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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Southern National Corporation
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
843444
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(CUSIP Number)
Jerone C. Herring, Esq.
Vice President and Secretary
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
(919) 399-4370
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 29, 1994
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement
[ X ].
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CUSIP No. 843444
SCHEDULE 13D
1. Name of Reporting Person: BB&T Financial Corporation
I.R.S. Identification No.: 56-1056232
2. Check the Appropriate Box if a Member of a Group*
(a) [ ]
(b) [ ]
3. SEC Use Only
4. Source of Funds: WC
5. Check Box if Disclosure of Legal Proceedings Is Required
Pursuant to Item 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization: North Carolina
Number of 7. Sole Voting Power: 0/1/
Shares
Beneficially 8. Shared Voting Power: 0/1/
Owned by
Each 9. Sole Dispositive Power: 0/1/
Reporting
Person 10. Shared Dispositive Power: 0/1/
with
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 0/1/
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ X ]
13. Percent of Class Represented by Amount in Row (11): 0/1/
14. Type of Reporting Person: HC
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/1/ The Reporting Person has entered into a Stock Option Agreement
covering 8,633,736 shares of SNC Common Stock (as defined herein)
or approximately 16.6% of the shares that would be outstanding
following exercise. Unless and until the option granted
thereunder is exercised, the Reporting person disclaims beneficial
ownership of the shares covered thereby.
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Item 1. Security and Issuer.
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The title of the class of equity securities to which this
Schedule 13D relates is the common stock, par value $5.00 per
share, of Southern National Corporation ("SNC Common Stock"). The
address of the principal executive offices of Southern National
Corporation ("SNC") is 200 West Second Street, Winston-Salem,
North Carolina 27101.
Item 2. Identity and Background.
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This statement is filed on behalf of BB&T Financial
Corporation, a North Carolina corporation ("BB&T"), with principal
executive offices at 223 West Nash Street, Wilson, North Carolina
27893. BB&T is a bank holding company and is principally engaged
in the business of managing and controlling banks and activities
closely related to banking.
Attached as Schedule I to this Schedule 13D is a list of
the directors and executive officers of BB&T containing the
following information with respect to each such person: (i) name,
(ii) residence or business address and (iii) present principal
occupation or employment, and the name and, if different than such
person's business address, the address of any corporation or other
organization in which such employment is conducted. Each person
listed in Schedule I is a United States citizen.
During the past five years, neither BB&T nor, to the best
of BB&T's knowledge, any person named in Schedule I (i) has been
convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws, or finding any violation with respect to such
laws.
Item 3. Source and Amount of Funds
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Pursuant to a Stock Option Agreement dated as of July 29,
1994 ("SNC Option Agreement"), SNC has granted to BB&T an option
to purchase up to 8,633,736 shares of SNC Common Stock ("SNC
Option"), subject to adjustment as provided therein. The exercise
price under the SNC Option Agreement is $20.625 per share, and the
aggregate amount of funds required to exercise the SNC Option in
full would be $178,070,805. If and when the SNC Option is
exercised, in whole or in part, BB&T anticipates that its source
of funds will be working capital.
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Item 4. Purpose of Transactions.
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On July 29, 1994, BB&T and SNC entered into an Agreement
and Plan of Reorganization ("Reorganization Agreement") and
adopted a related Plan of Merger ("Plan of Merger"), providing for
the merger ("Merger") of SNC with and into BB&T under the name
"Southern National Corporation." The Reorganization Agreement and
Plan of Merger are herein sometimes referred to collectively as
the "Merger Agreements." Under the Plan of Merger, each share of
issued and outstanding SNC Common Stock, on the effective date of
the Merger will be converted into 1.0 share of common stock of
BB&T, par value $2.50 per share ("BB&T Common Stock"), and each
share of BB&T Common Stock issued and outstanding will be
converted into 1.45 shares of BB&T Common Stock. Each share of
issued and outstanding SNC 6-3/4% Cumulative Convertible Preferred
Stock, Series A, par value $5.00 per share ("SNC Series A
Preferred Stock"), on the effective date of the Merger will be
converted into 1.0 share of BB&T 6-3/4% Cumulative Convertible
Preferred Stock, Series A ("BB&T Series A Preferred Stock"). In
addition, as contemplated by the Reorganization Agreement, Branch
Banking and Trust Company ("BB&T-NC") and Southern National Bank
of North Carolina ("SNBNC") will enter into an agreement ("North
Carolina Bank Merger Agreement") pursuant to which SNBNC will
merge with and into BB&T-NC ("North Carolina Bank Merger") and
operate under the name "Branch Banking and Trust Company" and
Branch Banking and Trust Company of South Carolina ("BB&T-SC") and
Southern National Bank of South Carolina ("SNBSC") will enter into
an agreement ("South Carolina Bank Merger Agreement") pursuant to
which SNBSC will merge with and into BB&T-SC ("South Carolina
Bank Merger") and operate under the name "Branch Banking and
Trust Company of South Carolina." The North Carolina Bank Merger
Agreement and the South Carolina Bank Merger Agreement are herein
sometimes referred to collectively as the "Bank Merger
Agreements," and the North Carolina Bank Merger and the South
Carolina Bank merger are herein sometimes referred to collectively
as the "Bank Mergers." It is anticipated the Bank Mergers will be
consummated after the effective date of the Merger.
The Reorganization Agreement provides that after the
effective date of the Merger, the Board of Directors of BB&T
(after such time, the "Continuing Corporation") shall consist of
eleven persons named by the Board of Directors of BB&T and eleven
persons named by the Board of Directors of SNC. The Merger
Agreements state that it is the intention of the parties that John
A. Allison IV, Chairman and Chief Executive Officer of BB&T, shall
be elected Chairman of the Board and Chief Executive Officer of
the Continuing Corporation. The Merger Agreements also name
individuals who will serve as additional senior officers of the
Continuing Corporation. The Merger Agreements also provide that
the headquarters of the Continuing Corporation will be located at
200 West Second Street, Winston-Salem, North Carolina.
In addition to the SNC Option Agreement, SNC and BB&T
entered into a Stock Option Agreement dated July 29, 1994 (the
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"BB&T Option Agreement" and, together with the SNC Option Agreement, the "Option
Agreements") pursuant to which BB&T granted to SNC an option ("BB&T Option") to
purchase up to 7,217,932 shares of BB&T Common Stock at an exercise price of
$30.625 per share, subject to adjustment. BB&T and SNC have entered into the
Option Agreements in order to facilitate consummation of the transactions
contemplated by the Merger Agreements. See also the description in Item 6 hereof
of certain other provisions of the Option Agreements and the Merger Agreements.
Consummation of the Merger and the Bank Mergers are subject to, among
other things, receipt of all necessary shareholder and government approvals.
Except as otherwise set forth in Items 4, 5 and 6 hereof and the
Exhibits to this Schedule 13D (which are hereby incorporated by reference herein
and made a part hereof to the same extent as though set forth herein in full),
the Reporting Person does not now have any plans or proposals which relate to or
would result in (i) the acquisition by any person of additional securities of
SNC, or the disposition of securities of SNC; (ii) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving SNC or
any of its subsidiaries; (iii) any change in the present Board of Directors or
management of SNC, including any change in the number or term of SNC directors
or the filling of any existing vacancies on the Board of Directors of SNC; (iv)
any material change in the present capitalization or dividend policy of SNC; (v)
any other material change in the business or corporate structure of SNC; (vi)
changes in SNC's charter, bylaws or instruments corresponding thereto or other
actions which may impede the acquisition of control of SNC by any person; (vii)
causing a class of securities of SNC to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association; or (viii) a class of
equity securities of SNC becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934.
Item 5. Interest in Securities of the Issuer.
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The 8,633,736 shares of SNC Common Stock subject to the SNC Option
represent approximately 16.6% of the approximately 52,019,346 shares of SNC
Common Stock that would be issued and outstanding upon exercise of the SNC
Option in full. Unless and until the SNC Option is exercised, the Reporting
Person disclaims beneficial ownership of the SNC Common Stock subject to the SNC
Option.
In addition to these shares, Fred H. Deaton, Jr., a director of BB&T,
owns beneficially jointly with a sibling 14,174 shares of SNC Common Stock, or
less than 0.1% of the outstanding shares thereof, and has shared voting
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and dispositive power over such shares. Mr. Deaton is also the
co-trustee of a trust which owns 14,174 shares of SNC Common
Stock, or less than 0.1% of the outstanding shares thereof, and
has shared voting and dispositive power over such shares. Robert
L. Brady, a director of BB&T, is the beneficial owner of 1,512
shares of SNC Common Stock, or less than 0.1% of the outstanding
shares thereof, and has sole voting and dispositive power with
respect to such shares.
Except as otherwise described herein, neither the
Reporting Person, nor, to the best of the Reporting Person's
knowledge, any of the persons listed on Schedule I hereto,
beneficially owns any shares of SNC Common Stock or SNC Series A
Preferred Stock. No transactions in SNC Common Stock or SNC
Series A Preferred Stock were effected during the past 60 days
by the Reporting Person, or, to the best of the Reporting Person's
knowledge, by any of the persons listed on Schedule I hereto.
Item 6. Contracts, Arrangements, Understandings
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Securities of the Issuer.
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Option Agreements
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Set forth below is a description of selected provisions of
the Option Agreements. Such description is qualified in its
entirety by reference to the copies of the Option Agreements filed
as Exhibits hereto, which are incorporated by reference herein and
made a part hereof to the same extent as though set forth herein
in full.
The SNC Option Agreement provides for the purchase by BB&T
of up to 8,633,736 shares of SNC Common Stock at an exercise price
of $20.625 per share; provided, however, that in the event SNC
issues or agrees to issue any shares of SNC Common Stock (other
than as permitted under the Merger Agreements) at a price less
than $20.625 per share (as set forth below), the exercise price
shall be equal to such lesser price. In the event of any change
in SNC Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, exchanges of shares or
the like, the type and number of shares subject to the Option, and
the purchase price therefor, shall be adjusted appropriately.
Also, in the event that any additional shares of SNC Common Stock
are issued or otherwise become outstanding after the date of the
SNC Option Agreement (other than pursuant to the SNC Option
Agreement), the number of shares of SNC Common Stock subject to
the SNC Option shall be adjusted so that, after such issuance, it
equals 19.9% of the number of shares of SNC Common Stock then
issued and outstanding without giving effect to any shares subject
or issued pursuant to the SNC Option. The SNC Option Agreement
also provides that the number of shares of SNC Common Stock
subject to the SNC Option shall be reduced to such lesser number,
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if any, as may from time to time be necessary (but only for so
long as may be necessary) to cause BB&T not to be subject to the
provisions of Section 55-9-01 et seq. of, or deemed to own
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"control shares" of SNC within the meaning of Section 55-9A-01
of, the North Carolina Business Corporation Act, as amended.
BB&T may exercise the SNC Option upon the occurrence of
certain events ("Purchase Events"). The SNC Option Agreement
provides that a Purchase Event shall mean the occurrence of any of
the following events after the date of execution of the SNC Option
Agreement: (i) SNC, SNBNC or SNBSC, without having received
BB&T's prior written consent, shall have entered into an agreement
with any person (other than SNC, SNBNC or SNBSC) to (x) merge,
consolidate or enter into any similar transaction with SNC, SNBNC
or SNBSC except as contemplated in the Merger Agreements
(including transactions which SNC has disclosed to BB&T);
(y) purchase, lease or otherwise acquire all or substantially all
of the assets of SNC, SNBNC or SNBSC; or (z) purchase or otherwise
acquire (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 10% or more of
the voting power of SNC, SNBNC or SNBSC; (ii) any person (other
than BB&T, or BB&T-NC or BB&T-SC in a fiduciary capacity, or SNC,
or SNBNC or SNBSC in a fiduciary capacity) shall have acquired
beneficial ownership or the right to acquire beneficial ownership
of 15% or more of the outstanding shares of SNC Common Stock or
the common stock of SNBNC or SNBSC; (iii) any person (other than
SNC, SNBNC or SNBSC) shall have made a bona fide proposal to SNC,
SNBNC or SNBSC by public announcement or written communication
that is or becomes the subject of public disclosure to acquire
SNC, SNBNC or SNBSC by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction,
and following such bona fide proposal the shareholders of SNC vote
not to adopt the Plan of Merger; or (iv) SNC shall have willfully
breached certain specified covenants contained in the Merger
Agreements following a bona fide proposal to SNC, SNBNC or SNBSC
to acquire SNC, SNBNC or SNBSC by merger, consolidation, purchase
of all or substantially all of its assets or any other similar
transaction, which breach would entitle BB&T to terminate the
Merger Agreements (without regard to the cure periods provided for
therein) and such breach shall not have been cured prior to the
date on which BB&T shall notify SNC of its intent to exercise the
SNC Option.
The SNC Option may be exercised in whole or in part, at
one or more closings, and may be exercised at any time if a
Purchase Event shall have occurred and be continuing and before
the SNC Option Agreement is terminated, unless BB&T shall have
breached in any material respect any material covenant or
representation contained in the Reorganization Agreement and such
breach has not been cured. The SNC Option Agreement provides that
to the extent that it shall have not been exercised, the SNC
Option shall terminate (i) on the effective date of the Merger;
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(ii) upon the termination of the Merger Agreements in accordance
with the provisions thereof (other than a termination resulting
from a willful breach by SNC of certain specified covenants
contained therein or, following the occurrence of a Purchase
Event, failure of SNC's shareholders to approve the Merger
Agreements by the vote required under applicable law); or
(iii) twelve months after termination of the Merger Agreements due
to a willful breach by SNC of certain specified covenants
contained therein or, following the occurrence of a Purchase
Event, failure of SNC's shareholders to approve the Merger
Agreements by the vote required under applicable law.
The SNC Option Agreement provides that neither BB&T nor
SNC may assign any of its rights or obligations under the SNC
Option Agreement or the SNC Option created thereunder without the
express written consent of the other party, except that if a
Purchase Event shall have occurred and be continuing, BB&T may
assign in whole or in part its rights and obligations under the
SNC Option Agreement; provided, however, that to the extent
required by applicable regulatory authorities, BB&T may not assign
its rights under the SNC Option except in (i) a widely dispersed
public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting
shares of SNC, (iii) an assignment to a single party (e.g., a
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broker or investment banker) for the purpose of conducting a
widely dispersed public distribution on BB&T's behalf, or (iv) any
other manner approved by applicable regulatory authorities.
BB&T's acquisition of more than certain percentages of the
outstanding SNC Common Stock may be subject to prior approval of,
or the filing of notices with, applicable regulatory authorities.
The BB&T Option Agreement provides for the purchase by SNC
of up to 7,217,932 shares of BB&T Common Stock at an exercise
price of $30.625 per share; provided, however, that in the event
BB&T issues or agrees to issue any shares of BB&T Common Stock
(other than as permitted under the Merger Agreements) at a price
less than $30.625 per share (as set forth below), the exercise
price shall be equal to such lesser price. In the event of any
change in BB&T Common Stock by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the
BB&T Option, and the purchase price therefor, shall be adjusted
appropriately. Also, in the event that any additional shares of
BB&T Common Stock are issued or otherwise become outstanding after
the date of the BB&T Option Agreement (other than pursuant to the
BB&T Option Agreement), the number of shares of BB&T Common Stock
subject to the BB&T Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of BB&T Common
Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the BB&T Option. The BB&T
Option Agreement also provides that the number of shares of BB&T
Common Stock subject to the BB&T Option shall be reduced to such
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lesser number, if any, as may from time to time be necessary (but
only for so long as may be necessary) to cause SNC not to be
subject to the provisions of Section 55-9-01 et seq. of, or deemed
to own "control shares" of BB&T within the meaning of Section
55-9A-01 of, the North Carolina Business Corporation Act, as
amended.
SNC may exercise the BB&T Option upon the occurrence of
certain events ("Purchase Events"). The BB&T Option Agreement
provides that a Purchase Event shall mean the occurrence of any of
the following events after the date of execution of the Option
Agreement: (i) BB&T, BB&T-NC or BB&T-SC, without having received
SNC's prior written consent, shall have entered into an agreement
with any person (other than BB&T, BB&T-NC or BB&T-SC) to
(x) merge, consolidate or enter into any similar transaction with
BB&T, BB&T-NC or BB&T-SC except as contemplated in the Merger
Agreements (including transactions which BB&T has disclosed to
SNC); (y) purchase, lease or otherwise acquire all or
substantially all of the assets of BB&T, BB&T-NC or BB&T-SC; or
(z) purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of BB&T,
BB&T-NC or BB&T-SC; (ii) any person (other than BB&T, or BB&T-NC
or BB&T-SC in a fiduciary capacity, or SNC, or SNBNC or SNBSC in a
fiduciary capacity) shall have acquired beneficial ownership or
the right to acquire beneficial ownership of 15% or more of the
outstanding shares of BB&T Common Stock or the common stock of
BB&T-NC or BB&T-SC; (iii) any person (other than BB&T, BB&T-NC or
BB&T-SC) shall have made a bona fide proposal to BB&T, BB&T-NC or
BB&T-SC by public announcement or written communication that is or
becomes the subject of public disclosure to acquire BB&T, BB&T-NC
or BB&T-SC by merger, consolidation, purchase of all or
substantially all of its assets or other similar transaction, and
following such bona fide proposal the shareholders of BB&T vote
not to adopt the Plan of Merger; or (iv) BB&T shall have willfully
breached certain specified covenants contained in the Merger
Agreements following a bona fide proposal to BB&T, BB&T-NC or
BB&T-SC to acquire BB&T, BB&T-NC or BB&T-SC by merger,
consolidation, purchase of all or substantially all of its assets
or any other similar transaction, which breach would entitle SNC
to terminate the Merger Agreements (without regard to the cure
periods provided for therein) and such breach shall not have been
cured prior to the date on which SNC shall notify BB&T of its
intent to exercise the BB&T Option.
The BB&T Option may be exercised in whole or in part, at
one or more closings, and may be exercised at any time if a
Purchase Event shall have occurred and be continuing and before
the BB&T Option Agreement is terminated, unless SNC shall have
breached in any material respect any material covenant or
representation contained in the Reorganization Agreement and such
breach has not been cured. The BB&T Option Agreement provides
that to the extent that it shall have not been exercised, the BB&T
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Option shall terminate (i) on the effective date of the Merger; (ii) upon the
termination of the Merger Agreements in accordance with the provisions thereof
(other than a termination resulting from a willful breach by BB&T of certain
specified covenants contained therein or, following the occurrence of a Purchase
Event, failure of BB&T's shareholders to approve the Merger Agreements by the
vote required under applicable law); or (iii) twelve months after termination of
the Merger Agreements due to a willful breach by BB&T of certain specified
covenants contained therein or, following the occurrence of a Purchase Event,
failure of BB&T's shareholders to approve the Merger Agreements by the vote
required under applicable law.
The BB&T Option Agreement provides that neither SNC nor BB&T may assign
any of its rights or obligations under the BB&T Option Agreement or the BB&T
Option created thereunder without the express written consent of the other
party, except that if a Purchase Event shall have occurred and be continuing,
SNC may assign in whole or in part its rights and obligations under the BB&T
Option Agreement; provided, however, that to the extent required by applicable
regulatory authorities, SNC may not assign its rights under the BB&T Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of BB&T, (iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on SNC's behalf, or (iv) any other manner approved by applicable
regulatory authorities. SNC's acquisition of more than certain percentages of
the outstanding BB&T Common Stock may be subject to prior approval of, or the
filing of notices with, applicable regulatory authorities.
Merger Agreements
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Set forth below is a description of selected provisions of the Merger
Agreements. Such description is qualified in its entirety by reference to the
copies thereof filed as Exhibits hereto, which are incorporated by reference
herein and made a part hereof.
The Plan of Merger provides that, on the effective date of the Merger,
SNC will be merged with and into BB&T and that the Continuing Corporation will
change its name to "Southern National Corporation" and each share of SNC Common
Stock outstanding immediately prior to such date (with certain exceptions) will
be converted into 1.0 share of BB&T Common Stock, and each share of BB&T Common
Stock outstanding immediately prior to the effective date of the Merger (with
certain exceptions) will be converted into 1.45 shares of BB&T Common Stock.
Each share of issued and outstanding SNC Series A Preferred Stock on the
effective date of the Merger will be converted into 1.0 share of BB&T Series A
Preferred Stock. The Plan of Merger also provides that on the effective date of
the Merger SNC's obligations with
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respect to stock options granted under its stock option plans shall be assumed
by the Continuing Corporation and each stock option outstanding under such plans
shall become the right to receive, upon payment of the exercise price, a number
of shares of BB&T Common Stock equal to the number of shares of SNC Common Stock
covered by such options. Likewise, under the Plan of Merger, on the effective
date of the Merger, options to purchase shares of BB&T Common Stock issued
pursuant to BB&T's stock option plans shall be converted and exchanged, without
any action on the part of the holders thereof, into options to acquire, upon
payment of the adjusted exercise price (which shall equal the exercise price per
share for the options immediately prior to the Merger, divided by 1.45), the
number of shares of BB&T Common Stock the option holder would have received
pursuant to the Merger if he or she had exercised his or her options immediately
prior thereto.
The Reorganization Agreement provides that each party thereto shall use
its best efforts in good faith to, among other things: (i) furnish such
information as may be necessary or desirable in connection with the preparation
of applications to be filed with government agencies for approval of the Merger
and Bank Mergers and the registration statement to be filed with the Securities
and Exchange Commission and (ii) take or cause to be taken all action necessary
or desirable on its part so as to permit consummation of the Merger and the Bank
Mergers at the earliest possible date. The Reorganization Agreement further
provides that no party shall take or cause, nor to the best of its ability,
permit to be taken, any action that would adversely affect the qualification of
the Merger for pooling of interests accounting treatment; provided that nothing
contained in the Merger Agreements shall preclude BB&T or SNC from exercising
rights under the BB&T Option Agreement or the SNC Option Agreement (whichever
may be applicable). The Reorganization Agreement further provides that without
the consent of BB&T, on the one hand, or of SNC, on the other, except as
otherwise provided therein or in certain instances as previously disclosed by
each party to the other, SNC, BB&T and their respective subsidiaries each will
not, among other things: (i) carry on its business other than in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted prior to July 29, 1994; (ii) in the case of SNC and BB&T only (a)
declare, set aside, make or pay any dividend or other distribution in respect of
SNC Common Stock or of BB&T Common Stock, as the case may be, other than
quarterly cash dividends in an amount per share in excess of $0.20, in the case
of SNC, and $0.29, in the case of BB&T, in a manner consistent with past
practice and in accordance with applicable law, regulation and contractual and
regulatory commitments and in respect of SNC Series A Preferred Stock as
required by SNC's Articles of Incorporation or (b) make any changes in its
dividend record or dividend payment dates; provided, however, that if the
Closing Date shall not have occurred prior to July 31, 1995, SNC or BB&T may
increase its regular quarterly cash dividends in a manner and amount consistent
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with past increases in such dividends, except that, if SNC
increases its dividend after July 31, 1995, BB&T may increase its
dividend(s) by an amount equal to the increase in the SNC dividend
multiplied by 1.45; (iii) issue any shares of its capital stock or
permit any treasury shares to become outstanding other than
pursuant to the Option Agreements, the dividend reinvestment plans
of the parties or other rights outstanding at July 29, 1994, or
incur any additional debt obligation or other obligation for
borrowed money in amounts materially in excess of amounts
previously borrowed in the ordinary course of business of SNC,
BB&T and their respective subsidiaries consistent with past
practice; (iv) issue, grant or authorize any rights other than
pursuant to the Option Agreements or grants of stock options to
their employees in the ordinary course of business or effect any
recapitalization, reclassification, stock dividend (other than
pursuant to their respective dividend reinvestment plans), stock
split or like change in capitalization or redeem, repurchase or
otherwise acquire any shares of its capital stock; (v) amend its
Articles of Incorporation, Articles of Association or Bylaws
except as contemplated in the Reorganization Agreement; impose, or
suffer the imposition, on any share of stock held by SNC or BB&T
in any of their subsidiaries of any lien, charge or encumbrance,
or permit any such lien, charge or encumbrance to exist, except as
existing on July 29, 1994; (vi) merge or consolidate with any
other entity; sell or lease all or any material portion of its
assets or business; make any acquisition of all or any substantial
portion of the business or assets of any other person, firm,
association, corporation or business organization other than in
connection with the collection of any loan or credit arrangement
between it and any other person; enter into or consummate a
purchase and assumption transaction with respect to deposits and
liabilities; revoke or surrender its certificate of authority to
maintain, or apply for the relocation of, any existing branch
office or apply for a certificate of authority to establish a new
branch office other than in the ordinary course of business; (vii)
fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and material
to the conduct of its business except where it is in good faith
contesting the validity of any of the foregoing; (viii) liquidate
or sell or dispose of any material assets or acquire any material
assets; make any capital expenditures outside the ordinary course
of business; or establish new branches or other similar facilities
or modify any leases or other contracts relating thereto outside
the ordinary course of business; (ix) except as contemplated by
the Reorganization Agreement, increase the rate of compensation
of, pay or agree to pay any bonus to, or provide any other
employee benefit or incentive to, any of its directors, officers
or employees except in a manner consistent with past practice,
provided, however, that such payments may not increase severance
amounts payable under employment or severance agreements;
provided, however, all amounts covered under SNC's Long-Term and
Short-Term Incentive Plans as of the end of the month prior to the
- 12 -
<PAGE>
month in which the Merger is consummated shall vest and be paid
out immediately; except as contemplated by the Reorganization
Agreement, enter into, modify or extend or permit to be renewed
any employment or severance contracts with any of its present or
former directors, officers or employees; or enter into or modify
(except as may be required by applicable law, for any modification
that is not material or to effect normal, corrective or previously
contemplated actions with respect to such plans) any pension,
retirement, stock option, stock purchase, stock appreciation
right, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or
other employees; (x) change its lending, investment,
asset/liability management or other material banking policies in
any material respect except as may be required by applicable law;
(xi) change its methods of accounting in effect at December 31, 1993,
in any material respect except as required by changes in generally
accepted accounting principles concurred in by its independent
certified public accountants, or change any of its methods of
reporting income and deductions for federal income tax purposes in
any material respect from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1993,
except as required by law; (xii) solicit or encourage inquiries or
proposals with respect to any acquisition or purchase of all or a
substantial portion of the assets of, or a substantial equity
interest in, either party or its principal banking subsidiaries or
any business combination with either party or its principal
banking subsidiaries other than as contemplated by the
Reorganization Agreement; or authorize or permit any officer,
director, agent or affiliate of it to do any of the above; or fail
to notify the other party immediately if any such inquiries or
proposals are received by either party or its principal banking
subsidiaries; or (xiii) agree to do any of the foregoing.
Reference is made to Item 4 hereof for a description of
certain other provisions of the Merger Agreements.
Item 7. Material to be Filed as Exhibits.
- ------ --------------------------------
1. SNC Option Agreement, dated as of July 29, 1994.
2. Agreement and Plan of Reorganization, dated as of
July 29, 1994.
3. Plan of Merger, dated as of July 29, 1994 (included as
Annex A to Exhibit 2).
4. BB&T Option Agreement, dated as of July 29, 1994.
- 13 -
<PAGE>
Signature
- ---------
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: August 8, 1994 BB&T FINANCIAL CORPORATION
By/s/ Jerone C. Herring, Esq.
-------------------------------
Jerone C. Herring
Vice President and Secretary
<PAGE>
SCHEDULE I
EXECUTIVE OFFICERS
Name Position
- ---- --------
John A. Allison IV Chairman of the Board and Chief
Executive Officer, BB&T
Financial Corporation and
Branch Banking and Trust
Company
Henry G. Williamson, Jr. President and Chief Operating
Officer, BB&T Financial
Corporation and Chief Operating
Officer, Branch Banking and
Trust Company
Kelly S. King Senior Executive Vice President,
BB&T Financial Corporation and
President, Branch Banking and
Trust Company
W. Kendall Chalk Senior Executive Vice President,
BB&T Financial Corporation and
Branch Banking and Trust
Company
Scott E. Reed Senior Executive Vice President
and Treasurer, BB&T Financial
Corporation and Senior
Executive Vice President,
Branch Banking and Trust
Company
DIRECTORS
Name Principal Occupation and
- ---- Business or Residence Address
-----------------------------
Joseph B. Alala, Jr. Senior Partner, Alala, Mullen,
Holland and Cooper, P.A.
(Attorneys),
P.O. Box 859
Gastonia, N.C. 28052
<PAGE>
John A. Allison, IV Chairman of the Board and Chief
Executive Officer, BB&T
Financial Corporation and
Chairman of the Board, Branch
Banking and Trust Company
Wilson, N.C.
W. Watson Barnes President, Wilson Petroleum
Company, Inc.
(Distributor of petroleum
products),
Wilson, N.C. 27893
Paul B. Barringer President and Chief Executive
Officer, Coastal Lumber Company
(Dealer in lumber products)
P.O. Box 829
Weldon, N.C. 27890
Robert L. Brady Senior Vice President, Branch
Banking and Trust Company
Greensboro, N.C. 27140
W.G. Clark III President, Clark Industries, Inc.
(Farming)
P.O. Box 1134
Tarboro, N.C. 27886
Jesse W. Corbett, Jr. Personal Investments
208 Bogue Drive
Morehead City, N.C. 28857
W.R. Cuthbertson, Jr. Senior Vice President, Branch
Banking and Trust Company
Charlotte, N.C. 28234
Fred H. Deaton, Jr. Personal Investments
P.O. Box 1021
Statesville, N.C. 28677
Joe L. Dudley, Sr. President and Chief Executive
Officer, Dudley Products, Inc.
(Hair care products)
7856 McCloud Road
Greensboro, N.C. 27409
<PAGE>
Tom D. Efird President, Standard Distributors,
Inc.
(Beverage wholesaler)
P.O. Drawer 68
Gastonia, N.C. 28502
O. William Fenn, Jr. Director, Furniture Export
Office, International Trade
Division, N.C. Department of
Commerce
510 Emerywood Drive
High Point, N.C. 27262
James E. Heins Telecommunications Consultant
1600 Morgantown Road
Pinehurst, N.C. 28374
Raymond A. Jones, Jr. Personal Investments
335 Eastover Road
Charlotte, N.C. 28207
Kelly S. King Senior Executive Vice President,
BB&T Financial Corporation and
President, Branch Banking and
Trust Company
Wilson, N.C.
J. Ernest Lathem, M.D. Medical Director
Prostate Diagnostic Center
Greenville, S.C. 29605
James H. Maynard Chairman and Chief Executive
Officer, Investors Management
Corporation
(Restaurants)
P.O. Box 29502
Raleigh, N.C. 27626
A. Winniett Peters Chairman of the Board, Standard
Commercial Tobacco Company
(Tobacco processors and
exporters)
Wilson, N.C. 27893
Richard L. Player, Jr. President, Player, Inc.
(Commercial and industrial
general contractor)
Fayetteville, N.C.
<PAGE>
Larry J. Waggoner Real Estate Development and
Investments
4951 Gulfshore Boulevard North
Unit 802
Naples, FL 33940
Henry G. Williamson, Jr. President and Chief Operating
Officer, BB&T Financial
Corporation and Chief
Operating Officer, Branch
Banking and Trust Company
Wilson, N.C. 27893
William B. Young, M.D. Retired Specialist in Internal
Medicine
Wilson, N.C. 27893
<PAGE>
EXHIBIT INDEX
-------------
Exhibit 1 SNC Option Agreement, dated as of July 29, 1994
Exhibit 2 Agreement and Plan of Reorganization, dated as of July
29, 1994
Exhibit 3 Plan of Merger, dated as of July 29, 1994 (included as
Annex A to Exhibit 2)
Exhibit 4 BB&T Option Agreement, dated as of July 29, 1994
<PAGE>
Exhibit 1
EXECUTION DRAFT
---------------
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement")
dated as of July 29, 1994, between SOUTHERN NATIONAL
CORPORATION ("SNC"), a North Carolina corporation
registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended ("Bank Holding
Company Act"), and BB&T FINANCIAL CORPORATION ("BB&T"),
a North Carolina corporation registered as a bank
holding company under the Bank Holding Company Act.
WITNESSETH
----------
WHEREAS, the Boards of Directors of the parties
hereto have approved an Agreement and Plan of
Reorganization ("Reorganization Agreement") and have
adopted a related Plan of Merger dated as of the date
hereof (together referred to herein as the "Merger
Agreements"), providing for certain transactions
pursuant to which SNC would be merged with and into
BB&T; and
WHEREAS, as a condition to and as consideration
for BB&T's entry into the Merger Agreements and to
induce such entry, SNC has agreed to grant to BB&T the
option set forth herein to purchase authorized but
unissued shares of SNC Common Stock;
NOW, THEREFORE, in consideration of the premises
herein contained, the parties agree as follows:
1. Definitions.
-----------
Capitalized terms defined in the Merger
Agreements and used herein shall have the same meanings
as in the Merger Agreements.
2. Grant of Option.
---------------
Subject to the terms and conditions set forth
herein, SNC hereby grants to BB&T an option ("Option")
to purchase up to 8,633,736 shares of SNC Common Stock,
at a price of $20.625 per share payable in cash as
provided in Section 4 hereof; provided, however, that in
the event SNC issues or agrees to issue any shares of
SNC Common Stock (other than as permitted under the
Merger Agreements) at a price less than $20.625 per
share (as adjusted pursuant to Section 6 hereof), the
exercise price shall be equal to such lesser price.
Notwithstanding anything else in this Agreement to the
<PAGE>
- 2 -
contrary, the number of shares of SNC Common Stock
subject to the Option shall be reduced to such lesser
number, if any, as may from time-to-time be necessary,
but only for so long as may be necessary, to cause BB&T
not to be subject to the provisions of Section 55-9-01
et seq. of, or deemed to own "control shares" of SNC
within the meaning of Section 55-9A-01 of, the North
Business Corporation Act, as amended.
3. Exercise of Option.
------------------
(a) Unless BB&T shall have breached in any
material respect any material covenant or representation
contained in the Reorganization Agreement and such
breach has not been cured, BB&T may exercise the Option,
in whole or part, at any time or from time to time if a
Purchase Event (as defined below) shall have occurred
and be continuing; provided that to the extent the
Option shall not have been exercised, it shall terminate
and be of no further force and effect (i) on the
Effective Date of the Merger or (ii) upon termination of
the Merger Agreements in accordance with the provisions
thereof (other than a termination resulting from a
willful breach by SNC of any Specified Covenant or,
following the occurrence of a Purchase Event, failure of
SNC's shareholders to approve the Merger Agreements by
the vote required under applicable law), or (iii) 12
months after termination of the Merger Agreements due to
a willful breach by SNC of any Specified Covenant or,
following the occurrence of a Purchase Event, failure of
SNC's shareholders to approve the Merger Agreements by
the vote required under applicable law; and provided
further that any such exercise shall be subject to
compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event"
shall mean any of the following events or transactions
occurring after the date hereof:
(i) SNC, Southern National Bank of
North Carolina ("SNBNC") or Southern
National Bank of South Carolina ("SNBSC"),
without having received BB&T's prior
written consent, shall have entered into
an agreement with any person (other than
SNC, SNBNC or SNBSC) to (x) merge or
consolidate, or enter into any similar
transaction, with SNC, SNBNC or SNBSC,
except as contemplated in the
Reorganization Agreement (including
Previously Disclosed transactions),
<PAGE>
- 3 -
(y) purchase, lease or otherwise acquire
all or substantially all of the assets of
SNC, SNBNC or SNBSC or (z) purchase or
otherwise acquire (including by way of
merger, consolidation, share exchange or
any similar transaction) securities
representing 10% or more of the voting
power of SNC, SNBNC or SNBSC;
(ii) any person (other than BB&T, or Bank
Banking and Trust Company or Branch
Banking and Trust Company of South
Carolina in a fiduciary capacity, or SNC,
or SNBNC or SNBSC in a fiduciary capacity)
shall have acquired beneficial ownership
or the right to acquire beneficial
ownership of 15% or more of the
outstanding shares of the common stock of
SNC, SNBNC or SNBSC after the date hereof
(the term "beneficial ownership" for
purposes of this Option Agreement having
the meaning assigned thereto in
Section 13(d) of the Exchange Act and the
regulations promulgated thereunder);
(iii) any person (other than SNC, SNBNC or
SNBSC) shall have made a bona fide
proposal to SNC, SNBNC or SNBSC by public
announcement or written communication that
is or becomes the subject of public
disclosure to acquire SNC, SNBNC or SNBSC
by merger, consolidation, purchase of all
or substantially all of its assets or any
other similar transaction, and following
such bona fide proposal the shareholders
of SNC vote not to adopt the Plan of
Merger; or
(iv) SNC shall have willfully breached any
Specified Covenant following a bona fide
proposal to SNC, SNBNC or SNBSC to acquire
SNC, SNBNC or SNBSC by merger,
consolidation, purchase of all or
substantially all of its assets or any
other similar transaction, which breach
would entitle BB&T to terminate the Merger
Agreements (without regard to the cure
periods provided for therein) and such
breach shall not have been cured prior to
the Notice Date (as defined below).
<PAGE>
- 4 -
If more than one of the transactions giving rise to a
Purchase Event under this Section 3(b) is undertaken or
effected, then all such transactions shall give rise
only to one Purchase Event, which Purchase Event shall
be deemed continuing for all purposes hereunder until
all such transactions are abandoned. As used in this
Option Agreement, "person" shall have the meanings
specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(c) In the event BB&T wishes to exercise
the Option, it shall send to SNC a written notice (the
date of which being herein referred to as "Notice Date")
specifying (i) the total number of shares it will
purchase pursuant to such exercise, and (ii) a place and
date not earlier than three business days nor later than
60 business days from the Notice Date for the closing of
such purchase ("Closing Date"); provided that if prior
notification to or approval of any federal or state
regulatory agency is required in connection with such
purchase, BB&T shall promptly file the required notice
or application for approval and shall expeditiously
process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead
from the date on which any required notification period
has expired or been terminated or such approval has been
obtained and any requisite waiting period shall have
passed.
(d) As used herein, "Specified Covenant"
means any covenant contained in Sections 4.1, 4.4 or
4.11, or subsections (2), (3), (4), (5), (6), (12) and,
to the extent applicable to the foregoing subsections,
(14) of Section 4.7(b) of the Reorganization Agreement.
4. Payment and Delivery of Certificates.
------------------------------------
(a) At the closing referred to in Section 3
hereof, BB&T shall pay to SNC the aggregate purchase
price for the shares of SNC Common Stock purchased
pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account
designated by SNC.
(b) At such closing, simultaneously with
the delivery of funds as provided in subsection (a) SNC
shall deliver to BB&T a certificate or certificates
representing the number of shares of SNC Common Stock
purchased by BB&T, and BB&T shall deliver to SNC a
letter agreeing that BB&T will not offer to sell or
otherwise dispose of such shares in violation of
<PAGE>
- 5 -
applicable law or the provisions of this Option
Agreement.
(c) Certificates for SNC Common Stock
delivered at a closing hereunder may be endorsed with a
restrictive legend which shall read substantially as
follows:
"The transfer of the shares
represented by this certificate is
subject to certain provisions of an
agreement between the registered holder
hereof and Southern National
Corporation and to resale restrictions
arising under Securities Act of 1933,
as amended, a copy of which agreement
is on file at the principal office of
Southern National Corporation. A copy
of such agreement will be provided to
the holder hereof without charge upon
receipt by Southern National
Corporation of a written request."
It is understood and agreed that the above legend shall
be removed by delivery of substitute certificate(s)
without such legend if BB&T shall have delivered to SNC
a copy of a letter from the staff of the Commission, or
an opinion of counsel, in form and substance
satisfactory to SNC, to the effect that such legend is
not required for purposes of the Securities Act.
5. Representations.
---------------
SNC hereby represents, warrants and covenants to
BB&T as follows:
(a) SNC shall at all times maintain
sufficient authorized but unissued shares of SNC Common
Stock so that the Option may be exercised without
authorization of additional shares of SNC Common Stock.
(b) The shares to be issued upon due
exercise, in whole or in part, of the Option, when paid
for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization.
-----------------------------------------
In the event of any change in SNC Common Stock by
reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or
<PAGE>
- 6 -
the like, the type and number of shares subject to the
Option, and the purchase price per share, as the case
may be, shall be adjusted appropriately. In the event
that any additional shares of SNC Common Stock are
issued or otherwise become outstanding after the date of
this Option Agreement (other than pursuant to this
Option Agreement), the number of shares of SNC Common
Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 19.9% of the number of
shares of SNC Common Stock then issued and outstanding
without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this
Section 6 shall be deemed to authorize SNC to breach any
provision of the Merger Agreements.
7. Registration Rights.
-------------------
SNC shall, if requested by BB&T, as expeditiously
as possible file a registration statement on a form of
general use under the Securities Act if necessary in
order to permit the sale or other disposition of the
shares of SNC Common Stock that have been acquired upon
exercise of the Option in accordance with the intended
method of sale or other disposition requested by BB&T.
BB&T shall provide all information reasonably requested
by SNC for inclusion in any registration statement to be
filed hereunder. SNC will use its best efforts to cause
such registration statement first to become effective
and then to remain effective for such period not in
excess of 270 days from the day such registration
statement first becomes effective as may be reasonably
necessary to effect such sales or other dispositions.
The first registration effected under this Section 7
shall be at SNC's expense except for underwriting
commissions and the fees and disbursements of BB&T's
counsel attributable to the registration of such SNC
Common Stock. A second registration may be requested
hereunder at BB&T's expense. In no event shall SNC be
required to effect more than two registrations
hereunder. The filing of any registration statement
hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public
distribution by SNC of SNC Common Stock. If requested
by BB&T, in connection with any such registration, SNC
will become a party to any underwriting agreement
relating to the sale of such shares, but only to the
extent of obligating itself in respect of
representations, warranties, indemnities and other
agreements customarily included in such underwriting
agreements. Upon receiving any request from BB&T or
assignee thereof under this Section 7, SNC agrees to
<PAGE>
- 7 -
send a copy thereof to BB&T and to any assignee thereof
known to SNC, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons
entitled to receive such copies.
8. Severability.
------------
If any term, provision, covenant or restriction
contained in this Option Agreement is held by a court or
a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and
restrictions contained in this Option 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 will not permit the holder to acquire the full
number of shares of SNC Common Stock provided in
Section 2 hereof (as adjusted pursuant to Section 6
hereof), it is the express intention of SNC to allow the
holder to acquire or to require SNC to repurchase such
lesser number of shares as may be permissible, without
any amendment or modification hereof.
9. Miscellaneous.
-------------
(a) Expenses. Except as otherwise provided
--------
herein, each of the parties hereto shall bear and pay
all costs and 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) Entire Agreement. Except as otherwise
----------------
expressly provided herein, this Option Agreement
contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with
respect thereto, written or oral. The terms and
conditions of this Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and
their respective successors and assigns. Nothing in
this Option Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided
herein.
<PAGE>
- 8 -
(c) Assignment. Neither of the parties
----------
hereto may assign any of its rights or obligations under
this Option Agreement or the Option created hereunder to
any other person, without the express written consent of
the other party, except that in the event a Purchase
Event shall have occurred and be continuing BB&T may
assign in whole or in part its rights and obligations
hereunder; provided, however, that to the extent
required by applicable regulatory authorities, BB&T may
not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of SNC,
(iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a
widely dispersed public distribution on BB&T's behalf,
or (iv) any other manner approved by applicable
regulatory authorities.
(d) Notices. All notices or other
-------
communications which are required or permitted hereunder
shall be in writing and sufficient if delivered in the
manner and to the addresses provided for in or pursuant
to Section 7.4 of the Reorganization Agreement.
(e) Counterparts. This Option Agreement
------------
may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall
constitute but one agreement.
(f) Specific Performance. The parties
--------------------
agree that damages would be an inadequate remedy for a
breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may
be enforced by either party hereto through injunctive or
other equitable relief.
(g) Governing Law. This Option Agreement
-------------
shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to
agreements made and entirely to be performed within such
state and such federal laws as may be applicable.
<PAGE>
- 9 -
IN WITNESS WHEREOF, each of the parties hereto
has executed this Option Agreement as of the day and
year first written above.
SOUTHERN NATIONAL CORPORATION
By: /s/ L. Glenn Orr, Jr.
--------------------------
Name: L. Glenn Orr, Jr.
Title: Chairman, President and
Chief Executive Officer
BB&T FINANCIAL CORPORATION
By: /s/ John A. Allison IV
--------------------------
Name: John A. Allison IV
Title: Chairman and CEO
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
BB&T FINANCIAL CORPORATION
AND
SOUTHERN NATIONAL CORPORATION
July 29, 1994
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1. DEFINITIONS............................. 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SNC... 6
2.1. Capital Structure of SNC................ 6
2.2. Organization, Standing and
Authority of SNC........................ 7
2.3. Ownership of the SNC Subsidiaries;
Capital Structure of the SNC
Subsidiaries............................ 7
2.4. Organization, Standing and Authority
of the SNC Subsidiaries ................ 8
2.5. Authorized and Effective Agreement...... 8
2.6. SEC Documents; Regulatory Filings....... 10
2.7. Financial Statements; Books and
Records; Minute Books................... 10
2.8. Material Adverse Change................. 10
2.9. Absence of Undisclosed Liabilities...... 10
2.10. Properties.............................. 11
2.11. Loans................................... 11
2.12. Allowance for Loan Losses............... 12
2.13. Tax Matters............................. 12
2.14. Employee Benefit Plans.................. 13
2.15. Certain Contracts....................... 15
2.16. Other Real Estate Owned................. 16
2.17. Legal Proceedings....................... 17
2.18. Compliance with Laws.................... 18
2.19. Brokers and Finders..................... 18
2.20. Insurance............................... 18
2.21. Repurchase Agreements................... 19
2.22. Deposit Insurance; Federal
Reserve Membership...................... 19
2.23. Administration of Trust Accounts........ 19
2.24. Environmental Matters................... 20
2.25. Certain Information..................... 22
2.26. Information in Applications............. 23
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BB&T.. 23
3.1. Capital Structure of BB&T............... 23
3.2. Organization, Standing and
Authority of BB&T....................... 23
3.3. Ownership of the BB&T Subsidiaries;
Capital Structure of the BB&T
Subsidiaries............................ 24
- i -
<PAGE>
3.4. Organization, Standing and Authority
of the BB&T Subsidiaries................ 24
3.5. Authorized and Effective Agreement...... 25
3.6. SEC Documents; Regulatory Filings....... 26
3.7. Financial Statements; Books and
Records; Minute Books................... 26
3.8. Material Adverse Change................. 27
3.9. Absence of Undisclosed Liabilities...... 27
3.10. Properties.............................. 27
3.11. Loans................................... 28
3.12. Allowance for Loan Losses............... 28
3.13. Tax Matters............................. 29
3.14. Employee Benefit Plans.................. 30
3.15. Certain Contracts....................... 32
3.16. Other Real Estate Owned................. 33
3.17. Legal Proceedings....................... 34
3.18. Compliance with Laws.................... 34
3.19. Brokers and Finders..................... 35
3.20. Insurance............................... 35
3.21. Repurchase Agreements................... 35
3.22. Deposit Insurance....................... 36
3.23. Administration of Trust Accounts........ 36
3.24. Environmental Matters................... 36
3.25. Certain Information..................... 38
3.26. Information in Applications............. 38
ARTICLE 4. COVENANTS............................... 39
4.1. Shareholders' Meetings.................. 39
4.2. Proxy Statement; Registration
Statement............................... 39
4.3. Applications............................ 40
4.4. Best Efforts............................ 40
4.5. Investigation and Confidentiality....... 41
4.6. Press Releases.......................... 42
4.7. Covenants of SNC........................ 42
4.8. Covenants of BB&T....................... 45
4.9. Headquarters............................ 48
4.10. Dividends Prior to the Effective Date... 48
4.11. Closing; Certificate of Merger.......... 48
4.12. Affiliates.............................. 49
4.13. Board of Directors...................... 49
4.14. Management; Employees; Employee
Benefits................................ 51
4.15. Indemnifications........................ 52
4.16. Charter and Bylaws of Continuing
Corporation............................. 52
4.17 NYSE Listing............................ 52
- ii -
<PAGE>
ARTICLE 5. CONDITIONS PRECEDENT.................... 53
5.1. Conditions Precedent - Mutual........... 53
5.2. Conditions Precedent - BB&T............. 55
5.3. Conditions Precedent - SNC.............. 56
ARTICLE 6. TERMINATION, WAIVER AND AMENDMENT....... 58
6.1. Termination............................. 58
6.2. Effect of Termination................... 59
6.3. Survival of Representations,
Warranties and Covenants................ 60
6.4. Waiver.................................. 60
6.5. Amendment or Supplement................. 61
ARTICLE 7. MISCELLANEOUS........................... 61
7.1. Expenses................................ 61
7.2. Entire Agreement........................ 62
7.3. No Assignment........................... 62
7.4. Notices................................. 63
7.5. Captions................................ 63
7.6. Counterparts............................ 63
7.7. Governing Law........................... 64
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
("Reorganization Agreement" or "Agreement") dated as of
July 29, 1994, among BB&T FINANCIAL CORPORATION
("BB&T"), a North Carolina corporation having its
principal executive offices at 223 West Nash Street,
Wilson, North Carolina 27893 and SOUTHERN NATIONAL
CORPORATION ("SNC"), a North Carolina corporation having
its principal executive offices at 200 West Second
Street, Winston-Salem, North Carolina 27101.
WITNESSETH
WHEREAS, the parties hereto desire to combine
their respective businesses; and
WHEREAS, in furtherance of the combination of
their respective businesses, the parties hereto desire
that SNC shall be merged ("Merger") with and into BB&T,
with its name to be changed to "Southern National
Corporation" (BB&T as it will exist from and after the
Effective Date being referred to herein as the
"Continuing Corporation"), and that all of the issued
and outstanding shares of common stock and preferred
stock of SNC (other than shares held by dissenting
shareholders) shall be converted into and exchanged for
shares of common stock or preferred stock of the
Continuing Corporation and all outstanding options to
acquire common stock of SNC shall be converted into
options to acquire common stock of BB&T and all of the
issued and outstanding shares of capital stock of BB&T
shall continue to be issued and outstanding shares of
capital stock of the Continuing Corporation (as adjusted
as provided herein), all pursuant to a Plan of Merger
substantially in the form attached hereto as Annex A
("Plan of Merger"); and
WHEREAS, in furtherance of the combination of
their respective businesses, the parties hereto
contemplate that, as soon as practicable after the
Merger, Southern National Bank of North Carolina
("SNBNC"), a wholly owned subsidiary of SNC, shall be
merged ("North Carolina Bank Merger") with and into
Branch Banking and Trust Company ("BB&T-NC"), a wholly
owned subsidiary of BB&T, under the name "Branch Banking
and Trust Company" (BB&T-NC as it will exist from and
after the consummation of the North Carolina Bank Merger
<PAGE>
being referred to herein as the "NC Continuing Bank");
and
WHEREAS, in furtherance of the combination of
their respective businesses, the parties hereto
contemplate that as soon as practicable after the
Merger, Southern National Bank of South Carolina
("SNBSC"), a wholly owned subsidiary of SNC, shall be
merged ("South Carolina Bank Merger") with and into
Branch Banking and Trust Company of South Carolina
("BB&T-SC"), an indirect wholly owned subsidiary of
BB&T, under the name "Branch Banking and Trust Company
of South Carolina," (BB&T-SC as it will exist from and
after the consummation of the SC Bank Merger being
referred to herein as the "SC Continuing Bank"); and
WHEREAS, the parties hereto desire to provide for
certain undertakings, conditions, representations,
warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises
and of the mutual representations, warranties and
covenants herein contained and intending to be legally
bound hereby, the parties hereto do hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1. "Bank Holding Company Act" shall mean the
Bank Holding Company Act of 1956, as amended.
1.2. "Bank Merger Agreements" shall have the
meaning set forth in Section 4.6 hereof.
1.3. "Bank Mergers" shall mean the North
Carolina Bank Merger and the South Carolina Bank Merger.
1.4. "BB&T Common Stock" shall have the meaning
set forth in Section 3.1.
1.5. "BB&T DRP" shall mean BB&T's Dividend
Reinvestment and Shareholders Savings Service.
1.6. "BB&T ERISA Affiliate" shall mean any trade
or business, whether or not incorporated, that together
with BB&T or any BB&T Subsidiary would be deemed a
"single employer" within the meaning of Section 4001(b)
of ERISA.
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<PAGE>
1.7. "BB&T Financial Statements" shall mean
(i) the consolidated balance sheets of BB&T as of
December 31, 1993 and 1992 and the related consolidated
statements of income, cash flows and changes in
shareholders' equity (including related notes, if any)
for each of the three years ended December 31, 1993,
1992 and 1991 as filed by BB&T in SEC Documents and
(ii) the consolidated balance sheets of BB&T and related
consolidated statements of income, cash flows and
changes in shareholders' equity (including related
notes, if any) as filed by BB&T in SEC Documents with
respect to periods ended subsequent to December 31, 1993.
1.8. "BB&T Option Agreement" shall mean the
Stock Option Agreement dated as of the date hereof
between BB&T and SNC with regard to BB&T Common Stock
which shall be executed immediately after execution of
this Reorganization Agreement.
1.9. "BB&T Preferred Stock" shall have the
meaning set forth in Section 3.1.
1.10. "BB&T Subsidiary" shall have the meaning
set forth in Section 3.3.
1.11. "Closing Date" shall mean the date
specified pursuant to Section 4.11 hereof as the date on
which the parties hereto shall close the transactions
contemplated herein.
1.12. "Code" shall mean the Internal Revenue Code
of 1986, as amended.
1.13. "Commission" shall mean the Securities and
Exchange Commission.
1.14. "Communication" shall have the meaning set
forth in Section 2.25(e)(i).
1.15. "Continuing Corporation Common Stock" shall
mean BB&T Common Stock from and after the Effective Date.
1.16. "Continuing Corporation Preferred Stock"
shall mean the preferred stock of the Continuing
Corporation to be designated as "6-3/4% Cumulative
Convertible Preferred Stock."
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<PAGE>
1.17. "Effective Date" shall mean the date
specified pursuant to Section 4.11 hereof as the
effective date of the Merger.
1.18. "Environmental Claim" shall have the
meaning set forth in Section 2.24(e)(ii).
1.19. "Environmental Laws" shall have the meaning
set forth in Section 2.24(e)(iii).
1.20. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
1.21. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
1.22. "FDIA" shall mean the Federal Deposit
Insurance Act, as amended.
1.23. "FDIC" shall mean the Federal Deposit
Insurance Corporation.
1.24. "Federal Reserve Board" shall mean the
Board of Governors of the Federal Reserve System.
1.25. "FRB Richmond" shall mean the Federal
Reserve Bank of Richmond.
1.26. "Materials of Environmental Concern"
shall have the meaning set forth in Section 2.24(e)(iv).
1.27. "NYSE" shall mean the New York Stock
Exchange.
1.28. "OREO" shall mean real and personal
property assets acquired as a result of foreclosure,
deeded in lieu of foreclosure or any other method in
satisfaction of indebtedness.
1.29. "PBGC" shall mean the Pension Benefit
Guaranty Corporation.
1.30. "Previously Disclosed" shall mean
disclosed in (i) an SEC Document delivered by one party
to the other on or prior to the execution of this
Reorganization Agreement or (ii) a letter from the party
delivered and dated not later than August 15, 1994
making such disclosure specifically referring to this
Agreement and delivered to the other party, provided
that such letter (x) is not materially inconsistent with
a letter delivered to the other party and dated on or
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<PAGE>
prior to the date of this Agreement ("Initial Letter")
and (y) does not by its contents demonstrate that the
Initial Letter contained a material omission or
misstatement. Any matter included, whether aggregated
or not, in SNC Financial Statements or BB&T Financial
Statements, as the case may be, shall be deemed to be
Previously Disclosed.
1.31. "Proxy Statement" shall mean the joint
proxy statement/prospectus (or similar documents)
together with any supplements thereto sent to the
shareholders of SNC and/or BB&T to solicit their votes
in connection with this Agreement and the Plan of Merger.
1.32. "Registration Statement" shall mean the
registration statement with respect to the Continuing
Corporation Common Stock to be issued in connection with
the Merger as declared effective by the Commission under
the Securities Act.
1.33. "Rights" shall mean warrants, options,
rights, convertible securities and other arrangements or
commitments which obligate an entity to issue or dispose
of any of its capital stock.
1.34. "SEC Documents" shall mean all reports and
registration statements filed, or required to be filed,
by a party hereto pursuant to the Securities Laws.
1.35. "Securities Act" shall mean the Securities
Act of 1933, as amended.
1.36. "Securities Laws" shall mean the Securities
Act; the Exchange Act; the Investment Company Act of
1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended;
and the rules and regulations of the Commission
promulgated thereunder.
1.37. "SNC Common Stock" shall have the meaning
set forth in Section 2.1.
1.38. "SNC DRP" shall mean SNC's Dividend
Reinvestment Plan.
1.39. "SNC ERISA Affiliate" shall mean any trade
or business, whether or not incorporated, that together
with SNC or any SNC Subsidiary would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA.
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<PAGE>
1.40. "SNC Financial Statements" shall mean
(i) the consolidated balance sheets of SNC as of
December 31, 1993 and 1992 and the related consolidated
statements of income, cash flows and changes in
shareholders' equity (including related notes, if any)
for each of the three years ended December 31, 1993,
1992 and 1991 as filed by SNC in SEC Documents and
(ii) the consolidated balance sheets of SNC and related
consolidated statements of income, cash flows and
changes in shareholders' equity (including related
notes, if any) as filed by SNC in SEC Documents with
respect to periods ended subsequent to December 31, 1993.
1.41. "SNC Option Agreement" shall mean the Stock
Option Agreement dated as of even date herewith between
SNC and BB&T with regard to SNC Common Stock, which
shall be executed immediately after execution of this
Reorganization Agreement.
1.42. "SNC Preferred Stock" shall have the
meaning set forth in Section 2.1.
1.43. "SNC Series A Preferred Stock" shall have
the meaning set forth in Section 2.1.
1.44. "SNC Subsidiary" shall have the meaning set
forth in Section 2.3.
1.45. "State Boards" shall mean the North
Carolina State Banking Commission, the Savings
Institutions Division of the North Carolina Department
of Commerce and the South Carolina State Board of
Financial Institutions.
Other terms used herein are defined in the
preamble and the recitals to this Reorganization
Agreement.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SNC
SNC hereby represents and warrants to BB&T as
follows:
2.1. Capital Structure of SNC
The authorized capital stock of SNC consists of
(i) 120,000,000 shares of common stock, par value $5.00
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<PAGE>
per share ("SNC Common Stock"), of which 43,385,610
shares were issued and outstanding and no shares were
held in treasury as of June 30, 1994; and (ii) 5,000,000
shares of preferred stock, $5.00 par value ("SNC
Preferred Stock"), of which 770,000 shares were
designated as 6 3/4% Cumulative Convertible Preferred
Stock, Series A ("SNC Series A Preferred Stock") and
were issued and outstanding as of June 30, 1994. All
outstanding shares of SNC Common Stock have been duly
authorized and validly issued, and are fully paid and
nonassessable. There are no Rights authorized, issued
or outstanding with respect to the capital stock of SNC
and no written or oral plans, understandings,
commitments or contracts to which SNC or, to SNC's
knowledge, any of its affiliates is subject with respect
to the issuance, voting or sale of issued or unissued
shares of SNC's capital stock, except as Previously
Disclosed. None of the shares of SNC's capital stock
has been issued in violation of the preemptive rights of
any person.
2.2. Organization, Standing and Authority of SNC
SNC is a duly organized corporation, validly
existing and in good standing under the laws of the
State of North Carolina. SNC (i) has full corporate
power and authority to carry on its business as now
conducted and (ii) is duly qualified to do business in
the states of the United States and foreign
jurisdictions where its ownership or leasing of property
or the conduct of its business requires such
qualification and where failure to so qualify would have
a material adverse effect on the financial condition,
results of operations or business of SNC on a
consolidated basis. SNC has all federal, state, local
and foreign governmental authorizations and licenses
necessary for it to own and lease its properties and
assets and to carry on its business as it is now being
conducted. SNC has delivered to BB&T a true, complete
and correct copy of its Articles of Incorporation and of
its Bylaws, each as in effect on the date of this
Agreement. SNC is registered as a bank holding company
under the Bank Holding Company Act.
2.3. Ownership of the SNC Subsidiaries; Capital
Structure of the SNC Subsidiaries
SNC does not own, directly or indirectly, 5% or
more of the outstanding capital stock or other voting
securities of any corporation, bank or other
organization actively engaged in business except as
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<PAGE>
Previously Disclosed (collectively the "SNC
Subsidiaries" and each individually an "SNC
Subsidiary"). The outstanding shares of capital stock
of each SNC Subsidiary have been duly authorized and are
validly issued, and are fully paid and (subject to
12 U.S.C. (S) 55) nonassessable and all such shares are
directly or indirectly owned by SNC free and clear of
all liens, claims and encumbrances. No Rights are
authorized, issued or outstanding with respect to the
capital stock of any SNC Subsidiary and there are no
agreements, understandings or commitments relating to
the right of SNC to vote or to dispose of said shares.
None of the shares of capital stock of any SNC
Subsidiary has been issued in violation of the
preemptive rights of any person.
2.4. Organization, Standing and Authority of
the SNC Subsidiaries
Each SNC Subsidiary is a duly organized
corporation, national banking association, savings
institution or savings bank, validly existing and in
good standing under applicable laws. Each SNC
Subsidiary (i) has full corporate power and authority to
own, lease and operate its properties and to carry on
its business as now conducted except where the absence
of such power or authority would not have a material
adverse effect on the financial condition, results of
operations or business of SNC on a consolidated basis,
and (ii) is duly qualified to do business in the states
of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its
business requires such qualification and where failure
to so qualify would have a material adverse effect on
the financial condition, results of operations or
business of SNC on a consolidated basis. Each SNC
Subsidiary has all federal, state, local and foreign
governmental authorizations and licenses necessary for
it to own or lease its properties and assets and to
carry on its business as it is now being conducted,
except where failure to obtain such authorization or
license would not have a material adverse effect on the
business of such SNC Subsidiary.
2.5. Authorized and Effective Agreement
(a) SNC has all requisite corporate power and
authority to enter into, adopt and perform all of its
obligations under this Reorganization Agreement, the
Plan of Merger and the SNC Option Agreement. The
execution, adoption and delivery of this Reorganization
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<PAGE>
Agreement, the Plan of Merger and the SNC Option
Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action in
respect thereof on the part of SNC, except that the
affirmative vote of the shareholders of SNC is required
to adopt the Plan of Merger pursuant to the North
Carolina Business Corporation Act, as amended, and SNC's
Articles of Incorporation and Bylaws.
(b) This Reorganization Agreement, the SNC
Option Agreement and the Plan of Merger constitute
legal, valid and binding obligations of SNC enforceable
against it in accordance with their respective terms,
subject as to enforceability, to bankruptcy, insolvency
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
(c) Except as Previously Disclosed, neither the
execution, adoption and delivery of this Reorganization
Agreement, the Plan of Merger or the SNC Option
Agreement nor consummation of the transactions
contemplated hereby or thereby, nor compliance by SNC
with any of the provisions hereof or thereof shall
(i) conflict with or result in a breach of any provision
of the Articles of Incorporation, Articles of
Association or Bylaws of SNC or any SNC Subsidiary,
(ii) constitute 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, charge or encumbrance upon
any property or asset of SNC or any SNC Subsidiary
pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or
(iii) subject to the receipt of all required regulatory
approvals, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to SNC or any SNC
Subsidiary.
(d) Except for consents and approvals of or
filings with the Federal Reserve Board, the FDIC, the
Commission and the State Boards and any appropriate
state securities authorities, no consents or approvals
of or filings or registrations with any public body or
authority are necessary, and no consents or filings or
registrations with any public body or authority are
necessary and no consents or approval of any third
parties are necessary, in connection with the execution
and delivery of this Agreement by SNC or the
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<PAGE>
consummation by SNC of the transactions contemplated
hereby or by the Plan of Merger.
2.6. SEC Documents; Regulatory Filings
SNC has filed all SEC Documents required by the
Securities Laws and such SEC Documents complied in all
material respects with the Securities Laws. Each of
SNC, SNBNC and SNBSC has filed all reports required by
statute or regulation to be filed with any federal or
state bank or savings association or savings institution
regulatory agency, and such reports were prepared in
accordance with the applicable statutes, regulations and
instructions in all material respects.
2.7. Financial Statements; Books andRecords; Minute Books
The SNC Financial Statements fairly present the
consolidated financial position of SNC as of the dates
indicated and the consolidated results of operations,
changes in shareholders' equity and cash flows of SNC
for the periods then ended in conformity with generally
accepted accounting principles applicable to financial
institutions applied on a consistent basis except as
disclosed therein. The books and records of SNC and
each SNC Subsidiary fairly reflect the transactions to
which it is a party or by which its properties are
subject or bound. Such books and records have been
properly kept and maintained and are in compliance in
all material respects with all applicable legal and
accounting requirements. The minute books of SNC and
each SNC Subsidiary contain accurate records of all
corporate actions of their respective shareholders and
Boards of Directors (including committees of their
Boards of Directors).
2.8. Material Adverse Change
Except as Previously Disclosed, SNC has not, on a
consolidated basis, suffered any material adverse change
in its business, financial condition or results of
operations since December 31, 1993.
2.9. Absence of Undisclosed Liabilities
Neither SNC nor any SNC Subsidiary has any
liability (contingent or otherwise) that is material to
SNC on a consolidated basis, or that, when combined with
all similar liabilities, would be material to SNC on a
consolidated basis, except as disclosed in the SNC
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<PAGE>
Financial Statements and except for liabilities incurred
in the ordinary course of business consistent with past
practice since the date of the most recent SNC Financial
Statements.
2.10. Properties
SNC and the SNC Subsidiaries have good title free
and clear of all liens, encumbrances, charges, defaults
or equitable interests to all of the properties and
assets, real and personal, reflected on the SNC
Financial Statements as of December 31, 1993 or acquired
after such date, except (i) liens for current taxes not
yet due and payable, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character,
amount or extent and (iv) dispositions and encumbrances
for adequate consideration in the ordinary course of
business. Each SNC Subsidiary as lessee has the right
under valid and subsisting leases of properties used by
it in the conduct of its respective business to occupy
and use all such properties as presently occupied and
used by it. Each of the real properties used by each
SNC Subsidiary has been maintained in all material
respects in good condition and is suitable for its
current use. Each of such properties conforms in all
material respects to currently applicable ordinances,
regulations and zoning requirements and, if required, is
occupied pursuant to a certificate of occupancy
authorizing its current use. Since December 31, 1993,
none of such properties which are material to the
operation of any SNC Subsidiary has been damaged by
fire, storm or other identifiable event or other act of
God, except to the extent that any property owned or
leased by any SNC Subsidiary if so damaged is insured to
the extent necessary to satisfactorily repair the
damaged premises.
2.11. Loans
(a) Except as Previously Disclosed, to SNC's
best knowledge each loan reflected as an asset in the
SNC Financial Statements (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent
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<PAGE>
conveyance and other laws of general applicability
relating to or affecting creditors' rights and to
general equity principles. All loans and extensions of
credit which are subject to Regulation O of the Federal
Reserve Board which have been made by SNBNC and SNBSC
comply therewith.
(b) The classification on the books and records
of SNC and each SNC Subsidiary that is a banking
institution of loans and/or non-performing assets as
nonaccrual, troubled debt restructuring, OREO or other
similar classification, complies in all material
respects with generally accepted accounting principles
and applicable regulatory accounting principles.
2.12. Allowance for Loan Losses
The allowance for loan losses reflected on the
SNC Financial Statements as of December 31, 1993 and any
SNC Financial Statements, as of their respective dates,
is adequate in all material respects under the
requirements of generally accepted accounting principles
and regulatory accounting principles to provide for
reasonably anticipated losses on outstanding loans.
2.13. Tax Matters
(a) SNC and each SNC Subsidiary, and each of
their respective predecessors, have timely filed federal
income tax returns for each year through December 31,
1992 and have timely filed, or caused to be filed, all
other federal and state tax returns (including, without
limitation, estimated tax returns, withholding tax
returns and FICA and FUTA returns) required to have been
filed with respect to SNC or such SNC Subsidiary. SNC
has made available to BB&T true and complete copies of
its federal and state income tax returns for the past
five years, and true and complete copies of all
correspondence from governmental authorities, and
responses of SNC or any SNC Subsidiary thereto, relating
to such federal and state income tax returns or any
other federal, state or other tax filings within the
past five years. All taxes due in respect of the
periods covered by such tax returns have been paid or
adequate reserves have been established for the payment
of such taxes and, as of the Closing Date, all taxes due
in respect of any subsequent periods ending on or prior
to the Closing Date will have been paid or adequate
reserves will have been established for the payment
thereof. Except as Previously Disclosed, no audit
examination or deficiency or refund litigation with
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<PAGE>
respect to such returns is pending. SNC has been
audited by the IRS through the tax year ended
December 31, 1986. Neither SNC nor any SNC Subsidiary
will have as of the Closing Date any material liability
for any such taxes in excess of the amounts so paid or
reserves or accruals so established.
(b) All federal, state and local (and, if
applicable, foreign) tax returns filed by SNC and each
SNC Subsidiary are complete and accurate in all material
respects. Neither SNC nor any SNC Subsidiary is
delinquent in the payment of any tax, assessment or
governmental charge, and, except as Previously
Disclosed, none of them has requested any extension of
time within which to file any tax returns in respect of
any fiscal year or portion thereof which have not since
been filed. No deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against SNC or any
SNC Subsidiary which have not been settled and paid.
Except as Previously Disclosed, there are currently no
agreements in effect with respect to SNC or any SNC
Subsidiary to extend the period of limitations for the
assessment or collection of any tax.
(c) SNC and each SNC Subsidiary have timely
filed all material information returns required under
Sections 6041-6050N of the Code and any comparable state
laws, and have timely complied in all material respects
with the requirements of Section 3406 of the Code and
the regulations thereunder and any comparable state laws
and regulations. Neither SNC nor any SNC Subsidiary has
made or entered into, or holds any asset subject to, a
consent filed pursuant to Section 341(f) of the Code and
the regulations thereunder or a "safe harbor lease"
subject to former Section 168(f)(8) of the Code and the
regulations thereunder.
2.14. Employee Benefit Plans
(a) SNC has Previously Disclosed true and
complete copies of all pension or profit-sharing plans,
any deferred compensation, consulting, bonus or group
insurance contract or any other incentive, stock option,
welfare or employee benefit plan or agreement maintained
for the benefit of any employees or former employees of
SNC, any SNC Subsidiary or any SNC ERISA Affiliate
(collectively, the "SNC Plans") together with (i) the
most recent actuarial and financial reports, if any,
prepared with respect to each such SNC Plan, (ii) the
most recent annual report, if any, filed with any
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<PAGE>
government agency with respect to each such SNC Plan,
and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain to any
SNC Plan. Except as Previously Disclosed, no SNC Plan
provides health, medical, death or survivor benefits to
any former employee or beneficiary thereof (other than
coverage mandated by applicable law or death or
retirement benefits under an employee pension benefit
plan, as defined in Section 3(2) of ERISA).
(b) No liability under Title IV of ERISA has
been incurred by SNC, any SNC Subsidiary or any SNC
ERISA Affiliate since the effective date of ERISA that
has not been satisfied in full, and no condition exists
that presents a material risk to SNC, any SNC Subsidiary
or any SNC ERISA Affiliate of incurring a liability
under such Title, other than liability for premiums due
the PBGC, which payments have been or will be made when
due.
(c) None of the SNC Plans is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA.
(d) A favorable determination letter has been
issued by the Internal Revenue Service with respect to
each SNC Plan that is intended to be a qualified plan to
the effect that such plan is qualified under Section 401
of the Code and tax exempt under Section 501 of the Code
and each such letter has been Previously Disclosed. No
such letter has been revoked or threatened to be revoked
and neither SNC nor any SNC Subsidiary knows of any
ground on which such revocation may be based. Neither
SNC nor any SNC Subsidiary has a material liability
under any SNC Plan that is not reflected on the SNC
Financial Statements.
(e) Except as Previously Disclosed, each of the
SNC Plans has been operated and administered in all
material respects in accordance with applicable laws,
including but not limited to ERISA and the Code.
(f) No prohibited transaction (which shall mean
any transaction prohibited by Section 406 of ERISA and
not exempt under Section 408 of ERISA) has occurred with
respect to any SNC Plan (i) which would result in the
imposition, directly or indirectly, of a material excise
tax under Section 4975 of the Code or (ii) the
correction of which would have a material adverse effect
on the financial condition, results of operations or
business of SNC on a consolidated basis.
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<PAGE>
(g) Each of the SNC Plans that is intended to
satisfy the requirements of Section 125 or Section
501(c)(9) of the Code satisfies such requirements.
(h) With respect to each SNC Plan that is
subject to Title IV of ERISA, the present value of
accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not, as of its
latest valuation date, exceed the then current value of
the assets of such plan allocable to such accrued
benefits and nothing has occurred since such most recent
valuation date with respect to each such plan that
adversely affects the funded status of such plan. No
reportable event under Section 4043(b) of ERISA has
occurred with respect to any SNC Plan (other than a
reportable event for which the requirement of notice to
the PBGC has been waived by regulation).
(i) There are no actions, suits or claims
pending, or to the best knowledge of SNC, threatened or
anticipated (other than routine claims for benefits) by,
on behalf of or against any of the SNC Plans or any
trusts related thereto or against SNC or any SNC
Subsidiary with respect to the SNC Plans or any trusts
related thereto.
(j) Except as Previously Disclosed, the
consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former
employee of SNC or any SNC Subsidiary to severance pay,
employment compensation or any other payment, benefit or
award or (ii) accelerate the time of payment or vesting,
or increase the amount of any benefit, award or
compensation due any such employee.
2.15. Certain Contracts
(a) Except as Previously Disclosed, neither SNC
nor any SNC Subsidiary is a party to, or is bound by,
(i) any material agreement, arrangement or commitment
whether or not made in the ordinary course of business,
(ii) any agreement, indenture or other instrument
relating to the borrowing of money by SNC or any SNC
Subsidiary or the guarantee by SNC or any SNC Subsidiary
of any such obligation, (iii) any agreement, arrangement
or commitment relating to the employment of a consultant
or the employment, election, retention in office or
severance of any present or former director or officer,
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(iv) any agreement to make loans or for the provision,
purchase or sale of goods, services or property between
SNC or any SNC Subsidiary and any director or officer of
SNC or any SNC Subsidiary, or any member of the
immediate family or affiliate of any of the foregoing,
or (v) any agreement between SNC or any SNC Subsidiary
and any 5% or more shareholder of SNC, in each case
other than transactions entered into in the ordinary
course of the banking business of SNBNC or SNBSC
consistent with past practice.
(b) Neither SNC nor any SNC Subsidiary, nor to
the knowledge of SNC, the other party thereto, is in
default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument
whether entered into in the ordinary course of business
or otherwise and whether written or oral, and there has
not occurred any event that, with the lapse of time or
giving of notice or both, would constitute such a
default, other than defaults of loan agreements by
borrowers from SNBNC or SNBSC in the ordinary course of
its banking business.
(c) Since December 31, 1993, neither SNC nor any
SNC Subsidiary has incurred or paid any obligation or
liability that would be material to SNC, except
obligations incurred or paid in connection with
transactions in the ordinary course of business of any
SNC Subsidiary consistent with its past practice and
except as Previously Disclosed. Except as Previously
Disclosed, from December 31, 1993 to the date hereof,
neither SNC nor any SNC Subsidiary has taken any action
that, if taken after the date hereof, would breach any
of the covenants contained in Section 4.7(b) hereof.
2.16. Other Real Estate Owned
(a) Except for liens, security interests,
claims, charges, or such other encumbrances as have been
appropriately reserved for in the SNC Financial
Statements or are not material, title to the OREO is
good and marketable, and there are no adverse claims or
encumbrances on the OREO.
(b) All title, hazard and other insurance claims
and mortgage guaranty claims with respect to the OREO
have been timely filed and neither SNC nor any SNC
Subsidiary has received any notice of denial of any such
claim.
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(c) SNC and each SNC Subsidiary are in
possession of all of the OREO or, if any of the OREO
remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements
providing for market rental rates have been agreed upon
and SNC and/or each SNC Subsidiary are diligently
pursuing such eviction or summary proceedings or such
rental arrangements.
(d) Except as Previously Disclosed, no legal
proceeding or quasi-legal proceeding is pending or, to
the knowledge of SNC and each SNC Subsidiary, threatened
concerning any OREO or any servicing activity or
omission to provide a servicing activity with respect to
any of the OREO.
2.17. Legal Proceedings
Except as Previously Disclosed, there are no
actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of
SNC, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome)
against SNC or any SNC Subsidiary or against any asset,
interest or right of SNC or any SNC Subsidiary that
would, if determined adversely to SNC or an SNC
Subsidiary, have a material adverse effect on SNC. To
the knowledge of SNC, there are no actual or threatened
actions, suits or proceedings which present a claim to
restrain or prohibit the transactions contemplated
herein, the Plan of Merger or the BB&T Option Agreement
or to impose upon BB&T, SNC or any of their respective
subsidiaries any material cost or obligation in
connection therewith. Except as Previously Disclosed
there are no actions, suits, claims, governmental
investigations or proceedings instituted, pending or, to
the knowledge of SNC, threatened (or unasserted but
considered probable of assertion and which if asserted
would have at least a reasonable probability of an
unfavorable outcome) against any present or former
director or officer of SNC that would be reasonably
likely to give rise to a claim for indemnification by
such present or former director or officer that would,
if determined adversely to SNC or an SNC Subsidiary,
have a material adverse effect on SNC, and, to the
knowledge of SNC, there is no reasonable basis for any
such action, suit or proceeding.
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2.18. Compliance with Laws
SNC and the SNC Subsidiaries are in compliance in
all material respects with all statutes and regulations
applicable to the conduct of their business, and neither
SNC nor any SNC Subsidiary has received notification
from any agency or department of federal, state or local
government (i) asserting a material violation of any
such statute or regulation, (ii) threatening to revoke
any license, franchise, permit or government
authorization or (iii) restricting or in any way
limiting its operations. Neither SNC nor any SNC
Subsidiary is subject to any regulatory or supervisory
cease and desist order, agreement, directive, memorandum
of understanding or commitment, and neither of them has
received any communication requesting that they enter
into any of the foregoing. Without limiting the
generality of the foregoing, each of SNBNC and SNBSC has
timely filed all currency transaction reports required
to be filed and taken all other actions required under
the Currency and Foreign Transactions Reporting Act,
codified at 31 U.S.C. (S) 5301 et seq., and its
-- ---
implementing regulations.
2.19. Brokers and Finders
Neither SNC nor any SNC Subsidiary, nor any of
their respective officers, directors or employees, has
employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in
connection with the transactions contemplated herein,
the Bank Merger Agreement or the Plan of Merger, except
for Lehman Brothers and Wheat, First Securities, Inc.
2.20. Insurance
SNC and each SNC Subsidiary currently maintains
insurance in amounts reasonably necessary for their
operations and, to the best knowledge of SNC, similar in
scope and coverage to that maintained by other entities
similarly situated. Neither SNC nor any SNC Subsidiary
has received any notice of a premium increase or
cancellation with respect to any of its insurance
policies or bonds, and within the last three years,
neither SNC nor any SNC Subsidiary has been refused any
insurance coverage sought or applied for, and SNC has no
reason to believe that existing insurance coverage
cannot be renewed as and when the same shall expire,
upon terms and conditions as favorable as those
presently in effect, other than possible increases in
premiums or unavailability in coverage that have not
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resulted from any extraordinary loss experience of SNC
or any SNC Subsidiary.
2.21. Repurchase Agreements
With respect to all agreements pursuant to which
SNC or any SNC Subsidiary has purchased securities
subject to an agreement to resell, if any, SNC or such
SNC Subsidiary, as the case may be, has a valid,
perfected first lien or security interest in the
government securities or other collateral securing the
repurchase agreement, and the value of such collateral
equals or exceeds the amount of the debt secured thereby.
2.22. Deposit Insurance; Federal Reserve Membership
The deposits of SNBNC and SNBSC are insured by
the FDIC in accordance with the FDIA, and SNBNC and
SNBSC have paid all assessments and filed all reports
required by the FDIA. SNBNC and SNBSC are members of
the Federal Reserve System and have subscribed and paid
(or will have done so by the Closing Date) for the
requisite number of shares of capital stock of the FRB
Richmond.
2.23. Administration of Trust Accounts
SNBNC and SNBSC have properly administered, in
all respects material and which could reasonably be
expected to be material to the business, operations or
financial condition of SNC, SNBNC and SNBSC, taken as a
whole, all accounts for which they act as fiduciaries,
including but not limited to accounts for which they
serve as trustees, agents, custodians, personal
representatives, guardians, conservators or investment
advisors, in accordance with the terms of the governing
documents and applicable state and federal law and
regulation and common law. Neither SNC, SNBNC or SNBSC,
nor any director, officer or employee of SNC, SNBNC or
SNBSC has committed any breach of trust with respect to
any such fiduciary account which is material to or could
reasonably be expected to be material to the business,
operations or financial condition of SNC, and SNBNC and
SNBSC, taken as a whole, and the accountings for each
such fiduciary account are true and correct in all
material respects and accurately reflect the assets of
such fiduciary account in all material respects.
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2.24. Environmental Matters
(a) Except as Previously Disclosed, to the best
of SNC's knowledge, neither SNC nor any SNC Subsidiary
owns or leases any properties affected by toxic waste,
radon gas or other hazardous conditions or constructed
in part with the use of asbestos. Each of SNC and the
SNC Subsidiaries is in substantial compliance with all
Environmental Laws applicable to real or personal
properties in which it has a direct fee ownership or,
with respect to a direct interest as lessee, applicable
to the leasehold premises or, to the best knowledge of
SNC and the SNC Subsidiaries, the premises on which the
leasehold is situated. Neither SNC nor any SNC
Subsidiary has received any Communication alleging that
SNC or such SNC Subsidiary is not in such compliance
and, to the best knowledge of SNC and the SNC
Subsidiaries, there are no present circumstances
(including Environmental Laws that have been adopted but
are not yet effective) that would prevent or interfere
with the continuation of such compliance.
(b) (i) There are no legal, administrative,
arbitral or other proceedings, or Environmental Claims
or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that
could result in the imposition, on SNC and the SNC
Subsidiaries of any liability arising under any
Environmental Laws pending or, to the best knowledge of
SNC and the SNC Subsidiaries, threatened against (A) SNC
or any SNC Subsidiary, (B) any person or entity whose
liability for any Environmental Claim SNC or any SNC
Subsidiary has or may have retained or assumed either
contractually or by operation of law, or (C) any real or
personal property which SNC or any SNC Subsidiary owns
or leases, or has been or is judged to have managed or
to have supervised or participated in the management of,
which liability might have a material adverse effect on
the business, financial condition or results of
operations of SNC. SNC and the SNC Subsidiaries are not
subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any such
liability.
(ii) To the best knowledge of SNC and the SNC
Subsidiaries, there are no legal, administrative,
arbitral or other proceedings, or Environmental Claims
or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that
could result in the imposition, on SNC or any SNC
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Subsidiary of any liability arising under any
Environmental Laws pending or threatened against any
real or personal property in which SNC or any SNC
Subsidiary holds a security interest in connection with
a loan or a loan participation which liability might
have a material adverse effect on the business,
financial condition or results of operations of SNC.
SNC and the SNC Subsidiaries are not subject to any
agreement, order, judgment, decree or memorandum by or
with any court, governmental authority, regulatory
agency or third party imposing any such liability.
(c) With respect to all real and personal
property owned or leased by SNC or any SNC Subsidiary,
other than OREO, SNC will have made available to BB&T
before or by September 1, 1994 copies of any
environmental audits, analyses and surveys that have
been prepared relating to such properties. With respect
to all OREO held by SNC or any SNC Subsidiary and all
real or personal property which SNC or any SNC
Subsidiary has been or is judged to have managed or to
have supervised or participated in the management of,
SNC has made available to BB&T the information relating
to such OREO available to SNC. SNC and the SNC
Subsidiaries are in compliance in all material respects
with all recommendations contained in any environmental
audits, analyses and surveys relating to any of the
properties, real or personal, described in this
subsection (c).
(d) There are no past or present actions,
activities, circumstances, conditions, events or
incidents, including, without limitation, the release,
emission, discharge or disposal of any Materials of
Environmental Concern, that could reasonably form the
basis of any Environmental Claim or other claim or
action or governmental investigation that could result
in the imposition of any liability arising under any
Environmental Laws currently in effect or adopted but
not yet effective against SNC or any SNC Subsidiary or
against any person or entity whose liability for any
Environmental Claim SNC or any SNC Subsidiary has or may
have retained or assumed either contractually or by
operation of law.
(e) For the purpose of this Agreement, the
following terms shall have the following meanings:
(i) "Communication" means a communication which
is of a substantive nature and which is made (A) in
writing to SNC or any SNC Subsidiary on the one hand or
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to BB&T or any BB&T Subsidiary on the other hand, or (B)
orally to a senior officer of SNC or any SNC Subsidiary
or of BB&T or any BB&T Subsidiary, whether from a
governmental authority or a third party.
(ii) "Environmental Claim" means any
Communication from any governmental authority or third
party alleging potential liability (including, without
limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from
the presence, or release into the environment, of any
Material of Environmental Concern.
(iii) "Environmental Laws" means all applicable
federal, state and local laws and regulations, including
the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, that relate to
pollution or protection of human health or the
environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface
strata). This definition includes, without limitation,
laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of
Environmental Concern.
(iv) "Materials of Environmental Concern" means
pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other materials
regulated under Environmental Laws.
2.25. Certain Information
When the Registration Statement or any
post-effective amendment thereto shall become effective,
and at all times subsequent to such effectiveness up to
and including the time of the later of the SNC and BB&T
shareholders' meetings to vote upon the Merger, such
Registration Statement and all amendments or supplements
thereto, with respect to all information set forth
therein furnished by SNC relating to SNC and the SNC
Subsidiaries, (i) shall comply in all material respects
with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
contained therein not misleading.
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<PAGE>
2.26. Information in Applications
All information concerning SNC and the SNC
Subsidiaries, and their respective officers, directors
and shareholders, included (or submitted for inclusion)
in the applications described in Section 4.3 hereof
shall be true, correct and complete in all material
respects.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF BB&T
BB&T hereby represents and warrants to SNC as
follows:
3.1. Capital Structure of BB&T
The authorized capital stock of BB&T consists of
(i) 100,000,000 shares of common stock, par value $2.50
per share ("BB&T Common Stock"), of which as of June 30,
1994, 36,271,016 shares were issued and outstanding and
none were held in treasury; and (ii) 4,000,000 shares of
nonvoting preferred stock, no par value ("BB&T Preferred
Stock"), none of which have been issued or are
outstanding. All outstanding shares of BB&T Common
Stock have been duly authorized and are validly issued,
and are fully paid and nonassessable. There are no
Rights authorized, issued or outstanding with respect to
the capital stock of BB&T and no written or oral plans,
understandings, commitments or contracts to which BB&T
or any of its affiliates is subject with respect to the
issuance, voting or sale of issued or unissued shares of
BB&T's capital stock, except for the BB&T DRP and as
Previously Disclosed. None of the shares of BB&T's
capital stock has been issued in violation of the
preemptive rights of any person. The shares of
Continuing Corporation Common Stock to be issued in
connection with the Merger have been duly authorized
and, when issued in accordance with the terms of this
Agreement and the Plan of Merger, will be validly
issued, fully paid and nonassessable.
3.2. Organization, Standing and Authority of BB&T
BB&T is a duly organized corporation, validly
existing and in good standing under the laws of the
State of North Carolina. BB&T (i) has full corporate
power and authority to carry on its business as now
conducted and (ii) is duly qualified to do business in
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the states of the United States and foreign
jurisdictions where its ownership or leasing of property
or the conduct of its business requires such
qualification and where failure to so qualify would have
a material adverse effect on the financial condition,
results of operations or business of BB&T on a
consolidated basis. BB&T has all federal, state, local
and foreign governmental authorizations and licenses
necessary for it to own and lease its properties and
assets and to carry on its business as it is now being
conducted. BB&T has delivered to SNC a true, complete
and correct copy of its Articles of Incorporation and of
its Bylaws, each as in effect on the date of this
Agreement. BB&T is registered as a bank holding company
under the Bank Holding Company Act.
3.3. Ownership of the BB&T Subsidiaries;
Capital Structure of the BB&T Subsidiaries
BB&T does not own, directly or indirectly, 5% or
more of the outstanding capital stock or other voting
securities of any corporation, bank or other
organization actively engaged in business except as
Previously Disclosed (collectively the "BB&T
Subsidiaries" and each individually a "BB&T
Subsidiary"). The outstanding shares of capital stock
of each BB&T Subsidiary have been duly authorized and
are validly issued, and are fully paid and nonassessable
and all such shares are directly or indirectly owned by
BB&T free and clear of all liens, claims and
encumbrances. No Rights are authorized, issued or
outstanding with respect to the capital stock of any
BB&T Subsidiary and there are no agreements,
understandings or commitments relating to the right of
BB&T to vote or to dispose of said shares. None of the
shares of capital stock of any BB&T Subsidiary has been
issued in violation of the preemptive rights of any
person.
3.4. Organization, Standing and Authority of the
BB&T Subsidiaries
Each BB&T Subsidiary is a duly organized
corporation or North Carolina chartered or South
Carolina chartered commercial bank or a North Carolina
chartered savings bank, validly existing and in good
standing under applicable laws. Each BB&T Subsidiary
(i) has full corporate power and authority to own, lease
and operate its properties and to carry on its business
as now conducted except where the absence of such power
or authority would not have a material adverse effect on
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the financial condition, results of operations or
business of BB&T on a consolidated basis, and (ii) is
duly qualified to do business in the states of the
United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its
business requires such qualification and where failure
to so qualify would have a material adverse effect on
the financial condition, results of operations or
business of BB&T on a consolidated basis. Each BB&T
Subsidiary has all federal, state, local and foreign
governmental authorizations and licenses necessary for
it to own or lease its properties and assets and to
carry on its business as it is now being conducted,
except where failure to obtain such authorization or
license would not have a material adverse effect on the
business of such BB&T Subsidiary.
3.5. Authorized and Effective Agreement
(a) BB&T has all requisite corporate power and
authority to enter into, adopt and perform all of its
obligations under this Reorganization Agreement, the
Plan of Merger and the BB&T Option Agreement. The
execution, adoption and delivery of this Reorganization
Agreement, the Plan of Merger and the BB&T Option
Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action in
respect thereof on the part of BB&T, except that the
affirmative vote of the holders of all outstanding
shares of BB&T Common Stock entitled to vote thereon is
required to adopt the Plan of Merger, unless two-thirds
of the entire board of directors of BB&T recommends to
the shareholders of BB&T a vote in favor of the Merger,
in which case the affirmative vote of the holders of a
majority of all outstanding shares of BB&T Common Stock
entitled to vote thereon is required to adopt the Plan
of Merger, pursuant to the North Carolina Business
Corporation Act, as amended, and BB&T's Articles of
Incorporation and Bylaws.
(b) This Reorganization Agreement, the BB&T
Option Agreement and the Plan of Merger constitute
legal, valid and binding obligations of BB&T enforceable
against it in accordance with their respective terms,
subject as to enforceability, to bankruptcy, insolvency
and other laws of general applicability relating to or
affecting creditors' rights and to general equity
principles.
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<PAGE>
(c) Neither the execution, adoption and delivery
of this Reorganization Agreement, the Plan of Merger or
the BB&T Option Agreement, nor consummation of the
transactions contemplated hereby or thereby, nor
compliance by BB&T with any of the provisions hereof or
thereof shall (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or Bylaws
of BB&T or any BB&T Subsidiary, (ii) constitute 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,
charge or encumbrance upon any property or asset of BB&T
or any BB&T Subsidiary pursuant to, any note, bond,
mortgage, indenture, license, agreement or other
instrument or obligation, or (iii) subject to the
receipt of all required regulatory approvals, violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to BB&T or any BB&T Subsidiary.
(d) Except for consents and approvals of or
filings with the Federal Reserve Board, the FDIC, the
Commission and the State Boards and any appropriate
state securities authorities, no consents or approvals
of or filings or registrations with any public body or
authority are necessary, and no consents or filings or
registrations with any public body or authority are
necessary and no consents or approval of any third
parties are necessary, in connection with the execution
and delivery of this Agreement by BB&T or the
consummation by BB&T of the transactions contemplated
hereby or by the Plan of Merger.
3.6. SEC Documents; Regulatory Filings
BB&T has filed all SEC Documents required by the
Securities Laws and such SEC Documents complied in all
material respects with the Securities Laws. Each of
BB&T, BB&T-NC and BB&T-SC has filed all reports required
by statute or regulation to be filed with any federal or
state bank or savings association or savings institution
regulatory agency, and such reports were prepared in
accordance with the applicable statutes, regulations and
instructions in all material respects.
3.7. Financial Statements; Books and Records; Minute
Books
The BB&T Financial Statements fairly present the
consolidated financial position of BB&T as of the dates
indicated and the consolidated results of operations,
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changes in shareholders' equity and cash flows of BB&T
for the periods then ended in conformity with generally
accepted accounting principles applicable to financial
institutions applied on a consistent basis except as
disclosed therein. The books and records of BB&T and
each BB&T Subsidiary fairly reflect the transactions to
which it is a party or by which its properties are
subject or bound. Such books and records have been
properly kept and maintained and are in compliance in
all material respects with all applicable legal and
accounting requirements. The minute books of BB&T and
each BB&T Subsidiary contain accurate records of all
corporate actions of their respective shareholders and
Boards of Directors (including committees of their
Boards of Directors).
3.8. Material Adverse Change
BB&T has not, on a consolidated basis, suffered
any material adverse change in its business, financial
condition or results of operations since December 31,
1993.
3.9. Absence of Undisclosed Liabilities
Neither BB&T nor any BB&T Subsidiary has any
liability (contingent or otherwise) that is material to
BB&T on a consolidated basis, or that, when combined
with all similar liabilities, would be material to BB&T
on a consolidated basis, except as disclosed in the BB&T
Financial Statements and except for liabilities incurred
in the ordinary course of business consistent with past
practice since the date of the most recent BB&T
Financial Statements.
3.10. Properties
BB&T and the BB&T Subsidiaries have good title
free and clear of all liens, encumbrances, charges,
defaults or equitable interests to all of the properties
and assets, real and personal, reflected on the BB&T
Financial Statements as of December 31, 1993 or acquired
after such date, except (i) liens for current taxes not
yet due and payable, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character,
amount or extent and (iv) dispositions and encumbrances
for adequate consideration in the ordinary course of
business. Each BB&T Subsidiary as lessee has the right
under valid and subsisting leases of properties used by
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it in the conduct of its respective business to occupy
and use all such properties as presently occupied and
used by it. Each of the real properties used by any
BB&T Subsidiary has been maintained in all material
respects in good condition and is suitable for its
current use by it. Each of such properties conforms in
all material respects to currently applicable
ordinances, regulations and zoning requirements and, if
required, is occupied pursuant to a certificate of
occupancy authorizing its current use. Since
December 31, 1993, none of such properties which are
material to the operation of any BB&T Subsidiary has
been damaged by fire, storm or other identifiable event
or other act of God, except to the extent that any
property owned or leased by any BB&T Subsidiary if so
damaged is insured to the extent necessary to
satisfactorily repair the damaged premises.
3.11. Loans
(a) Except as Previously Disclosed, to BB&T's
best knowledge each loan reflected as an asset in the
BB&T Financial Statements (i) is evidenced by notes,
agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and
security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent
conveyance and other laws of general applicability
relating to or affecting creditors' rights and to
general equity principles. All loans and extensions of
credit which are subject to Regulation O of the Federal
Reserve Board which have been made by BB&T-NC and
BB&T-SC comply therewith.
(b) The classification on the books and records
of BB&T and each BB&T Subsidiary that is a banking
institution of loans and/or non-performing assets as
nonaccrual, troubled debt restructuring, OREO or other
similar classification, complies in all material
respects with generally accepted accounting principles
and applicable regulatory accounting policy.
3.12. Allowance for Loan Losses
The allowance for loan losses reflected on the
BB&T Financial Statements as of December 31, 1993 and
any BB&T Financial Statements, as of their respective
dates, is adequate in all material respects under the
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requirements of generally accepted and regulatory
accounting principles to provide for reasonably
anticipated losses on outstanding loans.
3.13. Tax Matters
(a) BB&T and each BB&T Subsidiary, and each of
their respective predecessors, have timely filed federal
income tax returns for each year through December 31,
1992 and have timely filed, or caused to be filed, all
other federal and state tax returns (including, without
limitation, estimated tax returns, withholding tax
returns and FICA and FUTA returns) required to have been
filed with respect to BB&T or such BB&T Subsidiary.
BB&T has made available to SNC true and complete copies
of its federal and state income tax returns for the past
five years, and true and complete copies of all
correspondence from governmental authorities, and
responses of BB&T or any BB&T Subsidiary thereto,
relating to such federal and state income tax returns or
any other federal, state or other tax filings within the
past five years. All taxes due in respect of the
periods covered by such tax returns have been paid or
adequate reserves have been established for the payment
of such taxes and, as of the Closing Date, all taxes due
in respect of any subsequent periods ending on or prior
to the Closing Date will have been paid or adequate
reserves will have been established for the payment
thereof. No audit examination or deficiency or refund
litigation with respect to such returns is pending.
BB&T has been audited by the IRS through the tax year
ended December 31, 1992. Neither BB&T nor any BB&T
Subsidiary will have as of the Closing Date any material
liability for any such taxes in excess of the amounts so
paid or reserves or accruals so established.
(b) All federal, state and local (and, if
applicable, foreign) tax returns filed by BB&T and each
BB&T Subsidiary are complete and accurate in all
material respects. Neither BB&T nor any BB&T Subsidiary
is delinquent in the payment of any tax, assessment or
governmental charge, and, except as Previously
Disclosed, none of them has requested any extension of
time within which to file any tax returns in respect of
any fiscal year or portion thereof which have not since
been filed. No deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against BB&T or any
BB&T Subsidiary which have not been settled and paid.
There are currently no agreements in effect with respect
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to BB&T or any BB&T Subsidiary to extend the period of
limitations for the assessment or collection of any tax.
(c) BB&T and each BB&T Subsidiary have timely
filed all material information returns required under
Sections 6041-6050N of the Code and any comparable state
laws, and have timely complied in all material respects
with the requirements of Section 3406 of the Code and
the regulations thereunder and any comparable state and
local laws and regulations. Neither BB&T nor any BB&T
Subsidiary has made or entered into, or holds any asset
subject to, a consent filed pursuant to Section 341(f)
of the Code and the regulations thereunder or a "safe
harbor lease" subject to former Section 168(f)(8) of the
Code and the regulations thereunder.
3.14. Employee Benefit Plans
(a) BB&T has Previously Disclosed true and
complete copies of all pension or profit-sharing plans,
any deferred compensation, consulting, bonus or group
insurance contract or any other incentive, stock option,
welfare or employee benefit plan or agreement maintained
for the benefit of any employees or former employees of
BB&T, any BB&T Subsidiary or any BB&T ERISA Affiliate
(collectively, the "BB&T Plans") together with (i) the
most recent actuarial and financial reports, if any,
prepared with respect to each such BB&T Plan, (ii) the
most recent annual report, if any, filed with any
government agency with respect to each such BB&T Plan,
and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain to any
BB&T Plan. Except as Previously Disclosed, no BB&T Plan
provides health, medical, death or survivor benefits to
any former employee or beneficiary thereof (other than
coverage mandated by applicable law or death or
retirement benefits under an employee pension benefit
plan, as defined in Section 3(2) of ERISA).
(b) No liability under Title IV of ERISA has
been incurred by BB&T, any BB&T Subsidiary or any BB&T
ERISA Affiliate since the effective date of ERISA that
has not been satisfied in full, and no condition exists
that presents a material risk to BB&T, any BB&T
Subsidiary or any BB&T ERISA Affiliate of incurring a
liability under such Title, other than liability for
premiums due the PBGC, which payments have been or will
be made when due.
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(c) None of the BB&T Plans is a "multiemployer
plan," as such term is defined in Section 3(37) of ERISA.
(d) A favorable determination letter has been
issued by the Internal Revenue Service with respect to
each BB&T Plan that is intended to be a qualified plan
to the effect that such plan is qualified under
Section 401 of the Code and tax exempt under Section 501
of the Code and each such letter has been Previously
Disclosed. No such letter has been revoked or
threatened to be revoked and neither BB&T nor any BB&T
Subsidiary knows of any ground on which such revocation
may be based. Except as Previously Disclosed, neither
BB&T nor any BB&T Subsidiary has a material liability
under any BB&T Plan that is not reflected on the BB&T
Financial Statements.
(e) Each of the BB&T Plans has been operated and
administered in all material respects in accordance with
applicable laws, including but not limited to ERISA and
the Code.
(f) No prohibited transaction (which shall mean
any transaction prohibited by Section 406 of ERISA and
not exempt under Section 408 of ERISA) has occurred with
respect to any BB&T Plan (i) which would result in the
imposition, directly or indirectly, of a material excise
tax under Section 4975 of the Code or (ii) the
correction of which would have a material adverse effect
on the financial condition, results of operations or
business of BB&T on a consolidated basis.
(g) Each of the BB&T Plans that is intended to
satisfy the requirements of Section 125 or Section
501(c)(9) of the Code satisfies such requirements.
(h) With respect to each BB&T Plan that is
subject to Title IV of ERISA, the present value of
accrued benefits under such plan, based upon the
actuarial assumptions used for funding purposes in the
most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not, as of its
latest valuation date, exceed the then current value of
the assets of such plan allocable to such accrued
benefits and nothing has occurred since such most recent
valuation date with respect to each such plan that
adversely affects the funded status of such plan. No
reportable event under Section 4043(b) of ERISA has
occurred with respect to any BB&T Plan (other than a
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reportable event for which the requirement of notice to
the PBGC has been waived by regulation).
(i) There are no actions, suits or claims
pending, or to the best knowledge of SNC, threatened or
anticipated (other than routine claims for benefits) by,
on behalf of or against any of the BB&T Plans or any
trusts related thereto or against BB&T or any BB&T
Subsidiary with respect to the BB&T Plans or any trusts
related thereto.
(j) Except as Previously Disclosed, the
consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former
employee of BB&T or any BB&T Subsidiary to severance
pay, employment compensation or any other payment,
benefit or award or (ii) accelerate the time of payment
or vesting, or increase the amount of any benefit, award
or compensation due any such employee.
3.15. Certain Contracts
(a) Except as Previously Disclosed, neither BB&T
nor any BB&T Subsidiary is a party to, or is bound by,
(i) any material agreement, arrangement or commitment
whether or not made in the ordinary course of business,
(ii) any agreement, indenture or other instrument
relating to the borrowing of money by BB&T or any BB&T
Subsidiary or the guarantee by BB&T or any BB&T
Subsidiary of any such obligation, (iii) any agreement,
arrangement or commitment relating to the employment of
a consultant or the employment, election, retention in
office or severance of any present or former director or
officer, (iv) any agreement to make loans or for the
provision, purchase or sale of goods, services or
property between BB&T or any BB&T Subsidiary and any
director or officer of BB&T or any BB&T Subsidiary, or
any member of the immediate family or affiliate of any
of the foregoing, or (v) any agreement between BB&T or
any BB&T Subsidiary and any 5% or more shareholder of
BB&T, in each case other than transactions entered into
in the ordinary course of the banking business of
BB&T-NC or BB&T-SC consistent with past practice.
(b) Neither BB&T nor any BB&T Subsidiary, nor to
the knowledge of BB&T, the other party thereto, is in
default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument
whether entered into in the ordinary course of business
or otherwise and whether written or oral, and there has
not occurred any event that, with the lapse of time or
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giving of notice or both, would constitute such a
default, other than defaults of loan agreements by
borrowers from BB&T-NC or BB&T-SC in the ordinary course
of its banking business.
(c) Since December 31, 1993, neither BB&T nor
any BB&T Subsidiary has incurred or paid any obligation
or liability that would be material to BB&T, except
obligations incurred or paid in connection with
transactions in the ordinary course of business of the
BB&T Subsidiaries consistent with its past practice and
except as Previously Disclosed. Except as Previously
Disclosed, from December 31, 1993 to the date hereof,
neither BB&T nor any BB&T Subsidiary has taken any
action that, if taken after the date hereof, would
breach any of the covenants contained in Section 4.8(b)
hereof.
3.16. Other Real Estate Owned
(a) Except for liens, security interests,
claims, charges, or such other encumbrances as have been
appropriately reserved for in the BB&T Financial
Statements or are not material, title to the OREO is
good and marketable, and there are no adverse claims or
encumbrances on the OREO.
(b) All title, hazard and other insurance claims
and mortgage guaranty claims with respect to the OREO
have been timely filed and neither BB&T nor any BB&T
Subsidiary has received any notice of denial of any such
claim.
(c) BB&T and each BB&T Subsidiary are in
possession of all of the OREO or, if any of the OREO
remains occupied by the mortgagor, eviction or summary
proceedings have been commenced or rental arrangements
providing for market rental rates have been agreed upon
and BB&T and/or each BB&T Subsidiary are diligently
pursuing such eviction or summary proceedings or such
rental arrangements.
(d) No legal proceeding or quasi-legal
proceeding is pending or, to the knowledge of BB&T and
each BB&T Subsidiary, threatened concerning any OREO or
any servicing activity or omission to provide a
servicing activity with respect to any of the OREO.
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3.17. Legal Proceedings
Except as Previously Disclosed, there are no
actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of
BB&T, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome)
against BB&T or any BB&T Subsidiary or against any
asset, interest or right of BB&T or any BB&T Subsidiary
that would, if determined adversely to BB&T or a BB&T
Subsidiary, have a material adverse effect on BB&T. To
the knowledge of BB&T, there are no actual or threatened
actions, suits or proceedings which present a claim to
restrain or prohibit the transactions contemplated
herein, the Plan of Merger or the SNC Option Agreement
or to impose upon SNC, BB&T or any of their respective
subsidiaries any material cost or obligation in
connection therewith. Except as Previously Disclosed
there are no actions, suits, claims, governmental
investigations or proceedings instituted, pending or, to
the knowledge of BB&T, threatened (or unasserted but
considered probable of assertion and which if asserted
would have at least a reasonable probability of an
unfavorable outcome) against any present or former
director or officer of BB&T that would be reasonably
likely to give rise to a claim for indemnification by
such present or former director or officer that would,
if determined adversely to BB&T or a BB&T Subsidiary,
have a material adverse effect on BB&T, and, to the
knowledge of BB&T, there is no reasonable basis for any
such action, suit or proceeding.
3.18. Compliance with Laws
Except as Previously Disclosed, BB&T and the BB&T
Subsidiaries are in compliance in all material respects
with all statutes and regulations applicable to the
conduct of their business, and except as Previously
Disclosed, neither BB&T nor any BB&T Subsidiary has
received notification from any agency or department of
federal, state or local government (i) asserting a
material violation of any such statute or regulation,
(ii) threatening to revoke any license, franchise,
permit or government authorization or (iii) restricting
or in any way limiting its operations. Except as
Previously Disclosed, neither BB&T nor any BB&T
Subsidiary is subject to any regulatory or supervisory
cease and desist order, agreement, directive, memorandum
of understanding or commitment, and neither of them has
received any communication requesting that they enter
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into any of the foregoing. Without limiting the
generality of the foregoing, each of BB&T-NC and BB&T-SC
has timely filed all currency transaction reports
required to be filed and taken all other actions
required under the Currency and Foreign Transactions
Reporting Act, codified at 31 U.S.C. (S) 5301 et seq., and
-- ---
its implementing regulations.
3.19. Brokers and Finders
Neither BB&T nor any BB&T Subsidiary, nor any of
their respective officers, directors or employees, has
employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in
connection with the transactions contemplated herein,
the Bank Merger Agreement or the Plan of Merger, except
for Lehman Brothers and Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch").
3.20. Insurance
BB&T and each BB&T Subsidiary currently maintain
insurance in amounts reasonably necessary for their
operations and, to the best knowledge of BB&T, similar
in scope and coverage to that maintained by other
entities similarly situated. Neither BB&T nor any BB&T
Subsidiary has received any notice of a premium increase
or cancellation with respect to any of its insurance
policies or bonds, and within the last three years,
neither BB&T nor any BB&T Subsidiary has been refused
any insurance coverage sought or applied for, and BB&T
has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall
expire, upon terms and conditions as favorable as those
presently in effect, other than possible increases in
premiums or unavailability in coverage that have not
resulted from any extraordinary loss experience of BB&T
or any BB&T Subsidiary.
3.21. Repurchase Agreements
With respect to all agreements pursuant to which
BB&T or any BB&T Subsidiary has purchased securities
subject to an agreement to resell, if any, BB&T or such
BB&T Subsidiary, as the case may be, has a valid,
perfected first lien or security interest in the
government securities or other collateral securing the
repurchase agreement, and the value of such collateral
equals or exceeds the amount of the debt secured thereby.
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3.22. Deposit Insurance
The deposits of BB&T-NC and BB&T-SC are insured
by the FDIC in accordance with the FDIA, and BB&T-NC and
BB&T-SC have paid all assessments and filed all reports
required by the FDIA.
3.23. Administration of Trust Accounts
BB&T-NC and BB&T-SC have properly administered,
in all respects material and which could reasonably be
expected to be material to the business, operations or
financial condition of BB&T, BB&T-NC and BB&T-SC, taken
as a whole, all accounts for which they act as
fiduciaries, including but not limited to accounts for
which they serve as trustees, agents, custodians,
personal representatives, guardians, conservators or
investment advisors, in accordance with the terms of the
governing documents and applicable state and federal law
and regulation and common law. Neither BB&T, BB&T-NC or
BB&T-SC, nor any director, officer or employee of BB&T,
BB&T-NC or BB&T-SC has committed any breach of trust
with respect to any such fiduciary account which is
material to or could reasonably be expected to be
material to the business, operations or financial
condition of BB&T, BB&T-NC and BB&T-SC, taken as a
whole, and the accountings for each such fiduciary
account are true and correct in all material respects
and accurately reflect the assets of such fiduciary
account in all material respects.
3.24. Environmental Matters
(a) Except as Previously Disclosed, to the best
of BB&T's knowledge, neither BB&T nor any BB&T
Subsidiary owns or leases any properties affected by
toxic waste, radon gas or other hazardous conditions or
constructed in part with the use of asbestos. Each of
BB&T and the BB&T Subsidiaries is in substantial
compliance with all Environmental Laws applicable to
real or personal properties in which it has a direct fee
ownership or, with respect to a direct interest as
lessee, applicable to the leasehold premises or, to the
best knowledge of BB&T and the BB&T Subsidiaries, the
premises on which the leasehold is situated. Neither
BB&T nor any BB&T Subsidiary has received any
Communication alleging that BB&T or such BB&T Subsidiary
is not in such compliance and, to the best knowledge of
BB&T and the BB&T Subsidiaries, there are no present
circumstances (including Environmental Laws that have
been adopted but are not yet effective) that would
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prevent or interfere with the continuation of such
compliance.
(b) (i) There are no legal, administrative,
arbitral or other proceedings, or Environmental Claims
or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that
could result in the imposition, on BB&T and the BB&T
Subsidiaries of any liability arising under any
Environmental Laws pending or, to the best knowledge of
BB&T and the BB&T Subsidiaries, threatened against (A)
BB&T or any BB&T Subsidiary, (B) any person or entity
whose liability for any Environmental Claim BB&T or any
BB&T Subsidiary has or may have retained or assumed
either contractually or by operation of law, or (C) any
real or personal property which BB&T or any BB&T
Subsidiary owns or leases, or has been or is judged to
have managed or to have supervised or participated in
the management of, which liability might have a material
adverse effect on the business, financial condition or
results of operations of BB&T. BB&T and the BB&T
Subsidiaries are not subject to any agreement, order,
judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party
imposing any such liability.
(ii) To the best knowledge of BB&T and the BB&T
Subsidiaries, there are no legal, administrative,
arbitral or other proceedings, or Environmental Claims
or other claims, causes of action or governmental
investigations of any nature, seeking to impose, or that
could result in the imposition, on BB&T or any BB&T
Subsidiary of any liability arising under any
Environmental Laws pending or threatened against any
real or personal property in which BB&T or any BB&T
Subsidiary holds a security interest in connection with
a loan or a loan participation which liability might
have a material adverse effect on the business,
financial condition or results of operations of BB&T.
BB&T and the BB&T Subsidiaries are not subject to any
agreement, order, judgment, decree or memorandum by or
with any court, governmental authority, regulatory
agency or third party imposing any such liability.
(c) With respect to all real and personal
property owned or leased by BB&T or any BB&T Subsidiary,
other than OREO, BB&T will have made available to SNC
before or by September 1, 1994 copies of any
environmental audits, analyses and surveys that have
been prepared relating to such properties. With respect
to all OREO held by BB&T or any BB&T Subsidiary and all
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real or personal property which BB&T or any BB&T
Subsidiary has been or is judged to have managed or to
have supervised or participated in the management of,
BB&T has made available to SNC the information relating
to such OREO available to BB&T. BB&T and the BB&T
Subsidiaries are in compliance in all material respects
with all recommendations contained in any environmental
audits, analyses and surveys relating to any of the
properties, real or personal, described in this
subsection (c).
(d) There are no past or present actions,
activities, circumstances, conditions, events or
incidents, including, without limitation, the release,
emission, discharge or disposal of any Materials of
Environmental Concern, that could reasonably form the
basis of any Environmental Claim or other claim or
action or governmental investigation that could result
in the imposition of any liability arising under any
Environmental Laws currently in effect or adopted but
not yet effective against BB&T or any BB&T Subsidiary or
against any person or entity whose liability for any
Environmental Claim BB&T or any BB&T Subsidiary has or
may have retained or assumed either contractually or by
operation of law.
3.25. Certain Information
When the Registration Statement or any
post-effective amendment thereto shall become effective,
and at all times subsequent to such effectiveness up to
and including the time of the later of the SNC and BB&T
shareholders' meetings to vote upon the Merger, such
Registration Statement and all amendments or supplements
thereto, with respect to all information set forth
therein furnished by BB&T relating to BB&T and the BB&T
Subsidiaries, (i) shall comply in all material respects
with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
contained therein not misleading.
3.26. Information in Applications
All information concerning BB&T and the BB&T
Subsidiaries, and their respective officers, directors
and shareholders, included (or submitted for inclusion)
in the applications described in Section 4.3 hereof
shall be true, correct and complete in all material
respects.
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ARTICLE 4.
COVENANTS
4.1. Shareholders' Meetings
BB&T and SNC shall submit this Reorganization
Agreement and the Plan of Merger to their respective
shareholders for approval at an annual or a special
meeting to be held as soon as practicable. Except to
the extent legally required for the discharge by the
boards of directors of their fiduciary duties as
determined by such boards of directors after
consultation with such board's counsel, the boards of
directors of SNC and BB&T shall recommend at the
respective shareholders' meetings that the shareholders
vote in favor of and approve the Merger and adopt the
Plan of Merger.
4.2. Proxy Statement; Registration Statement
As promptly as practicable after the date hereof,
BB&T and SNC shall cooperate in the preparation of the
Proxy Statement to be mailed to the shareholders of BB&T
and SNC in connection with the Merger and to be filed by
BB&T as part of the Registration Statement. BB&T will
advise SNC, promptly after it receives notice thereof,
of the time when the Registration Statement or any
post-effective amendment thereto has become effective or
any supplement or amendment has been filed, of the
issuance of any stop order, of the suspension of
qualification of the Continuing Corporation Common Stock
and Preferred Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or the
initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for
additional information. The Continuing Corporation
after the Effective Date shall file a post-effective
amendment to the Registration Statement either with
respect to the sale of the shares of Continuing
Corporation Common Stock provided for in the Plan of
Merger to the holders of stock options issued by SNC or
for the resale of such shares by such optionees, as the
Continuing Corporation and such optionees may agree.
BB&T shall take all actions necessary to register or
qualify the shares of Continuing Corporation Common
Stock and Preferred Stock to be issued in the Merger and
pursuant to such options pursuant to all applicable
state "blue sky" or
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securities laws and shall maintain such registrations or
qualifications in effect for all purposes hereof.
4.3. Applications
As promptly as practicable after the date hereof,
(i) BB&T shall submit any requisite applications for
prior approval of the transactions contemplated herein
and in the Plan of Merger to the Federal Reserve Board
pursuant to Section 3 of the Bank Holding Company Act,
(ii) each of the parties shall submit any requisite
applications for prior approval of the transactions
contemplated herein and the Plan of Merger to the FDIC
and the State Boards, and (iii) each of the parties
hereto shall, and they shall cause their respective
subsidiaries to, submit any applications, notices or
other filings to any other state or federal government
agency, department or body the approval of which is
required for consummation of the Merger and the Bank
Mergers. Prior to the making of any such filings with
any regulatory authority or any third persons, BB&T and
SNC shall submit to each other the materials to be
filed, mailed or released. Any such materials must be
acceptable to both BB&T and SNC prior to the filings
with any regulatory authorities or any third persons,
except to the extent that BB&T or SNC is legally
required to proceed prior to obtaining the acceptance of
the other.
4.4. Best Efforts
BB&T, BB&T-NC, BB&T-SC, SNC, SNBNC and SNBSC each
shall use its best efforts in good faith to (i) furnish
such information as may be necessary or desirable in
connection with the preparation of the documents
referred to in Sections 4.2 and 4.3 above, and (ii)
take or cause to be taken all action necessary or
desirable on its part so as to permit consummation of
the Merger and the Bank Mergers at the earliest possible
date, including, without limitation, (1) obtaining the
consent or approval of each individual, partnership,
corporation, association or other business or
professional entity whose consent or approval is
necessary or desirable for consummation of the
transactions contemplated hereby, and (2) requesting the
delivery of appropriate opinions, consents and letters
from its counsel and independent auditors. No party
hereto shall take, or cause or to the best of its
ability permit to be taken, any action that would
adversely affect the qualification of the Merger for
pooling of interests accounting treatment; provided that
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nothing herein contained shall preclude BB&T from
exercising its rights under the SNC Option Agreement or
SNC from exercising its rights under the BB&T Option
Agreement.
4.5. Investigation and Confidentiality
(a) BB&T and SNC each will keep the other
advised of all material developments relevant to its
business and to consummation of the transactions
contemplated herein. BB&T and SNC each may make or
cause to be made such investigation of the financial
and legal condition of the other as such party
reasonably deems necessary or advisable in connection
with the transactions contemplated herein and in the
Plan of Merger, provided, however, that such
investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with
normal operations. BB&T and SNC agree to furnish the
other and the other's advisors with such financial data
and other information with respect to its business and
properties as such other party shall from time to time
reasonably request. No investigation pursuant to this
Section 4.5 shall affect or be deemed to modify any
representation or warranty made by, or the conditions to
the obligations to consummate the Merger and the Bank
Mergers of, any party hereto.
(b) Each party hereto shall, and shall cause its
directors, officers, attorneys and advisors to, maintain
the confidentiality of all information obtained in such
investigation which is not otherwise publicly disclosed
by the other parties, said undertaking with respect to
confidentiality to survive any termination of this
Agreement pursuant to Section 6.1 hereof. In the event
of termination of this Agreement each party shall return
to the furnishing party or destroy and certify the
destruction of all information previously furnished by
the other party in connection with the transactions
contemplated by this Agreement.
(c) SNC shall give prompt notice to BB&T, and
BB&T shall give prompt notice to SNC, of (i) the
occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any
representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect at
any time from the date hereof to the Closing Date and
(ii) any material failure of SNC or BB&T, as the case
may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied
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by it hereunder, and each party shall use all reasonable
efforts to remedy such failure.
4.6. Press Releases
The parties hereto shall agree with each other as
to the form and substance of any press release related
to this Reorganization Agreement, the Plan of Merger and
the agreements which shall be acceptable in form to BB&T
and SNC to effect the North Carolina Bank Merger and the
South Carolina Bank Merger (collectively, the "Bank
Merger Agreements") or the transactions contemplated
hereby or thereby, and shall consult each other as to
the form and substance of other public disclosures
related thereto, provided, however, that nothing
contained herein shall prohibit any party, following
notification to the other parties, from making any
disclosure which its counsel deems necessary.
4.7. Covenants of SNC
(a) Prior to the Closing Date, and except as
otherwise provided for by this Reorganization Agreement
or consented to or approved by BB&T, SNC shall use its
best efforts to preserve the properties, business and
relationships of SNC and the SNC Subsidiaries with
customers, employees and other persons.
(b) Except with the prior written consent of
BB&T, between the date hereof and the Effective Date,
SNC and each SNC Subsidiary that is a banking
institution shall not:
(1) carry on its business other than in the
usual, regular and ordinary course in substantially the
same manner as heretofore conducted;
(2) in the case of SNC only (a) declare,
set aside, make or pay any dividend or other
distribution in respect of SNC Common Stock other than
quarterly cash dividends in an amount per share in
excess of $0.20, in a manner consistent with past
practice and in accordance with applicable law,
regulation and contractual and regulatory commitments
and in respect of SNC Series A Preferred Stock as
required by SNC's Articles of Incorporation or (b) make
any changes in its dividend record or dividend payment
dates; provided, however, that if the Closing Date shall
not have occurred prior to July 31, 1995, SNC may
increase its regular quarterly cash dividends in a
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manner and amount consistent with past increases in such
dividends;
(3) except as Previously Disclosed, issue
any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the
SNC Option Agreement, the SNC DRP or Rights outstanding
at the date hereof, or incur any additional debt
obligation or other obligation for borrowed money in
amounts materially in excess of amounts previously
borrowed in the ordinary course of business of SNC and
SNC Subsidiaries consistent with past practice;
(4) issue, grant or authorize any Rights
other than pursuant to the SNC Option Agreement or
grants of stock options to its employees in the ordinary
course of business or effect any recapitalization,
reclassification, stock dividend (other than pursuant to
the SNC DRP), stock split or like change in
capitalization or redeem, repurchase or otherwise
acquire any shares of its capital stock;
(5) except as Previously Disclosed, amend
its Articles of Incorporation, Articles of Association
or Bylaws except as contemplated herein; impose, or
suffer the imposition, on any share of stock held by SNC
in any SNC Subsidiary of any lien, charge or
encumbrance, or permit any such lien, charge or
encumbrance to exist, except as existing on the date
hereof;
(6) except as Previously Disclosed, merge
or consolidate with any other entity; sell or lease all
or any material portion of its assets or business;
except as Previously Disclosed, make any acquisition of
all or any substantial portion of the business or assets
of any other person, firm, association, corporation or
business organization other than in connection with the
collection of any loan or credit arrangement between it
and any other person; enter into or consummate a
purchase and assumption transaction with respect to
deposits and liabilities; revoke or surrender its
certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a
certificate of authority to establish a new branch
office other than in the ordinary course of business;
(7) fail to comply in any material respect
with any laws, regulations, ordinances or governmental
actions applicable to it and material to the conduct of
its business except where it is in good faith contesting
the validity of any of the foregoing;
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(8) liquidate or sell or dispose of any
material assets or acquire any material assets; make any
capital expenditures outside the ordinary course of
business; or, except as Previously Disclosed, establish
new branches or other similar facilities or modify any
leases or other contracts relating thereto outside the
ordinary course of business;
(9) except as Previously Disclosed or as
contemplated by this Agreement, increase the rate of
compensation of, pay or agree to pay any bonus to, or
provide any other employee benefit or incentive to, any
of its directors, officers or employees except in a
manner consistent with past practice, provided, however,
that such payments may not increase severance amounts
payable under employment or severance agreements;
provided, however, all amounts covered under SNC's
Long-Term and Short-Term Incentive Plans as of the end
of the month prior to the month in which the Closing
Date occurs shall vest and be paid out immediately;
except as Previously Disclosed or as contemplated by
this Agreement, enter into, modify or extend or permit
to be renewed any employment or severance contracts with
any of its present or former directors, officers or
employees; or enter into or modify (except as may be
required by applicable law, for any modification that is
not material or to effect normal, corrective or
previously contemplated actions with respect to such
plans) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit
sharing, deferred compensation, consulting, bonus, group
insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its
directors, officers or other employees;
(10) change its lending, investment,
asset/liability management or other material banking
policies in any material respect except as may be
required by applicable law;
(11) change its methods of accounting in
effect at December 31, 1993, in any material respect
except as required by changes in generally accepted
accounting principles concurred in by its independent
certified public accountants, or change any of its
methods of reporting income and deductions for federal
income tax purposes in any material respect from those
employed in the preparation of its federal income tax
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returns for the year ended December 31, 1993, except as
required by law;
(12) solicit or encourage inquiries or
proposals with respect to any acquisition or purchase of
all or a substantial portion of the assets of, or a
substantial equity interest in, SNC, SNBNC or SNBSC or
any business combination with SNC, SNBNC or SNBSC other
than as contemplated by this Reorganization Agreement;
or authorize or permit any officer, director, agent or
affiliate of it to do any of the above; or fail to
notify BB&T immediately if any such inquiries or
proposals are received by SNC, SNBNC or SNBSC; or
(13) agree to do any of the foregoing.
4.8. Covenants of BB&T
(a) Prior to the Closing Date, and except as
otherwise provided for by this Reorganization Agreement
or consented to or approved by SNC, BB&T shall use its
best efforts to preserve the properties, business and
relationships of BB&T and the BB&T Subsidiaries with
customers, employees and other persons.
(b) Except with the prior written consent of
SNC, between the date hereof and the Effective Date,
BB&T and each BB&T Subsidiary that is a banking
institution shall not:
(1) carry on its business other than in the
usual, regular and ordinary course in substantially the
same manner as heretofore conducted;
(2) in the case of BB&T only (a) declare,
set aside, make or pay any dividend or other
distribution in respect of its capital stock other than
its regular quarterly cash dividends in an amount per
share in excess of $0.29, in a manner consistent with
past practice and in accordance with applicable law,
regulation and contractual and regulatory commitments or
(b) make any changes in its dividend record or dividend
payment dates; provided, however, that if the Closing
Date shall not have occurred prior to July 31, 1995,
BB&T may increase its regular quarterly cash dividends
in a manner and amount consistent with past increases in
such dividends, except that, if SNC increases its
dividend after July 31, 1995, BB&T may increase its
dividend(s) by an amount equal to the increase in the
SNC dividend multiplied by 1.45;
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(3) except as Previously Disclosed, issue
any shares of its capital stock or permit any treasury
shares to become outstanding other than pursuant to the
BB&T Option Agreement, the BB&T DRP or Rights
outstanding at the date hereof, or incur any additional
debt obligation or other obligation for borrowed money
in amounts materially in excess of amounts previously
borrowed in the ordinary course of business of BB&T and
the BB&T Subsidiaries consistent with past practice;
(4) issue, grant or authorize any Rights
other than pursuant to the BB&T Option Agreement, the
BB&T DRP or grants of stock options to its employees in
the ordinary course of business or effect any
recapitalization, reclassification, stock dividend,
stock split or like change in capitalization, or redeem,
repurchase or otherwise acquire any shares of its
capital stock;
(5) amend its Articles of Incorporation or
Bylaws except as contemplated herein; impose, or suffer
the imposition, on any share of stock held by BB&T in
any BB&T Subsidiary of any lien, charge or encumbrance,
or permit any such lien, charge or encumbrance to exist,
except as existing on the date hereof;
(6) except as Previously Disclosed, merge
or consolidate with any other entity; sell or lease all
or any material portion of its assets or business;
except as Previously Disclosed, make any acquisition of
all or any substantial portion of the business or assets
of any other person, firm, association, corporation or
business organization other than in connection with the
collection of any loan or credit arrangement between it
and any other person; enter into or consummate a
purchase and assumption transaction with respect to
deposits and liabilities; revoke or surrender its
certificate of authority to maintain, or apply for the
relocation of, any existing branch office or apply for a
certificate of authority to establish a new branch
office other than in the ordinary course of business;
(7) except as Previously Disclosed, fail to
comply in any material respect with any laws,
regulations, ordinances or governmental actions
applicable to it and material to the conduct of its
business except where it is in good faith contesting the
validity of any of the foregoing;
(8) liquidate or sell or dispose of any
material assets or, except as Previously Disclosed,
acquire any material assets; make any capital
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expenditures outside the ordinary course of business; or
establish new branches or other similar facilities or
modify any leases or other contracts relating thereto
outside the ordinary course of business;
(9) except as contemplated by this
Agreement, increase the rate of compensation of, pay or
agree to pay any bonus to, or provide any other employee
benefit or incentive to, any of its directors, officers
or employees except in a manner consistent with past
practice, provided, however, that such payments may not
increase severance amounts payable under employment or
severance agreements; except as Previously Disclosed or
as contemplated by this Agreement, enter into, modify or
extend, or permit to be renewed, any employment or
severance contracts with any of its present or former
directors, officers or employees; or, enter into or
modify (except as may be required by applicable law, for
any modification that is not material or to effect
normal, corrective or previously contemplated actions
with respect to such plans) any pension, retirement,
stock option, stock purchase, stock appreciation right,
savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement related thereto, in
respect of any of its directors, officers or other
employees;
(10) change its lending, investment,
asset/liability management or other material banking
policies in any material respect except as may be
required by applicable law;
(11) change its methods of accounting in
effect at December 31, 1993, in any material respect
except as required by changes in generally accepted
accounting principles concurred in by its independent
certified public accountants, or change any of its
methods of reporting income and deductions for federal
income tax purposes in any material respect from those
employed in the preparation of its federal income tax
returns for the year ended December 31, 1993, except as
required by law;
(12) solicit or encourage inquiries or
proposals with respect to any acquisition or purchase of
all or a substantial portion of the assets of, or a
substantial equity interest in, BB&T, BB&T-NC or BB&T-SC
or any business combination with BB&T, BB&T-NC or
BB&T-SC other than as contemplated by this
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Reorganization Agreement; or authorize or permit any
officer, director, agent or affiliate of it to do any of
the above; or fail to notify SNC immediately if any such
inquiries or proposals are received by BB&T, BB&T-NC or
BB&T-SC; or
(13) agree to do any of the foregoing.
4.9. Headquarters
At the Effective Date, the headquarters of the
Continuing Corporation and of the NC Continuing Bank
shall be located at 200 West Street, Winston-Salem,
North Carolina.
4.10. Dividends Prior to the Effective Date
BB&T and SNC shall coordinate with one another as
to the declaration and payment of cash dividends on the
shares of BB&T Common Stock and SNC Common Stock to be
declared prior to the Effective Date to ensure that an
equivalent number of such dividends are declared by BB&T
and SNC prior to the Effective Date.
4.11. Closing; Certificate of Merger
The transactions contemplated by this
Reorganization Agreement and the Plan of Merger shall be
consummated simultaneously at a closing to be held at
such location as the parties shall agree on the first
business day following satisfaction of the conditions to
consummation of the Merger set forth in Article 5 hereof
or such later date within 45 days thereafter as may be
agreed upon by the parties hereto ("Closing Date"). In
connection with such Closing, BB&T and SNC shall execute
a certificate of merger and shall cause such certificate
to be delivered to the Secretary of State of the State
of North Carolina. The Merger shall be effective at the
time and on the date ("Effective Date") specified in
such certificate of merger. The North Carolina Bank
Merger and the South Carolina Bank Merger are intended
to be accomplished as soon as practicable after the
Merger. After the North Carolina Bank Merger, the
NC Continuing Bank shall operate under the name of
"Branch Banking and Trust Company" and after the South
Carolina Bank Merger the SC Continuing Bank shall
operate under the name of "Branch Banking and Trust
Company of South Carolina" and utilize all trademarks,
service marks and other registered and non-registered
rights, words, symbols and devices related to such names.
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4.12. Affiliates
BB&T and SNC shall cooperate and use their best
efforts to identify those persons who may be deemed to
be "affiliates" of BB&T or SNC within the meaning of
Rule 144 or 145 promulgated by the Commission under the
Securities Act, as appropriate, or by whom the transfer
of Continuing Corporation Common Stock following
consummation of the Merger may adversely affect the
accounting for the Merger as a pooling of interests.
SNC and BB&T shall use their best efforts to cause each
person so identified to deliver to BB&T or SNC, no later
than 30 days prior to the Effective Date, a written
agreement providing that such person will not dispose of
any SNC Common Stock, BB&T Common Stock or Continuing
Corporation Common Stock except in compliance with the
Securities Act, the rules and regulations promulgated
thereunder and the Commission's rules relating to
pooling of interests accounting treatment. Shares of
Continuing Corporation Common Stock issued to such
affiliates in exchange for SNC Common Stock shall not be
transferable until such time as financial results
covering at least 30 days of combined operations of SNC
and BB&T have been published within the meaning of
Section 201.01 of the Commission's Codification of
Financial Reporting Policies, regardless of whether each
such affiliate has provided the written agreement
referred to in this section.
4.13. Board of Directors
(a) From and after the Effective Date, the Board
of Directors of the Continuing Corporation shall consist
of 22 persons, of which 11 shall be persons named by the
Board of Directors of BB&T and 11 shall be persons named
by the Board of Directors of SNC. John A. Allison IV
shall be elected Chairman of the Board of the Continuing
Corporation. If for any reason John A. Allison IV is
unavailable to serve in that capacity at the Effective
Date, the Chairman of the Board of the Continuing
Corporation shall be selected by mutual agreement of the
Boards of Directors of BB&T and SNC. If the Boards of
Directors of BB&T and SNC are unable to agree upon a
Chairman of the Board after reasonable effort to do so,
then either party may upon written notice to the other
terminate this Agreement. The terms of the directors of
the Continuing Corporation after the Effective Date
shall be allocated, prior to the mailing of the Proxy
Statement, so that, as nearly as practicable, the terms
of the same number of persons designated as directors by
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BB&T and by SNC, respectively, will expire in each
applicable year. If prior to the Effective Date (i) any
of the individuals named by either BB&T or SNC to serve
on the Board of Directors of the Continuing Corporation
following the Effective Date becomes unable or unwilling
to serve as a director of the Continuing Corporation, or
(ii) either BB&T or SNC determines to replace an
individual named by such party to serve on the Board of
Directors of the Continuing Corporation, the party that
designated such individual may name a replacement to
become a director of the Continuing Corporation after
the Effective Date. The Board of Directors of the
NC Continuing Bank following the North Carolina Bank
Merger shall be comprised of current BB&T and SNC
Directors who do not serve as directors of the
Continuing Corporation and such other persons as may be
determined at the time the North Carolina Bank Merger is
effected.
(b) Subject to the fiduciary duties of the
Continuing Corporation directors, L. Glenn Orr, Jr. and
John A. Allison will be elected as members of the
Executive Committee of the Continuing Corporation's
Board of Directors for as long as they are directors of
the Continuing Corporation.
(c) At the Effective Date each Committee of the
Board of Directors of Continuing Corporation shall
consist of an equal number of Directors who were BB&T
Directors prior to the Merger and Directors who were SNC
Directors prior to the Merger.
(d) At the Effective Date and until consummation
of the North Carolina Bank Merger, John A. Allison IV
and L. Glenn Orr, Jr. shall each serve on the Boards of
Directors of BB&T-NC and SNBNC and, after the
consummation of the North Carolina Bank Merger, on the
Board of Directors of NC Continuing Bank. At the
Effective Date and until consummation of the South
Carolina Bank Merger, John A. Allison IV and L. Glenn
Orr, Jr. shall each serve on the Boards of Directors of
BB&T-SC and SNBSC and, after the consummation of the
South Carolina Bank Merger, on the Board of Directors of
SC Continuing Bank.
(e) The persons to be named by BB&T and SNC as
members of the Board of Directors of the Continuing
Corporation after the Effective Date shall be so named
prior to the first filing of a regulatory application
contemplated by Section 4.3 or the Registration
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Statement, subject to receipt of the consent of such
individuals to be so named.
4.14. Management; Employees; Employee Benefits
(a) From and after the Effective Date, the Chief
Executive Officer of the Continuing Corporation shall be
John A. Allison IV. If for any reason John A.
Allison IV is unavailable to serve in that capacity at
the Effective Date, the Chief Executive Officer of the
Continuing Corporation shall be selected by mutual
agreement of the Boards of Directors of BB&T and SNC.
If the Boards of Directors of BB&T and SNC are unable to
agree upon a Chairman of the Board after reasonable
efforts to do so, then either party may terminate this
Agreement. From and after the Effective Date, Henry G.
Williamson, Jr. shall be the Chief Administrative
Officer, John R. Spruill shall be the Chief Financial
Officer, and each of W. Kendall Chalk, Robert E. Greene,
Morris D. Marley, Scott E. Reed and Michael W. Sperry
shall be Executive Vice Presidents of the Continuing
Corporation. The principal officers of the
NC Continuing Bank and the SC Continuing Bank from and
after the consummation of the North Carolina Bank Merger
and the South Carolina Bank Merger, respectively, shall
be as provided in the Bank Merger Agreements. No
officer of BB&T-NC, SNBNC, BB&T-SC or SNBSC shall have
his or her title or position altered automatically as a
result of the Bank Mergers; provided, however, that
nothing in this Section 4.14(a) shall affect the rights
of the NC Continuing Bank and the SC Continuing Bank to
alter such titles and positions of such officers
following the Bank Mergers.
(b) It is the intention of the parties hereto
that after the Effective Date, all directors, officers
and employees of the Continuing Corporation and its
subsidiaries will be entitled to participate in
compensation, benefit, welfare and related plans,
programs or arrangements made available to similarly
situated directors, officers and employees under the
same terms and conditions, notwithstanding such
individuals' prior affiliation with BB&T or SNC. The
parties agree to work together prior to the Effective
Date to develop and design such plans, programs and
arrangements, and to prepare for the implementation of
such plans, programs and arrangements following the
Effective Date. It is also anticipated that any such
plans, programs or arrangements to be effective after
the Effective Date shall provide that, for purposes of
determining eligibility for and vesting of such employee
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benefits only (and not for pension benefit or other
accrual purposes), service with SNC or an SNC
Subsidiary, on the one hand, or BB&T or a BB&T
Subsidiary, on the other hand, to the Effective Date
shall be treated as service with an "employer" to the
same extent as if such persons had been employees of
BB&T or a BB&T Subsidiary or of SNC or an SNC
Subsidiary, as appropriate.
(c) After the Effective Date, as provided in the
Plan of Merger, the obligations under any stock option
plans of SNC shall be assumed by BB&T, and no further
options shall be granted under such plan, and all
officers and employees of the Continuing Corporation
shall be eligible to participate in BB&T's stock option
plans notwithstanding such individuals' prior
affiliation with BB&T or SNC.
4.15. Indemnification
Except as may be limited by applicable law, from
and after the Effective Date, the Continuing Corporation
and the NC Continuing Bank and the SC Continuing Bank
shall maintain all rights of indemnification existing in
favor of the former employees, agents, officers and
directors of SNC, SNBNC and SNBSC, respectively, on
terms no less favorable than those provided in the
Articles of Incorporation and Bylaws of SNC or in the
Articles of Association and Bylaws of SNBNC or SNBSC, or
otherwise in effect on the date of this Agreement for a
period of not less than six years from the Effective
Date with respect to matters occurring prior to the
Effective Date.
4.16. Charter and Bylaws of Continuing Corporation
Prior to the Closing, the parties may agree on
revisions to the Articles of Incorporation and Bylaws of
the Continuing Corporation, which would include an
amendment to provide for a classified Board of Directors
and related provisions. The parties may also consider
and propose arrangements regarding change in control
provisions and such additional provisions and
arrangements as may be mutually agreeable.
4.17. NYSE Listing
BB&T and SNC shall use their best efforts to
obtain the approval of the NYSE to the listing on the
NYSE of the Continuing Corporation Common Stock and the
Continuing Corporation Preferred Stock.
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ARTICLE 5.
CONDITIONS PRECEDENT
5.1. Conditions Precedent - Mutual
The respective obligations of BB&T and SNC to
effect the Merger shall be subject to satisfaction or
waiver of the following conditions at or prior to the
Closing Date:
(a) All corporate action necessary to authorize
the execution, delivery and performance of this
Reorganization Agreement, the Plan of Merger, the Bank
Merger Agreements and consummation of the transactions
contemplated hereby and thereby shall have been duly and
validly taken, and all required shareholder approvals
shall have been duly received;
(b) The parties hereto shall have received all
regulatory approvals required or mutually deemed
necessary in connection with the transactions
contemplated by this Reorganization Agreement, the Plan
of Merger, and the Bank Merger Agreements, and all
notice periods and waiting periods required after the
granting of any such approvals shall have passed and all
conditions contained in any such approval required to
have been satisfied prior to consummation of such
transactions shall have been satisfied, provided,
however, that no such approval shall have imposed any
condition or requirement which, in the reasonable
opinion of the Board of Directors of either BB&T or SNC
so materially and adversely affects the anticipated
economic and business benefits to such party of the
transactions contemplated by this Agreement as to render
consummation of such transactions inadvisable;
(c) The parties hereto shall have received from
counsel or a tax advisor, which counsel or tax advisor
shall be satisfactory to each of SNC and BB&T (and SNC
and BB&T each may elect to use separate counsel or tax
advisor(s)), an opinion satisfactory in form and
substance to BB&T and SNC, to the effect that the Merger
when consummated in accordance with the terms hereof and
the Plan of Merger, and the Bank Mergers when
consummated in accordance with the terms of the Bank
Merger Agreements will constitute reorganizations within
the meaning of Section 368(a) of the Code, that no gain
or loss will be recognized by BB&T or SNC on
consummation of the Merger, that no gain or loss will be
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recognized by BB&T-NC, BB&T-SC, SNBNC and SNBSC on
consummation of the Bank Mergers, and that the exchange
of SNC Common Stock for BB&T Common Stock, and SNC
Series A Preferred Stock for Continuing Corporation
Preferred Stock, will not give rise to recognition of
gain or loss for federal income tax purposes to the
shareholders of SNC and the Bank Mergers will not give
rise to recognition of gain or loss for federal income
tax purposes to BB&T;
(d) The parties hereto shall have received an
opinion from a public accounting firm mutually agreed
upon by the parties that the Merger shall qualify for
the pooling-of-interests method of accounting;
(e) The Registration Statement (including any
post-effective amendment thereto) shall be effective
under the Securities Act, and no proceeding shall be
pending or to the knowledge of BB&T threatened by the
Commission to suspend the effectiveness of such
Registration Statement, and BB&T shall have received all
state securities or "Blue Sky" permits or other
authorizations, or confirmations as to the availability
of an exemption from registration requirements as may be
necessary, and no proceedings shall be pending or to the
knowledge of BB&T threatened by any state "Blue Sky"
securities administrator to suspend the effectiveness of
such Registration Statement;
(f) Except as Previously Disclosed, to the
extent that any lease, license, loan, financing
agreement or other contract or agreement to which any
party hereto of any of its subsidiaries, as the case may
be, is a party requires the consent of or waiver from
the other party thereto as a result of the transactions
contemplated by this Agreement, such consent or waiver
shall have been obtained, unless the failure to obtain
such consent or waiver would not have a material adverse
effect on the consolidated financial condition of such
party from that reflected in the December 31, 1993
financial statements included in the SNC Financial
Statements as to SNC and the SNC Subsidiaries and the
BB&T Financial Statements as to BB&T and the BB&T
Subsidiaries, following consummation of the Merger and
the Bank Mergers;
(g) None of the parties hereto or to the Bank
Merger Agreements shall be subject to any order, decree
or injunction of a court or agency of competent
jurisdiction, which enjoins or prohibits the
consummation of the transactions contemplated by this
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Reorganization Agreement, the Plan of Merger and the
Bank Merger Agreements and there shall be no action or
proceeding by or before any such court or agency that,
in the judgment of SNC or BB&T, with the advice of its
respective counsel, shall present a bona fide claim to
restrain, prohibit or invalidate the transactions
contemplated hereby; and
(h) The Continuing Corporation Common Stock and
the Continuing Corporation Preferred Stock shall have
been approved for listing on the NYSE.
5.2. Conditions Precedent - BB&T
The obligations of BB&T to effect the Merger and
of BB&T-NC and BB&T-SC to effect the Bank Mergers shall
be subject to satisfaction of the following additional
conditions at or prior to the Closing Date unless waived
by BB&T pursuant to Section 6.4 hereof:
(a) The representations and warranties of SNC
set forth in Article 2 hereof shall be true and correct
in all material respects as of the date of this
Reorganization Agreement and as of the Closing Date as
though made on and as of the Closing Date (or on the
date when made in the case of any representation and
warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization
Agreement or consented to in writing by BB&T;
(b) SNC, SNBNC and SNBSC shall have in all
material respects performed all obligations and complied
with all covenants required by this Reorganization
Agreement, the Plan of Merger and the Bank Merger
Agreements;
(c) BB&T shall have received from Arthur
Andersen & Co. a letter dated not more than five days
prior to (i) the effective date of the Registration
Statement and (ii) the Closing Date, with respect to
certain financial information regarding SNC, each in
form and substance which is customary in transactions of
the nature contemplated by this Agreement;
(d) SNC shall have delivered to BB&T a
certificate, dated the Closing Date and signed by its
President and Chief Executive Officer and by its Chief
Financial Officer to the effect that the conditions set
forth in this section have been satisfied;
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(e) BB&T shall have received an opinion of
counsel to SNC, which counsel shall be reasonably
satisfactory to BB&T, dated the Closing Date, as to such
matters as BB&T may reasonably request with respect to
the transactions contemplated hereby, by the Plan of
Merger, the Bank Merger Agreements and the SNC Option
Agreement;
(f) Neither SNC, SNBNC nor SNBSC shall have
experienced or suffered any material adverse change in
its business, operations, assets or condition (financial
or other) since the date hereof;
(g) BB&T shall have received the opinion of
Lehman Brothers and Merrill Lynch as of or immediately
prior to the effective date of the Registration
Statement, to the effect that the terms of the Merger
are fair from a financial point of view to the BB&T
shareholders;
(h) Current BB&T officers as Previously
Disclosed shall have executed employment agreements
substantially in the form provided in Exhibit 5.2(h) to
this Agreement; and
(i) Dissenters' rights pursuant to Section
55-13-02 of the North Carolina Business Corporation Act
with respect to the Merger shall not have been exercised
by the holders of more than 10% in the aggregate of
either the outstanding SNC Common Stock and SNC Series A
Preferred Stock or the BB&T Common Stock.
5.3. Conditions Precedent - SNC
The obligations of SNC to effect the Merger and
of SNBNC and of SNBSC to effect the Bank Mergers shall
be subject to satisfaction of the following additional
conditions at or prior to the Closing Date unless waived
by SNC pursuant to Section 6.4 hereof:
(a) The representations and warranties of BB&T
set forth in Article 3 hereof shall be true and correct
in all material respects as of the date of this
Reorganization Agreement and as of the Closing Date as
though made on and as of the Closing Date (or on the
date when made in the case of any representation and
warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization
Agreement or consented to in writing by SNC;
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(b) BB&T, BB&T-NC and BB&T-SC shall have in all
material respects performed all obligations and complied
with all covenants required by this Reorganization
Agreement, the Plan of Merger and the Bank Merger
Agreements;
(c) SNC shall have received from KPMG Peat
Marwick a letter dated not more than five days prior to
(i) the effective date of the Registration Statement and
(ii) the Closing Date, with respect to certain financial
information regarding BB&T, each in form and substance
which is customary in transactions of the nature
contemplated by this Agreement;
(d) BB&T shall have delivered to SNC a
certificate, dated the Closing Date and signed by its
President and Chief Executive Officer and by its Chief
Financial Officer to the effect that the conditions set
forth in this section have been satisfied;
(e) SNC shall have received an opinion of
counsel to BB&T, which counsel shall be reasonably
satisfactory to SNC, dated the Closing Date, as to such
matters as SNC may reasonably request with respect to
the transactions contemplated hereby and by the Plan of
Merger, the Bank Merger Agreements and the BB&T Option
Agreement;
(f) Neither BB&T, BB&T-NC nor BB&T-SC shall have
experienced or suffered any material adverse change in
its business, operations, assets or condition (financial
or other) since the date hereof;
(g) SNC shall have received the opinion of
Lehman Brothers and Wheat, First Securities, Inc. as of
or immediately prior to the effective date of the
Registration Statement, to the effect that the terms of
the Merger are fair from a financial point of view to
the SNC shareholders;
(h) Current SNC officers as Previously Disclosed
shall have terminated any and all employment, severance
or similar agreements with SNC or any SNC Subsidiary and
shall have executed employment agreements substantially
in the form provided in Exhibit 5.2(h) to this Agreement;
(i) Dissenters' rights pursuant to
Section 55-13-02 of the North Carolina Business
Corporation Act with respect to the Merger shall not
have been exercised by the holders of more than 10% in
the aggregate of
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<PAGE>
either the outstanding SNC Common Stock and SNC Series A
Preferred Stock or the BB&T Common Stock; and
(j) L. Glenn Orr, Jr. shall have entered into an
agreement with the terms provided for in Exhibit 5.3(j)
to this Agreement.
ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. Termination
This Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreements may be terminated, either
before or after approval by the shareholders of BB&T or
SNC:
(a) At any time on or prior to the Effective
Date, by the mutual consent in writing of the parties
hereto;
(b) At any time on or prior to the Closing Date,
by BB&T in writing, if SNC has, or by SNC in writing, if
BB&T has, in any material respect, breached (i) any
covenant or agreement contained herein, in the Plan of
Merger or in the Bank Merger Agreements or (ii) any
representation or warranty contained herein, and in
either case if such breach has not been cured by the
earlier of 30 days after the date on which written
notice of such breach is given to the party committing
such breach or the Closing Date;
(c) On the Closing Date, by any party hereto in
writing, if any of the conditions precedent set forth in
Article 5 hereof with respect to such party have not
been satisfied or fulfilled;
(d) At any time, by any party hereto in writing,
if the applications for prior approval referred to in
Section 4.3 hereof have been denied, and the time period
for appeals and requests for reconsideration has run;
(e) At any time, by any party hereto in writing,
if the shareholders of SNC or BB&T do not approve the
transactions contemplated herein at the special meeting
duly called for that purpose;
(f) By any party hereto in writing, if the
Closing Date has not occurred by the close of business
on July 31, 1995; provided, however, such date shall be
extended until December 31, 1995, if the reason for
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<PAGE>
failure of the Closing to have occurred by July 31, 1995
is that any regulatory approval contemplated by
Section 4.3 has not been received;
(g) At any time prior to September 15, 1994 by
BB&T in writing, if BB&T determines in its sole good
faith judgment that the financial condition, business or
prospects of SNC, SNBNC or SNBSC are materially
adversely different from what was reasonably expected by
BB&T after the performance of its due diligence prior to
the execution of this Agreement; provided that BB&T
shall inform SNC upon such termination as to the reasons
for BB&T's determination; and, provided further, that
this Section 6.1(g) shall not limit in any way the due
diligence investigation of SNC, SNBNC and SNBSC which
BB&T may perform or otherwise affect any other rights
which BB&T has after the date hereof and after
September 15, 1994, under the terms of this Agreement;
(h) At any time prior to September 15, 1994, by
SNC in writing, if SNC determines in its sole good faith
judgment that the financial condition, business or
prospects of BB&T, BB&T-NC or BB&T-SC are materially
adversely different from what was reasonably expected by
SNC after the performance of its due diligence prior to
the execution of this Agreement; provided that SNC shall
inform BB&T upon such termination as to the reasons for
SNC's determination; and, provided further, that this
Section 6.1(h) shall not limit in any way the due
diligence investigation of BB&T, BB&T-NC and BB&T-SC
which SNC may perform or otherwise affect any other
rights which SNC has after the date hereof and after
September 15, 1994, under the terms of this Agreement; or
(i) by either BB&T or SNC if, in the event John
A. Allison, IV is unavailable to serve as Chairman of
the Board of Directors and Chief Executive Officer of
the Continuing Corporation at such time as the parties
are otherwise prepared to consummate the Merger, and the
BB&T Board of Directors and the SNC Board of Directors
are unable, after reasonable efforts, to mutually agree
upon a person to serve as Continuing Corporation
Chairman and a person to serve as Continuing Corporation
Chief Executive Officer.
6.2. Effect of Termination
In the event this Reorganization Agreement and
the Plan of Merger are terminated pursuant to Section
6.1 hereof, this Agreement, the Plan of Merger and the
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Bank Merger Agreements shall become void and have no
effect, except that (i) the provisions relating to
confidentiality and expenses set forth in Sections 4.5
and 7.1 hereof, respectively, shall survive any such
termination and (ii) a termination pursuant to Section
6.1(b)(i) shall not relieve the breaching party from
liability for an uncured willful breach of such covenant
or agreement giving rise to such termination.
6.3. Survival of Representations, Warranties
and Covenants
All representations, warranties and covenants in
this Reorganization Agreement, the Plan of Merger and
the Bank Merger Agreements or in any instrument
delivered pursuant hereto or thereto shall expire on,
and be terminated and extinguished at, the Effective
Date and from and after the Effective Date, none of the
parties hereto shall have any liability to the other on
account of any breach or failure of any of these
representations, warranties or covenants, other than
covenants that by their terms are to survive or be
performed after the Effective Date, provided that no
such representations, warranties or covenants shall be
deemed to be terminated or extinguished so as to deprive
BB&T or SNC (or any director, officer or controlling
person thereof) of any defense in law or equity which
otherwise would be available against the claims of any
person, including, without limitation, any shareholder
or former shareholder of either BB&T or SNC, the
aforesaid representations, warranties and covenants
being material inducements to the consummation by BB&T,
SNC, BB&T-NC, SNBNC, BB&T-SC and SNBSC of the
transactions contemplated herein and in the Bank Merger
Agreements.
6.4. Waiver
Except with respect to any required shareholder
or regulatory approval, BB&T and SNC respectively, by
written instrument signed by an executive officer of
such party, may at any time (whether before or after
approval of this Reorganization Agreement and the Plan
of Merger by the shareholders of BB&T and SNC) extend
the time for the performance of any of the obligations
or other acts of BB&T, BB&T-NC or BB&T-SC, on the one
hand, or SNC, SNBNC or SNBSC, on the other hand, and may
waive (i) any inaccuracies of such parties in the
representations or warranties contained in this
Agreement, the Plan of Merger, the Bank Merger
Agreements or any document delivered pursuant hereto or
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<PAGE>
thereto, (ii) compliance with any of the covenants,
undertakings or agreements of such parties, or
satisfaction of any of the conditions precedent to its
obligations, contained herein, in the Plan of Merger or
in the Bank Merger Agreements or (iii) the performance
by such parties of any of its obligations set out herein
or therein; provided, however, that no such waiver
executed after approval of this Reorganization Agreement
and the Plan of Merger by the shareholders of BB&T
and/or SNC shall alter the number of shares of BB&T
Common Stock and BB&T Preferred Stock into which each
share of SNC Common Stock and SNC Series A Preferred
Stock and BB&T Common Stock shall be converted pursuant
to the Merger.
6.5. Amendment or Supplement
This Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreements may be amended or
supplemented at any time by mutual agreement of the
parties hereto, in the case of this Reorganization
Agreement, or thereto, in the case of the Plan of Merger
and the Bank Merger Agreements, respectively. Any such
amendment or supplement must be in writing and approved
by their respective boards of directors and/or officers
authorized thereby and shall be subject to the proviso
in Section 6.4 hereof.
ARTICLE 7.
MISCELLANEOUS
7.1. Expenses
(a) Except as provided in Section 7.1(b) below,
each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the
transactions contemplated in this Reorganization
Agreement, including fees and expenses of its own
financial consultants, accountants and counsel, except
that BB&T and SNC each shall bear and pay 50% of the
fees of Lehman Brothers and 50% of all printing costs.
(b) Notwithstanding the provisions of
Section 7(a) hereof, if for any reason this
Reorganization Agreement is terminated by any party
before the closing of the transactions contemplated
hereby is concluded, each of SNC and BB&T shall bear and
pay one-half of the reasonable and actual out of pocket
costs and expenses incurred by the parties in connection
with this Agreement, including the fees and expenses of
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<PAGE>
consultants, printers and persons involved in the
transactions contemplated by this Reorganization
Agreement, the preparation of the Registration Statement
and Proxy Statement, the solicitation of proxies and the
registration under the Securities Act of the Continuing
Corporation Common Stock, (except that the fees and
expenses for paying employees and of investment bankers,
accountants, and counsel shall not be subject to this
Section 7.1(b)), provided that if this Reorganization
Agreement, the Plan of Merger and the Bank Merger
Agreements are terminated by SNC or BB&T pursuant to
Section 6.1(b) hereof, in either case because of a
willful breach by the other of any representation,
warranty, covenant, undertaking or restriction as set
forth in Section 6.1(b), and provided further that the
terminating party shall not have been in breach of any
representation and warranty (in any material respect),
covenant, undertaking or restriction contained herein,
in the Plan of Merger or in the Bank Merger Agreements,
then the breaching party shall bear and pay all such
costs and expenses. Final settlement with respect to
the payment of such fees and expenses by the parties
shall be made within thirty days of the termination of
this Reorganization Agreement, the Plan of Merger and
the Bank Merger Agreements.
7.2. Entire Agreement
This Reorganization Agreement, the Plan of
Merger, the BB&T Option Agreement, the SNC Option
Agreement and the Bank Merger Agreements contain the
entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and
supersede all prior arrangements or understandings with
respect thereto, written or oral, other than documents
referred to herein or therein. The terms and conditions
of this Reorganization Agreement and the Plan of Merger
shall inure to the benefit of and be binding upon the
parties hereto and thereto and their respective
successors. Nothing in this Reorganization Agreement or
the Plan of Merger, expressed or implied, is intended to
confer upon any party, other than the parties hereto and
thereto, and their respective successors, any rights,
remedies, obligations or liabilities.
7.3. No Assignment
No party hereto may assign any of its rights or
obligations under this Reorganization Agreement to any
other person.
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<PAGE>
7.4. Notices
All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by facsimile
transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to BB&T:
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
Attention: John A. Allison IV
Facsimile No.: (919) 399-4895
With a required copy to:
Arnold & Porter
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
Attention: L. Stevenson Parker
Facsimile No.: (202) 872-6720
If to SNC:
Southern National Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Attention: L. Glenn Orr, Jr.
Facsimile No.: (910) 773-7203
With a required copy to:
Hunton & Williams
951 E. Byrd Street
Richmond, Virginia 23219
Attention: David M. Carter
Facsimile No.: (804) 788-8218
7.5. Captions
The captions contained in this Reorganization
Agreement are for reference purposes only and are not
part of this Reorganization Agreement.
7.6. Counterparts
This Reorganization Agreement may be executed in
any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, but all
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<PAGE>
such counterparts together shall constitute but one
agreement.
7.7. Governing Law
This Reorganization Agreement shall be governed
by and construed in accordance with the laws of the
State of North Carolina applicable to agreements made
and entirely to be performed within such jurisdiction,
without regard to the conflict of laws principles
thereof, except to the extent federal law may be
applicable.
IN WITNESS WHEREOF, the parties hereto, intending
to be legally bound hereby, have caused this
Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their
officers thereunto duly authorized, all as of the day
and year first above written.
Attest BB&T FINANCIAL CORPORATION
/s/ Jerone C. Herring By /s/ John A. Allison IV
- ---------------------- --------------------------
Secretary John A. Allison IV
Chairman of the Board and
(SEAL) Chief Executive Officer
Attest SOUTHERN NATIONAL CORPORATION
/s/ Judy P. Bullard By /s/ L. Glenn Orr, Jr.
- ---------------------- --------------------------
Assistant Secretary L. Glenn Orr, Jr.
Chairman, President and
Chief Executive Officer
<PAGE>
Exhibit 3
ANNEX A
-------
PLAN OF MERGER OF
SOUTHERN NATIONAL CORPORATION WITH AND INTO
BB&T FINANCIAL CORPORATION
PLAN OF MERGER ("Plan of Merger") dated as of
July 29, 1994, by and between SOUTHERN NATIONAL
CORPORATION ("SNC"), a North Carolina corporation having
its registered office at 200 West Second Street,
Winston-Salem, North Carolina 27101, and BB&T FINANCIAL
CORPORATION ("BB&T"), a North Carolina corporation
having its registered office at 223 West Nash Street,
Wilson, North Carolina 27893.
WITNESSETH
----------
WHEREAS, the respective Boards of Directors of
SNC and BB&T deem the merger of SNC with and into BB&T,
under and pursuant to the terms and conditions herein
set forth or referred to, desirable and in the best
interests of the respective corporations and their
respective shareholders, and the respective Boards of
Directors of SNC and BB&T have adopted resolutions
approving this Plan of Merger and an Agreement and Plan
of Reorganization dated as of even date herewith
("Reorganization Agreement");
WHEREAS, the Board of Directors of SNC has
directed that this Plan of Merger be submitted to the
shareholders of SNC; and
WHEREAS, the Board of Directors of BB&T has
directed that this Plan of Merger be submitted to the
shareholders of BB&T;
NOW, THEREFORE, in consideration of the premises
and of the mutual agreements herein contained, the
parties hereto do hereby agree that the Plan of Merger
shall be as follows:
ARTICLE I.
MERGER
Subject to the terms and conditions of this Plan
of Merger and the Reorganization Agreement, on the
Effective Date (as hereinafter defined), SNC shall be
merged with and into BB&T, pursuant to the provisions
of, and with the effect provided in, Section 55-11-06 of
the North Carolina Business Corporation Act (said
transaction being hereinafter referred to as the
<PAGE>
-2-
"Merger"). On the Effective Date, the separate
existence of SNC shall cease and BB&T, as the surviving
entity, shall continue unaffected and unimpaired by the
Merger and shall operate under the name "Southern
National Corporation." (BB&T as existing on and after
the Effective Date being hereinafter sometimes referred
to as the "Surviving Corporation.")
ARTICLE II.
ARTICLES OF INCORPORATION AND BYLAWS
Upon the Effective Date, the Articles of
Incorporation and the Bylaws of the Surviving
Corporation shall be the Articles of Incorporation and
Bylaws of BB&T.
ARTICLE III.
BOARD OF DIRECTORS AND OFFICERS
1. From and after the Effective Date, the
directors of the Surviving Corporation, who shall hold
office until the expiration of their respective terms or
until their successors are duly elected and qualified,
shall be the eleven persons designated by the Board of
Directors of BB&T and the eleven persons designated by
the Board of Directors of SNC pursuant to the
Reorganization Agreement, or any persons chosen to
replace such designated persons pursuant to the
Reorganization Agreement and the Articles of
Incorporation and Bylaws of the Surviving Corporation.
The directors of the Surviving Corporation shall be
divided into three classes as nearly equal in number as
possible, as provided in the Reorganization Agreement.
It is intended by the parties hereto that following the
Effective Date John A. Allison IV shall serve as
Chairman of the Board of the Surviving Corporation. If
for any reason John A. Allison IV is unavailable to
serve as Chairman of the Board of the Surviving
Corporation at the Effective Date, the Chairman of the
Board of the Surviving Corporation shall be selected by
mutual agreement of the Boards of Directors of BB&T and
SNC.
2. From and after the Effective Date, the Chief
Executive Officer of the Surviving Corporation shall be
John A. Allison IV, to serve until his successor is duly
elected and qualified. If for any reason John A.
Allison IV is unavailable to serve as Chief Executive
Officer of the Surviving Corporation at the Effective
<PAGE>
-3-
Date, the Board of Directors of BB&T and SNC shall
mutually agree upon the person to serve as the Chief
Executive Officer of the Surviving Corporation. From
and after the Effective Date, Henry G. Williamson, Jr.
shall be the Chief Administrative Officer, John R.
Spruill shall be the Chief Financial Officer, and each
of W. Kendall Chalk, Robert E. Greene, Morris D. Marley,
Scott E. Reed and Michael W. Sperry shall be Executive
Vice Presidents of the Surviving Corporation. All other
officers of the Surviving Corporation shall be elected
by the Board of Directors of the Surviving Corporation.
ARTICLE IV.
CAPITAL
1. The designation and number of outstanding
shares of capital stock of SNC as of June 30, 1994 was
as follows: (a) 43,385,610 shares of common stock, par
value $5.00 per share ("SNC Common Stock") and
(b) 770,000 shares of 6-3/4% Cumulative Convertible
Preferred Stock, Series A, $5.00 par value ("SNC Series
A Preferred Stock"). Shares of capital stock of SNC
shall be entitled to vote with respect to the Merger as
required by North Carolina law. Such number of
outstanding shares of SNC Common Stock and SNC Series A
Stock may be changed prior to the Effective Date as a
result of the exercise of stock options, the sale of
such shares by SNC pursuant to its Dividend Reinvestment
Plan, the conversion of shares of SNC Series A Preferred
Stock, or other rights or upon the repurchase by SNC of
shares of SNC Common Stock. The number of outstanding
shares of Preferred Stock may be changed prior to the
Effective Date as a result of the conversion of such
shares into shares of SNC Common Stock or upon the
repurchase by SNC of such shares.
2. The designation and number of outstanding
shares of capital stock of BB&T as of June 30, 1994 was
as follows: (a) 36,271,016 shares of common stock, par
value $2.50 per share ("BB&T Common Stock" until the
Effective Date and "Surviving Corporation Common Stock"
from and after the Effective Date); and (b) no shares of
Preferred Stock. Each share of BB&T Common Stock is
entitled to vote with respect to the Merger. Such
number of outstanding shares of BB&T Common Stock may be
changed prior to the Effective Date as a result of the
exercise of stock options or other rights, the sale of
such shares by BB&T pursuant to its Dividend
Reinvestment Plan the issuance of shares pursuant to its
<PAGE>
-4-
pending acquisition of Commerce Bank, or upon the
repurchase by BB&T of such shares.
3. The shares of capital stock of BB&T issued
and outstanding immediately prior to the Effective Date
shall, on the Effective Date, continue to be issued and
outstanding capital stock of the Surviving Corporation.
ARTICLE V.
CONVERSION AND EXCHANGE OF SNC
SHARES; FRACTIONAL SHARE INTERESTS
1. On the Effective Date, each share of SNC
Common Stock outstanding immediately prior to the
Effective Date (except as provided in Paragraphs 4, 8,
and 9 of this Article) shall by virtue of the Merger be
converted into 1.0 share of Surviving Corporation Common
Stock and shall no longer be shares of common stock of
SNC.
2. On the Effective Date, each share of BB&T
Common Stock outstanding immediately prior to the
Effective Date shall by virtue of the Merger be
converted into 1.45 shares of Surviving Corporation
Common Stock.
3. On the Effective Date, each share of SNC
Series A Preferred Stock outstanding immediately prior
to the Effective Date shall be converted into one share
of Surviving Corporation Series A Preferred Stock,
designated as "6 3/4% Cumulative Convertible Preferred
Stock, Series A," with the same terms, designations,
preferences, limitations, privileges, and relative
rights as the SNC Series A Preferred Stock.
4. On the Effective Date, all shares of SNC
Common Stock or SNC Series A Preferred Stock authorized
but unissued shall be canceled and no cash, stock or
other property shall be delivered in exchange therefor.
5. On and after the Effective Date, each holder
of a certificate or certificates theretofore
representing outstanding shares of SNC Common Stock or
SNC Series A Preferred Stock (any such certificate being
hereinafter referred to as a "SNC Certificate") may
surrender the same to the Surviving Corporation or its
agent for cancellation and each such holder shall be
entitled upon such surrender to receive in exchange
therefor certificate(s) representing the number of
shares of Surviving Corporation Common Stock or
<PAGE>
-5-
Surviving Corporation Series A Preferred Stock to which
such holder is entitled as provided herein. Until so
surrendered, each SNC Certificate shall be deemed for
all purposes to evidence ownership of the number of
shares of Surviving Corporation Common Stock or
Surviving Corporation Series A Preferred Stock into
which the shares represented by such SNC Certificates
have been changed or converted as aforesaid. SNC
Certificates surrendered for exchange by any person who
is an "affiliate" of SNC for purposes of Rule 145(c)
under the Securities Act of 1933, as amended, shall not
be exchanged for certificates representing shares of
Surviving Corporation Common Stock or Surviving
Corporation Series A Preferred Stock until the Surviving
Corporation has received the written agreement of such
person contemplated by Section 4.12 of the
Reorganization Agreement. If any certificate for shares
of Surviving Corporation Common Stock or Surviving
Corporation Series A Preferred Stock is to be issued in
a name other than that in which a SNC Certificate
surrendered for exchange is issued, the SNC 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 SNC Certificate surrendered or provide
funds for their purchase or establish to the
satisfaction of the Surviving Corporation or its agent
that such taxes are not payable.
6. On and after the Effective Date, each holder
of a certificate or certificates theretofore
representing outstanding shares of BB&T Common Stock
(any such certificate being hereinafter referred to as a
"BB&T Certificate") may surrender the same to the
Surviving Corporation or its agent for cancellation and
each such holder shall be entitled upon such surrender
to receive in exchange therefor certificate(s)
representing the number of whole shares of Surviving
Corporation Common Stock to which such holder is
entitled as provided herein and a check in an amount
equal to the amount of cash in lieu of a fractional
share, without interest, to which such holder is
entitled. Until so surrendered, each BB&T Certificate
shall be deemed for all purposes to evidence ownership
of the number of whole shares of Surviving Corporation
Common Stock into which the shares represented by such
Certificates have been changed or converted as
aforesaid. If any certificate for shares of Surviving
Common Stock is to be issued in a name other than that
in which a BB&T Certificate surrendered for exchange is
issued, the BB&T Certificate so surrendered shall be
<PAGE>
-6-
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
BB&T Certificate surrendered or provide funds for their
purchase or establish to the satisfaction of the
Surviving Corporation or its agent that such taxes are
not payable.
7. Upon the Effective Date, the stock transfer
books of SNC shall be closed and no transfer of SNC
Common Stock or SNC Series A Preferred Stock shall
thereafter be made or recognized. Any other provision
of this Plan of Merger notwithstanding, neither the
Surviving Corporation or its agent nor any party to the
Merger shall be liable to a holder of SNC Common Stock
or SNC Series A Preferred 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.
8. No conversion under Paragraph 1 of this
Article V shall be made in respect of any share of SNC
Common Stock or SNC Series A Preferred Stock as to which
an SNC shareholder has, or BB&T Common Stock as to which
a BB&T shareholder has, elected to exercise dissenters'
rights pursuant to Section 55-13-02 of the North
Carolina Business Corporation Act, as amended, if any,
until such time as such shareholder shall have
effectively lost dissenters' rights.
9. In the event that during the period
commencing on the date hereof and ending on the
Effective Date, the outstanding shares of BB&T Common
Stock shall have been increased, decreased or changed
into or exchanged for a different number or kind of
shares or securities by reorganization,
recapitalization, reclassification, stock dividend
(other than pursuant to the Dividend Reinvestment Plan),
stock split or other like changes in BB&T's
capitalization, all without BB&T's receiving
consideration therefor, then an appropriate and
proportionate adjustment shall be made in the number and
kind of shares of Surviving Corporation Common Stock to
be thereafter delivered to SNC and BB&T shareholders
pursuant to this Plan of Merger.
10. Notwithstanding any other provision hereof,
each holder of shares of BB&T Common Stock who would
otherwise have been entitled to receive a fraction of a
share of Surviving Corporation Common Stock (after
taking into account all BB&T Certificates delivered by
<PAGE>
-7-
such holder) shall receive, in lieu thereof, upon
presentation of such BB&T Certificates, cash in an
amount equal to such fractional part of a share of
Surviving Corporation Common Stock multiplied by the
market value of such Surviving Corporation Common Stock.
The market value of one share of Surviving Corporation
Common Stock on the Effective Date shall be the closing
price of BB&T Common Stock as reported by the National
Market System of the National Association of Securities
Dealers' Automated Quotation System on the last business
day preceding such date (or, if no such price is
reported on such date, on the next preceding business
day when such price is reported). No such holder shall
be entitled to dividends, voting rights or any other
shareholder right in respect of any fractional share.
11. On the Effective Date, SNC's obligations with
respect to stock options granted under its stock option
plans shall be assumed by the Surviving Corporation and
each stock option outstanding under such plans shall
become the right to receive, upon payment of the
exercise price, a number of shares of Surviving
Corporation Common Stock equal to the number of shares
of SNC Common Stock covered by such options; provided,
however, that in respect of any stock option which is an
"incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended
("Code"), the conversion hereinabove provided for shall
comply with the requirements of Section 424(a) of the
Code, including the requirement that such converted
options shall not give to the holder thereof any
benefits additional to those which such holder had prior
to such conversion under the option as originally
granted.
12. On the Effective Date, options to purchase
shares of BB&T Common Stock issued pursuant to BB&T's
stock option plans shall be converted and exchanged,
without any action on the part of the holders thereof,
into options to acquire, upon payment of the adjusted
exercise price (which shall equal the exercise price per
share for the options immediately prior to the Merger,
divided by the Exchange Ratio in Article V, paragraph
2), the number of shares of BB&T Common Stock the option
holder would have received pursuant to the Merger if he
or she had exercised his or her options immediately
prior thereto; provided, however, that in respect of any
stock option which is an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended ("Code"), the conversion hereinabove
provided for shall comply with the requirements of
<PAGE>
-8-
Section 424(a) of the Code, including the requirement
that such converted options shall not give to the holder
thereof any benefits additional to those which such
holder had prior to such conversion under the option as
originally granted.
ARTICLE VI.
EFFECTIVE DATE OF THE MERGER
Articles of Merger evidencing the transactions
contemplated herein shall be delivered to the
North Carolina Secretary of State for filing as provided
in the Reorganization Agreement. The Merger shall be
effective at the time and on the date specified in such
Articles of Merger (such date and time being herein
referred to as the "Effective Date").
ARTICLE VII.
FURTHER ASSURANCES
If at any time the Surviving Corporation shall
consider or be advised that any further assignments,
conveyances or assurances are necessary or desirable to
vest, perfect or confirm in the Surviving Corporation
title to any property or rights of SNC, or otherwise
carry out the provisions hereof, the proper officers and
directors of SNC, as of the Effective Date, and
thereafter the officers of the Surviving Corporation
acting on behalf of SNC, shall execute and deliver any
and all proper assignments, conveyances and assurances,
and do all things necessary or desirable to vest,
perfect or confirm title to such property or rights in
the Surviving Corporation and otherwise carry out the
provisions hereof.
ARTICLE VIII.
CONDITIONS PRECEDENT
The obligations of BB&T and SNC to effect the
Merger as herein provided shall be subject to
satisfaction, unless duly waived, of the conditions set
forth in the Reorganization Agreement.
ARTICLE IX.
TERMINATION
Anything contained in this Plan of Merger to the
contrary notwithstanding, and notwithstanding adoption
<PAGE>
-9-
hereof by the shareholders of SNC and BB&T, this Plan of
Merger may be terminated and the Merger abandoned as
provided in the Reorganization Agreement. If the
Reorganization Agreement is terminated, then this Plan
of Merger shall terminate.
ARTICLE X.
MISCELLANEOUS
1. This Plan of Merger may be amended or
supplemented at any time prior to its Effective Date by
mutual agreement of BB&T and SNC. Any such amendment or
supplement must be in writing and approved by their
respective Boards of Directors and/or by officers
authorized thereby and shall be subject to the proviso
in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or
permitted under this Plan of Merger shall be given, and
shall be effective, in accordance with the provisions of
the Reorganization Agreement.
3. The headings of the several Articles herein
are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or
interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of
North Carolina applicable to agreements made and
entirely to be performed in such jurisdiction, except to
the extent Federal law may be applicable.
<PAGE>
Exhibit 4
EXECUTION DRAFT
---------------
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement")
dated as of July 29, 1994, between BB&T FINANCIAL
CORPORATION ("BB&T"), a North Carolina corporation
registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended ("Bank Holding
Company Act"), and SOUTHERN NATIONAL CORPORATION
("SNC"), a North Carolina corporation registered as a
bank holding company under the Bank Holding Company Act.
WITNESSETH
----------
WHEREAS, the Boards of Directors of the parties
hereto have approved an Agreement and Plan of
Reorganization ("Reorganization Agreement") and have
adopted a related Plan of Merger dated as of the date
hereof (together referred to herein as the "Merger
Agreements"), providing for certain transactions
pursuant to which SNC would be merged with and into
BB&T; and
WHEREAS, as a condition to and as consideration
for SNC's entry into the Merger Agreements and to induce
such entry, BB&T has agreed to grant to SNC the option
set forth herein to purchase authorized but unissued
shares of BB&T Common Stock;
NOW, THEREFORE, in consideration of the premises
herein contained, the parties agree as follows:
1. Definitions.
-----------
Capitalized terms defined in the Merger
Agreements and used herein shall have the same meanings
as in the Merger Agreements.
2. Grant of Option.
---------------
Subject to the terms and conditions set forth
herein, BB&T hereby grants to SNC an option ("Option")
to purchase up to 7,217,932 shares of BB&T Common Stock,
at a price of $30.625 per share payable in cash as
provided in Section 4 hereof; provided, however, that in
the event BB&T issues or agrees to issue any shares of
BB&T Common Stock (other than as permitted under the
Merger Agreements) at a price less than $30.625 per
share (as adjusted pursuant to Section 6 hereof), the
exercise price shall be equal to such lesser price.
Notwithstanding anything else in this Agreement to the
<PAGE>
- 2 -
contrary, the number of shares of BB&T Common Stock
subject to the Option shall be reduced to such lesser
number, if any, as may from time-to-time be necessary,
but only for so long as may be necessary, to cause SNC
not to be subject to the provisions of Section 55-9-01
et seq. of, or deemed to own "control shares" of BB&T
within the meaning of Section 55-9A-01 of, the North
Business Corporation Act, as amended.
3. Exercise of Option.
------------------
(a) Unless SNC shall have breached in any
material respect any material covenant or representation
contained in the Reorganization Agreement and such
breach has not been cured, SNC may exercise the Option,
in whole or part, at any time or from time to time if a
Purchase Event (as defined below) shall have occurred
and be continuing; provided that to the extent the
Option shall not have been exercised, it shall terminate
and be of no further force and effect (i) on the
Effective Date of the Merger or (ii) upon termination of
the Merger Agreements in accordance with the provisions
thereof (other than a termination resulting from a
willful breach by BB&T of any Specified Covenant or,
following the occurrence of a Purchase Event, failure of
BB&T's shareholders to approve the Merger Agreements by
the vote required under applicable law or under BB&T's
Certificate of Incorporation), or (iii) 12 months after
termination of the Merger Agreements due to a willful
breach by BB&T of any Specified Covenant or, following
the occurrence of a Purchase Event, failure of BB&T's
shareholders to approve the Merger Agreements by the
vote required under applicable law or under BB&T's
Certificate of Incorporation; and provided further that
any such exercise shall be subject to compliance with
applicable provisions of law.
(b) As used herein, a "Purchase Event"
shall mean any of the following events or transactions
occurring after the date hereof:
(i) BB&T, Branch Banking and Trust Company
("BB&T-NC") or Branch Banking and Trust
Company of South Carolina ("BB&T-SC"),
without having received SNC's prior
written consent, shall have entered into
an agreement with any person (other than
BB&T, BB&T-NC or BB&T-SC, to (x) merge or
consolidate, or enter into any similar
transaction, with BB&T, BB&T-NC or
BB&T-SC, except as contemplated in the
<PAGE>
- 3 -
Reorganization Agreement (including
Previously Disclosed transactions),
(y) purchase, lease or otherwise acquire
all or substantially all of the assets of
BB&T, BB&T-NC or BB&T-SC or (z) purchase
or otherwise acquire (including by way of
merger, consolidation, share exchange or
any similar transaction) securities
representing 10% or more of the voting
power of BB&T, BB&T-NC or BB&T-SC;
(ii) any person (other than BB&T, or BB&T-NC or
BB&T-SC in a fiduciary capacity, or SNC,
or Southern National Bank of North
Carolina or Southern National Bank of
South Carolina in a fiduciary capacity)
shall have acquired beneficial ownership
or the right to acquire beneficial
ownership of 15% or more of the
outstanding shares of BB&T Common Stock
after the date hereof (the term
"beneficial ownership" for purposes of
this Option Agreement having the meaning
assigned thereto in Section 13(d) of the
Exchange Act and the regulations
promulgated thereunder);
(iii) any person (other than BB&T, BB&T-NC or
BB&T-SC) shall have made a bona fide
proposal to BB&T by public announcement or
written communication that is or becomes
the subject of public disclosure to
acquire BB&T, BB&T-NC or BB&T-SC by
merger, consolidation, purchase of all or
substantially all of its assets or any
other similar transaction, and following
such bona fide proposal the shareholders
of BB&T vote not to adopt the Plan of
Merger; or
(iv) BB&T shall have willfully breached any
Specified Covenant following a bona fide
proposal to BB&T-NC, BB&T-SC or BB&T to
acquire BB&T, BB&T-NC or BB&T-SC by
merger, consolidation, purchase of all or
substantially all of its assets or any
other similar transaction, which breach
would entitle SNC to terminate the Merger
Agreements (without regard to the cure
periods provided for therein) and such
<PAGE>
- 4 -
breach shall not have been cured prior to
the Notice Date (as defined below).
If more than one of the transactions giving rise to a
Purchase Event under this Section 3(b) is undertaken or
effected, then all such transactions shall give rise
only to one Purchase Event, which Purchase Event shall
be deemed continuing for all purposes hereunder until
all such transactions are abandoned. As used in this
Option Agreement, "person" shall have the meanings
specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(c) In the event SNC wishes to exercise
the Option, it shall send to BB&T a written notice (the
date of which being herein referred to as "Notice Date")
specifying (i) the total number of shares it will
purchase pursuant to such exercise, and (ii) a place and
date not earlier than three business days nor later than
60 business days from the Notice Date for the closing of
such purchase ("Closing Date"); provided that if prior
notification to or approval of any federal or state
regulatory agency is required in connection with such
purchase, SNC shall promptly file the required notice or
application for approval and shall expeditiously process
the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the
date on which any required notification period has
expired or been terminated or such approval has been
obtained and any requisite waiting period shall have
passed.
(d) As used herein, "Specified Covenant"
means any covenant contained in Sections 4.1, 4.4 or
4.11, or subsections (2), (3), (4), (5), (6), (12) and,
to the extent applicable to the foregoing subsections,
(14) of Section 4.8(b) of the Reorganization Agreement.
4. Payment and Delivery of Certificates.
------------------------------------
(a) At the closing referred to in Section 3
hereof, SNC shall pay to BB&T the aggregate purchase
price for the shares of BB&T Common Stock purchased
pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account
designated by BB&T.
(b) At such closing, simultaneously with
the delivery of funds as provided in subsection (a),
BB&T shall deliver to SNC a certificate or certificates
representing the number of shares of BB&T Common Stock
<PAGE>
- 5 -
purchased by SNC, and SNC shall deliver to BB&T a letter
agreeing that SNC will not offer to sell or otherwise
dispose of such shares in violation of applicable law or
the provisions of this Option Agreement.
(c) Certificates for BB&T Common Stock
delivered at a closing hereunder may be endorsed with a
restrictive legend which shall read substantially as
follows:
"The transfer of the shares
represented by this certificate is
subject to certain provisions of an
agreement between the registered holder
hereof and BB&T Financial Corporation
and to resale restrictions arising
under the Securities Act of 1933, as
amended, a copy of which agreement is
on file at the principal office of BB&T
Financial Corporation. A copy of such
agreement will be provided to the
holder hereof without charge upon
receipt by BB&T Financial Corporation
of a written request."
It is understood and agreed that the above legend shall
be removed by delivery of substitute certificate(s)
without such legend if SNC shall have delivered to BB&T
a copy of a letter from the staff of the Commission, or
an opinion of counsel, in form and substance
satisfactory to BB&T, to the effect that such legend is
not required for purposes of the Securities Act.
5. Representations.
---------------
BB&T hereby represents, warrants and covenants to
SNC as follows:
(a) BB&T shall at all times maintain
sufficient authorized but unissued shares of BB&T Common
Stock so that the Option may be exercised without
authorization of additional shares of BB&T Common Stock.
(b) The shares to be issued upon due
exercise, in whole or in part, of the Option, when paid
for as provided herein, will be duly authorized, validly
issued, fully paid and nonassessable.
<PAGE>
- 6 -
6. Adjustment Upon Changes in Capitalization.
-----------------------------------------
In the event of any change in BB&T Common Stock
by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchanges of shares or
the like, the type and number of shares subject to the
Option, and the purchase price per share, as the case
may be, shall be adjusted appropriately. In the event
that any additional shares of BB&T Common Stock are
issued or otherwise become outstanding after the date of
this Option Agreement (other than pursuant to this
Option Agreement), the number of shares of BB&T Common
Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 19.9% of the number of
shares of BB&T Common Stock then issued and outstanding
without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this
Section 6 shall be deemed to authorize BB&T to breach
any provision of the Merger Agreements.
7. Registration Rights.
-------------------
BB&T shall, if requested by SNC, as expeditiously
as possible file a registration statement on a form of
general use under the Securities Act if necessary in
order to permit the sale or other disposition of the
shares of BB&T Common Stock that have been acquired upon
exercise of the Option in accordance with the intended
method of sale or other disposition requested by SNC.
SNC shall provide all information reasonably requested
by BB&T for inclusion in any registration statement to
be filed hereunder. BB&T will use its best efforts to
cause such registration statement first to become
effective and then to remain effective for such period
not in excess of 270 days from the day such registration
statement first becomes effective as may be reasonably
necessary to effect such sales or other dispositions.
The first registration effected under this Section 7
shall be at BB&T's expense except for underwriting
commissions and the fees and disbursements of SNC's
counsel attributable to the registration of such BB&T
Common Stock. A second registration may be requested
hereunder at SNC's expense. In no event shall BB&T be
required to effect more than two registrations
hereunder. The filing of any registration statement
hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public
distribution by BB&T of BB&T Common Stock. If requested
by SNC, in connection with any such registration, BB&T
will become a party to any underwriting agreement
relating to the sale of such shares, but only to the
<PAGE>
- 7 -
extent of obligating itself in respect of
representations, warranties, indemnities and other
agreements customarily included in such underwriting
agreements. Upon receiving any request from SNC or
assignee thereof under this Section 7, BB&T agrees to
send a copy thereof to SNC and to any assignee thereof
known to BB&T, in each case by promptly mailing the
same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
8. Severability.
------------
If any term, provision, covenant or restriction
contained in this Option Agreement is held by a court or
a federal or state regulatory agency of competent
jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and
restrictions contained in this Option 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 will not permit the holder to acquire the full
number of shares of BB&T Common Stock provided in
Section 2 hereof (as adjusted pursuant to Section 6
hereof), it is the express intention of BB&T to allow
the holder to acquire or to require BB&T to repurchase
such lesser number of shares as may be permissible,
without any amendment or modification hereof.
9. Miscellaneous.
-------------
(a) Expenses. Except as otherwise provided
--------
herein, each of the parties hereto shall bear and pay
all costs and 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) Entire Agreement. Except as otherwise
----------------
expressly provided herein, this Option Agreement
contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with
respect thereto, written or oral. The terms and
conditions of this Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and
their respective successors and assigns. Nothing in
this Option Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights,
<PAGE>
- 8 -
remedies, obligations or liabilities under or by reason
of this Option Agreement, except as expressly provided
herein.
(c) Assignment. Neither of the parties
----------
hereto may assign any of its rights or obligations under
this Option Agreement or the Option created hereunder to
any other person, without the express written consent of
the other party, except that in the event a Purchase
Event shall have occurred and be continuing SNC may
assign in whole or in part its rights and obligations
hereunder; provided, however, that to the extent
required by applicable regulatory authorities, SNC may
not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to
purchase in excess of 2% of the voting shares of BB&T,
(iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a
widely dispersed public distribution on SNC's behalf, or
(iv) any other manner approved by applicable regulatory
authorities.
(d) Notices. All notices or other
-------
communications which are required or permitted hereunder
shall be in writing and sufficient if delivered in the
manner and to the addresses provided for in or pursuant
to Section 7.4 of the Reorganization Agreement.
(e) Counterparts. This Option Agreement
------------
may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall
constitute but one agreement.
(f) Specific Performance. The parties
--------------------
agree that damages would be an inadequate remedy for a
breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may
be enforced by either party hereto through injunctive or
other equitable relief.
(g) Governing Law. This Option Agreement
-------------
shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to
agreements made and entirely to be performed within such
state and such federal laws as may be applicable.
<PAGE>
- 9 -
IN WITNESS WHEREOF, each of the parties hereto
has executed this Option Agreement as of the day and
year first written above.
BB&T FINANCIAL CORPORATION
By: /s/ John A. Allison IV
-------------------------
Name: John A. Allison IV
Title: Chairman and
Chied Executive Officer
SOUTHERN NATIONAL CORPORATION
By: /s/ L. Glenn Orr, Jr.
-------------------------
Name: L. Glenn Orr, Jr.
Title: Chairman, President and
Chief Executive Officer
