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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): December 29, 1999
(December 14, 1999)
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
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(Exact Name of Registrant as Specified in Its Charter)
GEORGIA 0-10853 58-1458268
- ------------------------------ ------------- ------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
40 NORTH MAIN STREET, STATESBORO, GEORGIA 30458
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (912) 764-6611
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On December 14, 1999, First Banking Company of Southeast Georgia (the
"Company") entered into an Agreement and Plan of Reorganization (the
"Agreement") with BB&T Corporation ("BB&T"). Pursuant to the Agreement, the
Company will merge with BB&T in a stock-for-stock exchange (the "Merger").
Under the terms of the Agreement, BB&T will exchange 0.74 shares of its common
stock for each share of the Company's common stock.
The Merger is subject to approval of Company shareholders, federal and
state bank regulatory authorities and other customary closing conditions. The
Company and BB&T issued a press release on December 15, 1999 describing the
proposed transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Not applicable.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
2.1 Agreement and Plan of Reorganization by and
between First Banking Company of Southeast
Georgia and BB&T Corporation
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST BANKING COMPANY OF
SOUTHEAST GEORGIA
By: /s/ James E. Hodges
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Its: President
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Date: December 28, 1999
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
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<S> <C> <C>
2.1 Agreement and Plan of Reorganization by and between
First Banking Company of Southeast Georgia and BB&T
Corporation
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
AND
BB&T CORPORATION
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE II THE MERGER.................................................................................... 1
ARTICLE II THE MERGER.................................................................................... 6
2.1 Merger......................................................................................... 6
2.2 Filing; Plan of Merger......................................................................... 7
2.3 Effective Time................................................................................. 7
2.4 Closing........................................................................................ 7
2.5 Effect of Merger............................................................................... 7
2.6 Further Assurances............................................................................. 8
2.7 Merger Consideration........................................................................... 8
2.8 Conversion of Shares; Payment of Merger Consideration.......................................... 9
2.9 Conversion of Stock Options.................................................................... 10
2.10 No Right to Dissent............................................................................ 11
2.11 Merger of Subsidiaries......................................................................... 11
2.12 Anti-Dilution.................................................................................. 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FIRST BANKING.............................................. 12
3.1 Capital Structure.............................................................................. 12
3.2 Organization, Standing and Authority........................................................... 12
3.3 Ownership of Subsidiaries...................................................................... 12
3.4 Organization, Standing and Authority of the Subsidiaries....................................... 13
3.5 Authorized and Effective Agreement............................................................. 13
3.6 Securities Filings; Financial Statements; Statements True...................................... 14
3.7 Minute Books................................................................................... 15
3.8 Adverse Change................................................................................. 15
3.9 Absence of Undisclosed Liabilities............................................................. 15
3.10 Properties..................................................................................... 15
3.11 Environmental Matters.......................................................................... 16
3.12 Loans; Allowance for Loan Losses............................................................... 17
3.13 Tax Matters.................................................................................... 17
3.14 Employees; Compensation; Benefit Plans......................................................... 18
3.15 Certain Contracts.............................................................................. 22
3.16 Legal Proceedings; Regulatory Approvals........................................................ 23
3.17 Compliance with Laws; Filings.................................................................. 23
3.18 Brokers and Finders............................................................................ 24
3.19 Repurchase Agreements; Derivatives............................................................. 24
3.20 Deposit Accounts............................................................................... 24
3.21 Related Party Transactions..................................................................... 25
3.22 Certain Information............................................................................ 25
3.23 Tax and Regulatory Matters..................................................................... 25
3.24 State Takeover Laws............................................................................ 25
3.25 Labor Relations................................................................................ 25
3.26 Fairness Opinion............................................................................... 26
3.27 Year 2000 Compliance........................................................................... 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T........................................................ 26
4.1 Capital Structure of BB&T...................................................................... 26
4.2 Organization, Standing and Authority of BB&T................................................... 27
4.3 Authorized and Effective Agreement............................................................. 27
4.4 Organization, Standing and Authority of BB&T Subsidiaries...................................... 28
4.5 Securities Documents; Statements True.......................................................... 28
4.6 Certain Information............................................................................ 28
4.7 Tax and Regulatory Matters..................................................................... 28
4.8 Share Ownership................................................................................ 28
4.9 Legal Proceedings; Regulatory Approvals........................................................ 29
ARTICLE V COVENANTS...................................................................................... 29
5.1 First Banking Shareholder Meeting.............................................................. 29
</TABLE>
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<TABLE>
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5.2 Registration Statement; Proxy Statement/Prospectus............................................ 29
5.3 Best Efforts.................................................................................. 30
5.4 Plan of Merger; Reservation of Shares......................................................... 30
5.5 Additional Acts............................................................................... 31
5.6 Certain Accounting Matters.................................................................... 31
5.7 Access to Information......................................................................... 31
5.8 Press Releases................................................................................ 32
5.9 Forbearances of First Banking................................................................. 32
5.10 Employment Agreements......................................................................... 35
5.11 Affiliates.................................................................................... 35
5.12 Section 401(k) Plan; Other Employee Benefits.................................................. 35
5.13 Directors and Officers Protection............................................................. 36
5.14 Forbearances of BB&T.......................................................................... 37
5.15 Reports....................................................................................... 37
5.16 Exchange Listing.............................................................................. 38
5.17 Advisory Boards............................................................................... 38
ARTICLE VI CONDITIONS PRECEDENT......................................................................... 38
6.1 Conditions Precedent - BB&T and First Banking................................................. 38
6.2 Conditions Precedent - First Banking.......................................................... 39
6.3 Conditions Precedent - BB&T................................................................... 40
ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT.................................................. 41
7.1 Termination................................................................................... 41
7.2 Effect of Termination......................................................................... 42
7.3 Survival of Representations, Warranties and Covenants......................................... 42
7.4 Waiver........................................................................................ 43
7.5 Amendment or Supplement....................................................................... 43
ARTICLE VIII MISCELLANEOUS.............................................................................. 43
8.1 Expenses...................................................................................... 43
8.2 Entire Agreement.............................................................................. 43
</TABLE>
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<TABLE>
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8.3 No Assignment................................................................................. 44
8.4 Notices....................................................................................... 44
8.5 Specific Performance.......................................................................... 45
8.6 Captions...................................................................................... 45
8.7 Counterparts.................................................................................. 45
8.8 Governing Law................................................................................. 45
</TABLE>
ANNEXES
Annex A Articles of Merger
Annex B Employment Agreement with James E. Hodges
Annex C Employment Agreement Forms for up to Four
Additional Employees
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
December 14, 1999, is among FIRST BANKING COMPANY OF SOUTHEAST GEORGIA ("First
Banking"), a Georgia corporation having its principal office at Statesboro,
Georgia, and BB&T CORPORATION ("BB&T"), a North Carolina corporation having its
principal office at Winston-Salem, North Carolina;
R E C I T A L S:
The parties desire that First Banking shall be merged with and 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. As a condition and inducement to BB&T's
willingness to enter into the Agreement, First Banking is concurrently granting
to BB&T an option to acquire, under certain circumstances, 1,112,862 shares of
the common stock, par value $1.00 per share, of First Banking.
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 II
THE MERGER
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"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 the NCBCA, and with the office of the Secretary of State
of Georgia, as provided in Section 14-2-1105 of the GBCC.
"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
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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 First Banking 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 any
employee pension or welfare benefit plan or program maintained by First Banking
at the Effective Time, the date determined by BB&T with respect to each such
plan or program which shall be not later than January 1 following the close of
the calendar year in which the last of the First Banking Subsidiaries which is
a bank is merged into BB&T or one of the BB&T Subsidiaries.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" means 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 First Banking Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Environmental Claim" means any notice from any governmental authority
or third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based 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
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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 USBA Holdings, Ltd.
"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 First Banking, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of First Banking 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 First Banking in Securities
Documents and (ii) the consolidated statements of financial condition of First
Banking (including related notes and schedules, if any) and the related
consolidated statements of income and retained earnings, and cash flows
(including related notes and schedules, if any) included in Securities
Documents filed by First Banking with respect to periods ended subsequent to
December 31, 1998.
"First Banking Common Stock" shall mean the shares of voting common
stock, par value $1.00 per share, of First Banking. The First Banking Common
Stock has no Rights attached, except as provided in Section 3.1.
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"First Banking Disclosure Memorandum" shall mean the written
information in one or more documents, each of which is entitled "First Banking
Disclosure Memorandum" and dated on or before the date of this Agreement and
delivered not later than the date of execution of this Agreement by First
Banking to BB&T, and describing 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. Information disclosed with respect to one
Section shall not be deemed to be disclosed for purposes of any other Section
not specifically referenced.
"First Banking Subsidiaries" shall mean First Bulloch Bank & Trust
Company, Metter Banking Company, First National Bank of Effingham, Wayne
National Bank, and any and all other Subsidiaries of First Banking as of the
date hereof and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of First Banking after the date hereof
and held as a Subsidiary by First Banking at the Effective Time.
"GAAP" shall mean generally accepted accounting principles applicable
to financial institutions and their holding companies, as in effect at the
relevant date.
"GBCC" shall mean the Georgia Business Corporation Code, as amended.
"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.
"Material Adverse Effect" on BB&T or First Banking shall mean an
event, change, or occurrence which, individually or together with any other
event, change or occurrence, (i) has a material adverse effect on the financial
condition, results of operations, business or business prospects of BB&T and
the BB&T Subsidiaries taken as a whole, or First Banking and the First Banking
Subsidiaries taken as a whole, or (ii) materially impairs the ability of BB&T
or First Banking 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 the impact of (a) actions and omissions of BB&T or First Banking taken
with the prior written consent of the other in contemplation of the
transactions contemplated hereby and (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.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
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"NYSE" shall mean the New York Stock Exchange, Inc.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders
of First Banking 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 Agreement described under the definition of "BB&T
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, collectively, any option granted under the
Stock Option Plans, outstanding and unexercised on the date hereof to acquire
shares of First Banking Common Stock, aggregating 38,438 shares.
"Stock Option Plan" shall mean First Banking's 1997 Stock Option Plan.
"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).
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"TILA" shall mean the Truth in Lending Act, as amended.
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the
following sections:
<TABLE>
<S> <C>
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(c)
Constituent Corporations Section 2.1
Effective Time Section 2.3
Employer Entity Section 5.12(a)
Exchange Ratio Section 2.7(a)
First Banking Introduction
Merger Recitals
Merger Consideration Section 2.7(a)
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(b)
</TABLE>
ARTICLE II
THE MERGER
2.1 Merger
BB&T and First Banking are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the GBCC. At the
Effective Time:
(a) First Banking shall be merged with and into BB&T in accordance
with the applicable provisions of the NCBCA and the GBCC, with BB&T being the
surviving corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of First Banking shall cease and the
Merger shall in all respects have the effect 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.
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(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 First Banking Common Stock. 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 Georgia, as provided in
Section 55-11-05 of the NCBCA and Section 14-2-1105 of the GBCC, respectively.
The Plan of Merger is incorporated herein by reference, and adoption of this
Agreement by the Boards of Directors of the Constituent Corporations and
approval by the shareholders of First Banking shall constitute adoption and
approval of the Plan of Merger.
2.3 Effective Time
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
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 First
Banking 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
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
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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, 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 First Banking 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 which would otherwise
be distributable to a First Banking 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 First Banking Common Stock (the "Exchange Ratio") shall be
0.74.
(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 Value. The "Closing Value" shall mean the average
4:00 p.m. eastern time closing price per share of BB&T Common Stock on the NYSE
on the Closing Date as reported on NYSEnet.com.
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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 First Banking or the holders of record of First Banking
Common Stock, each share of First Banking 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 First Banking Common Stock (as provided in subsection (d) below),
the Merger Consideration.
(b) Each share of the common stock of BB&T 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 First Banking Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration. No interest will be paid or accrued
on the Merger Consideration upon the surrender of the certificate or
certificates representing shares of First Banking Common Stock. With respect to
any certificate for First Banking 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, no
transfer of the shares of First Banking 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 First Banking 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 First Banking Common Stock. Upon 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.
(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 First Banking in respect of shares of First Banking Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time, subject to compliance by First Banking with section 5.9(b).
To the extent permitted by law, former shareholders of record of First Banking
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 First Banking Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Banking Common Stock for certificates representing BB&T Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
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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
Effective Time shall be delivered to the holder of any certificate representing
First Banking 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 First Banking 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 Plan, except that from and after the Effective
Time (i) BB&T and its Compensation Committee shall be substituted for First
Banking and the Committee of First Banking's Board of Directors administering
the Stock Option Plan, (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 First Banking 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 Plan granting each Stock Option. 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 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 First Banking agree to take all necessary steps to effectuate
the foregoing 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
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soon as practicable after the Effective Time, if it has not already done so,
and to the extent First Banking 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
Exchange Act, BB&T shall administer the Stock Option Plan 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. First
Banking hereby represents that the Stock Option Plan in its current form
complies 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.
2.10 No Right to Dissent
Nothing in the Articles of Incorporation or the Bylaws of First
Banking or any First Banking Subsidiary provides or would provide to any
person, including without limitation the First Banking shareholders, upon
execution of this Agreement, the Plan of Merger or the BB&T Option Agreement
and consummation of the transactions contemplated hereby and thereby, rights of
dissent and appraisal of any kind.
2.11 Merger of Subsidiaries
In the event that BB&T shall request, First Banking shall take such
actions, and shall cause the First Banking Subsidiaries to take such actions,
as may be required in order to effect, at the Effective Time, the merger of one
or more of the First Banking Subsidiaries with and 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.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST BANKING
Except as Disclosed, First Banking represents and warrants to BB&T as
follows (the representations and warranties herein of First Banking are made
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 to refuse to consummate the Merger under such
applicable standard):
3.1 Capital Structure
The authorized capital stock of First Banking consists of 10,000,000
shares of First Banking Common Stock, par value $1.00 per share. As of the date
hereof, 5,592,274 shares of First Banking Common Stock are issued and
outstanding. No other classes of capital stock of First Banking, common or
preferred, are authorized, issued or outstanding. All outstanding shares of
First Banking Common 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 First Banking Common Stock reserved in
connection with the Stock Option Plan, and (ii) 1,112,862 shares of First
Banking Common Stock reserved in connection with the BB&T Option Agreement.
First Banking has granted options to acquire 38,438 shares of First Banking
Common Stock under the Stock Option Plan, 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 First Banking
shareholder to own, to vote or to dispose of, the capital stock of First
Banking. Holders of First Banking Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
First Banking is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, with full corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. First Banking 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 First Banking Disclosure Memorandum lists all of the
First Banking Subsidiaries and, with respect to each, its jurisdiction of
organization, jurisdictions in which it is qualified or otherwise licensed to
conduct business, the number of shares or ownership interests owned by First
Banking (directly or indirectly), the percentage ownership interest so owned by
First Banking and its business activities. The outstanding shares of capital
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stock or other equity interests of the First Banking Subsidiaries are validly
issued and outstanding, fully paid and nonassessable, and all such shares are
directly or indirectly owned by First Banking 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 First Banking Subsidiaries, and there are no agreements,
understandings or commitments relating to the right of First Banking to own, to
vote or to dispose of said interests. None of the shares of capital stock or
other equity interests of the First Banking Subsidiaries have been issued in
violation of the preemptive rights of any person. Section 3.3 of the First
Banking Disclosure Memorandum also lists all shares of capital stock or other
securities or ownership interests of any corporation, partnership, joint
venture, or other organization (other than the First Banking Subsidiaries and
stock or other securities held in a fiduciary capacity) owned directly or
indirectly by First Banking.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Banking Subsidiary which is a depository institution is a
national bank or Georgia chartered bank with its deposits insured by the FDIC.
Each of the First Banking Subsidiaries is validly existing and in good standing
under the laws of its jurisdiction of organization. Each of the First Banking
Subsidiaries has full power and authority to carry on its business as now
conducted, and is duly qualified to do business in each jurisdiction Disclosed
with respect to it. No First Banking Subsidiary is required to be qualified to
do business in any other state of the United States or foreign jurisdiction, or
is engaged in any type of activities that have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) First Banking 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 First Banking 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, the Articles of Merger and the BB&T Option Agreement, 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 First Banking
shareholders pursuant to and to the extent required by applicable law. This
Agreement, the Plan of Merger and the BB&T Option Agreement constitute legal,
valid and binding obligations of First Banking, and each is enforceable against
First Banking 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).
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(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 hereby or thereby, nor compliance by First Banking 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 First Banking or any
First Banking 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
First Banking or any First Banking 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 approvals,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to First Banking or any First Banking 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
First Banking of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Filings; Financial Statements; Statements True
(a) First Banking has timely filed all Securities Documents required by
the Securities Laws to be filed since December 31, 1996. First Banking has
Disclosed or made available to BB&T a true and complete copy of each Securities
Document filed by First Banking with the Commission after December 31, 1996 and
prior to the date hereof, which are all of the Securities Documents that First
Banking 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 First Banking fairly present or will
fairly present, as the case may be, the consolidated financial position of First
Banking and the First Banking 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 First Banking or any First Banking Subsidiary to
BB&T contains or will contain any untrue statement of a material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
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3.7 Minute Books
The minute books of First Banking and each of the First Banking
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.
3.8 Adverse Change
Since December 31, 1998, First Banking and the First Banking
Subsidiaries have not incurred any liability, whether accrued, absolute or
contingent, except as disclosed in the most recent First Banking 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 business
prospects of First Banking or any of the First Banking Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Banking and
the First Banking Subsidiaries are disclosed in the most recent Financial
Statements of First Banking or are normally recurring business obligations
incurred in the ordinary course of its business since the date of First
Banking's most recent Financial Statements.
3.10 Properties
(a) First Banking and the First Banking 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 First Banking 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 First Banking or any
First Banking Subsidiary, as lessee or licensee, leases or licenses rights to
real or personal property are valid and enforceable in accordance with their
respective terms.
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3.11 Environmental Matters
(a) First Banking and the First Banking Subsidiaries are and at all
times have been in compliance with all Environmental Laws. Neither First Banking
nor any First Banking Subsidiary has received any communication alleging that
First Banking or the First Banking 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 First Banking
nor any First Banking 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 legal, administrative, arbitral 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) First Banking or any First Banking Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim First Banking or any First
Banking 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
First Banking or any First Banking Subsidiary, or any real or personal property
which First Banking or any First Banking 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 First Banking or any First Banking Subsidiary holds a
security interest securing a loan recorded on the books of First Banking or any
First Banking Subsidiary. Neither First Banking nor any First Banking 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) First Banking and the First Banking Subsidiaries are in compliance
with all recommendations contained in any environmental audits, analyses and
surveys received by First Banking relating to all real and personal property
owned or leased by First Banking or any First Banking Subsidiary and all real
and personal property of which First Banking or any First Banking 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, circumstances,
conditions, events or incidents 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 First Banking or any First Banking Subsidiary or against any
person or entity whose liability for any Environmental Claim First Banking or
any First Banking Subsidiary has or may have retained or assumed, either
contractually or by operation of law.
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3.12 Loans; Allowance for Loan Losses
(a) All of the loans on the books of First Banking and the First
Banking Subsidiaries are valid and properly documented, 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 First Banking'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.
(b) The allowances for loan losses reflected on the consolidated
balance sheets included in the Financial Statements of First Banking are
adequate as of their respective dates under the requirements of GAAP and
applicable regulatory requirements and guidelines.
3.13 Tax Matters
(a) First Banking and the First Banking 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 First Banking nor any First Banking Subsidiary has
or will have any liability for any such taxes in excess of the amounts so paid
or reserves or accruals so established. First Banking and the First Banking
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 First Banking and the First Banking Subsidiaries are complete
and accurate. Neither First Banking nor any First Banking 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 First Banking or any
First Banking Subsidiary which have not been settled and paid. There are
currently no agreements in effect with respect to First Banking or any
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First Banking 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 First Banking nor any of the First Banking 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 First Banking or a First Banking
subsidiary) or has any liability for taxes of any person (other than First
Banking and the First Banking 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.
(e) Each of First Banking and the First Banking 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 First Banking nor any of the First Banking 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. First Banking 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 First Banking and of each First Banking
Subsidiary and each other person (in each case other than as an employee) to
whom First Banking or any First Banking 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) First Banking has Disclosed an accurate and complete list
of all Plans, as defined below, contributed to, maintained or sponsored
by First Banking or any First Banking Subsidiary, to which First
Banking or any First Banking Subsidiary is obligated to contribute or
has any liability or potential liability, whether direct
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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 First Banking or any First Banking 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 employee benefit plan as
defined in Section 3(3) of ERISA, whether or not funded and whether or
not terminated.
(ii) Neither First Banking nor any First Banking 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 First Banking or any First
Banking 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
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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) 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 First Banking or any
First Banking Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code, neither First
Banking nor any First Banking 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 First Banking or any First Banking
Subsidiary to any tax under Sections 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 First Banking or any First Banking Subsidiary is
a member or was a member during such five-year period.
(vii) As of December 31, 1998, 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.
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(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 First Banking nor, to the
best knowledge of First Banking, any First Banking 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 First Banking or any First
Banking 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.
(x) First Banking and each First Banking Subsidiary has been
and is presently in compliance with all of the requirements of Section
4980B of the Code.
(xi) Neither First Banking nor any First Banking 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
First Banking as of December 31, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) First
Banking's or any First Banking 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, First Banking 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.
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(xiv) Each of the Plans as applied to First Banking and any
First Banking Subsidiary may be amended or terminated at any time by
action of First Banking's Board of Directors, or such First Banking'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 First Banking or a First Banking
Subsidiary thereunder).
3.15 Certain Contracts
(a) Neither First Banking nor any First Banking Subsidiary is
a party to, is bound or affected by, or receives benefits under (i) any
agreement, arrangement or commitment, written or oral, the default of
which would have a Material Adverse Effect, whether or not made in the
ordinary course of business (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 business
activities, 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 First Banking or any First Banking Subsidiary or
the guarantee by First Banking or any First Banking Subsidiary of any
such obligation, which cannot be terminated within less than 30 days
after the Closing Date by First Banking or any First Banking Subsidiary
(without payment of any 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 30 days after the
Closing Date by First Banking or any First Banking Subsidiary (without
payment of any penalty or cost), or that provides benefits which are
contingent, or the application of which is altered, upon the occurrence
of a transaction involving First Banking 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 plan, 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 First Banking nor any First Banking Subsidiary is in
default under any agreement, commitment, arrangement, lease, insurance policy,
or other instrument, whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of
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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 best knowledge of First Banking,
threatened against First Banking or any knowledge of First Banking, threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or in the BB&T Option Agreement. To the best
knowledge of First Banking, no fact or condition relating to First Banking or
any First Banking Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent First Banking or BB&T from
obtaining all of the federal and state regulatory approvals contemplated
herein.instituted, pending or, to the best knowledge of First Banking,
threatened against First Banking or any First Banking Subsidiary or against any
asset, interest, plan or right of First Banking or any First Banking Subsidiary,
or, to the best knowledge of First Banking, 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 best knowledge of First Banking,
threatened against any present or former director or officer of First Banking or
any First Banking Subsidiary that would reasonably be expected to give rise to a
claim against First Banking or any First Banking Subsidiary for indemnification.
There are no actual or, to the best knowledge of First Banking, threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or in the BB&T Option Agreement. To the best
knowledge of First Banking, no fact or condition relating to First Banking or
any First Banking Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent First Banking or BB&T from
obtaining all of the federal and state regulatory approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of First Banking and each First Banking 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 First Banking nor any
First Banking Subsidiary has received 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 First Banking nor any First Banking 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
communication requesting that it enter into any of the foregoing. Since December
31, 1995, First Banking and each of the First Banking Subsidiaries 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,
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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 First Banking nor any First Banking 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 First Banking or any First Banking Subsidiary has purchased securities
subject to an agreement to resell, First Banking or the First Banking 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 First Banking or any First
Banking Subsidiary has sold securities subject to an agreement to repurchase,
neither First Banking nor the First Banking Subsidiary has pledged collateral in
excess of the amount of the debt secured thereby. Neither First Banking nor any
First Banking Subsidiary has pledged collateral in excess of the amount required
under any interest rate swap or other similar agreement currently outstanding.
(b) Neither First Banking nor any First Banking 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 First Banking Subsidiaries that are
depository institutions are insured by the FDIC to the maximum extent permitted
by federal law, and the First Banking 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.
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3.21 Related Party Transactions
First Banking has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which First
Banking or any First Banking Subsidiary is a party with any director, executive
officer or 5% shareholder of First Banking or any person, corporation, or
enterprise controlling, controlled by or under common control with any of the
foregoing. All such transactions, investments and loans are on terms no less
favorable to First Banking than could be obtained from unrelated parties.
3.22 Certain Information
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of First Banking to vote on the Plan of Merger, the
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by First Banking, (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.
3.23 Tax and Regulatory Matters
Neither First Banking nor any First Banking Subsidiary has taken or
agreed to 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 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
First Banking and each First Banking 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.
3.25 Labor Relations
Neither First Banking nor any First Banking 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 First Banking or any First Banking Subsidiary
party to any collective bargaining agreement. There is no strike or other labor
dispute involving First Banking or any First Banking
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Subsidiary, pending or threatened, or to the best knowledge of First Banking, is
there any activity involving any employees of First Banking or any First Banking
Subsidiary seeking to certify a collective bargaining unit or engaging in any
other organization activity.
3.26 Fairness Opinion
First Banking has received from the Financial Advisor an opinion that,
as of the date hereof, the Merger Consideration is fair to the shareholders of
First Banking from a financial point of view.
3.27 Year 2000 Compliance
All Systems (as defined below) and all components thereof will function
in accordance with applicable specifications, documentation and warranties prior
to, during and after the calendar year 2000. Prior to, during and after the
calendar year 2000, each of the Systems will accurately accept date-related
records and information for the years 2000 and following and perform
computations respecting or based on such date-related information in an accurate
and appropriate manner. No change in any calendar year shall adversely affect
the accurate performance of any Systems nor cause any Systems or any of their
components to operate in a manner not in accordance with applicable
specifications, documentation or warranties. For the purpose of this paragraph,
"Systems" includes all proprietary and third-party software and computers and
other automated machines or systems of any kind used or operated by First
Banking (including but not limited to systems relating to the operation of
buildings and facilities such as elevators, escalators and automated HVAC
systems).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to First Banking as follows (the
representations and warranties herein of BB&T are made subject to the applicable
standard set forth in Section 6.2(a), and no such representation or warranty
shall be deemed to be inaccurate unless the inaccuracy would permit First
Banking to refuse 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 318,538,910 shares
were issued and outstanding as of October 31, 1999. All outstanding shares of
BB&T Common Stock
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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 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.
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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; Statements True
BB&T has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1995. 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. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by BB&T or any other BB&T Subsidiary to
First Banking contains or will contain any untrue statement of material fact or
will omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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 First Banking 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 Tax and Regulatory Matters
Neither BB&T nor any BB&T Subsidiary has taken or agreed to 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, or (ii) materially 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).
4.8 Share Ownership
As of the date of this Agreement, BB&T does not own (except in a
fiduciary capacity) any shares of First Banking Common Stock.
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4.9 Legal Proceedings; Regulatory Approvals
There are no actual or, to the best knowledge of BB&T, threatened
actions, suits or proceedings instituted, which present a claim to restrain or
prohibit the transactions contemplated herein. To the best 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 First
Banking from obtaining all of the federal and state regulatory approvals
contemplated herein.
ARTICLE V
COVENANTS
5.1 First Banking Shareholder Meeting
First Banking shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and by
approving execution of this Agreement, the Board of Directors of First Banking
agrees that it shall, at the time the Proxy Statement/Prospectus is mailed to
the shareholders of First Banking, recommend that First Banking's shareholders
vote for such approval; provided, that the Board of Directors of First Banking
may withdraw or refuse to make such recommendation only if the Board of
Directors shall determine in good faith that such recommendation should not be
made in light of its fiduciary duty to First Banking's shareholders after
consideration of (i) written advice of legal counsel that, in the opinion of
such counsel, such recommendation or the failure to withdraw or modify such
recommendation could reasonably be expected to constitute a breach of the
fiduciary duty of the Board of Directors to the shareholders of First Banking,
and (ii) a written determination from the Financial Advisor that the Merger
Consideration is not fair or is inadequate to the First Banking shareholders
from a financial point of view, accompanied by a detailed analysis of the
reasons for such determination.
5.2 Registration Statement; Proxy Statement/Prospectus
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As promptly as practicable after the date hereof, BB&T shall prepare
and file the Registration Statement with the Commission. First Banking will
furnish to BB&T the Statement prior to the filing with the Commission. Such
Registration Statement, at the time it becomes effective and on the Effective
Time, shall in all material respects conform to the requirements of the
Securities Act and the applicable rules and regulations of the Commission. The
Registration Statement shall include the form of Proxy Statement/Prospectus.
BB&T and First Banking shall use their reasonable best efforts to cause the
Proxy Statement/Prospectus to be approved by the Commission for mailing to the
First Banking 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. First Banking shall cause the Proxy Statement/Prospectus to be
mailed to shareholders in accordance with all applicable notice requirements
under the Securities Laws and the GBCC.
5.3 Best Efforts
Each of BB&T and First Banking 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 First
Banking 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.
5.4 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.
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5.5 Additional Acts
(a) First Banking 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 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 and First
Banking 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. First Banking and BB&T each
represents and warrants to the other that all information included (or submitted
for inclusion) concerning it, its 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.
5.6 Certain Accounting Matters
First Banking shall cooperate with BB&T concerning 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; provided, that any action taken pursuant to this Section
5.6 shall not be deemed to constitute or result in the breach of any
representation or warranty of First Banking contained in this Agreement.
5.7 Access to Information
First Banking 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,
First Banking 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 First Banking and the
First Banking Subsidiaries and, during such period, shall 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
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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 First Banking 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 First Banking
Except with the prior written consent of BB&T, between the date hereof
and the Effective Time, First Banking shall not, and shall cause each of the
First Banking 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 $.17 per share of First Banking Common
Stock payable on record dates and in amounts consistent with past
practices; provided that any dividend declared or payable on the shares
of First Banking Common Stock for the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
BB&T and First Banking, 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;
(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plan with respect to the
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;
(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 First Banking
Subsidiary, or permit any
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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
assets or acquire any 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 outstanding as of the
date of this Agreement), 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;
(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, First Banking or any First Banking Subsidiary or any
business combination with First Banking or any First Banking Subsidiary
other than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of First Banking or any First Banking
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 subsection (k) shall not
apply to furnishing information, negotiations or discussions following
an unsolicited offer if, as a result of such offer, First Banking is
advised in writing by legal counsel that in its opinion the failure to
so furnish information or negotiate would likely constitute a breach of
the fiduciary duty of First Banking's Board of Directors to the First
Banking shareholders;
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(l) enter into (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 First Banking
or a First Banking Subsidiary or guarantee by First Banking or a First
Banking 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,
First Banking 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, 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 year ended December 31, 1998, except as required by
changes in law or regulation;
(o) incur any commitments for capital expenditures or
obligation to make capital expenditures in excess of $25,000, for any
one expenditure, or $100,000, in the aggregate;
(p) incur any 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
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(s) agree to do any of the foregoing.
5.10 Employment Agreements
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements with James E. Hodges substantially in the form of Annex B hereto and
with up to four additional employees of First Banking substantially in the form
of Annex C hereto.
5.11 Affiliates
First Banking shall use its best efforts to cause all persons who are
Affiliates of First Banking to deliver to BB&T promptly following 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 except 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 with respect to
the 401(k) plan of First Banking, BB&T shall cause the 401(k) plan of First
Banking either to be merged with the 401(k) plan maintained by BB&T and the BB&T
Subsidiaries or terminated, in each case subject to the receipt of all
applicable regulatory or governmental approvals. Each employee of First Banking
at the Effective Time who becomes an employee immediately following the
Effective Time of BB&T or a BB&T Subsidiary ("Employer Entity") and is an
employee of an Employer Entity as of the Benefit Plan Determination Date shall
be eligible to participate in BB&T's 401(k) plan (subject to complying with
eligibility requirements and to BB&T's right to terminate such plan). Until the
Benefit Plan Determination Date, BB&T shall continue in effect for the benefit
of participating employees the Section 401(k) plan of First Banking. For
purposes of administering BB&T's 401(k) plan, service with First Banking and the
First Banking Subsidiaries shall be deemed to be service with BB&T or the BB&T
Subsidiaries for participation and vesting purposes, but not for purposes of
benefit accrual.
(b) Each employee of First Banking or a First Banking Subsidiary at the
Effective Time who becomes an employee immediately following the Effective Time
of an Employer Entity (a "Transferred Employee") shall be eligible to
participate in group hospitalization, medical, dental, life, disability and
other welfare benefit plans and programs available to employees of the Employer
Entity, subject to the terms of such plans and programs, as of the Benefit Plan
Determination Date with respect to each such plan or program, conditional upon
the Transferred Employee's being employed by an
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Employer Entity as of such Benefit Plan Determination Date. With respect to any
welfare benefit plan or program of First Banking 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 First Banking plan or program in effect for
the benefit of the Transferred Employees 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 each
such plan or program, service with First Banking 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.
(c) Each Transferred Employee who is terminated by an Employer Entity
subsequent to the Effective Time, excluding any employee who has an existing
employment or special termination agreement which is Disclosed, shall be
entitled to severance pay in accordance with the general severance policy
maintained by BB&T, if and to the extent that such employee is entitled to
severance pay under such policy. Such employee's service with First Banking or a
First Banking Subsidiary shall be treated as service with BB&T for purposes of
determining the amount of severance pay, if any, under BB&T's severance policy.
(d) BB&T agrees to honor all employment agreements, severance
agreements and deferred compensation agreements that First Banking and the First
Banking 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 Agreement, First Banking's
Target Benefit Plan and other employee benefit plans of First Banking shall be
terminated or, in the sole discretion of BB&T, merged into comparable plans of
BB&T, effective as BB&T shall determine in its sole discretion.
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 First Banking for acts
or omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in First Banking's policy on
the date hereof; provided, that in no event shall the annual premium on such
policy exceed 150% of the annual premium payments on First Banking'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
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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 First Banking or any First Banking
Subsidiary prior to the Effective Time from any acts or omissions in such
capacities prior to the Effective Time, to the extent that such indemnification
is provided pursuant to the Articles of Incorporation of First Banking on the
date hereof and is permitted under the NCBCA.
5.14 Forbearances of BB&T
Except with the prior written consent of First Banking, which consent
shall not be arbitrarily or unreasonably withheld, between the date hereof and
the Effective Time, neither BB&T nor any BB&T Subsidiary shall take any action
which 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 First Banking 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 First Banking and BB&T shall file (and shall cause the First
Banking 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 First Banking, 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.
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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 First Banking 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.
5.17 Advisory Boards
As of the Effective Time, BB&T shall offer to the members of the Boards
of Directors of each First Banking Subsidiary that is a bank a seat on the
BB&TAdvisory Board for the area in which each such bank is located. For two
years following the Effective Time, the Advisory Board members appointed
pursuant to this Section 5.17 and who continue to serve shall receive, as
compensation for service on the Advisory Board, Advisory Board member's fees
(annual retainer and attendance fees) equal in amount each year (prorated for
any partial year) to the annual retainer and schedule of attendance fees for
directors of the corresponding First Banking Subsidiary in effect on December 1,
1999. Following such two-year period, Advisory Board Members, if they continue
to serve in such capacity, 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). Membership of any person or
any Advisory Board shall be conditional upon execution by such person of an
agreement providing that such member will not engage in activities competitive
with BB&T for two years following the Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and First Banking
The respective obligations of BB&T and First Banking 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 First Banking 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
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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;
(d) None of BB&T, any of the BB&T Subsidiaries, First Banking or any of
the First Banking 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;
(e) First Banking and BB&T shall have received an opinion of BB&T's
legal counsel, in form and substance satisfactory to First Banking and 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 First
Banking will not recognize any gain or loss to the extent that such shareholders
exchange shares of First Banking Common Stock for shares of BB&T Common Stock;
and
6.2 Conditions Precedent - First Banking
The obligations of First Banking 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 First Banking 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
First Banking. The representations and warranties of BB&T set forth in Sections
4.1, 4.2 (except as relates to qualification), 4.3(a), 4.3(b)(i) and 4.4 (except
as relates to qualification) shall be true and correct (except for inaccuracies
which are de minimus in amount). There shall not exist inaccuracies in the
representations and warranties of BB&T set forth in this Agreement (including
the representations and warranties set forth in Sections 4.1, 4.2, 4.3(a),
4.3(b)(i) and 4.4) 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 First Banking a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to
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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
and that there are no actions, suits, claims, governmental investigations or
procedures instituted, pending or, to the best of such officer's knowledge,
threatened that reasonably may be expected to have a Material Adverse Effect on
BB&T or that present a claim to restrain or prohibit the transactions
contemplated herein or in the Plan of Merger.
(d) First Banking shall have received opinions of counsel to BB&T in
the form reasonably acceptable to First Banking's legal counsel.
(e) 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.
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 First Banking 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 First Banking set forth
in Sections 3.1, 3.2 (except the last sentence thereof), 3.3, 3.4 (except the
last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be true and
correct (except for inaccuracies which are de minimis in amount). There shall
not exist inaccuracies in the representations and warranties of First Banking
set forth in this Agreement (including the representations and warranties set
forth in the Sections designated in the preceding sentence) such that the effect
of such inaccuracies individually or in the aggregate has, or is reasonably
likely to have, a Material Adverse Effect on First Banking and the First Banking
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.
(c) First Banking shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) First Banking 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 First Banking, have been satisfied and that there are no
actions, suits, claims, governmental
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investigations or procedures instituted, pending or, to the best of such
officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on First Banking or that present a claim to restrain or
prohibit the transactions contemplated herein or in the Plan of Merger.
(e) BB&T shall have received opinions of counsel to First Banking in
the form reasonably acceptable to BB&T's legal counsel.
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 to the extent necessary, in the reasonable judgment of
BB&T, to ensure that the Merger will be accounted for as a pooling of interests
under GAAP and to promote compliance with Rule 145 promulgated by the
Commission.
(g) 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.
(h) BB&T shall have received an Employment Agreement substantially in
the form of Annex B hereto executed by James E. Hodges.
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 (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 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 First Banking 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
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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 First Banking do not approve the Agreement and the Plan of Merger.
(f) At any time following August 31, 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 11:59 p.m. on February 28, 2000 by BB&T in
writing, if BB&T determines in its sole good faith judgment, through review of
information Disclosed by First Banking, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Banking and of the First Banking Subsidiaries, taken as a whole, are materially
adversely different from BB&T's reasonable expectations with respect thereto on
the date of execution of this Agreement; provided that BB&T shall inform First
Banking upon such termination as to the reasons for BB&T's determination. The
fact that First Banking has Disclosed information shall not prevent BB&T from
terminating this Agreement pursuant to this Section 7.1(g) on account of such
information.
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 BB&T Option Agreement shall be governed by its own terms.
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 and 5.17); provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or First Banking (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
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shareholder or former shareholder of either BB&T or First Banking, the aforesaid
representations, warranties and covenants being material inducements to
consummation by BB&T and First Banking of the transactions contemplated herein.
7.4 Waiver
Except with respect to any required regulatory approval, 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 First Banking 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 First Banking 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 First Banking, subject to
the proviso to Section 7.4.
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 First
Banking.
8.2 Entire Agreement
This Agreement, including the documents and other writings referenced
herein or
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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 First Banking to
enforce rights in Sections 5.13 and 5.17.
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 First Banking:
James E. Hodges
First Banking Company of Southeast Georgia
40 North Main Street
Post Office Box 878
Statesboro, Georgia 30459
Telephone: 912-764-6611
Fax: 912-___-____
With a required copy to:
Walter G. Moeling
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Telephone: 404-572-6600
Fax: 404-572-6999
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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
First Banking acknowledges that the First Banking Common Stock and the
First Banking business and assets are unique, and that if First Banking 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 First Banking shall, without cause,
refuse to consummate the transactions contemplated by this Agreement.
8.6 Captions
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
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
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of the State of North Carolina, without regard to the principles of conflicts of
laws, except to the extent federal law may be applicable.
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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:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
FIRST BANKING COMPANY OF
SOUTHEAST GEORGIA
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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