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APPENDIX A
AGREEMENT OF COMBINATION by and between
FIRST SECURITY FINANCIAL CORPORATION and
OMNI CAPITAL GROUP, INC.
Dated February 14, 1992
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
TABLE OF CONTENTSARTICLE I
THE COMBINATION AND RELATED TRANSACTIONS
1.1 Combination............................................................................................................................................................... A- 1
1.2 Directors .................................................................................................................................................................... A- 1
1.3 Chairman, Vice Chairmen arid Committees of the Board of Directors .................................................................... A-2
1.4 Officers....................................................................................................................................................................... A-2
1.5 Name of Surviving Corporation ................................................................................................................................. A-2
1.6 Restated Articles of Incorporation and Bylaws ......................................................................................................... A-2
1.7 Time and Place of Closing ......................................................................................................................................... A-3
1.8 Effective Time............................................................................................................................................................. A-3
1.9 Subsequent Actions .................................................................................................................................................... A-3
A RTICLE II
MANNER OF CONVERTING SHARES
2.1 Conversion of Shares ................................................................................................................................................. A-3
2.2 Conversion of Options ............................................................................................................................................... A-4
2.3 Anti-Dilution Provisions ............................................................................................................................................ A-4
2.4 Shares Held by FSFC or OMNI ................................................................................................................................. A-4
2.5 Fractional Shares....................................................................................................................................................... A-4
2.6 Transfers .................................................................................................................................................................... A-4
2.7 Dissenting Shareholders ............................................................................................................................................ A-5
A RTICLE III
EXCHANGE OF SHARES
3.1 Exchange Procedures ................................................................................................................................................ A-5
3.2 Voting and Dividends................................................................................................................................................. A-6
A RTICLE IV
REPRESENTATIONS AND WARRANTIES OF OMNI
4.1 Organization, Standing, and Authority ...................................................................................................................... A-6
4.2 Capital Stock .............................................................................................................................................................. A-6
4.3 OMNI Subsidiaries..................................................................................................................................................... A-7
4.4 Authorization of Combination and Related Transactions ......................................................................................... A-7
4.5 Financial Statements.................................................................................................................................................. A-8
4.6 Books and Corporate Records ................................................................................................................................... A-8
4.7 Absence of Undisclosed Liabilities ............................................................................................................................ A-8
4.8 Tax Matters ................................................................................................................................................................ A-9
4.9 Allowance for Loan Losses ........................................................................................................................................ A-9
4.10 Properties................................................................................................................................................................... A-9
4.11 Compliance with Laws ............................................................................................................................................... A-9
4.12 Employee Benefit Plans ............................................................................................................................................. A-10
4.13 Commitments and Contracts ...................................................................................................................................... A-11
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4.14Material Contract Defaults ........................................................................................................................................ A-11
4.15 Legal Proceedings ..................................................................................................................................................... A-11
4.16 Absence of Certain Changes or Events...................................................................................................................... A-11
4.17 Reports ....................................................................................................................................................................... A-11
4.18 Statements True and Correct ..................................................................................................................................... A-12
4.19 Insurance.................................................................................................................................................................... A- 12
4.20 Labor .......................................................................................................................................................................... A-12
4.21 Material Interests of Certain Persons........................................................................................................................ A-12
4.22 Registration Obligations ............................................................................................................................................ A-12
4.23 Environmental Matters .............................................................................................................................................. A-12
4.24 Accounting; Tax; Regulatory Matters ....................................................................................................................... A-13
4.25 Brokers and Finders .................................................................................................................................................. A-13
A RTICLE V
REPRESENTATIONS AND WARRANTIES OF FSFC
5.1 Organization, Standing, and Authority ...................................................................................................................... A-13
5.2 Capital Stock .............................................................................................................................................................. A-14
5.3 FSFC Subsidiaries ..................................................................................................................................................... A-14
5.4 Authorization of Combination and Related Transactions ......................................................................................... A-14
5.5 Financial Statements.................................................................................................................................................. A-15
5.6 Books and Corporate Records ................................................................................................................................... A-15
5.7 Absence of Undisclosed Liabilities ............................................................................................................................ A-16
5.8 Tax Matters ................................................................................................................................................................ A-16
5.9 Allowance for Loan Losses ........................................................................................................................................ A-16
5.10 Properties................................................................................................................................................................... A-16
5.11 Compliance with Laws ............................................................................................................................................... A-17
5.12 Employee Benefit Plans ............................................................................................................................................. A-17
5.13 Commitments and Contracts ...................................................................................................................................... A-18
5.14 Material Contract Defaults ........................................................................................................................................ A-18
5.15 Legal Proceedings ..................................................................................................................................................... A-18
5.16 Absence of Certain Changes or Events...................................................................................................................... A-18
5.17 Reports ....................................................................................................................................................................... A-18
5.18 Statements True and Correct ................................................. ................................................................................... A-19
5.19 Insurance.................................................................................................................................................................... A-19
5.20 Labor .......................................................................................................................................................................... A-19
5.21 Material Interests of Certain Persons........................................................................................................................ A-19
5.22 Registration Obligations ............................................................................................................................................ A-19
5.23 Environmental Matters .............................................................................................................................................. A-19
5.24 Accounting; Tax; Regulatory Matters ....................................................................................................................... A-20
5.25 Brokers and Finders .................................................................................................................................................. A-20
5.26 Capital Stock Issued in Combination......................................................................................................................... A-20
A RTICLE VI
CONDUCT PRIOR TO THE EFFECTIVE TIME
6.1 Conduct of Businesses Prior to the Effective Time .................................................................................................... A-20
6.2 Forbearances ............................................................................................................................................................. A-20
6.3 Access and Information; Confidentiality ................................................................................................................... A-22
6.4 Current Information ................................................................................................................................................... A-22
6.5 Registration Statement; Regulatory Matters ............................................................................................................. A-22
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
6.6Shareholders’ Approvals ........................................................................................................................................... A-23
6.7 Agreements of Affiliates ............................................................................................................................................. A-23
6.8 Delivery of Monthly Financial Statements; Asset Review ......................................................................................... A-23
6.9 Accounting Treatment ................................................................................................................................................ A-24
6.10 Press Releases............................................................................................................................................................ A-24
6.11 Miscellaneous Agreements and Consents ................................................................................................................... A-24
Page
A RTICLE VII
ADDITIONAL AGREEMENTS
7.1 Indemnification and Insurance .................................................................................................................................. A-24
7.2 Employee Contracts and Vested Employee Benefits .................................................................................................. A-25
7.3 Employee Benefits ..................................................................................................... ................................................ A-25
7.4 Directors and Officers of Subsidiaries ...................................................................................................................... A-25
7.5 Loan Policies ............................................................................................................................................................. A-25
A RTICLE VIII
CONDITIONS
8.1 Conditions to Each Party’s Obligation to Effect the Combination ........................................................................... A-26
8.2 Conditions to Obligations of OMNI to Effect the Combination ................................................................................ A-26
8.3 Conditions to Obligations of FSFC to Effect the Combination ................................................................................. A-27
A RTICLE IX
TERMINATION
9.1 Termination ................................................................................................................................................................ A-27
9.2 Effect of Termination ................................................................................................................................................. A-28
9.3 Expenses..................................................................................................................................................................... A-28
9.4 Wrongful Termination................................................................................................................................................ A-28
A RTICLE X
GENERAL PROVISIONS
10.1 Non-Survival of Representations, Warranties and Covenants Following the Effective Time ................................... A-28
10.2 Entire Agreement ....................................................................................................................................................... A-28
10.3 Amendments ............................................................................................................................................................... A-29
10.4 Waivers ...................................................................................................................................................................... A-29
10.5 No Assignment ........................................................................................................................................................... A-29
10.6 Notices........................................................................................................................................................................ A-29
10. 7 Severability ................................................................................................................................................................ A-29
10.8 Governing Law........................................................................................................................................................... A-29
10.9 Counterparts .............................................................................................................................................................. A-30
10.10 Captions ..................................................................................................................................................................... A-30
APPENDIX A Plan of Merger........................................................................................................................................ A-31
APPENDIX B Restated Articles of Incorporation of the Surviving Corporation (see APPENDIX B to the Joint Proxy Statement-Prospectus)
APPENDIX C Bylaws of the Surviving Corporation (not included)
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INDEX OF DEFINED TERMS
Page
1933 Act............................................................................................................................................................................... A-5
1934 Act............................................................................................................................................................................... A-7
Agreement............................................................................................................................................................................ A-1
Allowance ............................................................................................................................................................................ A-9
Articles of Merger................................................................................................................................................................ A-3
Authorizations...................................................................................................................................................................... A-6
BHCA .................................................................................................................................................................................. A-1
Bylaws ................................................................................................................................................................................. A-2
Closing ................................................................................................................................................................................. A-3
Combination ........................................................................................................................................................................ A-1
Costs .................................................................................................................................................................................... A-28
D&O Insurance .................................................................................................................................................................... A-24
Effective Time ..................................................................................................................................................................... A-1
Environmental Agency ........................................................................................................................................................ A-12
Environmental Law ............................................................................................................................................................. A-13
ERISA .................................................................................................. ............................................................................... A-10
Exchange Agent ................................................................................................................................................................... A-4
FDIC .................................................................................................................................................................................... A-10
Federal Reserve ................................................................................................................................................................... A-10
Federal Reserve Board ......................................................................................................................................................... A-3
FSFC .................................................................................................................................................................................... A-1
FSFC Benefit Plans.............................................................................................................................................................. A-17
FSFC Common Stock .......................................................................................................................................................... A-3
FSFC ERISA Plan ............................................................................................................................................................... A-17
FSFC Financial Statements.................................................................................................................................................. A-15
GAAP .................................................................................................................................................................................. A-8
Hazardous Materials ............................................................................................................................................................ A-13
HOLA ..................................................................................................................................... ............................................ A-1
HSR Act ............. ................................................................................................................................................................. A-7
Indemnified Party ................................................................................................................................................................ A-24
Internal Revenue Code ........................................................................................................................................................ A-4
Joint Proxy Statement .......................................................................................................................................................... A-22
Liens .................................................................................................................................................................................... A-7
NASD .................................................................................................................................................................................. A-7
NCBCA................................................................................................................................................................................ A-1
NMS..................................................................................................................................................................................... A-4
OCC ..................................................................................................................................................................................... A-10
OMNI................................................................................................................................................................................... A-1
OMNI Benefit Plans ............................................................................................................................................................ A-10
OMNI Common Stock......................................................................................................................................................... A-3
OMNI ERISA Plan .............................................................................................................................................................. A-10
OMNI Financial Statements ................................................................................................................................................ A-8
OMNI Option Plans ............................................................................................................................................................. A-4
OMNI Stock Option ............................................................................................................................................................ A-4
OTS ...................................................................................................................................................................................... A-3
PBGC ................................................................................................................................................................................... A-7
Plan of Merger ..................................................................................................................................................................... A-3
Previously Disclosed ........................................................................................................................................................... A-6
Registration Statement ......................................................................................................................................................... A-22
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
Regulatory Agreement ......................................................................................................................................................... A-10
Regulatory Authorities......................................................................................................................................................... A-10
Restated Articles .................................................................................................................................................................. A-2
SEC ...................................................................................................................................................................................... A-2
SEC Document .................................................................................................................................................................... A-8
Securities Laws .................................................................................................................................................................... A-7
Shareholders’ Meetings ....................................................................................................................................................... A-22
Subsidiaries .......................................................................................................................................................................... A-3
Subsidiary ............................................................................................................................................................................ A-3
Surviving Corporation ......................................................................................................................................................... A-1
Surviving Corporation Common Stock ............................................................................................................................... A-3AGREEMENT OF COMBINATION
This Agreement of Combination (this “Agreement”) is made and entered into on February 14, 1992 by and between
FIRST SECURITY FINANCIAL CORPORATION, a North Carolina corporation (“FSFC”), and OMNI CAPITAL
GROUP, INC., a North Carolina corporation (“OMNI”).
WITNESSETH:
W HEREAS , FSFC is a registered bank holding company under the Bank Holding Company Act of 1956, as amended
(the “BHCA”); and
WHEREAS , OMNI is a registered savings and loan holding company under the Home Owners’ Loan Act, as ame nded
(the “HOLA”); and
WHEREAS , pursuant to the terms and subject to the conditions of this Agreement, OMNI will merge wi th and into
FSFC to create a bank and thrift holding company (the “Combination”); and
WHEREAS , the respective Boards of Directors of FSFC and OMNI have resolved that the transactions de scribed herein
are in the best interests of the parties and their respective shareholders and have approved this Agreement and authorized
the execution hereof; and
WHEREAS , FSFC and OMNI desire to provide for certain undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated by this Agreement;
NOW , T HEREFORE , in consideration of the premises and the mutual representations, warranties and agreeme nts herein
contained, the parties hereby agree as follows:
ARTICLE I
THE COMBINATION AND RELATED TRANSACTIONS
1.1 Combination. Subject to the terms and conditions of this Agreement, at the date and time at which the
Combination becomes effective as provided in Section 1.8 of this Agreement (the “E ffective Time”), OMNI shall be
merged with and into FSFC in accordance with the provisions of Article 11 of the North Carolina Business Corporation
Act (the “NCBCA”) and with the effect provided in Section 55-11-06 of the NCBCA. The separate corporate existence of
OMNI shall thereupon cease, and FSFC shall be the surviving corporation in the Combination (the “Surviving
Corporation”).
1.2 Directors. The Restated Articles and Bylaws (each as defined in Section 1.6) to govern the Surviving
Corporation, together with any fixing of the number of directors by the Board of Directors of the Survi ving
Corporation, shall provide that the Surviving Corporation shall have twenty-two (22) directors, divided int o two
classes of seven (7) directors each and one class of eight (8) directors. The members of eac h class shall be elected
and serve as follows: (i) the initial term of office of Class I directors shall expi re at the 1993 annual meeting of
shareholders of the Surviving Corporation, (ii) the initial term of Class II directors shall expire at the 1994 annual
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meeting of shareholders of the Surviving Corporation, and (iii) the initial term of Class III directors shall expire at
the 1995 annual meeting of shareholders of the Surviving Corporation. The names and classes of t he persons who
are to serve as directors of the Surviving Corporation until the annual meeting of shareholders at which each class
is subject to re-election, or until their successors are elected and qualify, are:
1.3 Class Name of Director
I Ralph A. Barnhardt
I Lloyd G. Gurley
I David B. Jordan
I William G. Loeblein
I J.G. Rutledge III
I Carl M. Short, Jr.
I Miles J. Smith, Jr.
I William C. Stanback
II John M. Barnhardt
II Edward A. Brown
II Henry B. Gaye
II Dan L. Gray
II Ervin E. Lampert, Jr.
II Harold Mowery
II Fred J. Stanback, Jr.
III William C. Kluttz, Jr.
III F. Taft McCoy, Jr.
III Jimmy K. Stegall
III W. Erwin Spainhour
III Thomas A. Tate, Sr.
III E. William Wagoner
III James L. Williamson
1.3 Chairman, Vice Chairmen and Committees of the Board of Directors.
(a) At the Effective Time, the Chairman of the Board of Directors of the Surviving C orporation shall be Miles J.
Smith, Jr., and the two Vice Chairmen of the Board of Directors of the Surviving Corporation shall be Ralph A. Barnhardt
and David B. Jordan, each of whom shall serve in such capacities until his successor shal l have been duly appointed in
accordance with the bylaws of the Surviving Corporation.
(b) At the Effective Time, the Board of Directors of the Surviving Corporation shall creat e a four-person Executive
Committee of the Board of Directors. The initial members of the Executive Com mittee shall be Miles J. Smith, Jr., Lloyd
G. Gurley, David B. Jordan and Ralph A. Barnhardt, each of whom shall serve until his successor shal l have been duly
appointed in accordance with the Bylaws of the Surviving Corporation. Ralph A. Barnhardt shall be the Chairman of the
Executive Committee until his successor shall have been duly appointed in accordance with the Bylaws of the Surviving
Corporation.
1.4Officers. At the Effective Time, the Board of Directors of the Surviving Corporation shall appoint Da vid B.
Jordan as Chief Executive Officer of the Surviving Corporation and Lloyd G. Gurley as President and Chief
Administrative Officer, each of whom shall serve in such capacities until his succ essor shall have been duly appointed in
accordance with the Bylaws of the Surviving Corporation.
1.5Name of Surviving Corporation. The name of the Surviving Corporation to be effective as of the Effective Time
shall be “Security Capital Bancorp” or such other name as FSFC and OMNI shall mutua lly agree upon prior to filing of
the Registration Statement (as defined in Section 6.5(a) hereof) with the Securities and Exchange Commission (the
“SEC”). Such corporate name shall be reflected in the Restated Articles (a s defined in Section 1.6 below) and in the Plan
of Merger (as defined in Section 1.8 below).
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
1.6Restated Articles of Incorporation and Bylaws. Subject to the terms and conditions of this Agreement, at the
Effective Time, the current Amended and Restated Charter (Articles of Incorporation) of FSFC will be amended and
restated to read in full as set forth in the Restated Articles of Incorporation of the Surviving Corporation attached hereto as
Appendix B (the “Restated Articles”) and the current bylaws of FSFC will be amended a nd restated to read in full as set
forth in the bylaws of the Surviving Corporation attached hereto as Appendix C (the “Bylaws”).
1.7Time and Place of Closing. The closing of the transactions contemplated hereby (the “Closing”) will take place at
the Board of Directors meeting room in the executive offices of OMNI, 507 West Innes Stree t, Salisbury, North Carolina
at 10:00 A.M. on the date that the Effective Time occurs, or at such other time, and at such place, as may be mutually
agreed upon by FSFC and OMNI.
1.8Effective Time. The Combination shall become effective on the date and at the time on which articles of merger
containing a Plan of Merger in substantially the form of Appendix A hereto (the “Plan of Me rger”) and the other
provisions required by, and executed in accordance with, Section 55-11-05 of the NCBCA (the “Artic les of Merger”) shall
have been accepted for filing by the Secretary of State of the State of North Carol ina (or such later date and time as may
be specified in the Articles of Merger). Unless otherwise mutually agreed upon by FSFC and OMNI, subjec t to the terms
and conditions hereof, the Effective Time shall occur on the first business day following t he last to occur of (i) the date
that is 30 days after the date of the later to occur of the order of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”) approving the Combination pursuant to the BHCA and the approva l of the Combination by
the Director of the Office of Thrift Supervision (the “OTS”) pursuant to the HOLA, (ii) the e ffective date of the last order,
approval, or exemption of any other federal or state regulatory agency approving or exempting the Combination if such
action is required, (iii) the expiration of all required waiting periods after the fi ling of all notices to all federal or state
regulatory agencies required for consummation of the Combination, and (iv) the date on which the shareholders of OMNI
approve this Agreement and the shareholders of FSFC approve this Agreement and the Restated Articles, in each case as
contemplated hereby.
1.9Subsequent Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be
advised that any corporate or regulatory filings, regulatory approvals, deeds, bills of sale, assignm ents, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm of record, or othe rwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights, properties or assets of either FSFC or OMNI
acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Combination, or
otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, and file, if required in the name and on behalf of each of FSFC and OMNI or otherwise, all such
corporate or regulatory filings, deeds, bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of FSFC and OMNI or otherwise, all such other actions and things as may be nec essary or desirable to vest,
perfect or confirm any and all right, title and . interest in, to and under such right s, properties or assets in the Surviving
Corporation, or otherwise to carry out this Agreement.
ARTICLE II
MANNER OF CONVERTING SHARES
2.1 Conversion of Shares. Subject to the provisions of this Article II, at the Effective Time, by virtue of the
Combination and without any action on the part of the holders thereof, each of the shares of common stock of OMNI (the
“OMNI Common Stock”) issued and outstanding immediately prior to the Effective Time (excluding shares held by
FSFC, OMNI or any of their Subsidiaries (as hereinafter defined), in each case other than in a fiduciary capacity or as a
result of debts previously contracted, and excluding shares held by Dissenting Shareholders (as hereinaft er defined)), shall
be converted into and become 2.25 shares (the “Exchange Ratio”) of common stock of the Surviving Corporation (the
“FSFC Common Stock” or “Surviving Corporation Common Stock”). Shares of OMNI Common Stock held by FSFC,
OMNI or any of their Subsidiaries, other than in a fiduciary capacity or as a result of debts previously contracted, shall be
canceled as of the Effective Time. Each of the shares of Surviving Corporation Common Stoc k and any shares of any
Subsidiary of OMNI or FSFC 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 t he Combination, except to the
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extent that the par value of the common stock of the Surviving Corporation is eliminated in accordance with the Restated
Articles of the Surviving Corporation. For purposes of this Agreement, “Subsidiary” or “Subsidiaries” wit h respect to
OMNI shall mean any or all of OMNIBANK, A Federal Savings Bank (“OMNIBANK”), Citizens Savings, FSB
(“Citizens”), Home Federal Savings Bank (“Home Federal”), each of which is a federal savings bank, and Estates
Development Corporation (“EDC”) and First Cabarrus Corporation (“FCC”), each of which is a North Carolina
corporation. “Subsidiary” or “Subsidiaries” with respect to FSFC means either or both of Security B ank and Trust
Company, a North Carolina commercial bank (“Security Bank”), and First Security Credit Corporation, a North Carolina
corporation (“FSCC”).
2.2Conversion of Options. At the Effective Time, all rights with respect to options to purchase OMNI Common
Stock granted or assumed by OMNI (the “OMNI Stock Options”) pursuant to stock option plans of OMNI or of any of its
Subsidiaries described in OMNI’s proxy statement dated September 20, 1991 in connection with its 1991 annual meeting
of shareholders (the “OMNI Option Plans”), which are outstanding at the Effective Time, whet her or not then exercisable,
shall be converted into and become rights with respect to the Surviving Corporation Common Stock, and the Surviving
Corporation shall assume all obligations of OMNI with respect to each OMNI Stock Option, in acc ordance with the terms
of the respective OMNI Option Plan under which it was issued and the stock option agreement by which it may be
evidenced. From and after the Effective Time, (i) each OMNI Stock Option assumed by t he Surviving Corporation may
be exercised solely for shares of the Surviving Corporation Common Stock, (ii) the number of shares of the Surviving
Corporation Common Stock subject to each OMNI Stock Option shall be equal to the number of shares of OMNI
Common Stock subject to such OMNI Stock Option immediately prior to the Effective Ti me multiplied by the Exchange
Ratio and (iii) the per share exercise price under each such OMNI Stock Option shall be adjusted by dividing the per share
exercise price under each such option by the Exchange Ratio and rounding down to the neare st cent; provided, however,
that the number of shares of Surviving Corporation Common Stock subject to each OMNI Stock Option and the per share
exercise price shall be subject to further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction subsequent to the Effective Tim e. It is intended that the foregoing adjustments
and assumption shall be undertaken in a manner that will not constitute a “modifica tion” within the meaning of, and that is
otherwise consistent with, Section 424(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue
Code”) as to any stock option which is an “incentive stock option” (as defined in Section 422 of the Internal Revenue
Code).
2.3Anti-Dilution Provisions. Except for the issuance of OMNI Common Stock pursuant to the exercise of any OMNI
Stock Options outstanding as of the date hereof, in the event that FSFC or OMNI changes the num ber of shares of FSFC
Common Stock or OMNI Common Stock, respectively, issued and outstanding between the date hereof a nd the Effective
Time, the Exchange Ratio shall be proportionately adjusted.
2.4Shares Held by FSFC or OMNI. Each of the shares of OMNI Common Stock held by FSFC or any of its
Subsidiaries or OMNI or any of its Subsidiaries, other than shares held by FSFC or any of its Subsidiarie s or OMNI or
any of its Subsidiaries in a fiduciary capacity or as a result of debts previously contract ed, shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
2.5Fractional Shares. Notwithstanding any other provision of this Agreement, each holder of shares of OMNI
Common Stock converted pursuant to the Combination, or of OMNI Stock Options, who would otherwise have been
entitled to receive a fraction of a share of the Surviving Corporation Common Stock (afte r taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash (wi thout interest) in an amount equal to such
fractional part of a share of the Surviving Corporation Common Stock multiplied by the marke t value of one share of the
Surviving Corporation Common Stock at the Effective Time, in the case of shares converte d pursuant to the Combination,
or the date of exercise, in the case of OMNI Stock Options. The market value of one share of the Surviving Corporation
Common Stock at the Effective Time or the date of exercise, as the case m ay be, shall be the closing sales price of FSFC
Common Stock as quoted on the National Association of Securities Dealers Automated Quot ations National Market
System (“NMS”) (as reported by The Wall Street Journal or, if not reported thereby, any other authoritative source) on the
last business day preceding the Effective Time or the date of exercise, as the case may be. No such holder will be entitled
to dividends, voting rights or any other rights as a shareholder in respect of any fractional share.
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
2.6Transfers. At the Effective Time, the stock transfer books of OMNI shall be closed as to holders of OMNI
Common Stock immediately prior to the Effective Time and no transfer of OMNI Common Stock by any such holder
shall thereafter be made or recognized. If, after the Effective Time, certific ates are properly presented in accordance with
Article III of this Agreement to Wachovia Bank of North Carolina, N.A. acting as the exchange agent for the Surviving
Corporation Common Stock (the “Exchange Agent”), such certificates shall be cancele d and exchanged for certificates
representing the number of whole shares of the Surviving Corporation Common Stock, and a check represent ing the
amount of cash for fractional shares, if any, into which the OMNI Common Stock represented thereby wa s converted in
the Combination. Any other provision of this Agreement notwithstanding, none of FSFC, OMNI, the Surviving
Corporation, the Exchange Agent or any other person shall be liable to a holder of OMNI Common St ock for any amount
paid or property delivered in good faith to a public official pursuant to any applicable a bandoned property, escheat, or
similar law.
2.7Dissenting Shareholders. Notwithstanding any other provision of this Agreement, shares of OMNI Common
Stock held by holders who did not vote in favor of the Combination and who otherwise perfect dissente rs’ rights under
Section 55-13-01 et seq. of the NCBCA shall not be converted into or become shares of the Surviving Corporation
Common Stock, but such shares of OMNI Common Stock shall represent only the right to receive t he “fair value” of such
shares as provided in the NCBCA. If any such holder shall have failed to perfect or sha ll have effectively withdrawn or
lost such dissenters’ rights, such shares of OMNI Common Stock shall thereupon be deemed to have bee n converted and
become shares of the Surviving Corporation Common Stock in accordance with the Exchange Rat io as of the Effective
Time without any interest thereon. OMNI shall give FSFC prompt notice of any purported exercise of dissenters’ rights
and FSFC shall have the right to participate in all negotiations and proceedings wit h respect to any such demands. OMNI
shall not, except with the prior written consent of FSFC, voluntarily make any payment wi th respect to, or settle or offer
or agree to settle, any such demand for payment.
ARTICLE III
EXCHANGE OF SHARES
3.1 Exchange Procedures. Promptly after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail appropriate transmittal materials (which shall specify that delivery shall be effected, and risk of loss and
title to the certificates theretofore representing shares of OMNI Common Stock shall pass, only upon proper delivery of
such certificates to the Exchange Agent) to the former shareholders of OMNI. After the Effecti ve Time, each holder of
shares of OMNI Common Stock issued and outstanding at the Effective Time (other than shares to be canceled pursuant
to Sections 2.4 or 2.7 of this Agreement) shall surrender the certificate or certificat es theretofore representing such shares,
together with such transmittal materials properly executed, to the Exchange Agent and promptly upon surrender shall
receive in exchange therefor the consideration provided in Section 2.1 of this Agreement, toge ther with all declared but
unpaid dividends in respect of such shares. The certificate or certificates of OMNI Common Stock so surrendered shall be
duly endorsed as the Exchange Agent may require. To the extent provided by Section 2.5 of this Agreement, each holder
of shares of OMNI Common Stock issued and outstanding at the Effective Time also shall re ceive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any fractional shares of Surviving Corporation Common
Stock of which such holder would otherwise be entitled. The Surviving Corporation shall not be obligated to deliver the
consideration to which any former holder of OMNI Common Stock is entitled as a result of t he Combination until such
holder surrenders his certificate or certificates representing shares of OMNI Common Stock for exchange as provided in
this Article III. In addition, certificates surrendered for exchange by any person constituting a n “affiliate” of OMNI for
purposes of Rule 145(c) under the Securities Act of 1933, as amended (the “1933 Act”), shall not be exchanged for
certificates representing whole shares of the Surviving Corporation Common Stock until the Survivi ng Corporation has
received a written agreement from such person as provided in Section 6.7. In the event any certificate shall have been lost,
stolen or destroyed, upon receipt of appropriate evidence as to such loss, theft or destruction and to ownership of such
certificate by the person claiming such certificate to be lost, stolen or destroyed and the receipt by the Exchange Agent of
appropriate and customary indemnification, the Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate shares of Surviving Corporation Common Stock and a check representing cash in lieu of fractional shares
and/or declared but unpaid dividends deliverable in respect thereof. If any certificate for shares of the Surviving
12-1380I© 1993 Jefren Publishing Company, Inc.
Corporation Common Stock or any check representing cash in lieu of fractional shares and/or declared but unpaid
dividends, is to be issued in a name other than that in which a certificate surre ndered for exchange is issued, the certificate
so surrendered shall be properly endorsed and otherwise in proper form for transfer and the person requesting such
exchange shall affix any requisite stock transfer tax stamps to the certificate surrendered, shall provide funds for their
purchase or for any transfer or other taxes required by reason of the delivery of such certificate or check or shall establish
to the satisfaction of the Exchange Agent that such taxes have been paid or are not payable.
3.2Voting and Dividends. Former shareholders of record of OMNI shall be entitled to vote after the Effective Time at
any meeting of shareholders of the Surviving Corporation the number of whole shares of the Surviving C orporation
Common Stock into which their respective shares of OMNI Common Stock are convened, regardless of whether such
holders have exchanged their certificates representing OMNI Common Stock for certificates representing the Surviving
Corporation Common Stock in accordance with the provisions of this Agreement. Until surrendered for exchange in
accordance with the provisions of Section 3.1 of this Agreement, each certificate there tofore representing shares of OMNI
Common Stock (other than shares to be canceled pursuant to Sections 2.4 or 2.7 of this Agreement) shall from and after
the Effective Time represent for all purposes only the right to receive shares of the Surviving Corporation Common Stock,
and cash in lieu of fractional shares as set forth in this Agreement. Whenever a di vidend or other distribution is declared
by the Surviving Corporation on the Surviving Corporation Common Stock, the record date for which is a t or after the
Effective Time, the declaration shall include dividends or other distributions on al l shares issuable pursuant to this
Agreement, but beginning six (6) months after the Effective Time no dividend or other distribut ion payable to the holders
of record of the Surviving Corporation Common Stock at or as of any time after the Effecti ve Time shall be paid to the
holder of any certificate representing shares of OMNI Common Stock issued and outstanding at the Effective Time until
such holder physically surrenders such certificate for exchange as provided in Section 3.1 of this Agre ement, promptly
after which time all such dividends or distributions shall be paid (without interest).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OMNI
OMNI represents and warrants to FSFC as follows: 4.1 Organization, Standing, and Authority. OMNI is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina. OMNI is duly qualified to do business and i n good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of propert y or the conduct of its
business requires it to be so qualified. OMNI has all requisite corporate power and authority to carry on its business as
now conducted and to own, lease and operate its assets, properties and business, and to execute and deliver this
Agreement and perform the terms of this Agreement. OMNI is duly registered as a savings and loan holding company
under the HOLA. Except as Previously Disclosed (as hereinafter defined), OMNI has in effect all federal, state, local and
foreign governmental, regulatory and other authorizations, permits and licenses (collective ly, “Authorizations”) necessary
for it to own or lease its properties and assets and to carry on its business as now c onducted. “Previously Disclosed” shall
mean the written information delivered by OMNI to FSFC and by FSFC to OMNI, respectively, concurrent ly with the
execution of this Agreement. Information shall be deemed to be Previously Disclosed for the purpose of a given section of
this Agreement only to the extent a specific written reference to such section i s made in connection with the disclosure of
such information at the time of such delivery.
4.2Capital Stock.
(a) The authorized capital stock of OMNI consists of (i) 5,000,000 shares of OMNI Common Stock, of which
2,519,395 shares were issued and outstanding on February 14, 1992, and (ii) 1,000,000 shares of serial preferred stock,
par value $1.00 per share, none of which were issued and outstanding on such date. All of the issued and outstanding
shares of OMNI Common Stock are duly and validly issued and outstanding and are fully paid and nonassessable. None
of the outstanding shares of OMNI Common Stock has been issued in violation of any preemptive rights. Except as
contemplated by this Agreement and except for the OMNI Stock Options described in Section 2.2 hereof, there are no
other shares of capital stock or other equity securities of OMNI outstanding and no outstanding opti ons, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever relating to, or se curities or rights convertible into
§12.207 PROXY STATEMENTS: STRATEGY & FORMS
or exchangeable for, shares of the capital stock of OMNI or contracts, commitments, understandings or arrangements by
which OMNI is or may be bound to issue additional shares of its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock. There are currently outstanding OMNI Stoc k Options to acquire 258,600
shares of OMNI Common Stock.
b) The OMNI Common Stock is duly registered under the Securities Exchange Act of 1934, as am ended (the “1934
Act”). The OMNI Common Stock is not subject to any restrictions as to transfer thereof (exc lusive of shares of OMNI
Common Stock held by its directors, officers or other “affiliates” in accordance wit h the Securities Laws (as defined in
Section 4.4(c)). To the knowledge of OMNI, except as Previously Disclosed, as of the date hereof, no person, corporation
or entity is a beneficial owner of, or has a contractual right to own beneficially fi ve percent (5%) or more of the OMNI
Common Stock. For purposes of this Section 4.2, the term “beneficial owner” shall have the meaning provided in Rule
13d-3 of the rules and regulations of the SEC as in effect on the date hereof, except tha t the terms shall not include
ownership of any of the OMNI Common Stock held by OMNI or any of its Subsidiaries as trustee or i n some other
fiduciary or custodial capacity.
4.3OMNI Subsidiaries.
(a) Each of OMNI’s Subsidiaries (i) is duly organized, validly existing and in good standing under the laws of the
United States (with respect to OMNI’s Subsidiaries that are federal savings banks) or of Nort h Carolina (with respect to
its other Subsidiaries), (ii) is duly qualified to do business and is in good standing in all juri sdictions (whether federal,
state, local or foreign) where its ownership or leasing of property or the conduct of its business re quires it to be so
qualified and (iii) has all requisite corporate power and authority to, and has in effect all Authorizations necessary for it to,
carry on its business as now conducted and to own, lease and operate its assets, properties and busine ss. Other than the
Subsidiaries, OMNI neither owns nor controls 5% or more of the outstanding equity securities, either di rectly or indirectly
of any corporation, bank, association or other entity.
(b) OMNI is the direct, record and beneficial owner of 100% of the outstanding shares of capital stoc k of each of its
Subsidiaries. All of the shares of capital stock of each of OMNI’s Subsidiaries are fully paid a nd nonassessable and are
owned by OMNI free and clear of any claim, lien, pledge or encumbrance of whatsoever kind (“L iens”). No equity
securities of any of OMNI’s Subsidiaries are or may become required to be issued by reason of any opti ons, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of any of OMNI’s Subsidiaries, and there are no contracts,
commitments, understandings or arrangements by which any of OMNI’s Subsidiaries is bound to issue addit ional shares
of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock.
4.4Authorization of Combination and Related Transactions.
(a) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in respect the reof on the part of OMNI, subject to
the approval of the shareholders of OMNI to the extent required by applicable law. This Agreeme nt, subject to any
requisite shareholder and regulatory approvals, represents a valid and legally binding obligati on of OMNI, enforceable
against OMNI in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by OMNI, nor the consummation by OMNI of the
transactions contemplated hereby nor compliance by OMNI with any of the provisions hereof or there of will (i) conflict
with or result in a breach of any provision of OMNI’s Articles of Incorporation or bylaws or (ii) constitut e or result in a
breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any Lien · upon, any property or assets of OMNI or
any of its Subsidiaries pursuant to any note, bond, mortgage, indenture, license, agreement, lea se or other instrument or
obligation to which any of them is a party or by which any of them or any of their propertie s or assets may be subject or
(iii) subject to receipt of the requisite approvals referred to in Sections 8.1(a) and 8.1(b) of this Agreement, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to OMNI or any of i ts Subsidiaries or any of their
properties or assets.
12-1380I© 1993 Jefren Publishing Company, Inc.
(c) Other than (i) in connection or compliance with the provisions of applicable state securities laws, the 1933 Act,
the 1934 Act, and the rules and regulations of the SEC and any state securities admi nistrators promulgated thereunder
(collectively the “Securities Laws”), and the rules and regulations of the National Association of Securities Dealers, Inc.
(the “NASD”), (ii) consents, authorizations, approvals or exemptions required from the OTS, the Internal Revenue
Service or the Pension Benefit Guaranty Corporation (the “PBGC”) with respect to any em ployee benefit plans, or und
