AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JULY 15, 2001
BY AND BETWEEN
NATIONAL COMMERCE FINANCIAL CORPORATION
SOUTHBANC SHARES, INC.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
this 15th day of July, 2001, by and between NATIONAL COMMERCE FINANCIAL
CORPORATION ("NCF"), a Tennessee corporation which is registered as a bank
holding company under the Bank Holding Company Act of 1956 and whose principal
office is located at One Commerce Square, Memphis, Tennessee 38150, and
SOUTHBANC SHARES, INC. ("SBS"), a Delaware corporation which is registered as a
savings and loan holding company and whose principal office is located at 907
North Main Street, Anderson, South Carolina. NCF and SBS are sometimes
hereinafter called the "Parties."
Certain other capitalized terms used in this Agreement and in the related
Plan of Merger are defined below.
R E C I T A L S
A. SBS is the beneficial owner and holder of record of one hundred
percent (100%) of the issued and outstanding shares of capital stock of
SouthBank. SouthBank is the beneficial owner of record of one hundred percent
(100%) of the issued and outstanding shares of capital stock of United Service
Corporation of Anderson, Inc. and Mortgage First Service Corporation. United
Service Corporation of Anderson, Inc. is the beneficial owner and holder of
record of one hundred percent (100%) of the issued and outstanding shares of
capital stock of United Investments Services, Inc. SouthBank, United Service
Corporation of Anderson, Inc., Mortgage First Service Corporation and United
Investments Services, Inc. are hereinafter referred to collectively as the "SBS
B. The Board of Directors of SBS deems it advisable and in the best
interests of SBS and its stockholders for SBS to merge with and into NCF (the
"Merger"), with NCF surviving the merger, on the terms and subject to the
conditions set forth in this Agreement and in the manner provided in the Plan of
Merger annexed hereto as Exhibit 1 (the "Plan of Merger") and has directed that
this Agreement be submitted to the stockholders of SBS with the recommendation
that this Agreement be adopted by the SBS stockholders.
C. The Board of Directors of NCF deems the Merger to be advisable and in
the best interests of NCF and its shareholders.
D. The Parties intend that the Merger qualify as a reorganization
pursuant to Section 368 of the Internal Revenue Code of 1986, as amended (the
E. The respective Boards of Directors of NCF and SBS have each adopted
resolutions approving this Agreement and the Plan of Merger.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:
"Acquisition Proposal" has the meaning set forth in Section 7.7.
"Adjustable Conversion Shares" has the meaning set forth in Section 3.2(d).
"Affiliate" of a Party means any Person, partnership, corporation,
association, limited liability company, business trust, or other legal entity
directly or indirectly controlling, controlled by or under common Control, with
"Agency" shall mean FHA, VA, FNMA, FHLMC, or any other federal agency or
corporation the funding of which is provided or guaranteed by the United States
and which is in the business of insuring, guaranteeing or purchasing mortgage
loans or a comparable state agency, as applicable.
"Agreement" shall mean this Agreement, the Plan of Merger and the Exhibits
delivered pursuant hereto and incorporated herein by reference.
"Allowances" shall mean the allowances for loan, lease and other credit
losses, including losses in connection with ORE, of any Person.
"Articles" has the meaning set forth in Section 1.3.
"Assets" of a Person shall mean all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and records
of such Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"Balance Sheet Date" shall mean March 31, 2001.
"BHC Act" shall mean the Bank Holding Company Act of 1956, as amended.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a federal or state holiday generally recognized or observed
by banks in the State of Tennessee or Delaware.
"Buydown" shall mean with respect to a VA Loan, the waiver by SBS of a
portion of the indebtedness of a Mortgage Loan, including, without limitation, a
reduction of the principal, a credit to escrow or unapplied funds accounts or
the forgiveness of accrued interest, which causes the VA to pay off the
remaining amount of indebtedness owed and acquire the Collateral.
"Cash Consideration" has the meaning set forth in Section 2.1(b).
"Cash Election" has the meaning set forth in Section 3.2(b).
"Cash Election Shares" has the meaning set forth in Section 3.2(b).
"Certificates" has the meaning set forth in Section 3.2(a).
"Closing" has the meaning set forth in Section 1.2.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" has the meaning set forth in Recital D.
"Collateral" shall mean the property securing a Mortgage Loan.
"Competing Transaction" shall mean any transaction that is the subject of
an Acquisition Proposal.
"Conforming Loan" shall mean a Mortgage Loan which is, or is eligible to
be, a FHA Loan or a VA Loan, or which is a loan eligible to be sold to FNMA or
FHLMC or any other Agency.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or affirmation by any Person pursuant to any Contract, Law,
Order or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets, or business.
"Control" shall have the meaning assigned to such term in Section 2(a)(2)
of the Bank Holding Company Act of 1956, as amended.
"Converted Stock Consideration" has the meaning set forth in Section 2.4.
"Default" shall mean (i) any breach or violation of or default under any
Contract, Order or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence or any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of or renegotiate, or to accelerate, increase or impose any Liability
under, any Contract, Order or Permit.
"Deposits" shall mean all deposits (including, but not limited to,
certificates of deposit, savings accounts, NOW accounts and checking accounts)
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenters' Shares" has the meaning set forth in Section 2.5.
"Effective Date" shall mean that date on which the Effective Time of the
Merger shall have occurred.
"Effective Time" has the meaning set forth in Section 1.3.
"Election Deadline" has the meaning set forth in Section 3.2(c).
"Election Form" has the meaning set forth in Section 3.2(a).
"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) and which are
administered, interpreted or enforced by the United States Environmental
Protection Agency and any state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 USC (S)9601, et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 USC (S)6901, et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
"Exchange Agent" has the meaning set forth in Section 3.1.
"Exchange Fund" has the meaning set forth in Section 3.1.
"Exchange Ratio" has the meaning set forth in Section 2.1(b), subject to
such adjustments as may be provided in this Agreement and the Plan of Merger.
"Excluded Shares" means, with respect to SBS or NCF, shares of capital
stock held, directly or indirectly, in trust accounts, managed accounts and the
like, or otherwise held in a fiduciary capacity, that are beneficially owned by
third parties, or shares of capital stock held on account of a debt previously
"Exhibits" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto or thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve" shall mean the Board of Governors of the Federal Reserve
System and shall include the Federal Reserve Bank of St. Louis when acting under
"FHA" shall mean the Federal Housing Administration or any successor
"FHA Loans" shall mean Mortgage Loans which are insured by FHA.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation or any
"FNMA" shall mean the Federal National Mortgage Association or any
"Foreclosure" shall mean the process by which title to Collateral is
acquired in a foreclosure sale or pursuant to any other comparable procedure
allowed under applicable law.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time, consistently applied.
"Hazardous Material" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any chemicals,
pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
"HSR Act" shall mean Section 7A of the Clayton Act, as added by Title III
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder.
"HUD" shall mean United States Department of Housing and Urban Development
or any successor thereto.
"Indemnified Party" has the meaning set forth in Section 7.15(a).
"Intellectual Property" shall mean copyrights, patents, trademarks, service
marks, service names, trade names, applications therefor, technology rights and
licenses, computer software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how, inventions
and other intellectual property rights.
"Insurer" shall mean a Person who insures or guarantees all or any portion
of the repayment of principal, interest and costs or the risk of loss upon
borrower default on any Mortgage Loan, including, without limitation, the FHA,
the VA and any private mortgage insurer, and providers of life, hazard, flood,
disability, title or other insurance with respect to any Mortgage Loan or other
"Investor" shall mean any Person (including any Agency) who (i) owns
Previously Disposed Loans, or (ii) is a party (other than SBS) to an Investor
"Investor Commitment" shall mean the commitment of a Person to purchase a
Mortgage Loan owned or originated by SBS.
"Knowledge" as used with respect to a Person (including references to such
Person being aware of a particular matter) shall mean those facts that are
actually (as opposed to constructively) known by the Chairman, Chief Executive
Officer, President, Chief Financial Officer, Chief Credit Officer or General
Counsel of such Person, or such other officer of such Person, regardless of
title, charged with or responsible for the oversight of a particular area,
department or function to which the subject matter relates.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule or statute applicable to a Person or its Assets,
Liabilities or business, including those promulgated, interpreted or enforced by
any Regulatory Authority.
"Letter of Transmittal" has the meaning set forth in Section 3.3(a).
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Licenses" has the meaning set forth in Section 4.25.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property Taxes not yet due
and payable, and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary course of
the banking business.
"Litigation" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability, but shall not include regular, periodic routine examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"Mailing Date" has the meaning set forth in Section 3.2(a).
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business or results of operations of such Party and its Subsidiaries, taken as a
whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement; provided, however, that "Material Adverse Effect" shall not be
deemed to include
the impact of (a) the direct effects of compliance with this Agreement on the
operating performance of the Parties, including expenses incurred by the Parties
in consummating the transactions contemplated hereby or relating to any
litigation arising as a result of the Merger, (b) any change in general economic
conditions, including changes in interest rates, affecting insured depository
institutions and their holding companies generally, or (c) changes in laws or
accounting requirements affecting insured depository institutions and their
holding companies generally.
"Merger" shall mean the merger of SBS with and into NCF, as described in
Section 1.1 of this Agreement.
"Merger Consideration" shall mean the cash and shares of NCF Common Stock
deliverable to the SBS Record Holders pursuant to Section 2.1(b) of this
"Mixed Election" has the meaning set forth in Section 3.2(b).
"Mortgage Loan" shall mean any loan or other extension of credit, whether
or not such loan or extension of credit is included in a securitized portfolio,
that is evidenced by a promissory note or other evidence of indebtedness and
that is secured by a mortgage or deed of trust on real property.
"Nasdaq" shall mean the Nasdaq Stock Market's National Market, or its
successor, upon which shares of NCF Common Stock and SBS Common Stock are listed
"NCF" has the meaning set forth in the first paragraph hereof.
"NCF Capital Stock" shall mean, collectively, the NCF Common Stock, the NCF
Preferred Stock and any other class or series of capital stock of NCF.
"NCF Common Stock" shall mean the $2.00 par value common stock of NCF.
"NCF Companies" shall mean, collectively, NCF and all NCF Subsidiaries.
"NCF Disclosure Letter" shall mean a letter signed by an Executive Vice
President and the Chief Financial Officer of NCF delivered prior to the date of