<PAGE>
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):
February 24, 1999
MATEWAN BANCSHARES, INC.
(Exact Name of Registrant as specified in its charter)
DELAWARE No. 0-16707 No. 55-0639363
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
250 East Second Avenue
Williamson, West Virginia 25661
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (304) 235-1544
(Registrant's former address of principal executive offices)
Not Applicable
<PAGE>
Item 5. Other Events.
On February 24, 1999, Matewan BancShares, Inc., a Delaware
corporation, entered into an Agreement and Plan of Reorganization (the
"Agreement") with BB&T Corporation, a North Carolina corporation. Under the
Agreement, Matewan will merge into BB&T, and BB&T will be the surviving company.
At the effective time of the merger, each share of Matewan's common stock and
preferred stock issued and outstanding will be converted into the right to
receive the merger consideration. Based on BB&T's closing price on February 24,
1999, Matewan shareholders would have received .9333 BB&T shares of common stock
for each share of their Matewan common stock. Under the Agreement, the exchange
ratio will be determined as follows for Matewan's common stock:
. if the Closing Value (as defined below) is between $37.50 and
$40.4375, the exchange ratio will equal $35.00 divided by the
Closing Value.
. if the Closing Value is less than $37.50, then the exchange ratio
will be 0.9333.
. if the Closing Value is more than $40.4375, the exchange ratio
will be 0.8655.
"Closing Value" means the average closing price per share of BB&T's common stock
on the New York Stock Exchange Composite Transaction List for the five trading
days ending on the tenth calendar day immediately preceding the effective time
of the merger.
The exchange ratio for Matewan's preferred stock is the product of the
exchange ratio for Matewan's common stock (as calculated above) multiplied by
1.1.
The merger is subject to the approval of Matewan's shareholders and
applicable regulatory authorities. Matewan has granted BB&T the option,
exercisable under certain circumstances, to purchase up to 19.9% of Matewan's
shares of common stock outstanding.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release dated February 25, 1999, announcing the proposed
merger.
99.2 Agreement and Plan of Reorganization between Matewan BancShares,
Inc., and BB&T Corporation, dated February 24, 1999.
<PAGE>
99.3 Stock Option Agreement between Matewan BancShares, Inc., and
BB&T Corporation, dated February 24, 1999.
SIGNATURES
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.
Date: February 26, 1999
MATEWAN BANCSHARES, INC.
By: /s/ Dan R. Moore
---------------------------------------
Name: Dan R. Moore
Title: Chairman of the Board,
President and
Chief Executive Officer
<PAGE>
Exhibit Index
99.1 Press released dated February 25, 1999, announcing the proposed merger.
99.2 Agreement and Plan of Reorganization between Matewan BancShares, Inc., and
BB&T Corporation, dated February 24, 1999.
99.3 Stock Option Agreement between Matewan BancShares, Inc., and BB&T
Corporation, dated February 24, 1999.
<PAGE>
Exhibit 99.1
BB&T BB&T Corporation
- --------------------------------------------------------------------------------
Public Relations
200 West Second Street
Feb. 25, 1999 Winston-Salem, NC 27101
FOR IMMEDIATE RELEASE
News Release
Contacts:
- ---------
ANALYSTS
Tom A. Nicholson Scott Reed
Senior Vice President Sr. Exec. Vice President
Investor Relations Chief Financial Officer
(336) 733-3058 (336) 733-3088
MEDIA
Burney Warren Bob Denham Dan R. Moore
Executive Vice President Vice President President & CEO
Mergers & Acquisitions Public Relations Matewan BancShares
(252) 321-3347 (336) 733-2202 (304) 235-1544
BB&T to acquire Matewan BancShares
of Williamson, W.Va.
WINSTON-SALEM, N.C. - In a move that will strengthen its western Virginia
franchise, BB&T Corporation (NYSE:BBT) said today it will buy Matewan BancShares
Inc. (OTC:MATE) of Williamson, W.Va., in a stock swap valued at $157.9 million.
Matewan BancShares, with $676 million in assets, operates 22 banking
offices and one mortgage loan office in southwestern Virginia, southern West
Virginia and eastern Kentucky.
The transaction, approved by the directors of both companies, will give
Matewan shareholders .9333 BB&T shares, worth $33.89 based on BB&T's closing
price on Tuesday. The exchange ratio is based on a pricing period prior to
closing.
"This acquisition was particularly attractive because it will allow us to
expand our western Virginia franchise into southern West Virginia and eastern
Kentucky," said BB&T Chairman John Allison. "Matewan is an 86-year-old bank
with a reputation for excellent customer service. We look forward to continuing
that tradition."
MORE
<PAGE>
BB&T moved into western Virginia in August 1998 with its pending
acquisition of MainStreet Financial Corporation, a Martinsville-based community
banking franchise.
Earlier this year, BB&T said it would buy First Citizens Corporation of
Newnan, Ga., giving it entry into metropolitan Atlanta, and Mason-Dixon
Bancshares of Westminster, Md., giving it entry into central Maryland and
metropolitan Baltimore. When the Matewan acquisition is completed, BB&T, the
23rd largest bank in the country, will have banking offices in seven states and
Washington, D.C.
BB&T expects to capitalize on Matewan's growing commercial base by
providing substantially higher levels of credit and resources in the Tri-State
area, a region rapidly attracting new commerce and tourism. More than $1.2
billion in capital investments was committed to new business projects in West
Virginia last year and 158 companies announced the location of new facilities or
the expansion of existing facilities in the state. Kentucky was ranked one of
the Top 10 business climates in the nation by Financial World magazine.
Matewan customers will be introduced to a broad BB&T product line that
includes insurance, mutual funds, annuities, leasing, trust, retail brokerage
and investment banking.
Over the last five years, BB&T has produced the strongest growth rate in
noninterest revenue among the country's 50 largest banks. Its noninterest
income growth in 1998 was 28.5 percent. Yet, as it continues to grow, BB&T
allows for local decision-making through its community bank network - now
divided into 17 autonomous regions.
"BB&T's unique community banking network will be the perfect complement to
our brand of customer service known as ValueBanking," said Matewan BancShares
Chairman Dan R. Moore. "One great thing about this merger is that we'll be
allowed to continue delivering that same high level of reliable hometown service
to the hard-working people of the Tri-State. Only now we can also provide the
products and services of a financial institution with $35 billion in assets."
Williamson will become headquarters of BB&T's newest community banking
region in southern West Virginia, eastern Kentucky and part of southwestern
Virginia. Moore will be named president of the new region.
Matewan operates through banking subsidiaries Matewan National Bank and
Matewan FSB. The corporation also owns insurance and investment subsidiaries.
Its market area includes Mingo, Logan, Boone, Lincoln and Wayne counties in West
Virginia; Pike, Floyd, Johnson, martin and Letcher counties in Kentucky; and
Buchanan, Tazewell, Wise, Russell and Washington counties in Virginia.
The merger, which is subject to the approval of Matewan shareholders and
banking regulators, is expected to be completed in the third quarter of 1999.
BB&T Corporation with $35 billion in assets, operates 534 banking offices in
Virginia, Maryland, Washington, D.C. and the Carolinas.
<PAGE>
Exhibit 99.2
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
MATEWAN BANCSHARES, INC.
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I
DEFINITIONS.................................................................... 1
ARTICLE II
THE MERGER..................................................................... 6
2.1 Merger................................................................... 6
------
2.2 Filing; Plan of Merger................................................... 6
----------------------
2.3 Effective Time........................................................... 6
--------------
2.4 Closing.................................................................. 6
-------
2.5 Effect of Merger......................................................... 7
----------------
2.6 Further Assurances....................................................... 7
------------------
2.7 Merger Consideration..................................................... 7
--------------------
2.8 Conversion of Shares; Payment of Merger Consideration.................... 8
-----------------------------------------------------
2.9 Merger of Subsidiaries................................................... 9
----------------------
2.10 Anti-Dilution............................................................ 9
-------------
2.11 Dissenting Shares........................................................ 10
-----------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Matewan...................................... 10
3.1 Capital Structure........................................................ 10
-----------------
3.2 Organization, Standing and Authority..................................... 11
------------------------------------
3.3 Ownership of Subsidiaries................................................ 11
-------------------------
3.4 Organization, Standing and Authority of the Subsidiaries................. 11
--------------------------------------------------------
3.5 Authorized and Effective Agreement....................................... 11
----------------------------------
3.6 Securities Filings; Financial Statements; Statements True................ 12
---------------------------------------------------------
3.7 Minute Books............................................................. 13
------------
3.8 Adverse Change........................................................... 13
--------------
3.9 Absence of Undisclosed Liabilities....................................... 13
----------------------------------
3.10 Properties............................................................... 13
----------
3.11 Environmental Matters.................................................... 14
---------------------
3.12 Loans; Allowance for Loan Losses......................................... 14
--------------------------------
3.13 Tax Matters.............................................................. 15
-----------
3.14 Employees; Compensation; Benefit Plans................................... 16
--------------------------------------
3.15 Certain Contracts........................................................ 19
-----------------
3.16 Legal Proceedings; Regulatory Approvals.................................. 20
---------------------------------------
3.17 Compliance with Laws; Filings............................................ 20
-----------------------------
3.18 Brokers and Finders...................................................... 20
-------------------
3.19 Repurchase Agreements; Derivatives....................................... 21
----------------------------------
3.20 Deposit Accounts......................................................... 21
----------------
3.21 Related Party Transactions............................................... 21
--------------------------
3.22 Certain Information...................................................... 21
-------------------
3.23 Tax and Regulatory Matters............................................... 22
--------------------------
3.24 State Takeover Laws...................................................... 22
-------------------
3.25 Labor Relations.......................................................... 22
---------------
</TABLE>
<PAGE>
<TABLE>
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3.26 Fairness Opinion......................................................... 22
----------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T.......................................... 22
4.1 Capital Structure of BB&T................................................. 22
-------------------------
4.2 Organization, Standing and Authority of BB&T.............................. 23
--------------------------------------------
4.3 Authorized and Effective Agreement........................................ 23
----------------------------------
4.4 Organization, Standing and Authority of BB&T Subsidiaries................. 23
---------------------------------------------------------
4.5 Securities Documents; Statements True..................................... 24
-------------------------------------
4.6 Financial Statements..................................................... 24
--------------------
4.7 Certain Information...................................................... 24
-------------------
4.8 Tax and Regulatory Matters............................................... 24
--------------------------
4.9 Share Ownership.......................................................... 24
---------------
4.10 Legal Proceedings; Regulatory Approvals.................................. 25
---------------------------------------
4.11 Adverse Change........................................................... 25
--------------
ARTICLE V
COVENANTS...................................................................... 25
5.1 Matewan Shareholder Meeting.............................................. 25
---------------------------
5.2 Registration Statement; Proxy Statement/Prospectus....................... 25
--------------------------------------------------
5.3 Plan of Merger; Reservation of Shares.................................... 26
-------------------------------------
5.4 Additional Acts.......................................................... 26
---------------
5.5 Best Efforts............................................................. 26
------------
5.6 Certain Accounting Matters............................................... 27
--------------------------
5.7 Access to Information.................................................... 27
---------------------
5.8 Press Releases........................................................... 28
--------------
5.9 Forbearances of Matewan.................................................. 28
-----------------------
5.10 Employment Agreements.................................................... 30
---------------------
5.11 Affiliates............................................................... 30
----------
5.12 401(k) Plan; Pension Plan; Other Employee Benefits; Stock Purchase Plan.. 31
-----------------------------------------------------------------------
5.13 Directors and Officers Protection........................................ 32
---------------------------------
5.14 Forbearances of BB&T..................................................... 32
--------------------
5.15 Reports.................................................................. 33
-------
5.16 Exchange Listing......................................................... 33
----------------
5.17 Advisory Board for the Matewan Market Area............................... 33
------------------------------------------
5.18 Board of Directors of BB&T............................................... 33
--------------------------
ARTICLE VI
CONDITIONS PRECEDENT........................................................... 34
6.1 Conditions Precedent - BB&T and Matewan.................................. 34
---------------------------------------
6.2 Conditions Precedent - Matewan........................................... 34
------------------------------
6.3 Conditions Precedent - BB&T.............................................. 35
---------------------------
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT..................................... 36
7.1 Termination.............................................................. 36
-----------
7.2 Effect of Termination.................................................... 39
---------------------
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
7.3 Survival of Representations, Warranties and Covenants.................... 39
-----------------------------------------------------
7.4 Waiver................................................................... 39
------
7.5 Amendment or Supplement.................................................. 40
-----------------------
ARTICLE VIII
MISCELLANEOUS.................................................................. 40
8.1 Expenses................................................................. 40
--------
8.2 Entire Agreement......................................................... 40
----------------
8.3 No Assignment............................................................ 40
-------------
8.4 Notices.................................................................. 40
-------
8.6 Captions................................................................. 42
--------
8.7 Counterparts............................................................. 42
------------
8.8 Governing Law............................................................ 42
-------------
</TABLE>
ANNEXES
- -------
Annex A Articles of Merger
Annex B Form of Employment Agreement with Dan R. Moore
Annex C Form of Employment Agreements with Timothy Edwards
and Anna Ward
Annex D Form of Employment Agreement with Lee E. Ellis
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
February 24, 1999, is between MATEWAN BANCSHARES, INC. ("Matewan"), a Delaware
corporation having its principal office at Williamston, West Virginia, 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 Matewan 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, Matewan is concurrently granting to BB&T an option to
acquire, under certain circumstances, 791,700 shares of the common stock, par
value $1.00 per share, of Matewan.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
-----------
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any 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 Delaware Department of State, as
provided in Section 252 of the DGCL.
"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 the Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
1
<PAGE>
"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 Matewan 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.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"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 Matewan Disclosure Memorandum,
referencing the Section number herein pursuant to which such disclosure is being
made.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"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 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 the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq. ("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 Baxter Fentriss and Company.
2
<PAGE>
"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, 1997, 1996, and 1995, 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,
1997, 1996, and 1995, 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, 1997, and (b) with respect to Matewan, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of Matewan as of December 31, 1997, 1996 and 1995, 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, 1997, 1996 and 1995, as filed by Matewan in Securities
Documents, and (ii) the consolidated statements of financial condition of
Matewan (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 Matewan with respect to periods ended subsequent to December 31, 1997.
"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the relevant
date.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or regulation,
including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v)
poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste
which are otherwise dangerous, hazardous, harmful to human health or the
environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or Matewan 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 Matewan and the Matewan Subsidiaries taken as
a whole, or (ii) materially impairs the ability of BB&T or Matewan 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 Matewan 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.
"Matewan Common Stock" shall mean the shares of voting common stock, par
value $1.00 per share, of Matewan. The Matewan Common Stock has no Rights
attached, except as provided in Section 3.1.
"Matewan Disclosure Memorandum" shall mean the written information in one
or more documents, each of which is entitled "Matewan 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 Matewan to
3
<PAGE>
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.
"Matewan Preferred Stock" shall mean the shares of Cumulative Convertible
Preferred Stock, Series A, par value $1.00 per share, of Matewan. The Matewan
Preferred Stock has no Rights attached, except as provided in Section 3.1.
"Matewan Subsidiaries" shall mean Matewan National Bank, Matewan Bank FSB,
Matewan Venture Fund, Inc., any and all other Subsidiaries of Matewan as of the
date hereof and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Matewan after the date hereof and held
as a Subsidiary by Matewan at the Effective Time.
"NCBCA" shall mean the North Carolina Business Corporation Act, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of Matewan 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.
"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
4
<PAGE>
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).
"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 Ratio Section 7.1(h)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(d)
Common Exchange Ratio Section 2.7
Constituent Corporations Section 2.1
Determination Date Section 7.1(h)
Dissenting Shareholder Section 2.11
Dissenting Shares Section 2.11
Effective Time Section 2.3
Employer Entity Section 5.12(b)
Index Group Section 7.1(h)
Index Price Section 7.1(h)
Matewan Introduction
Maximum Amount Section 5.13
Merger Recitals
Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Pension Plan Section 5.12(b)
Preferred Exchange Ratio Section 2.7
Starting Date Section 7.1(h)
Surviving Corporation Section 2.1(a)
</TABLE>
ARTICLE II
THE MERGER
2.1 Merger
------
BB&T and Matewan are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA. At the Effective
Time:
5
<PAGE>
(a) Matewan shall be merged with and into BB&T in accordance with the
applicable provisions of the NCBCA and the DGCL, with BB&T being the surviving
corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of Matewan 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.
(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 the requisite number of shares
of Matewan Common Stock and Matewan Preferred 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 Delaware Department of State, as provided in
Section 55-11-05 of the NCBCA and Section 252 of the DGCL, 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 Matewan 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 Matewan 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
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to and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
------------------
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, 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
--------------------
As used herein, the term "Merger Consideration" shall mean the number of
shares of BB&T Common Stock to be exchanged for each share of Matewan Common
Stock issued and outstanding as of the Effective Time (the "Common Exchange
Ratio") and for each share of Matewan Preferred Stock issued and outstanding as
of the Effective Time (the "Preferred Exchange Ratio") 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 Matewan shareholder as
provided in Section 2.7(d). The Preferred Exchange Ratio shall equal the
product of the Common Exchange Ratio multiplied by 1.1. The Common Exchange
Ratio shall be determined as follows:
(a) If the Closing Value (as defined below) is between $37.50 and $40.4375,
the Common Exchange Ratio shall be the number (rounded to four decimal places)
yielded by dividing $35.00 by the Closing Value.
(b) If the Closing Value is less than $37.50, the Common Exchange Ratio
shall be 0.9333.
(c) If the Closing Value is more than $40.4375, the Common Exchange Ratio
shall be 0.8655.
(d) 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 closing
price per share of BB&T Common Stock on the NYSE Composite Transaction List (as
reported by The Wall Street Journal - Eastern Edition) for the five trading days
(determined by excluding days on which the NYSE is closed) ending on the tenth
calendar day immediately
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preceding the Effective Time (the tenth day to be determined by counting the
first calendar day preceding the Effective Time as the first day). No person
will be entitled to dividends, voting rights or any other rights as a BB&T
shareholder in respect of any fractional share.
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 Matewan or the holders of record of Matewan Common Stock or
Matewan Preferred Stock, each share of Matewan Common Stock and each share of
Matewan Preferred 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 Matewan Common
Stock or Matewan Preferred 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 Matewan Common Stock or Matewan
Preferred 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 Matewan Common Stock or
Matewan Preferred Stock. With respect to any certificate for Matewan Common
Stock or Matewan Preferred 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 Matewan Common Stock or Matewan Preferred 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 Matewan 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 Matewan
Common Stock or Matewan Preferred 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 Matewan in respect of shares of Matewan Common Stock or
Matewan Preferred Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time, subject to compliance by Matewan with
Section 5.9(b). To the extent permitted by law, former shareholders of record
of Matewan 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 Matewan Common Stock or Matewan Preferred Stock are
converted, regardless of whether such holders have exchanged their certificates
representing Matewan Common Stock or Matewan Preferred Stock for certificates
representing BB&T Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by BB&T on the
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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 Matewan Common Stock or Matewan Preferred 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 Matewan
Common Stock or Matewan Preferred Stock represented by such certificate.
2.9 Merger of Subsidiaries
----------------------
In the event that BB&T shall request, Matewan shall take such actions, and
shall cause the Matewan 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 Matewan
Subsidiaries with and into, in each case, one of the BB&T Subsidiaries or any
other Subsidiary of BB&T. In the event that any such actions shall be taken and
the Merger shall not be consummated for any reason other than a breach of this
Agreement by Matewan, BB&T shall reimburse Matewan for all legal and regulatory
costs incurred by Matewan with respect to such actions.
2.10 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 Common Exchange Ratio and the
Preferred Exchange Ratio shall be proportionately adjusted.
2.11 Dissenting Shares
-----------------
Any holder of shares of Matewan Preferred Stock who shall have exercised
appraisal rights with respect to the Merger in accordance with the DGCL and who
has properly exercised such shareholder's rights to demand payment of the "fair
value" of the Shareholder's shares (the "Dissenting Shares") as provided in the
DGCL (the "Dissenting Shareholder") shall thereafter have only such rights, if
any, as are provided a Dissenting Shareholder in accordance with the DGCL and
shall have no rights under Sections 2.7 and 2.8; provided, however, that if a
Dissenting Shareholder shall withdraw (in accordance with the DGCL) the demand
for such appraisal or shall become ineligible for such appraisal, then such
Dissenting Shareholder's Dissenting Shares automatically shall cease to be
Dissenting Shares and shall be converted into and represent only the right to
receive from the Surviving Corporation the Merger Consideration provided for in
Section 2.7 upon surrender of the certificate representing the Dissenting
Shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Matewan
Except as Disclosed, Matewan represents and warrants to BB&T as follows
(the representations and warranties herein of Matewan 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 Matewan consists of 10,000,000 shares of
Matewan Common Stock, par value $1.00 per share, and 1,000,000 shares of
preferred stock, par value $1.00 per share. As of the date hereof, 3,978,392
shares of Matewan Common Stock and 617,358 shares of Matewan Preferred Stock are
issued and outstanding. No other classes of capital stock of Matewan, common or
preferred, are authorized, issued or outstanding. All outstanding shares of
Matewan Common Stock and Matewan Preferred 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 Matewan Common
Stock reserved for issuance upon conversion of shares of Matewan Preferred Stock
and (ii) 791,700 shares of Matewan Common Stock reserved in connection with the
BB&T Option Agreement. 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 Matewan
shareholder to own, to vote or to dispose of, the capital stock of Matewan.
Holders of Matewan Common Stock and holders of Matewan Preferred Stock do not
have preemptive rights.
3.2 Organization, Standing and Authority
------------------------------------
Matewan is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. Matewan has qualified to do business in West
Virginia, Kentucky and Virginia, and Matewan 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 Matewan Disclosure Memorandum lists all of the Matewan
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 Matewan (directly
or indirectly), the percentage ownership interest so owned by Matewan and its
business activities. The outstanding shares of capital stock or other equity
interests of the Matewan Subsidiaries are validly issued and outstanding, fully
paid and nonassessable, and all such shares are directly or indirectly owned by
Matewan 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 Matewan
Subsidiaries, and there are no agreements, understandings or commitments
relating to the right of Matewan to own, to vote or to dispose of said
interests. None of the shares of capital stock or other equity interests of the
Matewan Subsidiaries have been issued in violation of the preemptive rights of
any person. Section 3.3 of the Matewan Disclosure Memorandum also lists all
shares of capital stock or other
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securities or ownership interests of any corporation, partnership, joint
venture, or other organization (other than the Matewan Subsidiaries) owned
directly or indirectly by Matewan.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each Matewan Subsidiary which is a depository institution is a federally
chartered national bank or savings association with its deposits insured by the
FDIC. Each of the Matewan Subsidiaries is validly existing and in good standing
under the laws of its jurisdiction of organization. Each of the Matewan
Subsidiaries has full corporate 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 Matewan 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) Matewan 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 Matewan 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 Matewan 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 Matewan, and each is enforceable against Matewan in accordance
with its terms, in each such case subject to (i) bankruptcy, fraudulent
transfer, insolvency, moratorium, reorganization, conservatorship, receivership,
or other similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity (whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Matewan 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 Matewan or any
Matewan 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
Matewan or any Matewan 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 Matewan or any Matewan 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
Matewan of the Merger and the other transactions contemplated in this Agreement.
3.6 Securities Filings; Financial Statements; Statements True
---------------------------------------------------------
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(a) Matewan has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1995. Matewan has Disclosed or
made available to BB&T a true and complete copy of each Securities Document
filed by Matewan with the Commission after December 31, 1995 and prior to the
date hereof, which are all of the Securities Documents that Matewan 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 Matewan fairly present or will fairly
present, as the case may be, the consolidated financial position of Matewan and
the Matewan 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 Matewan or any Matewan 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.
3.7 Minute Books
------------
The minute books of Matewan and each of the Matewan 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, 1997, Matewan and the Matewan Subsidiaries have not
incurred any liability, whether accrued, absolute or contingent, except as
disclosed in the most recent Matewan 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 Matewan or any of the
Matewan Subsidiaries.
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of Matewan and the
Matewan Subsidiaries are disclosed in the most recent Financial Statements of
Matewan or were incurred in the ordinary course of its business since the date
of Matewan's most recent Financial Statements.
3.10 Properties
----------
(a) Matewan and the Matewan 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
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personal, tangible and intangible, reflected on the consolidated balance sheet
included in the Financial Statements of Matewan as of December 31, 1997 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 Matewan or any Matewan
Subsidiary, as lessee or licensee, leases or licenses rights to real or personal
property are valid and enforceable in accordance with their respective terms.
3.11 Environmental Matters
---------------------
(a) Matewan and the Matewan Subsidiaries are and at all times have been in
compliance with all Environmental Laws. Neither Matewan nor any Matewan
Subsidiary has received any communication alleging that Matewan or the Matewan
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 Matewan nor any
Matewan 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)
Matewan or any Matewan Subsidiary, (ii) any person or entity whose liability for
any Environmental Claim Matewan or any Matewan 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 Matewan or any Matewan Subsidiary, or
any real or personal property which Matewan or any Matewan 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 Matewan or any Matewan Subsidiary
holds a security interest securing a loan recorded on the books of Matewan or
any Matewan Subsidiary. Neither Matewan nor any Matewan 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) Matewan and the Matewan Subsidiaries are in compliance with all
recommendations contained in any environmental audits, analyses and surveys
received by Matewan relating to all real and personal property owned or leased
by Matewan or any Matewan Subsidiary and all real and personal property of which
Matewan or any Matewan 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 Matewan or any Matewan Subsidiary or against any person or entity
whose liability for any Environmental Claim Matewan or any Matewan 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 Matewan and the Matewan Subsidiaries
are valid and properly documented, and were made in the ordinary course of
business. 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
Matewan'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 Matewan are adequate as of their
respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
-----------
(a) Matewan and the Matewan 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 Matewan nor any Matewan Subsidiary has or will have any liability
for any such taxes in excess of the amounts so paid or reserves or accruals so
established. Matewan and the Matewan 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 Matewan and the Matewan Subsidiaries are complete and accurate.
Neither Matewan nor any Matewan 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 Matewan or any Matewan Subsidiary which have not been settled
and paid. There are currently no agreements in effect with respect to Matewan
or any Matewan 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 Matewan nor any of the Matewan 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 Matewan or a Matewan subsidiary) or has any liability for
taxes of any person (other than Matewan and the Matewan Subsidiaries) under
Treasury
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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 Matewan and the Matewan 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 Matewan nor any of the Matewan 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. Matewan 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 Matewan and of each Matewan Subsidiary and
each other person (in each case other than as an employee) to whom Matewan or
any Matewan 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) Matewan has Disclosed an accurate and complete list of all Plans,
as defined below, contributed to, maintained or sponsored by Matewan or any
Matewan Subsidiary, to which Matewan or any Matewan Subsidiary is obligated
to contribute or has any liability or potential liability, whether direct
or indirect, including all Plans contributed to, maintained or sponsored by
each member of the controlled group of corporations, within the meaning of
Sections 414(b), 414(c), 414(m) and 414(o) of the Code, of which Matewan or
any Matewan 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 Matewan nor any Matewan 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
15
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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 Matewan or any Matewan Subsidiary
to pay separation, severance, termination or similar-type benefits solely
as a result of any transaction contemplated by this Agreement or solely as
a result of a "change in control," as such term is used in Section 280G of
the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject
to the funding requirements of Section 412 of the Code or Section 302 of
ERISA has incurred any "accumulated funding deficiency" as such term is
defined in such Sections of ERISA and the Code, whether or not waived, and
each Plan has always fully met the funding standards required under Title I
of ERISA and Section 412 of the Code. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) 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 Matewan or any Matewan Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code,
neither Matewan nor any Matewan 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 Matewan or any Matewan 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 Matewan or any Matewan Subsidiary is a member or was a member during
such five-year period.
16
<PAGE>
(vii) As of the close of the last plan year preceding the date
hereof, the fair market value of the assets of each Plan that is a tax
qualified defined benefit plan equals or exceeds the present value of all
vested and non-vested liabilities thereunder determined in accordance with
reasonable actuarial methods, factors and assumptions applicable to a
defined benefit plan on an ongoing basis. With respect to each Plan that
is subject to the funding requirements of Section 412 of the Code and
Section 302 of ERISA, all required contributions for all periods ending
prior to or as of the Closing Date (including periods from the first day of
the then-current plan year to the Closing Date and including all quarterly
contributions required in accordance with Section 412(m) of the Code) shall
have been made. With respect to each other Plan, all required payments,
premiums, contributions, reimbursements or accruals for all periods ending
prior to or as of the Closing Date shall have been made. No tax qualified
Plan has any unfunded liabilities.
(viii) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code, whether by statutory, class or
individual exemption) has occurred with respect to any Plan which would
result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409 or
502(i) of ERISA. Neither Matewan nor, to the best knowledge of Matewan,
any Matewan 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
Matewan or any Matewan 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) Matewan and each Matewan Subsidiary has been and is presently in
compliance with all of the requirements of Section 4980B of the Code.
(xi) Neither Matewan nor any Matewan Subsidiary has a liability as of
December 31, 1997 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 Matewan as of December 31, 1997 or otherwise
Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) Matewan's
or any Matewan 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 or accelerated allocation of previously
unallocated Plan assets.)
(xiii) With respect to each Plan, Matewan 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
17
<PAGE>
filings, and (F) all governmental rulings, determinations, and opinions
(and pending requests for governmental rulings, determinations, and
opinions) during the past three years.
(xiv) Each of the Plans as applied to Matewan and any Matewan
Subsidiary may be amended or terminated at any time by action of Matewan's
Board of Directors, or such Matewan'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 Matewan or a
Matewan Subsidiary thereunder).
3.15 Certain Contracts
-----------------
(a) Neither Matewan nor any Matewan 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 Matewan
or any Matewan Subsidiary or the guarantee by Matewan or any Matewan Subsidiary
of any such obligation, which cannot be terminated within less than 30 days
after the Closing Date by Matewan or any Matewan 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 Matewan or any Matewan 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
Matewan 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 Matewan nor any Matewan 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 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 Matewan, threatened
against Matewan or any Matewan Subsidiary or against any asset, interest, plan
or right of Matewan or any Matewan Subsidiary, or, to the best knowledge of
Matewan, against any officer, director or employee of any of them in their
capacity as such. There are no
18
<PAGE>
actions, suits or proceedings instituted, pending or, to the best knowledge of
Matewan, threatened against any present or former director or officer of Matewan
or any Matewan Subsidiary that would reasonably be expected to give rise to a
claim against Matewan or any Matewan Subsidiary for indemnification. There are
no actual or, to the best knowledge of Matewan, 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
Matewan, no fact or condition relating to Matewan or any Matewan Subsidiary
exists (including, without limitation, noncompliance with the CRA) that would
prevent Matewan or BB&T from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.17 Compliance with Laws; Filings
-----------------------------
Each of Matewan and each Matewan 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 Matewan nor any Matewan 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 Matewan nor any Matewan 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,
Matewan and each of the Matewan 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 OTS, Commission, FDIC, Federal Reserve Board and
applicable state regulators. Each such report, registration, notice and
statement, and each amendment thereto, complied with applicable legal
requirements.
3.18 Brokers and Finders
-------------------
Neither Matewan nor any Matewan 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, the nature
and extent of which has been Disclosed, for investment banking services, and
except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
----------------------------------
(a) With respect to all agreements currently outstanding pursuant to which
Matewan or any Matewan Subsidiary has purchased securities subject to an
agreement to resell, Matewan or the Matewan 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 Matewan or any Matewan Subsidiary has sold securities subject
to an agreement to repurchase, neither Matewan nor the Matewan Subsidiary has
pledged collateral in excess of the amount of the debt secured thereby. Neither
Matewan nor any Matewan Subsidiary has pledged collateral in excess of the
amount required under any interest rate swap or other similar agreement
currently outstanding.
19
<PAGE>
(b) Neither Matewan nor any Matewan 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 Matewan Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by federal
law, and the Matewan Subsidiaries have paid all premiums and assessments and
filed all reports required to have been paid or filed under all rules and
regulations applicable to the FDIC.
3.21 Related Party Transactions
--------------------------
Matewan has Disclosed all existing transactions, investments and loans,
including loan guarantees existing as of the date hereof, to which Matewan or
any Matewan Subsidiary is a party with any director, executive officer or 5%
shareholder of Matewan 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 Matewan
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 Matewan 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 Matewan, (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 Matewan nor any Matewan Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger 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
-------------------
Matewan and each Matewan 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.
20
<PAGE>
3.25 Labor Relations
---------------
Neither Matewan nor any Matewan 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 Matewan or any Matewan Subsidiary party to any collective
bargaining agreement. There is no strike or other labor dispute involving
Matewan or any Matewan Subsidiary, pending or threatened, or to the best
knowledge of Matewan, is there any activity involving any employees of Matewan
or any Matewan Subsidiary seeking to certify a collective bargaining unit or
engaging in any other organization activity.
3.26 Fairness Opinion
----------------
Matewan has received from the Financial Advisor an opinion that, as of the
date hereof, the Merger Consideration is fair, from a financial point of view,
to the holders of the Matewan Common Stock and the Matewan Preferred Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T
BB&T represents and warrants to Matewan 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 Matewan 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 290,210,766 shares were issued
and outstanding on December 31, 1998. All outstanding shares of BB&T Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The shares of BB&T Common Stock reserved as provided in Section
5.3 are free of any Rights and have not been reserved for any other purpose, and
such shares are available for issuance as provided pursuant to the Plan of
Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
--------------------------------------------
BB&T is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
21
<PAGE>
(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.
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
Matewan 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.
22
<PAGE>
4.6 Financial Statements
--------------------
The Financial Statements of BB&T fairly present or will fairly present, as
the case may be, the consolidated financial position of BB&T and the BB&T
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to the
absence of any notes and to normal year-end audit adjustments that are not
material in amount or effect) in conformity with GAAP consistently applied.
4.7 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
Matewan 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.
4.8 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
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).
4.9 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of Matewan Common Stock or Matewan Preferred Stock.
4.10 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 Matewan from
obtaining all of the federal and state regulatory approvals contemplated herein.
4.11 Adverse Change
--------------
Since December 31, 1997 and except as specifically identified (by footnote
or otherwise) in the most recent BB&T Financial Statements, there has not been
any adverse change or any event involving a prospective adverse change in the
business, financial condition, results of operations or business prospects of
BB&T or any of the BB&T Subsidiaries.
23
<PAGE>
ARTICLE V
COVENANTS
5.1 Matewan Shareholder Meeting
---------------------------
Matewan 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 Matewan agrees
that it shall, at the time the Proxy Statement/Prospectus is mailed to the
shareholders of Matewan, recommend that Matewan's shareholders vote for such
approval; provided, that the Board of Directors of Matewan may withdraw or
refuse to make such recommendation only if the Board of Directors shall
determine in good faith that such recommendation would violate its fiduciary
duty to Matewan'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 would likely constitute a
breach of the fiduciary duty of the Board of Directors to the shareholders of
Matewan, and (ii) a written determination from the Financial Advisor that the
Merger Consideration is not fair or is inadequate to the Matewan shareholders
from a financial point of view, or a written withdrawal of the opinion described
in Section 3.26, in either case accompanied by a detailed analysis of the
reasons for such determination, or a written withdrawal of the opinion described
in Section 3.26.
5.2 Registration Statement; Proxy Statement/Prospectus
--------------------------------------------------
As promptly as practicable after the date hereof, BB&T shall prepare and
file the Registration Statement with the Commission. Matewan will furnish to
BB&T the information required to be included in the Registration Statement with
respect to its business and affairs before it is filed with the Commission and
again before any amendments are filed, and shall have the right to review and
consult with BB&T on the form of, and any characterizations of such information
included in, the Registration 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 Matewan shall use their reasonable best efforts to cause the Proxy
Statement/Prospectus to be approved by the Commission for mailing to the Matewan
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. Matewan shall
cause the Proxy Statement/Prospectus to be mailed to shareholders in accordance
with all applicable notice requirements under the Securities Laws and the DGCL.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T undertakes and agrees to 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.
24
<PAGE>
5.4 Additional Acts
---------------
(a) Matewan 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 Matewan
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. Matewan 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.
5.5 Best Efforts
------------
Each of BB&T and Matewan 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 Matewan
shall take, or cause, or to the best of its ability permit to be taken, any
action that would substantially delay or impair the prospects of completing the
Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
--------------------------
Matewan 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
Matewan contained in this Agreement; and provided further, that Matewan shall
not be required to implement any changes in accounting or financial matters
unless and until BB&T agrees in writing that all conditions to BB&T's obligation
to consummate the Merger set forth in Sections 6.1 and 6.3 (other than the
delivery of certificates, opinions and other instruments and documents to be
delivered at the Closing or otherwise to be dated at the Effective Time, the
delivery of which shall continue to be conditions to BB&T's obligation to
consummate the Merger) have been satisfied or waived.
5.7 Access to Information
---------------------
25
<PAGE>
Matewan 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,
Matewan 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 Matewan and the Matewan
Subsidiaries and, during such period, shall make available all information
concerning their businesses as may be reasonably requested. BB&T shall make
available to representatives of Matewan information consistent with information
provided by BB&T in the past to other corporations similarly situated. No
investigation pursuant to this Section 5.7 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations
hereunder of, either party hereto. Each party hereto shall, and shall cause each
of its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information (including all
copies thereof, but not including such party's own work product) previously
furnished in connection with the transactions contemplated by this Agreement.
5.8 Press Releases
--------------
BB&T and Matewan 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 Matewan
-----------------------
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, Matewan shall not, and shall cause each of the Matewan
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 $.12 per share of Matewan Common Stock and $.47 per share of
Matewan Preferred Stock payable on record dates and in amounts consistent
with past practices; provided that any dividend declared or payable on the
shares of Matewan Common Stock or Matewan Preferred Stock for the quarterly
period during which the Effective Time occurs shall, unless otherwise
agreed upon in writing by BB&T and Matewan, 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 upon conversion of Matewan Preferred Stock or pursuant to the BB&T
Option Agreement;
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(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 Matewan Subsidiary, or permit any such
lien, charge or encumbrance to exist (with the exception of the lien held
on the shares of common stock of Matewan National Bank held by One Valley
Bank, National Association); 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, 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, Matewan or
any Matewan Subsidiary or any business combination with Matewan or any
Matewan Subsidiary other than as contemplated by this Agreement; or
authorize any officer, director, agent or affiliate of Matewan or any
Matewan 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, Matewan 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 Matewan's Board of Directors to the Matewan shareholders;
(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
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ordinary course of business relating to the borrowing of money by Matewan
or a Matewan Subsidiary or guarantee by Matewan or a Matewan 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, Matewan 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, 1997,
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, 1997, 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 $50,000 for any one expenditure, or
$250,000 in the aggregate (it being understood that Matewan has existing
commitments of approximately $900,000 for the purchase of a banking
facility in Tazewell, Virginia, approximately $750,000 for the construction
of a banking facility in Richlands, Virginia, and approximately $900,000
for year-2000 compliance and for computer systems);
(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 constitute a reorganization under Section 368 of
the Code as determined by BB&T, (ii) result in any inaccuracy of a
representation or warranty herein which would allow for a termination of
this Agreement, or (iii) cause any of the conditions precedent to the
transactions contemplated by this Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary course
of business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
BB&T (or its specified BB&T Subsidiary) agrees to enter into an employment
agreement with Dan R. Moore substantially in the form of Annex B hereto, with
Timothy Edwards and Anna Ward substantially in the form of Annex C hereto, and
with Lee E. Ellis substantially in the form of Annex D hereto.
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5.11 Affiliates
----------
Matewan shall use its best efforts to cause all persons who are Affiliates
of Matewan 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 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.
5.12 401(k) Plan; Pension Plan; Other Employee Benefits; Stock Purchase Plan
-----------------------------------------------------------------------
(a) BB&T shall cause the 401(k) plan of Matewan to be merged with the
401(k) plan maintained by BB&T and the BB&T Subsidiaries, and the account
balances of former employees of Matewan or the Matewan Subsidiaries who are
participants in the Matewan plan shall be transferred to the accounts of such
employees under the BB&T 401(k) plan. Following such merger and transfer, such
accounts shall be governed and controlled by the terms of the BB&T 401(k) plan
as in effect from time to time (and subject to BB&T's right to terminate such
plan). For purposes of administering the 401(k) plan, service with Matewan and
the Matewan 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) As soon as practicable following the Effective Time, BB&T shall take
any and all action necessary either (i) to terminate the defined benefit pension
plan of Matewan (the "Pension Plan") pursuant to a standard termination in
accordance with Section 4041 of ERISA and to provide for full vesting of the
accrued benefits of all participants in the Pension Plan and the distribution of
the assets thereof to the participants or (ii) to merge the Pension Plan with
and into BB&T's defined benefit pension plan. The actions relating to
termination or merger of the Pension Plan shall be conditioned upon receiving a
favorable determination letter from the IRS with regard to the termination or
merger of the Pension Plan. BB&T will use its reasonable best efforts to seek
the issuance of such letter as soon as practicable following the Effective Time.
Each employee of Matewan or a Matewan Subsidiary at the Effective Time who
becomes an employee immediately following the Effective Time of BB&T or a BB&T
Subsidiary ("Employer Entity") shall be given credit under BB&T's defined
benefit pension plan for service with Matewan and the Matewan Subsidiaries for
participation and vesting purposes, but not for purposes of benefit accrual.
(c) Each employee of Matewan or a Matewan Subsidiary at the Effective Time
who becomes an employee immediately following the Effective Time of an Employer
Entity shall be eligible to participate in the 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; provided, that service with Matewan or a Matewan Subsidiary 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. Medical expenses paid by any
Matewan employee prior to the Effective Time shall be counted toward deductibles
or co-payments to the same extent that such expenses would have been counted had
such employee been participating in the Employer Entity's welfare plans and
programs.
(d) Each employee of Matewan or a Matewan Subsidiary who becomes an
employee of an Employer Entity and is terminated by such or another Employer
Entity subsequent to the Effective Time, excluding any employee who has an
existing employment or special termination agreement which is
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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
Matewan or a Matewan 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.
(e) BB&T agrees to honor all employment agreements, severance agreements
and deferred compensation agreements that Matewan and the Matewan 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,
the employee benefit plans of Matewan shall be terminated as of the Effective
Time.
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 Matewan for acts or
omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in Matewan'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 Matewan's policy in effect as of
the date hereof (the "Maximum Amount"). If the amount of the premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, BB&T shall use its reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance obtainable for a
premium equal to the Maximum Amount. Notwithstanding the foregoing, BB&T further
agrees to indemnify all individuals who are or have been officers, directors or
employees of Matewan or any Matewan 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 and By-laws of Matewan on the date hereof and is permitted under
the NCBCA.
5.14 Forbearances of BB&T
--------------------
Except with the prior written consent of Matewan, 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 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 Matewan 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 Matewan and BB&T shall file (and shall cause the Matewan
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 Matewan, as the case may be,
copies of all such reports promptly
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after the same are filed. If financial statements are contained in any such
reports filed with the Commission, such financial statements will fairly present
the consolidated financial position of the entity filing such statements as of
the dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to the absence of
notes and to normal recurring year-end adjustments that are not material). As of
their respective dates, such reports filed with the Commission will comply in
all material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to a regulatory authority other than
the Commission shall be prepared in accordance with requirements applicable to
such reports.
5.16 Exchange Listing
----------------
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of Matewan Common Stock and Matewan
Preferred 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 Board for the Matewan Market Area.
------------------------------------------
As of the Effective Time, BB&T shall offer to each of the members of the
Board of Directors of Matewan a seat on the Advisory Board for the Southern West
Virginia region. 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 Matewan in effect on January 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). Matewan shall use its best
efforts to cause each member of its Board of Directors to enter into an
agreement with BB&T on or before the Closing Date providing that such member
will not engage in activities competitive with BB&T for two years following the
Effective Time.
5.18 Board of Directors of BB&T
--------------------------
As of the Effective Time, Branch Banking and Trust Company, a North
Carolina banking corporation, shall elect Dan R. Moore to its Board of
Directors, to serve until its next annual meeting (subject to the right of
removal for cause) and thereafter so long as he is elected and qualifies.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and Matewan
---------------------------------------
The respective obligations of BB&T and Matewan 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
Matewan of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement and the Plan of
Merger, all notice periods and waiting periods with respect to such approvals
shall have passed and all such approvals shall be in effect;
(d) None of BB&T, any of the BB&T Subsidiaries, Matewan or any of the
Matewan 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; and
(e) Matewan and BB&T shall have received an opinion of BB&T's legal
counsel, in form and substance satisfactory to Matewan 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 Matewan will not recognize
any gain or loss to the extent that such shareholders exchange shares of Matewan
Common Stock or Matewan Preferred Stock for shares of BB&T Common Stock.
6.2 Conditions Precedent - Matewan
------------------------------
The obligations of Matewan 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 Matewan 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 Matewan. The
representations and warranties of BB&T set forth in Sections 4.1, 4.2 (except as
relates to qualification),
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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 minimis 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 Matewan a certificate, dated the Closing
Date and signed by its Chairman or President or an Executive Vice President, to
the effect that the conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c),
6.1(d), 6.2(a) and 6.2(b) hereof, 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) Matewan shall have received opinions of counsel to BB&T in the form
reasonably acceptable to Matewan's legal counsel.
(e) All approvals of the transactions contemplated herein from the Federal
Reserve Board and any other state or federal government agency, department or
body, the approval of which is required for the consummation of the Merger,
shall have been received and all waiting periods with respect to such approvals
shall have expired.
(f) 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 Matewan 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 Matewan 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 Matewan 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 Matewan and the Matewan Subsidiaries taken as
a whole.
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(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) Matewan shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement.
(d) Matewan 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) hereof, to the extent
applicable to Matewan, 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 Matewan 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 Matewan 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 hereof to the extent necessary, in the reasonable
judgment of BB&T, to promote compliance with Rule 145 promulgated by the
Commission.
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)
hereof in the case of Matewan and Section 6.3(a) hereof in the case of BB&T;
and, in the case of (i) or (ii), if such breach or inaccuracy has not been cured
by the earlier of thirty days following written notice of such breach to the
party committing such breach or the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
breach of any of its representations, warranties, covenants or undertakings
herein.
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(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 hereof 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
Matewan do not approve the Agreement and the Plan of Merger.
(f) At any time following October 15, 1999 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 breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to 11:59 p.m. on April 9, 1999 by BB&T in writing, if
BB&T determines in its sole good faith judgment, through review of information
Disclosed by Matewan, or otherwise, that the financial condition, results of
operations, business or business prospects of Matewan and of the Matewan
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 Matewan upon such termination as to
the reasons for BB&T's determination. The fact that Matewan has Disclosed
information shall not prevent BB&T from terminating this Agreement pursuant to
this Section 7.1(g) on account of such information.
(h) By Matewan at any time during the five-day period commencing after the
Determination Date if both of the following conditions are satisfied:
(1) the Closing Value shall be less than $30.87; and
(2) (i) the quotient obtained by dividing the Closing Value by
$36.3125 (such number being referred to herein as the "BB&T Ratio") shall
be less than (ii) 90% of the quotient obtained by dividing the Index Price
on the Determination Date by the Index Price on the Starting Date;
subject, however, to the following three sentences. If Matewan determines not
to consummate the Merger pursuant to this Section 7.1(h), it shall give prompt
written notice of its election to terminate to BB&T, which notice may be
withdrawn at any time prior to the lapse of the ten-day period commencing on the
Determination Date. During the five-day period commencing with its receipt of
such notice, BB&T shall have the option, with respect to a failure to satisfy
the condition in clause (1), to elect to increase the Common Exchange Ratio to a
number such that the value (based on the Closing Value) of the amount of BB&T
Common Stock to be received in the Merger for each share of Matewan Common Stock
shall equal the value (based on the Closing Value) that would have been received
if the Closing Value were $30.87. The election contemplated by the preceding
sentence shall be made by giving notice to Matewan of such election and the
revised Common Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 7.1(h), and this Agreement shall remain in effect in
accordance with its terms (except as the Common Exchange Ratio shall have been
so modified), and any references in this Agreement to "Common Exchange Ratio"
shall thereafter be deemed to refer to the Common Exchange Ratio as adjusted
pursuant to this Section 7.1(h) and any references in this Agreement to
"Preferred Exchange Ratio" shall thereafter be deemed to refer to the product of
the Common Exchange Ratio as adjusted pursuant to this Section 7.1(h) multiplied
by 1.1. If the Closing Date shall occur during the five-day period such option
is in effect, the Closing Date shall be extended until the fifth Business Day
following the close of such five-day period.
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For purposes of this Section 7.1(h), the following terms shall have the
meanings indicated:
"Closing Value" shall have the meaning provided in Section 2.7(d).
"Determination Date" shall mean the tenth calendar day preceding the date
designated by BB&T as the Closing Date.
"Index Group" shall mean the 12 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which have been determined based upon the number of shares of outstanding
common stock) shall be redistributed proportionately for purposes of determining
the Index Price. The 12 bank holding companies and the weights attributed to
them are as follows:
<TABLE>
<CAPTION>
Bank Holding Companies % Weighting
- ------------------------------------------- -----------
<S> <C>
Wachovia Corporation 9.64
Fifth Third Bancorp 12.69
Comerica Incorporation 7.40
Summit Bancorp 8.23
Mercantile Bancorporation, Inc. 7.48
First Security Corporation 8.95
Huntington Bancshares Inc. 10.06
SouthTrust Corporation 7.86
Regions Financial Corporation 10.52
Marshall & Ilsley Corp. 5.05
AmSouth Bancorporation 5.67
Union Planters Corp. 6.45
Total 100.00%
=======
</TABLE>
"Index Price" on a given date shall mean the weighted average (weighted in
accordance with the "% Weighting" listed above) of the closing sales prices of
the companies composing the Index Group (determined as provided with respect to
the Closing Value).
"Starting Date" shall mean the date of this Agreement.
If any company belonging to the Index Group or BB&T declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or BB&T
shall be appropriately adjusted for the purposes of applying this Section
7.1(h).
7.2 Effect of Termination
---------------------
36
<PAGE>
In the event this Agreement and the Plan of Merger is terminated pursuant
to Section 7.1 hereof, 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 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 7.1(b) hereof 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, 5.17 and 5.18), provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or Matewan (or any director, officer or controlling person
thereof) of any defense at law or in equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either BB&T or Matewan, the aforesaid representations,
warranties and covenants being material inducements to consummation by BB&T and
Matewan 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 Matewan 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 Matewan
shareholders of this Agreement and the Plan of Merger, shall reduce either the
Common Exchange Ratio or the Preferred 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 Matewan, 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
37
<PAGE>
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 Matewan.
8.2 Entire Agreement
----------------
This Agreement, including the documents and other writings referenced
herein or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto, written
or oral, entered into on or before the date hereof. The terms and conditions of
this Agreement and the BB&T Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement or the BB&T Option Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors, any rights, remedies, obligations or
liabilities, except for the rights of directors and officers of Matewan to
enforce rights in Sections 5.13, 5.17 and 5.18.
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 Matewan:
Dan R. Moore
2/nd/ Avenue and Vinton Street
Post Office Box 100
Williamston, West Virginia 25661
Telephone: 304-235-1544
Fax: 304-235-1556
With a required copy to:
Charles D. Dunbar
Jackson & Kelly
1600 Laidley Tower
Charleston, West Virginia 25301
Telephone: 304-340-1196
Fax: 304-340-1080
38
<PAGE>
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
--------------------
Matewan acknowledges that the Matewan Common Stock and the Matewan
Preferred Stock and the Matewan business and assets are unique, and that if
Matewan 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 Matewan 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 of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[remainder of page intentionally left blank]
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
BB&T CORPORATION
By: /s/ John A. Allison, IV
--------------------------------------------
Name:
------------------------------------
Title:
----------------------------------
MATEWAN BANCSHARES, INC.
By: /s/ Dan R. Moore
-------------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
40
<PAGE>
Exhibit 99.3
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of February 24, 1999 by and between MATEWAN BANCSHARES, INC., a Delaware
corporation ("Matewan" or "Issuer"), and BB&T CORPORATION, a North Carolina
corporation ("Grantee").
R E C I T A L S:
- - - - - - - -
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Reorganization, dated this date (the "Merger Agreement"), providing for,
among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to
grant to Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 791,700 shares (as adjusted as set forth herein, the "Option
Shares," which term shall refer to the Option Shares before and after any
transfer of such Option Shares), of the common stock of Issuer, par value $1.00
per share ("Issuer Common Stock"), at a purchase price per Option Share (subject
to adjustment as set forth herein, the "Purchase Price") equal to $28.00.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) subject to clause (E) below, termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (as hereinafter defined) (other than a termination
of the Merger Agreement by Grantee pursuant to Section 7.1(b) thereof (a
"Default Termination")), (C) 12
<PAGE>
months after a Default Termination, (D) 12 months after any termination of the
Merger Agreement (other than a Default Termination) following the occurrence of
a Purchase Event or a Preliminary Purchase Event, and (E) subject to clause (D)
above, 12 months after termination of the Merger Agreement pursuant to Section
7.1(e) thereof; provided further, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). Subject to compliance with Section 12(h) hereof, the term "Holder" shall
mean the holder or holders of the Option from time to time, including initially
Grantee. The rights set forth in Section 8 hereof shall terminate when the right
to exercise the Option terminates (other than as a result of a complete exercise
of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its Subsidiaries (other than
transactions solely between Issuer's Subsidiaries or between Issuer's
Subsidiaries and Issuer), (B) the disposition, by sale, lease, exchange or
otherwise, of assets of Issuer or any of its Subsidiaries representing in
either case 15% or more of the consolidated assets of Issuer and its
Subsidiaries (other than a sale of loan receivables in a financing
transaction in the normal course of business consistent with past
practices), or (C) the issuance, sale or other disposition (including by
way of merger, consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or any of
its Subsidiaries; or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of the
Subsidiaries of Grantee is a member, shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 15% or more of the then-
outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved
the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been
held or shall have been canceled prior to termination of the Merger
Agreement, or Issuer's Board of Directors shall have withdrawn or modified
in a manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement, in each case after any
person (other than Grantee or any Subsidiary of Grantee)
2
<PAGE>
shall have (A) made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (B) commenced a Tender Offer or filed
a registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether in
draft or final form, under any federal or state statute or regulation
(including an application or notice filed under the BHC Act, the Bank
Merger Act, the Home Owners' Loan Act or the Change in Bank Control Act of
1978) seeking the consent to an Acquisition Transaction from any federal or
state governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Notwithstanding the foregoing, the obligation of Matewan to issue
Option Shares upon exercise of the Option shall be deferred (but shall not
terminate): (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for Matewan to issue the Option Shares or Holder
to exercise the Option, or until the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Option Shares.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior consent
of any governmental or regulatory agency or authority is required in connection
with such purchase, Issuer shall cooperate with Holder in the filing of the
required notice or application for such consent and the obtaining of such
consent at Holder's expense, and the Closing shall occur not earlier than three
business days nor later than 15 business days following receipt of such consents
(and expiration of any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer referenced in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no preemptive rights, and (B) if the Option
is exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter evidencing Holder's agreement not to offer, sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
3
<PAGE>
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
FEBRUARY 24, 1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 hereof upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 7 hereof, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges, and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) Grantee represents that it is acquiring the Option for Grantee's
own account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with and declared effective by the Commission
pursuant to Section 5 of the Securities Act, but instead each is being offered
in reliance upon the exemption from the registration requirement provided by
Section 4(2) thereof and the representations and warranties made by Grantee in
4
<PAGE>
connection therewith. Grantee represents that neither the Option nor the Option
Shares will be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Laws, and that with
respect to any transfer or other disposition proposed to be made in reliance
upon an exemption from registration, such transfer or other disposition shall
not be made unless Matewan first receives an opinion of counsel in form and
substance reasonably acceptable to it regarding the availability of such
exemption.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option and the Purchase Price therefor shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a) or pursuant to the conversion of any shares of Issuer's
Cumulative Convertible Preferred Stock, Series A, par value $1.00 per share
("Issuer Preferred Stock")), the number of shares of Issuer Common Stock subject
to the Option shall be adjusted so that, after such issuance, it, when added to
the number of shares of Issuer Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Issuer Common Stock then issued and
outstanding plus the number of shares of Issuer Common Stock issuable upon
conversion of all shares of Issuer Preferred Stock then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement (prior to
termination of the Option pursuant to Section 3(a) hereof): (i) to consolidate
with or merge into any person, other than Grantee or one of its Subsidiaries,
and Issuer shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; (iii) to permit any person, other than
Grantee or one of its Subsidiaries, to acquire all of the outstanding shares of
Issuer Common Stock pursuant to a statutory share exchange; or (iv) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, deemed granted by either
(x) the Acquiring Corporation (as defined below), (y) any person that controls
the Acquiring Corporation, or (z) in the case of a merger described in clause
(ii), the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be identical to those of the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee. The Substitute Option Issuer
shall also enter into an agreement with the then-holder or holders of the
Substitute Option in substantially the same form as this Agreement, which
agreement shall be applicable to the Substitute Option.
5
<PAGE>
(d) The Substitute Option shall be exercisable for such number of
shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of
the Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), Issuer in a merger in which Issuer is the continuing or
surviving person, the corporation that shall acquire all of the outstanding
shares of Issuer Common Stock pursuant to a statutory share exchange, or
the transferee of all or substantially all of the Issuer's assets (or the
assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange
Offer therefor has been made by any person (other than Grantee), (y) the
price per share of the Issuer Common Stock to be paid by any person (other
than the Grantee) pursuant to an agreement with Issuer, and (z) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market System within the six-month period immediately preceding
the agreement; provided, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized investment
banking firm selected by Grantee (or by a majority in interest of the
Grantees if there shall be more than one Grantee (a "Grantee Majority")),
divided by the number of shares of the Issuer Common Stock outstanding at
the time of such sale. In the event that an exchange offer is made for the
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm mutually selected by Grantee and Issuer (or if
applicable, Acquiring Corporation). (If there shall be more than one
Grantee, any such selection shall be made by a Grantee Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one-year period immediately
preceding effectiveness of the consolidation, merger, share exchange or
sale in question, but in no event higher than the closing price of the
shares of the Substitute Common Stock on the day preceding the
effectiveness of such consolidation, merger, share exchange or sale;
provided, that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by Issuer, the person merging into Issuer or by any company which
controls or is controlled by such merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing sections shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
6
<PAGE>
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 hereof shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a) hereof, at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired by Holder pursuant to the Option with respect
to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has been
exercised and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within ten business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial
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ownership of such shares and that the same are then free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. Notwithstanding the
foregoing, to the extent that prior notification to or the consent or approval
of any governmental or regulatory agency or authority is required in connection
with the payment of all or any portion of the Section 8 Repurchase
Consideration, Holder shall have the ongoing option to revoke its request for
repurchase pursuant to Section 8, in whole or in part, or to require that Issuer
deliver from time to time that portion of the Section 8 Repurchase Consideration
that it is not then so prohibited from paying and promptly file the required
notice or application for approval and expeditiously process the same (and each
party shall cooperate with the other in the filing of any such notice or
application and the obtaining of any such approval), in which case the ten
business day period of time that would otherwise run pursuant to the preceding
sentence for the payment of the portion of the Section 8 Repurchase
Consideration shall run instead from the date on which, as the case may be, any
required notification period has expired or been terminated or such approval has
been obtained and, in either event, any requisite waiting period shall have
passed. If any governmental or regulatory agency or authority disapproves of any
part of Issuer's proposed repurchase pursuant to this Section 8, Issuer shall
promptly give notice of such fact to Holder. If any governmental or regulatory
agency or authority prohibits the repurchase in part but not in whole, then
Holder shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such agency or authority, determine whether the repurchase
should apply to the Option and/or Option Shares and to what extent to each, and
Holder shall thereupon have the right to exercise the Option as to the number of
Option Shares for which the Option was exercisable at the Request Date less the
sum of the number of shares covered by the Option in respect of which payment
has been made pursuant to Section 8(a)(ii) and the number of shares covered by
the portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within five
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) hereof.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Sections 7(b)(i), 7(b)(ii), 7(b)(iii) or 7(b)(iv) hereof, or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on the
Nasdaq National Market (or if Issuer Common Stock is not quoted on the Nasdaq
National Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) during the 60 business days
preceding the Request Date; provided, however, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by an independent nationally recognized
investment banking firm selected by Holder and reasonably acceptable to Issuer
(which determination shall be conclusive for all purposes of this Agreement),
divided by the number of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired actual
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ownership or control, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which shall have acquired actual ownership or
control, of 50% or more of the then-outstanding shares of Issuer Common Stock,
or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii),
7(b)(iii) or 7(b)(iv) shall be consummated.
9. Registration Rights.
(a) For a period of 24 months following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subsection (c) below, if
requested by any Holder, including Grantee and any permitted transferee of the
Option Shares ("Selling Holder"), as expeditiously as possible prepare and file
a registration statement under the Securities Laws if necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that have been acquired by or are issuable to Selling Holder
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Holder in such request, including,
without limitation, a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities for sale under any applicable state
securities laws.
(b) If Issuer at any time after the exercise of the Option proposes to
register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to cause any such shares not to be so registered (i) if the underwriters in good
faith object for a valid business reason, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registration of resales;
provided, further, that such election pursuant to clause (i) may be made only
one time. If some but not all the shares of Issuer Common Stock, with respect
to which Issuer shall have received requests for registration pursuant to this
subsection (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each registration
statement referred to in subsection (a) above to become effective and to obtain
all consents or waivers of other parties which are required therefor and to keep
such registration statement effective, provided, that Issuer may delay any
registration of Option Shares required pursuant to subsection (a) above for a
period not exceeding 90 days in the event that Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Laws pursuant to
subsection (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
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(iv) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses, including reasonable fees and
expenses of one counsel to the Selling Holders whose Option Shares are being
registered, printing expenses, reasonable expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so desires
or the underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant to
subsection (a) or (b) above (including the related offerings and sales by
Selling Holders) and all other qualifications, notifications or exemptions
pursuant to subsection (a) or (b) above. Underwriting discounts and commissions
relating to Option Shares and any other expenses incurred by such Selling
Holders in connection with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under subsection (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such expenses, losses,
claims, damages or liabilities of such indemnified party are caused by any
untrue statement or alleged untrue statement or omission or alleged omission
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue or alleged untrue state ment or omission or alleged omission that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such holder or such underwriter, as the case may be,
expressly for such use.
Promptly upon receipt by a party indemnified under this subsection (e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or
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reimbursement may be sought against any indemnifying party under this subsection
(e), such indemnified party shall notify the indemnifying party in writing of
the commencement of such action, but the failure so to notify the indemnifying
party shall not relieve it of any liability which it may otherwise have to any
indemnified party under this subsection (e). In case notice of commencement of
any such action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party agrees to pay them, (ii) the indemnifying party fails
to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided, for in this subsection (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and the
underwriters in connection with the statements or omissions which resulted in
such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim; provided, that in no case shall any Selling Holder be responsible, in
the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to subsection (a) or (b)
above, Issuer and each Selling Holder (other than Grantee) shall enter into an
agreement containing the indemnification provisions of this subsection (e).
(f) Issuer shall comply with all reporting requirements and will do
all such other things as may be necessary to permit the expeditious sale at any
time of any Option Shares by the Selling Holders in accordance with and to the
extent permitted by any rule or regulation promulgated by the Commission from
time to time, including, without limitation, Rules 144 and 144A. Issuer shall
at its expense provide the Selling Holders with any information necessary in
connection with the completion and filing of any reports or forms required to be
filed by them under the Securities Laws, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the issuance
and the sale of the Option Shares and in connection with the exercise of the
Option, and will save Holder harmless, without limitation as to time, against
any and all liabilities, with respect to all such taxes.
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10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon as
practicable.
11. Division of Option. This Agreement (and the Option granted hereby) is
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided, herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h) hereof) any
rights or remedies hereunder. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided, in Sections 3 and 8 hereof (as adjusted pursuant to
Section 7 hereof), it is the express intention of Issuer to allow Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.
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(d) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of North Carolina without
regard to any applicable conflicts of law rules, except to the extent that the
federal laws of the United States shall govern.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
or transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
Grantee may assign or transfer its rights hereunder in whole or in part after
the occurrence of a Purchase Event. In the case of any permitted assignment or
transfer of the Option, Issuer shall do all things necessary to facilitate the
same, and the Holder to whom the Option is assigned or transferred shall make
the representations contained in Section 6 hereof (with Holder substituted for
Grantee) and shall agree in writing to the terms and conditions hereof. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided, for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
MATEWAN BANCSHARES, INC. BB&T CORPORATION
By: /s/ Dan R. Moore By: /s/ John A. Allison, IV
-------------------------------- ---------------------------------
Name: Name:
-------------------------- ---------------------------
Title: Title:
------------------------- --------------------------
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