SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 6, 2000
One Valley Bancorp, Inc.
(Exact name of registrant as specified in its charter)
West Virginia 0-10042 55-0609408
(State or other (Commission File Number) (I.R.S.
jurisdiction of Employer
incorporation or Identification No.)
organization)
One Valley Square, Charleston, West Virginia 25326
(Address of principal executive offices)
(Zip Code)
(304) 348-7000
(Registrant's telephone number, including area code)
Not applicable
(Former name, address, and fiscal year, if changed since last report)
One Valley Bancorp, Inc.
<PAGE>
Item 5. Other Events.
On February 6, 2000, One Valley Bancorp, Inc. ("Registrant") and BB&T
Corporation ("BB&T") entered into an Agreement and Plan of Reorganization
("Merger Agreement"). Pursuant to the Merger Agreement, the Registrant will
merge into BB&T with BB&T as the surviving corporation ("Merger"). At the
effective time of the Merger, each share of the Registrant's issued and
outstanding common stock will be converted into 1.28 shares of BB&T's common
stock (or cash in lieu of fractional shares otherwise deliverable in respect
thereof). The Merger, which was approved by the boards of directors of both
companies, is subject to normal regulatory approvals and the approval of the
shareholders of the Registrant.
Simultaneously with the execution of the Merger Agreement, the
Registrant also entered into a Stock Option Agreement with BB&T. Pursuant to the
terms and conditions set forth in the Stock Option Agreement, the Registrant
granted BB&T an irrevocable option to purchase up to 6,700,000 shares, subject
to certain adjustments, of the Registrant's common stock at a price per share of
$29.75, exercisable under certain circumstances.
Shareholders of the Registrant received a regular quarterly dividend in
January, 2000. It is anticipated that shareholders of the Registrant will
receive a second regular quarterly dividend from the Registrant in April, 2000.
Depending upon the timing of the closing of the Merger, a third quarterly
dividend will be paid in either July or August by either the Registrant or BB&T.
Thereafter, regular quarterly dividends will be paid by BB&T, and it is
anticipated that the fourth quarterly dividend will be paid in November, 2000.
As a result, shareholders of the Registrant are expected to receive four
dividend payments in 2000.
Attached and incorporated herein by reference in their entirety as
Exhibits 2.1, 2.2 and 99.1, respectively, are copies of the Merger Agreement,
the Stock Option Agreement, and the press release of the Registrant in
connection with the Merger, previously filed on a Form 8-K on February 7, 2000.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Exhibits:
Exhibit No. Description
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2.1 Agreement and Plan of Reorganization, dated as of
February 6, 2000, between One Valley Bancorp, Inc., a
West Virginia corporation, and BB&T Corporation, a
North Carolina corporation.
2.2 Stock Option Agreement, dated as of February 6, 2000,
between One Valley Bancorp, Inc., a West Virginia
corporation, and BB&T Corporation, a North Carolina
corporation.
99.1 Press Release, dated February 7, 2000.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONE VALLEY BANCORP, INC.
(Registrant)
Dated: February 14, 2000 By: /s/ Laurance G. Jones
---------------------------------
Name: Laurance G. Jones
Title: Executive Vice President and
Chief Financial Officer
-3-
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Reorganization, dated as of
February 6, 2000 between One Valley Bancorp, Inc., a
West Virginia corporation, and BB&T Corporation, a
North Carolina corporation.
2.2 Stock Option Agreement, dated as of February 6, 2000
between One Valley Bancorp, Inc., a West Virginia
corporation, and BB&T Corporation, a North Carolina
corporation.
99.1 Press Release, dated February 7, 2000.
-4-
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
ONE VALLEY BANCORP, INC.
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
ARTICLE II THE MERGER........................................................7
2.1 Merger.............................................................7
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2.2 Filing; Plan of Merger.............................................8
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2.3 Effective Time.....................................................8
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2.4 Closing............................................................8
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2.5 Effect of Merger...................................................8
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2.6 Further Assurances.................................................9
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2.7 Merger Consideration...............................................9
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2.8 Conversion of Shares; Payment of Merger Consideration.............10
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2.9 Conversion of Stock Options.......................................11
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2.10 No Right to Dissent...............................................13
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2.11 Merger of Subsidiaries............................................13
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2.12 Anti-Dilution.....................................................13
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF ONE VALLEY....................13
3.1 Capital Structure.................................................14
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3.2 Organization, Standing and Authority..............................14
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3.3 Ownership of Subsidiaries.........................................14
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3.4 Organization, Standing and Authority of the Subsidiaries..........15
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3.5 Authorized and Effective Agreement................................15
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3.6 Securities Documents; Financial Statements; Statements True.......16
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3.7 Minute Books......................................................16
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3.8 Adverse Change....................................................17
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3.9 Absence of Undisclosed Liabilities................................17
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3.10 Properties........................................................17
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3.11 Environmental Matters.............................................17
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3.12 Loans; Allowance for Loan Losses..................................18
--------------------------------
3.13 Tax Matters.......................................................19
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3.14 Employees; Compensation; Benefit Plans............................20
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3.15 Certain Contracts.................................................23
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3.16 Legal Proceedings; Regulatory Approvals...........................24
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3.17 Compliance with Laws; Filings.....................................25
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3.18 Brokers and Finders...............................................25
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3.19 Repurchase Agreements; Derivatives................................25
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3.20 Deposit Accounts..................................................26
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3.21 Related Party Transactions........................................26
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3.22 Certain Information...............................................26
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3.23 Accounting; Tax and Regulatory Matters............................26
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3.24 State Takeover Laws; No Supermajority Vote Required; Rights Plan..27
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3.25 Labor Relations...................................................27
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3.26 Fairness Opinion..................................................27
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T...........................27
4.1 Capital Structure of BB&T.........................................28
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4.2 Organization, Standing and Authority of BB&T......................28
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4.3 Authorized and Effective Agreement................................28
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4.4 Organization, Standing and Authority of BB&T Subsidiaries.........29
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4.5 Securities Documents; Financial Statements; Statements True.......29
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4.6 Certain Information...............................................30
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4.7 Accounting; Tax and Regulatory Matters............................30
` --------------------------------------
4.8 Share Ownership...................................................30
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4.9 Legal Proceedings; Regulatory Approvals...........................30
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4.10 Adverse Change....................................................31
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4.11 Absence of Undisclosed Liabilities................................31
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<PAGE>
ARTICLE V COVENANTS.........................................................31
5.1 One Valley Shareholder Meeting....................................31
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5.2 Registration Statement; Proxy Statement/Prospectus................31
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5.3 Plan of Merger; Reservation of Shares.............................32
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5.4 Additional Acts...................................................32
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5.5 Best Efforts......................................................33
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5.6 Certain Accounting Matters........................................33
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5.7 Access to Information.............................................33
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5.8 Press Releases....................................................34
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5.9 Forbearances of One Valley........................................34
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5.10 Employment Agreements.............................................37
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5.11 Affiliates........................................................37
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5.12 Section 401(k) Plan; Other Employee Benefits......................37
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5.13 Directors and Officers Protection.................................40
---------------------------------
5.14 Forbearances of BB&T..............................................40
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5.15 Reports...........................................................41
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5.16 Exchange Listing..................................................41
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5.17 Advisory Boards...................................................41
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5.18 Reserved..........................................................42
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5.19 Board of Directors of BB&T........................................42
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5.20 Treatment as Reorganization for Tax Purposes......................42
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ARTICLE VI CONDITIONS PRECEDENT.............................................43
6.1 Conditions Precedent - BB&T and One Valley........................43
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6.2 Conditions Precedent - One Valley.................................43
---------------------------------
6.3 Conditions Precedent - BB&T.......................................44
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ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT......................45
7.1 Termination.......................................................45
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7.2 Effect of Termination.............................................46
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7.3 Survival of Representations, Warranties and Covenants.............46
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7.4 Waiver............................................................47
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7.5 Amendment or Supplement...........................................47
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ARTICLE VIII MISCELLANEOUS..................................................47
8.1 Expenses..........................................................47
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8.2 Entire Agreement..................................................47
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8.3 No Assignment.....................................................48
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8.4 Notices...........................................................48
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8.6 Captions..........................................................49
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8.7 Counterparts......................................................49
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8.8 Governing Law.....................................................50
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<PAGE>
ANNEXES
Annex A ......... Articles of Merger
Annex B-1, B-3 and B-4 Employment Agreements with J. Holmes
Morrison, Frederick H. Belden and
Laurance G. Jones
Annex B-2 Reserved
Annex C-1 and C-2 Forms of Employment Agreement with
various officers
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
February 6, 2000 is between ONE VALLEY BANCORP, INC., a West Virginia
corporation having its principal office at One Valley Square, Charleston, West
Virginia ("One Valley"), and BB&T CORPORATION, a North Carolina corporation
having its principal office at Winston-Salem, North Carolina ("BB&T");
R E C I T A L S:
- - - - - - - -
The parties desire that One Valley shall be merged into BB&T (said
transaction being hereinafter referred to as the "Merger") pursuant to a plan of
merger (the "Plan of Merger") substantially in the form attached as Annex A
hereto, and the parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated hereby. The parties intend that the Merger be treated as a
"reorganization" as defined in Section 368 of the Code. As a condition and
inducement to BB&T's willingness to enter into the Agreement, One Valley is
concurrently granting to BB&T an option to acquire, under certain circumstances,
6,700,000 shares of the common stock, par value $10.00 per share, of One Valley.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
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When used herein, the capitalized terms set forth below shall have the
following meanings:
"Advisory Board Establishment Date" shall mean, with respect to each
One Valley Subsidiary that is a bank or savings institution, the date determined
by BB&T to be, with respect to each such One Valley Subsidiary, not later than
January 1 following the close of the calendar year in which it is merged into
BB&T or a BB&T Subsidiary.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such Person and, without limiting
the generality of the foregoing, includes any executive officer or director of
such Person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be
filed with the office of the Secretary of State of North Carolina, as provided
in Section 55-11-05 of
<PAGE>
the NCBCA, and with the office of the Secretary of State of West Virginia, as
provided in Sections 31-1-36 and 31-1-118 of the WVCA.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company
Act of 1956, as amended.
"BB&T Common Stock" shall mean the shares of voting common stock, par
value $5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Option Agreement" shall mean the Stock Option Agreement dated as
of even date herewith, as amended from time to time, under which BB&T has an
option to purchase shares of One Valley Common Stock, which shall be executed
immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Benefit Plan Determination Date" shall mean, with respect to each
employee pension or welfare benefit plan or program maintained by One Valley at
the Effective Time, the date determined by BB&T, with respect to each such plan
or program.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the One Valley Disclosure
Memorandum in a manner that references the Section number herein pursuant to
which such disclosure is being made or so that the Section or Section under
which such disclosure is being made is reasonably apparent.
"Environmental Claim" means any notice from any governmental authority
or third party alleging potential liability (including, without limitation,
potential liability for investigative costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based
2
<PAGE>
upon, or resulting from a violation of the Environmental Laws or the presence or
release into the environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including without limitation CERCLA,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.,
and other laws and regulations relating to emissions, discharges, releases, or
threatened releases of any Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"Financial Advisor" shall mean Merrill Lynch & Co., Inc. or another
investment banking firm of national standing.
"Financial Statements" shall mean: (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1998, 1997, and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1998, 1997, and 1996, as filed by BB&T in Securities Documents, and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1998; and (b) with respect to One Valley, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of One Valley as of December 31, 1998, 1997 and 1996, and the related
consolidated statements of income and retained earnings, and cash flows
(including related notes and schedules, if any) for each of the three years
ended December 31, 1998, 1997 and 1996 as filed by One Valley in Securities
Documents, and (ii) the consolidated statements of financial condition of One
Valley (including related notes and schedules, if any) and the related
consolidated statements of income and retained earnings, and cash
3
<PAGE>
flows (including related notes and schedules, if any) included in Securities
Documents filed by One Valley with respect to periods ended subsequent to
December 31, 1998.
"GAAP" shall mean generally accepted accounting principles applicable
to banks and their holding companies and Subsidiaries, as in effect at the
relevant date.
"Hazardous Substances" means any substance or material (i) identified
in CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or regulation,
including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v)
poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste
which are otherwise dangerous, hazardous, harmful to human health or the
environment.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, as used with respect to a Person, the personal
knowledge, after due inquiry, of the chief executive officer, chief financial
officer, chief operating officer, chief credit officer and general counsel of
such Person.
"Material Adverse Effect" on BB&T or One Valley shall mean an event,
change, or occurrence which, individually or together with one or more other
events, changes or occurrences, (i) has, or is reasonably likely to have, a
material adverse effect on the financial condition, results of operations,
business or stockholders' equity of BB&T and the BB&T Subsidiaries taken as a
whole, or One Valley and the One Valley Subsidiaries taken as a whole, or (ii)
materially impairs the ability of BB&T or One Valley to perform its obligations
under this Agreement or to consummate the Merger and the other transactions
contemplated by this Agreement; provided that "Material Adverse Effect" shall
not be deemed to include any effect of (a) actions and omissions of BB&T or One
Valley taken with the prior written consent of the other in contemplation of the
transactions contemplated hereby, (b) the direct effects of compliance with this
Agreement on the operating performance of the parties, including expenses
incurred by the parties in consummating the transactions contemplated by this
Agreement or relating to any litigation arising as a result of the Merger, or
(c) any change in general economic conditions, including changes in interest
rates, affecting banks and their holding companies generally, except to the
extent that such change affects One Valley or BB&T, as the case may be, in a
manner materially different from the manner in which it affects other banking
organizations or (d) subject to compliance with Section 6.3(e), changes in laws
or accounting requirements affecting banks and their holding companies
generally.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"One Valley Common Stock" shall mean the shares of voting common stock,
par value $10.00 per share, of One Valley with rights attached issued pursuant
to Rights
4
<PAGE>
Agreement dated October 18, 1995 between One Valley and One Valley Bank,
National Association, as Rights Agent.
"One Valley Disclosure Memorandum" shall mean the written information
in one or more documents, each of which (a) is entitled "One Valley Disclosure
Memorandum," (b) is dated and delivered to BB&T on or before the date of this
Agreement and (c) describes in reasonable detail the matters contained therein.
Each disclosure made therein shall be in existence on the date of this Agreement
and shall specifically reference each Section of this Agreement under which such
disclosure is made or be presented in a manner so that the Section or Sections
under which such disclosure is made shall be reasonably apparent. The inclusion
of a given item in the Disclosure Memorandum shall not be deemed a conclusion or
admission that such item (or any other item) is material or has a Material
Adverse Effect.
"One Valley Preferred Stock" shall mean the shares of nonvoting
Preferred Stock, $10.00 par value, of One Valley.
"One Valley Subsidiaries" shall mean One Valley Bank, National Association,
One Valley Bank of Huntington, Inc., One Valley Bank of Mercer County, Inc., One
Valley Bank-East, N.A., One Valley Bank, Inc., One Valley Bank-South, Inc., One
Valley Bank-North, Inc., One Valley Bank-Central Virginia, N.A., One Valley
Bank-Shenandoah, One Valley Square, Inc., Valley Security Insurance Company,
Inc., One Valley Insurance Corporation, Carson Insurance Agency, Inc. and any
and all other Subsidiaries of One Valley as of the date hereof and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of One Valley after the date hereof and held as a Subsidiary by One
Valley at the Effective Time.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or group of entities, or governmental body.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders of
One Valley to solicit their votes in connection with a proposal to approve this
Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T
as declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed with the Commission
under the Securities Act, with respect to the BB&T Common Stock to be issued in
connection with the transactions contemplated by this Agreement.
"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 or other ownership interests (other than
rights pursuant to the Rights Agreements described under the definitions of
"BB&T Common Stock" and "One Valley
5
<PAGE>
Common Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
"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.
"Stock Option" shall mean an option to acquire shares of One Valley
Common Stock granted under any of the Stock Option Plans that is outstanding and
unexercised on the date hereof.
"Stock Option Plans" shall mean One Valley's Amended and Restated 1993
Incentive Stock Option Plan, 1983 Incentive Stock Option Plan, Mountaineer
Bankshares Incentive Stock Option Plan, CSB Financial Corporation 1993 Incentive
Stock Option Plan, CSB Financial Corporation 1993 Stock Option Plan for Outside
Directors, and FFVA Financial Corporation Qualified and Non-Qualified Stock
Option Plans for Directors, Senior Officer and Officers.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (in determining
whether one entity owns or controls 50% or more of the outstanding equity
securities of another, equity securities owned or controlled in a fiduciary
capacity shall be deemed owned and controlled by the beneficial owner).
"Superior Offer" shall mean a proposal or offer to acquire or purchase
all or a substantial portion of the assets of or a substantial equity interest
in, or to effect any recapitalization, liquidation or dissolution involving or a
business combination or other similar transaction with, One Valley or any One
Valley Subsidiary (including, without limitation, a tender offer or exchange
offer to purchase One Valley Common Stock) other than as contemplated by this
Agreement: (i) that did not arise from or involve a breach or violation by One
Valley of Section 5.9(k) or any other provision of this Agreement; (ii) that the
One Valley Board of Directors determines in its good faith judgment, based,
among other things, on advice of the Financial Advisor, to be more favorable to
the One Valley shareholders than the Merger; and (iii) the financing for the
implementation of which, to the extent required, is then committed or in the
good faith reasonable judgment
6
<PAGE>
of the One Valley Board of Directors, based, among other things, on advice of
the Financial Advisor, is capable of being obtained by the party making the
proposal or offer.
"TILA" shall mean the Truth in Lending Act, as amended.
"WVCA" shall mean the West Virginia Corporation Act, as amended.
1.2 Terms Defined Elsewhere
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The capitalized terms set forth below are defined in the
following sections:
Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(b)
Constituent Corporations Section 2.1
Dissenting Shareholder Section 2.10
Dissenting Shares Section 2.10
Effective Time Section 2.3
Employer Entity Section 5.12(a)
Exchange Ratio Section 2.7(a)
Maximum Amount Section 5.13
Merger Recitals
Merger Consideration Section 2.7(a)
One Valley Introduction
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Surviving Corporation Section 2.1(a)
Transferred Employee Section 5.12(a)
ARTICLE II
THE MERGER
2.1 Merger
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BB&T and One Valley are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the WVCA. At the
Effective Time:
(a) One Valley shall be merged into BB&T in accordance with the
applicable provisions of the NCBCA and the WVCA, with BB&T being the surviving
corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
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<PAGE>
(b) The separate existence of One Valley shall cease and the Merger
shall in all respects have the effects provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time
shall become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall become the Bylaws of
the Surviving Corporation.
2.2 Filing; Plan of Merger
----------------------
The Merger shall not become effective unless this Agreement and the
Plan of Merger are duly approved by shareholders holding at least a majority of
the shares of One Valley Common Stock entitled to vote. Upon fulfillment or
waiver of the conditions specified in Article VI and provided that this
Agreement has not been terminated pursuant to Article VII, the Constituent
Corporations will cause the Articles of Merger to be executed and filed with the
Secretary of State of North Carolina and the Secretary of State of West
Virginia, as provided in Section 55-11-05 of the NCBCA and Section 31-1-36 of
the WVCA, respectively.
2.3 Effective Time
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The Merger shall be effective at the day and hour specified in the
Articles of Merger as filed as provided in Section 2.2 (herein sometimes
referred to as the "Effective Time").
2.4 Closing
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The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions to
Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing) or
such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
----------------
From and after the Effective Time, the separate existence of One Valley
shall cease, and the Surviving Corporation shall thereupon and thereafter, to
the extent consistent with its Articles of Incorporation, possess all of the
rights, privileges, immunities and franchises, of a public as well as a private
nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all other choses
in action, and each and every other interest of or belonging to or due to each
of the Constituent Corporations shall be taken and deemed to
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<PAGE>
be transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate or any interest therein vested in either
of the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. The Surviving Corporation shall thenceforth be responsible
for all the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
------------------
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any further deeds (including, without
limitation, any confirmatory deeds required by Section 31-1-37(b) of the WVCA),
assignments or assurances in law or any other actions are necessary, desirable
or proper to vest, perfect or confirm of record or otherwise, in the Surviving
Corporation, the title to any property or rights of the Constituent Corporations
acquired or to be acquired by reason of, or as a result of, the Merger, the
Constituent Corporations agree that such Constituent Corporations and their
proper officers and directors shall and will execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary, desirable
or proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized and directed in the name of the Constituent Corporations or
otherwise to take any and all such actions.
2.7 Merger Consideration
--------------------
(a) As used herein, the term "Merger Consideration" shall mean the
number of shares of BB&T Common Stock (to the nearest ten thousandth of a share)
to be exchanged for each share of One Valley Common Stock issued and outstanding
as of the Effective Time and cash (without interest) to be payable in exchange
for any fractional share of BB&T Common Stock that would otherwise be
distributable to a One Valley shareholder as provided in Section 2.7(b). The
number of shares of BB&T Common Stock to be issued for each issued and
outstanding share of One Valley Common Stock (the "Exchange Ratio") shall be
1.28.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the closing price per share of BB&T Common Stock on the NYSE at 4:00
p.m. eastern time on the Closing Date as reported on NYSEnet.com (or, if not
reported thereon, another authoritative source) (the "Closing Value").
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2.8 Conversion of Shares; Payment of Merger Consideration
-----------------------------------------------------
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of One Valley or the holders of record of One Valley Common
Stock, each share of One Valley Common Stock issued and outstanding immediately
prior to the Effective Time shall be converted into and shall represent the
right to receive, upon surrender of the certificate representing such share of
One Valley Common Stock (as provided in subsection (d) below), the Merger
Consideration.
(b) Each share of BB&T Common Stock issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of One Valley Common Stock shall
be deemed upon the Effective Time for all purposes to represent only the right
to receive the Merger Consideration and any declared and unpaid dividends
thereon. No interest will be paid or accrued on the Merger Consideration upon
the surrender of the certificate or certificates representing shares of One
Valley Common Stock. With respect to any certificate for One Valley Common Stock
that has been lost or destroyed, BB&T shall pay the Merger Consideration
attributable to such certificate upon receipt of a surety bond or other adequate
indemnity as required in accordance with BB&T's standard policy, and evidence
reasonably satisfactory to BB&T of ownership of the shares represented thereby.
After the Effective Time, One Valley's transfer books shall be closed and no
transfer of the shares of One Valley Common Stock outstanding immediately prior
to the Effective Time shall be made on the stock transfer books of the Surviving
Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered
or mailed to each One Valley shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of One Valley
Common Stock. Upon proper surrender of such certificates or other evidence of
ownership meeting the requirements of Section 2.8(c), together with such letter
of transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, BB&T shall
promptly cause the transfer to the persons entitled thereto of the Merger
Consideration and any declared and unpaid dividends thereon.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by One Valley in respect of shares of One Valley Common Stock
in accordance with the terms of this Agreement and which remain unpaid at the
Effective Time, subject to compliance by One Valley with Section 5.9(b). To the
extent permitted by law, former shareholders of record of One Valley shall be
entitled to vote after the Effective Time at any meeting of BB&T shareholders
the number of whole shares of BB&T Common Stock into which their respective
shares of One Valley Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing One Valley Common
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Stock for certificates representing BB&T Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by BB&T on the BB&T Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of BB&T Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of BB&T Common Stock as of any time subsequent to the thirtieth day after
the Effective Time shall be delivered to the holder of any certificate
representing One Valley Common Stock until such holder surrenders such
certificate for exchange as provided in this Section 2.8. Upon surrender of such
certificate, both the BB&T Common Stock certificate and any undelivered
dividends and cash payments payable hereunder (without interest) shall be
delivered and paid with respect to the shares of One Valley Common Stock
represented by such certificate.
2.9 Conversion of Stock Options
---------------------------
(a) At the Effective Time, each Stock Option then outstanding (and
which by its terms does not lapse on or before the Effective Time), whether or
not then exercisable, shall be converted into and become rights with respect to
BB&T Common Stock, and BB&T shall assume each Stock Option in accordance with
the terms of the Stock Option Plans, except that from and after the Effective
Time: (i) BB&T and its Compensation Committee shall be substituted for One
Valley and the Compensation Committee of One Valley's Board of Directors
administering the Stock Option Plans; (ii) each Stock Option assumed by BB&T may
be exercised solely for shares of BB&T Common Stock; (iii) the number of shares
of BB&T Common Stock subject to each such Stock Option shall be the number of
whole shares of BB&T (omitting any fractional share) determined by multiplying
the number of shares of One Valley Common Stock subject to such Stock Option
immediately prior to the Effective Time by the Exchange Ratio; and (iv) the per
share exercise price under each such Stock Option shall be adjusted by dividing
the per share exercise price under each such Stock Option by the Exchange Ratio
and rounding up to the nearest cent. Notwithstanding the foregoing, BB&T may at
its election substitute as of the Effective Time options under the BB&T
Corporation 1995 Omnibus Stock Incentive Plan or any other duly adopted
comparable plan (in either case, the "BB&T Option Plan") for all or a part of
the Stock Options, subject to the following conditions: (A) the requirements of
(iii) and (iv) above shall be met; (B) such substitution shall not constitute a
modification, extension or renewal of any of the Stock Options which are
incentive stock options; and (C) the substituted options shall continue in
effect on the same terms and conditions as provided in the Stock Options and the
Stock Option Plans under which they were granted. Each grant of a converted or
substitute option to any individual who subsequent to the Merger will be a
director or officer of BB&T as construed under Commission Rule 16b-3 shall, as a
condition to such conversion or substitution, be approved in accordance with the
provisions of Rule 16b-3. Each Stock Option which is an incentive stock option
shall be adjusted as required by Section 424 of the Code, and the Regulations
promulgated thereunder, so as to continue as an incentive stock option under
Section 424(a) of the Code, and so as not to constitute a modification,
extension, or renewal of the option within the meaning of Section 424(h) of the
Code. BB&T and One Valley agree to take all necessary steps to effectuate the
foregoing
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provisions of this Section 2.9. BB&T has reserved and shall continue to reserve
adequate shares of BB&T Common Stock for delivery upon exercise of any converted
or substitute options. As soon as practicable after the Effective Time, if it
has not already done so, and to the extent One Valley shall have a registration
statement in effect or an obligation to file a registration statement, BB&T
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of
BB&T Common Stock subject to converted or substitute options and shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such converted or substitute options remain
outstanding. With respect to those individuals, if any, who subsequent to the
Merger may be subject to the reporting requirements under Section 16(a) of the
Exchange Act, BB&T shall administer the Stock Option Plans assumed pursuant to
this Section 2.9 (or the BB&T Option Plan, if applicable) in a manner that
complies with Rule 16b-3 promulgated under the Exchange Act to the extent
necessary to preserve for such individuals the benefits of Rule 16b-3 to the
extent such benefits were available to them prior to the Effective Time. One
Valley hereby represents that the Stock Option Plans in their current forms
comply with Rule 16b-3 to the extent, if any, required as of the date hereof.
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
(c) Eligibility to receive grants of options to purchase BB&T Common
Stock following the Effective Time shall be determined by BB&T in accordance
with its plans and procedures as in effect from time to time, subject to any
contractual obligations.
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2.10 Dissenting Shares
-----------------
Any holder of shares of One Valley Common Stock who shall have properly
exercised rights to dissent with respect to the Merger and to demand payment of
the "fair value" of the shareholder's shares (the "Dissenting Shares") in
accordance with the WVCA (the "Dissenting Shareholder") shall thereafter have
only such rights, if any, as are provided a dissenting shareholder under the
WVCA and shall have no rights to receive the Merger Consideration under Sections
2.7 and 2.8 (provided, that nothing contained herein shall limit such Dissenting
Shareholder's rights to the payment of all accrued and unpaid dividends);
provided, however, that if a Dissenting Shareholder shall withdraw (in
accordance with the WVCA) the demand for such appraisal or shall become
ineligible for such appraisal, then such Dissenting Shareholder's Dissenting
Shares automatically shall cease to be Dissenting Shares and shall be converted
into and represent only the right to receive from the Surviving Corporation,
upon surrender of the certificates representing the Dissenting Shares, the
Merger Consideration provided for in Section 2.7 and accrued and unpaid
dividends as provided in Section 2.8(c) and Section 2.8(e).
2.11 Merger of Subsidiaries
----------------------
In the event that BB&T shall request, One Valley shall take such
actions, and shall cause the One Valley Subsidiaries to take such actions, as
may reasonably be required in order to effect, at the Effective Time, the merger
of one or more of the One Valley Subsidiaries into, in each case, one of the
BB&T Subsidiaries.
2.12 Anti-Dilution
-------------
In the event BB&T changes the number of shares of BB&T Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case of
a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ONE VALLEY
Except as Disclosed, One Valley represents and warrants to BB&T as
follows (the representations and warranties herein of One Valley are made as of
the date hereof and, as contemplated by Section 6.3(a), will also be evaluated
as of the Closing Date subject to the applicable standard set forth in Section
6.3(a), and no such representation or warranty shall be deemed to be inaccurate
unless the inaccuracy would permit BB&T not to consummate the Merger under such
applicable standard):
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3.1 Capital Structure
-----------------
The authorized capital stock of One Valley consists of 70,000,000
shares of One Valley Common Stock and 1,000,000 shares of One Valley Preferred
Stock. As of the date of this Agreement, One Valley has 33,698,223 shares of One
Valley Common Stock issued and outstanding and no shares of One Valley Preferred
Stock issued and outstanding. No other classes of capital stock of One Valley,
common or preferred, are authorized, issued or outstanding. All outstanding
shares of One Valley capital stock have been duly authorized and are validly
issued, fully paid and nonassessable. No shares of capital stock have been
reserved for any purpose, except for (i) shares of One Valley Common Stock
reserved in connection with the Stock Option Plans, and (ii) 6,700,000 shares of
One Valley Common Stock reserved in connection with the BB&T Option Agreement.
As of the date of this Agreement, One Valley has granted options to acquire
1,020,988.77 shares of One Valley Common Stock under the Stock Option Plans or
outstanding agreements and awards, which options remain outstanding as of the
date hereof. Except as set forth in this Section 3.1, there are no Rights
authorized, issued or outstanding with respect to, nor are there any agreements,
understandings or commitments relating to the right of any One Valley
shareholder to own, to vote or to dispose of, the capital stock of One Valley,
except as set forth in the rights described in the definition of One Valley
Common Stock. Holders of One Valley Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
------------------------------------
One Valley is a corporation duly organized, validly existing and in
good standing under the laws of the State of West Virginia, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its properties and assets. One Valley is not required to be
qualified to do business in any other state of the United States or foreign
jurisdiction.
3.3 Ownership of Subsidiaries
-------------------------
Section 3.3 of the One Valley Disclosure Memorandum lists all of the
One Valley Subsidiaries and One Valley's ownership percentage in, and the
business activities of, each such One Valley Subsidiary. The outstanding shares
of capital stock or other equity interests of the One Valley Subsidiaries are
validly issued and outstanding, fully paid and nonassessable (subject to 12 USC
ss.55 and similar state statutes), and all such shares are directly or
indirectly owned by One Valley free and clear of all liens, claims and
encumbrances or preemptive rights of any person. No Rights are authorized,
issued or outstanding with respect to the capital stock or other equity
interests of the One Valley Subsidiaries, and there are no agreements,
understandings or commitments relating to the right of One Valley to own, to
vote or to dispose of said interests. None of the shares of capital stock or
other equity interests of the One Valley Subsidiaries has been issued in
violation of the preemptive rights of any person. Section 3.3 of the One Valley
Disclosure Memorandum also lists all shares of capital stock or other securities
or ownership interests of any corporation, partnership, joint venture, or other
organization
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(other than the One Valley Subsidiaries and stock or other securities held in a
fiduciary capacity) owned directly or indirectly by One Valley.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each One Valley Subsidiary that is a depository institution is a
federally chartered or West Virginia or Virginia chartered bank with its
deposits insured by the FDIC. Each of the One Valley Subsidiaries is validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the One Valley Subsidiaries has full power and authority
to carry on its business as now conducted, and is duly qualified to do business
and in good standing in each jurisdiction Disclosed with respect to it. Each One
Valley Subsidiary is qualified to do business in each other state of the United
States or foreign jurisdiction where required to conduct its business and is not
engaged in any type of activities that have not been Disclosed.
3.5 Authorized and Effective Agreement
----------------------------------
(a) One Valley has all requisite corporate power and authority to enter
into and (subject to receipt of all necessary governmental approvals and the
receipt of approval of the One Valley shareholders of this Agreement and the
Plan of Merger) to perform all of its obligations under this Agreement, the
Articles of Merger and the BB&T Option Agreement. The execution and delivery of
this Agreement and the Articles of Merger, and consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action, except, in the case of this Agreement and the Plan
of Merger, the approval of the One Valley shareholders pursuant to and to the
extent required by applicable law. This Agreement and the Plan of Merger
constitute legal, valid and binding obligations of One Valley, and each is
enforceable against One Valley in accordance with its terms, in each such case
subject to (i) bankruptcy, fraudulent transfer, insolvency, moratorium,
reorganization, conservatorship, receivership, or other similar laws from time
to time in effect relating to or affecting the enforcement of the rights of
creditors of FDIC-insured institutions or the enforcement of creditors' rights
generally; and (ii) general principles of equity (whether applied in a court of
law or in equity).
(b) Neither the execution and delivery of this Agreement, the Articles
of Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated by this Agreement or the Articles of Merger, nor compliance by One
Valley 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 One Valley or any One Valley 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 One Valley or any One Valley Subsidiary pursuant to, any
note, bond, mortgage, indenture, license, permit, contract, agreement or other
instrument or obligation, or (iii) subject to receipt of all required
governmental
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approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to One Valley or any One Valley Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
One Valley of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Documents; Financial Statements; Statements True
-----------------------------------------------------------
(a) One Valley has timely filed all Securities Documents required by
the Securities Laws to be filed since December 31, 1996. One Valley has
Disclosed or made available to BB&T a true and complete copy of each Securities
Document filed by One Valley with the Commission after December 31, 1996 and
prior to the date hereof, which are all of the Securities Documents that One
Valley was required to file during such period. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect and did 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 therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of One Valley fairly present or will
fairly present, as the case may be, the consolidated financial position of One
Valley and the One Valley Subsidiaries as of the dates indicated and the
consolidated statements of income and retained earnings, changes in
shareholders' equity and statements of cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end audit adjustments that are not material in amount or
effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or
to be furnished hereunder by One Valley or any One Valley Subsidiary to BB&T
contains or will contain any untrue or misleading statement of a material fact.
3.7 Minute Books
------------
The minute books of One Valley and each of the One Valley Subsidiaries
contain or will contain at Closing accurate records of all meetings and other
corporate actions of their respective shareholders and Boards of Directors
(including committees of the Board of Directors), and the signatures contained
therein are the true signatures of the persons whose signatures they purport to
be.
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3.8 Adverse Change
--------------
Since September 30, 1999, One Valley and the One Valley Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent, except
as disclosed in the most recent One Valley Financial Statements, or entered into
any transactions with Affiliates, in each case other than in the ordinary course
of business consistent with past practices, nor has there been any adverse
change or any event involving a prospective adverse change in the business,
financial condition, results of operations or stockholders' equity of One Valley
or any of the One Valley Subsidiaries.
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of One Valley and
the One Valley Subsidiaries are disclosed in the most recent Financial
Statements of One Valley or are normally recurring business obligations incurred
in the ordinary course of its business since the date of One Valley's most
recent Financial Statements.
3.10 Properties
----------
(a) One Valley and the One Valley Subsidiaries have good and marketable
title, free and clear of all liens, encumbrances, charges, defaults or equitable
interests, to all of the properties and assets, real and personal, tangible and
intangible, reflected on the consolidated balance sheet included in the
Financial Statements of One Valley as of December 31, 1998 or acquired after
such date, except for (i) liens for current taxes not yet due and payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
banking business, (iii) such imperfections of title, easements and encumbrances,
if any, as are not material in character, amount or extent, or (iv) dispositions
and encumbrances for adequate consideration in the ordinary course of business.
(b) All leases and licenses pursuant to which One Valley or any One
Valley Subsidiary, as lessee or licensee, leases or licenses rights to real or
personal property are valid and enforceable in accordance with their respective
terms.
3.11 Environmental Matters
---------------------
(a) One Valley and the One Valley Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither One Valley nor any
One Valley Subsidiary has received any communication alleging that One Valley or
the One Valley Subsidiary is not in such compliance, and there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) There are no pending Environmental Claims, neither One Valley nor
any One Valley Subsidiary has received notice of any pending Environmental
Claims, and there are no conditions or facts existing which might reasonably be
expected to result in
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legal, administrative, arbitration or other proceedings asserting Environmental
Claims or other claims, causes of action or governmental investigations of any
nature seeking to impose, or that could result in the imposition of, any
liability arising under any Environmental Laws upon (i) One Valley or any One
Valley Subsidiary, (ii) any person or entity whose liability for any
Environmental Claim One Valley or any One Valley Subsidiary has or may have
retained or assumed, either contractually or by operation of law, (iii) any real
or personal property owned or leased by One Valley or any One Valley Subsidiary,
or any real or personal property which One Valley or any One Valley Subsidiary
has or is judged to have managed or supervised or participated in the management
of, or (iv) any real or personal property in which One Valley or any One Valley
Subsidiary holds a security interest securing a loan recorded on the books of
One Valley or any One Valley Subsidiary. Neither One Valley nor any One Valley
Subsidiary is subject to any agreement, order, judgment, decree or memorandum by
or with any court, governmental authority, regulatory agency or third party
imposing any liability under any Environmental Laws.
(c) One Valley and the One Valley Subsidiaries are in compliance with
all recommendations contained in any environmental audits, analyses and surveys
received by One Valley relating to all real and personal property owned or
leased by One Valley or any One Valley Subsidiary and all real and personal
property of which One Valley or any One Valley Subsidiary has or is judged to
have managed or supervised or participated in the management of.
(d) There are no past or present actions, activities, events or
incidents or, to the Knowledge of One Valley, circumstances or conditions 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, against One Valley or any One
Valley Subsidiary or against any person or entity whose liability for any
Environmental Claim One Valley or any One Valley Subsidiary has or may have
retained or assumed, either contractually or by operation of law.
3.12 Loans; Allowance for Loan Losses
--------------------------------
(a) All of the loans on the books of One Valley and the One Valley
Subsidiaries are valid and properly documented and were made in the ordinary
course of business, and the security therefor, if any, is valid and properly
perfected. Neither the terms of such loans, nor any of the loan documentation,
nor the manner in which such loans have been administered and serviced, nor One
Valley's procedures and practices of approving or rejecting loan applications,
violates any federal, state or local law, rule, regulation or ordinance
applicable thereto, including, without limitation, the TILA, Regulations O and Z
of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as
amended, and state laws, rules and regulations relating to consumer protection,
installment sales and usury.
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(b) The allowances for loan losses reflected on the consolidated
balance sheets included in the Financial Statements of One Valley are, in the
reasonable judgment of One Valley management, adequate as of their respective
dates under the requirements of GAAP and applicable regulatory requirements and
guidelines.
3.13 Tax Matters
-----------
(a) One Valley and the One Valley Subsidiaries and each of their
predecessors have timely filed (or requests for extensions have been timely
filed and any such extensions either are pending or have been granted and have
not expired) all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns, and
withholding and employment tax returns) and have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither One Valley nor any One Valley Subsidiary has or will
have any liability for any such taxes in excess of the amounts so paid or
reserves or accruals so established. One Valley and the One Valley Subsidiaries
have paid, or where payment is not required to have been made have set up an
adequate reserve or accrual for payment of, all taxes required to be paid or
accrued for the preceding or current fiscal year for which a return is not yet
due.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by One Valley and the One Valley Subsidiaries are complete and
accurate. Neither One Valley nor any One Valley Subsidiary is delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
tax, assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against One Valley or any One Valley Subsidiary which
have not been settled and paid. There are currently no agreements in effect with
respect to One Valley or any One Valley Subsidiary to extend the period of
limitations for the assessment or collection of any tax. No audit examination or
deficiency or refund litigation with respect to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither One Valley nor any of the One Valley Subsidiaries is a
party to any tax allocation or sharing agreement or has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was One Valley or a One Valley subsidiary) or
has any liability for taxes of any person (other than One Valley and the One
Valley Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor or by
contract or otherwise.
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(e) Each of One Valley and the One Valley Subsidiaries is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and tax withholding requirements under federal, state, and local tax
laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Code.
(f) Neither One Valley nor any of the One Valley Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any contract
that could obligate it to make any payments that would be disallowed as a
deduction under Section 280G or 162(m) of the Code.
3.14 Employees; Compensation; Benefit Plans
--------------------------------------
(a) Compensation. One Valley has Disclosed a complete and correct list
of the name, age, position, rate of compensation and any incentive compensation
arrangements, bonuses or commissions or fringe or other benefits, whether
payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of One Valley and of each One Valley Subsidiary
and each other person (in each case other than as an employee) to whom One
Valley or any One Valley Subsidiary pays or provides, or has an obligation,
agreement (written or unwritten), policy or practice of paying or providing,
retirement, health, welfare or other benefits of any kind or description
whatsoever.
(b) Employee Benefit Plans.
----------------------
(i) One Valley has Disclosed an accurate and complete list of
all Plans, as defined below, contributed to, maintained or sponsored by
One Valley or any One Valley Subsidiary, to which One Valley or any One
Valley Subsidiary is obligated to contribute or has any liability or
potential liability, whether direct or indirect, including all Plans
contributed to, maintained or sponsored by each member of the
controlled group of corporations, within the meaning of Sections
414(b), 414(c), 414(m) and 414(o) of the Code, of which One Valley or
any One Valley Subsidiary is a member. For purposes of this Agreement,
the term "Plan" shall mean a plan, arrangement, agreement or program
described in the foregoing provisions of this Section 3.14(b)(i) and
which is: (A) a profit-sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consulting, retirement,
severance, welfare or incentive plan, agreement or arrangement, whether
or not funded and whether or not terminated; (B) an employment
agreement; (C) a personnel policy or fringe benefit plan, policy,
program or arrangement providing for benefits or perquisites to current
or former employees, officers, directors or agents, whether or not
funded, and whether or not terminated, including, without limitation,
benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical, sick leave, severance, medical, dental,
hospitalization, life insurance and other types of insurance; or (D)
any other
20
<PAGE>
employee benefit plan as defined in Section 3(3) of ERISA, whether or
not funded and whether or not terminated.
(ii) Neither One Valley nor any One Valley Subsidiary
contributes to, has an obligation to contribute to or otherwise has any
liability or potential liability with respect to (A) any multiemployer
plan as defined in Section 3(37) of ERISA, (B) any plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the
Code (and regulations promulgated thereunder), or (C) any plan which
provides health, life insurance, accident or other "welfare-type"
benefits to current or future retirees or former employees or
directors, their spouses or dependents, other than in accordance with
Section 4980B of the Code or applicable state continuation coverage
law.
(iii) None of the Plans obligates One Valley or any One Valley
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term
is used in Section 280G of the Code (and regulations promulgated
thereunder).
(iv) Each Plan, and all related trusts, insurance contracts
and funds, has been maintained, funded and administered in compliance
in all respects with its own terms and in compliance in all respects
with all applicable laws and regulations, including but not limited to
ERISA and the Code. No actions, suits, claims, complaints, charges,
proceedings, hearings, examinations, investigations, audits or demands
with respect to the Plans (other than routine claims for benefits) are
pending or threatened, and there are no facts which could give rise to
or be expected to give rise to any actions, suits, claims, complaints,
charges, proceedings, hearings, examinations, investigations, audits or
demands. No Plan that is subject to the funding requirements of Section
412 of the Code or Section 302 of ERISA has incurred any "accumulated
funding deficiency" as such term is defined in such Sections of ERISA
and the Code, whether or not waived, and each Plan has always fully met
the funding standards required under Title I of ERISA and Section 412
of the Code. No liability to the Pension Benefit Guaranty Corporation
("PBGC") (except for routine payment of premiums) has been or is
expected to be incurred with respect to any Plan that is subject to
Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) for which the PBGC has not waived notice has
occurred with respect to any such Plan, and the PBGC has not commenced
or threatened the termination of any Plan. None of the assets of One
Valley or any One Valley Subsidiary is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code, neither
One Valley nor any One Valley Subsidiary has been required to post any
security pursuant to Section 307 of ERISA or Section 401(a)(29) of the
Code, and there are no facts which could be expected to give rise to
such lien or such posting of security. No event has occurred and no
condition exists that would subject One Valley or any One Valley
Subsidiary to any tax under Sections
21
<PAGE>
4971, 4972, 4976, 4977 or 4979 of the Code or to a fine or penalty
under Section 502(c) of ERISA.
(v) Each Plan that is intended to be qualified under Section
401(a) of the Code, and each trust (if any) forming a part thereof, has
received a favorable determination letter from the IRS as to the
qualification under the Code of such Plan and the tax exempt status of
such related trust, and nothing has occurred since the date of such
determination letter that could adversely affect the qualification of
such Plan or the tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term is
defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
corporations (within the meaning of Sections 414(b), (c), (m) and (o)
of the Code) of which One Valley or any One Valley Subsidiary is a
member or was a member during such five-year period.
(vii) As of December 31, 1999, the fair market value of the
assets of each Plan that is a tax qualified defined benefit plan
equaled or exceeded, and as of the Closing Date will equal or exceed,
the present value of all vested and nonvested liabilities thereunder
determined in accordance with reasonable actuarial methods, factors and
assumptions applicable to a defined benefit plan on an ongoing basis.
With respect to each Plan that is subject to the funding requirements
of Section 412 of the Code and Section 302 of ERISA, all required
contributions for all periods ending prior to or as of the Closing Date
(including periods from the first day of the then-current plan year to
the Closing Date and including all quarterly contributions required in
accordance with Section 412(m) of the Code) shall have been made. With
respect to each other Plan, all required payments, premiums,
contributions, reimbursements or accruals for all periods ending prior
to or as of the Closing Date shall have been made. No tax qualified
Plan has any unfunded liabilities.
(viii) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under
Section 408 of ERISA or Section 4975 of the Code, whether by statutory,
class or individual exemption) has occurred with respect to any Plan
which would result in the imposition, directly or indirectly, of any
excise tax, penalty or other liability under Section 4975 of the Code
or Section 409 or 502(i) of ERISA. Neither One Valley nor, to the
Knowledge of One Valley, any One Valley Subsidiary, any trustee,
administrator or other fiduciary of any Plan, or any agent of any of
the foregoing has engaged in any transaction or acted or failed to act
in a manner that could subject One Valley or any One Valley Subsidiary
to any liability for breach of fiduciary duty under ERISA or any other
applicable law.
(ix) With respect to each Plan, all reports and information
required to be filed with any government agency or distributed to Plan
participants and their beneficiaries have been duly and timely filed or
distributed.
22
<PAGE>
(x) One Valley and each One Valley Subsidiary has been and is
presently in compliance with all of the requirements of Section 4980B
of the Code.
(xi) Neither One Valley nor any One Valley Subsidiary has a
liability as of December 31, 1998 under any Plan that, to the extent
disclosure is required under GAAP, is not reflected on the consolidated
balance sheet included in the Financial Statements of One Valley as of
December 31, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) One
Valley's or any One Valley Subsidiary's obligation to make
contributions or any other payments to fund benefits accrued under the
Plans as of the date of this Agreement or (B) the benefits accrued or
payable with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting,
accelerated allocation of previously unallocated Plan assets or by the
conversion of all stock options in accordance with Section 2.9).
(xiii) With respect to each Plan, One Valley has Disclosed or
made available to BB&T, true, complete and correct copies of (A) all
documents pursuant to which the Plans are maintained, funded and
administered, including summary plan descriptions, (B) the three most
recent annual reports (Form 5500 series) filed with the IRS (with
attachments), (C) the three most recent actuarial reports, if any, (D)
the three most recent financial statements, (E) all governmental
filings for the last three years, including, without limitation, excise
tax returns and reportable events filings, and (F) all governmental
rulings, determinations, and opinions (and pending requests for
governmental rulings, determinations, and opinions) during the past
three years.
(xiv) Each of the Plans as applied to One Valley and any One
Valley Subsidiary may be amended or terminated at any time by action of
One Valley's Board of Directors, or such One Valley's Subsidiary's
Board of Directors, as the case may be, or a committee of such Board of
Directors or duly authorized officer, in each case subject to the terms
of the Plan and compliance with applicable laws and regulations (and
limited, in the case of multiemployer plans, to termination of the
participation of One Valley or a One Valley Subsidiary thereunder).
3.15 Certain Contracts
-----------------
(a) Neither One Valley nor any One Valley Subsidiary is a party to, is
bound or affected by, or receives benefits under (i) any agreement, arrangement
or commitment, written or oral, that would be required to be disclosed pursuant
to Item 601(b)(4) (without regard to clause (ii) thereof) or Item 601(b)(10)
(disregarding the exception therein for
23
<PAGE>
contracts entered into in the ordinary course of business) of Regulation S-K
(other than loans or loan commitments made or certificates or deposits received
in the ordinary course of the banking business), or any agreement restricting
its ability to engage in any line of business, including, without limitation,
agreements or memoranda of understanding with regulatory authorities, (ii) any
agreement, indenture or other instrument, written or oral, relating to the
borrowing of money by One Valley or any One Valley Subsidiary or the guarantee
by One Valley or any One Valley Subsidiary of any such obligation, which cannot
be terminated within less than 60 days after the Closing Date by One Valley or
any One Valley Subsidiary (without payment of any material penalty or cost,
except with respect to Federal Home Loan Bank or Federal Reserve Bank advances),
(iii) any agreement, arrangement or commitment, written or oral, relating to the
employment of a consultant, independent contractor or agent, or the employment,
election or retention in office of any present or former director or officer,
which cannot be terminated within less than 60 days after the Closing Date by
One Valley or any One Valley Subsidiary (without payment of any material penalty
or cost), or that provides benefits which are contingent, or the application of
which is altered, upon the occurrence of a transaction involving One Valley of
the nature contemplated by this Agreement or the BB&T Option Agreement, or (iv)
any agreement or plan, written or oral, including any Stock Option Plans, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the BB&T Option Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement or the BB&T Option Agreement. Each matter
Disclosed pursuant to this Section 3.15(a) is in full force and effect as of the
date hereof.
(b) Neither One Valley nor any One Valley Subsidiary is in default
under any agreement, commitment, arrangement, lease, insurance policy, or other
instrument Disclosed or that should be Disclosed in Section 3.15(a) of the One
Valley Disclosure Memorandum, 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.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the Knowledge of One Valley, threatened
against One Valley, any One Valley Subsidiary or any asset, interest, Plan or
right of One Valley or any One Valley Subsidiary, or, to the Knowledge of One
Valley, against any officer, director or employee of any of them in their
capacity as such. There are no actions, suits or proceedings instituted, pending
or, to the Knowledge of One Valley, threatened against any present or former
director or officer of One Valley or any One Valley Subsidiary that could
reasonably be expected to give rise to a claim against One Valley or any One
Valley Subsidiary for indemnification. There are no actual or, to the Knowledge
of One Valley, threatened actions, suits or proceedings which present, or could
reasonably be expected to present, a claim to restrain or prohibit the
transactions contemplated herein or
24
<PAGE>
in the BB&T Option Agreement. To the Knowledge of One Valley, no fact or
condition relating to One Valley or any One Valley Subsidiary exists (including,
without limitation, noncompliance with the CRA) that would prevent One Valley or
BB&T from obtaining all of the federal and state regulatory approvals
contemplated herein.
3.17 Compliance with Laws; Filings
-----------------------------
Each of One Valley and each One Valley Subsidiary is in compliance with
all statutes and regulations (including, but not limited to, the CRA, the TILA
and regulations promulgated thereunder, and other consumer banking laws), and
has obtained and maintained all permits, licenses and registrations applicable
to the conduct of its business, and neither One Valley nor any One Valley
Subsidiary has received written or, to One Valley's Knowledge, oral notification
that has not lapsed, been withdrawn or abandoned by any agency or department of
federal, state or local government (i) asserting a violation or possible
violation of any such statute or regulation, (ii) threatening to revoke any
permit, license, registration, or other government authorization, or (iii)
restricting or in any way limiting its operations. Neither One Valley nor any
One Valley Subsidiary is subject to any regulatory or supervisory cease and
desist order, agreement, directive, memorandum of understanding or commitment,
and none of them has received any written or, to One Valley's Knowledge, oral
communication requesting that it enter into any of the foregoing. Since December
31, 1996, each of One Valley and each One Valley Subsidiary has filed all
reports, registrations, notices and statements, and any amendments thereto, that
it was required to file with federal and state regulatory authorities,
including, without limitation, the Commission, FDIC, Federal Reserve Board and
applicable state regulators. Each such report, registration, notice and
statement, and each amendment thereto, complied with applicable legal
requirements.
3.18 Brokers and Finders
-------------------
Neither One Valley nor any One Valley 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, in the Plan of Merger or
in the BB&T Option Agreement, except for an obligation to the Financial Advisor
for investment banking services, the nature and extent of which has been
Disclosed, and except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
----------------------------------
(a) With respect to all agreements currently outstanding pursuant to
which One Valley or any One Valley Subsidiary has purchased securities subject
to an agreement to resell, One Valley or the One Valley Subsidiary has a valid,
perfected first lien or security interest in the securities or other collateral
securing such agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby. With respect to all agreements currently
outstanding pursuant to which One Valley or any One Valley Subsidiary has sold
securities subject to an agreement to repurchase, neither One Valley nor the One
Valley Subsidiary has pledged collateral in excess of the amount
25
<PAGE>
of the debt secured thereby. Neither One Valley nor any One Valley Subsidiary
has pledged collateral in excess of the amount required under any interest rate
swap or other similar agreement currently outstanding.
(b) Neither One Valley nor any One Valley Subsidiary is a party to or
has agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor, or collar financial contract, or any other interest
rate or foreign currency protection contract not included on its balance sheets
in the Financial Statements, which is a financial derivative contract (including
various combinations thereof), except for options and forwards entered into in
the ordinary course of its mortgage lending business consistent with past
practice and current policy.
3.20 Deposit Accounts
----------------
The deposit accounts of the One Valley Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by federal
law, and the One Valley Subsidiaries have paid all premiums and assessments and
filed all reports required to have been paid or filed under all rules and
regulations applicable to the FDIC.
3.21 Related Party Transactions
--------------------------
All existing transactions, investments and loans, including loan
guarantees existing as of the date hereof to which One Valley or any One Valley
Subsidiary is a party with any director, executive officer or 5% shareholder of
One Valley or any person, corporation, or enterprise controlling, controlled by
or under common control with any of the foregoing are on terms no less favorable
to One Valley than could be obtained from unrelated parties; and no such
transaction, investment or loan, if lost, discontinued or defaulted, would or
could be reasonably expected to have a Material Adverse Effect on the business
of One Valley.
3.22 Certain Information
-------------------
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of One Valley to vote on this Agreement and the Plan of
Merger, information supplied by One Valley for inclusion in the Proxy
Statement/Prospectus and all amendments or supplements thereto 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, in light of the circumstances in which they were made, not misleading.
3.23 Accounting; Tax and Regulatory Matters
--------------------------------------
Neither One Valley nor any One Valley Subsidiary has taken or agreed to
take any action that would or could reasonably be expected to (i) cause the
Merger not to be accounted for as a pooling of interests or not to constitute a
reorganization under Section
26
<PAGE>
368 of the Code or (ii) impede or delay receipt of any consents of regulatory
authorities referred to in Section 5.4(b) or result in failure of the condition
in Section 6.3(b).
3.24 State Takeover Laws; No Supermajority Vote Required; Rights Plan
----------------------------------------------------------------
One Valley and each One Valley Subsidiary have taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable moratorium, fair price, business combination, control share or other
anti-takeover laws, and no such law shall be activated or applied as a result of
such transactions. The provisions of Article VI.1 of One Valley's Articles of
Incorporation are not applicable to the Merger or the other transactions
contemplated in this Agreement, and neither the Articles of Incorporation nor
the Bylaws of One Valley contain a provision that requires more than a majority
of the shares of One Valley Common Stock entitled to vote to approve the Merger
or any of the other transactions contemplated in this Agreement. The rights
attached to shares of One Valley Common Stock described in the definition of One
Valley Common Stock are not and will not become exercisable by holders thereof
as a result of execution of this Agreement or consummation of the transactions
contemplated herein.
3.25 Labor Relations
---------------
Neither One Valley nor any One Valley Subsidiary is the subject of any
claim or allegation that it has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state law) or seeking
to compel it to bargain with any labor organization as to wages or conditions of
employment, nor is One Valley or any One Valley Subsidiary party to any
collective bargaining agreement. There is no strike or other labor dispute
involving One Valley or any One Valley Subsidiary, pending or threatened, or to
the Knowledge of One Valley, is there any activity involving any employees of
One Valley or any One Valley Subsidiary seeking to certify a collective
bargaining unit or engaging in any other organization activity.
3.26 Fairness Opinion
----------------
One Valley has received from the Financial Advisor an opinion that, as
of the date hereof, the Merger Consideration is fair to the shareholders of One
Valley from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to One Valley as follows (the
representations and warranties herein of BB&T are made as of the date hereof
and, as contemplated by Section 6.2(a), will also be evaluated as of the Closing
Date subject to the applicable standard set forth in Section 6.2(a), and no such
representation or warranty shall be
27
<PAGE>
deemed to be inaccurate unless the inaccuracy would permit One Valley not to
consummate the Merger under such applicable standard):
4.1 Capital Structure of BB&T
-------------------------
The authorized capital stock of BB&T consists of (i) 5,000,000 shares
of preferred stock, par value $5.00 per share, of which 2,000,000 shares have
been designated as Series B Junior Participating Preferred Stock and the
remainder are undesignated, and none of which shares are issued and outstanding,
and (ii) 500,000,000 shares of BB&T Common Stock of which 331,170,260 shares
were issued and outstanding as of December 31, 1999. All outstanding shares of
BB&T Common Stock have been duly authorized and are validly issued, fully paid
and nonassessable. The shares of BB&T Common Stock reserved as provided in
Section 5.3 are free of any Rights and have not been reserved for any other
purpose, and such shares are available for issuance as provided pursuant to the
Plan of Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
--------------------------------------------
BB&T is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its assets, and is duly qualified to do business in the states of
the United States where its ownership or leasing of property or the conduct of
its business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
(a) BB&T has all requisite corporate power and authority to enter into
and (subject to receipt of all necessary government approvals) perform all of
its obligations under this Agreement. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of BB&T. This Agreement and the Plan of Merger attached hereto
constitute legal, valid and binding obligations of BB&T, and each is enforceable
against BB&T in accordance with its terms, in each case subject to (i)
bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws in effect from time to time relating to or
affecting the enforcement of the rights of creditors; and (ii) general
principles of equity.
(b) Neither the execution and delivery of this Agreement or the
Articles of Merger, nor consummation of the transactions contemplated hereby,
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
28
<PAGE>
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) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to BB&T or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
BB&T of the Merger and the other transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
---------------------------------------------------------
Each of the BB&T Subsidiaries is duly organized, validly existing and
in good standing under applicable laws. BB&T owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of each of the BB&T
Subsidiaries. Each of the BB&T Subsidiaries (i) has full 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.
4.5 Securities Documents; Financial Statements; Statements True
-----------------------------------------------------------
(a) BB&T has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1996. As of their respective
dates of filing, such Securities Documents complied with the Securities Laws as
then in effect, and did 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 therein, in light of the circumstances under which they were
made, not misleading.
(b) The Financial Statements of BB&T fairly present or will fairly
present, as the case may be, the consolidated financial position of BB&T and its
Subsidiaries as of the dates indicated and the consolidated statements of income
and retained earnings, changes in shareholders' equity and statements of cash
flows for the periods then ended (subject in the case of unaudited interim
statements, to the absence of notes and to normal year-end audit adjustments
that are not material in amount or effect) in conformity with GAAP applied on a
consistent basis.
(c) No statement, certificate, instrument or other writing furnished or
to be furnished hereunder by BB&T or any other BB&T Subsidiary to One Valley
contains or will contain any untrue or misleading statement of material fact.
29
<PAGE>
4.6 Certain Information
-------------------
When the Proxy Statement/Prospectus is mailed, and at all times
subsequent to such mailing up to and including the time of the meeting of
shareholders of One Valley to vote on the Merger, the Proxy Statement/Prospectus
and all amendments or supplements thereto, with respect to all information set
forth therein relating to BB&T, (i) shall comply 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, in light of the
circumstances in which they were made, not misleading.
4.7 Accounting; Tax and Regulatory Matters
--------------------------------------
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action that would or could reasonably be expected to (i) cause the Merger not to
be accounted for as a pooling of interests or not to constitute a reorganization
under Section 368 of the Code, or (ii) impede or delay receipt of any consents
of regulatory authorities referred to in Section 5.4(b) or result in failure of
the condition in Section 6.3(b); provided, that nothing contained herein shall
limit the ability of BB&T to exercise its rights under the BB&T Option
Agreement.
4.8 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a
fiduciary capacity) any shares of One Valley Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the Knowledge of BB&T, threatened against
BB&T or any BB&T Subsidiary or any asset, interest, Plan or right of BB&T or any
BB&T Subsidiary, or, to the Knowledge of BB&T, against any officer, director or
employee of any of them in their capacity as such. There are no actions, suits
or proceedings instituted, pending or, to the Knowledge of BB&T, threatened
against any present or former director or officer of BB&T or any BB&T Subsidiary
that could reasonably be expected to give rise to a claim against BB&T or any
BB&T Subsidiary for indemnification. There are no actual or, to the Knowledge of
BB&T, threatened actions, suits or proceedings instituted, which present, or
could reasonably be expected to present, a claim to restrain or prohibit the
transactions contemplated herein. To the Knowledge of BB&T, no fact or condition
relating to BB&T or any BB&T Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent BB&T or One Valley from obtaining
all of the federal and state regulatory approvals contemplated herein.
30
<PAGE>
4.10 Adverse Change
--------------
Since September 30, 1999, BB&T and the BB&T Subsidiaries have not
incurred any liability, whether accrued, absolute or contingent, except as
disclosed in the most recent BB&T Financial Statements, or entered into any
transactions with Affiliates, in each case other than in the ordinary course of
business consistent with past practices, nor has there been any adverse change
or any event involving a prospective adverse change in the financial condition,
results of operations or stockholders' equity of BB&T or any of the BB&T
Subsidiaries.
4.11 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of BB&T and the
BB&T Subsidiaries are disclosed in the most recent Financial Statements of BB&T
or are normally recurring business obligations incurred in the ordinary course
of its business since the date of BB&T's most recent Financial Statements.
ARTICLE V
COVENANTS
5.1 One Valley Shareholder Meeting
------------------------------
One Valley shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as reasonably
practicable following the effectiveness of the Registration Statement. By
approving this Agreement and authorizing its execution, the Board of Directors
of One Valley agrees that it shall, at the time the Proxy Statement/Prospectus
is mailed to the shareholders of One Valley, recommend that One Valley's
shareholders vote for such approval; provided, that the Board of Directors of
One Valley may withdraw, modify, condition or refuse to make such recommendation
only if the Board of Directors shall determine in good faith, after consultation
with outside legal counsel, that such recommendation should not be made in light
of its fiduciary duty to One Valley's shareholders following (i) a Superior
Offer, or (ii) the withdrawal, or material modification that results in a
revocation, of the opinion referenced in Section 3.26 by the Financial Advisor
or (iii) the delivery to the One Valley Board of Directors of written advice
from the Financial Advisor that the Merger Consideration is either not fair or
is inadequate to the shareholders of One Valley from a financial point of view.
5.2 Registration Statement; Proxy Statement/Prospectus
--------------------------------------------------
As promptly as practicable after the date hereof, BB&T shall prepare
and file the Registration Statement with the Commission. One Valley will furnish
to BB&T the information required to be included in the Registration Statement
with respect to its business and affairs before it is filed with the Commission
and again before any amendments are filed, and shall have the right to review
and consult with BB&T on the
31
<PAGE>
form of, and any characterizations of such information included in, the
Registration Statement prior to the filing with the Commission. BB&T shall
prepare such Registration Statement such that, at the time it becomes effective
and at the Effective Time, it shall in all material respects conform to the
requirements of the Securities Act and the applicable rules and regulations of
the Commission (provided that no covenant is made by BB&T as to information
provided by One Valley for inclusion in the Registration Statement). The
Registration Statement shall include the form of Proxy Statement/Prospectus.
BB&T and One Valley shall use all reasonable efforts to cause the Proxy
Statement/Prospectus to be cleared by the Commission for mailing to the One
Valley shareholders, and such Proxy Statement/Prospectus shall, on the date of
mailing, conform in all material respects to the requirements of the Securities
Laws and the applicable rules and regulations of the Commission thereunder. One
Valley shall cause the Proxy Statement/Prospectus to be mailed to shareholders
in accordance with all applicable notice requirements under the Securities Laws,
the WVCA and the rules and regulations of the NYSE.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with
the Plan of Merger. In connection therewith, BB&T acknowledges that it (i) has
adopted the Plan of Merger and (ii) will pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient to
effect the Merger, BB&T shall take all appropriate action as may be required to
increase the number of shares of BB&T Common Stock reserved for such purpose.
5.4 Additional Acts
---------------
(a) One Valley agrees to take such actions requested by BB&T as may be
reasonably necessary to modify the structure of, or to substitute parties to (so
long as such substitute is BB&T or a BB&T Subsidiary) the transactions
contemplated hereby, provided that such modifications do not change the Merger
Consideration (or the tax treatment thereof) or abrogate the covenants and other
agreements contained in this Agreement, including, without limitation, the
covenant not to take any action that would substantially delay or impair the
prospects of completing the Merger pursuant to this Agreement and the Plan of
Merger.
(b) As promptly as practicable after the date hereof, BB&T shall
submit, and, to the extent required, One Valley shall submit, notice or
applications for prior approval of the transactions contemplated herein to the
Federal Reserve Board and any other federal, state or local government agency,
department or body to which notice is required or from which approval is
required for consummation of the Merger and the other transactions contemplated
hereby. One Valley and BB&T each represents and warrants to the other that all
information included (or submitted for inclusion) concerning it, its
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respective Subsidiaries, and any of its respective directors, officers and
shareholders, shall be true, correct and complete in all material respects as of
the date presented.
5.5 Best Efforts
------------
Each of BB&T and One Valley shall use, and shall cause each of their
respective Subsidiaries to use, its best efforts in good faith to (i) furnish
such information as may be required in connection with and otherwise cooperate
in the preparation and filing of the documents referred to in Sections 5.2 and
5.4 or elsewhere herein, and (ii) take or cause to be taken all action necessary
or desirable on its part to fulfill the conditions in Article VI, including,
without limitation, executing and delivering, or causing to be executed and
delivered, such representations, certificates and other instruments or documents
as may be reasonably requested by BB&T's legal counsel for such counsel to issue
the opinion contemplated by Section 6.1(e), and to consummate the transactions
herein contemplated at the earliest possible date. Neither BB&T nor One Valley
shall take, or cause, or to the best of its ability permit to be taken, any
action that would substantially delay or impair the prospects of completing the
Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
--------------------------
One Valley shall cooperate with BB&T concerning (i) accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with record keeping, loan
classification, valuation adjustments, levels of loan loss reserves and other
accounting practices, and (ii) One Valley's lending, investment or
asset/liability management policies; provided, that any action by One Valley or
a One Valley Subsidiary taken pursuant to this Section 5.6 shall not be deemed
to constitute or result in the breach of any representation, warranty, covenant
or closing condition of One Valley contained in this Agreement. One Valley shall
not be required to modify or change any such policies or practices, however,
until the earlier of (A) such time as BB&T acknowledges that all conditions to
its obligation to consummate the Merger have been waived or satisfied (other
than the delivery of certificates, opinions and other instruments and documents
to be delivered at Closing or otherwise to be dated at the Effective Time, the
delivery of which shall continue to be a condition to BB&T's obligation to
consummate the Merger) or (B) immediately prior to the Effective Time.
5.7 Access to Information
---------------------
One Valley and BB&T will each keep the other advised of all material
developments relevant to its business and the businesses of its Subsidiaries,
and to consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice, One
Valley shall afford to representatives of BB&T access, during normal business
hours during the period prior to the Effective Time, to all of the properties,
books, contracts, commitments and records of One Valley and the One Valley
Subsidiaries and, during such period, shall
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make available all information concerning their businesses as may be reasonably
requested. No investigation pursuant to this Section 5.7 shall affect or be
deemed to modify any representation or warranty made by, or the conditions to
the obligations hereunder of, either party hereto. Each party hereto shall, and
shall cause each of its directors, officers, attorneys and advisors to, maintain
the confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information previously
furnished in connection with the transactions contemplated by this Agreement.
5.8 Press Releases
--------------
BB&T and One Valley shall agree with each other as to the form and
substance of any press release related to this Agreement and the Plan of Merger
or the transactions contemplated hereby and thereby, and consult with each other
as to the form and substance of other public disclosures related thereto;
provided, that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the opinion
of its counsel is required by law.
5.9 Forbearances of One Valley
--------------------------
Except with the prior written consent of BB&T (which consent shall not
be unreasonably or arbitrarily withheld or delayed), between the date hereof and
the Effective Time, One Valley shall not, and shall cause each of the One Valley
Subsidiaries not to:
(a) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted, or establish or acquire any new Subsidiary or engage in any
new type of activity or expand any existing activities;
(b) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock, other than regularly
scheduled quarterly dividends of $0.26 (subject to increase at the time
and in an amount consistent with past practices) per share of One
Valley Common Stock payable on record dates and in amounts consistent
with past practices; provided that any dividend declared or payable on
the shares of One Valley Common Stock for the quarterly period during
which the Effective Time occurs shall, unless otherwise agreed upon in
writing by BB&T and One Valley, be declared with a record date prior to
the Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of BB&T Common Stock is
before the Effective Time;
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(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plans with respect to
options outstanding on the date hereof or pursuant to the BB&T Option
Agreement;
(d) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization other than pursuant to the Stock Option Plans
or Plans in existence on the date hereof, in the ordinary course of
business consistent with past practices; provided, that in no event
shall Rights to purchase more than 175,000 shares of the capital stock
of One Valley (subject to adjustment for organic changes) be granted
between the date hereof and the Effective Time.
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or
encumbrance on any share of stock held by it in any One Valley
Subsidiary, or permit any such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any debt or
claim, in each case other than in the ordinary course of business;
(g) merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control
over any other entity; or liquidate, sell or otherwise dispose of any
material amount of assets or acquire any material amount of assets
other than in the ordinary course of its business consistent with past
practices;
(h) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(i) increase the rate of compensation of any of its directors,
officers or employees (excluding increases in compensation resulting
from the exercise of compensatory stock options), or pay or agree to
pay any bonus to, or provide any new employee benefit or incentive to,
any of its directors, officers or employees, except for increases or
payments made in the ordinary course of business consistent with past
practice pursuant to plans or arrangements in effect on the date
hereof;
(j) enter into or substantially modify (except as may be
required by applicable law or regulation) 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; provided, however, that
this subparagraph shall not prevent renewal of any of the foregoing
consistent with past practice;
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(k) solicit or encourage inquiries or proposals with respect
to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition or purchase of
all or a substantial portion of the assets of or a substantial equity
interest in, or any recapitalization, liquidation or dissolution
involving or a business combination or other similar transaction with,
One Valley or any One Valley Subsidiary other than as contemplated by
this Agreement; or authorize any officer, director, agent or affiliate
of One Valley or any One Valley Subsidiary to do any of the above; or
fail to notify BB&T immediately if any such inquiries or proposals are
received, any such information is requested or required, or any such
negotiations or discussions are sought to be initiated; provided, that
this Section 5.9(k) shall not apply to furnishing information to or
participating in negotiations or discussions with any Person that has
made, or that the One Valley Board of Directors determines in good
faith is reasonably likely to make, a Superior Offer, if the One Valley
Board of Directors determines in good faith, after consultation with
outside legal counsel, that it should take such actions in light of its
fiduciary duty to One Valley's shareholders;
(l) enter into, other than as contemplated in this Agreement,
(i) any material agreement, arrangement or commitment not made in the
ordinary course of business, (ii) any agreement, indenture or other
instrument not made in the ordinary course of business relating to the
borrowing of money by One Valley or a One Valley Subsidiary or
guarantee by One Valley or a One Valley Subsidiary of any obligation,
(iii) any agreement, arrangement or commitment relating to the
employment or severance of a consultant or the employment, severance,
election or retention in office of any present or former director,
officer or employee (this clause shall not apply to the election of
directors by shareholders or the reappointment of officers in the
normal course), or (iv) any contract, agreement or understanding with a
labor union;
(m) change its lending, investment or asset liability
management policies in any material respect, except as may be required
by applicable law, regulation, or directives, and except that after
approval of the Agreement and the Plan of Merger by its shareholders
and after receipt of the requisite regulatory approvals for the
transactions contemplated by this Agreement and the Plan of Merger, One
Valley shall cooperate in good faith with BB&T to adopt policies,
practices and procedures consistent with those utilized by BB&T,
effective on or before the Closing Date;
(n) change its methods of accounting in effect at December 31,
1998 in any material respect, except as required by changes in GAAP
concurred in by BB&T, which concurrence shall not be unreasonably
withheld, or change any of its methods of reporting income and
deductions for federal income tax purposes from those employed in the
preparation of its federal income tax returns for the
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year ended December 31, 1998, except as required by changes in law or
regulation;
(o) incur any commitments for capital expenditures or
obligations to make capital expenditures in excess of $250,000 for any
one expenditure, or $1,000,000 in the aggregate; provided that
commitments or obligations in place prior to the date hereof shall not
be counted towards these thresholds.
(p) incur any material indebtedness other than deposits from
customers, advances from the Federal Home Loan Bank or Federal Reserve
Bank and reverse repurchase arrangements in the ordinary course of
business;
(q) take any action which would or could reasonably be
expected to (i) cause the Merger not to be accounted for as a pooling
of interests or not to constitute a reorganization under Section 368 of
the Code as determined by BB&T, (ii) result in any inaccuracy of a
representation or warranty herein which would allow for a termination
of this Agreement, or (iii) cause any of the conditions precedent to
the transactions contemplated by this Agreement to fail to be
satisfied;
(r) dispose of any material assets other than in the ordinary
course of business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
In addition to the Employment Agreements substantially in the form of
Annexes B-1, B-3 and B-4 hereto between BB&T's specified BB&T Subsidiary and J.
Holmes Morrison, Frederick H. Belden and Laurance G. Jones, respectively, which
have been entered into concurrently herewith to become effective at the
Effective Time, BB&T (or its specified BB&T Subsidiary) agrees to enter into
employment agreements substantially in the form of Annex C-1 or C-2 hereto with
up to 16 individuals who are officers of One Valley or a One Valley Subsidiary,
which individuals and the form of agreement applicable to each are to be
specified by One Valley with the consent of BB&T.
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5.11 Affiliates
----------
One Valley shall use its best efforts to cause all persons who are
Affiliates of One Valley to deliver to BB&T promptly following execution of this
Agreement a written agreement providing that such person will not dispose of
BB&T Common Stock received in the Merger, except in compliance with the
Securities Act and the rules and regulations promulgated thereunder and as
consistent with qualifying the transactions contemplated hereby for
pooling-of-interests accounting treatment, and in any event shall use its best
efforts to cause such Affiliates to deliver to BB&T such written agreement prior
to the Closing Date.
5.12 Section 401(k) Plan; Other Employee Benefits
--------------------------------------------
(a) Effective on the Benefit Plan Determination Date for the 401(k)
plan of One Valley, BB&T shall, in its sole discretion, cause the 401(k) plan of
One Valley to be (i) merged with the 401(k) plan maintained by BB&T and its
subsidiaries, (ii) frozen or (iii) terminated, in each case subject to the
receipt of all applicable regulatory or governmental approvals. Each employee of
One Valley at the Effective Time who (A) becomes an employee immediately
following the Effective Time of BB&T or any subsidiary of BB&T (a "Transferred
Employee") and is a participant in the 401(k) plan of One Valley, and (B)
continues in the employment of BB&T or any subsidiary of BB&T (an "Employer
Entity") until the Benefit Plan Determination Date for the 401(k) plan of One
Valley, shall be eligible to participate in BB&T's 401(k) plan as of such
Benefit Plan Determination Date. All rights to participate in BB&T's 401(k) plan
are subject to BB&T's rights to amend or to terminate the plan. Until such
Benefit Plan Determination Date, BB&T shall continue in effect for the benefit
of participating employees the Section 401(k) plan of One Valley. For purposes
of administering BB&T's 401(k) plan, service with One Valley and the One Valley
Subsidiaries shall be deemed to be service with BB&T for participation and
vesting purposes, but not for purposes of benefit accrual.
(b) Effective on the Benefit Plan Determination Date for the One Valley
Defined Benefit Pension Plan, BB&T shall, in its sole discretion, cause the One
Valley Defined Benefit Pension Plan to be (i) merged with the defined benefit
pension plan maintained by BB&T and its subsidiaries, (ii) frozen or (iii)
terminated, in each case subject to the receipt of all applicable regulatory or
governmental approvals. Each Transferred Employee who (A) is a participant in
One Valley Defined Benefit Pension Plan at the Effective Time, and (B) continues
in the employment of an Employer Entity until its Benefit Plan Determination
Date, shall be eligible to participate in BB&T's pension plan as of such Benefit
Plan Determination Date. All rights to participate in BB&T's pension plan are
subject to BB&T's right to amend or terminate the plan. As of the close of
business immediately preceding the Benefit Plan Determination Date for the One
Valley Defined Benefit Pension Plan, BB&T shall determine the accrued benefit
thereunder for each participant continuing in the service of an Employer Entity.
Such accrued benefit shall be determined by taking into account service and
compensation following the Effective Time, and the accrued benefit as so
determined shall be the
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accrued benefit under the BB&T pension plan for service prior to the Benefit
Plan Determination Date (and shall be added to the benefit accrued under the
BB&T pension plan for service and compensation beginning with the Benefit Plan
Determination Date). For purposes of administering BB&T's pension plan, service
with One Valley and the One Valley Subsidiaries shall be deemed to be service
with BB&T for participation and vesting purposes, but not for purposes of
benefit accrual.
(c) As of the Benefit Plan Determination Date for each group
hospitalization, medical, dental, life, disability and other welfare benefit
plan or program available to employees of the Employer Entity, each Transferred
Employee, together with his or her dependents and beneficiaries, shall generally
be eligible to participate in such plan or program, subject to (i) its
eligibility requirements and other terms and (ii) the Transferred Employee being
employed by an Employer Entity as of its Benefit Plan Determination Date. With
respect to health care coverage, participation in BB&T's plans may be subject to
availability of HMO options. In any case in which HMO coverage is not available,
substitute coverage will be provided which may not be fully comparable to the
HMO coverage. With respect to any welfare benefit plan or program of One Valley
which the Employer Entity determines, in its sole discretion, provides benefits
of the same type or class as a corresponding plan or program maintained by the
Employer Entity, the Employer Entity shall continue such One Valley plan or
program in effect for the benefit of the Transferred Employees so long as they
remain eligible to participate and until they shall become eligible to become
participants in the corresponding plan or program maintained by the Employer
Entity (and, with respect to any such plan or program, subject to complying with
eligibility requirements and subject to the right of the Employer Entity to
terminate such plan or program). For purposes of administering the welfare plans
and programs subject to this Section 5.12(c), (A) service with One Valley shall
be deemed to be service with the Employer Entity for the purpose of determining
eligibility to participate and vesting (if applicable) in such welfare plans and
programs, but not for the purpose of computing benefits, if any, determined in
whole or in part with reference to service (except as otherwise provided in
Section 5.12(d)), and (B) each Transferred Employee shall receive credit for any
co-payment and deductibles paid prior to the Benefit Plan Determination Date (to
the same extent such credit was given under the analogous Plan prior to such
Benefit Plan Determination Date) in satisfying any applicable deductibles,
co-payments or out-of-pocket expenses.
(d) Except to the extent of commitments herein or other contractual
commitments, if any, specifically made or assumed hereunder by BB&T, neither
BB&T nor any Employer Entity shall have any obligation to continue to employ any
Transferred Employee in any specific job, at any specified level of
compensation, incentive payments, benefits or perquisites, or at all. If a
Transferred Employee is terminated by an Employer Entity (other than a transfer
of employment to another Employer Entity), and such Transferred Employee was a
party at the Effective Time to a Change in Control Severance Agreement with One
Valley (a "Severance Agreement") which was not terminated by an agreement
executed by the Transferred Employee as of the Effective Time, such Transferred
Employee shall be entitled to severance pay in accordance with the Severance
Agreement and any additional benefit payable under the One Valley
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Special Severance Policy referenced below. A Transferred Employee shall be
entitled to severance pay under the One Valley Special Severance Policy (as
amended and restated 4/27/99) if and to the extent he or she is eligible for
severance pay under such Policy, except that, the Transferred Employee shall be
eligible for severance pay under the Policy if he or she is terminated within
eighteen months following the Effective Time.
(e) BB&T agrees to honor all employment agreements, severance
agreements and deferred compensation agreements that One Valley and the One
Valley Subsidiaries have with their current and former employees and directors
and which have been Disclosed to BB&T pursuant to this Agreement, except to the
extent any such agreements shall be superseded or terminated at the Closing or
following the Closing Date. Except for the agreements described in the preceding
sentence and except as otherwise provided in this Section 5.12, the employee
benefit plans of One Valley shall, in the sole discretion of BB&T, be frozen,
terminated or merged into comparable plans of BB&T as of the Effective Time or
at such time thereafter as BB&T shall determine in its sole discretion; provided
that BB&T agrees that, during the period commencing at the Effective Time and
ending on the first anniversary thereof, the Transferred Employees and former
One Valley employees who retired under the Plans of One Valley will continue to
be provided with benefits under benefit plans (other than stock options or other
stock-based incentive plans) which in the aggregate are substantially comparable
to (i) those provided immediately prior to the Effective Time under the Plans of
One Valley to such Transferred Employees and former employees or (ii) those
provided to similarly situated employees of BB&T; provided, however, that
Transferred Employees covered by collective bargaining agreements, if any, need
not be provided with such benefits.
5.13 Directors and Officers Protection
---------------------------------
BB&T or a BB&T Subsidiary shall provide and keep in force for a period
of three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of One Valley for acts or
omissions occurring prior to the Effective Time. Such insurance shall provide at
least the same coverage and amounts as contained in One Valley's policy on the
date hereof; provided, that in no event shall the annual premium on such policy
exceed 175% of the annual premium payments on One Valley's policy in effect as
of the date hereof (the "Maximum Amount"). If the amount of the premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, BB&T shall use its reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance obtainable for a
premium equal to the Maximum Amount. Notwithstanding the foregoing, BB&T further
agrees to indemnify all individuals who are or have been officers, directors or
employees of One Valley or any One Valley Subsidiary prior to the Effective Time
from any acts or omissions in such capacities prior to the Effective Time to the
fullest extent lawful. If BB&T or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of BB&T shall assume
the obligations set forth in this Section 5.13.
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5.14 Forbearances of BB&T
--------------------
Except with the prior written consent of One Valley, which consent
shall not be arbitrarily or unreasonably withheld or delayed, between the date
hereof and the Effective Time, neither BB&T nor any BB&T Subsidiary shall take
any action (or, in the case of clause (i), fail to take any action) that would
or might be expected to (i) cause the business combination contemplated hereby
not to be accounted for as a pooling of interests or not to constitute a
reorganization under Section 368 of the Code; (ii) result in any inaccuracy of a
representation or warranty herein which would allow for termination of this
Agreement; (iii) cause any of the conditions precedent to the transactions
contemplated by this Agreement to fail to be satisfied; (iv) exercise the BB&T
Option Agreement other than in accordance with its terms, or dispose of the
shares of One Valley Common Stock issuable upon exercise of the option rights
conferred thereby other than as permitted by the terms thereof; or (v) fail to
comply in any material respect with any laws, regulations, ordinances or
governmental actions applicable to it and to the conduct of its business.
5.15 Reports
-------
Each of One Valley and BB&T shall file (and shall cause the One Valley
Subsidiaries and the BB&T Subsidiaries, respectively, to file), between the date
of this Agreement and the Effective Time, all reports required to be filed by it
with the Commission and any other regulatory authorities having jurisdiction
over such party, and shall deliver to BB&T or One Valley, as the case may be,
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the Commission, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to the absence of notes and to normal recurring year-end
adjustments that are not material). As of their respective dates, such reports
filed with the Commission will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to a regulatory authority other than the Commission shall be prepared in
accordance with requirements applicable to such reports.
5.16 Exchange Listing
----------------
BB&T shall use its reasonable best efforts to list, prior to the
Effective Time, on the NYSE, subject to official notice of issuance, the shares
of BB&T Common Stock to be issued to the holders of One Valley Common Stock
pursuant to the Merger, and BB&T shall give all notices and make all filings
with the NYSE required in connection with the transactions contemplated herein.
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5.17 Advisory Boards
---------------
(a) As of the Effective Time, BB&T shall offer to each of the members
of the One Valley Board of Directors a seat on the BB&T Advisory Board for
West Virginia. Except as provided in Section 5.17(d), the Advisory Board
members appointed pursuant to this Section 5.17(a) and who continue to serve
shall receive, as compensation for service on the Advisory Board, Advisory
Board member fees (annual retainer and attendance fees) equal in amount, for
two years following the Effective Time (prorated for any partial year), to the
annual retainer and schedule of attendance fees for One Valley directors in
effect on January 1, 2000. Following such two-year period, Advisory Board
members who continue to serve shall receive fees in accordance with BB&T's
standard schedule of fees for service thereon as in effect from time to time.
For two years after the Effective Time, no such Advisory Board member shall be
prohibited from serving thereon because he or she shall have attained the
maximum age for service thereon (currently age 70).
(b) As of the Advisory Board Establishment Date for each One Valley
Subsidiary that is a bank or savings institution, BB&T shall offer to the
members of the Board of Directors of such One Valley Subsidiary a seat on the
BB&T Advisory Board for such One Valley Subsidiary's market area. During the
period commencing at the Effective Time and ending on the Advisory Board
Establishment Date for each such One Valley Subsidiary, the directors of such
One Valley Subsidiary shall continue to serve as such so long as they continue
to meet the requirements for serving. In addition, as of the Effective Time,
BB&T shall offer to R. Marshall Evans, Jr. a seat on the BB&T Advisory Board for
Georgia. Except as provided in Section 5.17(d), the Advisory Board members
appointed pursuant to this Section 5.17(b) and who continue to serve shall
receive, as compensation for service on the Advisory Board, Advisory Board
member fees (annual retainer and attendance fees) in accordance with BB&T's
standard schedule of fees for service thereon as in effect from time to time.
(c) Notwithstanding anything herein to the contrary, membership of any
person on any Advisory Board shall be conditional upon his or her execution of a
noncompetition and nonsolicitation agreement reasonably acceptable to BB&T.
(d) Notwithstanding the provisions of Section 5.17, no fees will be
paid to any member of any Advisory Board who is also an employee of BB&T or an
Affiliate of BB&T.
5.18 Reserved
--------
5.19 Board of Directors of BB&T
--------------------------
As soon as practicable following the Effective Time, the BB&T Board of
Directors shall (i) increase the number of directors comprising the Board of
Directors to 23 pursuant to Article III, Section 2 of BB&T's Bylaws and (ii)
elect J. Holmes Morrison and another individual to be selected on or before the
Effective Time by mutual
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agreement of the Chief Executive Officer of One Valley and the Chief Executive
Officer of BB&T to fill the two vacancies created by such increase, as permitted
by Article III, Section 6 of BB&T's Bylaws. Each of Mr. Morrison and the
selected individual shall serve for so long as he or she is elected and
qualifies, subject to the right of removal for cause. In addition, as soon as
practicable following the Effective Time, BB&T's Chief Executive Officer shall
appoint, and the BB&T Board of Directors shall elect, J. Holmes Morrison to
BB&T's Executive Committee.
5.20 Treatment as Reorganization for Tax Purposes
--------------------------------------------
Each of One Valley and BB&T shall treat the Merger as a reorganization
within the meaning of Section 368 of the Code for all federal income tax
purposes.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and One Valley
------------------------------------------
The respective obligations of BB&T and One Valley to effect the
transactions contemplated by this Agreement shall be subject to satisfaction or
waiver of the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the Plan of Merger, and consummation of
the transactions contemplated hereby and thereby, shall have been duly and
validly taken, including, without limitation, the approval of the shareholders
of One Valley of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the Knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required
in connection with the transactions contemplated by this Agreement and the Plan
of Merger; all notice periods and waiting periods with respect to such approvals
shall have passed and all such approvals shall be in effect; and
(d) None of BB&T, any of the BB&T Subsidiaries, One Valley or any of
the One Valley Subsidiaries shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated by this Agreement.
43
<PAGE>
6.2 Conditions Precedent - One Valley
---------------------------------
The obligations of One Valley to effect the transactions contemplated
by this Agreement shall be subject to the satisfaction of the following
additional conditions at or prior to the Effective Time, unless waived by One
Valley pursuant to Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and as
of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
One Valley. There shall not exist inaccuracies in the representations and
warranties of BB&T set forth in this Agreement such that the aggregate effect of
such inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on BB&T;
(b) BB&T shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement;
(c) BB&T shall have delivered to One Valley a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.1(d), 6.2(a) and 6.2(b), to the extent applicable to BB&T,
have been satisfied;
(d) The shares of BB&T Common Stock issuable pursuant to the Merger
shall have been approved for listing on the NYSE, subject to official notice of
issuance; and
(e) One Valley shall have received an opinion of Sullivan & Cromwell,
subject to customary assumptions and representations, substantially to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368 of the Code.
6.3 Conditions Precedent - BB&T
---------------------------
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of One Valley shall be evaluated
as of the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
BB&T. The representations and warranties of One Valley set forth in Sections 3.3
(solely with respect to the ownership by One Valley of the One Valley
Subsidiaries) and 3.24 shall be true and correct (except for inaccuracies that
are immaterial in amount). There shall not exist inaccuracies in the
representations and warranties of One Valley set forth in this Agreement
(including the representations and warranties set forth in the Sections
designated in the preceding sentence) such that
44
<PAGE>
the effect of such inaccuracies individually or in the aggregate has, or is
reasonably likely to have, a Material Adverse Effect on One Valley and the One
Valley Subsidiaries taken as a whole;
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of BB&T,
would so materially adversely affect the business or economic benefits to BB&T
of the transactions contemplated by this Agreement as to render consummation of
such transactions inadvisable or unduly burdensome; provided that any such
condition or requirement shall not relate principally to any regulatory
violation or other failure on the part of BB&T or a divestiture requirement that
is consistent with regulatory precedent;
(c) One Valley shall have performed in all material respects all
obligations and complied in all material respects with all covenants required
by this Agreement;
(d) One Valley shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the
extent applicable to One Valley, have been satisfied;
(e) BB&T shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective Time,
addressed to BB&T, in form and substance reasonably satisfactory to BB&T, from
Arthur Andersen, LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment as in effect on the date hereof; and
(f) BB&T shall have received an opinion of BB&T's legal counsel, in
form and substance satisfactory to BB&T, substantially to the effect that the
Merger will constitute one or more reorganizations under Section 368 of the Code
and that the shareholders of One Valley will not recognize any gain or loss to
the extent that such shareholders exchange shares of One Valley Common Stock for
shares of BB&T Common Stock.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent
in writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party in writing
(i) in the event of a material breach by the other party of any covenant or
agreement contained in this Agreement, or (ii) in the event of an inaccuracy of
any representation or warranty of
45
<PAGE>
the other party contained in this Agreement, which inaccuracy would provide the
nonbreaching party the ability to refuse to consummate the Merger under the
applicable standard set forth in Section 6.2(a) in the case of One Valley and
Section 6.3(a) in the case of BB&T; and, in the case of (i) or (ii), if such
breach or inaccuracy has not been cured by the earlier of thirty days following
written notice of such breach to the party committing such breach or the
Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
material breach of any of its representations, warranties, covenants or
undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 are denied, and the
time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders
of One Valley disapprove the Agreement and the Plan of Merger at a meeting
called and held for the purpose of voting thereon.
(f) At any time following October 1, 2000, by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in material breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to the Effective Time, by BB&T or One Valley in
writing, if the Board of Directors of One Valley shall have withdrawn, modified,
conditioned or refused to make its recommendation to the shareholders of One
Valley that they vote to approve the Plan of Merger under conditions permitted
by Section 5.1.
(h) At any time prior to the Effective Time, by BB&T or One Valley in
writing, if One Valley's Board of Directors shall have authorized One Valley
management to enter into an agreement, plan or transaction to consummate a
Superior Offer.
7.2 Effect of Termination
---------------------
In the event this Agreement and the Plan of Merger is terminated
pursuant to Section 7.1, both this Agreement and the Plan of Merger shall become
void and have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for a breach of the
covenant, agreement, representation or warranty giving rise to such termination.
The Option Agreement shall be governed by its own terms, and no termination of
this Agreement or the Plan of Merger pursuant to Section 7.1 shall be
46
<PAGE>
interpreted as a consent by BB&T to any action or matter that would have the
effect of diminishing or adversely affecting BB&T's rights under the Option
Agreement.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13, 5.17 and 5.19); provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or One Valley (or any director, officer or controlling person
thereof) of any defense at law or in 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 One Valley, the aforesaid
representations, warranties and covenants being material inducements to
consummation by BB&T and One Valley of the transactions contemplated herein.
7.4 Waiver
------
Except with respect to any required regulatory approval or other
condition imposed by law, each party hereto, by written instrument signed by an
executive officer of such party, may at any time (whether before or after
approval of the Agreement and the Plan of Merger by the One Valley shareholders)
extend the time for the performance of any of the obligations or other acts of
the other party hereto and may waive (i) any inaccuracies of the other party in
the representations or warranties contained in this Agreement, the Plan of
Merger or any document delivered pursuant hereto or thereto, (ii) compliance
with any of the covenants, undertakings or agreements of the other party, or
satisfaction of any of the conditions precedent to its obligations, contained
herein or in the Plan of Merger, or (iii) the performance by the other party of
any of its obligations set out herein or therein; provided that no such
extension or waiver, or amendment or supplement pursuant to this Section 7.4,
executed after approval by the One Valley shareholders of this Agreement and the
Plan of Merger, shall reduce either the Exchange Ratio or the payment terms for
fractional interests.
7.5 Amendment or Supplement
-----------------------
This Agreement or the Plan of Merger may be amended or supplemented at
any time in writing by mutual agreement of BB&T and One Valley, subject to the
proviso to Section 7.4.
47
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
--------
Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated by this Agreement,
including, without limitation, fees and expenses of its own financial
consultants, accountants and counsel; provided, however, that the filing fees
and printing costs incurred in connection with the Registration Statement and
the Proxy Statement/Prospectus shall be borne 50% by BB&T and 50% by One Valley.
8.2 Entire Agreement
----------------
This Agreement, including the documents and other writings referenced
herein or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto, written
or oral, entered into on or before the date hereof. The terms and conditions of
this Agreement and the BB&T Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement or the BB&T Option Agreement, 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, except for the rights of directors and officers of One Valley to
enforce rights in Sections 5.13, 5.17, 5.18 and 5.19 and the rights of
Transferred Employees to enforce rights in the last two sentences of Section
5.12(d).
8.3 No Assignment
-------------
Except for a substitution of parties pursuant to Section 5.4(a), none
of the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
If to One Valley:
Merrell S. McIlwain
One Valley Square
Charleston, West Virginia 25301
Telephone: 304-348-1172
Fax: 304-348-7397
48
<PAGE>
With a required copy to:
Mitchell S. Eitel
Sullivan & Cromwell
125 Broad Street
New York, New York 10004-2498
Telephone: 212-558-4000
Fax: 212-558-3588
If to BB&T:
Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 336-733-3088
Fax: 336-733-2296
With a required copy to:
William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 336-721-3624
Fax: 336-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Specific Performance
--------------------
One Valley acknowledges that the One Valley Common Stock and the One
Valley business and assets are unique and that, if One Valley fails to
consummate the transactions contemplated by this Agreement, such failure will
cause irreparable harm to BB&T for which there will be no adequate remedy at
law. BB&T shall be entitled, in addition to its other remedies at law, to
specific performance of this Agreement if One Valley shall, without cause,
refuse to consummate the transactions contemplated by this Agreement. This
Section 8.5 shall not be deemed a waiver by One Valley to seek any legally
available remedy in the event of a breach by BB&T.
8.6 Captions
--------
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
49
<PAGE>
8.7 Counterparts
------------
This 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.
8.8 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[remainder of page intentionally left blank]
50
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
BB&T CORPORATION
By: /s/ John A. Allison IV
---------------------------------
Name: John A. Allison IV
-------------------------------
Title: Chairman and Chief
Executive Officer
-----------------------------
ONE VALLEY BANCORP, INC.
By: /s/ J. Holmes Morrison
--------------------------------
Name: J. Holmes Morrison
-------------------------------
Title: President and Chief
Executive Officer
------------------------------
51
<PAGE>
ANNEX A
FORM OF
ARTICLES OF MERGER
OF
ONE VALLEY BANCORP, INC.
INTO
BB&T CORPORATION
The undersigned corporations, pursuant to Section 31-1-36 of the West
Virginia Corporation Code (the "WVCA") and Section 55-11-05 of the North
Carolina Business Corporation Act (the "NCBCA"), hereby execute the following
Articles of Merger.
ONE
The merger of One Valley Bancorp, Inc., a West Virginia corporation
("One Valley"), into BB&T Corporation, a North Carolina corporation ("BB&T"),
shall be in accordance with the Plan of Merger attached hereto as Exhibit I (the
"Plan of Merger").
TWO
A. The Plan of Merger was submitted to the shareholders of One Valley
by its Board of Directors in accordance with the provisions of Sections 31-1-34
and 31-1-38 of the WVCA and Section 55-11-03 of the NCBCA and was duly approved
in the manner prescribed by law by the shareholders of One Valley on the ____
day of June, 2000. The number of outstanding shares of common stock, $10.00 par
value, of One Valley (the only class entitled to vote on the Plan of Merger)
entitled to be cast with respect to the Plan of Merger and number of votes cast
for, cast against and abstaining were:
Outstanding Shares For Against Abstain
[33,698,223] _________ _________ _________
B. The shareholders of BB&T were not required to approve the Plan of
Merger.
THREE
These Articles of Merger shall become effective at 11:59 p.m. on
June __, 2000.
[Remainder of Page Intentionally Left Blank]
<PAGE>
The undersigned, each of BB&T and One Valley, declares that the facts
herein stated are true as of June __, 2000.
BB&T CORPORATION
By:
--------------------------------------
John A. Allison IV
Chairman and Chief Executive Officer
Attest:
- --------------------------
Secretary
ONE VALLEY BANCORP, INC.
By:
--------------------------------------
J. Holmes Morrison
President and Chief Executive Officer
Attest:
- --------------------------
Secretary
<PAGE>
EXHIBIT I
PLAN OF MERGER
OF
ONE VALLEY BANCORP, INC.
INTO
BB&T CORPORATION
Section 1. Corporations Proposing to Merge and Surviving Corporation.
One Valley Bancorp, Inc., a West Virginia corporation ("One Valley"), shall be
merged (the "Merger") into BB&T Corporation, a North Carolina corporation
("BB&T"), pursuant to the terms and conditions of this Plan of Merger (the "Plan
of Merger") and of the Agreement and Plan of Reorganization, dated as of
February 6, 2000 (the "Agreement"), by and between One Valley and BB&T. The
effective time for the Merger (the "Effective Time") shall be set forth in the
Articles of Merger to be filed with the Secretary of State of West Virginia and
the Secretary of State of North Carolina. BB&T shall continue as the surviving
corporation (the "Surviving Corporation") in the Merger and the separate
corporate existence of One Valley shall cease.
Section 2. Effects of the Merger. The Merger shall have the effects set
forth in Section 31-1-37 of the West Virginia Corporation Code (the "WVCA") and
Section 55-11-06 of the North Carolina Business Corporation Act (the "NCBCA").
Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of BB&T as in effect immediately prior to the
Effective Time shall become the Articles of Incorporation and Bylaws of the
Surviving Corporation following the Effective Time until changed in accordance
with their terms and the NCBCA.
Section 4. Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of One Valley or the holders of record of the voting common
stock, par value $10.00 per share, of One Valley with rights attached issued
pursuant to Rights Agreement dated October 18, 1995 between One Valley and One
Valley Bank, National Association, as Rights Agent ("One Valley Common Stock"),
each share of One Valley Common Stock issued and outstanding immediately prior
to the Effective Time shall be converted into and shall represent the right to
receive, upon surrender of the certificate representing such share of One Valley
Common Stock (as provided in Section 4(d)), the Merger Consideration (as defined
in Section 5).
(b) Each share of the voting common stock of BB&T, par value $5.00 per
share, with rights attached issued pursuant to Rights Agreement dated December
17, 1996 between BB&T and Branch Banking and Trust Company, as Rights Agent,
relating
<PAGE>
to BB&T's Series B Junior Participating Preferred Stock, $5.00 par value per
share ("BB&T Common Stock") issued and outstanding immediately prior to the
Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of One Valley Common Stock shall
be deemed upon the Effective Time for all purposes to represent only the right
to receive the Merger Consideration and any declared and unpaid dividends
thereon. No interest will be paid or accrued on the Merger Consideration upon
the surrender of the certificate or certificates representing shares of One
Valley Common Stock. With respect to any certificate for One Valley Common Stock
that has been lost or destroyed, BB&T shall pay the Merger Consideration
attributable to such certificate upon receipt of a surety bond or other adequate
indemnity as required in accordance with BB&T's standard policy, and evidence
reasonably satisfactory to BB&T of ownership of the shares represented thereby.
After the Effective Time, One Valley's transfer books shall be closed and no
transfer of the shares of One Valley Common Stock outstanding immediately prior
to the Effective Time shall be made on the stock transfer books of the Surviving
Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered
or mailed to each One Valley shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of One Valley
Common Stock. Upon proper surrender of such certificates or other evidence of
ownership meeting the requirements of Section 4(c), together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, BB&T shall
promptly cause the transfer to the persons entitled thereto of the Merger
Consideration and any declared and unpaid dividends thereon.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by One Valley in respect of shares of One Valley Common Stock
in accordance with the terms of the Agreement and which remain unpaid at the
Effective Time, subject to compliance by One Valley with Section 5.9(b) of the
Agreement. To the extent permitted by law, former shareholders of record of One
Valley shall be entitled to vote after the Effective Time at any meeting of BB&T
shareholders the number of whole shares of BB&T Common Stock into which their
respective shares of One Valley Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing One Valley
Common Stock for certificates representing BB&T Common Stock in accordance with
the provisions of the Agreement. Whenever a dividend or other distribution is
declared by BB&T on the BB&T Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of BB&T Common Stock issuable pursuant to the
Agreement, but no dividend or other distribution payable to the holders of
record of BB&T Common Stock as of any time subsequent to the thirtieth day after
the Effective Time shall be delivered to the holder of any certificate
representing One Valley Common Stock until such holder surrenders such
certificate for exchange as provided in this Section 4. Upon
<PAGE>
surrender of such certificate, both the BB&T Common Stock certificate and any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to the shares of One Valley Common
Stock represented by such certificate.
Section 5. Merger Consideration.
(a) As used herein, the term "Merger Consideration" shall mean the
number of shares of BB&T Common Stock (to the nearest ten thousandth of a share)
to be exchanged for each share of One Valley Common Stock issued and outstanding
as of the Effective Time and cash (without interest) to be payable in exchange
for any fractional share of BB&T Common Stock that would otherwise be
distributable to a One Valley shareholder as provided in Section 5(b). The
number of shares of BB&T Common Stock to be issued for each issued and
outstanding share of One Valley Common Stock (the "Exchange Ratio") shall be
1.28.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the closing price per share of BB&T Common Stock on the NYSE at 4:00
p.m. eastern time on the Closing Date as reported on NYSEnet.com (or, if not
reported thereon, another authoritative source).
Section 6. Conversion of Stock Options .
(a) At the Effective Time, each option granted under One Valley's
Amended and Restated 1993 Incentive Stock Option Plan and 1983 Incentive Stock
Option Plan (collectively, the "Stock Option Plans") or otherwise to acquire
shares of One Valley Common Stock then outstanding (and which, by its terms does
not lapse on or before the Effective Time), whether or not then exercisable (a
"Stock Option"), shall be converted into and become rights with respect to BB&T
Common Stock, and BB&T shall assume each Stock Option in accordance with the
terms of the Stock Option Plans, except that from and after the Effective Time
(i) BB&T and its Compensation Committee shall be substituted for One Valley and
its [COMPENSATION COMMITTEE] administering the Stock Option Plans, (ii) each
Stock Option assumed by BB&T may be exercised solely for shares of BB&T Common
Stock, (iii) the number of shares of BB&T Common Stock subject to each such
Stock Option shall be the number of whole shares of BB&T (omitting any
fractional share) determined by multiplying the number of shares of One Valley
Common Stock subject to such Stock Option immediately prior to the Effective
Time by the Exchange Ratio, and (iv) the per share exercise price under each
such Stock Option shall be adjusted by dividing the per share exercise price
under each such Stock Option by the Exchange Ratio and rounding up to the
nearest cent. Notwithstanding the foregoing, BB&T may at its election substitute
as of the Effective Time options under the BB&T Corporation 1995 Omnibus Stock
Incentive Plan or any other duly adopted comparable plan (in either case, the
"BB&T Option Plan") for all or a part of the Stock Options, subject to the
following conditions: (A) the requirements of (iii) and (iv) above shall be met;
(B) such substitution shall not constitute a modification, extension or
<PAGE>
renewal of any of the Stock Options which are incentive stock options; and (C)
the substituted options shall continue in effect on the same terms and
conditions as provided in the Stock Options and the Stock Option Plans under
which they were granted. Each grant of a converted or substitute option to any
individual who subsequent to the Merger will be a director or officer of BB&T as
construed under Commission Rule 16b-3 shall, as a condition to such conversion
or substitution, be approved in accordance with the provisions of Rule 16b-3.
Each Stock Option which is an incentive stock option shall be adjusted as
required by Section 424 of the Code, and the Regulations promulgated thereunder,
so as to continue as an incentive stock option under Section 424(a) of the Code,
and so as not to constitute a modification, extension, or renewal of the option
within the meaning of Section 424(h) of the Code. BB&T and One Valley will take
all necessary steps to effectuate the foregoing provisions of this Section 6.
BB&T has reserved and shall continue to reserve adequate shares of BB&T Common
Stock for delivery upon exercise of any converted or substitute options. As soon
as practicable after the Effective Time, if it has not already done so, and to
the extent One Valley shall have a registration statement in effect or an
obligation to file a registration statement, BB&T shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of BB&T Common Stock subject to
converted or substitute options and shall use its reasonable efforts to maintain
the effectiveness of such registration statement (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
converted or substitute options remain outstanding. With respect to those
individuals, if any, who subsequent to the Merger may be subject to the
reporting requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), BB&T shall administer the Stock Option
Plans assumed pursuant to this Section 6 (or the BB&T Option Plan, if
applicable) in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent necessary to preserve for such individuals the
benefits of Rule 16b-3 to the extent such benefits were available to them prior
to the Effective Time.
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
Section 7. Amendment. At any time before the Effective Time, this Plan
of Merger may be amended, provided that no such amendment executed after
approval by the One Valley shareholders of the Agreement and this Plan of Merger
shall modify either the amount or the form of the consideration to be provided
to holders of One Valley Common Stock upon consummation of the Merger.
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of February 6, 2000 by and between ONE VALLEY BANCORP, INC., a West Virginia
corporation ("One Valley" or "Issuer"), and BB&T CORPORATION, a North Carolina
corporation ("Grantee").
R E C I T A L S:
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Reorganization, dated this date (the "Merger Agreement"), providing
for, among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed,
to grant to Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 6,700,000 shares (as adjusted as set forth herein, the "Option
Shares," which term shall refer to the Option Shares before and after any
transfer of such Option Shares), of the common stock of Issuer, par value $10.00
per share ("Issuer Common Stock"), at a purchase price per Option Share (subject
to adjustment as set forth herein, the "Purchase Price") equal to $29.75.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) subject to clause (E) below, termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (as hereinafter defined) (other than a termination
of the Merger Agreement by
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Grantee pursuant to Section 7.1(b) thereof (a "Default Termination")), (C) 12
months after a Default Termination, (D) 12 months after any termination of the
Merger Agreement (other than a Default Termination) following the occurrence of
a Purchase Event or a Preliminary Purchase Event, and (E) subject to clause (D)
above, 12 months after termination of the Merger Agreement pursuant to Section
7.1(e) thereof; provided further, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). Subject to compliance with Section 13(h) hereof, the term "Holder" shall
mean the holder or holders of the Option from time to time, including initially
Grantee. The rights set forth in Section 8 hereof shall terminate when the right
to exercise the Option terminates (other than as a result of a complete exercise
of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) Issuer shall have authorized, recommended, publicly proposed or
publicly announced an intention to authorize, recommend or propose, or entered
into an agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As used
herein, the term "Acquisition Transaction" shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its Subsidiaries
(other than transactions solely between Issuer's Subsidiaries or between
Issuer's Subsidiaries and Issuer), (B) the disposition, by sale, lease, exchange
or otherwise, of assets of Issuer or any of its Subsidiaries representing in
either case 15% or more of the consolidated assets of Issuer and its
Subsidiaries (other than a sale of loan receivables in a financing transaction
in the normal course of business consistent with past practices), or (C) the
issuance, sale or other disposition (including by way of merger, consolidation,
share exchange or any similar transaction) of securities representing 20% or
more of the voting power of Issuer or any of its Subsidiaries; or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the Exchange Act),
other than a group of which Grantee or any of the Subsidiaries of Grantee is a
member, shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 20% or more of the then-outstanding shares of
Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person would own
or control 15% or more of the then-
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outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall have disapproved the
Merger Agreement at the meeting of such shareholders held for the purpose of
voting on the Merger Agreement, such meeting shall not have been held or shall
have been canceled prior to termination of the Merger Agreement, or Issuer's
Board of Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
Subsidiary of Grantee) shall have (A) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction, (B) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation (including
an application or notice filed under the BHC Act, the Bank Merger Act, the Home
Owners' Loan Act or the Change in Bank Control Act of 1978) seeking the consent
to an Acquisition Transaction from any federal or state governmental or
regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Notwithstanding the foregoing, the obligation of One Valley to
issue Option Shares upon exercise of the Option shall be deferred (but shall not
terminate): (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for One Valley to issue the Option Shares or
Holder to exercise the Option, or until the expiration or termination of any
waiting period required by law, or (ii) so long as any injunction or other
order, decree or ruling issued by any federal or state court of competent
jurisdiction is in effect which prohibits the sale or delivery of the Option
Shares.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior consent
of any governmental or regulatory agency or authority is required in connection
with such purchase, Issuer shall cooperate with Holder in the filing of the
required notice or application for such consent and the obtaining of such
consent at Holder's expense, and the Closing shall occur not earlier than three
business days nor later than 15 business days following receipt of such consents
(and expiration of any mandatory waiting periods).
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4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer referenced in Section 13(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no preemptive rights, and (B) if the Option
is exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter evidencing Holder's agreement not to offer, sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 6, 2000. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT
BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to its obtaining any approvals or
consents referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement
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(i) has been duly executed and delivered by Issuer, (ii) constitutes the legal,
valid and binding obligation of Issuer, and (iii) is enforceable against Issuer
in accordance with its terms, subject to (A) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship, receivership, or other
similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally, and (B) general principles of equity
(whether applied in a court of law or in equity).
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 hereof upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 7 hereof, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges, and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) Grantee represents that it is acquiring the Option for Grantee's
own account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with and declared effective by the Commission
pursuant to Section 5 of the Securities Act, but instead each is being offered
in reliance upon the exemption from the registration requirement provided by
Section 4(2) thereof and the representations and warranties made by Grantee in
connection therewith. Grantee represents that neither the Option nor the Option
Shares will be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Laws, and that with
respect to any transfer or other disposition proposed to be made in reliance
upon an exemption from registration, such transfer or other disposition shall
not be made unless One Valley first receives an opinion
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of counsel in form and substance reasonably acceptable to it regarding the
availability of such exemption.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option and the Purchase Price therefor shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a)), the number of shares of Issuer Common Stock subject to the
Option shall be adjusted so that, after such issuance, it, when added to the
number of shares of Issuer Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) In the event that Issuer shall enter into an agreement (prior to
termination of the Option pursuant to Section 3(a) hereof): (i) to consolidate
with or merge into any person, other than Grantee or one of its Subsidiaries,
and Issuer shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; (iii) to permit any person, other than
Grantee or one of its Subsidiaries, to acquire all of the outstanding shares of
Issuer Common Stock pursuant to a statutory share exchange; or (iv) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, deemed granted by either
(x) the Acquiring Corporation (as defined below), (y) any person that controls
the Acquiring Corporation, or (z) in the case of a merger described in clause
(ii), the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be identical to those of the Option, such terms shall be as similar as possible
and in no event less
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<PAGE>
advantageous to Grantee. The Substitute Option Issuer shall also enter into an
agreement with the then-holder or holders of the Substitute Option in
substantially the same form as this Agreement, which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than Issuer),
Issuer in a merger in which Issuer is the continuing or surviving person, the
corporation that shall acquire all of the outstanding shares of Issuer Common
Stock pursuant to a statutory share exchange, or the transferee of all or
substantially all of the Issuer's assets (or the assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price per
share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee), (y) the price per
share of the Issuer Common Stock to be paid by any person (other than the
Grantee) pursuant to an agreement with Issuer, and (z) the highest closing sales
price per share of Issuer Common Stock quoted on the New York Stock Exchange
within the six-month period immediately preceding the agreement; provided, that
in the event of a sale of less than all of Issuer's assets, the Assigned Value
shall be the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by Grantee (or by a majority in
interest of the Grantees if there shall be more than one Grantee (a "Grantee
Majority")), divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. In the event that an exchange offer is
made for the Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the Issuer
Common Stock shall be determined by a nationally recognized investment banking
firm mutually selected by Grantee and Issuer (or if applicable, Acquiring
Corporation). (If there shall be more than one Grantee, any such selection shall
be made by a Grantee Majority.)
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<PAGE>
(iv) "Average Price" shall mean the average closing price of a share
of the Substitute Common Stock for the one-year period immediately preceding
effectiveness of the consolidation, merger, share exchange or sale in question,
but in no event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding the effectiveness of such consolidation,
merger, share exchange or sale; provided, that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merger person, as Grantee may
elect.
(f) In no event pursuant to any of the foregoing sections shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for this clause (f), the Substitute Option Issuer shall make a cash payment
to Grantee equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in this clause (f) over (ii) the value of the
Substitute Option after giving effect to the limitation in this clause (f). This
difference in value shall be determined by a nationally recognized investment
banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 hereof shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a) hereof, at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the
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"Request Date." Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 7) paid (or, in the case of
Option Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Holder for each share of Issuer
Common Stock with respect to which the Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the number
of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or the consent or approval of any governmental
or regulatory agency or authority is required in connection with the payment of
all or any portion of the Section 8 Repurchase Consideration, Holder shall have
the ongoing option to revoke its request for repurchase pursuant to Section 8,
in whole or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such approval), in which case the ten business day period of time that would
otherwise run pursuant to the preceding sentence for the payment of the portion
of the Section 8 Repurchase Consideration shall run instead from the date on
which, as the case may be, any required notification period has expired or been
terminated or such approval has been obtained and, in either event, any
requisite waiting period shall have passed. If any governmental or regulatory
agency or authority disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If any governmental or regulatory agency or authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such agency or
authority, determine whether the repurchase should apply to the Option and/or
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Option Shares and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of the Option
(if any) that has been repurchased. Holder shall notify Issuer of its
determination under the preceding sentence within five business days of receipt
of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) hereof.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Sections 7(b)(i), 7(b)(ii), 7(b)(iii) or 7(b)(iv) hereof, or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on the
New York Stock Exchange (or if Issuer Common Stock is not quoted on the New York
Stock Exchange, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) during the 60 business days
preceding the Request Date; provided, however, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by an independent nationally recognized
investment banking firm selected by Holder and reasonably acceptable to Issuer
(which determination shall be conclusive for all purposes of this Agreement),
divided by the number of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered, paid or received pursuant
to either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired actual
ownership or control, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which shall have acquired actual ownership or
control, of 50% or more of the then-outstanding shares of Issuer Common Stock,
or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii),
7(b)(iii) or 7(b)(iv) shall be consummated.
9. Registration Rights.
(a) For a period of 24 months following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subsection (c) below, if
requested by any Holder, including Grantee and any permitted transferee of the
Option Shares
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("Selling Holder"), as expeditiously as possible prepare and file a registration
statement under the Securities Laws if necessary in order to permit the sale or
other disposition of any or all shares of Issuer Common Stock or other
securities that have been acquired by or are issuable to Selling Holder upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Holder in such request, including, without
limitation, a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and Issuer shall use its best efforts to qualify
such shares or other securities for sale under any applicable state securities
laws.
(b) If Issuer at any time after the exercise of the Option proposes
to register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to cause any such shares not to be so registered (i) if the underwriters in good
faith object for a valid business reason, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registration of resales;
provided, further, that such election pursuant to clause (i) may be made only
one time. If some but not all the shares of Issuer Common Stock, with respect to
which Issuer shall have received requests for registration pursuant to this
subsection (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subsection (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer may delay any registration of Option Shares required pursuant to
subsection (a) above for a period not exceeding 90 days in the event that Issuer
shall in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subsection (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
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(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling Holders
holding at least 25% or more of the aggregate number of Option Shares then
outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine months from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses, including reasonable fees and
expenses of one counsel to the Selling Holders whose Option Shares are being
registered, printing expenses, reasonable expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so desires
or the underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant to
subsection (a) or (b) above (including the related offerings and sales by
Selling Holders) and all other qualifications, notifications or exemptions
pursuant to subsection (a) or (b) above. Underwriting discounts and commissions
relating to Option Shares and any other expenses incurred by such Selling
Holders in connection with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under subsection (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expenses, losses,
claims, damages or liabilities of such indemnified party are caused by any
untrue statement or alleged untrue statement or omission or alleged omission
that was included by Issuer in
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any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon and
in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such Selling
Holder, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue or alleged untrue
statement or omission or alleged omission that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this subsection
(e) of notice of the commencement of any action against such indemnified party
in respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subsection (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action, but
the failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
subsection (e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party agrees
to pay them, (ii) the indemnifying party fails to assume the defense of such
action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided, for in this subsection (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and the
underwriters in connection with the statements or omissions which resulted in
such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses,
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claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim; provided, that in no case
shall any Selling Holder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option Shares included
in the offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any holder to indemnify shall be several
and not joint with other holders.
In connection with any registration pursuant to subsection (a)
or (b) above, Issuer and each Selling Holder (other than Grantee) shall enter
into an agreement containing the indemnification provisions of this subsection
(e).
(f) Issuer shall comply with all reporting requirements and will do
all such other things as may be necessary to permit the expeditious sale at any
time of any Option Shares by the Selling Holders in accordance with and to the
extent permitted by any rule or regulation promulgated by the Commission from
time to time, including, without limitation, Rules 144 and 144A. Issuer shall at
its expense provide the Selling Holders with any information necessary in
connection with the completion and filing of any reports or forms required to be
filed by them under the Securities Laws, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the issuance
and the sale of the Option Shares and in connection with the exercise of the
Option, and will save Holder harmless, without limitation as to time, against
any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the New York Stock Exchange or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the New York
Stock Exchange or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon as
practicable.
11. Division of Option. This Agreement (and the Option granted hereby) is
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be
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exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
12. Total Profit.
(a) Notwithstanding any other provision of this Agreement, in no
event shall the Grantee's Total Profit (as hereinafter defined) exceed $47.5
million and, if it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) reduce the number of shares of Issuer Common Stock
subject to this Option, (ii) deliver to Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to Issuer, or (d) any
combination thereof so that Grantee's actually realized Total Profit shall not
exceed $47.5 million after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than
$47.5 million; provided that nothing in this sentence shall restrict any
exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 8, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 8, less (y) the Grantee's
purchase price for such Option Shares, (iii) (x) the net cash amounts received
by Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, (iv) any amounts
received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party, and (v) any amount equivalent to the foregoing with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Issuer Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
13. Miscellaneous.
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(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) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 13(h) hereof) any
rights or remedies hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided, in Sections 3 and 8 hereof (as adjusted pursuant to
Section 7 hereof), it is the express intention of Issuer to allow Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of North Carolina without
regard to any applicable conflicts of law rules, except to the extent that the
federal laws of the United States shall govern.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
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(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
or transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that (i)
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
(ii) subject to the express provisions hereof, Grantee may assign in whole or in
part its rights and obligations hereunder within 12 months following a Purchase
Event; provided, that until the date 15 days following the date on which the
Federal Reserve Board has approved an application by Grantee to acquire the
shares of Issuer Common Stock subject to the Option, Grantee may not assign its
rights under the Option except in (A) a widely dispersed public distribution,
(B) a private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer, (C) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf or (iv) any other manner
approved by the Federal Reserve Board. In the case of any permitted assignment
or transfer of the Option, Issuer shall do all things necessary to facilitate
the same, and the Holder to whom the Option is assigned or transferred shall
make the representations contained in Section 6 hereof (with Holder substituted
for Grantee) and shall agree in writing to the terms and conditions hereof.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option
by Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided, for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ONE VALLEY BANCORP, INC. BB&T CORPORATION
By: /s/ J. Holmes Morrison By: /s/ John A. Allison IV
------------------------------- ------------------------------
Name: J. Holmes Morrison Name: John A. Allison IV
------------------------ -----------------------
Title: President and Chief Title: Chairman and Chief
Executive Officer Executive Officer
------------------------ -----------------------
BB&T to acquire One Valley Bancorp
WINSTON-SALEM, N.C. - BB&T Corporation (NYSE: BBT) and One Valley
Bancorp, Inc. (NYSE: OV) of Charleston, W.Va., today announced an agreement that
will combine two of the country's highest performing bank holding companies and
give BB&T the No. 1 market share in West Virginia.
BB&T will acquire One Valley in a $1.2 billion stock swap, creating the
nation's 18th largest financial institution and boosting BB&T's assets to more
than $52 billion. The acquisition will give BB&T its second West Virginia-based
bank and entry into 10 new markets in central Virginia.
One Valley, with $6.6 billion in assets, is the parent company to nine
community banks and 123 branches - 76 in West Virginia and 47 in central
Virginia.
The transaction, approved by the directors of both companies,is valued
at $35.20 per One Valley share based on BB&T's closing price Friday of $27.50.
The exchange ratio will be fixed at 1.28 BB&T shares for each One Valley share.
The transaction will be accounted for as a pooling of interests.
"BB&T's acquisition strategy is to pursue very high quality banks and
thrifts in Southeastern markets that improve our financial performance and
franchise value," said BB&T Chairman and Chief Executive Officer John Allison.
"We could not be more pleased with the prospects of a merger with One Valley,
which clearly meets this objective.
"Both institutions have solid capital positions, excellent credit
quality, strong branch office networks and very compatible corporate cultures.
This transaction will enable us to grow our franchise value and build on our
momentum in selling fee-based products and services."
BB&T entered West Virginia last year with its acquisition of Matewan
Bancshares, a Williamson-based bank holding company with $676 million in assets.
The One Valley merger will increase BB&T's West Virginia assets to $5.3
billion and its Virginia assets to $6.6 billion. BB&T will rank sixth in market
share in Virginia.
One Valley customers will be introduced to BB&T's strong branch-based
sales culture and the following new and expanded products and services: capital
markets access, cash management services, leasing and international banking.
BB&T will provide 150 to 200 new jobs in the Charleston area to
minimize the effect of other staff reductions.
BB&T will create three community bank regions in West Virginia and one
in central Virginia. BB&T currently has 19 autonomous regions, which operate
like community banks. More than 95 percent of lending decisions are made
locally.
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"It has long been a strategy of ours to operate what we refer to as a
super community bank," said One Valley Chairman, President and Chief Executive
Officer J. Holmes Morrison, who will be named chairman and CEO of BB&T's West
Virginia operations and join the BB&T Corporation board.
"Being a super community bank means we're committed to local decision
making that results in responsible, reliable and empathetic client service. The
fact that BB&T shares this approach makes this a perfect fit."
Both institutions are also among the highest performing banks in the
country. BB&T was rated last year as the second highest performing S&P 500 bank
holding company in the nation by Business Week magazine.
One Valley was ranked by U.S. Banker magazine in 1999 as the 10th
highest performing bank holding company. It recently reported its 18th
consecutive year of increased net income and dividends and 13th straight year of
record earnings per share.
In addition to its nine banking subsidiaries serving 81 cities and
towns in West Virginia and central Virginia, One Valley operates a trust
division, discount brokerage and insurance arm.
"Our employees are well-recognized as the best in the financial
services industry in the markets we serve," Morrison said.
One Valley's West Virginia community banks are located in the state's
most economically vibrant areas, primarily along major interstate highways.
One Valley began its expansion into central Virginia in 1996, targeting
the Charlottesville, Lynchburg and Lexington markets.
One Valley Chief Operating Officer Phyllis Arnold will be named COO and
president of BB&T's West Virginia operations and president of a Charleston-based
BB&T community bank region.
A $10 million trust fund will be established for charitable
contributions and economic development in communities served by One Valley. One
Valley already has a similar $4 million trust fund.
The merger, which is subject to the approval of One Valley shareholders
and banking regulators, is expected to be completed in the third quarter.
Over the past five years, BB&T has had a dividend payout ratio in the
range of approximately 36.5% to 39.5% of recurring earnings and a compound
growth rate of the annual dividend of 14.9%. Consistent with this history, BB&T
management intends to recommend to the Board of Directors that the regular
quarterly dividend be increased from $.20 to $.23 per share in the third quarter
of 2000.
Winston-Salem-based BB&T Corporation, with $45.5 billion in assets,
operates 687 banking offices in the Carolinas, Georgia, Virginia, Maryland, West
Virginia, Kentucky and Washington D.C.
