, respectively, in form and substance satisfactory to CFC, and CFC will
deliver to AFC letters from KPMG LLP, addressed to AFC and dated not more than
two business days before the Registration Statement shall have become effective
and not more than two business days prior to the Effective Time, respectively,
in form and substance satisfactory to AFC, in each case with respect to the
financial condition of the other party and such other matters as are customary
in accountants' comfort letters.
6.7 Tax Treatment; Pooling of Interests. AFC and CFC shall each take such
acts within their power as may be reasonably necessary to cause the Mergers to
qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and to qualify for pooling-of-interests accounting treatment, except to the
extent such performance or failure would be prohibited by law or regulation.
24
6.8 Expenses. Except to the extent expressly provided otherwise herein, the
parties shall pay their own fees and expenses (including legal and accounting
fees) incurred in connection with the Mergers.
6.9 Material Events. At all times prior to the Closing Date, each party
shall promptly notify the other parties in writing of the occurrence of any
event which will or may result in a breach of any covenant, representation or
warranty in this Reorganization Agreement, or the failure to satisfy the
conditions specified in Section VI or Section VII of this Reorganization
Agreement or other material developments relevant to the consummation of the
Mergers, and shall use its reasonable best efforts to prevent or promptly to
remedy the same.
6.10 Acquisition Proposals. In the case of AFC, without the prior written
consent of CFC, it shall not, and it shall cause AB not to, solicit or encourage
inquiries or proposals with respect to, or furnish any nonpublic information
relating to or participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a substantial portion of the assets or
deposits of, or a substantial equity interest in, AFC or AB or any merger or
other business combination with AFC or AB (an "Acquisition Proposal"); provided,
however, that if AFC is not otherwise in violation of this Section 6.10 and if
AFC or AB has received a bona fide, unsolicited third-party offer, the Board of
Directors of AFC may furnish or cause to be furnished information and may
participate in such discussions and negotiations in response to such offer if
such Board of Directors, after having consulted with and considered the written
advice of outside counsel, has determined that the failure to provide such
information or participate in such negotiations and discussions would cause the
members of such Board of Directors to breach their fiduciary duties under
applicable law. AFC shall instruct its and AB's officers, directors, agents,
advisors and affiliates to refrain from taking any action that would violate or
conflict with the foregoing. AFC shall notify CFC immediately if any such
inquiries or proposals are received by, or any such negotiations or discussions
are sought to be initiated with, AFC or AB, shall furnish CFC details of any
such inquiries or offers and shall advise CFC promptly of all developments
relating to such inquiries or proposals.
6.11 Public Announcements. At all times until after the Closing Date,
neither AFC nor CFC shall issue or permit any of its respective subsidiaries,
affiliates, officers, directors or employees to issue any press release or other
information to the press with respect to this Reorganization Agreement, without
the express prior consent of the other party, except as may be required by law
or the policies of the Nasdaq Stock Market. The parties shall cooperate to
prepare a joint press release with respect to the transactions contemplated
herein.
6.12 Updating of Schedules. AFC and CFC shall, at the Effective Time,
prepare and deliver to each other such supplements to the schedules attached
hereto as may be necessary or appropriate to ensure the accuracy and
completeness of the information required to be disclosed in such schedules at
all times prior to the Effective Time, provided that the furnishing of any such
supplement to such Schedules shall not modify, limit, or otherwise affect any
representations or warranties of AFC or CFC contained herein or any right of AFC
or CFC to terminate this Reorganization Agreement. AFC and CFC shall provide to
each other drafts of such supplemental Schedules at least three (3) business
days prior to the Closing Date.
6.13 Certain Policies of AFC. AFC shall, consistent with GAAP and
regulatory accounting principles, use its best efforts to record any accounting
adjustments required to conform its and AB's loan, litigation and other reserve
and real estate valuation policies and practices (including loan classifications
and levels of reserves) so as to reflect consistently on a mutually satisfactory
basis the policies and practices of CFC; provided, however, that AFC and AB
shall not be obligated to record any such accounting adjustments pursuant to
this Section unless and until AFC and AB shall be reasonably satisfied that all
the conditions to the obligation of the parties to consummate the Mergers will
be satisfied or waived on or before the Effective Time, and in no event until
the day prior to the Closing Date. Notwithstanding any other provision hereof,
until the Effective Time, the management of AFC and the authority to establish
and implement its business policies shall continue to reside solely in AFC
officers and board of directors, and the election of AFC directors shall be
solely the prerogative of AFC shareholders.
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6.14 Employee Matters.
(a) CFC, AFC and AB agree to cooperate to develop staffing plans which
will result in retention of as many AFC and AB managers and employees as is
practical (as determined by CFC). CFC agrees that AFC and AB employees
shall also be eligible for consideration for any other available positions
for which they are qualified at CFC and its subsidiaries. CFC agrees that
those former AFC or AB employees who are employed by CFC or its
subsidiaries immediately following the Closing Date: (i) will be eligible,
on the same basis as current CFC employees, for all CFC Benefit Plans; and
(ii) will receive past service credit for eligibility and vesting (but not
benefit accrual) purposes under CFC Benefit Plans for years of service with
AFC and AB as if such service had been with CFC or its subsidiaries. CFC
agrees that AFC may elect to fully vest its employees under some or all AFC
Benefit Plans prior to consummation of the Mergers. Prior to the Closing
Date, AFC shall, in accordance with the requirements of the Code and ERISA
and all regulations thereunder, take steps to terminate its Employee Stock
Ownership Plan ("ESOP") and its Defined Contribution Pension Plan ("DC
Plan"), and, upon receipt of a favorable determination letter from the IRS
with respect to each such plan, distribute the assets of such Plan to its
participants. Any AFC Benefit Plans that are intended to be qualified under
Section 401(a) of the Code and exempt from tax under Section 501(a) of the
Code will be terminated by proper action of the Board of Directors of AFC
or AB prior to the Effective Time. CFC agrees to assume all of AFC's
obligations under its Post-Retirement Health Benefit Plan with respect to
AB employees eligible to receive benefits under such Plan at the Effective
Time based on their age and years of service with AB. CFC further agrees
that those former AFC or AB employees who are employed by CFC or its
subsidiaries immediately following the Closing Date will not be subject to
any pre-existing condition exclusion under CFC's medical Benefit Plans.
(b) At Closing, CFC shall cause CFB to enter into the employment
agreements attached hereto as Appendix C and D (the "Employment
Agreements").
(c)At Closing, CFC (or its subsidiaries) shall pay at least $650,000
in "pay-to-stay" bonuses to such persons as shall be reasonably designated
by AFC in writing.
(d) Any former AFC employee or any former AFC Subsidiary employee who
is terminated within 18 months after Closing shall be entitled to the
greater of (i) CFC's currently-applicable severance benefits, (ii) two
weeks pay per year of service up to 26 weeks total pay with COBRA benefits
paid by CFC for the length of the period over which the severance is paid.
3. Directors, Committees.
(a) At the Special Meeting, CFC will nominate five existing AFC
directors (designated by the AFC Board of Directors, reasonably acceptable
to CFC and allocated among the various classes of directors as evenly as
possible) and recommend their election to the CFC shareholders for
election. CFC will nominate each one for at least one additional three-year
term when they stand for re-election.
(b) Each of CFC's board committees shall include a former member of
the AFC board.
6.15 Charitable Contributions. CFC shall honor AFC's obligations to make
the charitable contributions set forth on Schedule 6.16 (which contributions
shall not exceed ______ annually). In addition, CFC shall make a $500,000
contribution (as soon as practicable after Closing in the name AB or AFC) to
such charitable organizations as shall be reasonably designated by the former
AFC Board of Directors.
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6.16 Prohibited Actions.
(a) Except as expressly provided in this Reorganization Agreement, as
agreed to by CFC or as required by applicable law, rules or regulations
(including the fiduciary duties of the AFC and AB directors under
applicable law), during the period from the date of this Reorganization
Agreement to the Effective Time, AFC shall, and shall cause its
subsidiaries to, (i) take no action which would adversely affect or delay
the ability of the parties hereto to obtain any necessary Regulatory
Approvals or Authorizations required for the transactions contemplated
hereby or to perform its covenants and agreements on a timely basis under
this Reorganization Agreement and (ii) take no action that could reasonably
be expected to have a Material Adverse Effect on AFC or AB.
(b) Except as expressly provided in this Reorganization Agreement, as
agreed to by AFC or as required by applicable law, rules or regulations,
during the period from the date of this Reorganization Agreement to the
Effective Time, CFC shall, and shall cause its subsidiaries to, (i) take no
action which would adversely affect or delay the ability of the parties
hereto to obtain any necessary Regulatory Approvals or Authorizations
required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Reorganization
Agreement and (ii) take no action that could reasonably be expected to have
a Material Adverse Effect on CFC.
6.17 Exemption from Liability Under Section 16(b). Assuming that AFC
delivers to CFC any necessary information in a timely fashion prior to the
Effective Time, the CFC Board of Directors, or a committee of Non-Employee
Directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act), shall reasonably promptly thereafter and in any event prior
to the Effective Time adopt a resolution providing that the receipt by any
officer or director of AFC or AB (who, pursuant to the Mergers, becomes a
"reporting person" of CFC under Section 16 of the Exchange Act), of CFC Common
Stock in exchange for shares of AFC Common Stock, and of options to purchase
shares of CFC Common Stock upon conversion of options to purchase shares of AFC
Common Stock, in each case pursuant to the transactions contemplated hereby and
to the extent such securities are listed in the information provided to CFC (as
contemplated above), are approved by such Board or Directors or by such
committee thereof, and are intended to be exempt from liability pursuant to
Section 16(b) under the Exchange Act, such that any such receipt shall be so
exempt.
SECTION VII. CONDITIONS TO CFC'S OBLIGATION TO CLOSE
The obligation of CFC and CFB to consummate the transactions contemplated
in this Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
7.1 Performance of Acts and Representations by AFC. Each of the acts and
undertakings of AFC and AB to be performed on or before the Closing Date
pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
AFC and AB set forth in this Reorganization Agreement shall be true in all
respects on the Closing Date, subject to the standard set forth in Section III,
except as to transactions contemplated by this Reorganization Agreement or
representations which are as of a specific date.
7.2 Opinion of Counsel for AFC. AFC shall have furnished CFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to CFC and its counsel, to the effect that, except as
disclosed herein: (i) Each of AFC and AB is duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation; (ii) the consummation of the transactions contemplated by this
Reorganization Agreement will not (A) violate any provision of AFC's or AB's
Articles of Incorporation or Bylaws, as applicable, (B) violate any provision
27
of, result in the termination of, or result in the acceleration of any
obligation under, any agreement listed on Schedule 3.18 or any order,
arbitration award, judgment or decree known to counsel to which AFC or AB is a
party, or by which either is bound, except as such would not, in the aggregate,
have a Material Adverse Effect, except as disclosed on schedules to the
Reorganization Agreement, or (C) violate or conflict with any other restriction
of any kind or character of which such counsel has knowledge and to which AFC or
AB is subject; (iii) all of the shares of AFC Common Stock and AB common stock
are validly authorized and issued, fully paid and non-assessable; (iv) each of
AFC and AB has the legal right and power, and all authorizations and approvals
required by law, to enter into the Transaction Documents, and to consummate the
transactions contemplated therein and all applicable regulatory waiting periods
have passed; (v) other than filings and registrations required under applicable
law to be made by CFC or CFB, all filings and registrations with, and
notifications to, all federal and state authorities required on the part of AFC
or AB for the consummation of the Mergers have been made; (vi) each of AFC and
AB has full corporate power and authority to enter into the Transaction
Documents, and the Transaction Documents have been duly authorized, executed and
delivered by each of AFC and AB and constitutes a valid and legally binding
obligation of AFC and AB enforceable against each of AFC and AB in accordance
with their terms, except as such enforceability may be limited by (x) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to rights of creditors of FDIC-insured institutions
or the relief of debtors generally, (y) laws relating to the safety and
soundness of depository institutions, and (z) general principles of equity; and
(vii) to the best knowledge of such counsel, no material suit or proceeding is
pending or threatened against AFC, AB or other parties which would have a
Material Adverse Effect on AFC's or AB's business or properties or their
abilities to make the representations and warranties and perform the obligations
set forth herein.
7.3 Conduct of Business. There shall have been no Material Adverse Event
with respect to AFC or AB from the date hereof through the Closing Date.
7.4 Consents. All Regulatory Approvals and other authorizations necessary,
in the reasonable opinion of counsel for CFC, to the consummation of the
transactions contemplated hereby shall have been obtained, and no governmental
agency or department or judicial authority shall have issued any order, writ,
injunction or decree prohibiting the consummation of the transactions
contemplated hereby. Regulatory Approvals shall have been obtained without the
imposition of any condition or requirements that, in the reasonable judgment of
CFC, renders the consummation of this transaction unduly burdensome (excluding
conditions or requirements that are typically imposed in transactions of the
type contemplated herein).
7.5 Certificate. CFC shall have been furnished with such certificates of
officers of AFC and AB, in form and substance reasonably satisfactory to CFC,
dated as of the Closing Date, certifying to such matters as CFC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section VII.
7.6 Shareholder Approvals. The Shareholder Approvals shall have been
obtained.
7.7 Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of CFC Common Stock in any
jurisdiction shall have been issued, and no proceedings for that purpose shall
have been instituted.
7.8 The Employment Agreements shall have been executed.
7.9 Pooling-of-Interests CFC shall have received reasonable assurance from
KPMG LLP that the Mergers will qualify for pooling-of-interests accounting
treatment under GAAP. CFC shall have received reasonable assurance from Xxxxxx
Xxxxxxxx LLP that AFC will qualify for pooling-of-interests accounting treatment
under GAAP.
28
SECTION VIII. CONDITIONS TO THE OBLIGATION OF AFC TO CLOSE
The obligation of AFC to consummate the transactions contemplated in this
Reorganization Agreement is subject to the satisfaction of the following
conditions at or before the Closing Date:
8.1 Performance of Acts and Representations by CFC and CFB. Each of the
acts and undertakings of CFC and CFB to be performed on or before the Closing
Date pursuant to the terms of this Reorganization Agreement shall have been duly
authorized and duly performed, and each of the representations and warranties of
CFC and CFB set forth in this Reorganization Agreement shall be true in all
material respects on the Closing Date, except as to transactions contemplated by
this Reorganization Agreement or representations which are as of a specific
date.
8.2 Opinion of Counsel for CFC. CFC shall have furnished AFC with an
opinion of its counsel, dated as of the Closing Date, and in form and substance
reasonably satisfactory to AFC and its counsel, to the effect that, except as
disclosed herein: (i) CFC and CFB are duly organized, validly existing and in
good standing under the laws of the State of South Carolina; (ii) the
consummation of the transactions contemplated by this Reorganization Agreement
will not (A) violate any provision of CFC's or CFB's Articles of Incorporation
or Bylaws, (B) violate any provision of, result in the termination of, or result
in the acceleration of any obligation under, any mortgage, lien, lease,
franchise, license, permit, agreement, instrument, order, arbitration award,
judgment or decree known to counsel to which CFC or CFB is a party, or by which
it is bound, except as such would not, in the aggregate, have a material adverse
effect on the business or financial condition of CFC, or (C) violate or conflict
with any other restriction of any kind or character of which such counsel has
knowledge and to which CFC or CFB is subject; (iii) all of the shares of CFC
Common Stock to be issued in connection with the Corporate Merger will be, when
issued, validly authorized and issued, fully paid and non-assessable; (iv) CFC
and CFB have the legal right and power, and all authorizations and approvals
required by law, to enter into the Transaction Documents, and to consummate the
transactions contemplated herein and all applicable regulatory waiting periods
have passed; (v) all filings and registrations with, and notifications to, all
federal and state authorities required on the part of AFC or AB for the
consummation of the Mergers have been made; (vi) CFC and CFB have full corporate
power and authority to enter into the Transaction Documents, and the Transaction
Documents have been duly authorized, executed and delivered by CFC and CFB and
constitutes a valid and legally binding obligation of CFC and CFB enforceable
against CFC and CFB in accordance with their terms, except as such
enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors of FDIC-insured institutions or the relief of
debtors generally, (y) laws relating to the safety and soundness of depository
institutions, and (z) general principles of equity; (vii) to the best knowledge
of such counsel, no material suit or proceeding is pending or threatened against
CFC or other parties which would have a material adverse effect on CFC's
business or properties or its abilities to make the representations and
warranties and perform the obligations set forth herein, and (viii) the
Registration Statement became effective on [date] and no stop order suspending
the effectiveness of the Registration Statement or any part thereof has been
issued and no proceedings for that purpose have been instituted or are pending
under the Securities Act.
8.3 Conduct of Business. There shall have been no Material Adverse Event
with respect to CFC or CFB from the date hereof through the Closing Date.
8.4 Consents. All Regulatory Approvals or other authorizations necessary,
in the reasonable opinion of counsel for AFC, to the consummation of the
transactions contemplated hereby shall have been obtained, and no governmental
agency or department or judicial authority shall have issued any order, writ,
injunction or decree prohibiting the consummation of the transactions
contemplated hereby. Approvals of all applicable regulatory agencies shall have
been obtained without the imposition of any condition or requirements that, in
the reasonable judgment of AFC, renders the consummation of this transaction
unduly burdensome (excluding conditions or requirements that are typically
imposed in transactions of the type contemplated herein).
29
8.5 Certificate. AFC shall have been furnished with such certificates of
officers of CFC and CFB, in form and substance reasonably satisfactory to AFC,
dated as of the Closing Date, certifying to such matters as AFC may reasonably
request, including but not limited to the fulfillment of the conditions
specified in this Section VIII.
8.6 Tax Opinion. AFC shall have received from Wyche, Burgess, Xxxxxxx &
Xxxxxx, P.A. a tax opinion, reasonably satisfactory to AFC, opining, subject to
reasonable qualifications, that the Corporate Merger shall, upon compliance with
reasonable conditions, qualify as a tax-free reorganization under Section 368(a)
of the Code.
8.7 Shareholder Approvals. The Shareholder Approvals shall have been
obtained.
8.8 Securities Laws. The Registration Statement shall have been declared
effective. No order suspending the sale of the shares of CFC Common Stock in any
jurisdiction shall have been issued, and no proceedings for that purpose shall
have been instituted.
8.9 Pooling-of-Interests. AFC shall have received reasonable assurance from
KPMG LLP that the Mergers will qualify for pooling-of-interests accounting
treatment under GAAP. AFC shall have received reasonable assurance from Xxxxxx
Xxxxxxxx LLP that AFC will qualify for pooling-of-interests accounting treatment
under GAAP.
SECTION IX. TERMINATION
9.1 Termination. This Reorganization Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual consent of the parties;
(b) by either CFC or AFC, at that party's option, (A) if a permanent
injunction or other order (including any order denying any required
regulatory consent or approval) shall have been issued by any Federal or
state court of competent jurisdiction in the United States or by any United
States Federal or state governmental or regulatory body, which order
prevents the consummation of the transactions contemplated herein, or (B)
if the Shareholder Approvals are not received at the Shareholder Meetings;
(c)by either CFC or AFC if the other party (or its subsidiaries) has
failed to comply with the agreements or fulfill the conditions contained
herein, provided, however, that any such failure of compliance or
fulfillment (other than with respect to Section 6.10, as to which this
proviso does not apply) must result in a Material Adverse Event and, if
curable, the breaching party must be given notice of the failure to comply
and a reasonable period of time (not to exceed 30 days) to cure;
(d) by either CFC or AFC in the event that Closing has not occurred by
October 31, 2000, provided that no Party that is in material breach of any
of the provisions of this Reorganization Agreement will be entitled to
terminate this Reorganization Agreement pursuant to this provision;
(e)by either CFC or AFC as contemplated in Section 9.2(b);
(f) by the Board of Directors of AFC, if it determines by a vote of a
majority of the members of its entire Board at any time during the ten-day
period commencing two days after the Determination Date, if both of the
following conditions are satisfied:
(1) the Average Closing Price shall be twenty percent (20%) less
than the Starting Price; and
30
(2) the CFC Ratio shall be less than .85 times the Index Ratio;
subject, however, to the following: If AFC refuses to consummate the
Merger pursuant to this Section 9.1(f), it shall give prompt written
notice thereof to CFC; provided, that such notice of election to
terminate may be withdrawn at any time within the aforementioned
ten-day period. During the five-day period commencing with its receipt
of such notice, CFC shall have the option to elect to increase the
Exchange Ratio (as defined in the Plan of Merger) to equal the lesser
of (i) the quotient obtained by dividing (1) the product of 0.80, the
Starting Price and the Exchange Ratio (as then in effect) by (2) the
Average Closing Price, and (ii) the quotient obtained by dividing (1)
the product of the Index Ratio and the Exchange Ratio (as then in
effect) by (2) the CFC Ratio. If CFC makes an election contemplated by
the preceding sentence, within such five-day period, it shall give
prompt written notice to AFC of such election pursuant to this Section
9.1(f) and this Reorganization Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Reorganization Agreement
or the Plan of Merger to "Exchange Ratio" shall thereafter be deemed
to refer to the Exchange Ratio as adjusted pursuant to this Section
9.1(f).
For purposes of this Section 9.1(f), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily last sales
prices of CFC Common Stock as reported on The Nasdaq Stock Market (as reported
by The Wall Street Journal or, if not reported thereby, another authoritative
source as chosen by CFC) for the 20 consecutive full trading days in which such
shares are traded ending at the closing of trading on the Determination Date.
"Average Index Price" shall mean the average of the daily Index Price for
the 20 consecutive full trading days ending at the closing of trading on the
Determination Date.
"CFC Ratio" shall mean the quotient of the Average Closing Price divided by
the Starting Price.
"Determination Date" shall mean the date on which the last consent of the
Board of Governors of the Federal Reserve System shall be received.
"Index Group" shall mean the bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 75% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which shall be determined based upon the number of outstanding shares of common
stock) shall be redistributed proportionately for purposes of determining the
Index Price. The bank holding companies and the weights attributed to them are
as follows:
Bank Holding Companies Weighting (%)
---------------------- -------------
AmSouth Bancorporation 13.05
BancorpSouth, Inc. 1.64
CCB Financial Corporation 3.02
Centura Banks, Inc. 2.88
Colonial BancGroup, Inc. 1.96
Compass Bancshares, Inc. 4.05
F&M National Corporation 1.08
F.N.B. Corporation 0.81
First Citizens BancShares, Inc. 1.32
First Tennessee National Corporation 6.58
First Xxxxxxxx Xxxxx, Inc. 3.54
Xxxxxxx Holding Company 0.74
Hibernia Corporation 3.00
Keystone Financial, Inc. 1.70
Mercantile Bankshares Corporation 3.92
31
Bank Holding Companies Weighting (%)
---------------------- -------------
National Commerce Bancorporation 4.34
One Valley Bancorp, Inc. 1.76
Provident Bankshares Corporation 0.78
Regions Financial Corporation 8.97
SouthTrust Corporation 10.04
Synovus Financial Corp. 9.79
Trustmark Corporation 2.66
Union Planters Corporation 9.19
United Bankshares, Inc. 1.78
Whitney Holding Corporation 1.45
====
TOTAL 100.0
"Index Price" on a given date shall mean the current market price of the
Index Group for that day.
"Index Ratio" shall mean the quotient of the Average Index Price divided by
the Index Price on the Starting Date.
"Starting Price" shall the closing price of CFC Common Stock on the
Starting Date. The Starting Price shall be equitably adjusted to take into
effect any stock dividend, reclassification, recapitalization, split up,
combination, exchange of shares, or similar transaction between the date of this
Agreement and the Determination Date.
"Starting Date" shall mean January 10, 2000.
9.2 Consequences of Termination.
(a) Except as expressly provided herein, in the event of the
termination or abandonment of this Reorganization Agreement pursuant to the
provisions of Section 9.1, this Reorganization Agreement will become void
and have no force or effect, without any liability on the part of the
parties or any of their respective directors or officers or shareholders
with respect to this Reorganization Agreement. Notwithstanding the
preceding sentence, no termination of this Reorganization Agreement will
relieve any party of any liability for any breach of this Reorganization
Agreement or for any misrepresentation under this Reorganization Agreement
or be deemed to constitute a waiver of any remedy available for such breach
or misrepresentation. Without limiting the foregoing, termination under
this Reorganization Agreement shall not affect each party's rights and
obligations under the Stock Option Agreement.
(b) Termination Fee. If this Reorganization Agreement is terminated:
1. by CFC (i) if at any time prior to the AFC Shareholders
Meeting, the Board of Directors of AFC shall have failed to recommend
the Merger to the holders of AFC Common Stock, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of CFC, or (ii) because a
tender offer or exchange offer for 20% or more of the outstanding
shares of AFC Common Stock is commenced (other than by CFC) and the
Board of AFC recommends that the stockholders of AFC tender their
shares in such tender or exchange offer or otherwise fails to
recommend that such stockholders reject such tender offer or exchange
offer within ten business days after the commencement thereof;
32
2. by AFC or CFC because of a failure to obtain the required
approval of the stockholders of AFC after an Acquisition Proposal for
AFC shall have been publicly disclosed, or any Person shall have
publicly disclosed an intention (whether or not conditional) to make
an Acquisition Proposal; or
3. by CFC pursuant to Section 9.1(c) if the breach by AFC giving
rise to such termination was willful and, at or prior to such
termination, an Acquisition Proposal shall have been made known to AFC
or any of its subsidiaries or shall have been publicly disclosed to
AFC's stockholders or any Person shall have made known to AFC or any
of its subsidiaries or otherwise publicly disclosed an intention
(whether or not conditional) to make an Acquisition Proposal and
regardless of whether such Acquisition Proposal shall have been
rejected by AFC or withdrawn prior to the time of such termination,
then, in such case, AFC shall pay to CFC a termination fee of $10.5
million (the "Termination Fee"). Any Termination Fee that becomes
payable pursuant to this Section shall be paid promptly following the
receipt of a written request for Termination Fee to AFC from CFC.
Notwithstanding the foregoing, in no event shall AFC be obligated to
pay any Termination Fee if AFC shall be entitled to terminate this
Reorganization Agreement pursuant to Section 9.1(c) due to a breach by
CFC prior to the receipt by AFC of an Acquisition Proposal.
(c) Reimbursement Of Fee. In the event that this Reorganization is
terminated by AFC (or wrongfully terminated by CFC) and no Termination Fee
becomes payable under Section 9.2(b), then (after the point in time when
such Termination Fee could no longer reasonably become payable) CFC shall
reimburse AFC for its fees payable under its currently-existing investment
banking arrangement with The Xxxxxxxx-Xxxxxxxx Company, up to a maximum of
$250,000.
SECTION X. INDEMNIFICATION
10.1 Information for Application and Statements. Each of CFC and AFC
represents and warrants that all information concerning it which is or will be
included in any statement and application made to any governmental agency
(including the Registration Statement) in connection with the transactions
contemplated by the Agreement shall be true and correct in all material respects
and shall not omit any material fact required to be stated therein or necessary
to make the statements made, in light of the circumstances under which they were
made, not misleading. Each of CFC and AFC so representing and warranting will
indemnify and hold harmless the other, each of its directors and officers, who
controls the other within the meaning of the Securities Act, from and against
any and all losses, claims, damages, expenses or liabilities to which any of
them may become subject under applicable laws and rules and regulations
thereunder and will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any actions
whether or not resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any such
application or statement or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by the representing and
warranting party expressly for use therein. Each of CFC and AFC agrees, at any
time upon the request of the other, to furnish to the other a written letter or
statement confirming the accuracy of the information contained in any proxy
statement, registration statement, report or other application or statement, or
in any draft of any such document, and confirming that the information contained
in such document or draft was furnished expressly for use therein or, if such is
not the case, indicating the inaccuracies contained in such document or draft or
indicating the information not furnished expressly for use therein. The
indemnity agreement contained in this Section X shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the other party.
33
10.2 Indemnification of Officers and Directors.
(a) CFC covenants and agrees that it will cause each person who is an
officer or director of AFC or a director of AB (an "Indemnitee") on the
Closing Date to be indemnified for any costs and expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") arising out of such person's service as
an officer or director of AFC or director of AB to the fullest extent to
which such Indemnitee is entitled under the Articles of Incorporation and
Bylaws of CFC in effect on the date hereof (except that this provision
shall not be construed so as to cause CFC to violate applicable law).
Without limiting the foregoing obligation, CFC agrees that all limitations
of liability existing in favor of an Indemnitee in the Articles of
Incorporation and Bylaws of AFC as in effect on the date hereof and the
laws of the State of South Carolina arising out of matters existing or
occurring at or prior to the Effective Time shall survive the Mergers and
shall continue in full force. CFC, upon request of such Indemnitee, shall
advance expenses in connection with such indemnification. The provisions of
this Section X shall survive the closing and shall be enforceable directly
by each officer and director of AFC benefited by this Section X.
(b) Any Indemnity wishing to claim indemnification under this Section
X, upon learning of such claims or liabilities, shall promptly notify CFC
thereof; provided, that the failure so to notify shall not affect the
obligations of CFC hereunder unless such failure materially increases CFC's
liability hereunder. In the event of any litigation giving rise to a claim
hereunder, (i) CFC shall have the right to assume the defense thereof, if
it so elects, and CFC shall pay all reasonable fees and expenses of counsel
for the Indemnities promptly as statements therefor are received; provided,
however, that CFC shall be obligated pursuant to this Section to pay for
only one firm of counsel for all Indemnities 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, (ii) the
Indemnities shall cooperate in the defense of any such matter, (iii) CFC
shall not be liable for any settlement effected without its prior written
consent and (iv) CFC shall have no obligation hereunder in the event a
federal banking agency or a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of an Indemnity in the manner
contemplated hereby is prohibited by applicable law.
10.3 Insurance. Prior to Closing, AFC shall use its best efforts to extend
its existing directors' and officers' liability insurance policy past the
Closing Date (spending up to approximately $100,000) and after Closing, CFC
shall take no action to terminate prematurely such policy.
SECTION XI. MISCELLANEOUS
11.1 Survival of Representations and Warranties. Except as otherwise
provided in this Reorganization Agreement, the representations, warranties and
covenants contained in this Reorganization Agreement or in any other documents
delivered pursuant hereto, shall not survive the Closing of the transactions.
Notwithstanding any investigation made by or on behalf of the parties, whether
before or after Closing Date, the parties shall be entitled to rely upon the
representations and warranties given or made by the other party(ies) herein.
Each of the covenants set forth in Sections 6.2, 6.14, 6.15, 6.16, 10.2 and 10.3
shall survive the Closing Date forever (except that this sentence shall not be
construed to extend any applicable statutes of limitations).
34
11.2 Entire Agreement. This Reorganization Agreement, including any
schedules, exhibits, lists and other documents referred to herein which form a
part hereof, contains the entire agreement of the parties with respect to the
subject matter contained herein and there are no agreements, warranties,
covenants or undertakings other than those expressly set forth herein.
11.3 Binding Agreement. This Reorganization Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that the Agreement shall not be
assigned by either of the parties hereto without the prior written consent of
the other party hereto.
11.4 Notices. Any notice given hereunder shall be in writing and shall be
deemed delivered and received upon reasonable proof of receipt. Unless written
designation of a different address is filed with each of the other parties
hereto, notice shall be transmitted to the following addresses:
For CFC: Xxxxxxx X. Hummers III
Carolina First Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
Copy to: Xxxxxxx X. Xxxxxxxx, Xx.
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
Xxxx Xxxxxx Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
For AFC: Xxxxxxx X. Xxxxxx
Anchor Financial Corporation
0000 Xxx Xxxxxx
Xxxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Fax: 000-000-0000
Copies to: Xxx Xxxxxxx
Xxxxxxx & XxXxxxxx, P.C.
000 Xxxxxxxx Xxxx - Xxxxx 000
Xxxxxxx, XX 00000
Fax: 000-000-0000
11.5 Counterparts. This Reorganization Agreement may be executed in one or
more Counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.6 Headings. The section and paragraph headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretations of this Reorganization Agreement.
35
11.7 Law Governing. This Reorganization Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina.
11.8 Amendment. This Reorganization Agreement may not be amended except by
an instrument in writing signed on behalf of all of the parties.
11.9 Waiver. Any term, provision or condition of this Reorganization
Agreement (other than that required by law) may be waived in writing at any time
by the party which is entitled to the benefits thereof.
END OF PAGE
36
IN WITNESS WHEREOF, this Reorganization Agreement has been duly entered as
of the date first written above.
WITNESS:
CAROLINA FIRST CORPORATION
_________________________ By: /s/ Xxxxxxx X. Hummers III
------------------------------
Xxxxxxx X. Hummers III
_________________________ Executive Vice President
CAROLINA FIRST BANK
_________________________ By: /s/ Xxxxxxx X. Hummers III
------------------------------
Xxxxxxx X. Hummers III
_________________________ Executive Vice President and Cashier
ANCHOR FINANCIAL CORPORATION
_________________________ By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx
_________________________ President and Chief Executive Officer
THE ANCHOR BANK
_________________________ By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx
_________________________ President and Chief Executive Officer
[Schedules omitted - will be provided upon request of the Commission.]
37
APPENDIX A
PLAN OF MERGER OF
ANCHOR FINANCIAL CORPORATION
WITH AND INTO
CFC INTERIM, INC.
Pursuant to this Plan of Merger (the "Plan of Merger"), Anchor Financial
Corporation ("AFC"), a South Carolina corporation headquartered in Myrtle Beach,
South Carolina, shall be merged with and into CFC Interim, Inc. ("Interim"), a
South Carolina corporation headquartered in Greenville, South Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following meanings:
1.1. "AB" shall mean Anchor Bank, a South Carolina state bank.
1.2. "Articles of Merger" shall mean the Articles of Merger to be executed
by Interim and AFC in a form appropriate for filing with the Secretary of State
of South Carolina, relating to the effective consummation of the Corporate
Merger as contemplated by the Plan of Merger.
1.3. "BCA" shall mean the South Carolina Business Corporation Act of 1988,
as amended.
1.4 "CFB" shall mean Carolina First Bank, a South Carolina corporation and
a wholly-owned subsidiary of CFC.
1.5. "CFC Common Stock" shall mean the common stock, par value $1.00 per
share, of CFC.
1.6. "Change of Control Transaction" shall mean, with respect to CFC, a
transaction in which a majority of the surviving entity of such transaction (or
a majority of the entity holding substantially all of the assets of CFC) is not
owned by persons holding CFC Common Stock immediately prior to such transaction.
1.7. "Corporate Merger" shall mean the merger of AFC with and into Interim
as more particularly set forth herein and in the Reorganization Agreement.
1.8. "Effective Time" shall mean the date and time which the Corporate
Merger becomes effective as more particularly set forth in Section 2.2 hereof.
Subject to the terms and conditions hereof, the Effective Time shall be such
time on such date as CFC shall notify AFC in writing not less than five days
prior thereto, which date shall not be more than 30 days after all conditions
have been satisfied or waived in writing.
1.9. "Exchange Ratio" shall mean the number of shares of CFC Common Stock
issuable in exchange for one share of AFC Common Stock, as calculated pursuant
to Section 3.1 hereof.
1.10. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.11. "Reorganization Agreement" shall mean the Reorganization Agreement
among CFC, CFB, AB and AFC dated the date hereof, to which this Plan of Merger
is attached as Appendix A.
1.12. "Rights" shall mean warrants, calls, commitments, options, rights
(whether stock appreciation rights, conversion rights, exchange rights, profit
participation rights, or otherwise), securities or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe for or acquire,
and other arrangements or commitments which obligate a Person to issue,
otherwise cause to become outstanding, sell, transfer, pledge, or otherwise
dispose of any of its capital stock or other ownership interests, or any voting
rights thereof or therein, or to pay monetary sums by reference to the existence
or market valuation, or in lieu and place, of any of its capital stock or
ownership interests therein.
1.13. "Shareholder Approvals" shall mean, as the context may require, the
duly authorized written consent of CFC to the merger of AB with and into CFB;
the approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the merger of AFC with and into Interim; and the
approval by the requisite vote of the shareholders of CFC at the CFC
Shareholders' Meeting of the merger of AFC with and into Interim, all in
accordance with the Reorganization Agreement and this Plan of Merger.
1.14. "Shareholders' Meeting" shall mean, as applicable, the meetings of
the shareholders of AFC and CFC at which the Corporate Merger shall be voted
upon.
1.15. "Surviving Corporation" shall mean Interim after consummation of the
Corporate Merger.
ARTICLE II. THE CORPORATE MERGER
2.1. Corporate Merger. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, AFC shall
merge with and into Interim, the separate existence of AFC shall cease, and
Interim (the "Surviving Corporation") shall survive and the name of the
Surviving Corporation shall be "Carolina First Corporation". By virtue of the
Corporate Merger and without any action on the part of the holders thereof, each
of the shares of AFC Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares held by AFC, CFC, Interim any AFC
Subsidiary or any CFC Subsidiary, in each case other than in a fiduciary
capacity or as a result of debts previously contracted (the "Excluded Shares"))
shall be converted into the right to receive the Merger Consideration referenced
in Article III below. Each of the shares of CFC Common Stock (including the
rights ("CFC Rights") issued pursuant to a Shareholder Rights Agreement, dated
November 9, 1993 (as amended, the "CFC Rights Agreement")), and any shares of
any CFC Subsidiary or AFC Subsidiary outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding, and shall not be
converted, exchanged or altered in any manner as a result of the Corporate
Merger.
2.2. Effective Time. The Corporate Merger shall become effective on the
date and at the time specified in the Articles of Merger, and in the form to be
filed with the Secretary of State of the State of South Carolina.
2.3. Capitalization. The number of authorized shares of capital stock of
the Surviving Corporation shall be the same as immediately prior to the
Corporate Merger.
2.4. Articles of Incorporation. The articles of incorporation of Interim as
in effect at the Effective Time shall be and remain the articles of
incorporation of the Surviving Corporation.
2.5. Bylaws. The Bylaws of Interim, as in effect at the Effective Time,
shall continue in full force and effect as the bylaws of the Surviving
Corporation until otherwise amended as provided by law or by such bylaws.
2.6. Properties and Liabilities of AFC and CFC; Management. At the
Effective Time, the separate existence and corporate organization of AFC shall
cease, and Interim shall thereupon and thereafter, to the extent consistent with
applicable law and with its articles of incorporation and the changes, if any,
provided by the Corporate Merger, possess all the rights, privileges,
immunities, liabilities and franchises, of a public as well as a private nature,
of AFC without further act or deed. The directors and officers of Interim in
office immediately prior to the Corporate Merger becoming effective shall be the
directors and officers of the Surviving 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.
ARTICLE III. MERGER CONSIDERATION
3.1. Merger Consideration. In connection with the Corporate Merger, each
share of AFC Common Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Corporate Merger and without any action
on the part of the holder thereof, be exchanged for and converted into 2.175
shares of CFC Common Stock (the "Exchange Ratio"). All of the stock prices set
forth in this Section 3.1 shall also be subject to equitable adjustment for
stock splits, stock dividends, reverse stock splits and similar items.
3.2. CFC Common Stock; Interim Common Stock. None of the shares of CFC
shall be converted in the Corporate Merger and the capitalization of CFC after
the Corporate Merger shall remain unchanged (except to reflect the issuance of
shares in Section 3.1 above). None of the shares of Interim shall be converted
in the Corporate Merger and the capitalization of Interim after the Corporate
Merger shall remain unchanged.
3.3. Authorized or Treasury Shares. Any and all shares of AFC Common Stock
held as treasury shares by AFC or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. Fractional Shares. No fractional shares of CFC Common Stock will be
issued as a result of the Merger. In lieu of the issuance of fractional shares
pursuant to Section 3.1 hereof, cash will be paid to the holders of the AFC
Common Stock in respect of any fractional share that would otherwise be issuable
based on the Ending Price.
3.5. Excluded Shares. Each of the Excluded Shares shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
3.6. Equitable Adjustments. In the event of any change in the outstanding
CFC Common Stock by reason of a stock dividend, stock split, stock
consolidation, recapitalization, reorganization, merger, split up or the like,
the Conversation Ratio and all stock prices set forth in this Article III shall
be appropriately adjusted so as to preserve, but not increase, the benefits of
this Plan of Merger to the holders of AFC Common Stock.
3.7. Transfers. At the Effective Time, the stock transfer books of AFC
shall be closed and no transfer of AFC Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of AFC Common Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. Issuance of CFC Certificates; Cash for Fractional Shares.
(a) As soon as practicable after the Effective Time (but in no event
more than five days after the Effective Time), CFC or its transfer agent
(in such capacity, the "Exchange Agent") shall mail, or cause to be mailed,
and otherwise make available to each record holder of Shares, a form of the
letter of transmittal and instructions for use in effecting surrender and
exchange of certificates which immediately before the Effective Time
represented shares of AFC Common Stock ("Certificates") for payment
therefor. Upon receipt of such notice and transmittal form, each holder of
Certificates at the Effective Time shall surrender the Certificate or
Certificates to the Exchange Agent, and shall promptly upon surrender
receive in exchange therefor the Merger Consideration provided in Section 3
of this Plan of Merger. If any portion of the payment to be made upon
surrender and exchange of a Certificate is to be paid to a person other
than the person in whose name the Certificate is registered, it shall be a
condition of such payment that the Certificate shall be properly endorsed
or otherwise in proper form for transfer and that the person requesting
such payment shall pay in advance any transfer or other taxes or establish
to the satisfaction of CFC that no such tax is applicable. Upon surrender,
each Certificate shall be canceled. In addition, Certificates surrendered
for exchange by any person constituting an affiliate of AFC for purposes of
Rule 145(c) under the Securities Act of 1933, as amended (the "Securities
Act"), shall not be exchanged for certificates representing shares of CFC
Common Stock until CFC has received the written agreement from such person
as provided for in Section 6.4 of the Reorganization Agreement.
(b) Adequate provisions shall be made to permit Certificates to be
surrendered and exchanged in person not later than the business day
following the Effective Time.
4.2. Authorized Withholdings. CFC shall not be obligated to deliver the
consideration to which any former holder of AFC Common Stock is entitled as a
result of the Merger until such holder surrenders his or her certificate or
certificates representing the shares of AFC Common Stock for exchange as
provided in this Article IV, or, in default thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be reasonably required in each
case by CFC or AFC. In addition, no dividend or other distribution payable to
the holders of record of CFC Common Stock as of any time subsequent to the
Effective Time shall be paid to the holder of any certificate representing
shares of AFC Common Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section 4.1
above. However, upon surrender of the AFC Common Stock certificate both the CFC
Common Stock certificate, together with all such withheld dividends or other
distributions and any withheld cash payments in respect of fractional share
interest, but without any obligation for payment of interest by such
withholding, shall be delivered and paid with respect to each share represented
by such certificate.
4.3. Limited Rights of Former AFC Shareholders. After the Effective Time,
each outstanding certificate representing shares of AFC Common Stock prior to
the Effective Time shall be deemed for all corporate purposes (other than voting
and the payment of dividends and other distributions to which the former
shareholder of AFC Common Stock may be entitled) to evidence only the right of
the holder thereof to surrender such certificate and receive the requisite
number of shares of CFC Common Stock in exchange therefor (and cash in lieu of
fractional shares) as provided in this Plan of Merger.
ARTICLE V. STOCK OPTIONS AND OTHER RIGHTS
5.1. Options. All options set forth in Schedule 3.5 to the Reorganization
Agreement shall be converted into the right to receive shares of CFC Common
Stock based on the Exchange Ratio.
ARTICLE VI. MISCELLANEOUS
6.1. Conditions Precedent. Consummation of the Merger is conditioned upon
receipt of the Shareholder Approvals. In addition, consummation of the Merger is
conditioned upon the fulfillment of the conditions precedent set forth in
Article VII and Article VIII of the Reorganization Agreement, subject to waiver
of any such conditions, if appropriate, as provided thereunder.
6.2. Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time as provided in Article IX of the Reorganization Agreement.
6.3. Amendments. To the extent permitted by law, this Plan of Merger may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the board of directors of each of the parties hereto; provided,
however, that this Plan of Merger may not be amended after the Shareholders'
Meetings except in accordance with applicable law.
Dated as of this _____ day of _______________, 2000.
APPENDIX B
PLAN OF MERGER
OF
ANCHOR BANK
WITH AND INTO
CAROLINA FIRST BANK
Pursuant to this Plan of Merger (the "Plan of Merger"), Anchor Bank ("AB"),
a state banking corporation existing under the laws of South Carolina, shall be
merged with and into Carolina First Bank ("CFB"), a state banking corporation
existing under the laws of South Carolina.
ARTICLE I. DEFINITIONS
The capitalized terms set forth below shall have the following meanings.
1.1. "AB Common Stock" shall mean the common stock, par value $__ per
share, of AB.
1.2. "Articles of Merger" shall mean the Articles of Merger to be executed
by CFB and AB in a form appropriate for filing with the Secretary of State of
South Carolina, relating to the effective consummation of the Bank Merger as
contemplated by the Plan of Merger.
1.3. "BCA" shall mean the South Carolina Business Corporation Act of 1988,
as amended.
1.4. "Bank Merger" shall mean the merger of AB with and into CFB as more
particularly set forth in the Reorganization Agreement.
1.5. "CFB Common Stock" shall mean the common stock, par value $1.00 per
share, of CFB.
1.6. "CFC" shall mean Carolina First Corporation, a bank holding company
headquartered in Greenville, South Carolina.
1.7. "Effective Time" shall mean the date and time which the Bank Merger
becomes effective as more particularly set forth in Section 2.2 hereof. Subject
to the terms and conditions hereof, the Effective Time shall be such time on
such date as CFB shall notify AB in writing not less than five days prior
thereto, which date shall not be more than 30 days after all conditions have
been satisfied or waived in writing.
1.8. AFC. Anchor Financial Corporation, a corporation organized and
existing under the laws of the state of South Carolina.
1.9. "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.10. "Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
1.11. "Reorganization Agreement" shall mean the Reorganization Agreement
among CFC, CFB and AFC dated the date hereof, to which this Plan of Merger is
attached as Appendix A.
1.12. "Shareholder Approvals" shall mean, as the context may require, the
duly authorized written consent of CFC to the merger of AB with and into CFB;
the approval by the requisite vote of the shareholders of AFC at the AFC
Shareholders' Meeting of the merger of AFC with and into CFC; and the approval
by the requisite vote of the shareholders of CFC at the CFC Shareholders'
Meeting of the acquisition of AFC.
1.13. "Surviving Corporation" shall mean CFB after consummation of the Bank
Merger.
ARTICLE II. THE BANK MERGER
2.1. Bank Merger. At the Effective Time, subject to the terms and
conditions of the Reorganization Agreement and this Plan of Merger, AB shall
merge with and into CFB, the separate existence of AB shall cease, and CFB (the
"Surviving Corporation") shall survive and the name of the Surviving shall be
"Carolina First Bank". By virtue of the Bank Merger and without any action on
the part of the holders thereof, each of the shares of AB Common Stock issued
and outstanding immediately prior to the Effective Time, shall be converted into
the right to receive the Merger Consideration referenced in Article III below.
Each of the shares of CFB Common Stock, and any shares of any CFB subsidiary or
AB subsidiary outstanding immediately prior to the Effective Time shall continue
to be issued and outstanding, and shall not be converted, exchanged or altered
in any manner as a result of the Bank Merger.
2.2. Effective Time. The Bank Merger shall become effective on the date and
at the time specified in the Articles of Merger, and in the form to be filed
with the Secretary of State of the State of South Carolina and the FDIC.
2.3. Capitalization. The number of authorized shares of capital stock of
the Surviving Corporation shall be the same as immediately prior to the Bank
Merger.
2.4. Articles of Incorporation. The articles of incorporation of CFB as in
effect at the Effective Time shall be and remain the articles of incorporation
of the Surviving Corporation.
2.5. Bylaws. The Bylaws of CFB, as in effect at the Effective Time, shall
continue in full force and effect as the bylaws of the Surviving Corporation
until otherwise amended as provided by law or by such bylaws.
2.6. Properties and Liabilities of AB and CFB; Management. At the Effective
Time, the separate existence and corporate organization of AB shall cease, and
CFB shall thereupon and thereafter, to the extent consistent with applicable law
and with its articles of incorporation and the changes, if any, provided by the
Bank Merger, possess all the rights, privileges, immunities, liabilities and
franchises, of a public as well as a private nature, of AB without further act
or deed. The directors and officers of CFB in office immediately prior to the
Bank 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.
ARTICLE III. MERGER CONSIDERATION
3.1. Merger Consideration. In connection with the Bank Merger, all shares
of AB Common Stock issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Bank Merger and without any action on the part of
the holder thereof, be exchanged for and converted into 100 shares of CFB Common
Stock (the "Merger Consideration").
3.2. CFB Common Stock. None of the shares of CFB shall be converted in the
Bank Merger and the capitalization of CFB after the Bank Merger shall remain
unchanged.
3.3. Authorized or Treasury Shares. Any and all shares of AB Common Stock
held as treasury shares by AB or authorized but unissued shares shall be
canceled and retired at the Effective Time, and no consideration shall be issued
or given in exchange therefor.
3.4. Transfers. At the Effective Time, the stock transfer books of AB shall
be closed and no transfer of AB Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding, none of
the parties to the Reorganization Agreement or any affiliate of the foregoing
shall be liable to a holder of AB Common Stock for any amount paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
ARTICLE IV. EXCHANGE OF COMMON STOCK CERTIFICATES
4.1. Issuance of CFB Certificates; Cash for Fractional Shares. After the
Effective Time, each holder of shares of AB Common Stock issued and outstanding
at the Effective Time shall surrender the certificate or certificates
representing such shares to CFB or its transfer agent, and shall promptly upon
surrender receive in exchange therefor the Merger Consideration provided in
Section 3.1 of this Plan of Merger.
4.2. Authorized Withholdings. CFB shall not be obligated to deliver the
consideration to which any former holder of AB Common Stock is entitled as a
result of the Bank Merger until such holder surrenders his or her certificate or
certificates representing the shares of AB Common Stock for exchange as provided
in this Article IV, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be reasonably required in each case by
CFB or AB. In addition, no dividend or other distribution payable to the holders
of record of CFB Common Stock as of any time subsequent to the Effective Time
shall be paid to the holder of any certificate representing shares of AB Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 above. However, upon
surrender of the AB Common Stock certificate both the CFB Common Stock
certificate, together with all such withheld dividends or other distributions
and any withheld cash payments in respect of fractional share interest, but
without any obligation for payment of interest by such withholding, shall be
delivered and paid with respect to each share represented by such certificate.
4.3. Limited Rights of Former AB Shareholders. After the Effective Time,
each outstanding certificate representing shares of AB Common Stock prior to the
Effective Time shall be deemed for all Bank purposes (other than voting and the
payment of dividends and other distributions to which the former shareholder of
AB Common Stock may be entitled) to evidence only the right of the holder
thereof to surrender such certificate and receive the requisite number of shares
of CFB Common Stock in exchange therefor as provided in this Plan of Merger.
ARTICLE V. MISCELLANEOUS
5.1. Conditions Precedent. Consummation of the Bank Merger is conditioned
upon receipt of the Shareholder Approvals. In addition, consummation of the Bank
Merger is conditioned upon the fulfillment of the conditions precedent set forth
in Section VII and Section VIII of the Reorganization Agreement, subject to
waiver of any such conditions, if appropriate, as provided thereunder.
5.2. Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time as provided in Section IX of the Reorganization Agreement.
5.3. Amendments. To the extent permitted by law, this Plan of Merger may be
amended by a subsequent writing signed by all of the parties hereto upon the
approval of the board of directors of each of the parties hereto.
Dated as of this _____ day of _______________, 2000.
APPENDIX C
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE
AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST BANK, CAROLINA FIRST CORPORATION
and
XXXXXXX X. XXXXXX
This Noncompetition, Severance and Employment Agreement (this "Agreement")
is made and entered into as of this 10th day of January 2000, to be effective at
the effective time of the acquisition of Anchor Financial Corporation by
Carolina First Corporation ("Effective Time") by and between Xxxxxxx X. Xxxxxx,
an individual (the "Executive"), Carolina First Corporation and Carolina First
Bank, a South Carolina banking corporation headquartered in Greenville, South
Carolina (the "Company"). As used herein, the term "Company" shall include the
Company and any and all of its affiliates where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that the
Executive will be instrumental in the success of the Company;
WHEREAS the Company desires to employ the Executive as Chairman of the
Board and Chief Operating Officer of Carolina First Bank and in such other
capacities as set forth herein;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions hereof, Carolina First Bank
hereby employs the Executive and Executive hereby accepts such employment
as the Chairman of the Board and Chief Operating Officer of the Company
having such duties and responsibilities as are set forth in Section 3
below.
2. Definitions. For purposes of this Agreement, the following terms shall have
the meanings specified below.
-2-
"Change in Control" shall mean
(i) The acquisition, directly or indirectly, by any Person (other than
(A) any employee plan established by the Company, (B) the Company or any of
its affiliates (as defined in Rule 12b-2 promulgated under the Exchange
Act), (C) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company), of securities of the
Company (not including in the securities beneficially owned by such Person
any securities acquired directly from the Company) representing an
aggregate of 20% or more of the combined voting power of the Company's then
outstanding voting securities;
(ii) During any period of up to two consecutive years individuals who,
at the beginning of such period, constitute the Board cease for any reason
to constitute at least a majority thereof, provided that any person who
becomes a director subsequent to the beginning of such period and whose
nomination for election is approved by at least two- thirds of the
directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously
so approved (other than a director (A) whose initial assumption of office
is in connection with an actual or threatened election contest relating to
the election of the directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act, or (B) who was
designated by a Person who has entered into an agreement with the Company
to effect a transaction described in clause (i), (iii) or (iv) hereof)
shall be deemed a director as of the beginning of such period;
-3-
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A) a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of any Company, at least 51% of the combined
voting power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
is or becomes the beneficial owner (as defined in clause (i) above),
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined voting
power of the Company's then outstanding voting securities; or (C) a plan of
complete liquidation of the Company or an agreement for the sale or
disposition of the Company of all or substantially all of the Company's
assets; or
(iv) The occurrence of any other event or circumstance which is not
covered by (i) through (iii) above which the Board determines affects
control of the Company and, in order to implement the purposes of this
Agreement as set forth above, adopts a resolution that such event or
circumstance constitutes a Change in Control for the purposes of this
Agreement.
-4-
"Cause" shall mean:
(i) In the absence of a Change in Control, (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a material
breach of, or the wilful failure or refusal by the Executive to perform and
discharge the Executive's duties, responsibilities and obligations under
this Agreement and pursuant to a mutually acceptable job description; (e)
any act of moral turpitude or wilful misconduct by the Executive intended
to result in personal enrichment of the Executive at the expense of the
Company, or any of its affiliates or which has a material adverse impact on
the Business or reputation of the Company or any of its affiliates (such
determination to be made by the Board in its reasonable judgment); (f)
intentional material damage to the property or Business of the Company; (g)
gross negligence; or (h) the ineligibility of the Executive to perform his
duties because of a ruling, directive or other action by any agency of the
United States or any state of the United States having regulatory authority
over the Company.
(ii) After a Change in Control (a) material criminal fraud, (b) gross
negligence, (c) intentional material damage to the property or business of
the Company, or (d) the commission of a material felony, but only if (1)
the Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify in
reasonable detail specific facts regarding any such assertion, (2)
Executive is given thirty (30) days to cure any alleged violation of this
Agreement, (3) such written notice is provided to the Executive a
reasonable time before the Board meets to consider any possible termination
for cause, (4) at or prior to the meeting of the Board to consider the
-5-
matters described in the written notice, an opportunity is provided to the
Executive and his counsel to be heard before the Board with respect to the
matters described in the written notice, (5) any resolution or other Board
action held with respect to any deliberation regarding or decision to
terminate the Executive for cause is duly adopted by a vote of a majority
of the entire Board of the Company at a meeting of the Board called and
held and (6) the Executive is promptly provided with a copy of the
resolution or other corporate action taken with respect to such
termination. No act or failure to act by the Executive shall be considered
wilful unless done or omitted to be done by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of the Company. The unwillingness of the Executive to accept any
or all of a change in the nature or scope of his position, authorities or
duties, a reduction in his total compensation or benefits, a relocation
that he deems unreasonable in light of his personal circumstances, or other
action by or request of the Company in respect of his position, authority,
or responsibility that he reasonably deems to be contrary to this
Agreement, may not be considered by the Board to be a failure to perform or
misconduct by the Executive.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"Confidential Information" shall mean all business and other information
relating to the business of the Company, including without limitation, technical
or nontechnical data, programs, methods, techniques, processes, financial data,
financial plans, product plans, and lists of actual or potential customers,
which (i) derives economic value, actual or potential, from not being generally
-6-
known to, and not being readily ascertainable by proper means by, other Persons,
and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy or confidentiality. Such information and compilations of
information shall be contractually subject to protection under this Agreement
whether or not such information constitutes a trade secret and is separately
protectable at law or in equity as a trade secret. Confidential Information does
not include confidential business information which does not constitute a trade
secret under applicable law two years after any expiration or termination of
this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a result
of physical or mental incapacity to substantially perform his duties for the
Company on a full-time basis, with or without accommodation, for a period of six
(6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive which, is due to (i) a change of the Executive's
responsibilities, position (including status as Chief Operating Officer of the
Company, its successor or ultimate parent entity, office, title, reporting
relationships or working conditions) authority or duties (including changes
resulting from the assignment to the Executive of any duties inconsistent with
his positions, duties or responsibilities; or (ii) a change in the terms or
status (including the seven (7) year Term) of this Agreement; or (iii) a
reduction in the Executive's compensation or benefits; or (iv) a forced
relocation of the Executive from the Myrtle Beach metropolitan area; or (v) a
significant increase in the Executive's travel requirements.
-7-
"Person" shall mean any individual, corporation, bank, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other entity.
"Voluntary Termination" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. Duties.
3.1 During the term hereof, the Executive shall be provided such office,
and administrative, office automation, voice and network data support
commensurate with Executive's position and requirements and consistent with
those provided other high-ranking officers of the Company and shall have such
mutually agreeable duties and authority as are typical of the Chairman of the
Board and Chief Operating Officer of a company such as the Company. Executive
shall be a member of the Management Operating Committee (MOC) and shall be a
non-voting attendee of the Company's Compensation Committee. Executive shall
report to the Chief Executive Officer of Carolina First Corporation. Executive
agrees that during the Term hereof, he will devote his full working time,
attention and energies to his mutually agreed upon job duties. Executive shall
not, without the prior written consent of the Company, at any time during the
Term hereof (i) accept employment with, or render services of a business,
professional or commercial nature to, any Person other than the Company, (ii)
engage in any venture or activity which the Company may in good faith consider
to be competitive with or adverse to the business of the Company or of any
affiliate of the Company, whether alone, as a partner, or as an officer,
director, employee or shareholder or otherwise, except that the ownership of not
more than 5% of the stock or other equity interest of any
-8-
publicly traded corporation or other entity shall not be deemed a violation of
this Section, or (iii) engage in any venture or activity which the Board may in
good faith consider to interfere with Executive's performance of his duties
hereunder. Executive may continue to serve on the boards of directors for which
he is currently a member. The Company shall incur no obligations as a result of
Executive's service.
3.2 Provided Executive is not terminated for cause and has not been
convicted of fraud, embezzlement, or any other felonly, Executive will be
nominated to serve on the Board of the Company and the Board of Directors of
Carolina First Corporation for each year until Executive reaches age sixty-five
(65). Provided, however, if Executive is not elected to the Board of the Company
or the Board of Directors of Carolina First Corporation or their successors and
not an active employee, Executive will receive Board fees as if Executive were
an outside board member until Executive reaches the age of sixty-five (65).
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a term of seven (7) years (the "Term")
commencing at the Effective Time. Except for the obligations under Sections 6.9
and 6.10, this Agreement shall terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate Executive's
employment hereunder at any time during the Term hereof (i) for Cause, (ii) if
the Executive becomes Disabled, (iii) upon the Executive's death, or (iv)
without Cause.
-9-
5.1.1 If the Company terminates Executive's employment under this
Agreement prior to the fourth anniversary of the Effective Time, pursuant
to clauses (i), (ii) or (iii) of Section 5.1 the Company's obligations
hereunder shall cease as of the date of termination except as provided in
Section 6.11; provided, however, if Executive is terminated for Cause after
a Change in Control, then such termination shall be treated as a Voluntary
Termination as contemplated in Section 5.2.2 below. If the Company
terminates Executive's employment under this Agreement pursuant to clause
(i) of Section 5.1 after the fourth anniversary of the Effective Time,
Executive shall be entitled to receive as severance the compensation and
benefits provided in Section 6 for the remainder of the Term. If the
Company terminates Executive's employment under this Agreement pursuant to
clauses (ii) and (iii) of Section 5.1 after the fourth anniversary of the
Effective Time, the Company's obligations hereunder shall cease as of the
date of termination, except for the obligations under Sections 6.9, 6.10,
and 6.11.
5.1.2 If the Company terminates Executive pursuant to clause (iv) of
Section 5.1, Executive shall be entitled to receive immediately as
severance upon such termination, aggregate compensation and benefits
provided in Section 6 for the remainder of the Term.
5.1.3 In the event of such termination, pursuant to clause (iv) of
Section 5.1, (A) all rights of Executive pursuant to awards of share grants
or options granted by the Company shall be deemed to have vested and shall
be released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B) the
Executive shall be deemed to be credited with service with the
-10-
Company for such remaining Term for the purposes of the Company's benefit
plans; (C) the Executive shall be deemed to have retired from the Company
and shall be entitled as of the termination date, or at such later time as
he may elect to commence receiving the total combined qualified and
non-qualified retirement benefit to which he is entitled hereunder, or his
total non-qualified retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (D) if any provision of this Section
5.1.3 cannot, in whole or in part, be implemented and carried out under the
terms of the applicable compensation, benefit, or other plan, or
arrangement of the Company because the Executive has ceased to be an actual
employee of the Company, because the Executive has insufficient or reduced
credited service based upon his actual employment by the Company, because
the plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company itself
shall pay or otherwise provide the equivalent of such rights, benefits and
credits for such benefits to Executive, his dependents, beneficiaries and
estate.
5.2 By Executive. Executive shall have the right to terminate his
employment hereunder if (i) the Company materially breaches this Agreement and
such breach is not cured within 30 days after written notice of such breach is
given by Executive to the Company; (ii) there is a Voluntary Termination; or
(iii) there is an Involuntary Termination.
5.2.1 If Executive terminates his employment other than pursuant to
clauses (i), (ii) or (iii) of Section 5.2 prior to the fourth anniversary
of the Effective Time, the Company's obligations under this Agreement shall
cease as of the date of such
-11-
termination and Executive shall be subject to the confidentiality
provisions set forth in Section 8 hereof and the noncompetition provisions
set forth in Section 9 hereof.
5.2.2 If during the Term, Executive terminates his employment
hereunder pursuant to clauses (i), (ii) or (iii) of Section 5.2 or at any
time after the fourth anniversary of the Effective Time, Executive shall be
entitled to receive and the compensation and benefits provided in Section 6
for the remainder of the Term and for the period specified in Sections 6.9
and 6.10.
5.2.3 In addition, in the event of such termination pursuant to any of
clauses (i) through (iii) of this Section 5.2, (A) all rights of Executive
pursuant to awards of share grants or options granted by the Company shall
be deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be deemed
to be credited with service with the Company for such remaining Term for
the purposes of the Company's benefit plans, and (C) the Executive shall be
deemed to have retired from the Company and shall be entitled as of the
termination date, or at such later time as he may elect to commence
receiving the total combined qualified and non-qualified retirement benefit
to which he is entitled hereunder, or his total non-qualified retirement
benefit hereunder if under the terms of the Company's qualified retirement
plan for salaried employees he is not entitled to a qualified benefit, and
(D) if any provision of this Section 5.2.3 cannot, in whole or in part, be
implemented and carried out under the terms of the applicable compensation,
benefit, or other plan or arrangement of the Company because the Executive
has ceased to be an actual
-12-
employee of the Company, because the Executive has insufficient or reduced
credited service based upon his actual employment by the Company, because
the plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company itself
shall pay or otherwise provide the equivalent of such rights, benefits and
credits for such benefits to Executive, his dependents, beneficiaries and
estate.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall pay to
Executive an annual base salary established by the Board which for the first
year of the Term shall be not less than Five Hundred Twenty Thousand Dollars
($520,000.00). Executive's salary will be reviewed by the Board at the beginning
of each of its fiscal years and, in the sole discretion of the Board, may be
increased for such year; provided, however, that on January 1 of the year
following the acquisition of Anchor Financial Corporation by Carolina First
Corporation and each January 1 during the term hereof, Executive's annual base
salary shall be increased by five percent (5%) and provided further that
Executive's annual base salary can only be increased and cannot be reduced.
Following a Change in Control, Executive's annual base salary shall be increased
annually by a percentage at least equal to the average annual increase over the
past three years, but in no event
-13-
shall the increase be less than five percent (5%) and during the Term hereof
cannot be reduced.
6.2 Annual Bonus. During the Term hereof, Executive will receive an annual
bonus equaling fifty percent (50%) of Executive's annual base salary. The annual
bonus will be paid on or before March 31 of each calendar year.
6.3 Annual Incentive Bonus. During the Term hereof, the Board may pay to
Executive an annual incentive cash bonus in accordance with the terms of the
Short Term Incentive Compensation Plan provided the average incentive
compensation for other members of the MOC exceeds the Executive's annual bonus
set forth in Section 6.2 and provided further that any annual incentive bonus
paid pursuant to this Section 6.3 when combined with the annual bonus paid
pursuant to Section 6.3 shall not exceed the average incentive compensation for
other members of the MOC.
6.4 Long Term Incentive Compensation Plan. During the Term hereof, the
Board may pay to Executive long term incentive compensation in accordance with
the Long Term Incentive Compensation Plan
6.5 Stock Options and Restricted Stock. During the Term hereof and while
Executive is actively employed, the Board shall grant Executive options to
purchase Company Common Stock and restricted stock in accordance with the terms
of the Company's Long Term Incentive Compensation Plan.
-14-
6.6 Other Benefits. Executive shall be entitled to share in any other
employee benefits generally provided by the Company to its most highly ranking
executives for so long as the Company provides such benefits.
6.7 Automobile. During the Term, the Company also agrees to provide
Executive with a Company-paid automobile, consistent with the model of
automobile provided to other senior managers and allow Executive to trade
automobiles every three (3) years.
6.8 Clubs. During the Term, the Company agrees to provide Executive with
reasonable club dues for one country club and two business club(s), which shall
include full membership at The Dunes Golf and Beach Club in Myrtle Beach, South
Carolina.
6.9 Supplemental Retirement Payment. In the event of a Change in Control; a
termination by Executive pursuant to Section 5.2(iii); or the Executive
completes four (4) years of active employment under this Agreement, the Company
will make an annual supplemental retirement payment of One Hundred Fifty
Thousand Dollars ($150,000.00) beginning on Executive's sixty-fifth (65th)
birthday or Executive's death, whichever first occurs, and continuing for
fifteen (15) years to Executive; provided, however, in the event of Executive's
death prior to the end of such fifteen (15) year period, the supplemental
retirement payment will be paid or continue to be paid to Executive's estate or
designated beneficiary, if any, for the remainder of such fifteen (15) year
period.
-15-
6.10 Medical and Dental Insurance Benefits. Executive, Executive's spouse
and dependent children will be eligible for coverage by Carolina First's medical
and dental benefits, without cost, until Executive becomes eligible for
Medicare. When Executive becomes eligible for Medicare, the Company will
provide, at its expense for Executive and Executive's spouse for the remainder
of their lives, an insurance supplement for medical and dental insurance
coverage comparable (when combined with Medicare) to the coverage provided by
the Company at the time the supplemental insurance is purchased.
6.11 During the Term while Executive is actively employed, Executive shall
be entitled to education benefits similar to those provided other Company
executives, personal tax advisory services, and a $5,000,000 life insurance
policy and such disability insurance as may be purchased by $_____ per year in
premiums. If Executive becomes disabled and if the proceeds of the disability
policy purchased by the Company are insufficient to fund the Company's
obligation hereunder as if the Executive were not disabled, the Company will
fund the difference.
6.12 The payments hereunder are not subject to mitigation in the event
Executive receives compensation and is no longer actively employed.
7. Excess Parachute Payments.
7.1 It is the intention of the parties hereto that the severance payments
and other compensation provided for herein are reasonable compensation for
Executive's services to the Company and shall not constitute "excess parachute
payments" within the meaning of Section 280G
-16-
of the Code and any regulations thereunder. To the extent the provisions herein
for Executive's automobile, club membership, or other non-cash or
non-supplemental retirement compensation result in an "excess parachute payment"
as defined by Section 280(G)(b)(2) of the Code, Executive agrees to work in good
faith with the Company to ensure that the non-cash or non-supplemental
retirement compensation does not qualify as an "excess parachute payment."
7.2 To the extent that payments hereunder cause a "parachute payment," as
defined in Section 280G(b)2) of the Code, the Company shall indemnify Executive
and hold him harmless against all claims, losses, damages, penalties, expenses,
and excise taxes relating thereto. To effect this indemnification, the Company
shall pay Executive an additional amount that is sufficient to pay any excise
tax imposed by Section 4999 of the Code on the payments and benefits to which
Executive is entitled without the additional amount plus any penalties or
interest imposed by the Internal Revenue Service in regard to such amounts, plus
another additional amount sufficient to pay all the excise and income taxes on
the additional amounts. The determination of any additional amount that must be
paid under this section at any time shall be made in good faith by the
independent auditors then employed by the Company.
8. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all Confidential Information relating to the Company or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or
-17-
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. Upon the termination or expiration of his employment
hereunder, Executive agrees to deliver promptly to the Company all Company
files, customer lists, management reports, memoranda, research, Company forms,
financial data and reports and other documents supplied to or created by him in
connection with his employment hereunder (including all copies of the foregoing)
in his possession or control and all of the Company's equipment and other
materials in his possession or control. In no event shall an asserted violation
of the provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1 or by Executive pursuant to
Section 5.2, Executive shall not enter into an employment relationship or a
consulting arrangement with any other federally insured depository institution
headquartered or having a physical presence in the states of South Carolina or
North Carolina (hereinafter a "competitor") for a period of ten (10) years from
the Effective Time (the "Noncompete Period"). The obligations contained in this
Section 9 shall not prohibit Executive from being an owner of not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of Company to leave the employ of Company, including but not limited to a
competitor, or in any way interfere with the relationship
-18-
between Company and any employee thereof, (ii) hire any person who was an
employee of Company or any subsidiary at any time during the time that Executive
was employed by Company, or (iii) induce or attempt to induce any customer,
supplier, or other entity in a business relation of Company to cease doing
business with Company, or in any way interfere with the relationship between any
such customer, supplier, or business relation and Company or do business with a
competitor.
9.2 If, at the time of enforcement of this Section 9, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law. Executive agrees that the restrictions contained in this
Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by Executive of any
of the provisions of this Section 9, Company, in addition and supplementary to
other rights and remedies existing in its favor, may apply to any court of law
or equity of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce or prevent any violations of the provisions
hereof (without posting a bond or other security). In addition, in the event of
an alleged breach or violation by Executive of this Section 9, the Noncompete
Period shall be tolled until such breach or violation has been duly cured.
-19-
10. Trust. At the Effective Time, the Company shall establish and fund an
irrevocable trust in the amount of Four Million Seven Thousand Seven Hundred
Thirty-Three Dollars ($4,007,733) in connection with the termination of
Executive's employment with The Anchor Bank and fund the maximum amount of
obligations which could reasonably be expected to become payable hereunder under
any circumstances (which shall be a "rabbi trust" if so requested by Executive
in his discretion), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
acquirer of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and conditions as are reasonably necessary in
Executive's determination to ensure the Company's compliance with its
obligations hereunder. The Company will pay all management and other fees
associated with the administration of the trust established pursuant to this
Section 10.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
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To the Company: Carolina First Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Chairman of the Board
To Executive: Xxxxxxx X. Xxxxxx
000 Xxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
14. Remedies in the Absence of a Change in Control. The terms of this
Section 14 will apply in the absence of a Change in Control.
-21-
14.1 The Executive acknowledges that if he breaches or threatens to breach
his covenants and agreements in this Agreement, such actions may cause
irreparable harm and damage to the Company which could not be compensated in
damages. Accordingly, if Executive breaches or threatens to breach this
Agreement, the Company shall be entitled to injunctive relief, in addition to
any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question between the
Executive and the Company arising out of or related to the interpretation of
this Agreement or the breach of this Agreement, except as specifically governed
by the foregoing provisions where there may be irreparable harm and damage to
the Company which could not be compensated in damages, shall be decided by
arbitration in accordance with the rules of the American Arbitration
Association. This agreement to arbitrate shall be specifically enforceable under
applicable law in any court having jurisdiction. The award rendered by the
arbitrator shall be final and judgment may be entered upon it in accordance with
the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to engage legal
counsel to enforce his rights hereunder against the Company, Executive shall be
entitled to receive from the Company his reasonable attorneys' fees and costs;
provided that Executive shall not be entitled to receive those fees and costs
related to matters, if any, which were the subject of litigation and with
respect to which a judgment is rendered against Executive.
15. Remedies in the Event of a Change in Control. The terms of this Section
15 shall apply in the event of a Change of Control.
-22-
15.1 The Executive acknowledges that if he breaches or threatens to breach
his covenants and agreements in this Agreement, such actions may cause
irreparable harm and damage to the Company which could not be compensated in
damages. Accordingly, if Executive breaches or threatens to breach this
Agreement, the Company shall be entitled to injunctive relief, in addition to
any other rights or remedies of the Company. All claims, disputes and other
matters in question between the Executive and the Company arising out of or
related to the interpretation of this Agreement or the breach of this Agreement
shall be decided under and governed by the laws of the State of South Carolina.
15.2 The Company is aware that upon the occurrence of a Change in Control,
the Board or a stockholder of the Company may then cause or attempt to cause the
Company to refuse to comply with its obligations under this Agreement, or may
cause or attempt to cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or may take, or attempt
to take, other action to deny the Executive the benefits intended under this
Agreement. In these circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the parties that the Executive not be required
to incur the legal fees and expenses associated with the protection or
enforcement of his rights under this Agreement by litigation or other legal
action because such costs would substantially detract from the benefits intended
to be extended to the Executive hereunder, nor be bound to negotiate any
settlement of his rights hereunder under threat of incurring such costs.
Accordingly, if at any time after a Change of Control, it should appear to the
Executive that the Company is or has acted contrary to or is failing or has
failed to comply with any of its obligations under this Agreement for the reason
that it regards this Agreement to be void or unenforceable or for any other
reason, or that the Company has
-23-
purported to terminate his employment for cause or is in the course of doing so
in either case contrary to this Agreement, or in the event that the Company or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action designed to
deny, diminish or to recover from the Executive the benefits provided or
intended to be provided to him hereunder, and the Executive has acted in good
faith to perform his obligations under this Agreement, the Company irrevocably
authorizes the Executive from time to time to retain counsel of his choice at
the expense of the Company to represent him in connection with the protection
and enforcement of his rights hereunder, including without limitation
representation in connection with termination of his employment contrary to this
Agreement or with the initiation or defense of any litigation or other legal
action, whether by or against the Executive or the Company or any director,
officer, stockholder or other person affiliated with the Company, in any
jurisdiction. The reasonable fees and expenses of counsel selected from time to
time by the Executive as hereinabove provided shall be paid or reimbursed to the
Executive by the Company on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by such counsel representing
other officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements between them
and the Company, and, unless in his sole judgment use of common counsel could be
prejudicial to him or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use his best
efforts to agree with such other officers or executives to retain common
counsel.
16. Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.
17. Merger. This Agreement is the only employment agreement between the
parties and supersedes and replaces any and all other agreements, specifically
inlcuding the letter from Xxxx X. Xxxxxxx, Xx, to Executive dated January 5,
2000.
18. Amendments and Modifications. This Agreement may be amended or modified
only by a writing signed by other parties hereto.
19. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
CAROLINA FIRST BANK
/s/ Xxxx X Xxxxxxx, Xx.
-----------------------
By: Xxxx X. Xxxxxxx, Xx.
Chief Executive Officer
APPENDIX D
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE
AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST BANK, CAROLINA FIRST CORPORATION
and
XXXXX X. XXXXXX
This Noncompetition, Severance and Employment Agreement (this "Agreement")
is made and entered into as of this 10th day of January 2000, to be effective at
the effective time of the acquisition of Anchor Financial Corporation by
Carolina First Corporation ("Effective Time") by and between Xxxxx X. Xxxxxx, an
individual (the "Executive"), Carolina First Corporation and Carolina First
Bank, a South Carolina banking corporation headquartered in Greenville, South
Carolina (the "Company"). As used herein, the term "Company" shall include the
Company and any and all of its affiliates where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that the
Executive will be instrumental in the success of the Company;
WHEREAS the Company desires to employ the Executive as Senior Vice
President Finance of Carolina First Bank and in such other capacities as set
forth herein;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions hereof, Carolina First
Bank hereby employs the Executive and Executive hereby accepts such employment
as the Senior Vice President Finance of the Company having such duties and
responsibilities as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms shall
have the meanings specified below.
-2-
"Change in Control" shall mean
(i) The acquisition, directly or indirectly, by any Person (other than
(A) any employee plan established by the Company, (B) the Company or any of
its affiliates (as defined in Rule 12b-2 promulgated under the Exchange
Act), (C) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company), of securities of the
Company (not including in the securities beneficially owned by such Person
any securities acquired directly from the Company) representing an
aggregate of 20% or more of the combined voting power of the Company's then
outstanding voting securities;
(ii) During any period of up to two consecutive years individuals who,
at the beginning of such period, constitute the Board cease for any reason
to constitute at least a majority thereof, provided that any person who
becomes a director subsequent to the beginning of such period and whose
nomination for election is approved by at least two- thirds of the
directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously
so approved (other than a director (A) whose initial assumption of office
is in connection with an actual or threatened election contest relating to
the election of the directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act, or (B) who was
designated by a Person who has entered into an agreement with the Company
to effect a transaction described in clause (i), (iii) or (iv) hereof)
shall be deemed a director as of the beginning of such period;
-3-
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A) a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of any Company, at least 51% of the combined
voting power of the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
is or becomes the beneficial owner (as defined in clause (i) above),
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined voting
power of the Company's then outstanding voting securities; or (C) a plan of
complete liquidation of the Company or an agreement for the sale or
disposition of the Company of all or substantially all of the Company's
assets; or
(iv) The occurrence of any other event or circumstance which is not
covered by (i) through (iii) above which the Board determines affects
control of the Company and, in order to implement the purposes of this
Agreement as set forth above, adopts a resolution that such event or
circumstance constitutes a Change in Control for the purposes of this
Agreement.
-4-
"Cause" shall mean:
(i) In the absence of a Change in Control, (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a material
breach of, or the wilful failure or refusal by the Executive to perform and
discharge the Executive's duties, responsibilities and obligations under
this Agreement and pursuant to a mutually acceptable job description; (e)
any act of moral turpitude or wilful misconduct by the Executive intended
to result in personal enrichment of the Executive at the expense of the
Company, or any of its affiliates or which has a material adverse impact on
the Business or reputation of the Company or any of its affiliates (such
determination to be made by the Board in its reasonable judgment); (f)
intentional material damage to the property or Business of the Company; (g)
gross negligence; or (h) the ineligibility of the Executive to perform his
duties because of a ruling, directive or other action by any agency of the
United States or any state of the United States having regulatory authority
over the Company.
(ii) After a Change in Control (a) material criminal fraud, (b) gross
negligence,(c) intentional material damage to the property or business of
the Company, or (d) the commission of a material felony, but only if (1)
the Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify in
reasonable detail specific facts regarding any such assertion, (2)
Executive is given thirty (30) days to cure any alleged violation of his
Agreement, (3) such written notice is provided to the Executive a
reasonable time before the Board meets to consider any possible termination
for cause, (4) at or prior to the meeting of the Board to consider the
-5-
matters described in the written notice, an opportunity is provided to the
Executive and his counsel to be heard before the Board with respect to the
matters described in the written notice, (5) any resolution or other Board
action held with respect to any deliberation regarding or decision to
terminate the Executive for cause is duly adopted by a vote of a majority
of the entire Board of the Company at a meeting of the Board called and
held and (6) the Executive is promptly provided with a copy of the
resolution or other corporate action taken with respect to such
termination. No act or failure to act by the Executive shall be considered
wilful unless done or omitted to be done by him not in good faith and
without reasonable belief that his action or omission was in the best
interests of the Company. The unwillingness of the Executive to accept any
or all of a change in the nature or scope of his position, authorities or
duties, a reduction in his total compensation or benefits, a relocation
that he deems unreasonable in light of his personal circumstances, or other
action by or request of the Company in respect of his position, authority,
or responsibility that he reasonably deems to be contrary to this
Agreement, may not be considered by the Board to be a failure to perform or
misconduct by the Executive.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"Confidential Information" shall mean all business and other information
relating to the business of the Company, including without limitation, technical
or nontechnical data, programs, methods, techniques, processes, financial data,
financial plans, product plans, and lists of actual or potential customers,
which (i) derives economic value, actual or potential, from not being generally
-6-
known to, and not being readily ascertainable by proper means by, other Persons,
and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy or confidentiality. Such information and compilations of
information shall be contractually subject to protection under this Agreement
whether or not such information constitutes a trade secret and is separately
protectable at law or in equity as a trade secret. Confidential Information does
not include confidential business information which does not constitute a trade
secret under applicable law two years after any expiration or termination of
this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a result
of physical or mental incapacity to substantially perform his duties for the
Company on a full-time basis, with or without accommodation, for a period of six
(6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive which, is due to (i) a change of the Executive's
responsibilities, position (including status as Senior Vice President Finance of
the Company, its successor or ultimate parent entity, office, title, reporting
relationships or working conditions) authority or duties (including changes
resulting from the assignment to the Executive of any duties inconsistent with
his positions, duties or responsibilities; or (ii) a change in the terms or
status (including the seven (7) year Term) of this Agreement; or (iii) a
reduction in the Executive's compensation or benefits; or (iv) a forced
relocation of the Executive from the Myrtle Beach metropolitan area; or (v) a
significant increase in the Executive's travel requirements.
-7-
"Person" shall mean any individual, corporation, bank, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other entity.
"Voluntary Termination" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. Duties.
3.1 During the term hereof, the Executive shall be provided such
office, and administrative, office automation, voice and network data
support commensurate with Executive's position and requirements and
consistent with those provided other high-ranking officers of the Company
and shall have such mutually agreeable duties and authority as are typical
of the Senior Vice President Finance of a company such as the Company.
Executive shall report to Xxxxxxx X. Hummers, Executive Vice President of
Carolina First Corporation. Executive agrees that during the Term hereof,
he will devote his full working time, attention and energies to the
diligent performance of his mutually agreed upon duties. Executive shall
not, without the prior written consent of the Company, at any time during
the Term hereof (i) accept employment with, or render services of a
business, professional or commercial nature to, any Person other than the
Company, (ii) engage in any venture or activity which the Company may in
good faith consider to be competitive with or adverse to the business of
the Company or of any affiliate of the Company, whether alone, as a
partner, or as an officer, director, employee or shareholder or otherwise,
except
-8-
that the ownership of not more than 5% of the stock or other equity
interest of any publicly traded corporation or other entity shall not be
deemed a violation of this Section, or (iii) engage in any venture or
activity which the Board may in good faith consider to interfere with
Executive's performance of his duties hereunder. Executive may continue to
serve on the boards of directors for which he is currently a member. the
Company shall incur no obligations as a result of Executive's service.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a term of four (4) years (the "Term")
commencing at the Effective Time. Except for the obligations under Sections 6.9
and 6.10, this Agreement shall terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's
death, or (iv) without Cause.
5.1.1 If the Company terminates Executive's employment under this
Agreement prior to the second anniversary of the Effective Time,
pursuant to clauses (i), (ii) or (iii) of Section 5.1 the Company's
obligations hereunder shall cease as of the date of termination,
except as provided in Section 6.11; provided, however, if Executive is
-9-
terminated for Cause after a Change in Control, then such termination
shall be treated as a Voluntary Termination as contemplated in Section
5.2.2 below. If the Company terminates Executive's employment under
this Agreement pursuant to clause (i) of Section 5.1 after the second
anniversary of the Effective Time, Executive shall be entitled to
receive as severance the compensation and benefits provided in Section
6 for the remainder of the Term. If the Company terminates Executive's
employment under this Agreement pursuant to clauses (ii) and (iii) of
Section 5.1 after the second anniversary of the Effective Time, the
Company's obligations hereunder shall cease as of the date of
termination, except for the obligations under Sections 6.9, 6.10, and
6.11.
5.1.2 If the Company terminates Executive pursuant to clause (iv)
of Section 5.1, Executive shall be entitled to receive immediately as
severance upon such termination, aggregate compensation and benefits
provided in Section 6 for the remainder of the Term.
5.1.3 In the event of such termination, pursuant to clause (iv)
of Section 5.1, (A) all rights of Executive pursuant to awards of
share grants or options granted by the Company shall be deemed to have
vested and shall be released from all conditions and restrictions,
except for restrictions on transfer pursuant to the Securities Act of
1933, as amended, and (B) the Executive shall be deemed to be credited
with service with the Company for such remaining Term for the purposes
of the Company's benefit plans; (C) the Executive shall be deemed to
have retired from the Company and shall be entitled as of the
-10-
termination date, or at such later time as he may elect to commence
receiving the total combined qualified and non-qualified retirement
benefit to which he is entitled hereunder, or his total non-qualified
retirement benefit hereunder if under the terms of the Company's
qualified retirement plan for salaried employees he is not entitled to
a qualified benefit, and (D) if any provision of this Section 5.1.3
cannot, in whole or in part, be implemented and carried out under the
terms of the applicable compensation, benefit, or other plan, or
arrangement of the Company because the Executive has ceased to be an
actual employee of the Company, because the Executive has insufficient
or reduced credited service based upon his actual employment by the
Company, because the plan or arrangement has been terminated or
amended after the effective date of this Agreement, or because of any
other reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to
Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate his
employment hereunder if (i) the Company materially breaches this Agreement
and such breach is not cured within 30 days after written notice of such
breach is given by Executive to the Company; (ii) there is a Voluntary
Termination; or (iii) there is an Involuntary Termination.
5.2.1 If Executive terminates his employment other than pursuant
to clauses (i), (ii) or (iii) of Section 5.2 prior to the second
anniversary of the Effective Time, the Company's obligations under
this Agreement shall cease as of the date of such termination and
Executive shall be subject to the confidentiality provisions set forth
in Section 8 hereof and the noncompetition provisions set forth in
Section 9 hereof.
-11-
5.2.2 If during the Term, Executive terminates his employment
hereunder pursuant to clauses (i), (ii) or (iii) of Section 5.2 or at
any time after the second anniversary of the Effective Time, Executive
shall be entitled to receive and the compensation and benefits
provided in Section 6 for the remainder of the Term and for the period
specified in Sections 6.9 and 6.10.
5.2.3 In addition, in the event of such termination pursuant to
any of clauses (i) through (iii) of this Section 5.2, (A) all rights
of Executive pursuant to awards of share grants or options granted by
the Company shall be deemed to have vested and shall be released from
all conditions and restrictions, except for restrictions on transfer
pursuant to the Securities Act of 1933, as amended, and (B) the
Executive shall be deemed to be credited with service with the Company
for such remaining Term for the purposes of the Company's benefit
plans, and (C) the Executive shall be deemed to have retired from the
Company and shall be entitled as of the termination date, or at such
later time as he may elect to commence receiving the total combined
qualified and non-qualified retirement benefit to which he is entitled
hereunder, or his total non-qualified retirement benefit hereunder if
under the terms of the Company's qualified retirement plan for
salaried employees he is not entitled to a qualified benefit, and (D)
if any provision of this Section 5.2.3 cannot, in whole or in part, be
implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any
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other reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such benefits to
Executive, his dependents, beneficiaries and estate.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall pay to
Executive an annual base salary established by the Board which for the
first year of the Term shall be not less than Two Hundred Sixty-Five
Thousand Dollars ($265,000.00). Executive's salary will be reviewed by the
Board at the beginning of each of its fiscal years and, in the sole
discretion of the Board, may be increased for such year; provided, however,
that on January 1 of the year following the acquisition of Anchor Financial
Corporation by Carolina First Corporation and each January 1 during the
term hereof, Executive's annual base salary shall be increased by five
percent (5%) and provided further that Executive's annual base salary can
only be increased and cannot be reduced. Following a Change in Control,
Executive's annual base salary shall be increased annually by at least five
percent (5%) and during the Term hereof cannot be reduced.
6.2 Annual Bonus. During the Term hereof, Executive will receive an
annual bonus equaling fifty percent (50%) of Executive's annual base
salary. The annual bonus will be paid on or before March 31 of each
calendar year.
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6.3 Annual Incentive Bonus. During the Term hereof, the Board may pay
to Executive an annual incentive cash bonus in accordance with the terms of
the Short Term Incentive Compensation Plan provided the average incentive
compensation for other senior managers exceeds the Executive's annual bonus
set forth in Section 6.2 and provided further that any annual incentive
bonus paid pursuant to this Section 6.3 when combined with the annual bonus
paid pursuant to Section 6.3 shall not exceed the average incentive
compensation for other senior managers.
6.4 Long Term Incentive Compensation Plan. During the Term hereof, the
Board may pay to Executive long term incentive compensation in accordance
with the Long Term Incentive Compensation Plan
6.5 Stock Options and Restricted Stock. During the Term hereof and
while Executive is actively employed, the Board shall grant Executive
options to purchase Company Common Stock and restricted stock in accordance
with the terms of the Company's Long Term Incentive Compensation Plan.
6.6 Other Benefits. Executive shall be entitled to share in any other
employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits.
6.7 Automobile. During the Term, the Company also agrees to provide
Executive with a Company-paid automobile, consistent with the model of
automobile provided to other senior managers and allow Executive to trade
automobiles every three (3) years.
-14-
6.8 Clubs. During the Term, the Company agrees to provide Executive
with reasonable club dues for one country club and two business club(s),
which shall include full membership at The Dunes Golf and Beach Club in
Myrtle Beach, South Carolina.
6.9 Supplemental Retirement Payment. In the event of a Change in
Control; a termination by Executive pursuant to Section 5.2.(iii); or the
Executive completes two (2) years of active employment under this
Agreement, the Company will make an annual supplemental retirement payment
of One Hundred Fifty Thousand Dollars ($150,000.00) beginning on
Executive's sixty-fifth (65th) birthday or Executive's death, whichever
first occurs, and continuing for fifteen (15) years to Executive; provided,
however, in the event of Executive's death prior to the end of such fifteen
(15) year period, the supplemental retirement payment will be paid or
continue to be paid to Executive's estate or designated beneficiary, if
any, for the remainder of such fifteen (15) year period.
6.10 Medical and Dental Insurance Benefits. Executive, Executive's
spouse and dependent children will be eligible for coverage by Carolina
First's medical and dental benefits, without cost, until Executive becomes
eligible for Medicare. When Executive becomes eligible for Medicare, the
Company will provide, at its expense for Executive and Executive's spouse
for the remainder of their lives, an insurance supplement for medical and
dental insurance coverage comparable (when combined with Medicare) to the
coverage provided by the Company at the time the supplemental insurance is
purchased.
6.11 During the Term while Executive is actively employed, Executive
shall be entitled to education benefits similar to those provided other
Company executives, personal tax
-15-
advisory services, and a $2,000,000 life insurance policy and such
disability insurance as may be purchased by $_____ per year in premiums. If
Executive becomes disabled and if the proceeds of the disability policy
purchased by the Company are insufficient to fund the Company's obligations
hereunder as if the Executive were not disabled, the Company will fund the
difference.
6.12 The payments hereunder are not subject to mitigation in the event
Executive receives compensation and is no longer actively employed.
7. Excess Parachute Payments.
7.1 It is the intention of the parties hereto that the severance
payments and other compensation provided for herein are reasonable
compensation for Executive's services to the Company and shall not
constitute "excess parachute payments" within the meaning of Section 280G
of the Code and any regulations thereunder. To the extent the provisions
herein for Executive's automobile, club membership, or other non-cash or
non-supplemental retirement compensation result in an "excess parachute
payment" as defined by Section 280(G)(b)(2) of the Code, Executive agrees
to work in good faith with the Company to ensure that the non-cash or
non-supplemental retirement compensation does not qualify as an "excess
parachute payment."
7.2 To the extent that payments hereunder cause a "parachute payment,"
as defined in Section 280G(b)2) of the Code, the Company shall indemnify
Executive and hold him harmless against all claims, losses, damages,
penalties, expenses, and excise taxes relating thereto. To effect this
indemnification, the Company shall pay Executive an additional amount that
is sufficient to pay any excise tax imposed by Section 4999 of the Code on
the payments and benefits to which
-16-
Executive is entitled without the additional amount plus any penalties or
interest imposed by the Internal Revenue Service in regard to such amounts,
plus another additional amount sufficient to pay all the excise and income
taxes on the additional amounts. The determination of any additional amount
that must be paid under this section at any time shall be made in good
faith by the independent auditors then employed by the Company.
8. Confidentiality. Executive shall hold in a fiduciary capacity for the
benefit of the Company all Confidential Information relating to the Company or
any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents supplied to or
created by him in connection with his employment hereunder (including all copies
of the foregoing) in his possession or control and all of the Company's
equipment and other materials in his possession or control. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
-17-
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1 or by Executive pursuant to
Section 5.2, Executive shall not enter into an employment relationship or a
consulting arrangement with any other federally insured depository institution
headquartered or having a physical presence in the states of South Carolina or
North Carolina (hereinafter a "competitor") for a period of eight (8) years from
the Effective Time (the "Noncompete Period"). The obligations contained in this
Section 9 shall not prohibit Executive from being an owner of not more than 5%
of the outstanding stock of any class of a corporation which is publicly traded,
so long as Executive has no active participation in the business of such
corporation.
9.1 During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not
limited to a competitor, or in any way interfere with the relationship
between Company and any employee thereof, (ii) hire any person who was an
employee of Company or any subsidiary at any time during the time that
Executive was employed by Company, or (iii) induce or attempt to induce any
customer, supplier, or other entity in a business relation of Company to
cease doing business with Company, or in any way interfere with the
relationship between any such customer, supplier, or business relation and
Company or do business with a competitor.
9.2 If, at the time of enforcement of this Section 9, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances
-18-
shall be substituted for the stated duration, scope or area and that the
court shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law. Executive agrees that
the restrictions contained in this Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by Executive of
any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply
to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or
violation by Executive of this Section 9, the Noncompete Period shall be
tolled until such breach or violation has been duly cured.
10. Trust. At the Effective Time, the Company shall establish and fund an
irrevocable trust in the amount of One Million Forty-Four Thousand Five Hundred
Twenty-Nine Dollars ($1,044,529) in connection with the termination of
Executive's employment agreement with The Anchor Bank and to fund the maximum
amount of obligations which could reasonably be expected to become payable
hereunder under any circumstances (which shall be a "rabbi trust" if so
requested by Executive in his discretion), which trust (i) shall have as trustee
an individual acceptable to Executive, (ii) shall be fully funded upon the
earlier of a Change in Control or the approval of any regulatory application
filed by a potential acquirer of the Company seeking to acquire control of the
Company, and (iii) shall contain such other terms and conditions as are
reasonably necessary in Executive's determination to ensure the Company's
compliance with its obligations hereunder. The Company will pay all management
and other fees associated with the administration of the trust established
pursuant to Section 10.
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11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Carolina First Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Chairman of the Board
To Executive: Xxxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
-20-
enforceability of the remaining provisions or covenants, or any part thereof, of
this Agreement, all of which shall remain in full force and effect.
14. Remedies in the Absence of a Change in Control. The terms of this
Section 14 will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or threatens to
breach his covenants and agreements in this Agreement, such actions may
cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief,
in addition to any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question between the
Executive and the Company arising out of or related to the interpretation
of this Agreement or the breach of this Agreement, except as specifically
governed by the foregoing provisions where there may be irreparable harm
and damage to the Company which could not be compensated in damages, shall
be decided by arbitration in accordance with the rules of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The
award rendered by the arbitrator shall be final and judgment may be entered
upon it in accordance with the applicable law of any court having
jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to engage
legal counsel to enforce his rights hereunder against the Company,
Executive shall be entitled to receive from the Company his reasonable
attorneys' fees and costs; provided that Executive shall not be entitled to
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receive those fees and costs related to matters, if any, which were the
subject of litigation and with respect to which a judgment is rendered
against Executive.
15. Remedies in the Event of a Change in Control. The terms of this Section
15 shall apply in the event of a Change of Control.
15.1 The Executive acknowledges that if he breaches or threatens to
breach his covenants and agreements in this Agreement, such actions may
cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief,
in addition to any other rights or remedies of the Company. All claims,
disputes and other matters in question between the Executive and the
Company arising out of or related to the interpretation of this Agreement
or the breach of this Agreement shall be decided under and governed by the
laws of the State of South Carolina.
15.2 The Company is aware that upon the occurrence of a Change in
Control, the Board or a stockholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its obligations under
this Agreement, or may cause or attempt to cause the Company to institute,
or may institute, litigation seeking to have this Agreement declared
unenforceable, or may take, or attempt to take, other action to deny the
Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the
intent of the parties that the Executive not be required to incur the legal
fees and expenses associated with the protection or enforcement of his
rights under this Agreement by litigation or other legal action because
such costs would substantially detract from the benefits
-22-
intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring
such costs. Accordingly, if at any time after a Change of Control, it
should appear to the Executive that the Company is or has acted contrary to
or is failing or has failed to comply with any of its obligations under
this Agreement for the reason that it regards this Agreement to be void or
unenforceable or for any other reason, or that the Company has purported to
terminate his employment for cause or is in the course of doing so in
either case contrary to this Agreement, or in the event that the Company or
any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action designed
to deny, diminish or to recover from the Executive the benefits provided or
intended to be provided to him hereunder, and the Executive has acted in
good faith to perform his obligations under this Agreement, the Company
irrevocably authorizes the Executive from time to time to retain counsel of
his choice at the expense of the Company to represent him in connection
with the protection and enforcement of his rights hereunder, including
without limitation representation in connection with termination of his
employment contrary to this Agreement or with the initiation or defense of
any litigation or other legal action, whether by or against the Executive
or the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. The reasonable fees and
expenses of counsel selected from time to time by the Executive as
hereinabove provided shall be paid or reimbursed to the Executive by the
Company on a regular, periodic basis upon presentation by the Executive of
a statement or statements prepared by such counsel representing other
officers or key executives of the Company in connection with the protection
and enforcement of their rights under similar agreements between them and
the Company, and, unless in his sole judgment use of common counsel could
be prejudicial to him or would not
-23-
be likely to reduce the fees and expenses chargeable hereunder to the
Company, the Executive agrees to use his best efforts to agree with such
other officers or executives to retain common counsel.
16. Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.
17. Merger. This Agreement is the only employment agreement between the
parties and supersedes and replaces any and all other agreements, specifically
inlcuding the letter from Xxxx X. Xxxxxxx, Xx, to Executive dated January 5,
2000.
18. Amendments and Modifications. This Agreement may be amended or modified
only by a writing signed by other parties hereto.
19. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
-24-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
CAROLINA FIRST BANK
/s/ Xxxx X. Xxxxxxx, Xx.
------------------------
By: Xxxx X. Xxxxxxx, Xx.
Chief Executive Officer
-25-
APPENDIX E - STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of January ____, 2000 (this "Agreement")
by and between Anchor Financial Corporation, a South Carolina corporation
("Issuer") and Carolina First Corporation, a South Carolina corporation
("Grantee").
WHEREAS, Issuer, Grantee, Issuer"s subsidiary Anchor Bank, and CFC's
subsidiary Carolina First Bank, propose to enter into a Reorganization Agreement
dated as of the date hereof (the "Reorganization Agreement"; capitalized terms
used but not defined herein shall have the meanings set forth in the
Reorganization Agreement), providing for, among other things, a merger (the
"Merger") of AFC into CFC.
WHEREAS, as a condition and inducement to Grantee's willingness to enter
into the Reorganization Agreement, Grantee has requested that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Reorganization Agreement, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 1,610,959 shares (the "Option Shares") of common stock, no par value, of
Issuer (the "Shares") (being 19.9% of the number of Shares outstanding on the
date hereof before such issuance) at a purchase price of $26.125 per Option
Share (such price, as adjusted if applicable, the "Purchase Price"). The number
of Option Shares that may be received upon the exercise of the Option and the
Purchase Price are subject to adjustment as set forth herein.
2. Exercise of Option.
(a) If not in material breach of the Reorganization Agreement, Grantee
may exercise the Option, in whole or in part, at any time or from time to
time following the occurrence of a Purchase Event (as defined below);
provided that, except as otherwise provided herein, the Option shall
terminate and be of no further force and effect upon the earliest to occur
of (i) the Effective Time, (ii) 15 months after the first occurrence of a
Purchase Event (or if, at the expiration of such 15 months after the first
occurrence of a Purchase Event, the Option cannot be exercised by reason of
any applicable judgment, decree, order, law or regulation, 10 business days
after such impediment to exercise shall have been removed, but in no event
under this clause (ii) later than the second anniversary of the date
hereof), (iii) termination of the Reorganization Agreement under
circumstances which do not and cannot result in Grantee's becoming entitled
to receive the Termination Fee from Issuer pursuant to Section 9.2(b) of
the Reorganization Agreement; or (iv) 12 months after the termination of
the Reorganization Agreement under circumstances which could result in
Grantee's becoming entitled to receive the Termination Fee from Issuer
pursuant to Section 9.2(b), unless during such 12-month period, a Purchase
Event shall occur. The termination of the Option shall not affect any
rights hereunder which by their terms extend beyond the date of such
termination.
(b) As used herein, a "Purchase Event" means the termination of the
Reorganization Agreement under any circumstance which would or could
entitle Grantee to receive the Termination Fee from Issuer pursuant to
Section 9.2(b) of the Reorganization Agreement; provided, that a Purchase
Event shall not occur unless and until Issuer shall have entered into a
definitive agreement with a third party with respect to an Acquisition
Proposal or an Acquisition proposal shall have been consummated during the
12 months following such termination of the Reorganization Agreement.
1
(c) In the event Grantee wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 20 business days from such
Notice Date for the closing of such purchase (a "Closing"; and the date of
such Closing, a "Closing Date"); provided that such closing shall be held
only if (A) such purchase would not otherwise violate or cause the
violation of applicable law (including the HSR Act), (B) no law, rule or
regulation shall have been adopted or promulgated, and no temporary
restraining order, preliminary or permanent injunction or other order,
decree or ruling issued by a court or other governmental authority of
competent jurisdiction shall be in effect, which prohibits delivery of such
Option Shares (and the parties hereto shall use their reasonable best
efforts to have any such order, injunction, decree or ruling vacated or
reversed) and (C) any prior notification to or approval of any other
regulatory authority in the United States or elsewhere required in
connection with such purchase shall have been made or obtained. If the
Closing cannot be consummated by reason of a restriction set forth in
clause (A), (B) or (C) above, notwithstanding the provisions of Section
2(a), the Closing shall be held within 10 business days following the
elimination of such restriction.
3. Payment and Delivery of Certificates. On each Closing Date, Grantee
shall pay to Issuer in immediately available funds by wire transfer to a bank
account designated by Issuer an amount equal to the Purchase Price multiplied by
the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer shall deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Closing, which Option Shares shall be free and clear of
all liens, charges or encumbrances ("Liens"), and Grantee shall deliver to
Issuer a letter agreeing that Grantee shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable law or the
provisions of this Agreement.
(c) Certificates for the Option Shares delivered at each Closing shall
be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
JANUARY ___, 2000. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
(ii) the reference to restrictions pursuant to this Agreement in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Option Shares evidenced by certificate(s)
2
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. Authorized Stock. Issuer hereby represents and warrants to Grantee that
Issuer has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and will have reserved for issuance at all
times from the date hereof until the obligation to deliver Shares upon the
exercise of the Option terminates, upon exercise of the Option, Shares necessary
for Grantee to exercise the Option, and Issuer will take all necessary corporate
action to authorize and reserve for issuance all additional Shares or other
securities which may be issued pursuant to Section 6 upon exercise of the
Option. The Shares to be issued upon due exercise of the Option, including all
additional Shares or other securities which may be issuable upon exercise of the
Option pursuant to Section 6, upon issuance pursuant hereto, shall be duly and
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all Liens, including any preemptive rights of any shareholder of
Issuer.
5. Purchase Not for Distribution. Grantee hereby represents and warrants to
Issuer that any Option Shares or other securities acquired by Grantee upon
exercise of the Option will not be taken with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act.
6. Adjustment upon Changes in Capitalization, etc. In the event of any
change in Shares by reason of reclassification, recapitalization, stock split,
split-up, combination, exchange of shares, stock dividend, dividend, dividend
payable in any other securities, or any similar event, the type and number of
Shares or securities subject to the Option, and the Purchase Price therefor
(including for purposes of repurchase thereof pursuant to Section 7), shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, so that Grantee shall receive upon exercise of the
Option the number and class of shares or other securities or property that
Grantee would have received in respect of Shares if the Option had been
exercised immediately prior to such event or the record date therefor, as
applicable. If any additional Shares are issued after the date of this Agreement
(other than pursuant to an event described in the immediately preceding
sentence), the number of Option Shares shall be adjusted so that immediately
prior to such issuance, it equals 19.9% of the number of Shares then issued and
outstanding.
7. Repurchase of Option and Option Shares.
(a) Notwithstanding the provisions of Section 2(a), at any time
commencing upon the first occurrence of a Repurchase Event (as defined
below) and ending 12 months thereafter, Issuer (or any successor entity
thereof) shall:
(i) at the request of Grantee, repurchase from Grantee the Option
(if and to the extent not previously exercised or terminated) at a
price equal to the excess, if any, of (x) the Applicable Price (as
defined below) as of the Section 7 Request Date (as defined below) for
a Share over (y) the Purchase Price (subject to adjustment pursuant to
Section 6), multiplied by the number of Shares with respect to which
the Option has not been exercised (the "Option Repurchase Price"); and
(ii) at the request of an owner of Option Shares from time to
time, repurchase all but not less than all of the Option Shares owned
directly or indirectly by such owner at a price equal to the
Applicable Price as of the Section 7 Request Date multiplied by the
number of Option Shares owned directly or indirectly by such owner
(the "Option Share Repurchase Price").
3
(b) Notwithstanding the provisions of Section 2(a), at any time
following the occurrence of a Purchase Event, Issuer (or any successor
entity thereof) may, at its election, repurchase the Option (if and to the
extent not previously exercised or terminated) or all but not less than all
of the Option Shares at the Option Repurchase Price or the Option Share
Repurchase Price, as the case may be.
(c) In connection with any exercise of rights under this Section 7,
Issuer shall, within 10 business days after the Section 7 Request Date, pay
the Option Repurchase Price or Option Share Repurchase Price, as he case
may be, in immediately available funds, and Grantee or such owner, as the
case may be, shall surrender to Issuer the Option or the Option Shares, as
the case may be.
(d) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Applicable Price", as of any date, means the highest of (A)
the highest price per Share paid pursuant to a tender offer or
exchange offer for Shares after the date hereof and on or prior to
such date, (B) the highest price per Share to be paid by any third
party for Shares or the consideration per Share to be received by
holders of Shares, in each case pursuant to an agreement for an
Acquisition Proposal with Issuer entered into on or prior to such date
or (C) the highest closing price per Share as reported on the New York
Stock Exchange Inc. ("NYSE") Composite Tape or if the Shares are not
listed on the NYSE, the highest bid price per Share as quoted on the
National Association of Securities Dealers Automated Quotations System
or, if the Shares are not quoted thereon, on the principal trading
market on which such Shares are traded as reported by a recognized
source during the 60 business days preceding such date. If the
consideration to be offered, paid or received pursuant to either of
the foregoing clauses (A) or (B) shall be other than in cash, the
value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer.
(ii) A "Repurchase Event" occurs when the Termination Fee is paid
or becomes due and payable to Grantee from Issuer pursuant to Section
9(b) of the Reorganization Agreement.
(iii) "Section 7 Request Date" means the date on which Issuer,
Grantee or an owner of Option Shares, as the case may be, exercises
its rights under this Section.
(e) The repurchase contemplated in this Section 7 shall be subject to
receipt of any necessary regulatory approvals. AFC shall use its best
efforts to obtain promptly any such necessary approvals.
8. Registration Rights. Issuer shall, if requested by Grantee or any owner
of Option Shares (collectively with Grantee, the "Owners") at any time and from
time to time within two years of the first exercise of the Option, as
expeditiously as possible prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to such Owners upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by such
owners, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use all reasonable
efforts to qualify such shares or other securities under any applicable state
securities laws. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to
4
obtain all consents or waivers of other parties which are required therefor and
to keep such registration statement effective for such period not in excess of
180 days from the day such registration statement first becomes effective as may
be reasonably necessary to effect such sale or other disposition. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods of time not exceeding
30 days in the aggregate if the Board of Directors of Issuer shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect Issuer. Any registration statement prepared and
filed under this Section 8, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
reasonable fees and disbursements of Owners' counsel related thereto. The Owners
shall provide all information reasonably requested by Issuer for inclusion in
any registration statement to be filed hereunder. If during the time period
referred to in the first sentence of this Section 8 Issuer effects a
registration under the Securities Act of Shares for its own account or for any
other stockholders of Issuer (other than on Form S-4 or Form S-8, or any
successor form), it shall allow the Owners the right to participate in such
registration, and such participation shall not affect the obligation of Issuer
to effect two registration statements for the Owners under this Section 8;
provided that, if the managing underwriters of such offering advise Issuer in
writing that in their opinion the number of Shares requested to be included in
such registration exceeds the number which can be sold in such offering without
adversely affecting the offering price, Issuer and the Owners shall each reduce
on a pro rata basis the Shares to be included therein on their respective
behalf. In connection with any registration pursuant to this Section 8, Issuer
and the Owners shall provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification and
contribution in connection with such registration.
9. Listing; Reasonable Best Efforts.
(a) If Shares or any other securities to be acquired upon exercise of
the Option are then listed on the NYSE or any other securities exchange or
market, Issuer, upon the request of any Owner, will promptly file an
application to list the Shares or other securities to be acquired upon
exercise of the Options on the NYSE or such other securities exchange or
market and will use its reasonable best efforts to obtain approval of such
listing as soon as practicable.
(b) Issuer will use its reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to permit the
exercise of the Option in accordance with the terms and conditions hereof,
as soon as practicable after the date hereof, including making any
appropriate filing pursuant to the HSR Act and any other applicable law,
supplying as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and any
other applicable law, and taking all other actions necessary to cause the
expiration or termination of the applicable waiting periods under the HSR
Act as soon as practicable.
10. Limitation of Grantee Profit.
(a) Notwithstanding any other provision herein, in no event shall
Grantee's Total Profit (as defined below) exceed $15 million (the "Maximum
Profit") and, if it otherwise would exceed such amount, Grantee, at its
sole discretion, shall either (i) reduce the number of Shares subject to
the Option, (ii) deliver to Issuer for cancellation Shares (or other
securities into which such Option Shares are converted or exchanged), (iii)
pay cash to Issuer, or (iv) any combination of the foregoing, so that
Grantee's actually realized Total Profit shall not exceed the Maximum
Profit after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (i) the
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option
5
shares (or securities into which such shares are converted or exchanged)
(including amounts paid to Grantee in respect of Option Shares repurchased
by Issuer pursuant to Section 7) over (y) the Grantee's aggregate purchase
price for such Option Shares (or other securities), plus (B) any amounts
received by Grantee on the repurchase of the Option by Issuer pursuant to
Section 7, plus (C) any Termination Fee received by Grantee pursuant to
Section 9.2(b) of the Reorganization Agreement, minus (ii) the sum of the
amounts of any cash previously paid by Grantee to Issuer pursuant to this
Section 10 and the value of the Option Shares (or other securities)
previously delivered by Grantee to Issuer for cancellation pursuant to this
Section 10.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, the Termination Fee provided for in Section
9.2(b) of the Reorganization Agreement; provided that if and to the extent
the Total Profit received by Grantee would exceed the Maximum Profit
following receipt of such payment, Grantee shall be obligated to comply
with the terms of Section 10(a) within 20 days of the latest of (i) the
date of receipt of such payment, (ii) the date of receipt of cash by
Grantee pursuant to the sale of Option Shares (or securities into which
such Option Shares are converted or exchanged) (including amounts paid to
Grantee in respect of Option Shares repurchased by Issuer pursuant to
Section 7) and (iii) the date of receipt of cash from the repurchase of the
Option by Issuer pursuant to Section 7.
(d) For purposes of Section 10(a) and clause (ii) of Section 10(b),
the value of any Option Shares delivered by Grantee to Issuer shall be the
Applicable Value.
11. Loss, Theft, Etc. of Agreement. This Agreement (and the Option granted
hereby) is exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of Shares
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any other Agreements and related Options for which this Agreement (and the
Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in Section 9 hereof or in
the Reorganization Agreement, each of the parties hereto shall bear and pay
all expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. Except
as otherwise set forth in the Reorganization Agreement, this Agreement,
together with the Reorganization Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
6
hereof and (b) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or a federal or state regulatory agency to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Option does not permit
Grantee to acquire, or does not require Issuer to repurchase, the full
number of Shares as provided in Sections 2 and 7, as adjusted pursuant to
Section 6, it is the express intention of Issuer to allow Grantee to
acquire or to require Issuer to repurchase such lesser number of Shares as
may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of South Carolina applicable to
contracts made and to be performed therein.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given as set forth in Section 8.2 of the
Reorganization Agreement.
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that both parties need not sign the same counterpart.
(h) Assignment. Grantee may not, without the prior written consent of
Issuer (which shall not be unreasonably withheld), assign this Agreement to
any other person. This Agreement shall not be assignable by Issuer except
by operation of law. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(i) Representations and Warranties. The representations and warranties
contained in Sections 3.1, 3.3, 3.4, 3.5, 3.6 and 3.7 of the Reorganization
Agreement, to the extent they relate to or affect this Stock Option
Agreement, are incorporated herein by reference.
(j) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(k) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed
that the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedy to which they are
entitled at law or in equity. Both parties further agree to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
7
(l) Captions. The Article, Section and paragraph captions herein are
for convenience only, do not constitute part of this Agreement and shall
not be deemed to limit or otherwise affect any of the provisions hereof.
(m) Confidentiality Agreement. Issuer hereby waives the restrictions
on Grantee's acquisition of Shares contained in the Confidentiality
Agreement to the extent necessary to permit Grantee to exercise the Option
and purchase the Option Shares as herein provided.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of January ___, 2000.
Anchor Financial Corporation
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Carolina First Corporation
By: /s/ Xxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxx X. Xxxxxxx, Xx., Chairman
8
