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: May 6, 1997
(Date of earliest event reported)
VIRGINIA FIRST FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Virginia 0-28408 54-1678497
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
Franklin and Adams Streets 23804-2009
Petersburg, Virginia (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(804) 733-0333
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Item 5. Other Events.
On May 6, 1997, Virginia First Financial Corporation, a Virginia
corporation (the "Registrant"), Southern National Corporation, the name of which
is to be changed to BB&T Corporation, a North Carolina corporation ("SNC"), and
BB&T Financial Corporation of Virginia, a Virginia corporation and wholly-owned
subsidiary of SNC ("BB&T"), entered into an Agreement and Plan of Reorganization
and a related Plan of Merger (the "Merger Agreement"), pursuant to which the
Registrant will be merged with and into BB&T, with BB&T as the surviving
corporate entity (the "Merger").
Under the terms of the Merger Agreement, each share of the Registrant's
common stock ("VFFC Common Stock") issued and outstanding immediately prior to
the consummation of the Merger will be converted into and will represent the
right to receive both shares of the common stock of SNC ("SNC Common Stock") and
cash (collectively, the "Merger Consideration"). Based upon certain price
protection features in the Merger Agreement, the value of the Merger
Consideration (based on the Closing Value of SNC Common Stock, as that term is
defined in the Merger Agreement) will not be less than $22.50 and will not be
more than $25.00. If the Closing Value of SNC Common Stock is less than $30.00,
the Registrant can elect to receive Merger Consideration with a value (based on
the Closing Value of SNC Common Stock) less than $22.50 or to terminate the
Merger Agreement. In addition, 30% of the Merger Consideration will be cash, and
70% of the Merger Consideration will be shares of SNC Common Stock, with such
percentages being subject to adjustment in the event that the Closing Value of
SNC Common Stock is less than $33.75. On May 5, 1997, the day before the
announcement of the Merger, the closing price of SNC Common Stock was $40.83. A
copy of the Merger Agreement is filed as an exhibit to this report and is
incorporated herein by reference.
Also on May 6, 1997, the Registrant and SNC entered into a Stock Option
Agreement (the "Stock Option Agreement"). Under the terms of the Stock Option
Agreement, the Registrant granted to SNC an option to purchase up to 19.9% of
the total shares of VFFC Common Stock currently outstanding. The Stock Option
Agreement is exercisable only under certain circumstances. A copy of the Stock
Option Agreement is also filed as an exhibit to this report and is incorporated
herein by reference.
The Merger Agreement and Stock Option Agreement, and the transactions
contemplated therein, were approved by the Boards of Directors of the Registrant
and SNC and are subject to, among other things, the approval of the shareholders
of the Registrant and the approvals of federal and state banking regulators.
Such agreements and transactions are also subject to SNC's right to perform due
diligence for a period ending July 31, 1997.
The Merger will be accounted for as a purchase.
SNC, through its subsidiaries, operates 423 banking offices in 221
cities and towns in North Carolina, South Carolina and Virginia.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Businesses Acquired.
None.
-2-
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(b) Pro Forma Financial Information.
None.
(c) Exhibits.
2 Agreement and Plan of Reorganization, dated as of May
6, 1997, among Virginia First Financial Corporation,
BB&T Financial Corporation of Virginia and Southern
National Corporation, the name of which is to be
changed to BB&T Corporation.
99.1 Stock Option Agreement, dated as of May 6, 1997,
by and between Virginia First Financial Corporation
and Southern National Corporation.
-3-
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
VIRGINIA FIRST FINANCIAL CORPORATION
(Registrant)
Date: May 9, 1997 By: /s/ Charles A. Patton
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Charles A. Patton
President and Chief Executive Officer
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Exhibit Index
Number Document
2 Agreement and Plan of Reorganization, dated as of May 6, 1997,
among Virginia First Financial Corporation, BB&T Financial
Corporation of Virginia and Southern National Corporation, the
name of which is to be changed to BB&T Corporation.
99.1 Stock Option Agreement, dated as of May 6, 1997, by and
between Virginia First Financial Corporation and Southern
National Corporation.
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
VIRGINIA FIRST FINANCIAL CORPORATION
BB&T FINANCIAL CORPORATION-VIRGINIA
and
SOUTHERN NATIONAL CORPORATION
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<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..................................................................................7
2.4 Closing.........................................................................................7
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 Conversion of Stock Options....................................................................10
2.10 Merger of Subsidiary...........................................................................10
2.11 Anti-Dilution..................................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Virginia First........................................................11
3.1 Capital Structure..............................................................................11
3.2 Organization, Standing and Authority...........................................................11
3.3 Ownership of Subsidiaries.....................................................................11
3.4 Organization, Standing and Authority of the Subsidiaries.......................................12
3.5 Authorized and Effective Agreement.............................................................12
3.6 Securities Filings; Statements True............................................................13
3.7 Minute Books...................................................................................14
3.8 Adverse Change.................................................................................14
3.9 Absence of Undisclosed Liabilities.............................................................14
3.10 Properties.....................................................................................14
3.11 Environmental Matters..........................................................................15
3.12 Loans; Allowance for Loan Losses...............................................................15
3.13 Tax Matters....................................................................................16
3.14 Employees; Compensation; Benefit Plans.........................................................17
3.15 Certain Contracts..............................................................................21
3.16 Legal Proceedings; Regulatory Approvals........................................................21
3.17 Compliance with Laws; Filings..................................................................22
3.18 Brokers and Finders............................................................................22
3.19 Repurchase Agreements; Derivatives.............................................................22
3.20 Deposit Accounts...............................................................................23
3.21 Related Party Transactions.....................................................................23
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3.22 Certain Information............................................................................23
3.23 Tax and Regulatory Matters.....................................................................23
3.24 State Takeover Laws............................................................................24
3.26 Fairness Opinion...............................................................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SNC..................................................................................................24
4.1 Capital Structure of SNC.......................................................................25
4.2 Organization, Standing and Authority of SNC....................................................25
4.3 Authorized and Effective Agreement.............................................................25
4.4 Organization, Standing and Authority of SNC Subsidiaries.......................................26
4.5 Securities Documents...........................................................................26
4.6 Financial Statements...........................................................................26
4.7 Adverse Change.................................................................................26
4.8 Legal Proceedings; Regulatory Approvals........................................................26
4.9 Absence of Undisclosed Liabilities.............................................................27
4.10 Compliance with Laws...........................................................................27
4.11 Certain Information............................................................................27
4.12 Accounting, Tax and Regulatory Matters.........................................................27
4.13 Share Ownership................................................................................28
ARTICLE V
COVENANTS...............................................................................................28
5.1 Virginia First Shareholder Meeting.............................................................28
5.2 Registration Statement; Proxy Statement/Prospectus.............................................28
5.3 Plan of Merger; Reservation of Shares..........................................................29
5.4 Additional Acts................................................................................29
5.5 Best Efforts...................................................................................30
5.6 Certain Accounting Matters.....................................................................30
5.7 Access to Information..........................................................................30
5.8 Press Releases.................................................................................30
5.9 Forbearances of Virginia First.................................................................31
5.10 Employment Agreement...........................................................................33
5.11 Affiliates.....................................................................................33
5.12 Section 401(k) Plan............................................................................34
5.13 Directors and Officers Protection..............................................................34
5.14 Forbearances of SNC............................................................................34
5.15 Reports........................................................................................35
5.16 Exchange Listing...............................................................................35
5.17 Board of Directors of Virginia Banking Subsidiary..............................................35
5.18 Employee Benefits; Special Payment.............................................................35
5.19 Assumption of Agreement by Acquiror............................................................36
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ARTICLE VI
CONDITIONS PRECEDENT....................................................................................36
6.1 Conditions Precedent --SNC and Virginia First..................................................36
6.2 Conditions Precedent -- Virginia First.........................................................37
6.3 Conditions Precedent -- SNC ...................................................................38
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT.......................................................................39
7.1 Termination....................................................................................39
7.2 Effect of Termination..........................................................................40
7.3 Survival of Representations, Warranties and Covenants..........................................40
7.4 Waiver.........................................................................................41
7.5 Amendment or Supplement........................................................................41
ARTICLE VIII
MISCELLANEOUS...........................................................................................41
8.1 Expenses.......................................................................................41
8.2 Entire Agreement...............................................................................41
8.3 No Assignment..................................................................................42
8.4 Notices........................................................................................42
8.5 Captions.......................................................................................43
8.6 Counterparts...................................................................................43
8.7 Governing Law..................................................................................43
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
________________, 1997, among VIRGINIA FIRST FINANCIAL CORPORATION ("Virginia
First"), a Virginia corporation having its principal office at Petersburg,
Virginia, BB&T FINANCIAL CORPORATION OF VIRGINIA, a Virginia corporation having
its principal office at Virginia Beach, Virginia ("BB&T Financial"), and
SOUTHERN NATIONAL CORPORATION, the name of which is to be changed to BB&T
Corporation ("SNC"), 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 Virginia First shall be merged with and into
BB&T Financial (said transaction being hereinafter referred to as the "Merger")
pursuant to a plan of merger (the "Plan of Merger") substantially in the form
set forth in Articles of Merger attached as Annex A hereto ("Articles of
Merger"), and the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, 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:
"Bank Holding Company Act" shall mean the federal Bank Holding Company
Act of 1956, as amended.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"Closing Date" shall mean the date specified pursuant to Section 2.4 as
the date on which the parties hereto shall close the transactions contemplated
herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
<PAGE>
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the Virginia First Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Effective Time" shall mean the time specified in Section 2.3 as the
Effective Time of the Merger.
"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 Materials of Environmental Concern.
"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., 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 Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Materials of Environmental
Concern.
"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 Statements" shall mean (a) with respect to SNC, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
SNC as of December 31, 1996, 1995, and 1994, 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,
1996, 1995, and 1994, as filed by SNC in Securities Documents and (ii) the
consolidated balance sheets of SNC (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 SNC with respect to periods ended subsequent
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to December 31, 1996, and (b) with respect to Virginia First, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Virginia First as of June 30, 1996, 1995, and 1994, and the related consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes and schedules, if any) for each of the three years ended June 30,
1996, 1995, and 1994 as filed by Virginia First in Securities Documents and (ii)
the consolidated balance sheets of Virginia First (including related notes and
schedules, if any) and the related consolidated statements of income, changes in
shareholders' equity and cash flows (including related notes and schedules, if
any) included in Securities Documents filed by Virginia First with respect to
periods ended subsequent to June 30, 1996.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"Material Adverse Effect" on SNC or Virginia First 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 SNC and the
SNC Subsidiaries, taken as a whole, or Virginia First and the Virginia First
Subsidiaries, taken as a whole, or (ii) materially impairs the ability of SNC or
Virginia First 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 SNC or Virginia First taken with the prior informed
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.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"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, sent to shareholders of
Virginia First to solicit their votes in connection with this Agreement and the
Plan of Merger.
"Registration Statement" shall mean the registration statement of SNC
with respect to the SNC Common Stock to be issued in the Merger as declared
effective by the Commission under the Securities Act.
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<PAGE>
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests (other than
rights pursuant to the Rights Agreements described under the definitions of "SNC
Common Stock" and "Virginia First 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.
"SAIF" shall mean the Savings Association Insurance Fund.
"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.
"SNC Common Stock" shall mean the shares of common stock, par value
$5.00 per share, of SNC, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between SNC and Branch Banking and Trust
Company, Rights Agent.
"SNC Option Agreement" shall mean the Option Agreement dated as of even
date herewith under which SNC has an option to purchase shares of Virginia
First, as amended from time to time, which shall be executed immediately
following execution of this Agreement.
"SNC Subsidiaries" shall mean all Subsidiaries of SNC at the Effective
Time which are banks or savings associations.
"State Board" shall mean the Virginia State Corporation Commission,
Bureau of Financial Institutions.
"Stock Option" shall mean, collectively, any option granted under the
Stock Option Plan and unexercised on the date hereof to acquire shares of
Virginia First Common Stock, aggregating 282,980 shares.
"Stock Option Plan" shall mean, collectively or singularly, Virginia
First's 1984 Incentive Stock Option Plan, 1986 Stock Compensation Program, and
1992 Incentive Plan, as amended.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or
4
<PAGE>
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.
"Virginia First Common Stock" shall mean the shares of common stock,
par value $1.00 per share, of Virginia First, with rights attached pursuant to
the Rights Agreement dated April 19, 1996 between Virginia First and First Union
National Bank of North Carolina, Rights Agent.
"Virginia First Disclosure Memorandum" shall mean the written
information in one or more documents, each of which is entitled "Virginia First
Disclosure Memorandum" and dated on or before the date of this Agreement and
delivered not later than twenty days after the execution of this Agreement by
Virginia First to SNC, 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.
"Virginia First Subsidiaries" shall mean the Subsidiaries of Virginia
First, which shall include any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Virginia First in the future and held
as a Subsidiary by Virginia First at the Effective Time.
"VSCA" shall mean the Virginia Stock Corporation Act, as
amended.
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the
following sections:
Agreement Introduction
Articles of Merger Recitals
BB&T Financial Introduction
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7
Constituent Corporations Section 2.1
Dissenting Shareholder Section 2.9
Dissenting Shares Section 2.9
Effective Time Section 2.3
Exchange Ratio Section 2.10
Indemnified Party Section 5.13
Merger Recitals
5
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Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
SNC Introduction
SNC Option Plan Section 2.10(c)
SNC-Virginia Recitals
Surviving Corporation Section 2.1(a)
Virginia First Introduction
ARTICLE II
THE MERGER
2.1 Merger
BB&T Financial and Virginia First are constituent corporations (the
"Constituent Corporations") to the Merger as contemplated by the VSCA. At the
Effective Time:
(a) Virginia First shall be merged with and into BB&T Financial in
accordance with the applicable provisions of the VSCA, with BB&T Financial being
the surviving corporate entity (hereinafter sometimes referred to as the
"Surviving Corporation").
(b) The separate existence of Virginia First 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 Financial at the Effective
Time shall become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T Financial 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 each of Virginia First and BB&T Financial. 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 Virginia State
Corporation Commission, as provided in Section 13.1-720 of the VSCA. 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 the Constituent Corporations shall constitute adoption and
approval of the Plan of Merger.
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2.3. Effective Time
The Merger shall be effective at the day and hour specified in the
Articles of Merger filed with the Virginia State Corporation Commission (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 11:00 a.m. on the Business Day
designated by SNC which is within thirty days following the satisfaction of the
conditions to Closing set forth in Article VI, 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 Merger shall have the effect
described in Section 13.1-721 of the VSCA.
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 portion
of a whole share of SNC Common Stock and cash to be exchanged for each share of
Virginia First Common Stock issued and outstanding as of the Effective Time,
determined as follows:
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(a) If the Closing Value (as defined below)is less than $41.67 and is
not less than $37.50, the Merger Consideration shall equal in value .6 of the
Closing Value, of which 70% shall be distributable in the form of SNC Common
Stock and 30% shall be distributable in cash.
(b) If the Closing Value is $41.67 or more, the Merger Consideration
shall equal in value $25.00, of which $17.50 in value shall be in the form of
SNC Common Stock (determined with reference to the Closing Value), and $7.50 in
value shall be in cash.
(c) If the Closing Value is less than $37.50 and is not less than
$33.75, the Merger Consideration shall equal in value $22.50, of which $15.75 in
value shall be in the form of SNC Common Stock (determined with reference to the
Closing Value), and $6.75 in value shall be in cash.
(d) If the Closing Value is less than $33.75 and is not less than
$30.00, the Merger Consideration shall equal in value $22.50, of which an amount
equal to .467 of the Closing Value shall be distributable in the form of SNC
Common Stock (determined with reference to the Closing Value) and the difference
between such amount and $22.50 shall be in cash.
(e) If the Closing Value shall be less than $30.00, the Merger
Consideration shall equal in value the sum of .467 of the Closing Value plus
cash of $8.50; provided that at any time following determination of the Closing
Value at below $30.00 and prior to the Effective Time, the Board of Directors of
Virginia First may elect to terminate this Agreement and the proposed Merger
rather than to consummate the proposed Merger for the Merger Consideration
provided in this Section 2.7(e).
(f) With regard to each Virginia First shareholder, the aggregate
shares (including fractional shares) of SNC Common Stock to be received as
Merger Consideration shall be determined, and the number of such shares shall be
rounded to the nearest whole share. The aggregate amount of cash shall be
correspondingly increased or decreased to adjust for such rounding determined
with reference to the Closing Value.
(g) For purposes of this Section 2.7, the "Closing Value" of SNC
Common Stock shall mean the average closing price per share on the NYSE
Composite Transactions List (as reported by The Wall Street Journal) for the 10
trading days (determined by excluding days on which the NYSE is closed)
immediately preceding the 10th calendar day preceding the Effective Time (the
10th day to be determined by counting the day preceding the Effective Time as
the first day).
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 Virginia First or the holders of record of Virginia First
Common Stock, each share of Virginia First Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and shall
represent the right to receive, upon surrender of the certificate representing
such share of Virginia First Common Stock (as provided in paragraph (d) below),
the Merger Consideration.
(b) Each share of the common stock of BB&T Financial issued and
outstanding immediately prior to the Effective Time shall continue to be issued
and outstanding.
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(c) Until surrendered, each outstanding certificate which prior to
the Effective Time represented one or more shares of Virginia First Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration as described in this Section 2.8. No
interest will be paid or accrued on the Merger Consideration upon the surrender
of the certificate or certificates representing shares of Virginia First Common
Stock. With respect to any certificate for Virginia First Common Stock that has
been lost or destroyed, the Surviving Corporation shall pay the Merger
Consideration attributable to such certificate upon receipt of a surety bond or
other adequate indemnity as required in accordance with SNC's standard policy,
and evidence reasonably satisfactory to SNC of ownership of the shares
represented thereby. After the Effective Time, no transfer of the shares of
Virginia First Common Stock outstanding immediately prior to the Effective Time
shall be made on the stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, SNC shall cause to be
delivered or mailed to each Virginia First 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 Virginia First Common Stock in exchange for the Merger Consideration.
Upon surrender of such certificates, 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, SNC 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 Virginia First in respect of shares of Virginia First Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. To the extent permitted by law, former shareholders of
record of Virginia First shall be entitled to vote after the Effective Time at
any meeting of SNC shareholders the number of whole shares of SNC Common Stock
into which their respective shares of Virginia First Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing Virginia First Common Stock for certificates representing SNC
Common Stock in accordance with the provisions of this Agreement. Whenever a
dividend or other distribution is declared by SNC on the SNC 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 SNC Common Stock
issuable pursuant to this Agreement, but after the Effective Time no dividend or
other distribution payable to the holders of record of SNC Common Stock as of
any time subsequent to the Effective Time shall be delivered to the holder of
any certificate until such holder surrenders such certificate for exchange as
provided in this Section 2.8. Upon surrender of such certificate, both the SNC
Common Stock certificate and any undelivered dividends and cash payments payable
hereunder (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
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2.9 Conversion of Stock Options
At the Effective Time, each Stock Option then outstanding (and which by
its terms does not lapse on or before the Effective Time), whether or not then
exercisable, shall be converted into and become an option under the SNC 1995
Omnibus Stock Incentive Plan (the "SNC Option Plan"), and shall be governed by
the terms and conditions of the SNC Option Plan. Specifically, without limiting
the foregoing, no holder of a Stock Option shall be entitled to receive any
payment from SNC of any tax liability incurred by such holder resulting from
exercise following the Effective Time of all or a part of the Stock Option. In
making such conversion, (i) the number of shares of SNC Common Stock subject to
each such Stock Option shall be the number of whole shares of SNC (omitting any
fractional share) determined by multiplying the number of shares of Virginia
First Common Stock subject to such Stock Option immediately prior to the
Effective Time by the Option Exchange Ratio (defined below), and (ii) the per
share exercise price under each such Stock Option shall be adjusted by dividing
the per share exercise price under each such Stock Option by the Option Exchange
Ratio and rounding up to the nearest cent. In addition, each such Stock Option
which is an "incentive stock option" shall be adjusted as required by Section
424 of the Code, and the Regulations promulgated thereunder, so as to continue
as an incentive stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the option, within the
meaning of Section 424(h) of the Code. As used in this Agreement, the Option
Exchange Ratio shall mean the percentage determined by dividing the value of the
Merger Consideration at the Effective Time by the Closing Value. SNC and
Virginia First agree to take all necessary steps to effectuate the foregoing
provisions of this Section 2.9. Each grant of a converted option to any
individual who subsequent to the Merger will be a director or officer of SNC as
construed under Rule 16b-3 shall, as a condition to such conversion, be
specifically approved in accordance with the provisions of Rule 16b-3. As soon
as practicable following the Effective Time, SNC shall deliver to the
participants receiving converted options under the SNC Option Plan an
appropriate notice setting forth such participant's rights pursuant thereto. SNC
has reserved under the SNC Option Plan adequate shares of SNC Common Stock for
delivery upon exercise of any such converted options. SNC hereby represents that
the SNC Option Plan in its current form complies with Rule 16b-3, as in effect
on the date hereof, promulgated under the Exchange Act.
2.10 Merger of Subsidiary
In the event that SNC shall request, Virginia First shall cooperate in
taking such actions, and shall cooperate in causing the Virginia First
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 Virginia First Subsidiaries
with and into, in each case, one of the SNC Subsidiaries.
2.11 Anti-Dilution
In the event SNC changes the number of shares of SNC 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
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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 Merger
Consideration and the Option Exchange Ratio shall be proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Virginia First
Except as otherwise Disclosed, Virginia First represents and warrants
to SNC as follows (no representation or warranty herein of Virginia First shall
be deemed to be inaccurate unless the inaccuracy would permit SNC to refuse to
consummate the Merger under the applicable standard set forth in Section
6.3(a)):
3.1 Capital Structure
The authorized capital stock of Virginia First consists of 20,000,000
shares of Virginia First Common Stock, and 5,000,000 shares of preferred stock,
par value $1.00 per share. No other classes of capital stock of Virginia First
are authorized. As of the date hereof, 5,804,661 shares of Virginia First Common
Stock are issued and outstanding, and no other shares of capital stock of
Virginia First, common or preferred, are issued and outstanding. All outstanding
shares of Virginia First Common Stock have been duly authorized and are validly
issued, fully paid and nonassessable. No shares of capital stock have been
reserved for any purpose, except for (i) shares of Virginia First Common Stock
reserved in connection with the Stock Option Plan and the Dividend Reinvestment
Plan, and (ii) 1,155,127 shares of Virginia First Common Stock in connection
with the SNC Option Agreement. Virginia First has granted options to acquire
307,980 shares of Virginia First Common Stock under the Stock Option Plan (of
which 25,000 shall lapse at the Effective Time). Except as set forth herein,
there are no Rights authorized, issued or outstanding with respect to the
capital stock of Virginia First. Holders of Virginia First Common Stock do not
have preemptive rights.
3.2 Organization, Standing and Authority
Virginia First is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its assets. Virginia First 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 Virginia First Disclosure Memorandum lists all of
the Virginia First 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 Virginia
First (directly or indirectly), and the percentage ownership interest so owned
by Virginia First. The outstanding shares of capital stock or other equity
interests of the Virginia
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First Subsidiaries are validly issued and outstanding, fully paid and
nonassessable, and all such shares are directly or indirectly owned by Virginia
First 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 Virginia First Subsidiaries,
and there are no agreements, understandings or commitments relating to the right
of Virginia First to own, to vote or to dispose of said interests. None of the
shares of capital stock or other equity interests of the Virginia First
Subsidiaries has been issued in violation of the preemptive rights of any
person. Section 3.3 of the Virginia First Disclosure Memorandum also lists all
shares of capital stock or other securities or ownership interests of any
corporation, partnership, joint venture, or other organization owned by Virginia
First, directly or indirectly (except for securities owned in a fiduciary
capacity).
3.4 Organization, Standing and Authority of the Subsidiaries
Each Virginia First Subsidiary which is a depository institution is a
federally chartered capital stock savings bank and its deposits are insured by
SAIF. Each of the Virginia First Subsidiaries is validly existing and in good
standing under the laws of its state of organization. Each of the Virginia First
Subsidiaries has full power and authority to carry on its business as now
conducted, and is duly qualified to do business in its state of organization. No
Virginia First Subsidiary is required to be qualified to do business in any
other state of the United States or foreign jurisdiction other than such
Virginia First Subsidiary's state of organization, or is engaged in any
activities that have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) Virginia First 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 Virginia First shareholders of this Agreement and
the Plan of Merger) to perform all of its obligations under this Agreement, the
Articles of Merger and the SNC Option Agreement. The execution and delivery of
this Agreement, the Articles of Merger and the SNC Option Agreement, and
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action in respect thereof,
except in the case of this Agreement and the Plan of Merger, the approval of
Virginia First shareholders pursuant to and to the extent required by applicable
law. This Agreement, the Plan of Merger and the SNC Option Agreement constitute
legal, valid and binding obligations of Virginia First, and each is enforceable
against Virginia First 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 rights of creditors of FDIC insured
institutions or the enforcement of creditors' rights generally; and (ii) general
principles of equity, and except that the availability of equitable remedies or
injunctive relief is within the discretion of the appropriate court.
(b) Neither the execution and delivery of this Agreement, the
Articles of Merger or the SNC Option Agreement, nor consummation of the
transactions contemplated hereby or
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thereby, nor compliance by Virginia First 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 by-laws of Virginia First or any Virginia First
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
Virginia First or any Virginia First 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 Virginia First or any Virginia First Subsidiary.
(c) Other than consents required from 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 Virginia First of the
Merger and the other transactions contemplated in this Agreement.
(d) Effective prior to execution of this Agreement, Virginia First
has taken all action necessary to redeem the rights pursuant to the Rights
Agreement described under the definition of "Virginia First Common Stock," or to
amend or terminate such Rights Agreement, so that execution of this Agreement
and the SNC Option Agreement and consummation of the transactions contemplated
herein and therein, including without limitation consummation of the Merger
pursuant to this Agreement or acquisition of shares pursuant to the SNC Option
Agreement, shall not result in the grant of any rights to any person under the
Rights Agreement or enable or require any of the rights thereunder to be
exercised, distributed or triggered.
3.6 Securities Filings; Statements True
(a) Virginia First has timely filed all Securities Documents
required by the Securities Laws since December 31, 1994. Virginia First shall
Disclose to SNC a true and complete copy of each Securities Document filed by
Virginia First with the Commission after December 31, 1994 and prior to the date
hereof, which are all of the Securities Documents that Virginia First 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 Virginia First fairly present or will
fairly present, as the case may be, the consolidated financial position of
Virginia First and the Virginia First Subsidiaries as of the dates indicated and
the consolidated results of operations, changes in shareholders' equity and
statements of cash flows for the periods then ended (subject, in the case of
unaudited interim statements, to normal year-end audit adjustments that are not
material in amount or effect) in conformity with generally accepted accounting
principles applicable to financial institutions applied on a consistent basis.
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(c) No statement, certificate, instrument or other writing furnished
or to be furnished hereunder by Virginia First or any Virginia First Subsidiary
to SNC 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.
3.7 Minute Books
The minute books of Virginia First and each of the Virginia First
Subsidiaries contain or will contain at Closing accurate records of all meetings
and other corporate actions of its shareholders and Board of Directors
(including committees of its Board of Directors).
3.8 Adverse Change
Since June 30, 1996, Virginia First and the Virginia First Subsidiaries
have not incurred any liability except as disclosed in the most recent Virginia
First Financial Statements, or entered into any transactions with affiliates,
other than in the ordinary course of business consistent with past practices,
nor has there been any change or any event involving a prospective change in the
business, financial condition or results of operations of Virginia First or any
of the Virginia First Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of Virginia First
and the Virginia First Subsidiaries are disclosed in the most recent Financial
Statements of Virginia First or incurred in the ordinary course of its business
since the date of Virginia First's most recent Financial Statements.
3.10 Properties
(a) Virginia First and the Virginia First Subsidiaries ave good and
marketable title, free and clear of all liens, encumbrances, charges, defaults
or equitable interests, to all of the properties and assets, real and personal,
reflected on the consolidated balance sheet included in the Financial Statements
of Virginia First as of June 30, 1996 or acquired after such date, except (i)
liens for current taxes not yet due and payable, (ii) pledges to secure deposits
and other liens incurred in the ordinary course of 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 Virginia First or any
Virginia First Subsidiary, as lessee or licensee, leases or licenses rights to
real or personal property, are valid and enforceable in accordance with their
respective terms.
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3.11 Environmental Matters
(a) Virginia First and the Virginia First Subsidiaries are in
compliance with all Environmental Laws. Neither Virginia First nor any Virginia
First Subsidiary has received any communication alleging that Virginia First or
the Virginia First Subsidiary is not in such compliance, and there are no
present circumstances that would prevent or interfere with the continuation of
such compliance.
(b) Neither Virginia First nor any Virginia First Subsidiary has
received notice of any pending, there are no pending, and to the best knowledge
of Virginia First 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) Virginia First or any Virginia First Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim Virginia First or any
Virginia First 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 Virginia First or any Virginia First Subsidiary, or any real or
personal property which Virginia First or any Virginia First 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 Virginia First or any Virginia First
Subsidiary holds a security interest securing a loan recorded on the books of
Virginia First or any Virginia First Subsidiary. Neither Virginia First nor any
Virginia First 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 such liability.
(c) Virginia First and the Virginia First Subsidiaries are in
compliance with all recommendations contained in any environmental audits,
analyses and surveys relating to all real and personal property owned or leased
by Virginia First or any Virginia First Subsidiary and all real and personal
property which Virginia First or any Virginia First 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 Virginia First or any Virginia First Subsidiary or against any
person or entity whose liability for any Environmental Claim Virginia First or
any Virginia First Subsidiary has or may have retained or assumed, either
contractually or by operation of law.
3.12 Loans; Allowance for Loan Losses
(a) All of the loans on the books of Virginia First and the Virginia
First 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, violates any federal, state or local law, rule, regulation or
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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 Virginia First are in the
opinion of Virginia First's management adequate as of their respective dates,
under the requirements of generally accepted accounting principles and
applicable regulatory requirements and guidelines as they apply to banks and
bank holding companies, to provide for losses on outstanding loans (including
accrued interest receivables) net of recoveries.
3.13 Tax Matters
(a) Virginia First and the Virginia First Subsidiaries and each of
their predecessors have timely filed (or requests for extensions have been
timely filed and any such extensions 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 Virginia First nor any Virginia First Subsidiary will have any liability
for any such taxes in excess of the amounts so paid or reserves or accruals so
established.
(b) Except as Disclosed, all federal, state and local (and, if
applicable, foreign) tax returns filed by Virginia First and the Virginia First
Subsidiaries are complete and accurate. Neither Virginia First nor any Virginia
First 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 Virginia First or any Virginia First Subsidiary which have not been
settled and paid. There are currently no agreements in effect with respect to
Virginia First or any Virginia First 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
generally accepted accounting principles consistently applied.
(d) Neither Virginia First nor any of the Virginia First Subsidiaries
is a party to any tax allocation or sharing agreement and none 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 Virginia First) or has any liability
for taxes of any person (other than Virginia First and the
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Virginia First Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law) as a transferee or successor
or by contract or otherwise.
(e) Each of Virginia First and the Virginia First 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) None of Virginia First or the Virginia First 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. Virginia First shall have 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 Virginia First and of each Virginia First
Subsidiary and each other person (other than an employee as such) to whom
Virginia First or any Virginia First 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) Virginia First shall have Disclosed an accurate
and complete list of all Plans, as defined below, contributed
to, maintained or sponsored by Virginia First or any Virginia
First Subsidiary, to which Virginia First or any Virginia
First 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 Virginia First or any Virginia First
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
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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) Except as Disclosed, neither Virginia First
nor any Virginia First Subsidiary contributes to, has an
obligation to contribute to or otherwise has any liability or
potential liability with respect to (A) any multiemployer plan
as defined in Section 3(37) of ERISA, (B) any plan of the type
described in Sections 4063 and 4064 of ERISA or in section 413
of the Code (and regulations promulgated thereunder), or (C)
any plan which provides health, life insurance, accident or
other "welfare-type" benefits to current or future retirees or
former employees or directors, their spouses or dependents,
other than in accordance with Section 4980B of the Code or
applicable state continuation coverage law.
(iii) Except as Disclosed, none of the Plans
obligates Virginia First or any Virginia First 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 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 Virginia First
or any
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Virginia First Subsidiary is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code,
neither Virginia First nor any Virginia First 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 Virginia First or any
Virginia First Subsidiary to any tax under Sections 4971,
4972, 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 Internal Revenue Service 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
Virginia First or any Virginia First Subsidiary is a member or
was a member during such five-year period.
(vii) As of the Closing Date, 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
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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
Virginia First, nor to the best knowledge of Virginia First
any Virginia First Subsidiary, nor any trustee, administrator
or other fiduciary of any Plan, nor to the best knowledge of
Virginia First any agent of any of the foregoing has engaged
in any transaction or acted or failed to act in a manner which
could subject Virginia First or any Virginia First 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) Virginia First and each Virginia First
Subsidiary has been and is presently in compliance with all
of the requirements of Section 4980B of the Code.
(xi) Neither Virginia First nor any Virginia First
Subsidiary has a liability as of June 30, 1996, under any Plan
that, to the extent disclosure is required under generally
accepted accounting principles, is not reflected on the
consolidated balance sheet included in the Financial
Statements of Virginia First as of June 30, 1996 or otherwise
Disclosed.
(xii) Neither the consideration nor implementation
of the transactions contemplated under this Agreement will
increase (A) Virginia First's or any Virginia First
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).
(xiii) With respect to each Plan, Virginia First has
Disclosed or made available 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 Internal Revenue Service (with
attachments), (C) the three most recent actuarial reports, if
any, (D) the three most recent financial statements, (E) all
governmental filings for the last three years, including
without limitation, excise tax returns and reportable events
filings, and (F) all governmental rulings, determinations,
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and opinions (and pending requests for governmental rulings,
determinations, and opinions) during the past three years.
3.15 Certain Contracts
(a) Except as Disclosed, neither Virginia First nor any Virginia
First 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 Virginia First or any Virginia First
Subsidiary or the guarantee by Virginia First or any Virginia First Subsidiary
of any such obligation, which cannot be terminated within less than 30 days
after the Closing Date by Virginia First or any Virginia First Subsidiary
(without payment of any penalty or cost, except with respect to Federal Home
Loan 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 Virginia First or any Virginia First Subsidiary
(without payment of any penalty or cost), or that provides benefits which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving Virginia First of the nature contemplated by this
Agreement or the SNC 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
SNC 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 SNC Option Agreement. Each matter Disclosed pursuant to this
Section 3.15(a) is in full force and effect.
(b) Neither Virginia First nor any Virginia First 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 Virginia First
threatened against Virginia First or any Virginia First Subsidiary or against
any asset, interest, plan or right of Virginia First or any Virginia First
Subsidiary, or against any officer, director or employee of any of them. There
are no actions, suits or proceedings instituted, pending or, to the best
knowledge of Virginia First
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threatened against any present or former director or officer of Virginia First
or any Virginia First Subsidiary that would reasonably be expected to give rise
to a claim against Virginia First or any Virginia First Subsidiary for
indemnification. There are no actual or, to the best knowledge of Virginia First
threatened actions, suits or proceedings which present a claim to restrain or
prohibit the transactions contemplated herein or in the SNC Option Agreement. To
the best knowledge of Virginia First, no fact or condition relating to Virginia
First or any Virginia First Subsidiary exists (including without limitation
noncompliance with the CRA) that would prevent Virginia First or SNC from
obtaining all of the federal and state regulatory approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of Virginia First and each Virginia First Subsidiary is in
compliance with all statutes and regulations (including, but not limited to, the
CRA, 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 Virginia First nor any
Virginia First 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 Virginia First nor any Virginia First 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. Virginia First
and each of the Virginia First 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, FDIC, Federal Reserve Board and State Board. Each
such report, registration, notice and statement, and each amendment thereto, has
complied with applicable legal requirements and none has contained any untrue
statement of a material fact or omitted 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.
3.18 Brokers and Finders
Neither Virginia First nor any Virginia First 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 SNC Option Agreement, except for fees to accountants and
lawyers and an obligation, the amount and nature of which is Disclosed, to
Sandler O'Neill & Partners, L.P. for investment banking services.
3.19 Repurchase Agreements; Derivatives
(a) With respect to all agreements currently outstanding pursuant to
which Virginia First or any Virginia First Subsidiary has purchased securities
subject to an agreement to resell,
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Virginia First or the Virginia First 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 Virginia First or any Virginia First Subsidiary has sold
securities subject to an agreement to repurchase, neither Virginia First nor the
Virginia First Subsidiary has pledged collateral materially in excess of the
amount of the debt secured thereby. Neither Virginia First nor any Virginia
First Subsidiary has pledged collateral materially in excess of the amount
required under any interest rate swap or other similar agreement currently
outstanding.
(b) Neither Virginia First nor any Virginia First 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 Virginia First Subsidiaries that are
insured depository institutions are insured by the SAIF to the maximum extent
permitted by federal law, and the Virginia First Subsidiaries have paid all
premiums and assessments and filed all reports required to have been paid or
filed under the SAIF.
3.21 Related Party Transactions
Virginia First has Disclosed all transactions, investments and loans,
including loan guarantees, to which Virginia First or any Virginia First
Subsidiary is a party with any director, executive officer or 5% shareholder of
Virginia First 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 Virginia First 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 Virginia First to vote upon the Plan of Merger, the
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by Virginia First, (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
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Neither Virginia First nor any Virginia First 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).
3.24 State Takeover Laws
Virginia First and each Virginia First 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, including without limitation the provisions of Section
13.1-728 of the VSCA.
3.25 Labor Relations
Neither Virginia First nor any Virginia First 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 Virginia First or any Virginia First Subsidiary
party to any collective bargaining agreement. There is no strike or other labor
dispute involving Virginia First or any Virginia First Subsidiary, pending or
threatened, or to the best knowledge of Virginia First, is there any activity
involving any employees of Virginia First or any Virginia First Subsidiary
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
3.26 Fairness Opinion
Virginia First has received from Sandler, O'Neill & Partners, L.P. an
opinion that, as of the date hereof, the Merger Consideration is fair to the
shareholders of Virginia First from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SNC
SNC represents and warrants to Virginia First as follows (no
representation or warranty herein of SNC shall be deemed to be inaccurate unless
the inaccuracy would permit Virginia First to refuse to consummate the Merger
under the applicable standard set forth in Section 6.2(a)):
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4.1 Capital Structure of SNC
The authorized capital stock of SNC 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)
300,000,000 shares of SNC Common Stock, of which 109,452,428 shares were issued
and outstanding on March 31, 1997. All outstanding shares of SNC Common Stock
have been duly authorized and are validly issued, fully paid and nonassessable.
The shares of SNC 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
SNC Common Stock do not have preemptive rights. SNC has registered 27,947,958
shares for issuance pursuant to its acquisition of United Carolina Bancshares
Corporation.
4.2 Organization, Standing and Authority of SNC
SNC 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. SNC is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
(a) SNC 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 SNC. This Agreement and the Plan of Merger attached hereto
constitute legal, valid and binding obligations of SNC, and each is enforceable
against SNC 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, and except that the availability of remedies or injunctive
relief is within the discretion of the appropriate court.
(b) Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby, nor compliance by SNC with
any of the provisions hereof or thereof shall (i) conflict with or result in a
breach of any provision of the articles of incorporation or bylaws of SNC or any
SNC Subsidiary, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of SNC or
any SNC Subsidiary pursuant to any note,
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bond, mortgage, indenture, license, agreement or other instrument or obligation,
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to SNC or any SNC Subsidiary.
4.4 Organization, Standing and Authority of SNC Subsidiaries
Each of the SNC Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. Each of the SNC 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
SNC has timely filed all Securities Documents required by the
Securities Laws since December 31, 1993. 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.
4.6 Financial Statements
The Financial Statements of SNC fairly present or will fairly present,
as the case may be, the consolidated financial position of SNC and the SNC
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
normal year-end audit adjustments in conformity with generally accepted
accounting principles applicable to financial institutions applied on a
consistent basis).
4.7 Adverse Change
Since December 31, 1996, SNC and the SNC Subsidiaries have not incurred
any liability except as disclosed on the most recent SNC Financial Statements,
or entered into any transactions with affiliates other than in the ordinary
course of business consistent with past practices, nor has there been any change
or any event involving a prospective change in the business, financial condition
or results of operations of SNC and the SNC Subsidiaries.
4.8 Legal Proceedings; Regulatory Approvals
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or threatened against SNC or any SNC Subsidiary
or against any asset, interest, or right of SNC or any SNC Subsidiary, or
against any officer, director or employee of any of them that in such case, if
decided adversely, would reasonably be expected to have a Material Adverse
Effect. There are no actions, suits or proceedings instituted, pending or, to
the best knowledge
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of SNC, threatened against any present or former director or officer of SNC or
any SNC Subsidiary for indemnification. There are no actual or, to the best
knowledge of SNC, threatened actions, suits or proceedings which present a claim
to restrain or prohibit the transactions contemplated herein, in the Plan of
Merger or the Option Agreement. To the best knowledge of SNC, no fact or
condition relating to SNC or any SNC Subsidiary exists (including without
limitation noncompliance with the CRA) that would prevent Virginia First or SNC
from obtaining all of the federal and state regulatory approvals contemplated
herein.
4.9 Absence of Undisclosed Liabilities
All liabilities of SNC and the SNC Subsidiaries are disclosed in the
most recent Financial Statements of SNC or incurred in the ordinary course of
business since the date of SNC's most recent Financial Statements.
4.10 Compliance with Laws
Each of SNC and the SNC Subsidiaries is in compliance with all statutes
and regulations (including, but not limited to, the CRA, TILA and regulations
promulgated thereunder and other consumer banking laws) applicable to the
conduct of its business, and neither SNC nor any of the SNC Subsidiaries has
received any notification that has not lapsed, been withdrawn or abandoned from
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 license, franchise, permit or government
authorization, or (iii) restricting or in any way limiting its operations.
Neither SNC nor any of the SNC Subsidiaries is subject to any regulatory or
supervisory cease and desist order, agreement, directive or memorandum of
understanding, and none of them has received any communication requesting that
they enter into any of the foregoing.
4.11 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 SNC 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 SNC, (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.
4.12 Accounting, Tax and Regulatory Matters
Neither SNC nor the SNC Subsidiaries have taken or agreed to take any
action which would or could reasonably be expected to (i) cause the business
combination contemplated hereby not to constitute a reorganization under Section
368 of the Code, or (ii) materially impede or
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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).
4.13 Share Ownership
As of the date of this Agreement, SNC does not own (except in a
fiduciary capacity) any shares of Virginia First Common Stock.
ARTICLE V
COVENANTS
5.1 Virginia First Shareholder Meeting
Virginia First 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 Virginia
First agrees that it shall, at the time the Proxy Statement/Prospectus is mailed
to the shareholders of Virginia First, recommend that Virginia First's
shareholders vote for such approval; provided, that the Board of Directors of
Virginia First 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 Virginia First's shareholders following (i) the
consideration of written advice of legal counsel that making such recommendation
or the failure to withdraw or modify such recommendation would constitute a
breach of the fiduciary duties of such Board to shareholders of Virginia First,
and (ii) the withdrawal by Sandler O'Neill & Partners, L.P. in writing of its
opinion referred to in Section 3.26 or the delivery to the Virginia First Board
of Directors of written advice from Sandler O'Neill & Partners, L.P. that the
Merger Consideration is not fair or is inadequate to the shareholders of
Virginia First from a financial point of view. Each of William A. Patton and
Charles A. Patton severally agrees to vote all shares of Virginia First Common
Stock over which he has sole or shared voting rights, through nominal or
beneficial ownership or by contract or otherwise (including without limitation
shares held by Patton Associates Limited Partnership, but excluding shares held
in a fiduciary capacity), in favor of the Plan of Merger, and each further
severally agrees not to transfer or agree to transfer (except as provided
herein), from and after the date hereof, to any person any shares of Virginia
First Common Stock over which he has sole or shared rights of transfer.
5.2 Registration Statement; Proxy Statement/Prospectus
As promptly as practicable after the date hereof, SNC shall prepare and
file the Registration Statement with the Commission. Virginia First will furnish
to SNC 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 SNC on the form of, and any characterizations of such
information included in, the Registration Statement prior to the filing with the
Commission. SNC shall use its reasonable best efforts to cause such Registration
Statement to be declared effective under the Securities Act. Such Registration
Statement, at the time it becomes effective
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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. SNC shall take all actions required to register or obtain
exemptions from such registration for the SNC Common Stock to be issued in
connection with the transactions contemplated by this Agreement and the Plan of
Merger under applicable state "Blue Sky" securities laws, as appropriate. The
Registration Statement shall include the form of Proxy Statement/Prospectus. SNC
and Virginia First shall use their best efforts to cause the Proxy
Statement/Prospectus to be approved by the SEC for mailing to the Virginia First
and SNC 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 SEC thereunder. Virginia
First shall cause the Proxy Statement/Prospectus to be mailed to shareholders in
accordance with all applicable notice requirements under the Securities Laws and
the VSCA.
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 this connection, SNC undertakes and agrees to pay or
cause to be paid when due the Merger Consideration to be distributed pursuant to
Section 2.7. SNC has reserved for issuance such number of shares of SNC Common
Stock as shall be necessary to pay the portion of the Consideration to be
distributed in the form of SNC Common Stock. If at any time the aggregate number
of shares of SNC Common Stock available for issuance hereunder shall not be
sufficient to effect the Merger, SNC shall take all appropriate action as may be
required to increase the amount of the authorized SNC Common Stock.
5.4 Additional Acts
(a) Virginia First agrees to take such actions as may be reasonably
necessary to modify the structure of, or to substitute parties to (so long as
such substitute is SNC or a SNC 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.
(b) As promptly as practicable after the date hereof, SNC and
Virginia First shall submit notice or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board, the OTS, 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. Virginia First and SNC
each represents and warrants to the other that all information included (or
submitted for inclusion) concerning it, their respective Subsidiaries, and any
of their respective directors, officers and shareholders, shall be true, correct
and complete in all material respects as of the date presented.
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5.5 Best Efforts
SNC and Virginia First 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 and to
consummate the transactions herein contemplated at the earliest practicable
date. Without limiting the foregoing, SNC agrees to vote its shares of BB&T
Financial in favor of the Plan of Merger following fulfillment of the conditions
in Sections 6.1 and 6.3. Neither SNC nor Virginia First 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
Virginia First shall cooperate with SNC concerning accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account SNC'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.
5.7 Access to Information
Virginia First and SNC 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,
Virginia First shall afford to representatives of SNC access, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments and records of Virginia First and the
Virginia First Subsidiaries and, during such period, shall make available all
information concerning their business as may be reasonably requested. No
investigation pursuant to this Section 5.7 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations
hereunder of, either party hereto. Each party hereto shall, and shall cause each
of its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertaking with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information previously
furnished in connection with the transactions contemplated by this Agreement.
5.8 Press Releases
SNC and Virginia First 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
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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 Virginia First
Except with the prior written consent of SNC, between the date hereof
and the Effective Time, Virginia First shall not, and shall cause each of the
Virginia First 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 activity;
(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 $.025 per share of Virginia First
Common Stock payable on record dates and in amounts consistent with
past practices, and other than redemption of Rights for a price of $.01
per Right under the Rights Agreement described in the definition of
"Virginia First Common Stock"; provided that any dividend declared or
payable on the shares of Virginia First Common Stock for the quarterly
period during which the Effective Time occurs shall, unless otherwise
agreed upon in writing by SNC and Virginia First, 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 SNC
Common Stock is before the Effective Time;
(c) issue any shares of its capital stock, except pursuant
to the Stock Option Plan, the SNC Option Agreement, and the Virginia
First Dividend Reinvestment Plan;
(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; impose
or permit imposition, of any lien, charge or encumbrance on any share
of stock held by it in any Virginia First Subsidiary, or permit any
such lien, charge or encumbrance to exist; or waive or release any
material right or cancel or compromise any debt or claim other than in
the ordinary course of business;
(f) 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;
(g) 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;
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(h) 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 other employee benefit or incentive to, any of its
directors, officers or employees, except with respect to officers and
employees in the ordinary course of business consistent with past
practices (it being understood that officers' salaries are generally
reviewed as of July 1 of each year and compensation of other employees
is generally reviewed on each anniversary of the date of hire);
(i) 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, that this
subparagraph shall not prevent renewal of any of the foregoing
consistent with past practice;
(j) 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, Virginia First or any Virginia First Subsidiary or any
business combination with Virginia First or any Virginia First
Subsidiary other than as contemplated by this Agreement; or authorize
any officer, director, agent or affiliate of Virginia First or any
Virginia First Subsidiary to do any of the above; or fail to notify SNC
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 paragraph
(j) shall not apply to furnishing information, negotiations or
discussions following an unsolicited offer if, as a result of such
officer, Virginia First is advised in writing by legal counsel that the
failure so to furnish information or negotiate would constitute a
breach of the fiduciary duties of Virginia First's Board of Directors
to its shareholders;
(k) enter into (i) any material agreement, arrangement or
commitment not made in the ordinary course of business, (ii) any
agreement, indenture or other instrument not made in the ordinary
course of business relating to the borrowing of money by Virginia First
or a Virginia First Subsidiary or guarantee by Virginia First or a
Virginia First 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 in
the normal course except to the extent otherwise provided in an
agreement, arrangement or commitment previously Disclosed); or (iv) any
contract, agreement or understanding with a labor union;
(1) change its lending, investment or asset liability
management policies in any material respect, except as may be required
by applicable law, regulation, or directives,
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and except that after approval of the Agreement and the Plan of Merger
by its shareholders Virginia First shall cooperate in good faith with
SNC to adopt policies, practices and procedures consistent with those
utilized by SNC, effective on or before the Closing Date;
(m) change its methods of accounting in effect at June 30,
1996, except as required by changes in generally accepted accounting
principles concurred in by SNC's independent certified public
accountants, 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 June 30, 1996, except
as required by changes in law or regulation;
(n) incur any commitments for capital expenditures or
obligation to make capital expenditures in excess of $50,000, for any
one expenditure, or $150,000, in the aggregate;
(o) incur any indebtedness other than deposits from
customers, advances from the Federal Home Loan Bank and reverse
repurchase arrangements in the ordinary course of business;
(p) take any action which would or could reasonably be
expected to (i) cause the business combination contemplated hereby not
to constitute a reorganization under Section 368 of the Code as
determined by SNC, (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;
(q) dispose of any material assets other than in the
ordinary course of business; or
(r) agree to do any of the foregoing.
5.10 Employment Agreement
SNC (or its specified banking subsidiary) and Charles A. Patton shall
enter into an employment agreement (the "Employment Agreement") substantially in
the form of Annex B hereto.
5.11 Affiliates
Virginia First shall cause all persons who are affiliates of Virginia
First to deliver to SNC promptly following this Agreement a written agreement
providing that such person will not dispose of SNC Common Stock received in the
Merger except in compliance with the Securities
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Act and the rules and regulations promulgated thereunder, and in any event shall
cause such affiliates to deliver to SNC such written agreement prior to the
Effective Time.
5.12 Section 401(k) Plan
SNC shall cause the 401(k) plan of Virginia First to be merged with the
401(k) plan maintained by SNC and the SNC Subsidiaries, and the account balances
of former employees of Virginia First or the Virginia First Subsidiaries who are
participants in the Virginia First plan shall be transferred to the accounts of
such employees under the SNC 401(k) plan. Following such merger and transfer,
such accounts shall be governed and controlled by the terms of the SNC 401(k)
plan as in effect from time to time (and subject to SNC's right to terminate
such plan). For purposes of administering the 401(k) plan, service with Virginia
First and the Virginia First Subsidiaries by each such employee shall be deemed
to be service with SNC or the SNC Subsidiaries for participation and vesting
purposes only.
5.13 Directors and Officers Protection
SNC or a SNC Subsidiary shall purchase 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 Virginia First for
acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in Virginia First'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 Virginia First'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, SNC 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, SNC
further agrees to indemnify all individuals who are or have been officers and
directors of Virginia First prior to the Effective Time from any acts or
omissions in such capacities prior to the Effective Time, to the extent
indemnification is provided pursuant to the Articles of Incorporation of
Virginia First on the date hereof and is permitted under the VSCA.
5.14 Forbearances of SNC
Except with the prior written consent of Virginia First, which consent
shall not be arbitrarily or unreasonably withheld, between the date hereof and
the Effective Time, neither SNC nor any SNC 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 Option Agreement other than in accordance with its
terms, or dispose of the shares of Virginia First Common Stock issuable upon
exercise of the option rights conferred thereby other than as permitted or
contemplated by the terms thereof; or (v) fail to comply in any material respect
with
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any laws, regulations, ordinances or governmental actions applicable to it and
to the conduct of its business.
5.15 Reports
Each of Virginia First and SNC shall file (and shall cause the Virginia
First Subsidiaries and the SNC 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 SNC or Virginia First, as the
case may be, copies of all such reports promptly after the same are filed. If
financial statements are contained in any such reports filed with the
Commission, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with generally
accepted accounting procedures (subject in the case of interim financial
statements 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
SNC shall use its reasonable efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of SNC
Common Stock to be issued to the holders of Virginia First Common Stock pursuant
to the Merger, and SNC shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.17 Board of Directors of Virginia Banking Subsidiary
The Chairman of the Board of Directors of Virginia First and at least
four other members of the Board of Directors of Virginia First other than
Charles A. Patton shall be elected to the Board of Directors of SNC's Virginia
banking subsidiary as soon as practicable following the Effective Time. The
maximum age requirement presently in effect for membership on such Board shall
be waived by SNC for two years following the Effective Time with respect to the
Chairman of the Board of Directors of Virginia First.
5.18 Employee Benefits; Special Payment
(a) Each employee of Virginia First at the Effective Time who becomes
an employee immediately following the Effective Time of SNC or a SNC Subsidiary
shall be eligible to
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participate in group hospitalization, medical, life, disability, retirement and
other benefit plans and programs comparable to those provided to then employees
of SNC, without the imposition of any waiting period or limitation on
preexisting conditions. For purposes of participating in all plans and benefits
of SNC, each such employee of Virginia First who becomes employed immediately
following the Effective Time by SNC or a SNC Subsidiary shall receive credit for
service to Virginia First for participation and vesting purposes only.
(b) At the Closing, and prior to the Effective Time, Virginia First
shall pay to Charles A. Patton a lump sum amount of $525,000, which payment
shall be in full satisfaction of any obligation to Employee pursuant to Section
10 of the Employment Agreement entered into by Charles A. Patton and each of
Virginia First and Virginia First Savings Bank, F.S.B, each dated January 1,
1996.
5.19 Assumption of Agreement by Acquiror
It shall be a condition precedent to SNC entering into any agreement
whereby SNC shall (i) consolidate with or merge into any other entity and shall
not be the continuing surviving person of such consolidation or merger, or (ii)
transfer all or substantially all of its assets to any entity, that proper
provision shall be made so that the successor and assigns of SNC shall
specifically agree to assume SNC's obligations under this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent --SNC and Virginia First
The respective obligations of SNC and Virginia First 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 Virginia First of the Agreement and the Plan of Merger set forth
in Section 2.2;
(b) The Registration Statement (including any post-effective
amendments thereto) shall be effective under the Securities Act, and SNC shall
have received all state securities or "Blue Sky" permits or other
authorizations, or confirmations as to the availability of an exemption from
registration requirements as may be necessary, and no proceedings shall be
pending or to the knowledge of SNC threatened by the Commission or any state
"Blue Sky" securities administration to suspend the effectiveness of such
Registration Statement; and the SNC 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;
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(c) The parties shall have received all regulatory approvals required
in connection with the transactions contemplated by this Agreement, all notice
periods and waiting periods required after the granting of any such approvals
shall have passed, and all such approvals shall be in effect;
(d) None of SNC, any of the SNC Subsidiaries, Virginia First or any
of the Virginia First 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) Virginia First and SNC shall have received an opinion of SNC's
legal counsel, in form and substance satisfactory to Virginia First and SNC,
substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of
Virginia First will not recognize any gain or loss to the extent that such
shareholders exchange shares of Virginia First Common Stock for shares of SNC
Common Stock.
6.2 Conditions Precedent -- Virginia First
The obligations of Virginia First 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 Virginia First pursuant to Section 7.4:
(a) All representations and warranties of SNC 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
Virginia First. The representations and warranties of SNC set forth in Sections
4.1, 4.2, 4.3, 4.4 and 4.10 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 SNC set forth in this Agreement (including the
representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4 and
4.10) such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Material Adverse Effect on SNC; provided that, for purposes of
this sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not to
include such qualifications.
(b) SNC shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement.
(c) SNC shall have delivered to Virginia First 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), 6.2(a) and 6.2(b), to the extent applicable to SNC, 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 SNC or that
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present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger.
(d) Virginia First shall have received opinions of counsel to SNC in
the form reasonably acceptable to Virginia First'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 SNC Common Stock issuable pursuant to the Merger
shall have been approved for listing on the NYSE, subject to official notice of
issuance.
(g) Virginia First shall not have reasonably determined in good faith
that there has been a material adverse change in the condition, operations or
prospects of SNC since December 31, 1996.
6.3 Conditions Precedent -- SNC
The obligations of SNC 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 SNC pursuant to
Section 7.4:
(a) All representations and warranties of Virginia First 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 SNC. The representations and warranties of Virginia First set forth
in Sections 3.1, 3.2 (except the last sentence thereof), 3.3 (except the last
sentence thereof), 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 Virginia First 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
Virginia First and the Virginia First Subsidiaries taken as a whole; provided
that, for purposes of this sentence only, those representations and warranties
which are qualified by references to "material" or "Material Adverse Effect"
shall be deemed not to include such qualifications.
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of SNC,
would so materially adversely affect the business or economic benefits to SNC of
the transactions contemplated by this Agreement as to render consummation of
such transactions inadvisable or unduly burdensome.
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(c) Virginia First shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) Virginia First shall have delivered to SNC a certificate, dated
the Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the
extent applicable to Virginia First, 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 Virginia First or that
present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger.
(e) SNC shall have received opinions of counsel to Virginia First in
the form reasonably acceptable to SNC's legal counsel.
(f) SNC shall have received the written agreements from affiliates as
specified in Section 5.11.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in
the event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
inaccuracy would provide the nonbreaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 6.2(a)
in the case of Virginia First and Section 6.3(a) in the case of SNC; and, in the
case of (i) or (ii), if such breach or inaccuracy has not been cured by the
earlier of 30 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 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 Virginia First do not approve the Agreement and the Plan of
Merger.
(f) At any time following March 31, 1998, 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 July 31, 1997 by SNC in
writing, if SNC determines in its sole good faith judgment, through review of
information Disclosed by Virginia First, the performance of its due diligence or
otherwise, that the financial condition, results of operations, business or
business prospects of Virginia First and of the Virginia First Subsidiaries,
taken as a whole, are materially adversely different from SNC's reasonable
expectations with respect thereto on the date of execution of this Agreement;
provided that SNC shall inform Virginia First upon such termination as to the
reasons for SNC's determination; and, provided further, that this Section 7.1(g)
shall not limit in any way the due diligence investigation of Virginia First and
the Virginia First Subsidiaries which SNC may perform or otherwise affect any
other rights which SNC has after the date hereof under the terms of this
Agreement. Specifically, without limitation, the fact that Virginia First has
Disclosed information shall not prevent SNC from terminating this Agreement
pursuant to this Section 7.1(g) on account of such information.
(h) At any time prior to the Effective Time by Virginia First as
provided in Section 2.7(e) if the Closing Value shall be less than $30.00.
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated
pursuant to Section 7.1, both this Agreement and the Plan of Merger shall become
void and have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for an uncured
breach of the covenant, agreement, understanding, representation or warranty
giving rise to such termination. The SNC 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,
provided that no such representations, warranties or covenants shall be deemed
to be terminated or extinguished so as to deprive SNC or Virginia First (or any
director,
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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 SNC or
Virginia First, the aforesaid representations, warranties and covenants being
material inducements to consummation by SNC and Virginia First 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 Virginia First 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 Section 7.5, executed after approval by the
Virginia First shareholders of this Agreement and the Plan of Merger shall
reduce either the number of shares of SNC Common Stock into which each share of
Virginia First Common Stock shall be converted in the Merger 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 SNC and Virginia First, 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
fees and expenses of its own financial consultants, accountants and counsel;
provided, however, that the printing costs incurred in connection with the
Registration Statement and the Proxy Statement/Prospectus shall be borne 50% by
SNC and 50% by Virginia First.
8.2 Entire Agreement
This Agreement and the SNC Option Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and thereunder and supersede all arrangements or understandings with
respect thereto, written or oral, entered into on or before the
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date hereof, other than documents referred to herein or therein. The terms and
conditions of this Agreement and the SNC 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 SNC 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.
8.3 No Assignment
Neither 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 the 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 Virginia First:
Charles A. Patton
Virginia First Financial Corporation
Franklin and Adams Street
Petersburg, Virginia 23803
Telephone:
Fax:
With a required copy to:
Wayne A. Whitham, Jr., Esq.
Williams Mullen Christian & Dobbins
1021 East Cary Street, 16th Floor
Richmond, Virginia 23219
Telephone: 804-783-6473
Fax: 804-783-6507
If to SNC:
Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 910-733-3088
Fax: 910-733-2296
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With a required copy to:
William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 910-721-3624
Fax: 910-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Captions
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.6 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.
8.7 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina applicable to agreements made and
entirely to be performed within such jurisdiction, except to the extent federal
law may be applicable.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Amended and Restated Agreement to be executed in
counterparts by their duly authorized officers, all as of the day and year first
above written.
SOUTHERN NATIONAL CORPORATION
By
-----------------------------------------
Title:
-------------------------------
BB&T FINANCIAL CORPORATION OF VIRGINIA
By
-----------------------------------------
Title:
-------------------------------
VIRGINIA FIRST FINANCIAL CORPORATION
By
-----------------------------------------
Title:
-------------------------------
The undersigned, by their signatures below, hereby agree to be
bound by and to comply with the provisions of Section 5.1 of the foregoing
Agreement and Plan of Reorganization as applicable to him. Further, Charles A.
Patton agrees to enter into and execute the Employment Agreement described in
Section 5.10 and agrees to the provisions of Section 5.18(b).
------------------------------------------
William A. Patton
------------------------------------------
Charles A. Patton
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Exhibit A
PLAN OF MERGER
OF
VIRGINIA FIRST FINANCIAL CORPORATION
WITH AND INTO
BB&T FINANCIAL CORPORATION OF VIRGINIA
Section 1. Corporations Proposing to Merge and Surviving
Corporation. Virginia First Financial Corporation, a Virginia corporation
("Virginia First"), shall be merged (the "Merger") with and into BB&T Financial
Corporation of Virginia, a Virginia corporation ("BB&T Financial- Virginia"),
pursuant to the terms and conditions of this Plan of Merger (the "Plan of
Merger") and of the Agreement and Plan of Reorganization, dated as of August __,
1996 (the "Agreement"), by and between Virginia First and BB&T Corporation, a
North Carolina corporation and parent corporation of BB&T Financial-Virginia
("BB&T"). The effective time for the Merger (the "Effective Time") shall be set
forth in the Articles of Merger to be filed with the Clerk of the State
Corporation Commission of Virginia. BB&T Financial-Virginia shall continue as
the surviving corporation (the "Surviving Corporation") in the Merger and the
separate corporate existence of Virginia First shall cease.
Section 2. Effects of the Merger. The Merger shall have the
effects set forth in Section 13.1-721 of the Virginia Stock Corporation Act (the
"VSCA").
Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of BB&T Financial-Virginia as in effect immediately
prior to the Effective Time shall remain in effect as the Articles of
Incorporation and Bylaws of the Surviving Corporation following the Effective
Time until changed in accordance with their terms and the VSCA.
Section 4. Conversion of Shares.
(a) At the Effective Time, each share of common stock, $1.00 par
value per share, of Virginia First ("Virginia First Common Stock") outstanding
immediately prior to the Effective Time, shall by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become the right to receive_____ shares of common stock, $5.00 par value per
share, of BB&T ("BB&T Common Stock"), plus cash in the amount of $___________.
(b) At the Effective Time, each share of the common stock of BB&T
Financial- Virginia issued and outstanding immediately prior to the Effective
Time shall continue to be issued and outstanding.
Section 5. No Right to Dissent. Pursuant to Section 13.1-730C of
the VSCA, holders of Virginia First Common Stock shall have no right to dissent
from the Merger.
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Section 6. No Fractional Shares. Notwithstanding any other term
or provision hereof, no fraction of a share of BB&T Common Stock, and no
certificates or scrip therefor or other evidence of ownership thereof, will be
issued in connection with the conversion of Virginia First Common Stock in the
Merger. At the Effective Time, the aggregate shares of BB&T Common Stock
(including fractional shares) to be received in the Merger by each holder of
shares of Virginia First Common Stock shall be determined, and the number of
such shares of BB&T Common Stock shall be rounded to the nearest whole share.
The amount of cash to be received by each such holder shall be increased or
decreased to adjust for such rounding based on a value per share for BB&T Common
Stock of $_____.
Section 7. Amendment. At any time before the Effective Time, this
Plan of Merger may be amended, provided that: (i) any such amendment is approved
by the Board of Directors of Virginia First ; and (ii) no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of
Virginia First shall have any of the effects specified in Section 13.1-718.I of
the VSCA without the approval of the shareholders affected thereby.
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ANNEX A
ARTICLES OF MERGER
OF
VIRGINIA FIRST FINANCIAL CORPORATION
WITH AND INTO
BB&T FINANCIAL CORPORATION OF VIRGINIA
The undersigned corporations, pursuant to Section 13.1-720 of the
Virginia Stock Corporation Act, hereby execute the following articles of merger.
ONE
The merger of Virginia First Financial Corporation, a Virginia
corporation ("Virginia First"), with and into BB&T Financial Corporation of
Virginia, a Virginia corporation ("BB&T Financial-Virginia"), shall be in
accordance with the Plan of Merger attached hereto as Exhibit A (the "Plan of
Merger").
TWO
The Plan of Merger was submitted to the shareholders of each of
Virginia First and BB&T Financial-Virginia by its Board of Directors in
accordance with the provisions of Section 13.1- 718 of the Virginia Stock
Corporation Act:
A. The number of outstanding shares of common stock, par value $1.00
per share, of Virginia First (the only voting group entitled to vote on the Plan
of Merger) entitled to be cast and number of undisputed votes cast for the Plan
of Merger were:
Outstanding Shares Undisputed Votes Cast for the Plan
------------- ----------------------
The number of undisputed votes cast for the Plan of Merger was
sufficient for approval of the Plan of Merger.
B. The Plan of Merger was adopted by unanimous consent of the
shareholders of BB&T Financial-Virginia.
THREE
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The articles of merger shall become effective at ______ __.m. on
_________________, 199_.
The undersigned, [Title] of each of Virginia First and BB&T
Financial-Virginia declares that the facts herein stated are true as of
__________________, 199_.
VIRGINIA FIRST FINANCIAL CORPORATION
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
BB&T FINANCIAL CORPORATION OF VIRGINIA
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
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ANNEX B
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of
_____________, 1997, by and among BB&T CORPORATION ("BB&T"), a North Carolina
corporation having its principal office at Winston-Salem, North Carolina,
VIRGINIA FIRST SAVINGS BANK, F.S.B. ("Employer"), a federally chartered capital
stock savings bank having its principal office at Petersburg, Virginia, and
CHARLES A. PATTON (the "Employee");
R E C I T A L S:
Employee has been President and Chief Executive Officer of
Employer, a wholly-owned subsidiary of Virginia First Financial Corporation
("Virginia First"), and Virginia First merged with and into BB&T Financial
Corporation of Virginia, a wholly-owned subsidiary of BB&T, effective on the
date hereof. Employer considers the continued availability of Employee's
services to be important to the management and conduct of Employer's business,
and Employee is willing to make his services available to Employer on the terms
and subject to the conditions set forth herein. Employer and Employee further
acknowledge and agree that Employee's knowledge of Employer's business, its
customers and employees would give Employee an unfair advantage if Employee were
to compete with Employer in Employer's business area or seek to hire employees
of Employer, and thus that Employer should be protected from such actions.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
1. Employment. As of the date hereof, Employee is
employed as Senior Vice President of Employer, and shall oversee Virginia
mortgage lending operations of Employer. Employee hereby accepts and agrees to
such employment, subject to the general supervision and pursuant to the orders,
advice and direction of Employer and its Board of Directors. Employee shall
perform such duties as are customarily performed by one holding such title and
position in similar businesses or enterprises as engaged in by Employer, and
shall additionally render such other services and duties as may be reasonably
assigned to him from time to time by Employer, consistent with his title and
position. Employee shall devote his full business time and energy to rendering
the services hereunder, and shall render such services in a competent and
businesslike manner and to the best of his ability.
2. Term of Employment. The term of this Agreement (the
"Term") shall commence from and after the date hereof and shall terminate on the
day preceding the fourth anniversary of such date.
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3. Compensation.
a. For all services rendered by Employee to
Employer under this Agreement, Employer shall pay to Employee, for the first two
years during the Term, an annual base salary of $250,000. Annual base salary
shall be payable in accordance with the payroll practices of Employer applicable
to officers.
b. For the period beginning on the date hereof
and ending on December 31, 1998 (or earlier date that Employee's employment with
Employer shall be terminated, if at least one year following the date hereof),
Employee shall be entitled to receive a bonus of $75,000 if Employee shall
continue in the employment of Employer pursuant to the terms of this Agreement.
For each calendar year commencing on and after January 1, 1999, if Employee
shall continue in the employment of Employee pursuant to the terms of this
Agreement, Employee shall participate in any bonus or incentive plan, whether
such plan provides for awards in cash or securities, made available to officers
within salary grades 22 to 28 (or similar grades subsequently adopted), as such
plan may be modified from time to time, or such other similar plans for which
Employee may become eligible and designated a participant.
c. Following the second year of the Term,
Employee's annual salary shall be subject to review by Employer at least
annually, and may be increased by Employer in its sole and absolute discretion.
In no event will the annual salary of Employee during the Term be decreased
below the annual salary level for any prior year.
d. Except as otherwise specifically provided
herein, for as long as Employee is employed by Employer during the Term,
Employee shall be entitled to receive, on the same basis as other officers of
Employer, employee pension and welfare benefits such as sick leave, vacation,
group disability and health, life, and accident insurance which Employer may
from time to time extend to its officers. In no event shall Employee receive
credit for benefit accrual purposes under any pension plan for service prior to
the date hereof.
e. As soon as practicable following the date
hereof, and continuing for the period of Employee's employment hereunder during
the Term, BB&T shall cause Employee to be appointed as Chairman of the Board of
Directors of American Finance & Investment, Inc., and to be elected to the Board
of Directors of Craigie Incorporated. In addition, for a period continuing at
least until the close of the Term, BB&T shall cause Employee to be elected to
the Board of Directors of Branch Banking and Trust Company of Virginia
("Virginia Bank") and Branch Banking and Trust Company ("NC Bank"). During the
period of Employee's employment hereunder, no fees shall be payable for services
on such Boards of Directors. Following termination of Employee's employment
hereunder, for services on the Board of Directors of Virginia Bank Employee
shall receive a payment of $350.00 for each Board meeting attended, and for
services on the Board of Directors of NC Bank Employee shall receive a payment
of $5,000 per year plus a payment of $1,000 for each Board or Committee meeting
attended. Such fees shall be payable in accordance with normal policies and
procedures established from time to time by BB&T. In the event BB&T shall
consolidate the Boards of Directors of its Virginia and North Carolina banking
subsidiaries, BB&T shall cause Employee to be elected to the consolidated Board
of Directors. Continuation in the above positions shall be conditional upon
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Employee's carrying out his duties in accordance with his fiduciary obligations,
and upon Employee's compliance with the terms of this Agreement.
f. Notwithstanding any other provisions of this
Section 3, for each year during the Term Employer shall pay to Employee the sum
of $16,000, payable on or before ______________ of each such year, to enable
Employee to pay premiums on a life insurance policy previously conveyed to
Employee by Employer.
4. Covenants of Employee.
a. To the extent and subject to the limitations
provided in the following subsections of this Section 4 (whichever may be
applicable), upon termination of Employee's employment prior to expiration of
the Term, Employee will not directly or indirectly, either as a principal,
agent, employee, employer, stockholder, co-partner or in any other individual or
representative capacity whatsoever: (i) engage in a Competitive Business
anywhere in the City of Petersburg, Virginia, and in any county in which either
Virginia First or Employer has an office immediately preceding the date hereof
and any county contiguous to any said county, or anywhere in the State of
Virginia; or (ii) solicit, or assist any other person in so soliciting, any
depositors or customers of Employer, BB&T or their Affiliates to make deposits
in or to become customers of any other financial institution conducting a
Competitive Business; or (iii) induce any individuals to terminate their
employment with Employer, BB&T or their Affiliates. As used in this Agreement,
the term "Competitive Business" means the banking and financial services
business, which includes consumer, savings and commercial banking, insurance
brokerage or agency business, trust business, savings and loan business,
mortgage banking business, and any other business in which Employer, BB&T or any
of their respective Affiliates is engaged; and the term "Affiliate" means a
business entity that directly or indirectly, through one or more intermediaries,
is controlled by BB&T or Virginia First. In the event Employer shall determine
that Employee is breaching the provisions of (i) or (ii) of this Section 4(a),
Employer shall give notice of such breach to Employee and Employee shall be
deemed not to have breached the covenants in (i) or (ii) if Employee shall cease
such activity immediately upon receipt of such notice. In the event Employee
shall desire to engage in any activities which Employee believes could breach
the covenants of this Section 4(a), Employee may give notice of such desired
activity to Employer, and Employer shall advise Employee in writing, within
thirty days following receipt of such notice, of its determination as to whether
the proposed activity is permissible hereunder or whether Employer is willing to
permit such activity even if Employer believes such activity is not permissible
hereunder.
b. If Employee voluntarily terminates
employment with Employer at any time after the first anniversary hereof,
Employee will be subject to the provisions of Section 4(a) for the period of
time during which Employee receives compensation and benefits pursuant to
Section 6(d).
c. If Employee's employment is terminated by
Employer for Just Cause (as defined in Section 6(b)), or if Employee voluntarily
terminates employment with Employer prior to the first anniversary hereof,
Employee will be subject to the provisions of Section 4(a) until the second
anniversary of Employee's termination.
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d. If Employee's employment is terminated by
Employer for reasons other than Just Cause (as defined in Section 6(b)) at any
time, Employee will be subject to the provisions of Section 4(a) for the period
of time that Employee receives compensation and benefits pursuant to Section
6(d).
e. During the Term and for two years
thereafter, and except as required by any court, supervisory authority or
Administrative agency or as may be otherwise required by applicable law,
Employee shall not, without the written consent of the Board of Directors of
Employer or a person authorized thereby, disclose to any person, other than an
employee of Employer, BB&T or an Affiliate or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by
Employee of his duties as an employee of Employer, any confidential information
obtained by him while in the employ of Employer, unless such information has
become a matter of public knowledge at the time of such disclosure.
f. The covenants contained in this Section 4
shall be construed and interpreted in any judicial proceeding to permit their
enforcement to the maximum extent permitted by law. Employee agrees that the
restraints imposed herein are necessary for the reasonable and proper protection
of Employer, BB&T and Affiliates and that each and every one of the restraints
is reasonable in respect to such matter, length of time and the geographic area.
Employee further acknowledges that damages at law would not be a measurable or
adequate remedy for breach of the covenants contained in this Section 4 and,
accordingly, Employee agrees to submit to the equitable jurisdiction of any
court of competent jurisdiction in connection with any action to enjoin Employee
from violating any such covenants.
g. All amounts payable to Employee by Employer
pursuant to Section 6(c) or 6(d) shall be solely in exchange for Employee's
covenants and agreements set forth in this Section 4, and such amounts shall not
be deemed to be severance payments.
5. Disability. If, by reason of physical or mental
disability during the Term, Employee is unable to carry out the essential
functions of his employment hereunder for six consecutive months, his services
hereunder may be terminated by action of the Board of Directors of Employer
determining so to do upon one month's notice to be given to Employee at any time
after the period of six continuous months of disability and while such
disability continues. If, prior to the expiration of the one-month period after
the giving of such notice, Employee shall recover from such disability and
return to the full-time active discharge of his duties, then such notice shall
be of no further force and effect and Employee's employment shall continue as if
the same had been uninterrupted. If Employee shall not so recover from his
disability and return to his duties, then his services shall terminate at the
expiration date of such one month's notice with the same force and effect as if
that date had been the date of termination originally provided for hereunder.
During the first six months of the period of Employee's disability, Employee
shall continue to earn all compensation (including bonuses) to which Employee
would have been entitled as if he had not been disabled, such compensation to be
paid at the time, in the amounts, and in the manner provided in Section 3(a),
inclusive of any compensation received pursuant to any applicable disability
insurance plan of Employer or BB&T. Thereafter, Employee shall receive
compensation to which he is entitled under any applicable disability insurance
plan of Employer. In the event a dispute arises between Employee and Employer
concerning Employee's physical or mental ability to continue or return to the
performance of his duties as aforesaid,
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Employee shall submit to examination by a competent physician mutually agreeable
to the parties, and the physician's opinion as to Employee's capability to so
perform will be final and binding. Upon termination of Employee's services by
reason of disability, the Term shall end. Notwithstanding the foregoing
provisions of this Section 5, if Employee's services shall terminate on account
of disability on or after the first anniversary of the date hereof, Employee
shall be treated as if he voluntarily terminated his employment and shall be
entitled to receive the payments provided in Section 6(d), subject to offset
each month for any payments received for the month pursuant to this Section 5.
6. Termination.
a. If Employee shall die during the Term,
Employer shall pay to Employee's personal representative, for one year following
Employee's death, a monthly amount equal to one-twelfth of Employee's annual
rate of base salary in effect on the date of his death. Except for such
payments, this Agreement and the employment relationship hereunder will
automatically terminate on the date of death, which date shall be the last day
of the Term.
b. Employer shall have the right to terminate
Employee's employment under this Agreement at any time for Just Cause, which
termination shall be effective immediately. Termination for "Just Cause" shall
include termination for Employee's personal dishonesty, gross incompetence,
willful misconduct, breach of a fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, conviction of a felony or of a misdemeanor involving
moral turpitude, unethical business practices in connection with Employer's or
BB&T's business, misappropriation of Employer's or BB&T's assets (determined on
a reasonable basis) or those of their Affiliates, or material breach of any
other provision of this Agreement, provided that Employee has received written
notice from Employer of such material breach and such breach remains uncured
thirty days after the delivery of such notice. In the event Employee's
employment under this Agreement is terminated for Just Cause, the Term shall end
at the time of such termination and Employee shall thereafter have no right to
receive compensation or other benefits under this Agreement.
c. Employer may terminate Employee's employment
other than for "Just Cause", as described in Section 6(b), at any time upon
written notice to Employee, which termination shall be effective immediately. In
the event Employer terminates Employee pursuant to this Section 6(c), Employee
will receive an annual amount equal to the sum of his rate of annual base salary
in effect immediately preceding such termination plus the annual amount payable
pursuant to Section 3(f) ("Termination Compensation") in each year until the end
of the Term (pro rated for any partial year), so long as Employee complies with
Section 4(a). Payments of the Termination Compensation shall be made at the
times such payments would have been made in accordance with Section 3(a). In
addition, Employee shall (i) receive a cash payment on the date of termination
equal to the amount of the cash bonus, if any, paid to him with respect to the
calendar year preceding the year in which his termination of employment occurs
multiplied by a fraction, the numerator of which is the number of days in the
calendar year in which his employment terminates that elapsed before such
termination, and the denominator of which is 365 (the "Bonus Amount"), and (ii)
continue to participate in retirement and welfare benefit plans for which
officers of Employer generally are eligible, on the same terms as applicable
from time to
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time to such officers, or receive benefits of comparable value, for all periods
Employee receives Termination Compensation. Notwithstanding anything in this
Agreement to the contrary, if Employee breaches Section 4(a), Employee will not
thereafter be entitled to receive any further compensation or benefits pursuant
to this Section 6(c).
d. Notwithstanding any other provision of this
Agreement to the contrary, in the event that Employee voluntarily terminates
employment with Employer at any time after the first anniversary of the date of
this Agreement, Employee will be entitled to receive the Termination
Compensation and other present or future employee benefits as are described in
Section 6(c) for the periods provided in Section 6(c), and will receive the
Bonus Amount, so long as Employee complies with Section 4(a). With the mutual
consent of Employer and Employee (and only with such mutual consent), Employee
may voluntarily terminate employment prior to the first anniversary of the date
of this Agreement and receive the payments and benefits provided in this Section
6(d). By way of explanation of this Section 6(d), if Employee voluntarily
terminates his employment with Employer in the second year of the Term, the
annual base salary used to compute Termination Compensation will equal $250,000.
If termination occurs in the third or fourth year of the Term, such base salary
shall be the actual base salary in effect at the time of termination (which
shall not be less than $250,000). Employee shall not be entitled to receive any
payments or benefits pursuant to this Section 6(d) if he voluntarily terminates
employment prior to the first anniversary of the date hereof (except with
consent of Employer as provided above) or if he breaches Section 4(a).
e. All amounts payable to Employee hereunder
shall be subject to such deductions and withholdings of payroll and income
taxes, and of any other amounts, as shall be required by applicable law.
f. If any payments made by Employer to Employee
pursuant to Section 6(c) or 6(d) shall be deemed to be excess parachute payments
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") and subject to the excise tax under Section 4999 of the
Code, Employer shall pay to Employee an additional sum (a "Gross-Up Payment") in
an amount such that after payment by Employee of all taxes imposed with respect
to such Gross-Up Payment (including any income taxes, FICA taxes and excise
taxes and any interest and penalties imposed thereon) Employee retains an amount
equal to the Excise Tax (including any interest and penalties thereon) that
would have been avoided if the payments under Section 6(c) or 6(d) had not been
treated as parachute payments.
7. Other Employment.
Employee shall devote all of his business time, attention,
knowledge and skills solely to the business and interest of Employer, BB&T and
Affiliates, and Employer, BB&T and Affiliates shall be entitled to all of the
benefits, profits and other emoluments arising from or incident to all work,
services and advice of Employee, and Employee shall not, during the time that he
is employed hereunder, become interested directly or indirectly, in any manner,
as partner, officer, director, stockholder, advisor, employee or in any other
capacity in any other business similar to Employer's or BB&T's business;
provided, however, that nothing herein contained (including without limitation
the provisions of Section 4(a)) shall be deemed to prevent or limit the right of
Employee to invest in a business similar to Employer's or BB&T's business if
such
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investment is limited to less than one percent of the capital stock or other
securities of any corporation or similar organization whose stock or securities
are publicly owned or are regularly traded on any public exchange.
8. Miscellaneous.
a. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia without
regard to conflicts of law principles thereof.
b. This Agreement constitutes the entire
Agreement between Employee and Employer with respect to the subject matter
hereof, and supersedes in their entirety any and all prior oral or written
agreements, understandings or arrangements between Employee and Virginia First
or Employer, or any Virginia First Affiliates, relating to the terms of
Employee's employment, and all such agreements, understandings and arrangements
are hereby terminated and are of no force and effect, including without
limitation, Employee's Employment Agreements with Virginia First and with
Employer, each dated January 1, 1996. Employee hereby expressly disclaims any
rights under any such agreements, understandings and arrangements. This
Agreement may not be amended or terminated except by an agreement in writing
signed by both parties.
c. This Agreement may be executed in one or
more counterparts, all of which, taken together, shall constitute one and the
same instrument.
d. Any notice or other communication required
or permitted under this Agreement shall be effective only if it is in writing
and delivered in person or by nationally recognized overnight courier service or
deposited in the mails, postage prepaid, return receipt requested, addressed as
follows:
To Employer or BB&T:
Southern National Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Attn: Jerone C. Herring, General Counsel
To Employee:
Charles A. Patton
Virginia First Financial Corporation
Franklin and Adams Street
Petersburg, Virginia 23803
Notices given in person or by overnight courier service shall be deemed given
when delivered personally to Employee or to the address required by this Section
8(d), and notices given by mail shall be deemed given three days after deposit
in the mails. Any party hereto may designate by
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written notice to the other party any other address to which notices addressed
to him shall be sent.
e. The provisions of this Agreement shall be
deemed severable, and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. It is
understood and agreed that no failure or delay by Employer, BB&T or Employee in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
f. This Agreement may not be assigned by
Employee without the written consent of Employer. This Agreement shall be
binding on any successors or assigns of either party hereto.
g. In the event that Employer, Virginia First,
BB&T or any Affiliate shall challenge the legality, validity or enforceability
of this Agreement or any provision hereof in any action, suit or proceeding,
Employer shall indemnify and hold harmless Employee from all costs and expenses
(including without limitation fees of counsel, court costs and witness fees)
incurred by Employee in defending the legality, validity and enforceability of
this Agreement or such provision. In the event that Employer shall fail to pay
to Employee any amounts or benefits to which Employee is entitled under this
Agreement and such failure shall not have been remedied within thirty days after
demand by Employee, and in the event that it shall be necessary for Employee to
institute any action, suit or proceeding to recover any amounts or benefits to
which Employee may be entitled under this Agreement, and it shall be finally
determined that Employee was entitled to any substantial portion of such amounts
or benefits, Employer shall indemnify and hold harmless Employee from all costs
and expenses (including without limitation fees of counsel, court costs and
witness fees) incurred by Employee in prosecuting such action, suit or
proceeding
h. Employer and Employee acknowledge that BB&T
anticipates that Employer shall be merged into or otherwise combined with
Virginia Bank, an Affiliate of BB&T. If such combination shall occur during the
Term, BB&T shall take any and all actions as may be deemed necessary or
advisable in order for Virginia Bank to assume Employer's obligations hereunder
from and after the effective time of such combination through the close of the
Term. For purposes of this Agreement, employment of Employee by any Affiliate of
BB&T shall be deemed to be employment by Employer hereunder, and a transfer of
employment of Employee from one such Affiliate to another shall not be deemed to
be a termination of employment of Employee by Employer or a cessation of the
Term, it being the intention of the parties hereto that employment of Employee
by any Affiliate of BB&T shall be treated as employment by Employer and that the
provisions of this Agreement shall continue to be fully applicable following any
such transfer. By executing this Agreement, BB&T guarantees to Employee the
performance hereunder of Employer.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
BB&T CORPORATION
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By:
Name:___________________________
Title:____________________________
VIRGINIA FIRST SAVINGS BANK, F.S.B.
By:
Name:___________________________
Title:____________________________
EMPLOYEE:
57
Exhibit 99.1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of May 6, 1997, by and between VIRGINIA FIRST FINANCIAL CORPORATION, a
Virginia corporation ("Issuer"), and SOUTHERN NATIONAL CORPORATION, a North
Carolina corporation ("Grantee").
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 BB&T Financial
Corporation of Virginia ("BB&T Financial- Virginia"), a wholly owned Subsidiary
of Grantee, with BB&T Financial-Virginia as the surviving entity; 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 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 1,155,127 shares, as adjusted as set forth herein (the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares), of common stock of Issuer, $1.00 par value per share
("Issuer Common Stock"), at a purchase price per Option Share (subject to
adjustment as set forth herein, the "Purchase Price") equal to $17.50.
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; 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 (other than a termination of the Merger Agreement by
Grantee pursuant to Section 7.1(b) thereof (a "Default Termination")), (C) 12
months after a Default Termination,
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(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, six months
after termination of the Merger Agreement pursuant to Section 7.1(e) thereof
(but only in the event the shareholders of Issuer do not approve the Agreement
and Plan of Merger); 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"). The term "Holder" shall mean the holder or holders of the Option from
time to time, including initially Grantee.
(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 Subsidiary when used with
respect to Issuer shall have the meaning given that term in the Merger
Agreement. 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 and other subsidiaries of 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 of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 15% or more of the voting power of Issuer or any of its
Subsidiaries;
(ii) any person (other than Grantee, any Subsidiary of
Grantee or any member of the Patton Group (as defined below)) 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; or
(iii) any member of the Patton Group (as defined below)
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) of which any member of the Patton
Group is a member, other than a group of
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which Grantee or any Subsidiary of Grantee is a member, shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 30% or more of the then-outstanding shares of Issuer Common
Stock. For the purpose of this Agreement, the "Patton Group" means
William A. Patton, Charles A. Patton, Jr., J. Dale Patton, Patton
Associates Limited Partnership and any associate or affiliate of such
person or entity. As used in this Agreement, the terms "associate" and
"affiliate" shall have the meanings specified in Rule 12b-2 promulgated
under the Exchange Act.
(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) 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 Owner's 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) 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
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in the filing of the required notice or application for such Consent and the
obtaining of such Consent, 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 specified in Section 11(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), (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 pre-emptive 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 agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK
OPTION AGREEMENT DATED AS OF MAY 6, 1997. 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 SEC, or an opinion of counsel
in form and substance reasonably satisfactory to
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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 any approvals 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 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, 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 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) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Laws.
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7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option and the Purchase Price therefor shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 7(a)), the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, equals 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
(b) In the event that Issuer shall enter into an agreement:
(i) to consolidate with or merge into any person, other than Grantee or one of
its Subsidiaries, and 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 the 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, of 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 the same as 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
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Option in substantially the same form as this Agreement, which shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the "Substitute
Purchase Price") shall then be equal to the Purchase Price multiplied by a
fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), Issuer in a merger in which Issuer is the continuing
or surviving person, the corporation that shall acquire all of the
outstanding shares of Issuer Common Stock pursuant to a statutory share
exchange, the transferee of all or any substantial part 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 Stock Market within the six-month period immediately
preceding the agreement; provided, that in the event of a sale of less
than all of Issuer's assets, the Assigned Value shall be the sum of the
price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Grantee (or by a majority in interest
of the Grantees if there shall be more than one Grantee (a "Grantee
Majority")), divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. In the event that an exchange offer
is made for the Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for the Issuer Common Stock shall be determined by a nationally
recognized investment banking firm mutually selected by Grantee and
Issuer (or if applicable, Acquiring Corporation). (If there shall be more
than one Grantee, any such selection shall be made by a Grantee
Majority.)
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(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding 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 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 paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9 and 10 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. Registration Rights.
(a) Following termination of the Merger Agreement, Issuer shall,
subject to the conditions of subparagraph (c) below, if requested by any Holder,
including Grantee and any permitted transferee ("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
Holder in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor
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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
subparagraph (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 subparagraph (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
subparagraph (a) above for a period not exceeding 90 days provided 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 subparagraph (a) above:
(i) prior to the earliest of (A) termination of the
Merger Agreement pursuant to Section 7.1 thereof, (B) failure to obtain
the requisite shareholder approval of the holders of Issuer Common Stock
pursuant to Section 5.1 of the Merger Agreement, and (C) a Purchase Event
or a Preliminary 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 subparagraph (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
Options 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 Holders whose Option Shares are being registered,
printing expenses, 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 subparagraph (a) or (b) above
(including the related offerings and sales by Selling Holders) and all other
qualifications, notifications or exemptions pursuant to subparagraph (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 subparagraph (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 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
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expressly for use therein, and Issuer and each officer, director and controlling
person of Issuer shall be indemnified by such Selling Holder, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, 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
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (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
subparagraph (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 subparagraph (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
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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 subparagraph
(a) or (b) above, Issuer and each Selling Holder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (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 Holder 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 Holder 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.
9. 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.
10. 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
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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.
11. 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 11(h)) 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 (as adjusted pursuant to Section
7), it is the express intention of Issuer to allow Holder to acquire or to
require Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of North
Carolina without regard to any applicable conflicts of law rules, except to the
extent that the federal laws of the United States shall govern.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by
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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. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned 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 its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
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.
VIRGINIA FIRST FINANCIAL CORPORATION
By: ____________________________
Name: ___________________
Title: ________________
SOUTHERN NATIONAL CORPORATION
By: ____________________________
Name: ___________________
Title: ________________
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