<PAGE>
As Filed with the Securities and Exchange Commission on January 13, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BB&T Corporation
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
North Carolina 6060 56-0939887
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
200 West Second Street
Winston-Salem, North Carolina 27101
(910) 733-2000
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
Jerone C. Herring, Esq.
200 West Second Street, 3rd Floor
Winston-Salem, North Carolina 27101
(910) 733-2180
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
The Commission is requested to send copies of all communications to:
<TABLE>
<S> <C>
Douglas A. Mays Hugh T. Wilkinson
Womble Carlyle Sandridge & Rice, PLLC Elias, Matz, Tiernan & Herrick L.L.P.
3300 One First Union Center 734 15th Street, N.W.
301 South College Street 12th Floor
Charlotte, North Carolina 28202 Washington, D.C. 20005
</TABLE>
---------------
Approximate date of commencement of proposed sale of the securities to the
public:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
---------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of each class Proposed maximum Proposed maximum
of securities to Amount to be offering price aggregate Amount of
be registered registered per unit offering price registration fee
<S> <C> <C> <C> <C>
Common Stock,
par value $5.00 per
share(1) ......... 6,500,000 (2) $ 375,419,103(3) $ 31,842(4)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Each share of the registrant's common stock includes one preferred share
purchase right.
(2) Not applicable.
(3) Computed in accordance with Rule 457(f) based on the average of the high
($34.75) and low ($34.00) sales price of the common stock of Life Bancorp,
Inc. on January 8, 1998 as reported on The Nasdaq National Market.
(4) Pursuant to Rule 457(b), the registration fee has been reduced by an amount
equal to the fee of $78,907 paid upon the filing with the Commission of
the preliminary proxy materials of Life Bancorp, Inc. on December 22,
1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
LIFE BANCORP, INC.
109 East Main Street, Norfolk, Virginia 23510
January 16, 1998
Dear Shareholders:
You are cordially invited to attend the special meeting of shareholders
(the "Special Meeting") of Life Bancorp, Inc. ("Life"), to be held at the
Norfolk Waterside Marriott located at 235 East Main Street, Norfolk, Virginia,
on February 23, 1998 at 10:00 a.m., Eastern Time. At the Special Meeting, you
will be asked to consider and vote on the Agreement and Plan of Reorganization,
dated as of October 29, 1997 (the "Reorganization Agreement"), by and among
Life, BB&T Corporation, a North Carolina corporation ("BB&T"), and BB&T
Financial Corporation of Virginia, a Virginia corporation and wholly owned
subsidiary of BB&T ("BB&T Financial-VA"), and a related Plan of Merger (the
"Plan of Merger"). Pursuant to the Reorganization Agreement and the Plan of
Merger, Life will merge with and into BB&T Financial-VA (the "Merger"), and
each share of common stock of Life ("Life Common Stock") will be converted into
the right to receive shares of common stock of BB&T ("BB&T Common Stock") and
cash in lieu of any fractional share. (As described in the accompanying Proxy
Statement/Prospectus, each share of Life Common Stock will be converted into
the right to receive a minimum of 0.58 shares of BB&T Common Stock, which
amount may be increased to up to 0.60 shares of BB&T Common Stock and may be
subject to possible additional upward adjustment.) BB&T Financial-VA will be
the surviving corporation in the Merger, and shareholders of Life will become
shareholders of BB&T. It is a condition to the Merger that the exchange of BB&T
Common Stock solely for shares of Life Common Stock will be tax free to the
shareholders of Life for federal income tax purposes.
The Merger has been approved by your Board of Directors and is recommended
by the Board to you for approval. The Board believes that the Merger is in the
best interests of Life and its shareholders. Consummation of the Merger is
subject to certain conditions, including approval of the Reorganization
Agreement and the Plan of Merger by the Life shareholders, approval of the
Merger by various regulatory agencies, and satisfaction or waiver of certain
other contractual conditions.
The enclosed Notice of Special Meeting and Proxy Statement/Prospectus
contain important information concerning the Special Meeting and the proposed
Merger, including details as to the determination of the consideration to be
received in the Merger. Please carefully read these materials and thoroughly
consider the information contained in them.
Whether or not you plan to attend the Special Meeting, you are urged to
complete, sign, date and promptly return the enclosed proxy card to assure that
your shares will be voted at the Special Meeting. If you attend the Special
Meeting, you may vote in person regardless of whether you have previously
submitted a proxy.
The Board of Directors of Life unanimously approved the Reorganization
Agreement and the Plan of Merger and believes that the Merger is fair to, and
in the best interests of, the shareholders of Life. Accordingly, the Board of
Directors of Life unanimously recommends that shareholders of Life vote "FOR"
approval of the Reorganization Agreement and the Plan of Merger.
Sincerely,
/s/ Edward E. Cunningham
EDWARD E. CUNNINGHAM
Chairman, President and Chief Executive
Officer
<PAGE>
LIFE BANCORP, INC.
109 East Main Street, Norfolk, Virginia 23510
----------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 1998
----------------------------------------
TO THE SHAREHOLDERS OF LIFE BANCORP, INC.:
NOTICE IS HEREBY GIVEN that the special meeting of shareholders (the
"Special Meeting") of Life Bancorp, Inc., a Virginia corporation ("Life"), will
be held at the Norfolk Waterside Marriott located at 235 East Main Street,
Norfolk, Virginia, on February 23, 1998 at 10:00 a.m., Eastern Time, for the
following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Reorganization, dated as of October 29, 1997 (the "Reorganization
Agreement"), by and among Life, BB&T Corporation, a North Carolina
corporation ("BB&T"), and BB&T Financial Corporation of Virginia, a
Virginia corporation and wholly owned subsidiary of BB&T ("BB&T
Financial-VA"), and a related Plan of Merger (the "Plan of Merger"),
pursuant to which Life will merge with and into BB&T Financial-VA, and
each share of common stock of Life will be converted into the right to
receive shares of common stock of BB&T and cash in lieu of any fractional
share. (As described in the accompanying Proxy Statement/Prospectus, each
share of Life Common Stock will be converted into the right to receive a
minimum of 0.58 shares of BB&T Common Stock, which amount may be increased
to up to 0.60 shares of BB&T Common Stock and may be subject to possible
additional upward adjustment.) A copy of the Reorganization Agreement and
the Plan of Merger set forth therein is attached to the accompanying Proxy
Statement/Prospectus as Appendix I.
2. To transact such other business as may be properly brought before the
Special Meeting or at any and all adjournments or postponements thereof.
Shareholders of Life of record at the close of business on January 9, 1998
are entitled to notice of and to vote at the Special Meeting. You are cordially
invited to attend the Special Meeting in person; however, whether or not you
plan to attend, we urge you to complete, date and sign the accompanying proxy
card and to return it promptly in the enclosed postage prepaid envelope.
By Order of the Board of Directors
/s/ Emily E. Steele
EMILY E. STEELE
Secretary
Norfolk, Virginia
January 16, 1998
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY WHETHER
OR NOT YOU PLAN TO BE PRESENT AT THE SPECIAL MEETING. PLEASE DO NOT SEND IN ANY
CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE>
PROXY STATEMENT
Life Bancorp, Inc.
---------------
PROSPECTUS
BB&T Corporation
COMMON STOCK
This Proxy Statement/Prospectus is being furnished to the holders of the
common stock of Life Bancorp, Inc., a Virginia corporation ("Life"), in
connection with the solicitation of proxies by the Board of Directors of Life
(the "Life Board") for use at the special meeting of shareholders of Life, or
any adjournment or postponement thereof (the "Special Meeting"), to be held at
the Norfolk Waterside Marriott located at 235 East Main Street, Norfolk,
Virginia, on February 23, 1998 at 10:00 a.m., Eastern Time. At the Special
Meeting, the shareholders of Life will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Reorganization, dated as of
October 29, 1997 (the "Reorganization Agreement"), among Life, BB&T
Corporation, a North Carolina corporation ("BB&T"), and BB&T Financial
Corporation of Virginia, a Virginia corporation and a wholly owned subsidiary
of BB&T ("BB&T Financial-VA"), a copy of which is attached hereto as Appendix
I, and the related Plan of Merger (the "Plan of Merger"), a copy of which
appears as Exhibit A to the form of Articles of Merger attached as Annex A to
the Reorganization Agreement. See "SPECIAL MEETING OF SHAREHOLDERS."
The Reorganization Agreement and the Plan of Merger provide for the merger
of Life with and into BB&T Financial-VA (the "Merger"). As a result of the
Merger, each issued and outstanding share of Life Common Stock will be
converted into and exchanged for shares of BB&T Common Stock and cash in lieu
of any fractional share. As described herein, each share of Life Common Stock
will be converted into the right to receive a minimum of 0.58 shares of BB&T
Common Stock, which amount may be increased to up to 0.60 shares of BB&T Common
Stock and may be subject to possible additional upward adjustment (the
"Exchange Ratio"). The Exchange Ratio is adjustable upward in excess of 0.60
only if certain conditions are met concerning the reported price of BB&T Common
Stock, and then only with the concurrence of BB&T. The Life Board has the right
to elect to terminate the Reorganization Agreement if such conditions should
occur, in which case the BB&T Board would be required to determine whether to
proceed with the Merger at a higher Exchange Ratio. In making this
determination, the principal factors the BB&T Board would consider include,
without limitation, the projected effect of the Merger on BB&T's pro forma
earnings and book value per share and whether BB&T's assessment of Life's
earning potential as part of BB&T justifies the issuance of a greater number of
BB&T's shares. If the BB&T Board should decline to adjust the Exchange Ratio,
Life may elect to proceed without adjustment. In making such determination, the
principal factors the Life Board would consider include, without limitation,
whether the Merger remains in the best interest of Life and its shareholders,
despite a decline in the BB&T Common Stock price, and whether the consideration
to be received by the holders of Life Common Stock remains fair from a
financial point of view. See "THE MERGER -- Exchange Ratio."
This Proxy Statement/Prospectus also constitutes a prospectus of BB&T with
respect to up to 6,500,000 shares of common stock, par value $5.00 per share,
of BB&T ("BB&T Common Stock"), to be issued to holders of the outstanding
shares of common stock, par value $0.01 per share, of Life ("Life Common
Stock") in accordance with the Reorganization Agreement and the Plan of Merger.
BB&T Common Stock is listed for trading on the New York Stock Exchange, Inc.
(the "NYSE") under the trading symbol "BBK." On January 9, 1998, the last sale
price of BB&T Common Stock as reported on the NYSE was $59.563. Life Common
Stock is listed for trading on the Nasdaq National Market under the trading
symbol "LIFB." On January 9, 1998, the last sale price of Life Common Stock as
reported on the Nasdaq National Market was $34.00. On October 28, 1997, the
last trading day before Life announced that it had entered into the
Reorganization Agreement, the last reported sale price of Life Common Stock on
the Nasdaq National Market was $23.625.
This Proxy Statement/Prospectus, the Notice of Special Meeting, and the
accompanying proxy card are first being mailed to the shareholders of Life on
or about January 16, 1998.
NEITHER THE MERGER NOR THE SECURITIES TO BE ISSUED PURSUANT TO THIS PROXY
STATEMENT/PROSPECTUS HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF BB&T COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK SUBSIDIARY OF BB&T AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
The date of this Proxy Statement/Prospectus is January 12, 1998
<PAGE>
AVAILABLE INFORMATION
BB&T and Life are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements, and other information filed with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the
following Regional Offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. The Commission maintains a World Wide
Web site on the Internet at http:// www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission, including BB&T and Life.
Shares of BB&T Common Stock and Life Common Stock are, respectively,
listed on the NYSE and traded on the Nasdaq National Market, and proxy
statements, reports and other information concerning BB&T and Life can also be
inspected and copied at the offices of the NYSE, 20 Broad Street, New York, New
York 10005 and the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006, respectively.
BB&T has filed a Registration Statement on Form S-4 (together with all
amendments, exhibits, and schedules thereto, the "Registration Statement") with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of BB&T Common Stock to be issued in the
Merger. This Proxy Statement/Prospectus does not include all of the information
set forth in the Registration Statement, as permitted by the rules and
regulations of the Commission. The Registration Statement, including any
amendments, schedules, and exhibits filed or incorporated by reference as a
part thereof, is available for inspection and copying as set forth above.
Statements contained in this Proxy Statement/ Prospectus or in any document
incorporated herein by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, and each
such statement shall be deemed qualified in its entirety by such reference.
The information contained herein with respect to BB&T has been provided by
BB&T, and the information contained herein with respect to Life before the
Merger has been provided by Life.
No person has been authorized to give any information or make any
representation in connection with the solicitation of proxies or the offering
of securities made hereby other than those contained or incorporated by
reference in this Proxy Statement/Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by BB&T or Life. This Proxy Statement/Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy the securities covered by this
Proxy Statement/Prospectus or a solicitation of a proxy in any jurisdiction
where, or to or from any person to whom, it is unlawful to make such offer,
solicitation of an offer or proxy solicitation in such jurisdiction. Neither
the delivery of this Proxy Statement/Prospectus nor any distribution of
securities made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of BB&T or Life since
the date hereof or that the information contained or incorporated by reference
herein is correct as of any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by BB&T with the Commission under
the Exchange Act are incorporated herein by reference:
(a) BB&T's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
(b) BB&T's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
(c) BB&T's Current Reports on Form 8-K, dated January 14, 1997, April 11,
1997, May 23, 1997, June 11, 1997, July 11, 1997, July 14, 1997, August 15,
1997, August 15, 1997, October 15, 1997, October 30, 1997 and December 17,
1997;
(d) BB&T's Registration Statement on Form 8-A, dated January 10, 1997,
with respect to the adoption of its shareholder rights plan; and
i
<PAGE>
(e) The description of BB&T Common Stock in BB&T's registration statement
filed under the Exchange Act with respect to BB&T Common Stock, including
all amendments and reports filed for the purpose of updating such
description.
The following documents previously filed by Life with the Commission under
the Exchange Act are incorporated herein by reference:
(a) Life's Annual Report on Form 10-K for the fiscal year ended December
31, 1996;
(b) Life's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
(c) Life's Current Report on Form 8-K, dated November 10, 1997; and
(d) The description of Life Common Stock in Life's registration statement
filed under the Exchange Act with respect to Life Common Stock, including
all amendments and reports filed for the purpose of updating such
description.
All documents filed by BB&T or Life pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus
and before the Special Meeting shall be deemed to be incorporated by reference
into this Proxy Statement/Prospectus and to be a part hereof from the date of
the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any statement
so modified or superseded shall not be deemed to constitute a part hereof
except as so modified or superseded. In particular, reference is made to BB&T's
Current Report on Form 8-K dated August 15, 1997, which includes supplemental
consolidated financial statements giving effect to the acquisition of United
Carolina Bancshares Corporation consummated July 1, 1997 and accounted for as a
pooling of interests. See "INFORMATION ABOUT BB&T -- UCB Merger."
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE HEREIN) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST
BY ANY PERSON, INCLUDING ANY BENEFICIAL OWNER OF LIFE COMMON STOCK, TO WHOM
THIS PROXY STATEMENT/ PROSPECTUS HAS BEEN DELIVERED. REQUESTS FOR DOCUMENTS
RELATING TO BB&T SHOULD BE DIRECTED TO INVESTOR RELATIONS, BB&T CORPORATION,
223 WEST NASH STREET, WILSON, NORTH CAROLINA 27893 OR TELEPHONE: (919)
246-4219. REQUESTS FOR DOCUMENTS RELATING TO LIFE SHOULD BE DIRECTED TO
INVESTOR RELATIONS, LIFE BANCORP, INC., 109 EAST MAIN STREET, NORFOLK, VIRGINIA
23510 OR TELEPHONE: (757) 858-1136. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY SUCH REQUEST SHOULD BE RECEIVED BY FEBRUARY 16, 1998.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION ............................................. i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................. i
SUMMARY ............................................................ 1
Special Meeting of Shareholders ................................. 1
Parties to the Merger ............................................. 1
The Merger ...................................................... 2
Comparative Market Prices and Dividends ........................... 6
Selected Consolidated Financial Data .............................. 6
Comparative per Share Data ....................................... 9
SPECIAL MEETING OF SHAREHOLDERS .................................... 10
General ......................................................... 10
Record Date, Voting Rights, and Vote Required ..................... 10
Voting and Revocation of Proxies ................................. 10
Solicitation of Proxies .......................................... 11
Recommendation of Life Board .................................... 11
THE MERGER ......................................................... 12
General ......................................................... 12
Background of the Merger .......................................... 12
Reasons for the Merger .......................................... 13
Opinion of Life's Financial Advisor .............................. 14
Exchange Ratio ................................................... 17
Exchange of Life Common Stock Certificates ........................ 19
The Reorganization Agreement .................................... 20
Interests of Certain Persons in the Merger ........................ 24
Regulatory Considerations ....................................... 27
Certain Federal Income Tax Consequences of the Merger ............ 28
Accounting Treatment ............................................. 29
Issuance of Additional Shares of Life Common Stock ............... 29
The Option Agreement ............................................. 29
Effect on Employees, Employee Benefit Plans and Stock Options ... 31
Restrictions on Resales by Affiliates ........................... 33
INFORMATION ABOUT BB&T ............................................. 34
General ......................................................... 34
Subsidiaries ...................................................... 34
UCB Merger ...................................................... 34
Other Acquisitions ................................................ 35
Capital ......................................................... 35
Deposit Insurance Assessments .................................... 36
INFORMATION ABOUT LIFE ............................................. 36
General ......................................................... 36
Acquisition of Seaboard Bancorp, Inc .............................. 37
Insurance of Accounts ............................................. 37
DESCRIPTION OF BB&T CAPITAL STOCK ................................. 37
General ......................................................... 37
BB&T Common Stock ................................................ 37
BB&T Preferred Stock ............................................. 38
Shareholder Rights Plan .......................................... 38
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws ... 40
COMPARISON OF SHAREHOLDERS' RIGHTS ................................. 40
Authorized Capital Stock .......................................... 41
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Directors ............................................................... 41
Dividends and Other Distributions ....................................... 41
Notice of Shareholder Nominations and Shareholder Proposals ............ 42
Exculpation and Indemnification .......................................... 42
Mergers, Share Exchanges and Sales of Assets ........................... 43
Anti-takeover Statutes ................................................... 43
Amendments to Articles of Incorporation and Bylaws ..................... 44
Shareholders' Rights of Dissent and Appraisal ........................... 45
Liquidation Rights ...................................................... 46
LEGAL MATTERS ............................................................ 46
EXPERTS .................................................................. 46
SHAREHOLDER PROPOSALS ................................................... 47
OTHER MATTERS ............................................................ 47
Appendix I -- Agreement and Plan of Reorganization and the Plan of Merger
Appendix II -- Opinion of Sandler O'Neill & Partners, L.P.
</TABLE>
iv
<PAGE>
SUMMARY
The following summary is intended only to highlight certain information
contained elsewhere in this Proxy Statement/Prospectus. This summary is not
intended to be complete and is qualified in its entirety by the more detailed
information contained elsewhere in this Proxy Statement/Prospectus, the
Appendices hereto and the documents incorporated by reference or otherwise
referred to herein. Shareholders are urged to review carefully this entire
Proxy Statement/Prospectus, including the Appendices hereto.
Special Meeting of Shareholders
The Special Meeting will be held on February 23, 1998 at 10:00 a.m.,
Eastern Time, at the Norfolk Waterside Marriott located at 235 East Main
Street, Norfolk, Virginia. At the Special Meeting, the shareholders of Life
will vote upon a proposal to approve the Reorganization Agreement and the Plan
of Merger attached hereto as Appendix I. On January 9, 1998, the record date
for the Special Meeting (the "Record Date"), there were approximately 1,091
holders of record of the 9,847,581 shares of Life Common Stock then outstanding
and entitled to vote at the Special Meeting.
The affirmative vote of the holders of more than two thirds of the
outstanding shares of Life Common Stock is required to approve the
Reorganization Agreement and the Plan of Merger. As of the Record Date,
directors and executive officers of Life and their affiliates beneficially
owned 482,231 outstanding shares or 4.90% of the Life Common Stock entitled to
vote at the Special Meeting, all of which are expected to be voted in favor of
the Merger proposal. The Life Employee Stock Ownership Plan (the "Life ESOP")
owned 8.28% of the outstanding shares of Life Common Stock as of the Record
Date; these shares are voted pursuant to the instructions of the participants
in such plan. The directors and executive officers of BB&T and their affiliates
beneficially owned, as of the Record Date, a total of less than 1% of the
outstanding shares of Life Common Stock. On the Record Date, BB&T and its
subsidiaries owned and intended to vote on their own account or in fiduciary
capacities a total of less than 1% of the outstanding shares of Life Common
Stock. See "SPECIAL MEETING OF SHAREHOLDERS."
Parties to the Merger
BB&T
BB&T is a multi-bank holding company headquartered in Winston-Salem, North
Carolina. BB&T conducts its operations in North Carolina, South Carolina and
Virginia primarily through its commercial banking subsidiaries and, to a lesser
extent, through its other subsidiaries. BB&T's bank subsidiaries are Branch
Banking and Trust Company ("BB&T-NC"), a North Carolina chartered bank that
currently operates 358 banking offices throughout North Carolina; Branch
Banking and Trust Company of South Carolina ("BB&T-SC"), a South Carolina
chartered bank that currently operates 98 banking offices throughout South
Carolina; Branch Banking and Trust Company of Virginia ("BB&T-VA"), a Virginia
chartered bank that currently operates 22 banking offices in the Hampton Roads
region of Virginia; Virginia First Savings Bank, F.S.B. ("VFSB"), a federally
chartered savings bank that currently operates 24 banking offices in the south,
central and southwestern regions of Virginia; and Fidelity Federal Savings Bank
("FFSB"), a federally chartered savings bank that currently operates seven
banking offices in the Richmond, Virginia area.
Effective July 1, 1997, United Carolina Bancshares Corporation, a bank
holding company headquartered in Whiteville, North Carolina ("UCB"), merged
with and into BB&T (the "UCB Merger"). Upon consummation of the UCB Merger,
each share of the common stock of UCB ("UCB Common Stock") issued and
outstanding at such time was converted into and exchanged for 1.135 shares of
BB&T Common Stock. Approximately 27.7 million shares of BB&T Common Stock were
issued in the UCB Merger. Through its two bank subsidiaries, United Carolina
Bank and United Carolina Bank of South Carolina, UCB operated 153 banking
offices in 89 communities in North Carolina and South Carolina. United Carolina
Bank and United Carolina Bank of South Carolina were merged into BB&T-NC and
BB&T-SC, respectively, on September 19, 1997. For additional information about
the UCB Merger, see "INFORMATION ABOUT BB&T -- UCB Merger."
The mailing address and telephone number of BB&T's principal executive
offices are 200 West Second Street, Winston-Salem, North Carolina 27101, (910)
733-2000. Additional information with respect to BB&T and its subsidiaries is
included elsewhere in this Proxy Statement/Prospectus and in documents
incorporated by reference in this Proxy Statement/ Prospectus. See "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and
"INFORMATION ABOUT BB&T."
1
<PAGE>
BB&T Financial-VA
BB&T Financial-VA is a Virginia corporation that serves as the holding
company of BB&T-VA, VFSB and FFSB. BB&T Financial-VA is a wholly owned
subsidiary of BB&T. In the Merger, Life will be merged with and into BB&T
Financial-VA, and BB&T Financial-VA will be the surviving corporation. The
mailing address and telephone number of BB&T Financial-VA's principal executive
offices are 5101 Cleveland Street, Virginia Beach, Virginia 23462, (757) 456-
1007.
Life
Life is a Virginia-chartered thrift holding company headquartered in
Norfolk, Virginia. Substantially all of Life's operations are conducted through
Life Savings Bank, FSB, a federal stock savings bank ("LSB"). LSB, which has
been in business since 1935, converted from mutual to stock ownership in
October 1994, and reorganized into the holding company form of organization
with Life becoming the holding company for LSB. Life Common Stock trades on the
Nasdaq National Market tier of the Nasdaq Stock Market under the symbol "LIFB."
LSB operates 20 retail banking offices in its immediate market area --
South Hampton Roads, Virginia, which consists of the cities of Chesapeake,
Norfolk, Portsmouth, Suffolk and Virginia Beach. Hampton, Newport News and
Williamsburg are also a part of Hampton Roads, which, with 1.5 million
residents, is the 4th largest metropolitan statistical area in the Southeast
region of the United States and the 27th largest in the nation. LSB is the
largest financial institution headquartered in Hampton Roads and the largest
savings bank in Virginia.
Through its retail banking offices, LSB delivers a wide range of banking
products and services to meet the needs of individuals, businesses and
organizations. LSB attracts retail deposits from the general public and the
business community through a variety of deposit products. Deposits are insured
by the Savings Association Insurance Fund, administered by the Federal Deposit
Insurance Corporation, within applicable limits. LSB's lending activities focus
on meeting the needs of individuals and businesses in its market area by
offering permanent and construction residential loans, second mortgages and
equity lines of credit, consumer loans, commercial real estate and business
loans, and lines of credit.
The Merger
General
At the effective time of the Merger (the "Effective Time"), Life will be
merged with and into BB&T Financial-VA, and BB&T Financial-VA will be the
surviving corporation in the Merger. Following the Merger, BB&T Financial-VA
will remain a wholly owned subsidiary of BB&T. It is expected that LSB will be
merged into BB&T-VA during 1998, with BB&T-VA as the surviving entity (the "LSB
Bank Merger").
Exchange Ratio
Upon consummation of the Merger, each share of Life Common Stock
outstanding at the Effective Time will be converted into the right to receive
between 0.58 and 0.60 shares of BB&T Common Stock, subject to possible upward
adjustment as described in the following paragraph. The Exchange Ratio will be
determined by reference to the average closing price of BB&T Common Stock on
the NYSE for the ten trading days immediately preceding the tenth calendar day
preceding the Effective Time (the "Closing Value"). The Exchange Ratio has been
initially set at 0.58 shares of BB&T Common Stock per share of Life Common
Stock; however, if the implied market value (based on the Closing Value) of the
BB&T Common Stock to be received for each share of Life Common Stock, using an
Exchange Ratio of 0.58, is less than $33.00 (i.e., if the Closing Value is less
than $56.90), then the Exchange Ratio will be increased to the lesser of (i)
the amount necessary to increase the implied market value to $33.00 or (ii)
0.60 shares of BB&T Common Stock per share of Life Common Stock.
In the event that both:
(1) the implied market value (based on the Closing Value) of the BB&T
Common Stock to be received for each share of Life Common Stock, using an
Exchange Ratio of 0.60 shares of BB&T Common Stock per share of Life Common
Stock, is less than $27.00 (i.e., the Closing Value is less than $45.00),
and
(2) (i) the amount obtained by dividing the Closing Value by $54.875 (the
closing price of BB&T Common Stock on October 28, 1997) is less than (ii)
90% of the amount obtained by dividing the weighted average of the closing
prices of a specified index of 17 bank stocks on the tenth calendar day
preceding the date designated by BB&T as the closing date of the Merger by
the weighted average of the closing prices of such stocks on October 29,
1997,
2
<PAGE>
then Life would have the right to terminate the Reorganization Agreement unless
BB&T elects to increase the Exchange Ratio so that holders of Life Common Stock
would receive consideration having an implied market value (based on the
Closing Value) of $27.00 per share of Life Common Stock. Under no circumstances
would the Exchange Ratio be less than 0.58 shares of BB&T Common Stock for each
share of Life Common Stock.
No fractional shares of BB&T Common Stock will be issued in the Merger.
Holders of Life Common Stock otherwise entitled to a fractional share will be
paid an amount in cash determined by multiplying the fractional part of such
share of BB&T Common Stock by the Closing Value. See "THE MERGER -- Exchange
Ratio."
Effective Date and Time of the Merger
The Merger will be effective on the date and at the time specified in the
Articles of Merger to be filed with the State Corporation Commission of the
Commonwealth of Virginia. Assuming the Reorganization Agreement and the Plan of
Merger are approved by Life shareholders at the Special Meeting, it is
currently anticipated (although there can be no assurance) that the Articles of
Merger will be filed on or about February 27, 1998 and the consummation of the
Merger will occur on or about March 1, 1998. See "THE MERGER -- The
Reorganization Agreement -- Effective Date and Time of the Merger."
Recommendation of Life Board; Reasons for the Merger
The Life Board has unanimously approved the Reorganization Agreement and
the Plan of Merger and the transactions contemplated thereby. The Life Board
believes that the Merger is in the best interests of Life and its shareholders
and unanimously recommends that the shareholders of Life vote "FOR" approval of
the Reorganization Agreement and the Plan of Merger. For further discussion of
the factors considered by the Life Board in reaching its conclusions, see "THE
MERGER -- Background of the Merger" and " -- Reasons for the Merger."
Opinion of Life's Financial Advisor
Life has retained Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") to
act as its financial advisor in connection with the Merger, and Sandler O'Neill
has rendered its opinion to the Life Board that, as of the date of such
opinion, the consideration to be received in the Merger is fair to the
shareholders of Life from a financial point of view. The full text of the
Sandler O'Neill opinion, dated as of the date hereof, is set forth as Appendix
II to this Proxy Statement/Prospectus, and should be read in its entirety with
respect to the assumptions made, matters considered and qualifications and
limitations on the review undertaken by Sandler O'Neill in rendering such
opinion. See "THE MERGER -- Opinion of Life's Financial Advisor."
Conditions to the Merger
The consummation of the Merger is subject to various conditions, including
the approval of the Reorganization Agreement and the Plan of Merger by the
shareholders of Life, receipt of necessary regulatory approvals, receipt of a
legal opinion regarding the tax consequences of the Merger and other customary
conditions to closing. See "THE MERGER -- The Reorganization Agreement --
Conditions to the Merger."
Waiver; Amendment; Termination; Expenses
Before the Effective Time, any provision of the Reorganization Agreement
(except with respect to any required regulatory approval) may be (a) waived by
the party benefited by the provision or (b) amended or modified at any time, by
mutual agreement of the parties, except that after the Special Meeting the
consideration to be received by the Life shareholders for each share of Life
Common Stock may not thereby be decreased.
The Reorganization Agreement may be terminated and the Merger abandoned
(a) by the mutual consent of the parties, (b) by either party if the other
party materially breaches any of its covenants or agreements contained in the
Reorganization Agreement and fails to cure by the earlier of 30 days after
notice of such breach and the Effective Time, (c) by either party in the event
of an inaccuracy of any representation or warranty of the other party contained
in the Reorganization Agreement that would provide the nonbreaching party the
ability to refuse to consummate the Merger under the applicable standard set
forth in the Reorganization Agreement (see "THE MERGER -- The Reorganization
Agreement -- Conditions to the Merger") and such inaccuracy has not been cured
by the earlier of 30 days after notice of such inaccuracy and the Effective
Time, (d) by either party in the event that the Merger is not consummated by
July 31, 1998 and the party seeking to terminate has not breached its
representations, warranties, covenants or undertakings in the Reorganization
Agreement, or (e) by either party, in the event (i) any of the regulatory
approvals required for consummation of the Merger and the other transactions
contemplated by the Reorganization Agreement have been denied and the time
period for appeals and requests
3
<PAGE>
for reconsideration have run, (ii) the required shareholder approval is not
obtained at the Special Meeting or (iii) any of the other conditions precedent
to the obligations of the other party cannot be satisfied or fulfilled before
the scheduled date of the closing of the transactions contemplated by the
Reorganization Agreement (the "Closing Date") and the party seeking to
terminate has not breached its representations, warranties, covenants or
undertakings in the Reorganization Agreement. In addition, the Reorganization
Agreement may be terminated by the Life Board if certain conditions concerning
the trading price of BB&T Common Stock are met, unless BB&T in turn determines
to increase the Exchange Ratio. See "THE MERGER -- Exchange Ratio."
Each party to the Reorganization Agreement will bear all expenses incurred
by it in connection with the Reorganization Agreement and the transactions
contemplated thereby, except that printing expenses and Commission registration
fees will be borne 50% by BB&T and 50% by Life. See "THE MERGER -- The
Reorganization Agreement -- Waiver; Amendment; Termination; Expenses."
Interests of Certain Persons in the Merger
Pursuant to the Reorganization Agreement, Edward E. Cunningham, President,
Chief Executive Officer and Chairman of Life, Tollie W. Rich, Jr., Executive
Vice President and Chief Operating Officer of Life, and five other members of
the management of Life will enter into employment agreements with BB&T-VA on
the Effective Date that provide for employment until up to June 30, 2003 and
severance payments and other benefits upon the occurrence of a merger or other
change in control of BB&T after the Merger. The Reorganization Agreement also
provides that certain directors of Life will serve as directors of BB&T-VA or
members of BB&T-VA's advisory board after the Merger. The Reorganization
Agreement further obligates BB&T to indemnify the directors and officers of
Life after the Merger against certain liabilities arising before the Merger and
obligates BB&T to obtain directors' and officers' liability insurance for the
benefit of Life's directors and officers covering periods before and after the
Merger. See "THE MERGER -- Interests of Certain Persons in the Merger."
Regulatory Considerations
The Merger must be approved by the Bureau of Financial Institutions of the
State Corporation Commission of the Commonwealth of Virginia (the "BFI") under
the Virginia Savings Institutions Act. BB&T also must provide notice of the
Merger to the Board of Governors of the Federal Reserve System (the "Federal
Reserve") under the Bank Holding Company Act and the Federal Reserve's
Regulation Y thereunder. The LSB Bank Merger, which is expected to occur during
1998, must be approved by the Federal Deposit Insurance Corporation (the
"FDIC") under the Bank Merger Act and by the BFI under the Virginia Savings
Institutions Act. LSB must provide notice of the LSB Bank Merger to the Office
of Thrift Supervision ("OTS") under its regulations. The required applications
and notices relating to the Merger were submitted to the appropriate regulatory
authorities in December 1997, and it is anticipated that the required
applications relating to the LSB Bank Merger will be submitted to the
appropriate regulatory authorities during the first quarter of 1998. See "THE
MERGER -- Regulatory Considerations."
Shareholders' Rights of Dissent and Appraisal
Pursuant to the Virginia Stock Corporation Act (the "VSCA"), holders of
Life Common Stock do not have dissenters' or appraisal rights in connection
with the Merger because as of the Record Date shares of Life Common Stock were
listed on the Nasdaq National Market and because the shares of BB&T Common
Stock to be received in the Merger are listed on the NYSE. See "COMPARISON OF
SHAREHOLDERS' RIGHTS -- Shareholders' Rights of Dissent and Appraisal -- Life."
Certain Federal Income Tax Consequences
The Merger has been structured to qualify as a nontaxable transaction
under the Internal Revenue Code of 1986, as amended (the "Code"). It is a
condition to the Merger that Life and BB&T receive an opinion from Womble
Carlyle Sandridge & Rice, PLLC, counsel to BB&T, to the effect that the Merger
will constitute one or more reorganizations under Section 368 of the Code and
that no gain or loss will be recognized by reason of the Merger by the holders
of Life Common Stock to the extent that such shareholders exchange shares of
Life Common Stock for shares of BB&T Common Stock (gain or loss will be
recognized with respect to cash received in lieu of a fractional share). See
"THE MERGER -- Certain Federal Income Tax Consequences of the Merger."
Accounting Treatment
The Merger is intended to be accounted for as a pooling of interests under
generally accepted accounting principles. It is a condition to the Merger that
BB&T receive letters from Arthur Andersen LLP to the effect that the Merger
will qualify for pooling-of-interests accounting treatment. Because of
repurchases by Life of Life Common Stock during 1996 and 1997,
4
<PAGE>
Life intends to issue and sell up to 200,000 additional shares of Life Common
Stock prior to the Effective Time in order to allow the Merger to be accounted
for as a pooling of interests. See "THE MERGER -- Accounting Treatment" and "
- -- Issuance of Additional Shares of Life Common Stock"
Comparison of Shareholders' Rights
The rights of the shareholders of Life currently are determined by the
VSCA, the Articles of Incorporation of Life (the "Life Articles") and the
Bylaws of Life (the "Life Bylaws"). At the Effective Time, the shareholders of
Life will become shareholders of BB&T. Their rights as shareholders will then
be determined by the North Carolina Business Corporation Act (the "NCBCA"), the
Articles of Incorporation of BB&T (the "BB&T Articles") and the Bylaws of BB&T
(the "BB&T Bylaws"). See "DESCRIPTION OF BB&T CAPITAL STOCK" and "COMPARISON OF
SHAREHOLDERS' RIGHTS."
Option Agreement
As a condition to BB&T entering into the Reorganization Agreement and to
increase the probability that the Merger will be consummated, BB&T and Life
entered into an Option Agreement, dated as of October 29, 1997 (the "Option
Agreement"), pursuant to which BB&T was granted an option to purchase up to
1,959,668 shares of Life Common Stock (approximately 19.9% of the number of
shares of Life Common Stock currently outstanding), subject to adjustment, at
an exercise price of $24.75 per share (the "Option"). The exercise of the
Option is permitted only upon the occurrence of certain events that generally
relate to an acquisition of control of Life, or the public offer or
announcement of such an acquisition of control, by a party other than BB&T, or
upon the acquisition by a third party of, or an offer or an announcement of an
intention by a third party to acquire, a significant interest in the equity or
assets of Life. The Option is not presently exercisable. See "THE MERGER -- The
Option Agreement."
Effect on Employees, Employee Benefit Plans and Stock Options
Each employee of Life or any of its subsidiaries at the time of the Merger
who becomes, immediately following the Merger, an employee of BB&T or one of
its subsidiaries will be eligible to receive benefits comparable to those
provided to similarly situated employees of BB&T or the subsidiary in question.
BB&T will merge the 401(k) plan of Life with the 401(k) plan maintained by BB&T
and its subsidiaries, and the account balances of the employees who are
participants in the Life plan will be transferred to accounts under the BB&T
401(k) plan. BB&T also intends to terminate Life's Employee Stock Ownership
Plan and its Recognition and Retention Plan and distribute the assets of these
plans to grant recipients. At the time of the Merger, all rights with respect
to Life Common Stock outstanding at the Effective Time pursuant to stock
options granted by Life under the existing stock option plan of Life, whether
or not exercisable, will be converted into and become options with respect to
BB&T Common Stock on a basis that reflects the Exchange Ratio. See "THE MERGER
- -- Exchange Ratio" and " -- Effect on Employees, Employee Benefit Plans and
Stock Options."
5
<PAGE>
Comparative Market Prices and Dividends
BB&T Common Stock is listed on the NYSE under the symbol "BBK." Life
Common Stock is included in the Nasdaq National Market under the symbol "LIFB."
The following table sets forth, for the periods indicated, the high and low
closing sales price of BB&T Common Stock and Life Common Stock on the NYSE
Composite Transactions List and the Nasdaq National Market, respectively, and
cash dividends paid per share. The prices do not include retail markups,
markdowns or commissions.
<TABLE>
<CAPTION>
BB&T Life
---------------------------------- --------------------------------
Cash Cash
High Low Dividend High Low Dividend(1)
--------- --------- -------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31, 1998 (through January 9) $ 63.13 $ 59.56 $ .31(2) $ 36.13 $ 34.00 $ (3)
Quarter Ended
March 31, 1997 .................. 40.75 35.25 .27 21.00 16.75 .11
June 30, 1997 ..................... 47.13 35.75 .27 26.13 16.88 .12
September 30, 1997 ............... 55.13 45.31 .31 26.63 23.63 .12
December 31, 1997 ............... 65.00 51.94 .31 36.63 23.63 .12
For year 1997 .................. 65.00 35.25 1.16 36.63 16.75 .47
Quarter Ended
March 31, 1996 .................. 29.75 25.88 .23 15.00 14.13 .11
June 30, 1996 ..................... 31.75 28.88 .23 14.63 14.00 .11
September 30, 1996 ............... 33.88 28.63 .27 16.13 14.13 .11
December 31, 1996 ............... 36.75 33.38 .27 18.38 16.13 .11
For year 1996 .................. 36.75 25.88 1.00 18.38 14.00 .44
</TABLE>
- ---------
(1) For information with respect to provisions in the Reorganization Agreement
relating to Life's ability to pay dividends on Life Common Stock prior to
the Effective Time, see "THE MERGER -- The Reorganization Agreement --
Conduct of Life's and BB&T's Business Prior to the Effective Time."
(2) Payable on February 2, 1998.
(3) The Life Board currently anticipates declaring a regular quarterly dividend
of $.12 on January 26, 1998, which would be payable at the end of February
to holders of record of Life Common Stock on February 13, 1998.
The following table sets forth the last reported sales price for shares of
BB&T Common Stock and Life Common Stock on October 28, 1997, the last trading
day before the public announcement of the proposed Merger, and January 9, 1998,
on the NYSE Composite Transactions List and the Nasdaq National Market,
respectively. The Life Equivalent represents the last sales prices of a share
of BB&T Common Stock on those dates multiplied by the Exchange Ratio that would
be applicable if the price in question were the Closing Value. The Exchange
Ratio may be subject to upward adjustment under certain circumstances. See "THE
MERGER -- Exchange Ratio."
<TABLE>
<CAPTION>
Date BB&T Life Life Equivalent
- ------------------------ --------- --------- ----------------
<S> <C> <C> <C>
October 28, 1997 ...... $54.875 $23.625 $32.925
January 9, 1998 ...... $59.563 $34.00 $34.547
</TABLE>
Selected Consolidated Financial Data
The following tables set forth certain consolidated financial data of BB&T
and Life for the five years ended December 31, 1996, and the nine months ended
September 30, 1997 and September 30, 1996. The consolidated financial data for
BB&T has been restated to include the accounts of UCB and its subsidiaries,
which merged into BB&T on July 1, 1997 in a transaction accounted for as a
pooling of interests. The following historical financial information has been
derived from historical consolidated financial statements of BB&T and Life,
respectively, and is qualified in its entirety by, and should be read in
conjunction with, such historical consolidated financial statements, and the
notes thereto, which are incorporated herein by reference. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE." Results of BB&T and Life for the nine
months ended September 30, 1997 are not necessarily indicative of results
expected for the entire year. All adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of results of interim
periods have been included.
6
<PAGE>
Selected Consolidated Financial Data -- BB&T
<TABLE>
<CAPTION>
As of/For the nine
months ended
September 30,
---------------------------------
1997 1996
---------------- ----------------
(Dollars in thousands, except
per share data)
<S> <C> <C>
Summary of Operations:
Interest income ................................. $ 1,573,904 $ 1,436,406
Interest expense .............................. 753,388 689,743
------------ ------------
Net interest income ........................... 820,516 746,663
Provision for loan and lease losses ............ 67,851 44,161
------------ ------------
Net interest income after provision for loan and
lease losses ................................. 752,665 702,502
Noninterest income .............................. 356,435 258,410
Noninterest expense ........................... 715,590 602,322
------------ ------------
Income before income taxes ..................... 393,510 358,590
Provision for income taxes ..................... 136,964 118,399
------------ ------------
Income before cumulative effect of changes in
accounting principles ........................ 256,546 240,191
Less: cumulative effect of changes in
accounting principles, net of income taxes -- --
------------ ------------
Net income .................................... $ 256,546 $ 240,191
============ ============
Per Common Share
Average shares outstanding (000's)
Primary ....................................... 138,614 137,716
Fully diluted ................................. 139,071 139,380
Primary earnings
Income before cumulative effect ............... $ 1.85 $ 1.74
Less: cumulative effect ........................ -- --
------------ ------------
Net income .................................... $ 1.85 $ 1.74
============ ============
Fully diluted
Income before cumulative effect ............... $ 1.84 $ 1.72
Less: cumulative effect ........................ -- --
------------ ------------
Net income .................................... $ 1.84 $ 1.72
============ ============
Cash dividends declared ........................ $ 0.85 0.73
Shareholders' equity ........................... 15.52 14.56
Average Balance Sheets
Securities at carrying value .................. $ 6,320,428 $ 5,959,325
Loans and leases* .............................. 18,674,109 17,097,346
Other assets .................................... 1,608,193 1,484,208
------------ ------------
Total assets ................................. $ 26,602,730 $ 24,540,879
============ ============
Deposits ....................................... $ 19,304,649 $ 18,422,273
Other liabilities .............................. 2,724,191 2,395,318
Long-term debt ................................. 2,460,637 1,759,768
Common shareholders' equity ..................... 2,113,253 1,943,272
Preferred shareholders' equity .................. -- 20,248
------------ ------------
Total liabilities and shareholders' equity ... $ 26,602,730 $ 24,540,879
============ ============
Period End Balances
Total assets .................................... $ 27,212,111 $ 25,435,894
Deposits ....................................... 19,335,274 18,954,062
Long-term debt ................................. 2,999,743 2,053,026
Shareholders' equity ........................... 2,084,226 1,989,722
Selected Performance Ratios
Rate of return on:
Average total assets ........................... 1.29% 1.31%
Average common shareholders' equity ............ 16.23 16.47
Dividend payout ................................. 45.95 41.95
Average equity to average assets ............... 7.94 8.00
<CAPTION>
As of/For the twelve months ended December 31,
------------------------------------------------------------------
1996 1995 1994 1993
---------------- ---------------- ---------------- ---------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Summary of Operations:
Interest income ................................. $ 1,934,570 $ 1,880,157 $ 1,586,515 $ 1,427,684
Interest expense .............................. 926,870 948,839 678,571 590,709
------------ ------------ ------------ -----------
Net interest income ........................... 1,007,700 931,318 907,944 836,975
Provision for loan and lease losses ............ 62,511 41,924 23,730 59,829
------------ ------------ ------------ -----------
Net interest income after provision for loan and
lease losses ................................. 945,189 889,394 884,214 777,146
Noninterest income .............................. 353,468 271,710 278,339 268,856
Noninterest expense ........................... 808,550 820,718 740,234 791,060
------------ ------------ ------------ -----------
Income before income taxes ..................... 490,107 340,386 422,319 254,942
Provision for income taxes ..................... 159,932 113,118 147,003 95,229
------------ ------------ ------------ -----------
Income before cumulative effect of changes in
accounting principles ........................ 330,175 227,268 275,316 159,713
Less: cumulative effect of changes in
accounting principles, net of income taxes -- -- -- (32,762)
------------ ------------ ------------ -----------
Net income .................................... $ 330,175 $ 227,268 $ 275,316 $ 126,951
============ ============ ============ ===========
Per Common Share
Average shares outstanding (000's)
Primary ....................................... 138,152 137,129 135,332 130,419
Fully diluted ................................. 139,518 142,154 140,382 136,303
Primary earnings
Income before cumulative effect ............... $ 2.39 $ 1.62 $ 2.00 $ 1.18
Less: cumulative effect ........................ -- -- -- ( 0.25)
------------ ------------ ------------ -----------
Net income .................................... $ 2.39 $ 1.62 $ 2.00 $ 0.93
============ ============ ============ ===========
Fully diluted
Income before cumulative effect ............... $ 2.37 $ 1.60 $ 1.96 $ 1.17
Less: cumulative effect ........................ -- -- -- ( 0.24)
------------ ------------ ------------ -----------
Net income .................................... $ 2.37 $ 1.60 $ 1.96 $ 0.93
============ ============ ============ ===========
Cash dividends declared ........................ $ 1.00 $ 0.86 $ 0.74 $ 0.64
Shareholders' equity ........................... 15.13 14.32 12.79 12.06
Average Balance Sheets
Securities at carrying value .................. $ 6,137,748 $ 6,244,509 $ 6,050,612 $ 5,401,762
Loans and leases* .............................. 16,958,876 16,286,928 14,711,409 13,155,522
Other assets .................................... 1,673,478 1,694,578 1,707,055 1,626,305
------------ ------------ ------------ -----------
Total assets ................................. $ 24,770,102 $ 24,226,015 $ 22,469,076 $20,183,589
============ ============ ============ ===========
Deposits ....................................... $ 18,577,368 $ 17,691,264 $ 17,318,921 $16,260,492
Other liabilities .............................. 2,346,374 3,507,910 2,724,841 1,687,474
Long-term debt ................................. 1,861,380 1,130,460 679,654 598,753
Common shareholders' equity ..................... 1,969,821 1,824,036 1,671,517 1,562,727
Preferred shareholders' equity .................. 15,159 72,345 74,143 74,143
------------ ------------ ------------ -----------
Total liabilities and shareholders' equity ... $ 24,770,102 $ 24,226,015 $ 22,469,076 $20,183,589
============ ============ ============ ===========
Period End Balances
Total assets .................................... $ 25,707,646 $ 24,671,277 $ 23,497,824 $22,273,226
Deposits ....................................... 19,003,340 18,321,708 17,458,085 17,594,408
Long-term debt ................................. 2,054,040 1,386,910 913,060 839,631
Shareholders' equity ........................... 2,071,567 2,025,112 1,803,888 1,686,134
Selected Performance Ratios
Rate of return on:
Average total assets ........................... 1.33% 0.94% 1.23% 0.63%
Average common shareholders' equity ............ 16.73 12.18 16.16 7.79
Dividend payout ................................. 41.84 53.09 37.00 68.82
Average equity to average assets ............... 8.01 7.83 7.77 8.11
<CAPTION>
1992
----------------
<S> <C>
Summary of Operations:
Interest income ................................. $ 1,436,751
Interest expense .............................. 686,922
------------
Net interest income ........................... 749,829
Provision for loan and lease losses ............ 76,030
------------
Net interest income after provision for loan and
lease losses ................................. 673,799
Noninterest income .............................. 229,736
Noninterest expense ........................... 625,875
------------
Income before income taxes ..................... 277,660
Provision for income taxes ..................... 97,290
------------
Income before cumulative effect of changes in
accounting principles ........................ 180,370
Less: cumulative effect of changes in
accounting principles, net of income taxes --
------------
Net income .................................... $ 180,370
============
Per Common Share
Average shares outstanding (000's)
Primary ....................................... 123,271
Fully diluted ................................. 130,938
Primary earnings
Income before cumulative effect ............... $ 1.43
Less: cumulative effect ........................ --
------------
Net income .................................... $ 1.43
============
Fully diluted
Income before cumulative effect ............... $ 1.38
Less: cumulative effect ........................ --
------------
Net income .................................... $ 1.38
============
Cash dividends declared ........................ $ 0.50
Shareholders' equity ........................... 11.95
Average Balance Sheets
Securities at carrying value .................. $ 4,733,403
Loans and leases* .............................. 11,978,837
Other assets .................................... 1,567,185
------------
Total assets ................................. $ 18,279,425
============
Deposits ....................................... $ 15,167,080
Other liabilities .............................. 1,535,422
Long-term debt ................................. 154,113
Common shareholders' equity ..................... 1,357,005
Preferred shareholders' equity .................. 65,805
------------
Total liabilities and shareholders' equity ... $ 18,279,425
============
Period End Balances
Total assets .................................... $ 18,979,348
Deposits ....................................... 15,674,867
Long-term debt ................................. 424,102
Shareholders' equity ........................... 1,510,774
Selected Performance Ratios
Rate of return on:
Average total assets ........................... 0.99%
Average common shareholders' equity ............ 12.95
Dividend payout ................................. 34.97
Average equity to average assets ............... 7.78
</TABLE>
- ---------
* Loans and leases are net of unearned income and the allowance for
losses. Amounts include loans held for sale.
7
<PAGE>
Selected Consolidated Financial Data -- Life
<TABLE>
<CAPTION>
As of/For the nine
months ended
September 30,
-----------------------------
1997 1996
-------------- --------------
(Dollars in thousands,
except per share data)
<S> <C> <C>
Selected Financial Condition Data:
Total assets ............................................. $1,486,357 $1,404,760
Cash and cash equivalents ................................. 17,072 10,637
Mortgage loans held-for-sale .............................. -- --
Investment securities .................................... 113,623 35,316
Mortgage-backed securities:
Held-to-maturity .......................................... 119,841 147,174
Available-for-sale ....................................... 538,872 574,680
Loans receivable, net .................................... 645,192 592,103
Deposit accounts .......................................... 740,839 720,920
FHLB advances ............................................. 299,385 154,011
Repurchase agreements and other borrowings ............... 273,676 363,367
Shareholders' equity ....................................... 159,280 145,446
Selected Operating Data:
Interest income .......................................... $ 78,951 $ 69,300
Interest expense .......................................... 51,373 44,073
---------- ----------
Net interest income ....................................... 27,578 25,227
Provision (credit) for loan losses ........................ (122) (299)
Noninterest income ....................................... 3,617 2,482
Noninterest expense ....................................... 13,907 18,929
---------- ----------
Income before income taxes ................................. 17,410 9,079
Income taxes ............................................. 7,323 3,635
---------- ----------
Income before cumulative effect of accounting change ...... 10,087 5,444
Cumulative effect of accounting change ..................... -- --
---------- ----------
Net income ................................................ $ 10,087 $ 5,444
========== ==========
Primary earnings per share (1) ........................... $ 1.06 $ 0.56
Fully diluted earnings per share (1) ..................... $ 1.04 $ 0.55
Selected Ratios (2)
Return on average assets ................................. 0.93% 0.58%
Return on average equity ................................. 8.72% 4.73%
Average equity to average assets ........................... 10.65% 12.25%
Equity to assets at end of period ........................ 10.72% 10.35%
Interest-rate spread (3) ................................. 2.20% 2.16%
Net interest margin (3) .................................... 2.64% 2.79%
Noninterest expense, exclusive of amortization of goodwill,
to average assets ....................................... 1.24% 1.92%
Efficiency ratio (4) ....................................... 43.19% 65.22%
Non-performing assets to total assets (5) .................. 0.31% 0.20%
Allowance for loan losses to non-accruing loans ............ 257.96% 644.80%
Allowance for loan losses to total loans .................. 1.34% 1.79%
Other Data
Full service customer facilities ........................... 20 20
Number of shares outstanding, including ESOP ............... 9,847,581 9,846,840
Book value per outstanding share ........................... $ 16.17 $ 14.77
<CAPTION>
As of/For the twelve months ended December 31,
-----------------------------------------------------------
1996 1995 1994 1993
-------------- --------------- -------------- -------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets ............................................. $1,419,762 $ 1,097,000 $ 996,908 $ 770,443
Cash and cash equivalents ................................. 11,283 8,845 7,945 9,372
Mortgage loans held-for-sale .............................. -- -- -- 9,346
Investment securities .................................... 30,742 23,040 18,414 11,419
Mortgage-backed securities:
Held-to-maturity .......................................... 140,974 168,602 402,244 332,112
Available-for-sale ....................................... 565,086 393,587 107,264 --
Loans receivable, net .................................... 622,405 467,424 421,191 366,510
Deposit accounts .......................................... 732,322 607,139 588,262 528,932
FHLB advances ............................................. 261,711 148,636 174,977 159,272
Repurchase agreements and other borrowings ............... 264,227 168,518 73,212 26,499
Shareholders' equity ....................................... 150,938 160,941 148,511 48,252
Selected Operating Data:
Interest income .......................................... $ 95,133 $ 77,025 $ 57,017 $ 52,510
Interest expense .......................................... 60,929 48,266 35,419 32,031
---------- ------------ ----------- ---------
Net interest income ....................................... 34,204 28,759 21,598 20,479
Provision (credit) for loan losses ........................ (265) 454 1,431 715
Noninterest income ....................................... 3,362 2,023 3,295 5,405
Noninterest expense ....................................... 23,501 16,054 13,980 18,610
---------- ------------ ----------- ---------
Income before income taxes ................................. 14,330 14,274 9,482 6,559
Income taxes ............................................. 5,716 5,126 3,007 2,099
---------- ------------ ----------- ---------
Income before cumulative effect of accounting change ...... 8,614 9,148 6,475 4,460
Cumulative effect of accounting change ..................... -- -- -- 133
---------- ------------ ----------- ---------
Net income ................................................ $ 8,614 $ 9,148 $ 6,475 $ 4,593
========== ============ =========== =========
Primary earnings per share (1) ........................... $ 0.89 $ 0.90 $ 0.27 N/A
Fully diluted earnings per share (1) ..................... $ 0.88 $ 0.89 $ 0.27 N/A
Selected Ratios (2)
Return on average assets ................................. 0.67% 0.87% 0.75% 0.61%
Return on average equity ................................. 5.66% 5.93% 9.42% 9.90%
Average equity to average assets ........................... 11.75% 14.61% 7.95% 6.14%
Equity to assets at end of period ........................ 10.63% 14.67% 14.90% 6.26%
Interest-rate spread (3) ................................. 2.20% 2.15% 2.45% 2.83%
Net interest margin (3) .................................... 2.73% 2.84% 2.67% 2.94%
Noninterest expense, exclusive of amortization of goodwill,
to average assets ....................................... 1.75% 1.51% 1.59% 2.40%
Efficiency ratio (4) ....................................... 60.16% 51.84% 55.07% 70.13%
Non-performing assets to total assets (5) .................. 0.26% 0.21% 0.25% 1.41%
Allowance for loan losses to non-accruing loans ............ 378.67% 255.79% 275.93% 216.53%
Allowance for loan losses to total loans .................. 1.55% 0.95% 1.06% 0.89%
Other Data
Full service customer facilities ........................... 20 17 17 17
Number of shares outstanding, including ESOP ............... 9,846,840 10,910,625 10,910,625 N/A
Book value per outstanding share ........................... $ 15.33 $ 14.75 $ 13.61 N/A
<CAPTION>
1992
-------------
<S> <C>
Selected Financial Condition Data:
Total assets ............................................. $ 691,976
Cash and cash equivalents ................................. 8,523
Mortgage loans held-for-sale .............................. 4,376
Investment securities .................................... 32,575
Mortgage-backed securities:
Held-to-maturity .......................................... 172,746
Available-for-sale ....................................... --
Loans receivable, net .................................... 430,051
Deposit accounts .......................................... 521,347
FHLB advances ............................................. 52,388
Repurchase agreements and other borrowings ............... 66,247
Shareholders' equity ....................................... 43,652
Selected Operating Data:
Interest income .......................................... $ 56,296
Interest expense .......................................... 34,967
---------
Net interest income ....................................... 21,329
Provision (credit) for loan losses ........................ 894
Noninterest income ....................................... 3,043
Noninterest expense ....................................... 15,398
---------
Income before income taxes ................................. 8,080
Income taxes ............................................. 3,285
---------
Income before cumulative effect of accounting change ...... 4,795
Cumulative effect of accounting change ..................... --
---------
Net income ................................................ $ 4,795
=========
Primary earnings per share (1) ........................... N/A
Fully diluted earnings per share (1) ..................... N/A
Selected Ratios (2)
Return on average assets ................................. 0.71%
Return on average equity ................................. 11.68%
Average equity to average assets ........................... 6.09%
Equity to assets at end of period ........................ 6.31%
Interest-rate spread (3) ................................. 3.39%
Net interest margin (3) .................................... 3.46%
Noninterest expense, exclusive of amortization of goodwill,
to average assets ....................................... 2.21%
Efficiency ratio (4) ....................................... 61.04%
Non-performing assets to total assets (5) .................. 2.70%
Allowance for loan losses to non-accruing loans ............ 74.97%
Allowance for loan losses to total loans .................. 0.64%
Other Data
Full service customer facilities ........................... 19
Number of shares outstanding, including ESOP ............... N/A
Book value per outstanding share ........................... N/A
</TABLE>
- ---------
(1) 1994 earnings per share have been stated only for a partial period because
of Life's conversion to stock form of ownership on October 11, 1994.
(2) With the exception of end of period ratios, all ratios are based on average
daily balances for 1997, 1996 and 1995, average monthly balances prior to
1995 and are annualized where appropriate.
(3) Interest-rate spread represents the difference between the weighted average
yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities, and net interest margin represents net
interest income as a percentage of average interest-earning assets.
(4) The efficiency ratio represents noninterest expense, exclusive of
amortization of goodwill, as a percentage of the sum of net interest
income and noninterest income.
(5) Non-performing assets consist of non-accrual loans and real estate acquired
through foreclosure, by deed-in-lieu thereof or deemed in-substance
foreclosed.
8
<PAGE>
Comparative per Share Data
The following table sets forth: (a) selected comparative per share data
for each of BB&T and Life on an historical basis; (b) selected unaudited pro
forma comparative per share data assuming the Merger had been effective at the
beginning of the periods presented for BB&T and Life combined; and (c) Life pro
forma equivalent amounts, using the Exchange Ratio of 0.58 shares of BB&T
Common Stock for each share of Life Common Stock. The Exchange Ratio may be
subject to upward adjustment under certain circumstances. See "THE MERGER --
Exchange Ratio." The unaudited pro forma data has been prepared giving effect
to the Merger as a pooling of interests. For a description of the effect of
pooling-of-interests accounting on the Merger and the historical financial
statements of BB&T, see "THE MERGER -- Accounting Treatment." The comparative
per share data presented are based on and derived from, and should be read in
conjunction with, the historical consolidated financial statements and the
related notes thereto of each of BB&T and Life incorporated by reference
herein. Results of each of BB&T and Life for the nine months ended September
30, 1997, are not necessarily indicative of results expected for the entire
year, nor are pro forma amounts necessarily indicative of results of operations
or combined financial position that would have resulted had the Merger been
consummated at the beginning of the period indicated. All adjustments,
consisting of only normal adjustments, necessary for a fair statement of
results of interim periods have been included.
<TABLE>
<CAPTION>
As of/For the Nine Months As of/For the Year Ended
Ended September 30, 1997 December 31, 1996
--------------------------- -------------------------
<S> <C> <C>
Earnings per common share
Primary
BB&T historical .................. $ 1.85 $ 2.39
Life historical .................. 1.06 0.89
Pro forma combined ............... 1.85 2.35
Life pro forma equivalent ...... 1.07 1.36
Fully diluted
BB&T historical .................. 1.84 2.37
Life historical .................. 1.04 0.88
Pro forma combined ............... 1.84 2.33
Life pro forma equivalent ...... 1.07 1.35
Cash dividends declared
BB&T historical .................. 0.85 1.00
Life historical .................. 0.35 0.44
Pro forma combined ............... 0.85 1.00
Life pro forma equivalent ......... 0.49 0.58
Shareholders' equity per common share
BB&T historical .................. 15.52 15.13
Life historical .................. 16.17 15.33
Pro forma combined ............... 16.02 15.58
Life pro forma equivalent ......... 9.29 9.04
</TABLE>
9
<PAGE>
SPECIAL MEETING OF SHAREHOLDERS
General
This Proxy Statement/Prospectus is being furnished to the shareholders of
Life as of the Record Date and is accompanied by a form of proxy that is
solicited by the Life Board for use at the Special Meeting to be held on
February 23, 1998 at 10:00 a.m., Eastern Time at the Norfolk Waterside Marriott
located at 235 East Main Street, Norfolk, Virginia. At the Special Meeting, the
shareholders of Life will vote upon a proposal to approve the Reorganization
Agreement and the Plan of Merger attached hereto as Appendix I. Proxies may be
voted on such other matters as may properly come before the Special Meeting at
the discretion of the proxy holders named therein. The Life Board knows of no
such other matters except matters incidental to the conduct of the Special
Meeting.
Holders of Life Common Stock are requested to complete, date, and sign the
accompanying proxy and return it promptly to Life in the enclosed postage
prepaid envelope.
Record Date, Voting Rights, and Vote Required
Only the holders of Life Common Stock on the Record Date (January 9, 1998)
are entitled to receive notice of and to vote at the Special Meeting. On the
Record Date, there were 9,847,581 shares of Life Common Stock outstanding,
which were held by approximately 1,091 holders of record. Each share of Life
Common Stock outstanding on the Record Date is entitled to one vote as to each
of the matters submitted at the Special Meeting.
Approval of the Reorganization Agreement and the Plan of Merger requires
the affirmative vote of the holders of more than two thirds of the outstanding
shares of Life Common Stock. FAILURE OF A HOLDER OF LIFE COMMON STOCK TO VOTE
SUCH SHARES WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE REORGANIZATION
AGREEMENT AND THE PLAN OF MERGER.
As of the Life Record Date, the directors and executive officers of Life
and their affiliates beneficially owned a total of 482,231 shares, or 4.90%, of
the issued and outstanding shares of Life Common Stock, exclusive of shares
that may be acquired pursuant to the exercise of stock options or rights or
awards. Each director and executive officer of Life has indicated such person's
intention to vote those shares of Life Common Stock over which such person has
voting authority (other than in a fiduciary capacity) in favor of the
Reorganization Agreement and the Plan of Merger. The Life ESOP owned 815,718
shares, or 8.28%, of the outstanding shares of Life Common Stock as of the
Record Date. The trustees of the Life ESOP must vote all allocated shares held
in the Life ESOP in accordance with the instructions of the participating
employees. Unallocated shares and allocated shares for which employees do not
give instructions are voted in the same ratio on any matter as to those shares
for which instructions are given. As of the Record Date, the directors and
executive officers of BB&T and their affiliates beneficially owned a total of
less than 1% of the issued and outstanding shares of Life Common Stock. Each
director and executive officer of BB&T has indicated such person's intention to
vote those Life shares over which such person has voting authority (other than
in a fiduciary capacity) in favor of the Reorganization Agreement and the Plan
of Merger. As of the Record Date, BB&T and its subsidiaries owned and intended
to vote on their own account or in fiduciary capacities a total of less than 1%
of the outstanding shares of Life Common Stock.
Voting and Revocation of Proxies
The shares of Life Common Stock represented by properly completed proxies
received at or before the time for the Special Meeting will be voted as
directed by the shareholders unless revoked as described below. If no
instructions are given, executed proxies will be voted "FOR" approval of the
Reorganization Agreement and the Plan of Merger. In addition, shares held in
street name that have been designated by brokers on proxy cards as not voted
("Broker Shares") will not be counted as votes cast. Shares with respect to
which proxies have been marked as abstentions will not be counted as votes
cast. Shares with respect to which proxies have been marked as abstentions and
Broker Shares, however, will be treated as shares present for purposes of
determining whether a quorum is present. If any other matters are properly
presented at the Special Meeting and may be properly voted on, the proxies
solicited hereby will be voted on such matters at the discretion of the proxy
holders named therein. However, in such event, voting authority will be
exercised only to the extent permissible under the applicable federal
securities laws. The Life Board is not aware of any other business to be
presented at the Special Meeting, other than matters incidental to the conduct
of the Special Meeting. This proxy is being solicited for the Special Meeting
called to consider the Reorganization Agreement and the Plan of Merger and will
not be used for any other meeting of the shareholders of Life.
The presence of a shareholder at the Special Meeting will not
automatically revoke such shareholder's proxy. A shareholder may, however,
revoke a proxy at any time before its exercise by filing a written notice of
revocation with, or by
10
<PAGE>
delivering a duly executed proxy bearing a later date to, the Secretary of Life
at Life's principal executive offices before the Special Meeting, or by
attending the Special Meeting and voting in person. The proxy will not be
revoked by the death or incapacity of the shareholder executing it unless,
before the shares are voted, notice of such death or incapacity is filed with
the Secretary of Life or other person authorized to tabulate the votes.
BECAUSE APPROVAL OF THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER
REQUIRES THE AFFIRMATIVE VOTE OF MORE THAN TWO THIRDS OF THE OUTSTANDING SHARES
OF LIFE COMMON STOCK, ABSTENTIONS AND BROKER SHARES WILL HAVE THE SAME EFFECT
AS NEGATIVE VOTES. ACCORDINGLY, THE LIFE BOARD URGES ITS SHAREHOLDERS TO
COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
Solicitation of Proxies
BB&T and Life will each bear 50% of the cost of printing this Proxy
Statement/Prospectus, and Life will bear all other costs of soliciting proxies.
In addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile by directors, officers, and other employees of Life, who
will not be specially compensated for such solicitation activities. Life
presently intends to utilize the services of Morrow & Co. in connection with
the solicitation of proxies for the Special Meeting, at an estimated cost of
$5,000 plus individual solicitation and out-of-pocket expenses.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this Proxy
Statement/Prospectus and, if given or made, such information or representation
should not be relied upon as having been authorized by Life, BB&T or any other
person. The delivery of this Proxy Statement/Prospectus will not, under any
circumstances, create any implication that there has been no change in the
affairs of Life or BB&T since the date of this Proxy Statement/Prospectus.
Recommendation of Life Board
The Life Board has unanimously adopted the Reorganization Agreement and
the Plan of Merger and believes that the proposed transaction is fair to and in
the best interests of Life and its shareholders. The Life Board unanimously
recommends that Life's shareholders vote "FOR" approval of the Reorganization
Agreement and the Plan of Merger. See "THE MERGER -- Background of the Merger"
and " -- Reasons for the Merger."
SHAREHOLDERS SHOULD NOT SEND IN STOCK CERTIFICATES WITH THEIR PROXY CARDS.
See "THE MERGER -- Exchange of Life Common Stock Certificates."
11
<PAGE>
THE MERGER
The following information describes the material aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Reorganization
Agreement and the Plan of Merger, which are attached to this Proxy
Statement/Prospectus as Appendix I and incorporated herein by reference. All
shareholders are urged to read the Appendices in their entirety.
General
In the Merger, Life will be merged with and into BB&T Financial-VA, a
wholly owned subsidiary of BB&T, and BB&T Financial-VA will be the surviving
corporation in the Merger and will remain a wholly owned subsidiary of BB&T.
Shareholders of Life will receive shares of BB&T Common Stock and cash in
exchange for their shares of Life Common Stock as described below. It is
expected that the LSB Bank Merger will be effected during 1998, with BB&T-VA as
the surviving entity. Thereafter, BB&T-VA will continue to operate as a
Virginia chartered commercial bank, with branches throughout eastern, central
and southern Virginia.
Background of the Merger
The Life Board has periodically reviewed the company's performance,
compared Life's performance with that of certain relatively comparable publicly
traded institutions in the banking and thrift industries, reviewed market
activity in Life Common Stock, considered various business opportunities and
strategies available to Life and discussed the general economic, regulatory,
competitive and business pressures affecting Life and LSB. In addition, the
Life Board, on an informal basis and during strategy planning meetings, would
periodically review merger and acquisition activity in the thrift industry. On
July 9, 1997, Burney S. Warren, III, Executive Vice President of BB&T-NC, met
with Edward E. Cunningham, Chairman, President and Chief Executive Officer of
Life, at the request of Mr. Warren, and indicated that BB&T was interested in
exploring a business combination transaction with Life. While no specific terms
were discussed by Mr. Warren and Mr. Cunningham, Mr. Warren urged Mr.
Cunningham to consider the potential opportunities which could be accomplished
through a merger transaction between Life and BB&T.
On July 10, 1997, Mr. Cunningham contacted Sandler O'Neill, which Life had
used for investment banking and other services in the past, in order to
discuss, in general terms, the merger process and the opportunities available
to Life. On August 7, 1997, Mr. Cunningham met with a representative of Sandler
O'Neill in order to explore in greater detail the ramifications of Life
considering a business combination transaction in the near-term compared to
continuing its operations on an independent basis.
At its regularly scheduled 1997 annual retreat, these preliminary
conversations were the basis for a wide-ranging discussion of the viable
strategic options available to Life. The Life Board discussed, among other
things, its perceptions about the future of the thrift industry, the various
regulatory and competitive pressures facing Life, the performance of Life
Common Stock, the perception of Life in its market area, the opportunities for
Life to continue its level of performance and to increase value to its
shareholders and whether Life should consider a business combination in the
relative near-term in its efforts to improve shareholder value. While no
ultimate conclusions were reached as a result of this discussion by the Life
Board, there was a general sense expressed that Life should not foreclose
consideration of any of its options including a possible merger or other
business combination.
After this board retreat, there were several informal conversations
between Mr. Cunningham, Mr. Warren and a representative of Sandler O'Neill. As
a result of such conversations, in early October 1997 Mr. Cunningham, together
with a representative of Sandler O'Neill, met with Mr. Warren and John A.
Allison, Chairman and Chief Executive Officer of BB&T. At such meeting there
was a more in-depth discussion of a possible merger transaction between Life
and BB&T, as well as a general discussion of potential merger consideration,
post-merger structure and other business and management considerations. After
this meeting, a draft of the proposed Reorganization Agreement and related
documents (including the Option Agreement) were prepared, circulated and
discussed in detail among Life, BB&T and their respective legal and financial
advisors.
The Life Board met on October 27, 1997 and reviewed the background of the
proposed Merger, the status of the negotiations to date, briefly reviewed the
proposed terms of the Merger and proposed post-Merger management and
operational structure and distributed a draft of the proposed Reorganization
Agreement for review by Life's directors. The Life Board reconvened on October
29, 1997 in order to discuss the terms of the proposed Reorganization Agreement
as revised to date. The Life Board was assisted by presentations made by both
its special legal counsel and Sandler O'Neill.
12
<PAGE>
During the course of the Life Board meeting, Life's strategic options were
reviewed in detail. At the meeting, representatives of Sandler O'Neill, Life's
financial advisor, reviewed with the Life Board a number of matters relating to
the Board's analysis of the strategic alternatives available to Life, including
(a) the general status of the financial services industry, including those
entities operating in Life's region, and the current regulatory environment;
(b) valuation analyses of Life and BB&T, on a stand-alone and combined basis;
(c) historic and current bank and thrift institution stock price levels and
terms of recent savings institution mergers; (d) consolidation trends in the
financial services industry and in Virginia specifically; (e) the outlook for
continued price appreciation of Life Common Stock; (f) the prospects for Life
continuing as an independent entity, including its prospects for expanding its
current business to further increase size and improve its earnings as an
independent entity; and (g) a comparison of the proposed Merger with BB&T and
remaining independent. Sandler O'Neill rendered its oral opinion (subsequently
confirmed in writing) that, as of such date, the consideration to be received
by Life's shareholders under the terms of the Reorganization Agreement was fair
to Life's shareholders from a financial point of view. Following the Sandler
O'Neill presentation, the Life Board of Directors, with the assistance of
special counsel, reviewed in detail the proposed Reorganization Agreement and
the related documents including the Option Agreement. The Life Board considered
at length Life's strategic alternatives and reviewed a number of factors,
including the continuing consolidation of the financial services industry, the
consideration that Life might be at a competitive disadvantage as an
independent entity in a more consolidated environment and Life's prospects of
further improving its earnings and increasing its franchise value as an
independent entity. The discussion also focused on the effects that a business
combination transaction would have on Life's shareholders, employees, customers
and on the communities served by Life. The Life Board then approved by
unanimous vote of those members present the Reorganization Agreement, the
Option Agreement and the transactions contemplated thereby.
Reasons for the Merger
BB&T
One of BB&T's announced acquisition objectives is to build a statewide
franchise in Virginia with an emphasis on customer service, value and personal
attention. BB&T management believes that Life and LSB have a tradition of
providing outstanding customer service and that their acquisition by BB&T,
which will give BB&T a substantial presence in southeastern Virginia as well as
the top market share in the Southside Hampton Roads region, is a major step
toward achieving this goal.
Life
The Life Board, with the assistance of its financial and legal advisors,
has evaluated the financial, legal and market considerations bearing on the
decision to recommend the Merger. The terms of the Merger, including the
Exchange Ratio, are a result of arms-length negotiations between
representatives of Life and BB&T. In reaching its determination that the
Reorganization Agreement is fair to, and in the best interest of, Life and
holders of Life Common Stock, the Life Board considered a number of factors,
both from a short-term and a long-term perspective.
The factors which the Life Board considered, without assigning any
relative or specific weights, included, without limitation, the following: (a)
the Life Board's review of Life's business, financial condition, results of
operations, management and prospects, including, but not limited to, its
potential growth, development, productivity and profitability; (b) the current
and prospective environment in which Life operates, including the regulatory
framework faced by Life, regional economic conditions, the competitive
environment for savings and other financial institutions generally and the
trend toward consolidation in the financial services industry; (c) information
concerning the business, financial condition, results of operations and
prospects of BB&T including recent acquisitions by BB&T, the recent performance
of BB&T Common Stock, historical financial data of BB&T, customary statistical
measurements of BB&T's financial performance, BB&T's expectations of future
business prospects and earnings based upon discussions with representatives of
BB&T; (d) the value to be received by holders of Life Common Stock pursuant to
the Merger in relation to the historical trading prices and book value of Life
Common Stock; (e) the information presented to the Life Board by Sandler
O'Neill with respect to the Merger and the opinion of Sandler O'Neill that, as
of the date of such opinion, the consideration to be received by Life's
shareholders under the terms of the Reorganization Agreement was fair, from a
financial point of view, to Life's shareholders; (f) the financial and other
significant terms of the BB&T offer; (g) the review by the Life Board with its
legal and financial advisors of the provisions of the proposed Reorganization
Agreement and Option Agreement; (h) the future growth prospects of LSB and BB&T
following the Merger and the potential synergies expected from the Merger; (i)
the expectation that BB&T will continue to provide quality service to the
community and customers served by LSB and the prospects for future expansion of
the products and services offered by LSB in the Hampton Roads market area; (j)
the compatibility of the respective business and management philosophies of
Life and BB&T, and the prospect that Mr. Cunningham and other members of
13
<PAGE>
Life's senior management team will be afforded the opportunity to have
significant management positions after the Merger; and (k) the alternative
strategic courses available to Life, including remaining independent and
exploring other potential acquisition transactions.
After considering the factors described above, the Life Board determined
that the Merger and the consideration to be received by Life's shareholders in
connection with the Merger was fair and, consequently, unanimously approved the
Reorganization Agreement as being in the best interests of Life and its
shareholders. ACCORDINGLY, THE LIFE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF LIFE VOTE FOR APPROVAL OF THE REORGANIZATION AGREEMENT.
---
Opinion of Life's Financial Advisor
Pursuant to an engagement letter dated as of October 14, 1997 (the
"Sandler O'Neill Agreement"), Life retained Sandler O'Neill as an independent
financial advisor in connection with Life's consideration of possible business
combinations with a second party. Sandler O'Neill is a nationally recognized
investment banking firm whose principal business specialty is banks and savings
institutions. As such, Sandler O'Neill is regularly engaged in the valuation of
such businesses and their securities in connection with mergers and
acquisitions and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to Life in connection with the Merger. In connection
therewith, the Life Board requested Sandler O'Neill to render its opinion as to
the fairness, from a financial point of view, of the consideration to be
received by the holders of Life Common Stock in the Merger. At the October 29,
1997 meeting at which the Life Board approved and adopted the Reorganization
Agreement, Sandler O'Neill delivered to the Life Board its oral opinion,
subsequently confirmed in writing, that, as of such date, the consideration to
be received by the holders of shares of Life Common Stock in the Merger was
fair, from a financial point of view, to such shareholders. Sandler O'Neill has
also delivered to the Life Board a written opinion dated as of the date of this
Proxy Statement/Prospectus (the "Sandler Fairness Opinion") which is
substantially identical to the October 29, 1997 opinion. The full text of the
Sandler Fairness Opinion, which sets forth the procedures followed, assumptions
made, matters considered and qualifications and limitations on the review
undertaken in connection with such opinion, is attached as Appendix II to this
Proxy Statement/Prospectus and is incorporated herein by reference. The
description of the opinion set forth herein is qualified in its entirety by
reference to Appendix II. Holders of shares of Life Common Stock are urged to
read the Sandler Fairness Opinion in its entirety in connection with their
consideration of the proposed Merger.
The Sandler Fairness Opinion was provided to the Life Board for its
information and is directed only to the fairness, from a financial point of
view, of the consideration to be received by the holders of Life Common Stock
in the Merger. It does not address the underlying business decision of Life to
engage in the Merger or any other aspect of the Merger and does not constitute
a recommendation to any holder of shares of Life Common Stock as to how such
shareholder should vote at the Special Meeting with respect to the Merger
Agreement or any other matter related thereto.
In connection with rendering its October 29, 1997 opinion, Sandler O'Neill
performed a variety of financial analyses. The following is a summary of the
material analyses performed by Sandler O'Neill, but does not purport to be a
complete description of all the analyses underlying Sandler O'Neill's opinion.
The preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to a partial analysis or summary
description. Sandler O'Neill believes that its analyses must be considered as a
whole and that selecting portions of such analyses and the factors considered
therein, without considering all factors and analyses, could create an
incomplete view of the analyses and processes underlying its opinion. In
performing its analyses, Sandler O'Neill made numerous assumptions with respect
to industry performance, business and economic conditions and various other
matters, many of which cannot be predicted and are beyond the control of Life,
BB&T and Sandler O'Neill. Any estimates contained in Sandler O'Neill's analyses
are not necessarily indicative of future results or values, which may be
significantly more or less favorable than such estimates. Estimates on the
values of companies do not purport to be appraisals or necessarily reflect the
prices at which companies or their securities may actually be sold. Because
such estimates are inherently subject to uncertainty, none of Life, BB&T or
Sandler O'Neill assumes responsibility for their accuracy.
Stock Trading History. Sandler O'Neill reviewed the history of the
reported trading prices and volume of Life Common Stock and BB&T Common Stock,
and the relationship between the movements in the prices of Life Common Stock
and BB&T Common Stock, respectively, to movements in certain stock indices,
including the Standard & Poor's 500 Index,
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the NASDAQ Banking Index and composite groups of publicly traded savings
institutions (in the case of Life) and publicly traded commercial banks (in the
case of BB&T), as identified below.
Analysis of Selected Publicly Traded Companies. Sandler O'Neill used
publicly available information to compare selected financial and market trading
information, including balance sheet composition, asset quality ratios, loan
loss reserve levels, profitability, capital adequacy, dividends and trading
multiples, for Life and two different groups of savings institutions. The first
group consisted of Life and the following 12 publicly traded regional savings
institutions (the "Regional Group"): First Palm Beach Bancorp Inc., BankUnited
Financial Corp., First Financial Holdings Inc., WSFS Financial Corp., Ocean
Financial Corp., PennFed Financial Services Inc., First Liberty Financial
Corp., Maryland Federal Bancorp, York Financial Corp., Parkvale Financial
Corporation, HFNC. Financial Corp. and Eagle Bancshares. Sandler O'Neill also
compared Life to a group of nine publicly traded savings institutions which had
a return on average equity (based on last quarter annualized earnings) of
greater than 15.9% and a price to tangible book value of greater than 217% (the
"Highly Valued Group"). The Highly Valued Group included the following
institutions: Anchor BanCorp Wisconsin, InterWest Bancorp Inc., D&N Financial
Corp., First Federal Capital Corp., WSFS Financial Corporation, Wilshire
Financial Services, Dime Financial Corp., CFSB Bancorp Inc. and Metropolitan
Financial Corp. The analysis compared publicly available financial information
for Life and each of the groups as of and for each of the years ended December
31, 1992 through December 31, 1996 and as of and for the twelve months (and, in
certain cases, the three months) ended June 30, 1997.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
BB&T and two different groups of commercial banks. The first group consisted of
BB&T and the following 12 publicly traded commercial banks (the "Peer Group"):
Comerica Inc., State Street Corp., Union BanCal Corp., Mercantile Bancorp,
SouthTrust Corp., Summit Bancorp, Northern Trust Corp., Huntington Bancshares
Inc., Crestar Financial Corp., Regions Financial Corp., First of America Bank
Corp., and Fifth Third Bancorp. Sandler O'Neill also compared BB&T to a group
of 12 publicly traded commercial banks which had a return on average equity
(based on last twelve months' earnings) of greater than 15.9% and a price to
tangible book value of greater than 266% (the "Commercial Highly Valued
Group"). The Commercial Highly Valued Group institutions included BB&T and the
following institutions: PNC Bank Corp., Bank of New York Co., Mellon Bank
Corp., Comerica Inc., State Street Corp., SouthTrust Corp., First of America
Bank Corp., Fifth Third Bancorp, Firstar Corp., AmSouth Bancorp, First Security
Corp. and Marshall & Ilsley Corp. The analysis compared publicly available
financial information for BB&T and each of the groups as of and for each of the
years ended December 31, 1992 through December 31, 1996 and as of and for the
twelve months ended June 30, 1997.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 50
transactions announced from January 1, 1997 to October 27, 1997 involving
public savings institutions nationwide as acquired institutions with
transaction values over $15 million ("Nationwide Transactions"), 12
transactions announced from January 1, 1997 to October 27, 1997 involving
public savings institutions in the Southeast (Alabama, Arkansas, Florida,
Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and
West Virginia) as acquired institutions with transaction values over $15
million ("Southeast Transactions"), and 17 transactions announced from January
1, 1997 to October 27, 1997 involving public savings institutions as acquired
institutions with transaction values greater than $200 million and less than $1
billion ("Large Transactions"). Sandler O'Neill reviewed the ratios of price to
last twelve months' earnings, price to book value, price to tangible book
value, price to deposits, price to assets and tangible book premium to core
deposits paid in each such transaction and computed high, low, mean and median
ratios and premiums for the respective groups of transactions. These multiples
were applied to Life's financial information as of and for the twelve months
ended September 30, 1997. Based upon the median multiples for Nationwide
Transactions, Sandler O'Neill derived an imputed range of values per share of
Life Common Stock of $18.61 to $30.47. Based upon the median multiples for
Southeast Transactions, Sandler O'Neill derived an imputed range of values per
share of Life Common Stock of $17.36 to $31.46. Based upon the median multiples
for Large Transactions, Sandler O'Neill derived an imputed range of values per
share of Life Common Stock of $20.25 to $32.19.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of Life through 2002 under various circumstances, assuming Life
performed in accordance with information regarding potential future earnings
provided by its management and certain variations thereof (including variations
with respect to the levels of assets, net interest spread, non-interest income,
non-interest expense and dividend payout ratio). To approximate the terminal
value of the Life Common Stock at the end of the five-year period, Sandler
O'Neill applied price to earnings multiples ranging from 12x to 24x and applied
multiples of tangible book value ranging from 120% to 250%. The dividend income
streams and terminal values were then discounted to present values using
different discount rates (ranging from 9% to 14%) chosen to reflect different
assumptions regarding required rates of return
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of holders or prospective buyers of Life Common Stock. This analysis, assuming
the current dividend payout ratio, indicated an imputed range of values per
share of Life Common Stock of between $13.80 and $30.60 when applying the price
to earnings multiples, and an imputed range of values per share of Life Common
Stock of between $15.68 and $36.53 when applying multiples of tangible book
value. In connection with its analysis, Sandler O'Neill extensively used
sensitivity analyses to illustrate the effects changes in the underlying
assumptions would have on the resulting present value, and discussed these
changes with the Life Board.
Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential pro
forma effects of the Merger on BB&T, based upon Life's and BB&T's current and
projected income statements and balance sheets provided by the senior
managements of Life and BB&T, respectively, and assumptions and analyses of the
economic environment, accounting and tax treatment of the Merger, acquisition
adjustments, operating efficiencies, revenue enhancements and other adjustments
discussed with the senior managements of Life and BB&T. In performing its
analysis, Sandler O'Neill assumed an Exchange Ratio of 0.60. This analysis
indicated that the Merger would be minimally dilutive to BB&T's earnings per
share in 1998 and accretive to earnings per share in all other periods
analyzed, and accretive to tangible book value per share of BB&T Common Stock
for all periods analyzed. The actual results achieved by BB&T may vary from
projected results and the variations may be material.
Contribution Analysis. Sandler O'Neill reviewed the relative contributions
to, among other things, total assets, total loans, total deposits, total
equity, last twelve months' ("LTM") net income and market capitalization to be
made by Life and BB&T to the combined institution based on data at and for the
twelve months ended September 30, 1997. This analysis indicated that Life's
implied contribution was 5.18% of total assets, 3.29% of total loans, 3.69% of
total deposits, 7.10% of total equity, 3.79% of LTM net income and 3.11% of
market capitalization. Based upon an Exchange Ratio of 0.58, holders of Life
Common Stock would own approximately 4.26% of the outstanding shares of the
combined institution.
In connection with rendering its October 29, 1997 opinion, Sandler
O'Neill reviewed, among other things: (i) the Merger Agreement and exhibits
thereto; (ii) the Option Agreement; (iii) Life's audited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations as contained in its Annual Report on Form 10-K for the
year ended December 31, 1996; (iv) BB&T's audited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations as contained in its annual report on Form 10-K for the
year ended December 31, 1996; (v) Life's unaudited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in its Quarterly Report on Form 10-Q for the
quarters ended March 31 and June 30, 1997, respectively; (vi) BB&T's unaudited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations contained in its Quarterly Report
on Form 10-Q for the quarters ended March 31 and June 30, 1997, respectively;
(vii) preliminary financial information prepared by the senior management of
Life concerning Life's financial condition and results of operations as of and
for the three months and nine months ended September 30, 1997; (viii) summary
financial information contained in BB&T's press release dated October 10, 1997
concerning BB&T's financial condition and results of operations as of and for
the three months and nine months ended September 30, 1997; (ix) certain
financial analyses and forecasts of Life prepared by and reviewed with
management of Life and the views of senior management of Life regarding Life's
past and current business operations, results thereof, financial condition and
future prospects; (x) certain financial analyses and forecasts of BB&T prepared
by and reviewed with management of BB&T and the views of senior management of
BB&T regarding BB&T's past and current business operations, results thereof,
financial condition and future prospects; (xi) the pro forma impact of the
Merger on BB&T; (xii) the publicly reported historical price and trading
activity for Life Common Stock and BB&T Common Stock, respectively, including a
comparison of certain financial and stock market information for Life and BB&T
with similar publicly available information for certain other companies, the
securities of which are publicly traded; (xiii) the financial terms of recent
business combinations in the savings institution industry, to the extent
publicly available; (xiv) the current market environment generally and the
banking environment in particular; and (xv) such other information, financial
studies, analyses and investigations and financial, economic and market
criteria as Sandler O'Neill considered relevant.
In connection with rendering the Sandler Fairness Opinion, Sandler O'Neill
confirmed the appropriateness of its reliance on the analyses used to render
its October 29, 1997 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the factors considered in connection therewith.
In performing its reviews and analyses, Sandler O'Neill assumed and relied
upon, without independent verification, the accuracy and completeness of all
the financial information, analyses and other information that was publicly
available or
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otherwise furnished to, reviewed by or discussed with it, and Sandler O'Neill
does not assume any responsibility or liability therefor. Sandler O'Neill did
not make an independent evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities of Life or BB&T or any of their
respective subsidiaries, or the collectibility of any such assets, nor was it
furnished with any such evaluations or appraisals (relying, where relevant, on
the analyses and estimates of Life and BB&T). With respect to the information
regarding potential future financial performance provided by each company's
management, Sandler O'Neill assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performances of Life
and BB&T and that such performances will be achieved. Sandler O'Neill also
assumed that there has been no material change in Life's or BB&T's assets,
financial condition, results of operations, business or prospects since the
date of the last financial statements filed pursuant to the requirements of the
Exchange Act, that Life and BB&T will remain as going concerns for all periods
relevant to its analyses, that the Merger will be accounted for as a pooling of
interests and that the conditions precedent in the Merger Agreement are not
waived.
Under the Sandler O'Neill Agreement, Life has agreed to pay Sandler
O'Neill a transaction fee in connection with the Merger, a substantial portion
of which is contingent upon the consummation of the Merger. Under the terms of
the Sandler O'Neill Agreement, Life has agreed to pay Sandler O'Neill a
transaction fee equal to 0.75% of the aggregate transaction price. As of the
date of this Proxy Statement/Prospectus, the total transaction fee payable
would be approximately $2,680,000, of which $642,147 has been paid and the
remainder is payable upon closing of the transaction. Sandler O'Neill has also
received a fee of $200,000 for rendering its fairness opinion. Life has also
agreed to reimburse Sandler O'Neill for its reasonable out-of-pocket expenses
incurred in connection with its engagement and to indemnify Sandler O'Neill and
its affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment banking
services to Life and has received its customary compensation for such services.
In the ordinary course of its business, Sandler O'Neill may actively trade the
debt and/or equity securities of Life and BB&T and their respective affiliates
for its own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
Exchange Ratio
At the Effective Time, Life will be merged with and into BB&T
Financial-VA, and BB&T Financial-VA will be the surviving corporation in the
Merger. Upon consummation of the Merger, each share of Life Common Stock
outstanding at the Effective Time will be converted into the right to receive
0.58 BB&T Common Stock, subject to possible upward adjustment as described in
the following paragraphs.
The Exchange Ratio will be determined by reference to the Closing Value,
which is the average closing price of BB&T Common Stock on the NYSE for the ten
trading days immediately preceding the tenth calendar day preceding the
Effective Time. The Exchange Ratio has been initially set at 0.58 shares of
BB&T Common Stock per share of Life Common Stock; however, if the implied
market value (based on the Closing Value) of the BB&T Common Stock to be
received for each share of Life Common Stock, using an Exchange Ratio of 0.58,
is less than $33.00 (i.e., if the Closing Value is less than $56.90), then the
Exchange Ratio will be increased to the lesser of (i) the amount necessary to
increase the implied market value to $33.00 or (ii) 0.60 shares of BB&T Common
Stock per share of Life Common Stock.
Under certain circumstances, the Exchange Ratio could be adjusted further
upward pursuant to the Reorganization Agreement. Under no circumstances would
the Exchange Ratio be less than 0.58 shares of BB&T Common Stock for each share
of Life Common Stock. An upward adjustment to the Exchange Ratio in excess of
0.60 could occur only if Life should elect to terminate the Reorganization
Agreement as described below, and if BB&T then elects to avoid termination of
the Reorganization Agreement by adjusting the Exchange Ratio.
Life may elect to terminate the Reorganization Agreement and abandon the
Merger if the circumstances in both (a) and (b) exist:
(a) the implied market value (based on the Closing Value) of the BB&T
Common Stock to be received for each share of Life Common Stock, using an
Exchange Ratio of 0.60 shares of BB&T Common Stock per share of Life
Common Stock, is less than $27.00 (i.e., the Closing Value is less than
$45.00), and
(b) (i) the amount obtained by dividing the Closing Value by $54.875 (the
"BB&T Ratio") is less than (ii) 90% of the amount obtained by dividing the
Index Price on the Determination Date by the Index Price on the Starting
Date (as such terms are defined below) (the "Index Ratio").
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Life may refuse to consummate the Merger pursuant to this provision by giving
written notice to BB&T during the five-day period following the Determination
Date. BB&T will thereafter have a five-day period in which it may elect to
increase the Exchange Ratio so that holders of Life Common Stock would receive
consideration having an implied market value (based on the Closing Value) of
$27.00 per share of Life Common Stock. BB&T WOULD HAVE NO OBLIGATION TO
INCREASE THE EXCHANGE RATIO. Such an election would be made by giving notice to
Life of the election and the revised Exchange Ratio, whereupon Life would be
required to proceed with the Merger with the adjusted Exchange Ratio in
accordance with all other terms of the Reorganization Agreement. Life may
withdraw its notice of termination at any time during the ten-day period
following the Determination Date, and could elect to proceed with the Merger at
the Exchange Ratio of 0.60 if BB&T were to determine not to adjust the Exchange
Ratio.
For purposes of the rights of termination and adjustment described above,
the following terms are defined as follows:
"Determination Date" means the tenth calendar day preceding the date
designated by BB&T as the Closing Date.
"Index Group" means 17 bank holding companies designated in the
Reorganization Agreement, the common stocks of all of which must be publicly
traded and as to which there may not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which have been determined based upon the
number of shares of outstanding common stock) will be redistributed
proportionately for purposes of determining the Index Price. If any company
belonging to the Index Group, or BB&T, declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares
or similar transaction between the Starting Date and the Determination Date,
the prices for the common stock of such company or BB&T will be appropriately
adjusted for the purposes of applying the provision set forth above.
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing sales prices of the
companies composing the Index Group.
"Starting Date" means October 29, 1997.
These conditions reflect the parties' agreement that Life's shareholders
will assume certain risks of decline in the value of BB&T Common Stock. If the
value of BB&T Common Stock were to decline so that the Closing Value was below
$45.00, but the Closing Value did not reflect a decline in the price of BB&T
Common Stock from $54.875 (the closing price of BB&T Common Stock on October
28, 1997, which was the date the parties agreed upon the Exchange Ratio) (the
"Starting Price") of more than 10% in comparison to the stock prices of the
group of comparable bank holding company stocks (the Index Group referenced
above) as measured from October 29, 1997 to the Determination Date, then Life's
shareholders would continue to assume the risk of decline in the value of BB&T
Common Stock. Life has the right to terminate the Reorganization Agreement only
when both (a) the Closing Value of BB&T Common Stock is less than $45.00 and
(b) the decline from the value of the Starting Price to the Closing Value
exceeds by more than 10% the decline in value for the group of comparable bank
holding companies from October 29, 1997 to the Determination Date.
If the Life Board elects to terminate the Reorganization Agreement because
of a decline in the price of BB&T Common Stock, BB&T may avoid termination by
increasing the Exchange Ratio. In deciding whether to increase the Exchange
Ratio, the principal factors BB&T would consider include, without limitation,
the projected effect of the Merger on BB&T's pro forma earnings and book value
per share and whether BB&T's assessment of Life's earning potential as part of
BB&T justifies the issuance of a greater number of shares of BB&T Common Stock.
If BB&T should decline to adjust the Exchange Ratio, Life may elect to withdraw
its election to terminate and to proceed with the Merger without adjustment. In
making this determination, the principal factors the Life Board would consider
include, without limitation, whether the Merger remains in the best interest of
Life and its shareholders, despite a decline in the BB&T Common Stock price,
and whether the consideration to be received by the holders of Life Common
Stock remains fair from a financial point of view.
In particular, the Life Board will review the circumstances surrounding
the decline in the price of BB&T Common Stock and whether the decline is a
result of an issue specific to BB&T or whether it is reflective of a general
decline in the bank stock market. In the event BB&T should decline to adjust
the Exchange Ratio and Life should determine to proceed without adjustment,
BB&T and Life intend to review the circumstances prevailing at that time to
determine whether to resolicit the Life shareholders, although the terms of the
Reorganization Agreement do not specifically require the parties to effect a
resolicitation of the Life shareholders.
The operation of the Exchange Ratio and the adjustment mechanism can be
illustrated by five scenarios. (For purposes of the numerical examples, the
Index Price, as of October 29, 1997, is $100.)
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(a) The first scenario is that the Closing Value of the BB&T Common Stock
is not less than $56.90. Under this scenario, the Exchange Ratio would be
0.58 and there would be no potential adjustment to the Exchange Ratio and
no right on the part of Life to terminate the Reorganization Agreement due
to a decline in the price of BB&T Common Stock. The implied market value
(based on the Closing Value) of the consideration to be received by Life
shareholders would be not less than $33.00.
(b) The second scenario is that the Closing Value is at least $55.00 and
less than $56.90. Under this scenario, the Exchange Ratio would be set at
the amount between 0.58 and 0.60 such that the implied market value (based
on the Closing Value) of the consideration to be received by Life
shareholders would be $33.00, and there would be no right on the part of
Life to terminate the Reorganization Agreement.
(c) The third scenario is that the Closing Value is at least $45.00 and
less than $55.00. Under this scenario, the Exchange Ratio would be 0.60
and there would be no right on the part of Life to terminate the
Reorganization Agreement due to a decline in the value of BB&T Common
Stock and therefore no potential adjustment to the Exchange Ratio, even
though the implied market value of the consideration to be received by
Life shareholders could have fallen from a pro forma $32.93 as of October
28, 1997 to $27.00 per share (based on a Closing Value of $45.00) as of
the Determination Date, assuming that the value at the Determination Date
equals the Closing Value.
(d) The fourth scenario is that the Closing Value is less than $45.00 but
the BB&T Ratio is equal to or above the Index Ratio. In this case, the
Exchange Ratio would be 0.60 and there would be no right on the part of
Life to terminate the Reorganization Agreement due to the decline in the
value of BB&T Common Stock and therefore no potential adjustment to the
Exchange Ratio, even though the implied market value of the consideration
to be received by Life shareholders would have fallen from a pro forma
$32.93 as of October 28, 1997 to less than $27.00 per share. For example,
if the Closing Value were $40.00 and the Index Price were $80.00, the BB&T
Ratio would be 0.73 ($40.00 / $54.875) and the Index Ratio would be 0.72
(0.9 x ($80.00 / $100.00)). Based upon the assumed $40.00 Closing Value,
the consideration to be received by Life shareholders would have an
implied market value of $24.00 per share.
(e) The fifth scenario is that both the Closing Value is less than $45.00
and the BB&T Ratio is less than the Index Ratio. In this case, Life would
have the right to terminate the Reorganization Agreement based on the
decline in BB&T's stock price. BB&T would have the right, but not the
obligation, to reinstate the Reorganization Agreement by adjusting the
Exchange Ratio so that Life shareholders would receive shares of BB&T
Common Stock having an implied market value (based upon the Closing Value)
equal to $27.00 per share. For example, if the Closing Value were $40.00
and the Index Price were $90.00, the BB&T Ratio would be 0.73 ($40.00 /
$54.875) and the Index Ratio would be 0.81 (0.9 x ($90.00 / $100.00)).
Based upon the assumed $40.00 Closing Value, the consideration to be
received by Life shareholders would have an implied market value of $24.00
per share. If the Life Board elected to terminate the Reorganization
Agreement, BB&T would have the right, but not the obligation, to reinstate
the Reorganization Agreement by increasing the Exchange Ratio within five
days to 0.675, which represents $27.00 divided by the Closing Value. Based
upon the assumed $40.00 Closing Value, the new Exchange Ratio would
represent a value to Life shareholders of $27.00 per share.
Life shareholders should be aware that the actual market value of a share
of BB&T Common Stock at the Effective Time and at the time certificates for
those shares are delivered following surrender and exchange of certificates for
shares of Life Common Stock may be more or less than the Closing Value. Life
shareholders are urged to obtain information on the trading value of BB&T
Common Stock that is more recent than that provided in this Proxy
Statement/Prospectus. See "SUMMARY -- Comparative Market Prices and Dividends."
No fractional shares of BB&T Common Stock will be issued in the Merger.
Holders of Life Common Stock otherwise entitled to a fractional share will be
paid an amount in cash determined by multiplying the fractional part of such
share of BB&T Common Stock by the Closing Value.
Exchange of Life Common Stock Certificates
At the Effective Time, by virtue of the Merger and without any action on
the part of Life or the holders of Life Common Stock, each share of Life Common
Stock issued and outstanding immediately before the Effective Time will be
converted into and will represent the right to receive, upon surrender of the
certificate representing such share of Life Common Stock as described below,
whole shares of BB&T Common Stock and cash in lieu of any fractional share (the
"Merger Consideration"). Promptly after the Effective Time, BB&T will deliver
or mail to each Life shareholder a form of letter of transmittal and
instructions for use in effecting the surrender, in exchange for the Merger
Consideration, of the certificates that, immediately before the Effective Time,
represented any shares of Life Common Stock. Upon surrender of such
certificates,
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together with such letter of transmittal duly executed and completed in
accordance with its instructions and such other documents as may be reasonably
requested, BB&T will promptly transfer the Merger Consideration to the persons
entitled to receive it.
HOLDERS OF LIFE COMMON STOCK SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE TRANSMITTAL FORMS AND INSTRUCTIONS.
Until surrendered as described above, each outstanding certificate that
prior to the Effective Time represented one or more shares of Life Common Stock
will be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration. No interest will be paid or accrued
on the Merger Consideration upon the surrender of the certificate or
certificates representing shares of Life Common Stock. With respect to any
certificate for Life Common Stock that has been lost or destroyed, BB&T will
pay the Merger Consideration attributable to such certificate upon receipt of a
surety bond or other adequate indemnity as required in accordance with BB&T's
standard policy and evidence reasonably satisfactory to BB&T of ownership of
the shares in question. After the Effective Time, no transfer of the shares of
Life Common Stock outstanding immediately before the Effective Time will be
made on the stock transfer books of BB&T Financial-VA.
BB&T Financial-VA will pay any dividends or other distributions with a
record date before the Effective Time that have been declared or made by Life
in respect of shares of Life Common Stock in accordance with the terms of the
Reorganization Agreement and that remain unpaid at the Effective Time. To the
extent permitted by law, former shareholders of record of Life will be entitled
to vote after the Effective Time at any meeting of BB&T shareholders the number
of whole shares of BB&T Common Stock into which their respective shares of Life
Common Stock are converted, regardless of whether such holders have exchanged
their certificates representing Life Common Stock for certificates representing
BB&T Common Stock. Whenever a dividend or other distribution is declared by
BB&T on the BB&T Common Stock, the record date for which is at or after the
Effective Time, the declaration will include dividends or other distributions
on all shares of BB&T Common Stock issuable pursuant to the Reorganization
Agreement, but after the Effective Time no dividend or other distribution
payable to the holders of record of BB&T Common Stock as of any time subsequent
to the Effective Time will be delivered to the holder of any certificate
representing Life Common Stock until such holder surrenders such certificate
for exchange described above. Upon surrender of such certificate, both the BB&T
Common Stock certificate and any undelivered dividends and cash payments
payable hereunder (without interest) will be delivered and paid with respect to
each share of Life Common Stock represented by such certificate.
The Reorganization Agreement
Effective Date and Time of the Merger
The Reorganization Agreement provides that the closing of the transactions
contemplated therein will take place on the business day designated by BB&T
that is within 30 days following the satisfaction of the conditions to the
consummation of the Merger, or such later date as the parties may otherwise
agree. The Effective Time will occur at the time and date specified in the
Articles of Merger to be filed with the State Corporation Commission of the
Commonwealth of Virginia. It is currently anticipated that the filing of the
Articles of Merger will take place as soon as practicable following the date on
which the Plan of Merger is approved by the Life shareholders and all other
conditions to the respective obligations of BB&T and Life to consummate the
Merger have been satisfied. If the Merger is approved at the Special Meeting on
February 23, 1998, it is currently anticipated that the filing of the Articles
of Merger will occur on or about February 27, 1998 and the Effective Time will
occur on or about March 1, 1998. There can be no assurance, however, that this
schedule will be followed.
Conditions to the Merger
The respective obligations of BB&T and Life to carry out the Merger and
the other transactions contemplated by the Reorganization Agreement are subject
to satisfaction (or, if permissible, waiver) of the following conditions at or
before the Effective Time: (a) all corporate action necessary to authorize the
execution, delivery and performance of the Reorganization Agreement and the
Plan of Merger must have been duly and validly taken, including the approval of
the shareholders of Life of the Reorganization Agreement and the Plan of
Merger; (b) the Registration Statement (including any post-effective
amendments) must be effective under the Securities Act, no proceedings may be
pending or threatened by the Commission to suspend the effectiveness of the
Registration Statement and the BB&T Common Stock to be issued in the Merger
must either have been registered or be subject to exemption from registration
under applicable state securities laws; (c) the parties must have received all
regulatory approvals required in connection with the transactions contemplated
by the Reorganization Agreement, all notice periods and waiting periods
required after the granting of the approvals must have passed and
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all approvals must be in effect; (d) neither BB&T nor Life nor any of their
respective subsidiaries may be subject to any order, decree or injunction of a
court or agency of competent jurisdiction that enjoins or prohibits
consummation of the transactions contemplated by the Reorganization Agreement;
(e) Life and BB&T must have received an opinion of BB&T's legal counsel, Womble
Carlyle Sandridge & Rice, PLLC, in form and substance satisfactory to Life and
BB&T, substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of Life
will not recognize any gain or loss to the extent that they exchange shares of
Life Common Stock for shares of BB&T Common Stock; and (f) BB&T must have
received letters, dated as of the date of filing of the Registration Statement
with the Commission and as of the Effective Time, in form and substance
reasonably satisfactory to BB&T, from Arthur Andersen LLP to the effect that
the Merger will qualify for pooling-of-interests accounting treatment.
The obligations of Life to carry out the transactions contemplated by the
Reorganization Agreement are also subject to the satisfaction of the following
additional conditions at or before the Effective Time, unless, where
permissible, waived by Life: (a) BB&T must have performed in all material
respects all obligations and complied in all material respects with all
covenants required by the Reorganization Agreement; (b) all approvals of the
transactions contemplated in the Reorganization Agreement from the Federal
Reserve and any other state or federal government agency, department or body
whose approval is required for the consummation of the Merger must have been
received and all waiting periods with respect to such approvals must have
expired; (c) the shares of BB&T Common Stock to be issued in the Merger must
have been approved for listing on the NYSE, subject to official notice of
issuance; and (d) Life must have received customary closing certificates and
legal opinions from BB&T and its counsel.
In addition, all representations and warranties of BB&T will be evaluated
as of the date of the Reorganization 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 that specifically relates to an earlier
date), except as otherwise contemplated by the Reorganization Agreement or
consented to in writing by Life. The representations and warranties of BB&T
concerning (a) its capitalization, (b) its and its subsidiaries' organization
and authority to conduct business, (c) its authorization and the binding nature
of the Reorganization Agreement and (d) the absence of any conflict between the
transactions contemplated by the Reorganization Agreement and the BB&T Articles
or BB&T Bylaws must be true and correct (except for inaccuracies that are de
minimis in amount). Moreover, there must not exist inaccuracies in any of the
representations and warranties of BB&T set forth in the Reorganization
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a material adverse effect on BB&T.
The obligations of BB&T to carry out the transactions contemplated by the
Reorganization Agreement are also subject to satisfaction of the following
additional conditions at or before the Effective Time, unless, where
permissible, waived by BB&T: (a) no regulatory approval may have imposed any
condition or requirement that, in the reasonable opinion of the BB&T Board,
would so materially adversely affect the business or economic benefits to BB&T
of the transactions contemplated by the Reorganization Agreement as to render
their consummation inadvisable or unduly burdensome; (b) Life must have
performed in all material respects all obligations and complied in all material
respects with all covenants required by the Reorganization Agreement; (c) BB&T
must have received written agreements from certain affiliates of Life
concerning the shares of BB&T Common Stock to be received by them; and (d) BB&T
must have received customary closing certificates and legal opinions from Life
and its counsel.
In addition, all representations and warranties of Life will be evaluated
as of the date of the Reorganization 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 that specifically relates to an earlier
date), except as otherwise contemplated by the Reorganization Agreement or
consented to in writing by BB&T. The representations and warranties of Life
concerning (a) its capitalization, (b) its and its subsidiaries' organization
and authority to conduct business, (c) its ownership of its subsidiaries, (d)
its authorization and the binding nature of the Reorganization Agreement, (e)
the absence of conflict between the transactions contemplated by the
Reorganization Agreement and the Life Articles or the Life Bylaws, (f) its
forbearance from taking any actions that would negatively affect the
pooling-of-interests or tax-free elements of the Merger or the receipt of
necessary regulatory approvals and (g) actions taken to exempt the Merger from
Virginia anti-takeover laws must be true and correct (except for inaccuracies
that are de minimis in amount). Moreover, there must not exist inaccuracies in
any of the representations and warranties of Life set forth in the
Reorganization Agreement such that the effect of such inaccuracies individually
or in the aggregate has, or is reasonably likely to have, a material adverse
effect on Life and Life's subsidiaries taken as a whole.
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Conduct of Life's and BB&T's Business Prior to the Effective Time
Except with the prior written consent of BB&T, before the Effective Time
Life may not, and must cause each of its subsidiaries not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as conducted prior to the date of
the Reorganization Agreement, 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 $.12 per share of Life Common Stock payable on record dates
and in amounts consistent with past practices (except that any dividend
declared or payable on the shares of Life Common Stock for the quarterly
period during which the Effective Time occurs will, unless otherwise
agreed upon in writing by BB&T and Life, be declared with a record date
prior to the date of the Merger only if the normal record date for payment
of the corresponding quarterly dividend to holders of BB&T Common Stock is
prior to the Effective Time);
(c) issue any shares of its capital stock, except pursuant to Life's 1995
Stock Option Plan or the Option Agreement or as described below under " --
Issuance of Additional Shares of Life Common Stock," or issue, grant or
authorize any rights to purchase any shares of its capital stock or effect
any recapitalization, reclassification, stock dividend, stock split or
like change in capitalization;
(d) amend the Life Articles or the Life Bylaws; impose or permit
imposition of any lien, charge or encumbrance on any share of stock held
by it in any 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;
(e) merge with any other entity or permit any other entity to merge into
it, 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;
(f) 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;
(g) increase the rate of compensation of any of its directors, officers
or employees (excluding increases in compensation resulting from the
vesting of restricted stock awards outstanding as of the date of the
Reorganization Agreement or the exercise of compensatory stock options
then outstanding), or pay or agree to pay any bonus to, or provide any new
employee benefit or incentive to, any of its directors, officers or
employees, except with respect to officers and employees in the ordinary
course of business consistent with past practices;
(h) 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 (except that this provision does not prevent renewal of
any of the foregoing consistent with past practice);
(i) 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,
Life or any subsidiary or any business combination with Life or any
subsidiary other than as contemplated by the Reorganization Agreement; or
authorize any officer, director, agent or affiliate of Life or any
subsidiary to do any of the above; or fail to notify BB&T immediately if
any such inquiries or proposals are received, any such information is
requested or required, or any such negotiations or discussions are sought
to be initiated (except that this commitment will not apply to furnishing
information, negotiations or discussions following an unsolicited offer
if, as a result of such offer, Life is advised in writing by legal counsel
that the failure so to furnish information or negotiate would, more likely
than not, constitute a breach of the fiduciary duties of the Life Board to
its shareholders);
(j) enter into any (i) material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) agreement, indenture or
other instrument not made in the ordinary course of business relating to
the borrowing of money by Life or any subsidiary or guarantee by Life or
any subsidiary of any obligation, (iii) 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 (except that this commitment will
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not apply to the election of directors by shareholders in the normal course
or the reappointment of officers in the normal course); or (iv) contract,
agreement or understanding with a labor union;
(k) change its lending, investment or asset liability management policies
in any material respect, except as may be required by applicable law,
regulation or directives, and except that after approval of the
Reorganization Agreement and the Plan of Merger by its shareholders and
receipt of required regulatory approvals Life will cooperate in good faith
with BB&T to adopt policies, practices and procedures consistent with
those utilized by BB&T, effective on or before the Closing Date;
(l) change its methods of accounting in effect at December 31, 1996,
except as required by changes in generally accepted accounting principles
concurred with by BB&T, which concurrence may not be unreasonably
withheld, or change any of its methods of reporting income and deductions
for federal income tax purposes from those employed in the preparation of
its federal income tax returns for the year ended December 31, 1996,
except as required by changes in law or regulation;
(m) 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, or 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;
(n) take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling of interests or not
to constitute a reorganization under Section 368 of the Code as determined
by BB&T, (ii) result in any inaccuracy of a representation or warranty
that would allow for a termination of the Reorganization Agreement or
(iii) cause any of the conditions precedent to the transactions
contemplated by the Reorganization Agreement to fail to be satisfied; or
(o) agree to do any of the foregoing.
Except with the prior written consent of Life, which consent may not be
arbitrarily or unreasonably withheld, before the Effective Time neither BB&T
nor any subsidiary of BB&T may take any action that would or might be expected
to (a) cause the Merger not to be accounted for as a pooling of interests or
not to constitute a reorganization under Section 368 of the Code; (b) result in
any inaccuracy of a representation or warranty that would allow for termination
of the Reorganization Agreement; (c) cause any of the conditions precedent to
the transactions contemplated by the Reorganization Agreement to fail to be
satisfied; (d) exercise the Option other than in accordance with the terms of
the Option Agreement, or dispose of the shares of Life Common Stock issuable
upon its exercise other than as permitted or contemplated by such terms; or (e)
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.
Waiver; Amendment; Termination; Expenses
Except with respect to any required regulatory approval, BB&T or Life may
at any time (whether before or after approval of the Reorganization Agreement
and the Plan of Merger by the Life shareholders) extend the time for the
performance of any of the obligations or other acts of the other party and may
waive (a) any inaccuracies of the other party in the representations or
warranties contained in the Reorganization Agreement, the Plan of Merger or any
document delivered pursuant thereto, (b) 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 in the Reorganization
Agreement or in the Plan of Merger or (c) the performance by the other party of
any of its obligations set out therein. No such extension or waiver, or
amendment or supplement executed after approval by the Life shareholders of the
Reorganization Agreement and the Plan of Merger, however, may reduce either the
number of shares of BB&T Common Stock into which each share of Life Common
Stock will be converted in the Merger or the payment terms for fractional
interests. Subject to the foregoing limitation, the Reorganization Agreement or
the Plan of Merger may be amended or supplemented at any time in writing by
mutual agreement of BB&T and Life.
In the event of nonfulfillment of any of the conditions to the obligation
of either party to consummate the Merger, such party will consider the
materiality to its shareholders of such nonfulfillment and, if appropriate
under the circumstances, will resolicit shareholder approval of the
Reorganization Agreement and the Plan of Merger and in connection therewith
provide appropriate information concerning the nonfulfillment of such
condition.
The Reorganization Agreement may be terminated, and the Merger may be
abandoned:
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(a) at any time before the Effective Time, by the mutual consent in
writing of BB&T and Life;
(b) at any time before 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 the Reorganization Agreement or (ii) in the event of an
inaccuracy of any representation or warranty of the other party contained
in the Reorganization Agreement that would provide the nonbreaching party
the ability to refuse to consummate the Merger under the applicable
standard set forth in the Reorganization Agreement (See " -- Conditions to
the Merger"); 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 inaccuracy or
the Effective Time;
(c) at any time before the Effective Time, by either party in writing, if
any of the conditions precedent to the obligations of the other party to
consummate the transactions contemplated in the Reorganization Agreement
cannot be satisfied or fulfilled before the Closing Date, and the party
giving the notice is not in breach of any of its representations,
warranties, covenants or undertakings;
(d) at any time, by either party in writing, if any of the applications
for prior regulatory approval are denied, and the time period for appeals
and requests for reconsideration has run;
(e) at any time, by either party in writing, if the shareholders of Life
do not approve the Reorganization Agreement and the Plan of Merger;
(f) at any time following July 31, 1998, by either party 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; or
(g) by Life, pursuant to the provisions of the Reorganization Agreement
described above under " -- Exchange Ratio."
If the Reorganization Agreement and the Plan of Merger are terminated
pursuant to any of the provisions described above, both the Reorganization
Agreement and the Plan of Merger will become void and have no effect, except
that (a) provisions in the Reorganization Agreement relating to confidentiality
and expenses will survive any such termination and (b) a termination for an
uncured breach of a covenant or agreement or inaccuracy in a representation or
warranty will not relieve the breaching party from liability for that breach or
inaccuracy. The Option Agreement is governed by its own terms. See " -- The
Option Agreement."
Each party to the Reorganization Agreement will bear all expenses incurred
by it in connection with the Reorganization Agreement and the transactions
contemplated thereby, except that printing expenses and Commission registration
fees will be borne 50% by BB&T and 50% by Life.
Interests of Certain Persons in the Merger
Certain members of Life's management, including all of its directors, have
certain interests in the Merger that are in addition to their interests as
shareholders of Life generally.
Employment Agreements
In connection with the Merger, BB&T-VA will enter into an employment
agreement with Mr. Cunningham providing for employment until June 30, 2003, a
five-year employment agreement with Mr. Rich and a three-year employment
agreement with each of Nelson R. Arnold, T. Frank Clements, Ralph T. Dempsey,
Jr., Emory J. Dunning, Jr. and Edward M. Locke (referred to herein individually
as an "Executive" and collectively as the "Executives"). The employment
agreements will provide for the employment of Mr. Cunningham as Chairman of the
Board of Directors, Mr. Rich as Senior Vice President, and each of the
remaining Executives as a Vice President, of BB&T-VA.
The employment agreement for each of the Executives provides that the
Executive will receive a base salary at least equal to the base salary received
by that Executive from LSB as of January 1, 1998, with an annual increase each
year based on BB&T-VA's performance and the Executive's performance, but in no
event less than the average percentage increase provided to similarly situated
officers of BB&T-VA. Each Executive will be entitled to participate in any
bonus or incentive plan, whether it provides for awards in cash or securities,
made available to officers of BB&T-VA similarly situated to the Executive, or
such other similar plans for which the Executive may become eligible and
designated a participant. Each Executive also will be entitled to receive, on
the same basis as other officers of BB&T-VA, employee pension and welfare
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benefits and group employee benefits such as sick leave, vacation, group
disability and health, dental, life and accident insurance, stock option plan
and similar indirect compensation that BB&T-VA may from time to time extend to
its similarly situated officers.
In addition to the foregoing, BB&T-VA will pay each Executive a certain
amount each year in lieu of providing the use of an automobile and certain
other fringe benefits. The amount to be paid to Mr. Cunningham is $36,510 per
year; to Mr. Rich, $25,952 per year; and to the other Executives, from $0 to
$28,936 (in each case prorated for any partial year). These payments will not
be deemed to constitute salary for purposes of calculating the base salaries to
be paid under the employment agreements, nor will they be deemed to be
compensation for purposes of determining accruals, contributions, grants or
benefits under any employee benefit plan or program.
Each Executive's employment agreement provides that, in the event BB&T-VA
terminates his employment other than by reason of disability or for cause, the
Executive will, if he complies with certain noncompetition provisions, be
entitled to receive an annual salary for the remainder of what would otherwise
have been the term of the agreement equal to the highest amount of cash
compensation (including bonuses) received during any of the preceding three
calendar years ("Termination Compensation"). In addition, each Executive would
continue to receive health insurance coverage from BB&T-VA on the same terms as
were in effect before the termination, either under BB&T-VA's plans or
comparable coverage, during the time payments of Termination Compensation are
made.
Mr. Cunningham's employment agreement provides that if his employment were
to terminate by reason of death or disability, BB&T-VA would continue to pay
his base salary as in effect on the date of death or disability for the
remainder of the term of the agreement (offset, in the case of disability, for
any benefits payable under any BB&T-VA disability benefit plan). The employment
agreements with the other Executives provide that upon termination by reason of
disability, the Executive would, during the first six months of the period of
disability, continue to earn all compensation (including bonuses and incentive
compensation) to which he would have been entitled had he not been disabled,
inclusive of any compensation received pursuant to any applicable disability
insurance plan of BB&T-VA or BB&T. Thereafter, the Executive would receive the
compensation to which he was entitled under any applicable disability insurance
plan of BB&T-VA or BB&T. The employment agreements for these Executives provide
in each case that the agreement would terminate upon the Executive's death.
The employment agreement with Mr. Rich provides that if he were to elect
to resign from employment after the one-year anniversary of the date of the
agreement other than for "Good Reason" or on account of disability, he would be
entitled to receive a lump sum amount equal to his annual Termination
Compensation times the lesser of (i) the number of years until the end of the
term of the agreement, with partial years rounded to two decimal places, or
(ii) 2.99. Each of the employment agreements with the other Executives, other
than Mr. Cunningham, provides that if the Executive were to elect to resign
from employment for "Good Reason" (as defined below, except that the reference
to an involuntary relocation would apply whether or not there has been a Change
of Control) after the one-year anniversary of the date of the agreement, the
Executive would be entitled to receive a lump sum amount equal to his annual
Termination Compensation times the lesser of (i) the number of years until the
end of the term of the agreement, with partial years rounded to two decimal
places, or (ii) 2.00. If any of the Executives other than Mr. Cunningham or Mr.
Rich were to elect to resign from employment after the one-year anniversary of
the date of the agreement other than for "Good Reason" or on account of
disability, he would be entitled to receive a lump sum amount equal to his
annual Termination Compensation times the lesser of (i) the number of years
until the end of the Term, with partial years rounded to two decimal places, or
(ii) 1.00.
Each of the employment agreements provides that, in the event of a Change
of Control of BB&T-VA or BB&T, the Executive may voluntarily terminate
employment with BB&T-VA up until twelve months after the Change of Control for
"Good Reason" and (a) be entitled to receive in a lump sum (i) any compensation
due but not yet paid through the date of termination and (ii) in lieu of any
further salary payments from the date of termination to the end of the term of
the agreement, an amount equal to the Termination Compensation times 2.99, and
(b) continue to participate in the same group hospitalization plan, health care
plan, dental care plan, life or other insurance or death benefit plan, and any
other present or future similar group employee benefit plan or program for
which officers of BB&T-VA generally are eligible, or comparable plans or
coverage, for a period of three years following termination of employment by
the Executive, on the same terms as were in effect either (A) at the date of
termination, or (B) if such plans and programs in effect before the Change of
Control of BB&T-VA or BB&T were, considered together as a whole, materially
more generous to the officers of BB&T-VA, then at the date of the Change of
Control.
"Good Reason" means the occurrence of any of the following events without
the Executive's express written consent: (a) the assignment to the Executive of
duties inconsistent with the position and status of the certain positions with
BB&T-VA
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held before the Change of Control; (b) a reduction by BB&T-VA in the
Executive's pay grade or base salary as then in effect, or the exclusion of the
Executive from participation in BB&T-VA's benefit plans in which he previously
participated, or BB&T-VA's failure to increase (within twelve months of the
Executive's last increase in base salary) the Executive's base salary in an
amount at least equal, on a percentage basis, to the average percentage
increase in base salary for all executives entitled to participate in BB&T-VA's
executive incentive plans for which the Executive was eligible in the preceding
twelve months; (c) an involuntary relocation of the Executive more than 100
miles from the location where the Executive worked immediately before the
Change in Control or the breach by BB&T-VA of any material provision of this
Agreement; or (d) any purported termination of the employment of the Executive
by BB&T-VA that is not effected in accordance with the employment agreement.
A "Change of Control" would be deemed to occur if (a) any person or group
of persons (as defined in the Exchange Act) together with its affiliates,
excluding employee benefit plans of BB&T-VA or BB&T, is or becomes the
beneficial owner of securities of BB&T-VA or BB&T representing 20% or more of
the combined voting power of BB&T-VA's or BB&T's then outstanding securities;
(b) as a result of a tender offer or exchange offer for the purchase of
securities of BB&T-VA or BB&T (other than an offer by BB&T for its own
securities), or as a result of a proxy contest, merger, consolidation or sale
of assets, or as a result of any combination of the foregoing, individuals who
at the beginning of any two-year period constitute the BB&T Board, plus new
directors whose election or nomination for election by BB&T's shareholders is
approved by a vote of at least two-thirds of the directors still in office who
were directors at the beginning of the two-year period, cease for any reason
during the two-year period to constitute at least two-thirds of the members of
the BB&T Board; (c) the shareholders of BB&T approve a merger or consolidation
of BB&T with any other corporation or entity regardless of which entity is the
survivor, other than a merger or consolidation that would result in the voting
securities of BB&T outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 60% of the combined voting power
of the voting securities of BB&T or the other surviving entity outstanding
immediately after the merger or consolidation; (d) the shareholders of BB&T
approve a plan of complete liquidation or winding-up of BB&T or an agreement
for the sale or disposition by BB&T of all or substantially all of BB&T's
assets; or (e) any other event occurs that BB&T's Board of Directors determines
should constitute a Change of Control.
The Executives' employment agreements with BB&T will supersede any of
their existing employment agreements and change of control arrangements with
Life and LSB.
Board of Directors of BB&T-VA
The Reorganization Agreement provides that Mr. Cunningham will be elected
Chairman of the Board of Directors of BB&T-VA and Mr. Rich, Donald I. Fentress,
William J. Jonak, Jr. and Frederick V. Martin will be elected as members of the
Board of Directors of BB&T-VA as soon as practicable following the Effective
Time. The remainder of the Life Board serving immediately preceding the
Effective Time will be offered seats on BB&T-VA's Advisory Board for the area
including Norfolk, Virginia, as of the Effective Time. For eighteen months
following the Effective Time, all of these directors will receive, as
compensation for service on the BB&T-VA boards, directors' fees (annual
retainer and attendance fees) equal in amount each year (prorated for any
partial year) to the annual retainer and schedule of attendance fees for
directors of Life in effect on July 1, 1997. Thereafter, these directors will
receive directors' fees in accordance with the standard schedule of fees for
service on the applicable boards. The Reorganization Agreement further provides
that for two years after the Effective Time, none of these directors will be
prohibited from serving on either of the BB&T-VA boards on the grounds that he
has attained the maximum age for service on the boards (currently age 70).
Indemnification of Directors and Officers
The Reorganization Agreement provides that BB&T or one of its subsidiaries
will 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 Life for acts or omissions occurring before the
Effective Time. This insurance will provide at least the same coverage and
amounts as contained in Life's policy on the date of the Reorganization
Agreement, except that in no event may the annual premium on this policy exceed
150% of the annual premium payments on Life's policy then in effect (the
"Maximum Amount"). If the amount of the premiums necessary to maintain or
procure this insurance coverage exceeds the Maximum Amount, BB&T will 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. In addition, BB&T has agreed in the Reorganization Agreement to
indemnify all individuals who are or have been officers, directors or employees
of Life before the Effective Time from any acts or omissions in these
capacities before the Effective Time, to the extent indemnification is
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provided pursuant to the Life Articles and is permitted under the VSCA. See
"COMPARISON OF SHAREHOLDERS' RIGHTS --Exculpation and Indemnification -- Life."
Regulatory Considerations
Bank holding companies (such as BB&T and BB&T Financial-VA), savings and
loan holding companies (such as Life) and their respective depository
institution subsidiaries (including BB&T-VA and LSB, respectively) are highly
regulated institutions, with numerous federal and state laws and regulations
governing their activities. Among these laws and regulations are requirements
of prior approval by applicable government regulatory authorities in connection
with acquisition and merger transactions such as the Merger, as summarized
below. In addition, these institutions are subject to ongoing supervision,
regulation, and periodic examination by various federal and state financial
institution regulatory agencies. Detailed discussions of such ongoing
regulatory oversight and the laws and regulations under which it is carried out
can be found in the Annual Reports on Forms 10-K of each of BB&T and Life
incorporated by reference herein. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." Those summaries are
qualified in their entirety by the actual language of the laws and regulations,
which are subject to change based on possible future legislation and action by
regulatory agencies.
The Merger and the LSB Bank Merger are subject to certain regulatory
approvals, as set forth below. To the extent that the following information
describes statutes and regulations, it is qualified in its entirety by
reference to those particular statutes and regulations.
The Merger
The Merger is subject to approval by the BFI under Section 6.1-194.97 of
the Code of Virginia, which permits an out-of-state holding company, such as
BB&T, to acquire directly or indirectly more than twenty five percent (25%) of
the voting shares of a Virginia savings institution holding company, such as
Life, or a savings institution located in Virginia, such as LSB, if the BFI
approves the transaction. Approval of such an application is conditioned upon,
among other things, the BFI's determination that the laws of the state in which
the out-of-state holding company is located, in this case North Carolina, would
permit Virginia savings institution holding companies to acquire savings
institutions and savings institution holding companies in that state. North
Carolina law would permit a Virginia savings and loan holding company to
acquire a savings institution and savings and loan holding company located in
North Carolina, subject to certain conditions. The BFI also must determine
whether: (a) the proposed acquisition would be detrimental to the safety and
soundness of the companies involved; (b) the applicant, its directors and
officers, and any proposed new directors and officers are qualified by
character, experience and financial responsibility to control and operate a
Virginia savings institution; (c) the proposed acquisition would be prejudicial
to the interests of the depositors, creditors, beneficiaries of fiduciary
accounts or shareholders of the companies involved; and (d) the acquisition is
in the public interest.
BB&T also is required to provide notice of the Merger to the Federal
Reserve under the Bank Holding Company Act and the Federal Reserve's Regulation
Y. Under the Bank Holding Company Act, a bank holding company, such as BB&T,
may not acquire direct or indirect ownership or control of a company engaged in
nonbanking activities unless the company is engaged in an activity that the
Federal Reserve has determined to be so closely related to banking, or managing
or controlling banks, as to be a proper incident thereto. The Federal Reserve
has determined by regulation that owning a savings institution is closely
related to banking. However, the Federal Reserve is required by the Bank
Holding Company Act to review the Merger to determine whether it reasonably can
be expected to produce benefits to the public (such as greater convenience,
increased competition or gains in efficiency) that outweigh possible adverse
effects (such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices). This
consideration includes an evaluation by the Federal Reserve of the financial
and managerial resources of BB&T and its subsidiaries, and Life and its
subsidiaries, and the effect of the proposed transaction on those resources, as
well as whether the Merger would result in a monopoly or otherwise would
substantially lessen competition. Recently enacted legislation requires the
Federal Reserve to forward a copy of the notice required to be filed by BB&T to
the OTS for its review and comment. However, because such legislation exempts
bank holding companies that acquire savings institutions from the provisions of
the federal law relating to savings and loan holding companies, BB&T is not
required to file a separate application with the OTS for approval of the
Merger.
The LSB Bank Merger
Although not required by the terms of the Reorganization Agreement or the
Plan of Merger, BB&T expects to effect the LSB Bank Merger during 1998. The LSB
Bank Merger is subject to approval of the FDIC under the Bank Merger Act.
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In granting its approval under the Bank Merger Act, the FDIC must consider the
financial and managerial resources and future prospects of the existing and
proposed institutions and the convenience and needs of the communities to be
served. Further, the FDIC may not approve the LSB Bank Merger if it would
result in a monopoly, if it would be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, if the effect of the LSB Bank Merger in any
section of the country may be substantially to lessen competition or to tend to
create a monopoly or if it would be in any other manner in restraint of trade,
unless the FDIC finds that the anticompetitive effects of the LSB Bank Merger
are clearly outweighed in the public interest by the probable effect of such
merger in meeting the convenience and needs of the communities to be served. In
addition, the FDIC must take into account the record of performance of the
existing and proposed institution under the Community Reinvestment Act in
meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by such institution. Applicable
regulations also require publication of notice of the application for approval
of the LSB Bank Merger and an opportunity for the public to comment on the
application in writing and to request a hearing.
The BFI must approve the LSB Bank Merger under Section 6.1-194.40 of the
Virginia Code, which authorizes the merger between a federal savings bank and a
Virginia chartered bank, when, among other things, the BFI determines that all
applicable laws governing such mergers are complied with and the public
interest will be served. In addition, notice of the LSB Bank Merger must be
provided to the OTS under its regulations.
The Bank Merger Act requires that any bank merger, including the LSB Bank
Merger, may not be consummated before the thirtieth day after approval by the
FDIC, during which time the U.S. Department of Justice (the "DOJ") may
challenge the LSB Bank Merger on antitrust grounds. If the FDIC has not
received any adverse comments from the DOJ concerning the competitive effects
of the proposed transaction, this time period may be shortened to no less than
fifteen days after the date of approval.
All of the required applications and notices for the Merger have been
submitted to the appropriate regulatory agencies, and BB&T anticipates that the
regulatory approvals described herein will be obtained in time to allow
consummation of the Merger by March 1, 1998. However, there can be no assurance
that other regulatory approvals will be obtained so as to permit consummation
of the Merger or that such approvals will not be conditioned upon matters that
would cause BB&T to abandon the Merger. There likewise is no assurance that the
DOJ or a state Attorney General will not challenge the Merger or the LSB Bank
Merger, or, if such a challenge is made, as to the results thereof.
BB&T and Life are not aware of any other governmental approvals or actions
that are required for consummation of the Merger or the LSB Bank Merger, except
as described above. Should any other approval or action be required, it is
contemplated presently that such approval or action would be sought. There can
be no assurance that any such approval or action, if needed, could be obtained,
would not delay consummation of the Merger or would not be conditioned in a
manner that would cause BB&T to abandon the Merger.
Certain Federal Income Tax Consequences of the Merger
The following is a summary description of certain anticipated federal
income tax consequences of the Merger to the shareholders of Life and to BB&T
and Life. This summary is not intended to be a complete description of all of
the federal income tax consequences of the Merger. No information is provided
with respect to the tax consequences of the Merger under any other tax laws,
including applicable state, local and foreign tax laws. In addition, the
following discussion may not be applicable with respect to certain specific
categories of shareholders, including but not limited to persons who are
corporations, trusts, dealers in securities, financial institutions, insurance
companies, or tax exempt organizations; persons who are not United States
citizens or resident aliens or domestic entities (partnerships or trusts);
persons who are subject to alternative minimum tax (to the extent that tax
affects the tax consequences of the Merger) or are subject to the "golden
parachute" provisions of the Code (to the extent that tax affects the tax
consequences of the Merger); persons who acquired Life Common Stock pursuant to
employee stock options or otherwise as compensation if such shares are subject
to any restriction related to employment; persons who do not hold their shares
as capital assets; or persons who hold their shares as part of a "straddle" or
"conversion transaction." The federal income tax laws are complex, and a
shareholder's individual circumstances may affect the tax consequences to the
shareholder. Consequently, each Life shareholder is urged to consult his or her
own tax advisor regarding the tax consequences of the Merger. No ruling has
been or will be requested from the Internal Revenue Service (the "IRS") with
respect to the tax effects of the Merger.
In the opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to BB&T:
(a) the Merger will constitute a reorganization under Section 368 of the Code;
(b) no gain or loss will be recognized by BB&T or Life by reason of the Merger;
(c) the shareholders of Life will recognize no gain or loss for federal income
tax purposes to the extent BB&T Common
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Stock is received in the Merger in exchange for Life Common Stock; (d) a
shareholder of Life who receives cash in lieu of a fractional share of BB&T
Common Stock will recognize gain or loss as if the shareholder received the
fractional share and it was then redeemed for cash in an amount equal to the
amount paid by BB&T in respect of such fractional share; (e) the tax basis in
the BB&T Common Stock received by a shareholder (including any fractional share
interest deemed received) will be the same as the tax basis in the Life Common
Stock surrendered in exchange therefor; and (f) the holding period for BB&T
Common Stock received (including any fractional share interest deemed received)
in exchange for shares of Life Common Stock will include the period during
which the shareholder held the shares of Life Common Stock surrendered in the
exchange, provided that the Life Common Stock was held as a capital asset at
the Effective Time.
The consummation of the Merger is conditioned upon the receipt by BB&T and
Life of the legal opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to
BB&T, dated as of the Closing Date to the effect of items (a) and (c) as
described above.
Accounting Treatment
It is anticipated that the Merger will be accounted for as a
pooling-of-interests transaction under generally accepted accounting
principles. Under such accounting method, holders of Life Common Stock will be
deemed to have combined their existing voting common stock interest with that
of holders of BB&T Common Stock by exchanging their shares for shares of BB&T
Common Stock. Accordingly, the book value of the assets, liabilities and
shareholders' equity of Life, as reported on its consolidated balance sheet,
will be carried over to the consolidated balance sheet of BB&T and no goodwill
will be created. BB&T will be able to include in its consolidated income the
consolidated income of Life for the entire fiscal year in which the Merger
occurs; however, certain expenses incurred to effect the Merger must be treated
by BB&T as current charges against income rather than adjustments to its
balance sheet. The unaudited proforma financial information contained in this
Proxy Statement/Prospectus has been prepared using the pooling-of-interests
method of accounting.
BB&T's and Life's respective obligations to consummate the Merger are
conditioned upon the receipt by BB&T of letters from Arthur Andersen LLP,
BB&T's independent certified public accountants, dated as of the date of filing
of the Registration Statement with the Commission and as of the Effective Time,
to the effect that the Merger qualifies for pooling-of-interests accounting
treatment. See " -- Issuance of Additional Shares of Life Common Stock."
Issuance of Additional Shares of Life Common Stock
Because of certain repurchases by Life of Life Common Stock, Life intends
to issue and sell up to 200,000 additional shares of Life Common Stock prior to
the Effective Time in order to facilitate the treatment of the Merger as a
pooling of interests. See " -- Accounting Treatment." The additional shares of
Life Common Stock will be issued shortly prior to the Effective Time, and will
be treated for all purposes as issued and outstanding at the Effective Time.
The Option Agreement
General
As a condition to BB&T entering into the Reorganization Agreement, Life
(as issuer) entered into the Option Agreement with BB&T (as grantee), pursuant
to which Life granted the Option to BB&T to purchase from Life up to 1,959,668
shares of Life Common Stock (subject to adjustment in certain circumstances,
but in no event to exceed 19.9% of the shares of Life Common Stock outstanding
upon any exercise of the Option) at a price of $24.75 per share (subject to
adjustment under certain circumstances, as described below) (the "Purchase
Price"). The purchase of any shares of Life Common Stock pursuant to the Option
is subject to compliance with applicable law, including the receipt of
necessary approvals under the Bank Holding Company Act. See " -- Regulatory
Considerations."
The Option Agreement is intended to increase the likelihood that the
Merger will be consummated in accordance with the terms set forth in the
Reorganization Agreement. Consequently, certain aspects of the Option Agreement
may have the effect of discouraging persons who might now, or before the
Effective Time, be interested in acquiring all of or a significant interest in
Life from considering or proposing such an acquisition, even if they were
prepared to offer to pay consideration to shareholders of Life with a higher
current market price than the shares of BB&T Common Stock to be received for
each share of Life Common Stock pursuant to the Reorganization Agreement.
The Option Agreement is filed as an exhibit to the Registration Statement,
and reference is made thereto for the complete terms of the Option Agreement
and the Option. The following discussion is qualified in its entirety by
reference to the Option Agreement. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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Exercisability
If BB&T is not in material breach of the Option Agreement or its covenants
and agreements contained in the Reorganization Agreement and if no injunction
or other court order against delivery of the shares covered by the Option is in
effect, BB&T may generally exercise the Option, in whole or in part, at any
time and from time to time, following the happening of either of the following
events (each a "Purchase Event"):
(a) without BB&T's prior written consent, Life authorizing, recommending,
publicly proposing (or publicly announcing an intention to authorize,
recommend or propose) or entering into an agreement with any third party
to effect any of the following (each an "Acquisition Transaction"): (i) a
merger, consolidation or similar transaction involving Life or any of its
significant subsidiaries, (ii) the sale, lease, exchange or other
disposition of 15% or more of the consolidated assets or deposits of Life
and its subsidiaries or (iii) the issuance, sale or other disposition of
securities representing 15% or more of the voting power of Life or any of
its significant subsidiaries; or
(b) any third party or group of third parties acquiring or having the
right to acquire beneficial ownership of securities representing 15% or
more of the voting power of Life or any of its significant subsidiaries.
The obligation of Life to issue shares of Life Common Stock upon exercise of
the Option will be deferred (but will not terminate) (i) until the receipt of
all required governmental or regulatory approvals or consents, or until the
expiration or termination of any waiting period required by law, or (ii) so
long as any injunction or other order, decree or ruling issued by any federal
or state court of competent jurisdiction is in effect that prohibits the sale
or delivery of the shares.
Termination
The Option will terminate upon the earliest to occur of the following
events: (a) the Effective Time; (b) the termination of the Reorganization
Agreement prior to the occurrence of a Purchase Event or Preliminary Purchase
Event (as defined below) (other than a termination by BB&T based on either a
material breach by Life of a covenant or agreement in the Reorganization
Agreement or an inaccuracy in Life's representations or warranties in the
Reorganization Agreement of a nature entitling BB&T to terminate (a "Default
Termination"); (c) 12 months after a Default Termination; (d) 12 months after
termination of the Reorganization Agreement (other than a Default Termination)
following the occurrence of a Purchase Event or a Preliminary Purchase Event;
or (e) 12 months after a termination of the Reorganization Agreement based on
the failure of the shareholders of Life to approve the Reorganization Agreement
and the Plan of Merger.
A "Preliminary Purchase Event" is defined as either of the following:
(a) the commencement by any third party of a tender or exchange offer
such that it would thereafter own 15% or more of the outstanding shares of
Life Common Stock or the filing of a registration statement with respect
to such an offer, or
(b) the failure of the shareholders of Life to approve the Reorganization
Agreement, the failure of the Special Meeting to have been held, the
cancellation of the Special Meeting prior to the termination of the
Reorganization Agreement or the Life Board having withdrawn or modified in
any manner adverse to BB&T its recommendations with respect to the
Reorganization Agreement, in any case after a third party: (i) proposes to
engage in an Acquisition Transaction, (ii) commences a tender offer or
files a registration statement under the Securities Act with respect to an
exchange offer such that it would thereafter own 15% or more of the
outstanding shares of Life Common Stock or (iii) files an application or
notice under federal or state statutes relating to the regulation of
financial institutions or their holding companies to engage in an
Acquisition Transaction.
To the knowledge of BB&T and Life, no Purchase Event or Preliminary
Purchase Event has occurred as of the date of this Proxy Statement/Prospectus.
Adjustments
The Option Agreement provides for certain adjustments in the Option in the
event of any change in Life Common Stock by reason of a stock dividend, stock
split, split-up, recapitalization, combination, exchange of shares or similar
transaction or in the event of the issuance of any additional shares of Life
Common Stock before termination of the Option.
Repurchase Rights
At the request of the holder of the Option any time during the 12 months
after the first occurrence of a Repurchase Event (as defined below), Life must,
if the Option has not terminated, repurchase from the holder (a) the Option and
(b) all
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shares of Life Common Stock purchased by the holder pursuant to the Option with
respect to which the holder then has beneficial ownership. The repurchase will
be at an aggregate price equal to the sum of:
(a) the aggregate Purchase Price paid by the holder for any shares of
Life Common Stock acquired pursuant to the Option with respect to which
the holder then has beneficial ownership, plus
(b) the excess, if any, of (i) the Applicable Price (as defined in the
Option Agreement) for each share of Life Common Stock over the Purchase
Price, multiplied by (ii) the number of shares of Life Common Stock with
respect to which the Option has not been exercised, plus
(c) the excess, if any, of (i) the Applicable Price over the Purchase
Price paid (or, in the case of shares of Life Common Stock covered by the
Option with respect to which the Option has been exercised but the closing
date for the purchase has not occurred, payable) by the holder for each
share of Life Common Stock with respect to which the Option has been
exercised and with respect to which the holder then has beneficial
ownership, multiplied by (ii) the number of such shares.
A "Repurchase Event" occurs if: (a) any third party acquires actual
ownership or control of, or any "group" (as such term is defined under the
Exchange Act) is formed that has acquired actual ownership or control of, 50%
or more of the then outstanding shares of Life Common Stock, or (b) any of the
merger or other business combination transactions described in subsections (a)
through (d) in the paragraph below describing substitute options is
consummated.
Substitute Options
If, before the termination of the Option Agreement, Life enters into an
agreement:
(a) to consolidate with or merge into any third party and will not be the
continuing or surviving corporation of the consolidation or merger;
(b) to permit any third party to merge into Life with Life as the
continuing or surviving corporation, but, in connection therewith, the
then outstanding shares of Life Common Stock are changed into or exchanged
for stock or other securities of Life or any other person or cash or any
other property, or the outstanding shares of Life Common Stock after the
merger represent less than 50% of the outstanding shares and share
equivalents of the merged company;
(c) to permit any third party to acquire all of the outstanding shares of
Life Common Stock pursuant to a statutory share exchange; or
(d) to sell or otherwise transfer all or substantially all of its assets
or deposits to any third party,
then the agreement must provide that the Option will be converted or exchanged
for an option (a "Substitute Option") to purchase shares of common stock of, at
the holder's option, either (x) the continuing or surviving corporation of a
merger or consolidation or the transferee of all or substantially all of Life
assets or (y) any person controlling the continuing or surviving corporation or
transferee. The number of shares subject to the Substitute Option and the
exercise price per share will be determined in accordance with a formula in the
Option Agreement. To the extent possible, the Substitute Option will contain
terms and conditions that are the same as those in the Option Agreement.
Registration Rights
The Option Agreement grants to BB&T and any permitted transferee of the
Option certain rights to require Life to prepare and file a registration
statement under the Securities Act if registration is necessary in order to
permit the sale or other disposition of any or all shares of Life Common Stock
or other securities that have been acquired by or are issuable upon exercise of
the Option.
Effect on Employees, Employee Benefit Plans and Stock Options
Employees
In the Reorganization Agreement, BB&T has agreed to use its reasonable
best efforts to inform the employees of Life and its subsidiaries of the
likelihood of having continued employment with BB&T or one of its subsidiaries
following the Effective Time and, where appropriate, to use its reasonable best
efforts to interview employees of Life to determine if there are mutually
beneficial employment opportunities available at BB&T or one of its
subsidiaries. Each employee of Life or a Life Subsidiary who becomes an
employee of BB&T or one of its subsidiaries and is terminated after the
Effective Time (excluding any employee who has an existing employment or
special termination agreement) may be entitled to severance
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pay, in accordance with the general severance policy maintained by BB&T. Such
an employee's service with Life will be treated as service with BB&T for
purposes of determining the amount of severance pay, if any, under BB&T's
severance policy.
Each employee of Life at the Effective Time who becomes an employee of
BB&T or one of its subsidiaries immediately after the Effective Time will be
eligible to participate in the group hospitalization, medical, dental, life,
disability and other welfare benefit plans and programs available to employees
of BB&T or its subsidiary, subject to the terms of the plans and programs.
Service with Life will be deemed to be service with BB&T or its subsidiary for
the purpose of determining eligibility to participate in these welfare plans
and programs.
401(k) Plan
BB&T will cause the 401(k) plan of Life to be merged with the 401(k) plan
maintained by BB&T and its subsidiaries, and the account balances of former
employees of Life or its subsidiaries who are participants in the Life plan
will be transferred to accounts under the BB&T 401(k) plan. Following the
merger and transfer, these accounts will be governed and controlled by the
terms of the BB&T 401(k) plan as in effect from time to time (and subject to
BB&T's right to terminate that plan). For purposes of administering the 401(k)
plan and any other pension benefit plan of BB&T, service with Life and its
subsidiaries by each such employee will be deemed to be service with BB&T or
its subsidiaries for participation and vesting purposes only.
Employee Stock Ownership Plan
Each participant in the Life ESOP not fully vested will become fully
vested in his or her Life ESOP account as of the Effective Time. Life and BB&T
have agreed to cooperate to amend the Life ESOP and take other action to
provide that the Life ESOP will terminate upon the Effective Time. Before the
Effective Time, Life or one of its subsidiaries will make contributions to the
Life ESOP in accordance with the its provisions consistent with past practice,
and the existing Life ESOP indebtedness ("Life ESOP Indebtedness") will be paid
down as required by the terms of the Life ESOP. Any Life ESOP Indebtedness
remaining as of the Effective Time will be repaid from the Trust associated
with the Life ESOP through application or sale of the BB&T Common Stock
received by the Life ESOP, except that any related sale or distribution of
shares by (a) the Life ESOP will be effected in accordance with the
requirements of federal and any applicable state securities laws and
regulations and (b) the Life ESOP and any participant will be effected in such
a manner (and with such safeguards as may be necessary or appropriate) so as
not to jeopardize the intended pooling-of-interests accounting treatment of the
Merger. Upon the repayment of the Life ESOP Indebtedness, the remaining funds
in the Life ESOP suspense account will be allocated (to the extent permitted
applicable laws and regulations) to Life ESOP participants (as determined under
the terms of the Life ESOP). Life and BB&T have agreed that, subject to the
conditions described in the Reorganization Agreement, as soon as practicable
after the Effective Time and repayment of the Life ESOP Indebtedness,
participants in the Life ESOP will be entitled at their election to have the
amounts in their Life ESOP accounts either distributed to them in a lump sum or
rolled over to another tax-qualified plan (including the BB&T 401(k) Savings
Plan to the extent permitted by that plan) or individual retirement account.
The actions relating to termination of the Life ESOP will be adopted
conditional upon the consummation of the Merger and upon receiving a favorable
determination letter from the IRS with regard to the continued qualification of
the Life ESOP after any required amendments. Life and BB&T will cooperate in
submitting appropriate requests for any determination letter to the IRS and
will use their best efforts to seek the issuance of the letter as soon as
practicable. Life and BB&T will adopt additional amendments to the Life ESOP as
may be reasonably required by the IRS as a condition to granting the
determination letter, provided that the amendments do not (a) substantially
change the terms outlined in the Reorganization Agreement, (b) have a material
adverse effect on Life and its subsidiaries taken as a whole or (c) result in
an additional material liability to BB&T.
After the Effective Time, BB&T will maintain the Life ESOP for the
exclusive benefit of employees and other persons who were participants or
beneficiaries prior to the Effective Time, and will proceed with termination of
the Life ESOP through distribution of its assets in accordance with its terms
subject to the amendments described in the Reorganization Agreement and as
otherwise may be required to comply with applicable law or to obtain a
favorable determination from the IRS as to the continuing qualified status of
the Life ESOP. No termination distributions from the Life ESOP will occur after
the Effective Time, however, until a favorable determination letter has been
received from the IRS.
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Recognition and Retention Plan
Life and BB&T have agreed that the Merger will constitute a "Change in
Control" as defined in Life's Recognition and Retention Plan (the "RRP"). At
the Effective Time, each participant in the RRP will become fully vested in all
shares of Life Common Stock previously granted or awarded to him or her under
the RRP, and these shares will be converted into shares of BB&T Common Stock.
Life and BB&T will cooperate to amend the RRP and take other action to provide
that the RRP will terminate upon the Effective Time. As soon as practicable
after the Effective Time, and subject to any applicable federal or state
securities laws, all shares of Life Common Stock previously granted or awarded
to participants in the RRP (but not yet distributed, and as converted to shares
of BB&T Common Stock pursuant to the Merger) will be distributed to the
participants. Any shares of Life Common Stock outstanding under the RRP's
related trust, but not subject to a grant or award, will be converted into BB&T
Common Stock as of the Effective Time and will revert to BB&T.
Stock Options
At the Effective Time, each stock option ("Stock Option") granted under
Life's 1995 Stock Option Plan (the "Life Option Plan") then outstanding (and
that by its terms does not lapse on or before the Effective Time), whether or
not then exercisable, will be converted automatically into and become an option
under the BB&T 1995 Omnibus Stock Incentive Plan (the "BB&T Option Plan"), and
will be governed by the terms and conditions of the BB&T Option Plan, except
that in no event will the vesting, exercise and duration provisions of any
Stock Option following conversion be less favorable to the optionee than
provided under the individual stock option agreements as in effect under the
Stock Option Plan immediately before the Effective Time. In making this
conversion, (a) the number of shares of BB&T Common Stock subject to each Stock
Option will be the number of whole shares of BB&T (omitting any fractional
share) determined by multiplying the number of shares of Life Common Stock
subject to such Stock Option immediately before the Effective Time by the
Exchange Ratio, (b) the per share exercise price under each Stock Option will
be adjusted by dividing the per share exercise price under the Stock Option by
the Exchange Ratio and rounding up to the nearest cent, and (c) no restrictions
on transfers will be placed on shares of BB&T Common Stock received through the
exercise of the Stock Option except to the extent such restrictions would have
been placed on such shares under the Life Option Plan or are required by the
securities laws. In addition, each Stock Option that is an "incentive stock
option" will be adjusted as required by the Code so as to continue as an
incentive stock option under the Code, and so as not to constitute a
modification, extension, or renewal of the Stock Option within the meaning of
the Code.
As soon as practicable following the Effective Time, BB&T will deliver to
the participants receiving converted options under the BB&T Option Plan an
appropriate notice setting forth such participant's rights pursuant thereto.
BB&T has reserved under the BB&T Option Plan adequate shares of BB&T Common
Stock for delivery upon exercise of any such converted options.
Options to purchase an aggregate of 873,702 shares of Life Common Stock
are expected to be outstanding at the Effective Time. Any shares of Life Common
Stock issued pursuant to the exercise of options under the plan before the
Effective Time will be converted into shares of BB&T Common Stock and cash in
the same manner as other outstanding shares of Life Common Stock.
Restrictions on Resales by Affiliates
All shares of BB&T Common Stock issuable in the Merger will be registered
under the Securities Act and will be freely transferable, except that any such
shares received by "persons" who are deemed to be "affiliates" (as such terms
are defined under the Securities Act) of Life at the Effective Time may be
resold by them only in transactions registered under the Securities Act or
permitted by the resale provisions of Rule 145 under the Securities Act or as
otherwise permitted by the Securities Act. Those who may be deemed affiliates
of Life generally include individuals or entities that directly, or indirectly
through one or more intermediaries, control, are controlled by or are under
common control with Life and include certain executive officers and directors
of Life. The restrictions on resales by an affiliate extend also to certain
related parties of the affiliate, including spouse, relatives and spouse's
relatives who in each case have the same home as the affiliate.
The Reorganization Agreement requires Life to cause each of its affiliates
to deliver to BB&T a written agreement to the effect that such person will not
offer or otherwise dispose of any shares of BB&T Common Stock issued to that
person in the Merger except (a) in compliance with the Securities Act and the
rules and regulations promulgated thereunder and (b) after such time as BB&T
publishes financial statements reflecting at least one month of combined
operations with Life, which restriction is necessary to obtain
pooling-of-interests accounting treatment.
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INFORMATION ABOUT BB&T
General
BB&T is a multi-bank holding company headquartered in Winston-Salem, North
Carolina. BB&T conducts operations in North Carolina, South Carolina and
Virginia primarily through its commercial banking subsidiaries and, to a lesser
extent, through its other subsidiaries. Substantially all of BB&T's loans are
to businesses and individuals in the Carolinas and Virginia. BB&T's bank
subsidiaries are BB&T-NC, a North Carolina chartered bank; BB&T-SC, a South
Carolina chartered bank; BB&T-VA, a Virginia chartered bank; and FFSB, a
federally chartered savings bank. The principal assets of BB&T are all of the
issued and outstanding shares of common stock of BB&T-NC, BB&T Financial
Corporation of South Carolina, Greenville, South Carolina, which in turn owns
all of the issued and outstanding shares of BB&T-SC, and BB&T Financial-VA,
Virginia Beach, Virginia, which in turn owns all of the issued and outstanding
shares of BB&T-VA, VFSB and FFSB.
Subsidiaries
BB&T-NC, BB&T's largest subsidiary, is the oldest bank in North Carolina
and currently operates through 358 banking offices throughout North Carolina.
BB&T-NC provides a wide range of banking services in its local market for
retail and commercial customers, including small and mid-size businesses,
public agencies and local governments, trust customers, and individuals. BB&T
Leasing Corporation, a wholly owned subsidiary of BB&T-NC, located in
Charlotte, North Carolina, offers lease financing to commercial businesses and
municipal governments. BB&T Investment Services, Inc., also a wholly owned
subsidiary of BB&T-NC, located in Charlotte, North Carolina, offers customers
investment alternatives, including discount brokerage services, fixed-rate and
variable-rate annuities, mutual funds, and government and municipal bonds. BB&T
Insurance Services, Inc., located in Raleigh, North Carolina, is also a
subsidiary of BB&T-NC and offers life, property and casualty and title
insurance on an agency basis. Additional subsidiaries of BB&T-NC include Prime
Rate Premium Finance Corporation, Inc., which provides insurance premium
financing and services to customers in Virginia and the Carolinas.
BB&T-SC serves South Carolina through 98 banking offices. BB&T-SC provides
a wide range of banking services in its local market for retail and commercial
customers, including small and mid-size businesses, public agencies, local
governments, trust customers and individuals. BB&T-SC's subsidiaries include
BB&T Investment Services of South Carolina, Inc., which is licensed as a
general broker/dealer of securities and is currently engaged in retailing of
mutual funds, U.S. Government securities, municipal securities, fixed and
variable insurance annuity products and unit investment trusts.
BB&T-VA, formerly Commerce Bank, was acquired on January 10, 1995 by BB&T
Financial Corporation ("BB&T Financial") prior to the merger of BB&T Financial
with and into BB&T, which was then named Southern National Corporation. BB&T-VA
offers a full range of commercial and retail banking services through 22
banking offices in the Hampton Roads region of Virginia.
FFSB was acquired on March 1, 1997, upon the merger of its parent company,
Fidelity Financial Bankshares Corporation ("FFBC"), with and into BB&T
Financial-VA. FFSB operates seven branch offices offering commercial and retail
banking services in the Richmond, Virginia area.
VFSB was acquired on December 1, 1997, upon the merger of its parent
company, Virginia First Financial Corporation ("Virginia First"), with and into
BB&T Financial-VA. VFSB operates 24 banking offices in the south, central and
southwestern regions of Virginia.
Regional Acceptance Corporation ("RAC"), of Greenville, North Carolina,
was acquired on September 1, 1996. RAC, which has 28 branch offices in North
Carolina, South Carolina, Tennessee and Virginia, specializes in indirect
financing for consumer purchases of mid-model and late-model used automobiles.
Craigie Incorporated ("Craigie"), which was acquired on October 1, 1997,
is a registered broker-dealer that specializes in the origination, trading and
distribution of fixed income securities and equity products. Phillips Factors
Corporation, which buys and manages account receivables primarily in the
furniture, textiles and home furnishings-related industries, and Sheffield
Financial Corp., which specializes in loans to small commercial lawn care
businesses across the country, are other subsidiaries of BB&T.
UCB Merger
Effective July 1, 1997, UCB merged with and into BB&T. Each share of UCB
Common Stock issued and outstanding at the effective time of the UCB Merger was
converted into and exchanged for 1.135 shares of BB&T Common Stock (the
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"UCB Exchange Ratio"). In addition, at the effective time, all rights with
respect to UCB Common Stock outstanding at the effective time pursuant to stock
options granted by UCB under the existing stock plans of UCB were converted
into and became rights with respect to BB&T Common Stock on a basis reflecting
the UCB Exchange Ratio. Approximately 27.7 million shares of BB&T Common Stock
were issued in the UCB Merger. The UCB Merger constituted a tax-free
transaction under the Code, and has been accounted for as a pooling of
interests. Through its two bank subsidiaries, United Carolina Bank and United
Carolina Bank of South Carolina, UCB operated 153 banking offices in 89
communities in North Carolina and South Carolina. Effective September 19, 1997,
United Carolina Bank and United Carolina Bank of South Carolina were merged
into BB&T-NC and BB&T-SC, respectively.
Other Acquisitions
BB&T's profitability and market share have been enhanced through both
internal growth and acquisitions during recent years. Specifically, BB&T has
expanded by both the acquisition of financial institutions (including thrift
institutions) and the purchase of deposits and assets from the Resolution Trust
Corporation in federally assisted transactions.
On March 1, 1997, BB&T completed the acquisition of FFBC, which was a
Virginia corporation that served as the holding company for FFSB, in a
transaction accounted for as a purchase. BB&T intends to effect the merger of
FFSB, which is currently a wholly owned subsidiary of BB&T Financial-VA, with
and into BB&T-VA during the second quarter of 1998.
On October 1, 1997, BB&T completed the acquisition of the investment
banking firm Craigie, of Richmond, Virginia. With offices in Richmond and
Charlotte, North Carolina, Craigie specializes in the origination, trading and
distribution of fixed-income securities and equity products in both the public
and private capital markets. Craigie's public finance department provides
investment banking services, financial advisory services and municipal bond
financing to a variety of regional tax-exempt issuers. The firm's corporate
finance department specializes in raising capital for corporate clients and has
an active mergers and acquisitions practice. Established in 1929, Craigie
continues to operate as a subsidiary of BB&T.
On December 1, 1997, BB&T completed the acquisition of Virginia First,
which was a Virginia corporation that served as the holding company for VFSB,
in a transaction accounted for as a purchase. BB&T intends to effect the merger
of VFSB, which is currently a wholly owned subsidiary of BB&T Financial-VA,
with and into BB&T-VA during the second quarter of 1998.
On December 16, 1997, BB&T announced that it will acquire Franklin
Bancorporation, Inc. ("Franklin"), of Washington, D.C., in a transaction valued
at $165.1 million based on the closing price of BB&T Common Stock of $63.75 on
December 15, 1997. Franklin, with approximately $535 million in assets,
operates nine banking offices through its banking subsidiary, Franklin National
Bank of Washington, D.C., in the metropolitan Washington area. The acquisition,
which is intended to be accounted for as a pooling of interests, is subject to
the approval of the shareholders of Franklin and federal and state banking
regulators and is expected to be completed during the second quarter of 1998.
BB&T expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Such acquisitions may entail the payment
by BB&T of consideration in excess of the book value of the underlying net
assets acquired, may result in the issuance of additional shares of BB&T
capital stock or the incurring of an additional indebtedness by BB&T, and could
have a dilutive effect on the per share earnings or book value of BB&T Common
Stock. Moreover, such acquisitions sometimes result in significant front-end
charges against earnings, although cost savings, especially incident to
in-market acquisitions, also are frequently anticipated.
Capital
The Federal Reserve has established a minimum requirement for a bank
holding company's ratio of capital to risk-weighted assets (including certain
off-balance-sheet activities, such as standby letters of credit) of 8%. At
least half of the total capital is required to be composed of common equity,
retained earnings, and qualifying perpetual preferred stock, less certain
intangibles ("Tier 1 capital"). The remainder may consist of certain
subordinated debt, certain hybrid capital instruments and other qualifying
preferred stock, and a limited amount of the loan loss allowance ("Tier 2
capital" and, together with Tier 1 capital, "total capital"). At September 30,
1997, BB&T's Tier 1 and total capital ratios were 10.0% and 13.9%,
respectively. Effective January 1, 1997, with mandatory compliance as of
January 1, 1998, the Federal Reserve also is requiring certain bank holding
companies that engage in trading activities to adjust their risk-based capital
to take into consideration market risk that may result from movements in market
prices of covered trading positions in trading accounts, or from foreign
exchange or commodity positions, whether or not in trading accounts, including
changes in interest rates, equity prices, foreign exchange rates or commodity
prices. Any capital required to be maintained pursuant to these provisions may
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consist of new "Tier 3 capital" consisting of certain short term subordinated
debt. In addition, the Federal Reserve has issued a policy statement, pursuant
to which a bank holding company that is determined to have weaknesses in its
risk management processes or a high level of interest rate risk exposure may be
required, among other things, to hold additional capital.
The Federal Reserve also has established minimum leverage ratio
requirements for bank holding companies. These requirements provide for a
minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets
("leverage ratio") equal to 3% for bank holding companies that meet certain
specified criteria, including that they have the highest regulatory rating. All
other bank holding companies will generally be required to maintain a leverage
ratio of from at least 100 to 200 basis points above the stated minimum. BB&T's
leverage ratio at September 30, 1997 was 7.1%. Bank holding companies
experiencing internal growth or making acquisitions are expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance on intangible assets. Furthermore, the
requirements indicate that the Federal Reserve will continue to consider a
"tangible Tier 1 leverage ratio" (deducting all intangibles) in evaluating
proposals for expansion or new activity.
The FDIC has adopted minimum risk-based and leverage ratio regulations to
which BB&T's bank subsidiaries are subject that are substantially similar to
those requirements established by the Federal Reserve described above. Under
federal banking laws, failure to meet the minimum regulatory capital
requirements could subject a banking institution to a variety of enforcement
remedies available to federal regulatory authorities, including, in the most
severe cases, the termination of deposit insurance by the FDIC and placing the
institution into conservatorship or receivership. The capital ratios of each of
BB&T's bank subsidiaries exceeded all minimum regulatory capital requirements
as of September 30, 1997.
Deposit Insurance Assessments
The deposits of each of BB&T's bank subsidiaries are insured by the FDIC
up to the limits set forth under applicable law. A majority of the deposits of
the banks are subject to the deposit insurance assessments of the Bank
Insurance Fund ("BIF") of the FDIC. However, approximately 40% of the deposits
of BB&T-NC and BB&T-SC (related to the banks' acquisition of various savings
associations) are subject to assessments imposed by the Savings Association
Insurance Fund ("SAIF") of the FDIC.
Pursuant to budget reconciliation legislation enacted in 1996, the FDIC
imposed a special assessment on SAIF-assessable deposits of 65.7 basis points
per $100 of SAIF-assessable deposits in order to increase the SAIF's net worth
to 1.25 percent of SAIF-insured deposits as of October 1, 1996. This special
assessment was applied by the FDIC to the amount of SAIF-assessable deposits
held by institutions as of March 31, 1995. Certain institutions that engaged in
thrift acquisitions, including BB&T-NC, received a 20 percent discount on the
assessment. As a result, the pre-tax impact of the special assessment on BB&T
was approximately $34 million, and was recorded as an expense as of September
30, 1996.
The FDIC also lowered the assessment rates for SAIF-insured deposits,
effective January 1, 1997, to the same levels as the assessment rates currently
applicable to BIF-insured deposits. Thus, for the semi-annual period beginning
January 1, 1997, the effective rate of assessments imposed on all FDIC deposits
for deposit insurance ranges from 0 to 27 basis points per $100 of insured
deposits, depending on the institution's capital position and other supervisory
factors, with a statutory minimum of $2,000. However, because the 1996
legislation requires that both SAIF-insured and BIF-insured deposits pay a pro
rata portion of the interest due on the obligations issued by the Financing
Corporation, the FDIC is currently assessing BIF-insured deposits an additional
1.26 basis points per $100 of deposits, and SAIF-insured deposits an additional
6.3 basis points per $100 of deposits, in each case on an annualized basis, to
cover those obligations.
INFORMATION ABOUT LIFE
General
Life is a Virginia corporation organized in May 1994, by LSB for the
purpose of acquiring all of the capital stock of LSB issued in the conversion
of LSB to stock form (the "Conversion"), which was completed on October 11,
1994. At such date, Life offered 10,910,625 shares of common stock, in
connection with the Conversion of LSB from mutual to stock ownership, and LSB
reorganized into the holding company form of organization with Life becoming
the holding company for LSB. The only significant assets of Life are the
capital stock of LSB, Life's loan to an Employee Stock Ownership Plan ("ESOP"),
and the net conversion proceeds retained by Life. To date, the business of Life
has consisted of LSB.
LSB operates twenty retail banking offices in its immediate market area --
South Hampton Roads, Virginia, which consists of the cities of Chesapeake,
Norfolk, Portsmouth, Suffolk and Virginia Beach. Hampton, Newport News and
Williamsburg
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are also a part of Hampton Roads, LSB's primary market area, which with 1.5
million residents is the fourth largest metropolitan statistical area in the
Southeast region of the United Sates and the 27th largest in the nation.
Through its retail banking offices, LSB delivers a wide range of banking
products and services to meet the needs of individuals, businesses and
organizations. LSB attracts retail deposits from the general public and the
business community through a variety of deposit products. Deposits are insured
by the SAIF within applicable limits.
LSB's lending activities focus on meeting the needs of individuals and
businesses in its market area by offering permanent and construction
residential loans, second mortgages and equity lines of credit, consumer loans,
commercial real estate and business loans, and lines of credit.
Life, as a registered savings and loan holding company, is subject to
examination and regulation by the OTS and is subject to various reporting and
other requirements of the SEC. LSB is subject to examination and comprehensive
regulation by the OTS, which is the Bank's chartering authority and primary
regulator. The Bank is also regulated by the FDIC, the administrator of the
SAIF. LSB is subject to certain reserve requirements established by the Federal
Reserve and is a member of the Federal Home Loan Bank ("FHLB") of Atlanta,
which is one of the 12 regional banks comprising the FHLB System.
Acquisition of Seaboard Bancorp, Inc.
On January 31, 1996, Life completed its acquisition of Seaboard Bancorp,
Inc. ("Seaboard"), the holding company for Seaboard Savings Bank, F.S.B.,
("Seaboard Savings"), in a transaction accounted for under the purchase method
of accounting. Seaboard Savings, headquartered in Virginia Beach, operated
three offices, one each in the Virginia cities of Chesapeake, Virginia Beach
and Portsmouth. The operations of Seaboard Savings were merged into LSB
effective February 1, 1996, representing a natural extension of LSB's existing
operations and strengthening its presence in the Hampton Roads market. Results
of operations of Seaboard, beginning February 1, 1996, are included in the
results of Life.
Insurance of Accounts
The deposits of LSB are insured to the maximum extent permitted by law. As
insurer, the FDIC is authorized to conduct examinations of, and to require
reporting by, FDIC-insured institutions. It also may prohibit any FDIC-insured
institution from engaging in any activity the FDIC determines by regulation or
order to pose a serious threat to the FDIC. The FDIC has the authority to
initiate enforcement actions against savings associations, after giving the OTS
an opportunity to take such action.
DESCRIPTION OF BB&T CAPITAL STOCK
General
The authorized capital stock of BB&T consists of 300,000,000 shares of
BB&T Common Stock and 5,000,000 shares of preferred stock, par value $5.00 per
share (the "BB&T Preferred Stock"). As of November 30, 1997, there were
133,898,190 shares of BB&T Common Stock issued and outstanding. There were no
shares of BB&T Preferred Stock issued and outstanding as of such date, although
2,000,000 shares of BB&T Preferred Stock have been designated as Junior
Participating Preferred Stock (the "BB&T Junior Preferred Stock") and are
reserved for issuance in connection with BB&T's shareholder rights plan. See "
- -- Shareholder Rights Plan." Based on the number of shares of Life Common Stock
outstanding at the Record Date and the approximately 200,000 shares of Life
Common Stock to be issued before the Effective Time, if the Closing Value is
$59.563, it is estimated that approximately 5,827,600 shares of BB&T Common
Stock would be issued in the Merger.
BB&T Common Stock
Each share of BB&T Common Stock is entitled to one vote on all matters
submitted to a vote at any meeting of shareholders. Holders of BB&T Common
Stock are entitled to receive dividends when, as, and if declared by the Board
of Directors of BB&T (the "BB&T Board") out of funds legally available therefor
and, upon liquidation, to receive pro rata all assets, if any, of BB&T
available for distribution after the payment of necessary expenses and all
prior claims. Holders of BB&T Common Stock have no preemptive rights to
subscribe for any additional securities of any class that BB&T may issue, nor
any conversion, redemption or sinking fund rights. Holders of BB&T Common Stock
have no right to cumulate votes in the election of directors. The rights and
privileges of holders of BB&T Common Stock are subject to any preferences
provided for by resolution of the BB&T Board for any series of BB&T Preferred
Stock that BB&T may issue in the future. The terms of the BB&T Junior Preferred
Stock reserved for issuance in connection with BB&T's shareholders rights
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plan provide that holders of such shares will have rights and privileges that
are substantially identical to those of holders of BB&T Common Stock.
The transfer agent and registrar for BB&T Common Stock is BB&T-NC. The
Company intends to apply for the listing on the NYSE, subject to official
notice of issuance, of the shares of BB&T Common Stock to be issued in the
Merger.
BB&T Preferred Stock
Under the BB&T Articles, BB&T may issue shares of BB&T Preferred Stock in
one or more series as may be determined by the BB&T Board or a duly authorized
committee. The BB&T Board or committee may also establish, from time to time,
the number of shares to be included in each series and may fix the designation,
powers, preferences and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof, and may increase or
decrease the number of shares of any series without any further vote or action
by the shareholders. Any BB&T Preferred Stock issued may rank senior to the
BB&T Common Stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of BB&T, or both. In addition, any
shares of BB&T Preferred Stock may have class or series voting rights. Under
certain circumstances, the issuance of BB&T Preferred Stock or the existence of
the unissued BB&T Preferred Stock may tend to discourage or render more
difficult a merger or other change in control of BB&T. See " -- Shareholder
Rights Plan."
Shareholder Rights Plan
BB&T has adopted a shareholder rights plan pursuant to which holders of
shares of BB&T Common Stock also hold rights to purchase securities or other
property that may be exercised upon the occurrence of certain "triggering
events." Shareholder rights plans such as BB&T's plan are intended to encourage
potential hostile acquirors of a "target" corporation to negotiate with the
board of directors of the target corporation in order to avoid occurrence of
the "triggering events" specified in such plans. Shareholder rights plans are
intended to give the directors of a target corporation the opportunity to
assess the fairness and appropriateness of a proposed transaction in order to
determine whether or not it is in the best interests of the corporation and its
shareholders. Notwithstanding these purposes and intentions of shareholder
rights plans, such plans, including that of BB&T, could have the effect of
discouraging a business combination that shareholders believe to be in their
best interests. The provisions of BB&T's shareholder rights plan are discussed
below.
On December 17, 1996, the BB&T Board declared a dividend distribution of
one right (a "Right," and collectively the "Rights") for each outstanding share
of BB&T Common Stock to shareholders of record at the close of business on
January 17, 1997. One Right will also be distributed for each share of BB&T
Common Stock issued between January 17, 1997 and the occurrence of a
"Distribution Date" (described in the next paragraph). Each Right entitles the
registered holder to purchase from BB&T a unit consisting of one-hundredth of a
share (a "Unit") of BB&T Junior Preferred Stock at a Purchase Price of $145.00
per Unit, subject to adjustment, or, under certain circumstances, other
securities or property. The description and terms of the Rights are set forth
in the Rights Agreement, dated as of December 17, 1996, between BB&T and
BB&T-NC in the capacity of Rights Agent (the "Rights Agreement").
Initially, the Rights will be attached to all BB&T Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. A "Distribution Date" will occur, and the
Rights will separate from shares of BB&T Common Stock, upon the earliest of (a)
10 business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding shares of BB&T Common Stock (the "Stock Acquisition Date"), (b) 10
business days following the commencement of a tender offer or exchange offer
that would if consummated result in a person or group beneficially owning 20%
or more of such outstanding shares of BB&T Common Stock or (c) 10 business days
after the BB&T Board declares any Person to be an "Adverse Person," as
described in the following paragraph.
The BB&T Board will declare a person to be an Adverse Person upon its
determinations (a) that such person, alone or together with its affiliates and
associates, has or will become the beneficial owner of 10% or more of the
outstanding shares of BB&T Common Stock (provided that any such determination
will not be effective until such person has in fact become the beneficial owner
of 10% or more of the outstanding shares of BB&T Common Stock) and (b)
following consultation with such persons as the BB&T Board deems appropriate,
that (i) such beneficial ownership by such person is intended to cause, is
reasonably likely to cause or will cause BB&T to repurchase the BB&T Common
Stock beneficially owned by such person or to cause pressure on BB&T to take
action or enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under circumstances where
the BB&T Board determines that the best
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long-term interests of BB&T and its shareholders would not be served by taking
such action or entering into such transactions or series of transactions at
that time or (ii) such beneficial ownership is causing or is reasonably likely
to cause a material adverse impact (including, but not limited to, impairment
of relationships with customers or impairment of BB&T's ability to maintain its
competitive position) on the business or prospects of BB&T or (iii) such
beneficial ownership otherwise is determined to be not in the best interests of
BB&T and its shareholders, employees, customers and communities in which BB&T
and its subsidiaries do business.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 31, 2006, subject to extension by the BB&T
Board, or unless earlier redeemed by BB&T as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of BB&T Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except for certain issuances in
connection with outstanding options and convertible securities and as otherwise
determined by the BB&T Board, only shares of BB&T Common Stock issued before
the Distribution Date will be issued with Rights.
In the event that the BB&T Board determines that a person is an Adverse
Person or, at any time following the Distribution Date, a person becomes the
beneficial owner of 25% or more of the then-outstanding shares of BB&T Common
Stock, each holder of a Right will thereafter have the right to receive at the
time specified in the Rights Agreement, (a) upon exercise and payment of the
exercise price, BB&T Common Stock (or, in certain circumstances, cash, property
or other securities of BB&T) having a value equal to two times the exercise
price of the Right or (b) at the discretion of the BB&T Board, upon exercise
and without payment of the exercise price, BB&T Common Stock (or, in certain
circumstances, cash, property or other securities of BB&T) having a value equal
to the difference between the exercise price of the Right and the value of the
consideration that would be payable under clause (a). Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person or
Adverse Person will be null and void. Rights will not become exercisable
following the occurrence of either of the events set forth above, however,
until such time as the Rights are no longer redeemable by BB&T as set forth
below.
For example, at an exercise price of $145.00 per Right, each Right not
owned by an Acquiring Person or an Adverse Person (or by certain related
parties) following an event set forth in the preceding paragraph would entitle
its holder to purchase $290.00 worth of BB&T Common Stock (or other
consideration, as noted above) for $145.00. Assuming that the BB&T Common Stock
had a per share value of $72.50 at such time, the holder of each valid Right
would be entitled to purchase four shares of BB&T Common Stock for $145.00.
Alternatively, at the discretion of the BB&T Board, each Right following an
event set forth in the preceding paragraph, without payment of the exercise
price, would entitle its holder to BB&T Common Stock (or other consideration,
as noted above) worth $145.00.
In the event that, at any time following the Stock Acquisition Date, (a)
BB&T is acquired in a merger, statutory share exchange or other business
combination transaction in which BB&T is not the surviving corporation or (b)
50% or more of BB&T's assets or earning power is sold or transferred, each
holder of a Right (except Rights that previously have been voided as set forth
above) will thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price
of the Right. The Purchase Price payable, and the number of Units of BB&T
Junior Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
in the event of certain events.
In general, BB&T may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right at any time until 10 business days following the
earlier of the Stock Acquisition Date or the effective date of any declaration
by the BB&T Board that any person is an Adverse Person. After the redemption
period has expired, BB&T's right of redemption may be reinstated if an
Acquiring Person or Adverse Person reduces his beneficial ownership to less
than 10% of the outstanding shares of BB&T Common Stock in a transaction or
series of transactions not involving BB&T and if there are no other Acquiring
Persons or Adverse Persons.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of BB&T, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to BB&T, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for stock (or other consideration) of BB&T or for common stock of
the acquiring company as set forth above.
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Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
BB&T Board before the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the BB&T Board in order to
cure any ambiguity, to make changes that do not adversely affect the interests
of holders of Rights (excluding the interests of any Acquiring Person or
Adverse Person) or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption may be made when the Rights are not redeemable.
The Rights Agreement is filed as an exhibit to a Registration Statement on
Form 8-A dated January 10, 1997 that has been filed by BB&T with the
Commission. This registration statement and the Rights Agreement are
incorporated by reference in this Proxy Statement/Prospectus, and reference is
made to them for the complete terms of the Rights Agreement and the Rights. The
foregoing discussion is qualified in its entirety by reference to the Rights
Agreement. See "AVAILABLE INFORMATION " and "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws
Certain provisions of the NCBCA, the BB&T Articles and the BB&T Bylaws
deal with matters of corporate governance and the rights of shareholders.
Certain of these provisions, as well as the ability of the BB&T Board to issue
shares of BB&T Preferred Stock and to set the voting rights, preferences and
other terms thereof, may be deemed to have an anti-takeover effect and may
delay or prevent takeover attempts not first approved by the BB&T Board. These
provisions also could delay or deter the removal of incumbent directors or the
assumption of control by shareholders. BB&T believes that these provisions are
appropriate to protect the interests of BB&T and all of its shareholders. The
following describes the principal provisions of the NCBCA applicable to BB&T,
the BB&T Articles and BB&T Bylaws that may be deemed to have anti-takeover
effects.
Control Share Act
The Control Share Acquisition Act of the NCBCA may make an unsolicited
attempt to gain control of BB&T more difficult by restricting the right of
certain shareholders to vote newly acquired large blocks of stock. For a
description of this statute, see "COMPARISON OF SHAREHOLDERS' RIGHTS --
Anti-takeover Statutes."
Provisions Regarding the BB&T Board
The provisions of the BB&T Articles and the BB&T Bylaws with respect to
the classification of the BB&T Board and the removal of directors only for
cause could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, control of BB&T. For
a description of such provisions, see "COMPARISON OF SHAREHOLDERS' RIGHTS --
Directors."
Meeting of Shareholders; Shareholders' Nominations and Proposals
Under the BB&T Bylaws, meetings of the shareholders may be called by the
Chief Executive Officer or the BB&T Board. Shareholders of BB&T may not request
that a special meeting of shareholders be called. This provision could have the
effect of delaying until the next annual shareholders' meeting shareholder
actions that are favored by the holders of a majority of the outstanding voting
securities of BB&T.
Certain procedures governing the submission of nominations for directors
and other proposals by shareholders may have some deterrent effect on
shareholder actions designed to result in change of control in BB&T. See
"COMPARISON OF SHAREHOLDERS' RIGHTS -- Notice of Shareholder Nominations and
Shareholder Proposals."
COMPARISON OF SHAREHOLDERS' RIGHTS
At the Effective Date, holders of Life Common Stock will become
shareholders of BB&T. The following is a summary of material differences
between the rights of holders of BB&T Common Stock and holders of Life Common
Stock. Since BB&T is organized under the laws of the State of North Carolina
and Life is organized under the laws of the Commonwealth of Virginia,
differences in the rights of holders of BB&T Common Stock and those of holders
of Life Common Stock arise from differing provisions of the NCBCA and the VSCA
in addition to differing provisions of their respective articles of
incorporation and bylaws.
The following summary does not purport to be a complete statement of the
provisions affecting, and differences between, the rights of holders of BB&T
Common Stock and holders of Life Common Stock. The identification of specific
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provisions or differences is not meant to indicate that other equally or more
significant differences do not exist. This summary is qualified in its entirety
by reference to the NCBCA and VSCA and the governing corporate instruments of
BB&T and Life, to which the shareholders of Life are referred.
Authorized Capital Stock
BB&T
BB&T's authorized capital stock consists of 300,000,000 shares of BB&T
Common Stock and 5,000,000 shares of BB&T Preferred Stock. The BB&T Articles
authorize the BB&T Board to issue shares of BB&T Preferred Stock in one or more
series and to fix the designation, powers, preferences, and rights of the
shares of BB&T Preferred Stock in each such series. As of November 30, 1997,
133,898,190 shares of BB&T Common Stock were outstanding. No shares of BB&T
Preferred Stock were issued and outstanding as of such date, although 2,000,000
shares of BB&T Preferred Stock have been designated as BB&T Junior Preferred
Stock and are reserved for issuance in connection with BB&T's shareholder
rights plan. See "DESCRIPTION OF BB&T CAPITAL STOCK -- Shareholder Rights
Plan."
Life
Life's authorized capital stock consists of 30,000,000 shares of Life
Common Stock and 5,000,000 shares of preferred stock par value $1.00 per share
("Life Preferred Stock"). As of the Record Date, 9,847,581 shares of Life
Common Stock and no shares of Life Preferred Stock were outstanding.
Directors
BB&T
The BB&T Articles and the BB&T Bylaws provide for a board of directors
having not less than three nor more than 30 members as determined from time to
time by vote of a majority of the members of the BB&T Board or by resolution of
the shareholders of BB&T. Currently, the BB&T Board consists of 24 directors.
The BB&T Board is divided into three classes, with directors serving staggered
three-year terms. Under the BB&T Articles and the BB&T Bylaws, BB&T directors
may be removed only for cause and only by the vote of a majority of the
outstanding shares entitled to vote in the election of directors. Holders of
BB&T Common Stock do not have cumulative voting rights in the election of
directors.
Life
The Life Articles provide that the Life Board shall be divided into three
classes as nearly equal in number as the then total number of directors
constituting the Life Board permits and that the directors shall be elected by
the shareholders for staggered terms, or until their successors are elected and
qualified. A resolution of the directors provides that the Life Board shall
consist of ten members.
Dividends and Other Distributions
BB&T
The NCBCA prohibits a North Carolina corporation from making any
distributions to shareholders, including the payment of cash dividends, that
would render it insolvent or unable to meet its obligations as they become due
in the ordinary course of business. BB&T is not subject to other express
regulatory restrictions on payments of dividends and other distributions. The
ability of BB&T to pay distributions to the holders of BB&T Common Stock will
depend, however, to a large extent upon the amount of dividends its bank
subsidiaries, which are subject to restrictions imposed by regulatory
authorities, pay to BB&T. In addition, the Federal Reserve could oppose a
distribution by BB&T if it determined that such a distribution would harm
BB&T's ability to support its bank subsidiaries. There can be no assurances
that dividends will be paid in the future. The declaration, payment and amount
of any such future dividends would depend on business conditions, operating
results, capital, reserve requirements and the consideration of other relevant
factors by the BB&T Board.
Life
The VSCA prohibits a Virginia corporation from making any distributions to
shareholders, including the payment of cash dividends, that would render it
insolvent or unable to meet its obligations as they become due in the usual
course of business. Life is not subject to other express regulatory
restrictions on payments of dividends and other distributions. The ability of
Life to pay distributions to the holders of Life Common Stock may depend,
however, upon the amount of dividends its savings bank subsidiary, which is
subject to the restrictions imposed by regulatory authorities, pays to Life.
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Notice of Shareholder Nominations and Shareholder Proposals
BB&T
The BB&T Bylaws establish advance notice procedures for shareholder
proposals and the nomination, other than by or at the direction of the BB&T
Board or a committee thereof, of candidates for election as directors. The BB&T
Bylaws provide that a shareholder wishing to nominate a person as a candidate
for election to the BB&T Board must submit such nomination in writing to the
Secretary of BB&T not later than 60 days before one year after the date of the
immediately preceding annual meeting of shareholders, together with
biographical information about the candidate and the shareholder's name and
shareholdings. Nominations not made in accordance with the foregoing provisions
may be ruled out of order by the presiding officer or the chairman of the
meeting.
Similarly, a shareholder must notify the Secretary of BB&T in writing not
later than 60 days before one year after the date of the immediately preceding
annual meeting of shareholders of the shareholder's intention to make a
proposal for consideration at the next annual meeting. The notice must contain:
(a) a brief description of the proposal, (b) the name and shareholdings of the
shareholder submitting the proposal and (c) any material interest of the
shareholder in such proposal.
Life
Shareholder proposals which are not submitted for inclusion in Life's
proxy materials pursuant to Rule 14a-8 under the Exchange Act may be brought
before an annual meeting pursuant to Article 9.B of the Life Articles, which
provides that business at an annual meeting of shareholders must be (a)
properly brought before the meeting by, or at the direction of, the Life Board,
or (b) otherwise properly brought before the meeting by a shareholder. For
business to be properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to the Secretary
of Life. To be timely, a shareholder's notice must be delivered to, or mailed
and received at, the principal executive office of Life not less than 60 days
prior to the anniversary date of the immediately preceding annual meeting. A
shareholder's notice must set forth certain information as specified in Article
9.B of the Life Articles as to each matter the shareholder proposes to bring
before an annual meeting.
Shareholders are also permitted to submit nominations of candidates for
the Life Board. Article 7.D. of the Life Articles governs nominations for
election to the Life Board and requires all such nominations, other than those
made by the Life Board, to be made at a meeting of shareholders called for the
election of directors, and only by a shareholder who has complied with the
notice provisions in that section. Shareholder nominations must be made
pursuant to timely notice in writing to the Secretary of Life. To be timely, a
shareholder's notice must be delivered to, or mailed and received at, the
principal executive offices of Life not later than 60 days prior to the
anniversary date of the immediately preceding annual meeting. Each written
notice of a shareholder nomination shall set forth certain information as
specified in Article 7.B of the Life Articles.
Exculpation and Indemnification
BB&T
The NCBCA requires that a director of a North Carolina corporation
discharge the duties as a director (a) in good faith, (b) with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances and (c) in a manner the director reasonably believes to be in the
best interests of the corporation. The NCBCA expressly provides that a director
facing a change of control situation shall not be subject to any different
duties or a higher standard of care. The BB&T Articles provide that, to the
fullest extent permitted by applicable law, no director of BB&T will have any
personal liability for monetary damage for breach of a duty as a director. The
BB&T Bylaws require BB&T to indemnify its directors and officers against
liabilities arising out of such person's status as such, excluding any
liability relating to activities that were at the time taken known or believed
by such person to be clearly in conflict with the best interests of BB&T.
Life
The VSCA requires that a director of a Virginia corporation discharge the
duties as a director in accordance with the director's good faith business
judgment of the best interests of the corporation. The VSCA permits Virginia
corporations to provide indemnification for directors, officers and agents and
also permits Virginia corporations to eliminate personal liability for
directors and officers for certain actions.
The Life Articles and the Life Bylaws provide that a director or officer
of Life will not be personally liable to Life or any of its shareholders for
monetary damages for actions taken, or for any failure to take any action, as a
director or officer except for liability where the director or officer engaged
in willful misconduct or a knowing violation of the criminal
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law or of any federal or state securities laws, including, without limitation,
unlawful insider trading or manipulation of the market for any security. This
provision applies to actions taken by a director or officer only in that
capacity.
The Life Articles and the Life Bylaws provide that Life shall indemnify
and advance expenses to all directors and officers to the fullest extent
provided by the law of the Commonwealth of Virginia, and may provide further
indemnity with respect to a proceeding by or in right of Life but not including
indemnity against any willful misconduct or a knowing violation by the director
of the criminal law. Life may indemnify and advance expenses to all employees
and agents of Life to the fullest extent permitted by the law of the
Commonwealth of Virginia.
The VSCA permits a corporation to indemnify against liability an
individual made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal because that person is or was a director, officer,
employee or agent of the corporation if: (i) he conducted himself in good
faith; and (ii) he believed: (A) in the case of conduct in his official
capacity with the corporation that his conduct was in its best interests; and
(B) in all other cases, that his conduct was at least not opposed to its best
interests; and (C) in the case of a criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. A corporation may not indemnify such
person against his willful misconduct or a knowing violation of the criminal
law. The indemnity may continue as to a person who has ceased to be a director,
officer, employee or agent of the company and may inure to the benefit of his
heirs and executors. No right of indemnity provided to any person under the
Life Articles may be reduced or eliminated by any amendment of the Life
Articles or the Life Bylaws with respect to any act or omission by such persons
before such amendment. The indemnification provisions also require Life to pay
reasonable expenses of any director or officer (and permit Life to pay the
reasonable expenses of any employee or agent) in advance of the final
disposition of any action, suit or proceeding as authorized by the Life Board,
provided that the indemnified person furnishes Life with a written statement of
his good faith belief that he has met the required statutory standard of
conduct and undertakes in writing to repay Life if it is ultimately determined
that he was not entitled to indemnification.
Mergers, Share Exchanges and Sales of Assets
BB&T
The NCBCA generally requires that any merger, share exchange or sale of
substantially all the assets of a corporation not in the ordinary course of
business be approved by the affirmative vote of the majority of the issued and
outstanding shares of each voting group entitled to vote. BB&T is also subject
to certain statutory anti-takeover provisions. See " -- Anti-takeover
Statutes."
Life
The VSCA generally requires that any merger, share exchange or sale of
substantially all of the assets of a corporation not in the ordinary course of
business be approved by at least two thirds of the votes entitled to be cast by
each voting group entitled to vote, unless the articles of incorporation
provide for a greater or lesser vote (but in no event less than a majority of
votes cast by each such voting group at a meeting at which a quorum of the
voting group exists).
In addition to the provisions of the VSCA, the Life Articles provide that
for a period of five years from the mutual-to-stock conversion of LSB (or until
October 11, 1999) no person shall directly or indirectly offer to acquire or
acquire the beneficial ownership of (i) more than 10% of the issued and
outstanding shares of any class of an equity security of Life, or (ii) any
securities convertible into, or exercisable for, any equity securities of Life
if, assuming conversion or exercise by such persons of all securities of which
such person is the beneficial owner which are convertible into, or exercisable
for, such equity securities (but of no securities convertible into, or
exercisable for, such equity securities of which such person is not the
beneficial owner), such person would be the beneficial owner of more than 10%
of any class of an equity security of Life. Because the Merger was approved in
advance by the affirmative vote of more than two-thirds of the entire Life
Board, the foregoing limitations do not apply to BB&T or the Merger. Life is
also subject to certain statutory anti-takeover provisions. See " --
Anti-takeover Statutes."
Anti-takeover Statutes
BB&T
The North Carolina Control Share Acquisition Act (the "Control Share Act")
applies to BB&T. The Control Share Act is designed to protect shareholders of
publicly owned North Carolina corporations based within the state against
certain changes in control and to provide shareholders with the opportunity to
vote on whether to afford voting rights to certain shareholders.
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The Control Share Act is triggered upon the acquisition by a person of
shares of voting stock of a covered corporation that, when added to all other
shares beneficially owned by the person, would result in that person holding
one-fifth, one-third or a majority of the voting power in the election of
directors. Under the Control Share Act, the shares acquired that result in the
crossing of any of these thresholds ("Control Shares") have no voting rights
until such rights are conferred by the affirmative vote of the holders of a
majority of all outstanding voting shares, excluding those shares held by any
person involved or proposing to be involved in the acquisition of Control
Shares, any officer of the corporation and any employee of such corporation who
is also a director of such corporation. If voting rights are conferred on
Control Shares, all shareholders of such corporation have the right to require
that their shares be redeemed at the highest price paid per share by the
acquiror for any Control Shares.
In accordance with the provisions of such statute, BB&T has elected not to
be governed by the North Carolina Shareholder Protection Act.
Life
The VSCA contains provisions governing "Affiliated Transactions." These
provisions, with several exceptions discussed below, require approval of
specified material acquisition transactions between a Virginia corporation and
any holder of more than 10% of any class of its outstanding voting shares (an
"Interested Shareholder") by the holders of at least two-thirds of the
remaining voting shares. Affiliated Transactions subject to this approval
requirement include mergers, share exchanges, dispositions of corporate assets
with an aggregate fair market value in excess of 5% of the corporation's net
worth, any dissolution of the corporation proposed by or on behalf of an
Interested Shareholder, or any reclassification of securities, including a
reverse stock split, recapitalization or merger of the corporation with its
subsidiaries which increases the percentage of voting shares owned beneficially
by an Interested Shareholder by more than 5%.
For three years following the time that an Interested Shareholder becomes
an owner of 10% of the outstanding voting shares, a Virginia corporation cannot
engage in an Affiliated Transaction with such Interested Shareholder without
approval of two-thirds of the voting shares other than those shares
beneficially owned by the Interested Shareholder, and majority approval of the
"Disinterested Directors," as defined in the statute. At the expiration of the
three year period, the VSCA requires approval of Affiliated Transactions by
two-thirds of the voting shares other than those beneficially owned by the
Interested Shareholders.
The principal exceptions to the special voting requirement apply to
transactions proposed after the three year period has expired and require
either the transaction be approved by a majority of the corporation's
Disinterested Directors or that the transaction satisfy the fair-price
requirements of the VSCA. In general, the fair-price requirement provides that
in a two-step acquisition transaction, the Interested Shareholder must pay the
shareholders in the second step either the same amount of cash or the same
amount and type of consideration paid to acquire the Virginia corporation's
shares in the first step.
In addition, the VSCA provides that, by affirmative vote of a majority of
the voting shares other than shares owned by an Interested Shareholder, a
corporation can provide in its articles of incorporation or bylaws that the
Affiliated Transactions provisions shall not apply to the corporation. Life has
not "opted out" of the Affiliated Transactions provision of the VSCA.
The VSCA also regulates "Control Share Acquisitions," as defined therein,
and provides that shares acquired in a transaction that would cause the
acquiring person's voting strength to meet or exceed any of three thresholds
(20%, 33 1/3% or 50%) have no voting rights unless granted by a majority vote
of shares not owned by the acquiring person or any officer or employee-director
of the Virginia corporation. This provision empowers an acquiring person to
require the Virginia corporation to hold a special meeting of shareholders to
consider the matter within 50 days of its request. A Virginia corporation can
provide in its articles of incorporation or bylaws that the Control Share
Acquisition provisions do not apply to such corporation. Life has not "opted
out" of the Control Share Acquisitions provisions of the VSCA and, accordingly,
the Control Share Acquisitions provisions of the VSCA are applicable to Life
and its shareholders.
Amendments to Articles of Incorporation and Bylaws
BB&T
The NCBCA provides generally that a North Carolina corporation's articles
of incorporation may be amended if the amendment is affirmatively approved by a
majority of the votes cast within each voting group entitled to vote. The BB&T
Articles and BB&T Bylaws also require the affirmative vote of two thirds of the
outstanding shares entitled to vote to approve an amendment to the BB&T
Articles or BB&T Bylaws amending, altering or repealing the portions of such
articles or bylaws relating to classification and staggered terms of the board,
removal of directors or any requirement for a supermajority vote on such an
amendment. The BB&T Articles authorize the BB&T Board to amend the BB&T Bylaws.
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Life
The VSCA generally requires that any amendment to a Virginia corporation's
articles of incorporation be approved by at least two-thirds of the votes
entitled to be cast by each voting group entitled to vote on such amendment,
unless the articles of incorporation provide for a greater or lesser vote (but
in no event less than a majority of all of the votes cast by each such voting
group at a meeting at which a quorum of the voting group exists). The Life
Articles generally provide that the Life Articles may be amended as set forth
by Virginia law, except that any amendment to Articles 6 (conduct of
corporation affairs), 7 (directors), 8 (indemnification), 9 (meetings of
shareholders and shareholder proposals), 10 (restrictions on acquisitions) and
11 (amendments) must be approved by the affirmative vote of the holders of at
least 75% of the then outstanding shares of the class or classes entitled to
vote thereon at that meeting, voting together as a single class.
The VSCA provides generally that a Virginia corporation's board of
directors may amend or repeal the corporation's bylaws except to the extent
that (a) such power is reserved to the shareholders by the articles of
incorporation or by law, (b) the shareholders in adopting or amending a
particular bylaw provided expressly that the board of directors could not amend
or repeal such bylaw and (c) the corporation's shareholders may amend or repeal
the bylaws even though the bylaws may be amended or repealed by the board of
directors. The Life Articles provide that the Life Bylaws may be amended by a
majority vote of the Life Board. The shareholders of Life may also adopt, amend
or repeal the Life Bylaws; however, any such adoption, amendment or repeal must
be approved by the shareholders by the affirmative vote the holders of at least
67% of all of the then outstanding shares of capital stock of Life entitled to
vote, voting together as a single class.
Shareholders' Rights of Dissent and Appraisal
BB&T
Under the NCBCA, a shareholder of a North Carolina corporation is entitled
to dissent from, and obtain payment of the "full value" of his shares in the
event of, any of the following corporate transactions: (a) consummation of a
plan of merger to which the corporation is a party, unless (i) the corporation
is a parent merging with a subsidiary pursuant to a particular NCBCA provision
for such transactions; (ii) the merger is subject to an NCBCA provision that
exempts from the shareholder approval requirement certain mergers that do not
result in a substantial change to the corporation or the rights of its
shareholders; or (iii) the shares in question are then redeemable by the
corporation at a price not greater than the cash to be received for such
shares; (b) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, unless such shares
are then redeemable by the corporation at a price not greater than the cash to
be received in exchange for such shares; (c) consummation of a sale or exchange
of all or substantially all of the property of the corporation other than in
the regular course of business, including a sale in dissolution but not
including a sale pursuant to court order or a sale pursuant to a plan by which
all or substantially all of the net proceeds are to be distributed in cash to
shareholders within one year; (d) an amendment to the articles of incorporation
that materially and adversely affects rights in respect of a dissenter's shares
because it (i) alters or abolishes a preferential right of the shares; (ii)
creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares; (iii) alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities; (iv) excludes or limits the right
of shares to vote on any matter; (v) reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional share so created is to
be acquired for cash; or (vi) changes the corporation into a nonprofit
corporation or cooperative organization; or (e) any corporate action taken
pursuant to a shareholder vote to the extent the articles of incorporation,
bylaws or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
With respect to corporations that have a class or series of shares either
listed on a national securities exchange or held by more than 2,000 record
shareholders, dissenters' rights are not available to the holders of these
shares by reason of a merger, share exchange or sale or exchange of property
unless (a) the articles of incorporation of the corporation that issued the
shares provide otherwise or (b) in the case of a merger or share exchange, the
holders of the shares are required to accept anything other than (i) cash, (ii)
shares in another corporation that are either listed on a national securities
exchange or held by more than 2,000 record shareholders or (iii) a combination
of cash and such shares.
A shareholder who has the right to dissent from a transaction and receive
payment of the "fair value" of his shares must follow specific procedural
requirements as set forth in the NCBCA in order to maintain such right and
obtain such payment.
Life
Under the VSCA, a shareholder of a Virginia corporation is entitled to
dissent from, and to receive payment of the "fair value" of his shares in the
event of, any of the following corporation transactions: (a) consummation of a
merger to which
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the corporation is a party, provided that either (i) shareholder approval is
required for the merger pursuant to the VSCA or the corporation's articles of
incorporation and the shareholder is entitled to vote or (ii) the corporation
is a subsidiary being merged with its parent pursuant to a particular VSCA
provision for such transactions; (b) consummation of a plan of share exchange
to which the corporation is a party as the party whose shares will be acquired,
provided that the shareholder is entitled to vote on the plan; (c) consummation
of the sale or exchange of all or substantially all the property of the
corporation, if the shareholder is entitled to vote on the transaction or the
transaction is in furtherance of a dissolution on which the shareholder is
entitled to vote, and provided that the transaction is neither (i) a
transaction pursuant to court order nor (ii) a transaction for cash pursuant to
a plan by which all or substantially all of the net proceeds will be
distributed to shareholders within one year; or (d) any corporate action taken
pursuant to a shareholder vote, to the extent that the articles of
incorporation, the bylaws, or a resolution of the board of directors provides
that voting and nonvoting shareholders are entitled to dissent and obtain
payment for their shares.
With respect to corporations that have a class or series of shares either
listed on a national securities exchange or the Nasdaq market (such as Life) or
held by more than 2,000 record shareholders, dissenters' rights are not
available to the holders of such shares by reason of a merger, share exchange
or sale or exchange of property unless (a) the articles of incorporation of the
corporation issuing such shares provided otherwise; (b) in the case of a merger
or share exchange (unlike the Merger), the holders of such shares are required
to accept anything other than (i) cash, (ii) shares in another corporation that
are either listed on a national securities exchange or held by more than 2,000
record shareholders or (iii) a combination of cash and such shares; or (c) the
transaction is with a shareholder who owns more than 10 percent of a class of
shares and has not been approved by a majority of the directors unaffiliated
with such shareholder.
A shareholder who has the right to dissent from a transaction and receive
payment of the "fair value" of his shares must follow specific procedural
requirements as set forth in the VSCA in order to maintain such right and
obtain such payment.
Holders of Life Common Stock do not have dissenters' or appraisal rights
in connection with the Merger because, as of the Record Date, shares of Life
Common Stock were listed on the Nasdaq National Market and because the shares
of BB&T Common Stock to be received in the Merger are listed on the NYSE.
Liquidation Rights
BB&T
In the event of the liquidation, dissolution or winding-up of the affairs
of BB&T, holders of outstanding shares of BB&T Common Stock are entitled to
share, in proportion to their respective interests, in BB&T's assets and funds
remaining after payment, or provision for payment, of all debts and other
liabilities of BB&T.
Because BB&T is a bank holding company, its rights, the rights of its
creditors and of its shareholders, including the holders of the shares of any
BB&T Preferred Stock that may be issued, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization may be subject to
the prior claims of the subsidiary's creditors except to the extent that BB&T
may itself be a creditor with recognized claims against the subsidiary and any
interests in the liquidation accounts established by savings associations or
savings banks acquired by BB&T for the benefit of eligible account holders in
connection with conversion of such savings associations to stock form.
Life
The rights of holders of Life Common Stock upon liquidation are virtually
identical to those of holders BB&T Common Stock.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by Womble
Carlyle Sandridge & Rice, PLLC, Charlotte, North Carolina, as counsel to BB&T.
As of the date of this Proxy Statement/Prospectus, certain members of Womble
Carlyle Sandridge & Rice, PLLC owned an aggregate of approximately 22,000
shares of BB&T Common Stock.
EXPERTS
The consolidated financial statements of BB&T Corporation and its
subsidiaries which are incorporated by reference in this Proxy
Statement/Prospectus from BB&T's Current Report on Form 8-K dated August 15,
1997, which restates the consolidated financial statements that are
incorporated by reference from BB&T's Annual Report on Form 10-K for the year
ended December 31, 1996, to reflect the acquisition of UCB by BB&T during 1997,
have been audited by Arthur Andersen
46
<PAGE>
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of Life included in Life's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and
incorporated by reference in this Proxy Statement/Prospectus have been audited
by Edmondson, LedBetter & Ballard, L.L.P., independent public accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the proxy statement and form
of proxy to be used in connection with Life's scheduled 1998 annual meeting of
shareholders, which will not be held if the Merger is consummated, shareholder
proposals must have been received by the secretary of Life no later than
November 17, 1997; no shareholder proposals were received by that date. In the
event the Reorganization Agreement is terminated or the Merger is not otherwise
consummated, Life will promptly reschedule its 1998 annual meeting of
shareholders and, in a timely manner, inform its shareholders of the date on
which such annual meeting will be held and the date by which proposals of
shareholders must be received for inclusion in Life's proxy statement and form
of proxy relating to such annual meeting.
OTHER MATTERS
The Life Board is not aware of any other matters that may come before the
Special Meeting. However, the proxies may be voted with discretionary authority
with respect to any other matters that may properly come before the Special
Meeting.
47
<PAGE>
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
LIFE BANCORP, INC.
BB&T FINANCIAL CORPORATION OF VIRGINIA
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C> <C>
ARTICLE I
DEFINITIONS ................................................... I-1
1.1 Definitions ................................................ I-1
1.2 Terms Defined Elsewhere .................................... I-4
ARTICLE II
THE MERGER ................................................... I-4
2.1 Merger ................................................... I-4
2.2 Filing; Plan of Merger .................................... I-4
2.3 Effective Time ............................................. I-5
2.4 Closing ................................................... I-5
2.5 Effect of Merger .......................................... I-5
2.6 Further Assurances ....................................... I-5
2.7 Merger Consideration ....................................... I-5
2.8 Conversion of Shares; Payment of Merger Consideration ...... I-6
2.9 Conversion of Stock Options .............................. I-6
2.10 Merger of Subsidiary ....................................... I-7
2.11 Anti-Dilution ............................................. I-7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LIFE ........................ I-7
3.1 Capital Structure .......................................... I-7
3.2 Organization, Standing and Authority ..................... I-7
3.3 Ownership of Subsidiaries ................................. I-8
3.4 Organization, Standing and Authority of the Subsidiaries ... I-8
3.5 Authorized and Effective Agreement ........................ I-8
3.6 Securities Filings; Statements True ........................ I-8
3.7 Minute Books ............................................. I-9
3.8 Adverse Change ............................................. I-9
3.9 Absence of Undisclosed Liabilities ........................ I-9
3.10 Properties ................................................ I-9
3.11 Environmental Matters .................................... I-9
3.12 Loans; Allowance for Loan Losses ........................... I-10
3.13 Tax Matters ................................................ I-10
3.14 Employees; Compensation; Benefit Plans ..................... I-11
3.15 Certain Contracts .......................................... I-13
3.16 Legal Proceedings; Regulatory Approvals .................. I-13
3.17 Compliance with Laws; Filings .............................. I-13
3.18 Brokers and Finders ....................................... I-14
3.19 Repurchase Agreements; Derivatives ........................ I-14
3.20 Deposit Accounts .......................................... I-14
3.21 Related Party Transactions ................................. I-14
3.22 Certain Information ....................................... I-14
3.23 Tax and Regulatory Matters ................................. I-14
3.24 State Takeover Laws ....................................... I-14
3.25 Labor Relations .......................................... I-15
3.26 Fairness Opinion .......................................... I-15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T ........................ I-15
4.1 Capital Structure of BB&T ................................. I-15
4.2 Organization, Standing and Authority of BB&T ............... I-15
4.3 Authorized and Effective Agreement ........................ I-15
4.4 Organization, Standing and Authority of BB&T Subsidiaries I-16
4.5 Securities Documents ....................................... I-16
4.6 Financial Statements ....................................... I-16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
4.7 Adverse Change .......................................... I-16
4.8 Absence of Undisclosed Liabilities ..................... I-16
4.9 Compliance with Laws .................................... I-16
4.10 Certain Information .................................... I-16
4.11 Tax and Regulatory Matters .............................. I-17
4.12 Share Ownership .......................................... I-17
4.13 Legal Proceedings ....................................... I-17
ARTICLE V
COVENANTS ................................................... I-17
5.1 Life Shareholder Meeting ................................. I-17
5.2 Registration Statement; Proxy Statement/Prospectus ...... I-17
5.3 Plan of Merger; Reservation of Shares .................. I-17
5.4 Additional Acts .......................................... I-18
5.5 Best Efforts ............................................. I-18
5.6 Certain Accounting Matters .............................. I-18
5.7 Access to Information .................................... I-19
5.8 Press Releases .......................................... I-19
5.9 Forbearances of Life .................................... I-19
5.10 Employment Agreements .................................... I-20
5.11 Affiliates ............................................. I-21
5.12 Section 401(k) Plan; ESOP; Welfare and Other Benefits ... I-21
5.13 Directors and Officers Protection ........................ I-22
5.14 Forbearances of BB&T .................................... I-22
5.15 Reports ................................................ I-23
5.16 Exchange Listing ....................................... I-23
5.17 Board of Directors of Virginia Banking Subsidiary ...... I-23
ARTICLE VI
CONDITIONS PRECEDENT ....................................... I-23
6.1 Conditions Precedent -- BB&T and Life .................. I-23
6.2 Conditions Precedent -- Life ........................... I-24
6.3 Conditions Precedent -- BB&T ........................... I-24
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT .................. I-25
7.1 Termination ............................................. I-25
7.2 Effect of Termination .................................... I-26
7.3 Survival of Representations, Warranties and Covenants ... I-27
7.4 Waiver ................................................... I-27
7.5 Amendment or Supplement ................................. I-27
ARTICLE VIII
MISCELLANEOUS ................................................ I-27
8.1 Expenses ................................................ I-27
8.2 Entire Agreement ....................................... I-27
8.3 No Assignment .......................................... I-27
8.4 Notices ................................................ I-28
8.5 Specific Performance .................................... I-28
8.6 Captions ................................................ I-28
8.7 Counterparts ............................................. I-28
8.8 Governing Law .......................................... I-28
</TABLE>
Annexes Annex A -- Articles of Merger
Annex B -- BB&T Option Agreement (not included)
Annex C -- Employment Agreement with Edward E. Cunningham (not included)
Annex D -- Employment Agreement with Tollie W. Rich, Jr. (not included)
Annex E -- Form of Employment Agreement with Nelson R. Arnold, T. Frank
Clements, Ralph T. Dempsey, Emory J. Dunning and Edward M. Locke (not
included)
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
October 29, 1997, among LIFE BANCORP, INC. ("Life"), a Virginia corporation
having its principal office at Norfolk, Virginia, BB&T FINANCIAL CORPORATION OF
VIRGINIA, a Virginia corporation having its principal office at Virginia Beach,
Virginia ("BB&T Financial"), and BB&T CORPORATION ("BB&T"), a North Carolina
corporation having its principal office at Winston-Salem, North Carolina;
RECITALS:
The parties desire that Life 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. As a condition and inducement to BB&T's willingness to
enter into this Agreement, Life is concurrently granting to BB&T an option to
acquire, under certain circumstances, Life's common stock pursuant to a Stock
Option Agreement between BB&T and Life in the form attached hereto as Annex B
(the "BB&T Option Agreement").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any Person who directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person and, without limiting the
generality of the foregoing, includes any executive officer or director of such
Person and any Affiliate of such executive officer or director.
"BB&T Common Stock" shall mean the shares of common stock, par value $5.00
per share, of BB&T, with rights attached issued pursuant to Rights Agreement
dated December 17, 1996 between BB&T and Branch Banking and Trust Company,
Rights Agent relating to BB&T's Series B Junior Participating Preferred Stock,
$5 par value.
"BB&T Option Agreement" shall mean the Option Agreement dated as of even
date herewith under which BB&T has an option to purchase shares of Life, as
amended from time to time, which shall be executed immediately following
execution of this Agreement.
"BB&T Subsidiaries" shall mean all bank Subsidiaries of BB&T at the
Effective Time.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the Life Disclosure Memorandum,
referencing the Section number herein pursuant to which such disclosure is
being made.
"Environmental Claim" means any notice from any governmental authority or
third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from a
violation of the Environmental Laws or the presence or release into the
environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over, and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. 6901 et seq., and
I-1
<PAGE>
other laws and regulations relating to emissions, discharges, releases, or
threatened releases of any Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
BB&T 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 BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1996, and (b) with respect to Life, (i) the consolidated balance
sheets (including related notes and schedules, if any) of Life as of December
31, 1996, 1995, and 1994, and the related consolidated statements of
operations, changes in 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 Life in Securities Documents and (ii) the
consolidated balance sheets of Life (including related notes and schedules, if
any) and the related consolidated statements of operations, changes in
shareholders' equity and cash flows (including related notes and schedules, if
any) included in Securities Documents filed by Life with respect to periods
ended subsequent to December 31, 1996.
"GAAP" means generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the
relevant date.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or
regulation, including but not limited to petroleum products; (iii) asbestos;
(iv) radon; (v) poly-chlorinated biphiphenyls and (vi) such other materials,
substances or waste which are otherwise dangerous, hazardous, harmful to human
health or the environment.
"IRS" shall mean the Internal Revenue Service.
"Life Common Stock" shall mean the shares of common stock, par value $.01
per share, of Life.
"Life Disclosure Memorandum" shall mean the written information in one or
more documents, each of which is entitled
"Life Disclosure Memorandum" and dated the date of this Agreement and
delivered not later than the date of execution of this Agreement by Life to
BB&T, and describing in reasonable detail the matters contained therein. Each
disclosure made therein 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.
"Life Subsidiaries" shall mean the current Subsidiaries of Life, and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Life in the future and held as a Subsidiary by Life at the
Effective Time.
"Material Adverse Effect" on BB&T or Life shall mean an event, change or
occurrence which, individually or together with any other event, change or
occurrence, (i) has a material adverse effect on the financial condition,
results of operations, business or business prospects of BB&T and the BB&T
Subsidiaries, taken as a whole, or Life and the Life Subsidiaries, taken as a
whole, or (ii) materially impairs the ability of BB&T or Life to perform its
obligations under this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) actions and omissions
of BB&T or Life taken with the prior written consent of the other in
contemplation of the transactions contemplated hereby (including any actions
taken by Life pursuant to Section 5.6 of this Agreement), (b) the direct
effects of compliance with this Agreement on the operating performance of the
parties, including expenses incurred by the parties in consummating the
transactions contemplated by this Agreement or relating to any litigation
arising as a result of the Merger, (c) any effect with respect to a party
hereto caused, in whole or in part, by the other party.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
I-2
<PAGE>
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Person" means any individual, corporation, partnership, joint venture,
association, trust or "group" (as that term is defined in Section 13(d)(3) of
the Exchange Act).
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders
of Life to solicit their votes in connection with this Agreement and the Plan
of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto, as filed with the Commission
under the Securities Act with respect to the BB&T Common Stock to be issued in
connection with the transactions contemplated by this Agreement.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests (other than rights
pursuant to the Rights Agreement described under the definition of "BB&T Common
Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"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.
"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 Life
Common Stock, aggregating 873,702 shares.
"Stock Option Plan" shall mean Life's 1995 Stock Option Plan.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either owns or controls 50%
or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (in determining
whether one entity owns or controls 50% or more of the outstanding equity
securities of another, equity securities owned or controlled in a fiduciary
capacity shall be deemed owned and controlled by the beneficial owner).
"TILA" shall mean the Truth in Lending Act, as amended.
"VSCA" shall mean the Virginia Stock Corporation Act, as amended.
I-3
<PAGE>
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the following
sections:
<TABLE>
<S> <C>
Agreement Introduction
Articles of Merger Recitals
BB&T Introduction
BB&T Financial Introduction
BB&T Option Agreement Recitals
BB&T Option Plan Section 2.9
BB&T Ratio Section 7.1(g)
BB&T-Virginia Section 5.17
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(b)
Constituent Corporations Section 2.1
Determination Date Section 7.1(g)
Effective Time Section 2.3
Exchange Ratio Section 2.7
Index Group Section 7.1(g)
Index Price Section 7.1(g)
Life Introduction
Merger Recitals
Merger Consideration Section 2.7
Plan Section 3.14(b)(i)
Plan of Merger Recitals
RRP 5.12(d)
Starting Date Section 7.1(g)
Surviving Corporation Section 2.1(a)
</TABLE>
ARTICLE II
THE MERGER
2.1 Merger
BB&T Financial and Life are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the VSCA. At the Effective
Time:
(a) Life 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 Life 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 Life 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.
I-4
<PAGE>
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 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions
to Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing),
or such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of Life shall
cease, and the Surviving Corporation shall thereupon and thereafter, to the
extent consistent with its Articles of Incorporation, possess all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all other choses
in action, and all and every other interest of or belonging to or due to each
of the Constituent Corporations shall be taken and deemed to be transferred to
and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason
of the Merger. The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities, obligations and penalties of each of the
Constituent Corporations; and any claim existing or action or proceeding, civil
or criminal, pending by or against either of the Constituent Corporations may
be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in its place; and any judgment rendered against
either of the Constituent Corporations may be enforced against the Surviving
Corporation. Neither the rights of creditors nor any liens upon the property of
either of the Constituent Corporations shall be impaired by reason of the
Merger.
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in law
or any other actions are necessary, desirable or proper to vest, perfect or
confirm of record or otherwise, in the Surviving Corporation, the title to any
property or rights of the Constituent Corporations acquired or to be acquired
by reason of, or as a result of, the Merger, the Constituent Corporations agree
that such Constituent Corporations and their proper officers and directors
shall and will execute and deliver all such proper deeds, assignments and
assurances in law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and that
the proper officers and directors of the Surviving Corporation are fully
authorized and directed in the name of the Constituent Corporations or
otherwise to take any and all such actions.
2.7 Merger Consideration
As used herein, the term "Merger Consideration" shall mean the portion of
a whole share of BB&T Common Stock to be exchanged for each share of Life
Common Stock issued and outstanding as of the Effective Time and cash (without
interest) to be payable in exchange for any fractional share of BB&T Common
Stock which would otherwise be exchanged for a share of Life Common Stock,
determined as follows:
(a) The number of shares of BB&T Common Stock to be issued in exchange for
each issued and outstanding share of Life Common Stock shall be in the ratio of
.58 shares of BB&T Common Stock for each such share of Life Common Stock (the
"Exchange Ratio"); provided, that if the product of the Exchange Ratio
multiplied by the Closing Value (defined below) is less than $33.00, the
Exchange Ratio shall be increased by an amount necessary to increase such
product to $33.00, but in no event shall the Exchange Ratio exceed .60.
(b) For purposes of this Section 2.7, the "Closing Value" of BB&T 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 ten trading
days (determined by excluding days on which the NYSE is closed) immediately
preceding the tenth calendar day preceding the Effective Time (the tenth day to
be determined by counting the day preceding the Effective Time as the first
day).
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<PAGE>
(c) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of
such share by the Closing Value. No person will be entitled to dividends,
voting rights, or any other rights as a BB&T shareholder in respect of any
fractional share.
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of Life or the holders of record of Life Common Stock, each share
of Life 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 Life Common Stock (as
provided in paragraph (d) below), the Merger Consideration.
(b) Each share of BB&T Financial Common Stock issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of Life Common Stock shall be
deemed upon the Effective Time for all purposes to represent only the right to
receive the Merger Consideration. No interest will be paid or accrued on the
Merger Consideration upon the surrender of the certificate or certificates
representing shares of Life Common Stock. With respect to any certificate for
Life Common Stock that has been lost or destroyed, BB&T shall pay the Merger
Consideration attributable to such certificate upon receipt of a surety bond or
other adequate indemnity as required in accordance with BB&T's standard policy,
and evidence reasonably satisfactory to BB&T of ownership of the shares
represented thereby. After the Effective Time, no transfer of the shares of
Life Common Stock outstanding immediately prior to the Effective Time shall be
made on the stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each Life shareholder a form of letter of transmittal and
instructions for use in effecting the surrender, in exchange for the Merger
Consideration, of the certificates which, immediately prior to the Effective
Time, represented any shares of Life Common Stock. 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, BB&T shall promptly cause the transfer to the
persons entitled thereto of the Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by Life in respect of shares of Life 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 Life shall be entitled to vote after the Effective Time at any meeting of
BB&T shareholders the number of whole shares of BB&T Common Stock into which
their respective shares of Life Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing Life Common
Stock for certificates representing BB&T Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by BB&T on the BB&T Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares of BB&T Common Stock issuable pursuant to this
Agreement, but after the Effective Time no dividend or other distribution
payable to the holders of record of BB&T Common Stock as of any time subsequent
to the Effective Time shall be delivered to the holder of any certificate
representing Life Common Stock until such holder surrenders such certificate
for exchange as provided in this Section 2.8. Upon surrender of such
certificate, both the BB&T Common Stock certificate and any undelivered
dividends and cash payments payable hereunder (without interest) shall be
delivered and paid with respect to each share of Life Common Stock represented
by such certificate.
2.9 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding (and which
by its terms does not lapse on or before the Effective Time), whether or not
then exercisable, shall be converted automatically into and become an option
under the BB&T 1995 Omnibus Stock Incentive Plan (the "BB&T Option Plan"), and
shall be governed by the terms and conditions of the BB&T Option Plan;
provided, that in no event shall the vesting, exercise and duration provisions
of any Stock Option following conversion to an option under the BB&T Option
Plan be less favorable to the optionee than provided under the individual stock
option agreements as in effect under the Stock Option Plan immediately
preceding the Effective Time. In making such conversion, (i) the number of
shares of BB&T Common Stock subject to each such Stock Option shall be the
number of whole shares of BB&T (omitting any fractional share) determined by
multiplying the number of shares of Life Common Stock subject to such Stock
Option immediately prior to the Effective Time by the Exchange Ratio, (ii) the
per share exercise price under each such Stock Option shall be adjusted by
dividing the per share exercise price under each such
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Stock Option by the Exchange Ratio and rounding up to the nearest cent, and
(iii) no restrictions on transfers shall be placed on shares of BB&T Common
Stock received through the exercise of the option except to the extent such
restrictions would have been placed on such shares under such Life plan or are
required by the Securities Laws. 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. BB&T and Life 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 BB&T as construed under Rule 16b-3 shall, as a
condition to such conversion, be approved in accordance with the provisions of
Rule 16b-3.
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto. BB&T has reserved under the BB&T Option Plan adequate shares of BB&T
Common Stock for delivery upon exercise of any such converted options.
2.10 Merger of Subsidiary
In the event that BB&T shall request, Life shall take such actions, and
shall cause the Life 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 Life
Subsidiaries with and into, in each case, one of the BB&T Subsidiaries,
provided that such actions will not substantially delay or impair the prospects
of completing the Merger pursuant to this Agreement and the Plan of Merger.
2.11 Anti-Dilution
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend or other similar recapitalization, and the record date thereof (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Merger Consideration and the Exchange
Ratio shall be proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LIFE
Except as Disclosed, Life represents and warrants to BB&T as follows (no
representation or warranty herein of Life shall be deemed to be inaccurate
unless the inaccuracy would permit BB&T 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 Life consists of 30,000,000 shares of Life
Common Stock, par value $.01 per share and 5,000,000 shares of preferred stock,
par value $.01 per share. No other classes of capital stock of Life are
authorized. As of the date hereof, 9,847,581 shares of Life Common Stock are
issued and outstanding, and no other shares of capital stock of Life, common or
preferred, are issued and outstanding. All outstanding shares of Life 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 Life Common Stock reserved in connection with the
Stock Option Plan, (ii) 1,959,668 shares of Life Common Stock reserved in
connection with the BB&T Option Agreement, and (iii) 218,869 shares of
outstanding Life Common Stock held by Life's Recognition and Retention Plan as
of the date of this Agreement, of which 218,449 shares are subject to plan
share awards as of the date of this Agreement. Life has granted options to
acquire 873,702 shares of Life Common Stock under the Stock Option Plan, which
options are outstanding as of the date hereof. Except as set forth in this
Section 3.1, there are no Rights authorized, issued or outstanding with respect
to the capital stock of Life. Holders of Life Common Stock do not have
preemptive rights.
3.2 Organization, Standing and Authority
Life 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. Life is not required to be qualified to do business in
any other state of the United States or foreign jurisdiction.
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3.3 Ownership of Subsidiaries
Section 3.3 of the Life Disclosure Memorandum lists all of the Life
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 Life (directly
or indirectly), the percentage ownership interest so owned by Life, and its
business activities. The outstanding shares of capital stock or other equity
interests of the Life Subsidiaries are validly issued and outstanding, fully
paid and nonassessable, and all such shares are directly or indirectly owned by
Life 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 Life Subsidiaries, and there
are no agreements, understandings or commitments relating to the right of Life
to own, to vote or to dispose of said interests. None of the shares of capital
stock or other equity interests of the Life Subsidiaries have been issued in
violation of the preemptive rights of any person. Section 3.3 of the Life
Disclosure Memorandum also lists all shares of capital stock or other
securities or ownership interests of any corporation, partnership, joint
venture, or other organization (other than Life's Subsidiaries) owned by Life,
directly or indirectly.
3.4 Organization, Standing and Authority of the Subsidiaries
Each Life Subsidiary which is a depository institution is a federally
chartered capital stock savings bank and its deposits are insured by SAIF. Each
of the Life Subsidiaries is validly existing and in good standing under the
laws of its jurisdiction of organization. Each of the Life Subsidiaries has
full power and authority to carry on its business as now conducted, and is duly
qualified to do business in each jurisdiction as Disclosed. No Life Subsidiary
is required to be qualified to do business in any other state of the United
States or foreign jurisdiction or is engaged in any type of activities that
have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) Life 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 Life shareholders of this Agreement and the Plan of Merger) to
perform all of its obligations under this Agreement, the Articles of Merger and
the BB&T Option Agreement. The execution and delivery of this Agreement, the
Articles of Merger and the BB&T Option Agreement, and consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action except, in the case of this
Agreement and the Plan of Merger, the approval of Life shareholders. This
Agreement, the Plan of Merger and the BB&T Option Agreement constitute legal,
valid and binding obligations of Life, and each is enforceable against Life in
accordance with its terms, in each such case subject to (i) bankruptcy,
fraudulent transfer, insolvency, moratorium, reorganization, conservatorship,
receivership, or other similar laws from time to time in effect relating to or
affecting the enforcement of the rights of creditors of FDIC insured
institutions or the enforcement of creditors' rights generally; and (ii)
general principles of equity, 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 BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Life 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 Life or any Life
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 Life
or any Life 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 Life
or any Life Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing
with, or consent of, any public body or authority is necessary for the
consummation by Life of the Merger and the other transactions contemplated in
this Agreement.
3.6 Securities Filings; Statements True
(a) Life has timely filed all Securities Documents required by the
Securities Laws since December 31, 1994. Life has Disclosed or made available
to BB&T a true and complete copy of each Securities Document filed by Life with
the Commission after December 31, 1994 and prior to the date hereof, which are
all of the Securities Documents that Life was required to file during such
period. As of their respective dates of filing, such Securities Documents
complied with the
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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 Life fairly present or will fairly
present, as the case may be, the consolidated financial position of Life and
the Life 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 GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by Life or any Life Subsidiary to BB&T contains or will
contain any untrue statement of a material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.7 Minute Books
The minute books of Life and each of the Life 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 December 31, 1996, Life and the Life Subsidiaries have not incurred
any liability except as disclosed in the most recent Life 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
adverse change or any event involving a prospective adverse change in the
business, financial condition or results of operations of Life and the Life
Subsidiaries, taken as a whole.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of Life and the Life
Subsidiaries are disclosed in the most recent Financial Statements of Life or
incurred in the ordinary course of its business since the date of Life's most
recent Financial Statements.
3.10 Properties
(a) Life and the Life Subsidiaries have good and marketable title, free
and clear of all liens, encumbrances, charges, defaults or equitable interests,
to all of the properties and assets, real and personal, reflected on the
consolidated balance sheet included in the Financial Statements of Life as of
December 31, 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 Life or any Life Subsidiary,
as lessee or licensee, leases or licenses rights to real or personal property,
are valid and enforceable in accordance with their respective terms.
3.11 Environmental Matters
(a) Life and the Life Subsidiaries are and at all times have been in
compliance with all Environmental Laws, and there are no present circumstances
that would prevent or interfere with the continuation of such compliance.
(b) There are no pending Environmental Claims, and neither Life nor any
Life Subsidiary has received notice of any pending Environmental Claims, and to
the best knowledge of Life 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) Life or any Life Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim Life or any Life 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 Life or any Life
Subsidiary, or any real or personal property which Life or any Life 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 Life or any Life
Subsidiary holds a security interest securing a loan recorded on the books of
Life or any Life Subsidiary. Neither Life nor any Life Subsidiary is subject to
any
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agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing liability
under any Environmental Laws.
(c) Life and the Life Subsidiaries are in compliance with all
recommendations contained in any environmental audits, analyses and surveys
received by Life relating to all real and personal property owned or leased by
Life or any Life Subsidiary and all real and personal property which Life or
any Life 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 Life or any Life Subsidiary or against any person
or entity whose liability for any Environmental Claim Life or any Life
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 Life and the Life 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 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 Life are adequate as of their
respective dates, under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
(a) Life and the Life Subsidiaries and each of their predecessors have
timely filed (or requests for extensions have been timely filed and any such
extensions either are pending or have been granted and have not expired) all
federal, state and local (and, if applicable, foreign) tax returns required by
applicable law to be filed by them (including, without limitation, estimated
tax returns, income tax returns, information returns, and withholding and
employment tax returns) and have paid, or where payment is not required to have
been made, have set up an adequate reserve or accrual for the payment of, all
taxes required to be paid in respect of the periods covered by such returns.
Neither Life nor any Life Subsidiary has any liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established. Life and
the Life Subsidiaries have paid, or where payment is not required to have been
made have set up an adequate reserve or accrual for payment of, all taxes
required to be paid or accrued for the preceding or current fiscal year for
which a return is not yet due.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by Life and the Life Subsidiaries are complete and accurate. Neither Life
nor any Life 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 Life or any Life Subsidiary which have not been settled and paid. There
are currently no agreements in effect with respect to Life or any Life
Subsidiary to extend the period of limitations for the assessment or collection
of any tax. No audit examination or deficiency or refund litigation with
respect to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither Life nor any of the Life 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 Life or a Life Subsidiary) or has any liability for
taxes of any person (other than Life and the Life 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 Life and the Life 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.
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(f) Neither Life nor any of the Life 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. Life has Disclosed a complete and correct list of the
name, age, position, rate of compensation and any incentive compensation
arrangements, bonuses or commissions or fringe or other benefits, whether
payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of Life and of each Life Subsidiary and each
other person (in each case other than an employee of such companies) to whom
Life or any Life 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) Life has Disclosed an accurate and complete list of all Plans, as
defined below, contributed to, maintained or sponsored by Life or any Life
Subsidiary, to which Life or any Life 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 Life or
any Life Subsidiary is a member. For purposes of this Agreement, the term
"Plan" shall mean a plan, arrangement, agreement or program described in
the foregoing provisions of this Section 3.14(b)(i) and which is: (A) a
profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, whether or not funded and
whether or not terminated, (B) an employment agreement, (C) a personnel
policy or fringe benefit plan, policy, program or arrangement providing
for benefits or perquisites to current or former employees, officers,
directors or agents, whether or not funded, and whether or not terminated,
including without limitation benefits relating to automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, severance,
medical, dental, hospitalization, life insurance and other types of
insurance, or (D) any other employee benefit plan as defined in Section
3(3) of ERISA, whether or not funded and whether or not terminated.
(ii) Neither Life nor any Life Subsidiary contributes to, has an
obligation to contribute to or otherwise has any liability or potential
liability with respect to (A) any multiemployer plan as defined in Section
3(37) of ERISA, (B) any plan of the type described in Sections 4063 and
4064 of ERISA or in Section 413 of the Code (and regulations promulgated
thereunder), or (C) any plan which provides health, life insurance,
accident or other "welfare-type" benefits to current or future retirees or
former employees or directors, their spouses or dependents, other than in
accordance with Section 4980B of the Code or applicable state continuation
coverage law.
(iii) None of the Plans obligates Life or any Life 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 Life or any
Life Subsidiary is the subject of any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code, neither Life nor any Life 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
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Life or any Life Subsidiary to any tax under Sections 4971, 4972, 4976,
4977 or 4979 of the Code or to a fine or penalty under Section 502(c) of
ERISA.
(v) Each Plan that is intended to be qualified under Section 401(a) of
the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to the qualification under
the Code of such Plan and the tax exempt status of such related trust, and
nothing has occurred since the date of such determination letter that
could adversely affect the qualification of such Plan or the tax exempt
status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term is defined in
Section 3(35) of ERISA) has been, during the five years preceding the
Closing Date, transferred out of the controlled group of corporations
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code) of
which Life or any Life 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
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 Life nor to the best knowledge of Life, any
Life Subsidiary, any trustee, administrator or other fiduciary of any
Plan, or any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner which could subject
Life or any Life 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) Life and each Life Subsidiary has been and is presently in compliance
with all of the requirements of Section 4980B of the Code.
(xi) Neither Life nor any Life Subsidiary has a liability as of December
31, 1996, under any Plan that, to the extent disclosure is required under
GAAP, is not reflected on the consolidated balance sheet included in the
Financial Statements of Life as of December 31, 1996 or otherwise
Disclosed.
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) Life's or any Life
Subsidiary's obligation to make contributions or any other payments to
fund benefits accrued under the Plans as of the date of this Agreement or
(B) the benefits accrued or payable with respect to any participant under
the Plans (except to the extent benefits may be deemed increased by
accelerated vesting or by the accelerated allocation of previously
unallocated Plan assets).
(xiii) With respect to each Plan, Life 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 IRS (with attachments), (C) the three most recent
actuarial reports, if any, (D) the three most recent financial
statements, (E) all governmental filings for the last three years,
including without limitation, excise tax returns and reportable events
filings, and (F) all governmental rulings, determinations, and opinions
(and pending requests for governmental rulings, determinations, and
opinions) during the past three years.
(xiv) Each of the Plans as applied to Life and any Life Subsidiary may be
amended or terminated at any time by action of Life's Board of Directors,
committee of the Board of Directors or duly authorized officer, in each
case subject to the terms of the Plan and compliance with applicable laws
and regulations (and limited, in the case of multiemployer plans, to
termination of the participation of Life or a Life Subsidiary
thereunder).
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3.15 Certain Contracts
(a) Neither Life nor any Life 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 Life
or any Life Subsidiary or the guarantee by Life or any Life Subsidiary of any
such obligation, which cannot be terminated within less than 30 days after the
Closing Date by Life or any Life 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
Life or any Life Subsidiary (without payment of any penalty or cost), or that
provides benefits which are contingent, or the application of which is
materially altered, upon the occurrence of a transaction involving Life of the
nature contemplated by this Agreement or the BB&T Option Agreement, or (iv) any
agreement or plan, written or oral, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the BB&T Option Agreement, or the value of
any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the BB&T Option Agreement. Each
matter Disclosed pursuant to this Section 3.15(a) is in full force and effect.
(b) Neither Life nor any Life 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 Life, threatened
against Life or any Life Subsidiary or against any asset, interest, plan or
right of Life or any Life Subsidiary, or to the best knowledge of Life against
any officer, director or employee of any of them in their capacity as such.
There are no actions, suits or proceedings instituted, pending or, to the best
knowledge of Life, threatened against any present or former director or officer
of Life or any Life Subsidiary that would reasonably be expected to give rise
to a claim against Life or any Life Subsidiary for indemnification. There are
no actual or, to the best knowledge of Life threatened actions, suits or
proceedings which present a claim to restrain or prohibit the transactions
contemplated herein or in the BB&T Option Agreement. To the best knowledge of
Life, no fact or condition relating to Life or any Life Subsidiary exists
(including without limitation noncompliance with the CRA) that would prevent
Life or BB&T from obtaining all of the federal and state regulatory approvals
contemplated herein.
3.17 Compliance with Laws; Filings
Each of Life and each Life 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 Life nor any Life 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 Life nor any
Life Subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, directive, memorandum of understanding or commitment, and
none of them has received any communication requesting that it enter into any
of the foregoing. Since December 31, 1994, Life and each of the Life
Subsidiaries has filed all reports, registrations, notices and statements, and
any amendments thereto, that it was required to file with federal and state
regulatory authorities, including without limitation the Commission, OTS, FDIC,
Federal Reserve Board and State Board. Each such report, registration, notice
and statement, and each amendment thereto, complied with applicable legal
requirements.
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3.18 Brokers and Finders
Neither Life nor any Life Subsidiary, nor any of its officers, directors
or employees, has employed any broker, finder or financial advisor or incurred
any liability for any fees or commissions in connection with the transactions
contemplated herein, in the Plan of Merger or in the BB&T Option Agreement,
except for fees to accountants and lawyers and an obligation, the amount and
nature of which has been 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
Life or any Life Subsidiary has purchased securities subject to an agreement to
resell, Life or the Life 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 Life or any Life Subsidiary has sold securities subject to an
agreement to repurchase, neither Life nor the Life Subsidiary has pledged
collateral materially in excess of the amount of the debt secured thereby.
Neither Life nor any Life Subsidiary has pledged collateral materially in
excess of the amount required under any interest rate swap or other similar
agreement currently outstanding.
(b) Neither Life nor any Life 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 Life Subsidiaries that are depository
institutions are insured by the SAIF to the maximum extent permitted by federal
law, and the Life 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
Life has Disclosed all existing transactions, investments and loans,
including loan guarantees, to which Life or any Life Subsidiary is a party with
any director, executive officer or 5% shareholder of Life 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 Life 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 Life to vote on the Plan of Merger, the Proxy
Statement/Prospectus and all amendments or supplements thereto, with respect to
all information set forth therein provided by Life, (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 under which they were made, not misleading.
3.23 Tax and Regulatory Matters
Neither Life nor any Life Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger not
to be accounted for as a pooling-of-interest (except to the extent actions
taken pursuant to this Agreement could have such an effect) or not to
constitute a reorganization under Section 368 of the Code, or (ii) materially
impede or delay receipt of any consents of regulatory authorities referred to
in Section 5.4(b) or result in failure of the condition in Section 6.3(b).
3.24 State Takeover Laws
Life and each Life 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 Sections 13.1-728.1 to
13.1-728.9 of the VSCA.
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3.25 Labor Relations
Neither Life nor any Life 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 Life or any Life Subsidiary a party to any collective
bargaining agreement. There is no strike or other labor dispute involving Life
or any Life Subsidiary, pending or threatened, nor to the best knowledge of
Life is there any activity involving any employees of Life or any Life
Subsidiary seeking to certify a collective bargaining unit or engaging in any
other organization activity.
3.26 Fairness Opinion
Life 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
Life from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to Life as follows (no representation or
warranty herein of BB&T shall be deemed to be inaccurate unless the inaccuracy
would permit Life to refuse to consummate the Merger under the applicable
standard set forth in Section 6.2(a)):
4.1 Capital Structure of BB&T
The authorized capital stock of BB&T consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which 2,000,000 shares have been
designated as Series B Junior Participating Preferred Stock and the remainder
are undesignated, and none of which shares are issued and outstanding, and (ii)
300,000,000 shares of BB&T Common Stock, of which 134,308,475 shares were
issued and outstanding on September 30, 1997. All outstanding shares of BB&T
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The shares of BB&T Common Stock reserved as provided in Section
5.3 are free of any Rights and have not been reserved for any other purpose,
and such shares are available for issuance as provided pursuant to the Plan of
Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
BB&T is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its assets, and is duly qualified to do business in the states of
the United States where its ownership or leasing of property or the conduct of
its business requires such qualification. BB&T is registered as a bank holding
company under the Federal Bank Holding Company Act of 1956, as amended.
4.3 Authorized and Effective Agreement
(a) Each of BB&T and BB&T Financial 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 each of BB&T and BB&T
Financial. This Agreement and the Plan of Merger attached hereto constitute
legal, valid and binding obligations of BB&T and BB&T Financial, and each is
enforceable against BB&T and BB&T Financial 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 or the Articles
of Merger, nor consummation of the transactions contemplated hereby, nor
compliance by BB&T or BB&T Financial with any of the provisions hereof or
thereof shall (i) conflict with or result in a breach of any provision of the
articles of incorporation or bylaws of BB&T or any BB&T Subsidiary, (ii)
constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or
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encumbrance upon any property or asset of BB&T or any BB&T Subsidiary pursuant
to, any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to BB&T or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing
with, or consent of, any public body or authority is necessary for the
consummation by BB&T and BB&T Financial of the Merger and the other
transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
Each of the BB&T Subsidiaries and BB&T Financial is duly organized,
validly existing and in good standing under applicable laws. BB&T owns,
directly or indirectly, all of the issued and outstanding shares of capital
stock of each of the BB&T Subsidiaries and BB&T Financial. Each of the BB&T
Subsidiaries and BB&T Financial (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
BB&T has timely filed all Securities Documents required by the Securities
Laws since December 31, 1994. 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 BB&T fairly present or will fairly present, as
the case may be, the consolidated financial position of BB&T and the BB&T
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to
normal year-end audit adjustments) in conformity with GAAP applied on a
consistent basis.
4.7 Adverse Change
Since December 31, 1996, BB&T on a consolidated basis has not incurred any
liability except as disclosed on the most recent BB&T 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 adverse
change or any event involving a prospective adverse change in the business,
financial condition or results of operations of BB&T, on a consolidated basis.
4.8 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of BB&T and the BB&T
Subsidiaries are disclosed in the most recent Financial Statements of BB&T or
incurred in the ordinary course of its business since the date of BB&T's most
recent Financial Statements.
4.9 Compliance with Laws
Each of BB&T and the BB&T 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), and has obtained and
maintained all permits, licenses and registrations applicable to the conduct of
its business, and neither BB&T nor any of the BB&T 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 BB&T nor any of the BB&T Subsidiaries 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 they enter into any of the foregoing.
4.10 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
Life to vote on the Merger, the Proxy Statement/Prospectus and all amendments
or supplements thereto, with respect to all information set forth therein
relating to BB&T, (i) shall comply with the applicable
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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 under which they were made, not misleading.
4.11 Tax and Regulatory Matters
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger not
to be accounted for as a pooling-of-interest or not to constitute a
reorganization under Section 368 of the Code, or (ii) materially impede or
delay receipt of any consents of regulatory authorities referred to in Section
5.4(b) or result in failure of the condition in Section 6.3(b).
4.12 Share Ownership
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of Life Common Stock.
4.13 Legal Proceedings
There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein. To the best knowledge of BB&T, no fact or
condition relating to BB&T or any BB&T Subsidiary exists (including without
limitation, noncompliance with the CRA) that would prevent BB&T or Life from
obtaining all of the federal and state regulatory approvals contemplated
herein.
ARTICLE V
COVENANTS
5.1 Life Shareholder Meeting
Life 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 Life agrees
that it shall, at the time the Proxy Statement/Prospectus is mailed to the
shareholders of Life, recommend that Life's shareholders vote for such
approval; provided, that the Board of Directors of Life may withdraw or refuse
to make such recommendation only if the Board of Directors shall determine in
good faith that such recommendation should not be made in view of its fiduciary
duty to Life'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, more likely than not, constitute a breach of
the fiduciary duties of such Board to shareholders of Life, 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 Life 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 Life from a
financial point of view.
5.2 Registration Statement; Proxy Statement/Prospectus
As promptly as practicable after the date hereof, BB&T shall prepare and
file the Registration Statement with the Commission. Life will furnish to BB&T
the information required to be included in the Registration Statement with
respect to its business and affairs before it is filed with the Commission and
again before any amendments are filed, and shall have the right to review and
consult with BB&T on the form of, and any characterizations of such information
included in, the Registration Statement prior to the filing with the
Commission. Such Registration Statement, at the time it becomes effective and
on the Effective Time, shall in all material respects conform to the
requirements of the Securities Act and the applicable rules and regulations of
the Commission. The Registration Statement shall include the form of Proxy
Statement/Prospectus. BB&T and Life shall use their reasonable best efforts to
cause the Proxy Statement/Prospectus to be approved by the Commission for
mailing to the Life shareholders, and such Proxy Statement/Prospectus shall, on
the date of mailing, conform in all material respects to the requirements of
the Securities Laws and the applicable rules and regulations of the Commission
thereunder. Life 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, BB&T undertakes and agrees (i) to cause
BB&T Financial to adopt the Plan of Merger; (ii) to vote the shares of BB&T
Financial
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common stock for approval of the Plan of Merger; and (iii) to pay or cause to
be paid when due the Merger Consideration. BB&T has reserved for issuance such
number of shares of BB&T Common Stock as shall be necessary to pay the portion
of the Consideration to be distributed in the form of BB&T Common Stock, and
agrees to not take any action that would cause the aggregate number of shares
of BB&T Common Stock available for issuance hereunder not to be sufficient to
effect the Merger.
5.4 Additional Acts
(a) Life 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 BB&T or a BB&T Subsidiary) the transactions contemplated hereby,
provided that such modifications do not change the Merger Consideration or
abrogate the covenants and other agreements contained in this Agreement,
including the covenant to not take any action that would substantially delay or
impair the prospects of completing the Merger pursuant to this Agreement and
the Plan of Merger.
(b) As promptly as practicable after the date hereof, BB&T and Life 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. Life and BB&T 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.
(c) BB&T agrees that its Board of Directors or authorized Board committee
shall approve prior to the Effective Time each grant of a converted option (as
described in Section 2.9(a) hereof) to any individual who subsequent to the
Merger will be a director or officer of BB&T as construed under Rule 16b-3 of
the Exchange Act.
5.5 Best Efforts
(a) BB&T and Life 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. Neither
BB&T nor Life 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.
(b) Without limiting the generality of the foregoing, prior to the
Effective Time, Life shall offer and sell for fair value to individuals or
entities unaffiliated with Life or BB&T (and which are not investment banking
firms purchasing for their own accounts) such number of shares of Life Common
Stock as shall be deemed necessary or advisable, in the opinion of BB&T's
independent accountants, in order for the Merger to qualify to be accounted for
as a pooling-of-interests under GAAP. Life shall consult with BB&T with respect
to the number of shares, if any, to be sold and the timing and manner of such
sale, and the identity of the purchaser, which may involve placement agents or,
with BB&T's consent, underwriters, in order to ensure that the sale will comply
with requirements for pooling-of-interest accounting.
5.6 Certain Accounting Matters
Life shall cooperate with BB&T concerning accounting and financial matters
necessary or appropriate to facilitate the Merger (taking into account BB&T's
policies, practices and procedures), including without limitation issues
arising in connection with record keeping, loan classification, valuation
adjustments, levels of loan loss reserves and other accounting practices;
provided, that any action taken pursuant to this Section 5.6 shall not be
deemed to constitute or result in the breach of any representation or warranty
of Life contained in this Agreement; and provided further, that Life shall not
be required to implement any changes in accounting or financial matters unless
and until BB&T agrees in writing that all conditions to BB&T's obligation to
consummate the Merger set forth in Sections 6.1 and 6.3 hereof (other than the
delivery of certificates, opinions and other instruments and documents to be
delivered at the Closing or otherwise to be dated at the Effective Time, the
delivery of which shall continue to be conditions to BB&T's obligation to
consummate the Merger) have been satisfied or waived.
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5.7 Access to Information
Life and BB&T will each keep the other advised of all material
developments relevant to its business and the businesses of its Subsidiaries,
and to consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
Life shall afford to representatives of BB&T access, during normal business
hours during the period prior to the Effective Time, to all of the properties,
books, contracts, commitments and records of Life and the Life Subsidiaries
and, during such period, shall make available all information concerning their
businesses as may be reasonably requested. No investigation pursuant to this
Section 5.7 shall affect or be deemed to modify any representation or warranty
made by, or the conditions to the obligations hereunder of, either party
hereto. Each party hereto shall, and shall cause each of its directors,
officers, attorneys and advisors to, maintain the confidentiality of all
information obtained hereunder which is not otherwise publicly disclosed by the
other party, said 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
BB&T and Life shall agree with each other as to the form and substance of
any press release related to this Agreement and the Plan of Merger or the
transactions contemplated hereby and thereby, and consult with each other as to
the form and substance of other public disclosures related thereto; provided,
that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the
opinion of its counsel is required by law.
5.9 Forbearances of Life
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, Life shall not, and shall cause each of the Life
Subsidiaries not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, or
establish or acquire any new Subsidiary or engage in any new type of
activity;
(b) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock, other than regularly scheduled quarterly
dividends of $.12 per share of Life Common Stock payable on record dates
and in amounts consistent with past practices; provided that any dividend
declared or payable on the shares of Life Common Stock for the quarterly
period during which the Effective Time occurs shall, unless otherwise
agreed upon in writing by BB&T and Life, be declared with a record date
prior to the Effective Time only if the normal record date for payment of
the corresponding quarterly dividend to holders of BB&T Common Stock is
before the Effective Time;
(c) issue any shares of its capital stock, except pursuant to the Stock
Option Plan or the BB&T Option Agreement, or as necessary to comply with
Section 5.5;
(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 Life 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;
(h) increase the rate of compensation of any of its directors, officers
or employees (excluding increases in compensation resulting from the
vesting of restricted stock awards outstanding as of the date of this
Agreement or the exercise of compensatory stock options outstanding as of
the date of this Agreement), or pay or agree to pay any bonus to, or
provide any new employee benefit or incentive to, any of its directors,
officers or employees, except with respect to officers and employees in
the ordinary course of business consistent with past practices (it being
understood that compensation of officers and other employees is generally
reviewed in December or January of each year);
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(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,
Life or any Life Subsidiary or any business combination with Life or any
Life Subsidiary other than as contemplated by this Agreement; or authorize
any officer, director, agent or affiliate of Life or any Life Subsidiary
to do any of the above; or fail to notify BB&T immediately if any such
inquiries or proposals are received, any such information is requested or
required, or any such negotiations or discussions are sought to be
initiated; provided, that this paragraph (j) shall not apply to furnishing
information, negotiations or discussions following an unsolicited offer
if, as a result of such offer, Life is advised in writing by legal counsel
that the failure so to furnish information or negotiate would, more likely
than not, constitute a breach of the fiduciary duties of Life'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 Life or a Life Subsidiary or guarantee by Life
or a Life Subsidiary of any obligation, (iii) any agreement, arrangement
or commitment relating to the employment or severance of a consultant or
the employment, severance, election or retention in office of any present
or former director, officer or employee (this clause shall not apply to
the election of directors by shareholders or the re-appointment of
officers in the normal course); 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, and except that after approval of the Agreement
and the Plan of Merger by its shareholders and after receipt of the
requisite regulatory approvals for the transactions contemplated by this
Agreement and the Plan of Merger, Life shall cooperate in good faith with
BB&T to adopt policies, practices and procedures consistent with those
utilized by BB&T, effective on or before the Closing Date;
(m) change its methods of accounting in effect at December 31, 1996,
except as required by changes in GAAP concurred in by BB&T which
concurrence shall not be unreasonably withheld, or change any of its
methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its federal income tax returns
for the year ended December 31, 1996, except as required by changes in law
or regulation;
(n) incur any commitment 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 Merger not to be accounted for as a pooling-of-interest or not
to constitute a reorganization under Section 368 of the Code as determined
by BB&T, (ii) result in any inaccuracy of a representation or warranty
herein which would allow for a termination of this Agreement, or (iii)
cause any of the conditions precedent to the transactions contemplated by
this Agreement to fail to be satisfied;
(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 Agreements
BB&T (or its specified banking subsidiary) agrees to enter into (a) an
employment agreement with Edward E. Cunningham substantially in the form of
Annex C hereto, (b) an employment agreement with Tollie W. Rich, Jr.
substantially in the form of Annex D hereto, and (c) employment agreements with
each of Nelson R. Arnold, T. Frank Clements, Ralph T. Dempsey, Emory J. Dunning
and Edward M. Locke substantially in the form of Annex E hereto.
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<PAGE>
5.11 Affiliates
Life shall use its best efforts to cause all persons who are Affiliates of
Life to deliver to BB&T promptly following this Agreement a written agreement
providing that such person will not dispose of BB&T Common Stock received in
the Merger except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and except as consistent with qualifying the
transactions contemplated hereby for pooling-of-interests accounting treatment,
and in any event shall use its best efforts to cause such Affiliates to deliver
to BB&T such written agreement prior to the Closing Date.
5.12 Section 401(k) Plan; ESOP; Welfare and Other Benefits
(a) BB&T shall cause the 401(k) plan of Life to be merged with the 401(k)
plan maintained by BB&T and the BB&T Subsidiaries, and the account balances of
former employees of Life or the Life Subsidiaries who are participants in the
Life plan shall be transferred to the accounts of such employees under the BB&T
401(k) plan. Following such merger and transfer, such accounts shall be
governed and controlled by the terms of the BB&T 401(k) plan as in effect from
time to time (and subject to BB&T's right to terminate such plan). For purposes
of administering the 401(k) plan and any other pension benefit plan of BB&T,
service with Life and the Life Subsidiaries by each such employee shall be
deemed to be service with BB&T or the BB&T Subsidiaries for participation and
vesting purposes only.
(b)(i) Each participant in the Life Employee Stock Ownership Plan ("Life
ESOP") not fully vested will become fully vested in his or her Life ESOP
account as of the Effective Time. As soon as practicable after the execution of
this Agreement, Life and BB&T will cooperate to cause the Life ESOP to be
amended and other action taken, in a manner reasonably acceptable to Life and
BB&T, to provide that the Life ESOP will terminate upon the Effective Time.
Between the date hereof and the Effective Time, Life or a Life Subsidiary shall
make contributions to the Life ESOP in accordance with the provisions of the
Life ESOP consistent with past practice, and the existing Life ESOP
indebtedness ("Life ESOP Indebtedness") shall be paid down as required by the
terms of the Life ESOP. Any Life ESOP Indebtedness remaining as of the
Effective Time shall be repaid from the Trust associated with the Life ESOP
through application or sale of the BB&T Common Stock received by the Life ESOP;
provided, however, that any related sale or distribution of shares by (a) the
Life ESOP shall be effected in accordance with the requirements of federal and
any applicable state securities laws and regulations, and (b) the Life ESOP and
any participant shall be effected in such a manner (and with such safeguards as
may be necessary or appropriate) so as not to jeopardize the intended pooling
of interests accounting treatment of the Merger. Upon the repayment of the Life
ESOP Indebtedness, the remaining funds in the Life ESOP suspense account will
be allocated (to the extent permitted by Sections 401(a), 415 or 4975 of the
Code and the applicable laws and regulations including, without limitation, the
applicable provisions of ERISA) to Life ESOP participants (as determined under
the terms of the Life ESOP). Life and BB&T agree that, subject to the
conditions described herein, as soon as practicable after the Effective Time
and repayment of the Life ESOP Indebtedness, participants in the Life ESOP
shall be entitled at their election to have the amounts in their Life ESOP
accounts either distributed to them in a lump sum or rolled over to another
tax-qualified plan (including the BB&T 401(k) Savings Plan to the extent
permitted by such plan) or individual retirement account.
(ii) The actions relating to termination of the Life ESOP will be adopted
conditional upon the consummation of the Merger and upon receiving a favorable
determination letter from the IRS with regard to the continued qualification of
the Life ESOP after any required amendments. Life and BB&T will cooperate in
submitting appropriate requests for any such determination letter to the IRS
and will use their best efforts to seek the issuance of such letter as soon as
practicable following the date hereof. Life and BB&T will adopt such additional
amendments to the Life ESOP as may be reasonably required by the IRS as a
condition to granting such determination letter, provided that such amendments
do not (i) substantially change the terms outlined herein, (ii) have a Material
Adverse Effect on Life and the Life Subsidiaries taken as a whole or (iii)
result in an additional material liability to BB&T.
(iii) As of and following the Effective Time, BB&T shall cause the Life
ESOP to be maintained for the exclusive benefit of employees and other persons
who were participants or beneficiaries therein prior to the Effective Time, and
shall proceed with termination of the Life ESOP through distribution of its
assets in accordance with its terms subject to the amendments described herein
and as otherwise may be required to comply with applicable law or to obtain a
favorable determination from the IRS as to the continuing qualified status of
the Life ESOP; provided, however, that no such termination distributions from
the Life ESOP shall occur after the Effective Time until a favorable
determination letter has been received from the IRS.
(c) Each employee of Life at the Effective Time who becomes an employee
immediately following the Effective Time of BB&T or a BB&T Subsidiary
("Employer Entity") shall be eligible to participate in the group
hospitalization, medical, dental, life, disability and other welfare benefit
plans and programs available to employees of the Employer Entity, subject
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to the terms of such plans and programs; provided, that service with Life shall
be deemed to be service with the Employer Entity for the purpose of determining
eligibility to participate in such welfare plans and programs.
(d) Life and BB&T agree that the Merger shall constitute a "Change in
Control" as defined in Section 7.01(c) of Life's Recognition and Retention Plan
(the "RRP"). As of the Effective Time, each participant in the RRP shall become
fully vested in all shares of Life Common Stock previously granted or awarded
to him under the Life RRP, and such shares shall be converted into shares of
BB&T Common Stock. As soon as practicable after the execution of this
Agreement, Life and BB&T will cooperate to cause the RRP to be amended and
other action taken, in a manner reasonably acceptable to Life and BB&T, to
provide that the RRP will terminate upon the Effective Time. As soon as
practicable following the Effective Time, and subject to any applicable federal
or state securities laws, all shares of Life Common Stock previously granted or
awarded to each participant in the RRP (but not yet distributed, and as
converted to shares of BB&T Common Stock pursuant to the Merger) shall be
distributed to such participant. Any shares of Life Common Stock outstanding
under such Plan's related trust, but not subject to a grant or award, shall be
converted into BB&T Common Stock as of the Effective Time and shall revert to
BB&T.
(e) Each employee of Life or a Life Subsidiary who becomes an employee of
BB&T or a BB&T Subsidiary and is terminated by BB&T or a BB&T Subsidiary
subsequent to the Effective Time, excluding any employee who has an existing
employment or special termination agreement which is Disclosed, shall be
entitled to severance pay in accordance with the general severance policy
maintained by BB&T, if and to the extent that such employee is entitled to
severance pay under such policy. Such employee's service with Life or a Life
Subsidiary shall be treated as service with BB&T for purposes of determining
the amount of severance pay, if any, under BB&T's severance policy.
(f) Prior to the Effective Time, BB&T shall use its reasonable best
efforts to inform the employees of Life and the Life Subsidiaries of the
likelihood of such employees having continued employment with BB&T or a BB&T
Subsidiary following the Effective Time and, where appropriate, shall use its
reasonable best efforts to interview the employees of Life to determine if
there are mutually beneficial employment opportunities available at BB&T or a
BB&T Subsidiary.
(g) BB&T agrees to honor all employment agreements, severance agreements,
deferred compensation agreements and the Non-Employee Directors' Retirement
Plan that Life and the Life Subsidiaries have with their current and former
employees and directors and which have been Disclosed to BB&T pursuant to this
Agreement.
5.13 Directors and Officers Protection
BB&T or a BB&T 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 Life for acts or
omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in Life'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 Life's policy in effect as of the
date hereof (the "Maximum Amount"). If the amount of the premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, BB&T
shall use its reasonable efforts to maintain the most advantageous policies of
directors' and officers' liability insurance obtainable for a premium equal to
the Maximum Amount. Notwithstanding the foregoing, BB&T further agrees to
indemnify all individuals who are or have been officers, directors or employees
of Life 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 Life on the date hereof
and is permitted under the VSCA.
5.14 Forbearances of BB&T
Except with the prior written consent of Life, which consent shall not be
arbitrarily or unreasonably withheld, between the date hereof and the Effective
Time, neither BB&T nor any BB&T Subsidiary shall take any action which would or
might be expected to (i) cause the business combination contemplated hereby not
to be accounted for as a pooling-of-interest or not to constitute a
reorganization under Section 368 of the Code; (ii) result in any inaccuracy of
a representation or warranty herein which would allow for termination of this
Agreement; (iii) cause any of the conditions precedent to the transactions
contemplated by this Agreement to fail to be satisfied; (iv) exercise the BB&T
Option Agreement other than in accordance with its terms, or dispose of the
shares of Life Common Stock issuable upon exercise of the option rights
conferred thereby other than as permitted by the terms thereof; or (v) fail to
comply in any material respect with any laws, regulations, ordinances or
governmental actions applicable to it and to the conduct of its business.
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5.15 Reports
Each of Life and BB&T shall file (and shall cause the Life Subsidiaries
and the BB&T Subsidiaries, respectively, to file), between the date of this
Agreement and the Effective Time, all reports required to be filed by it with
the Commission and any other regulatory authorities having jurisdiction over
such party, and shall deliver to BB&T or Life, as the case may be, copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the Commission, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the Commission
will comply in all material respects with the Securities Laws and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to a
regulatory authority other than the Commission shall be prepared in accordance
with requirements applicable to such reports.
5.16 Exchange Listing
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of Life Common Stock pursuant to the
Merger, and BB&T shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.17 Board of Directors of Virginia Banking Subsidiary
Edward E. Cunningham, Jr. shall be elected Chairman of the Board of
Directors of Branch Banking and Trust Company of Virginia ("BB&T-Virginia") and
Tollie W. Rich, Jr., Donald I. Fentress, William T. Jonak, Jr. and Frederick V.
Martin shall be elected as members of the Board of Directors of BB&T-Virginia
as soon as practicable following the Effective Time. The remainder of the Life
Board serving immediately preceding the Effective Time shall be offered seats
on the BB&T-Virginia Advisory Board for the area including Norfolk, Virginia,
as of the Effective Time. For eighteen months following the Effective Time, all
Directors elected pursuant to this Section 5.17 shall receive, as compensation
for service on the BB&T-Virginia Boards, Directors' fees (annual retainer and
attendance fees) equal in amount each year (prorated for any partial year) to
the annual retainer and schedule of attendance fees for Directors of Life in
effect on July 1, 1997. Following such eighteen-month period, such Directors
shall receive Directors' fees in accordance with the standard schedule of fees
for service on the applicable Boards as in effect from time to time. For two
years after the Effective Time, no such Director shall be prohibited from
serving on either of the BB&T-Virginia Boards because he shall have attained
the maximum age for service on such Boards (currently age 70).
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent -- BB&T and Life
The respective obligations of BB&T and Life 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
Life and of BB&T Financial of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement, and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement and the Plan of
Merger, all notice periods and waiting periods required after the granting of
any such approvals shall have passed, and all such approvals shall be in
effect;
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(d) None of BB&T, any of the BB&T Subsidiaries, Life or any of the Life
Subsidiaries shall be subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits consummation of the
transactions contemplated by this Agreement;
(e) Life and BB&T shall have received an opinion of BB&T's legal counsel,
in form and substance satisfactory to Life and BB&T, substantially to the
effect that the Merger will constitute one or more reorganizations under
Section 368 of the Code and that the shareholders of Life will not recognize
any gain or loss to the extent that such shareholders exchange shares of Life
Common Stock for shares of BB&T Common Stock; and (f) BB&T shall have received
letters, dated as of the date of filing of the Registration Statement with the
Commission and as of the Effective Time, addressed to BB&T, in form and
substance reasonably satisfactory to BB&T, from Arthur Andersen, LLP to the
effect that the Merger will qualify for pooling-of-interest accounting
treatment.
6.2 Conditions Precedent -- Life
The obligations of Life 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 Life pursuant to
Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and
as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing
by Life. The representations and warranties of BB&T set forth in Sections 4.1,
4.2, 4.3(a), 4.3(b)(i) and 4.4 shall be true and correct (except for
inaccuracies which are de minimis in amount). There shall not exist
inaccuracies in the representations and warranties of BB&T set forth in this
Agreement (including the representations and warranties set forth in Sections
4.1, 4.2, 4.3(a), 4.3(b)(i) and 4.4) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect on
BB&T.
(b) BB&T shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this
Agreement.
(c) BB&T shall have delivered to Life a certificate, dated the Closing
Date and signed by its Chairman or President or an Executive Vice President, to
the effect that the conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c),
6.1(d), 6.2(a) and 6.2(b), to the extent applicable to BB&T, have been
satisfied and that there are no actions, suits, claims, governmental
investigations or procedures instituted, pending or, to the best of such
officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on BB&T or that present a claim to restrain or prohibit
the transactions contemplated herein or in the Plan of Merger.
(d) Life shall have received opinions of counsel to BB&T in the form
reasonably acceptable to Life's legal counsel.
(e) All approvals of the transactions contemplated herein from the Federal
Reserve Board and any other state or federal government agency, department or
body, the approval of which is required for the consummation of the Merger,
shall have been received and all waiting periods with respect to such approvals
shall have expired.(f) The shares of BB&T Common Stock issuable pursuant to the
Merger shall have been approved for listing on the NYSE, subject to official
notice of issuance.
6.3 Conditions Precedent -- BB&T
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of Life shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and
as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing
by BB&T. The representations and warranties of Life 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
Life 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 Life and the Life
Subsidiaries taken as a whole.
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(b) No regulatory approval shall have imposed any condition or requirement
which, in the reasonable opinion of the Board of Directors of BB&T, would so
materially adversely affect the business or economic benefits to BB&T of the
transactions contemplated by this Agreement as to render consummation of such
transactions inadvisable or unduly burdensome.
(c) Life shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this
Agreement.
(d) Life shall have delivered to BB&T a certificate, dated the Closing
Date and signed by its Chairman or President, to the effect that the conditions
set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the extent
applicable to Life, 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 Life or that present a claim to
restrain or prohibit the transactions contemplated herein or in the Plan of
Merger.
(e) BB&T shall have received opinions of counsel to Life in the form
reasonably acceptable to BB&T's legal counsel.
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 to the extent necessary, in the reasonable judgment
of BB&T, to ensure that the Merger will be accounted for as a
pooling-of-interests under GAAP, and to promote compliance with Rule 145
promulgated by the Commission.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement,
which inaccuracy would provide the nonbreaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 6.2(a)
in the case of Life and Section 6.3(a) in the case of BB&T; and, in the case of
(i) or (ii), if such breach or inaccuracy has not been cured by the earlier of
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.
(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
Life do not approve the Agreement and the Plan of Merger.
(f) At any time following July 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) By Life at any time during the five-day period commencing after the
Determination Date if both of the following conditions are satisfied:
(1) the Converted Value shall be less than $27.00; and
(2) (i) the quotient obtained by dividing the Closing Value by $54.875
(such number being referred to herein as the "BB&T Ratio") shall be less
than (ii) 90% of the quotient obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting Date.
subject, however, to the following three sentences. If Life determines not to
consummate the Merger pursuant to this Section 7.1(g), it shall give prompt
written notice of election to terminate to BB&T, which notice may be withdrawn
at any time prior to the close of the ten-day period commencing after the
Determination Date. During the five-day period commencing with its receipt of
such notice, BB&T shall have the option, in the case of a failure to satisfy
the condition in clause
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(1), to elect to increase the Exchange Ratio to a number such that the
Converted Value is no less than $27.00. The election contemplated by the
preceding sentence shall be made by giving notice to Life of such election and
the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 7.1(g) and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to
this Section 7.1(g). If the Closing Date shall occur during the five-day period
such option is in effect, the Closing Date shall be extended until the fifth
Business Day following the close of such five-day period.
For purposes of this Section 7.1(g), the following terms shall have the
meanings indicated:
"Converted Value" shall mean the product of the Closing Value multiplied
by an Exchange Ratio of .60.
"Determination Date" shall mean the tenth calendar day preceding the date
designated by BB&T as the Closing Date.
"Index Group" shall mean the 17 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company
to be acquired or for such company to acquire another company or companies
in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which have been determined based upon
the number of shares of outstanding common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 17 bank
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
Bank Holding Companies % Weighting
- -------------------------------------- ------------
<S> <C>
AmSouth Bancorporation ............... 2.40
CoreStates Financial Corp ............ 9.21
Comerica Incorporated ............... 5.17
Fifth Third Bancorp .................. 6.35
First of America Bank Corp. ......... 2.98
Firstar Corporation .................. 3.28
Huntington Bancshares Inc. ......... 3.93
Mellon Bank Corporation ............ 8.34
Mercantile Bancorporation, Inc. ...... 3.94
National City Corporation ............ 7.99
Northern Trust Corporation ......... 4.00
Regions Financial Corporation ...... 3.18
SouthTrust Corporation ............... 3.01
SunTrust Banks, Inc. ............... 8.72
Summit Bancorp. ..................... 4.66
U.S. Bancorp ........................ 15.41
Wachovia Corporation ............... 7.43
------
Total .............................. 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted average (weighted
in accordance with the "% Weighting" listed above) of the closing sales
prices of the companies composing the Index Group (determined as provided
with respect to the Determination Value).
"Starting Date" shall mean the date of this Agreement.
If any company belonging to the Index Group or BB&T declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or BB&T
shall be appropriately adjusted for the purposes of applying this Section
7.1(g).
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
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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, representation or warranty giving rise to such
termination. The BB&T Option Agreement shall be governed by its own terms.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time (including
Sections 5.10, 5.12, 5.13 and 5.17 hereof), 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 BB&T or Life (or any director, officer or
controlling person thereof) of any defense at law or in equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either BB&T or Life, the
aforesaid representations, warranties and covenants being material inducements
to consummation by BB&T and Life 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 Life 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 Life
shareholders of this Agreement and the Plan of Merger shall reduce either the
number of shares of BB&T Common Stock into which each share of Life 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 BB&T and Life, 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 filing fees and printing costs incurred in
connection with the Registration Statement and the Proxy Statement/Prospectus
shall be borne 50% by BB&T and 50% by Life.
8.2 Entire Agreement
This Agreement, including the documents and other writings referred to
herein or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto, written
or oral, entered into on or before the date hereof. The terms and conditions of
this Agreement and the BB&T Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement or the BB&T Option Agreement, expressed or implied,
is intended to confer upon any party, other than the parties hereto and
thereto, and their respective successors, any rights, remedies, obligations or
liabilities, except for rights of directors, officers and employees of Life to
enforce rights in Sections 5.13 and 5.17 applicable to them.
8.3 No Assignment
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person, except upon the prior written consent
of each other party.
I-27
<PAGE>
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 Life: Edward E. Cunningham
Life Bancorp, Inc.
109 East Main Street
Norfolk, Virginia 23510
Telephone: 757-858-1098
Fax: 757-858-1053
With a required copy to: Mr. Gerald F. Heupel, Jr.
Elias, Matz, Tiernan & Herrick
12th Floor
Washington, D.C. 20005
Telephone: 202-347-0300
Fax: 202-347-2172
If to BB&T or BB&T Financial: Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 910-733-3088
Fax: 910-733-2296
With a required copy to: William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 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 Specific Performance.
Life acknowledges that the Life Common Stock and the Life business and
assets are unique, and that if Life fails to consummate the transactions
contemplated by this Agreement such failure will cause irreparable harm to BB&T
for which there will be no adequate remedy at law. BB&T shall be entitled, in
addition to its other remedies at law, to specific performance of this
Agreement if Life shall, without cause, refuse to consummate the transactions
contemplated by this Agreement.
8.6 Captions
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina applicable to agreements made and entirely
to be performed within such jurisdiction, except to the extent federal law may
be applicable.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
I-28
<PAGE>
BB&T CORPORATION
By -------------------------------------
Title: ---------------------------------
BB&T FINANCIAL CORPORATION OF VIRGINIA
By -------------------------------------
Title: ---------------------------------
LIFE BANCORP, INC.
By -------------------------------------
Title: ---------------------------------
I-29
<PAGE>
ANNEX A
ARTICLES OF MERGER
OF
LIFE BANCORP, INC.
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 Life Bancorp, Inc., a Virginia corporation ("Life"), with
and into BB&T Financial Corporation of Virginia, a Virginia corporation ("BB&T
Financial"), 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 BB&T
Financial and Life 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 $.01, of
Life (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:
<TABLE>
<CAPTION>
Outstanding Shares Undisputed Votes Cast for the Plan
- -------------------- -----------------------------------
<S> <C>
</TABLE>
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.
THREE
The articles of merger shall become effective upon filing.
The undersigned, each of BB&T Financial and Life declares that the facts
herein stated are true as of , 1998.
BB&T FINANCIAL CORPORATION OF VIRGINIA
By:-------------------------------------
Name:-----------------------------------
Title:------------------------------------
LIFE BANCORP, INC.
By:-------------------------------------
Name:-----------------------------------
Title:------------------------------------
I-30
<PAGE>
EXHIBIT A
PLAN OF MERGER
OF
LIFE BANCORP, INC
WITH AND INTO
BB&T FINANCIAL CORPORATION OF VIRGINIA
Section 1. Corporations Proposing to Merge and Surviving Corporation. Life
Bancorp, Inc., a Virginia corporation ("Life") shall be merged (the "Merger")
with and into BB&T Financial Corporation of Virginia, a Virginia corporation
("BB&T Financial"), 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 , (the "Agreement"), by and among Life, BB&T Financial and
BB&T Corporation, a North Carolina corporation and parent corporation of BB&T
Financial ("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 shall continue as the
surviving corporation (the "Surviving Corporation") in the Merger and the
separate corporate existence of Life 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 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, par value $.01, of
Life ("Life 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") as described in
Section 5.
(b) At the Effective Time, 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.
Section 5. Merger Consideration. As used herein, the term "Merger
Consideration" shall mean the portion of a whole share of BB&T Common Stock to
be exchanged for each share of Life Common Stock issued and outstanding as of
the Effective Time and cash (without interest) to be payable in exchange for
any fractional share of BB&T Common Stock which would otherwise be exchanged
for a share of Life Common Stock, determined as follows:
(a) The number of shares of BB&T Common Stock to be issued in exchange for
each issued and outstanding share of Life Common Stock shall be in the ratio of
.58 shares of BB&T Common Stock for each such share of Life Common Stock (the
"Exchange Ratio"); provided, that if the product of the Exchange Ratio
multiplied by the Closing Value (defined below) is less than $33.00, the
Exchange Ratio shall be increased by an amount necessary to increase such
product to $33.00, but in no event shall the Exchange Ratio exceed .60.
(b) For purposes of this Section 4, the "Closing Value" of BB&T Common
Stock shall mean the average closing price per share on the NYSE Composite
Transactions List (as reported by The Wall Street Journal) on the ten trading
days (determined by excluding days on which the NYSE is closed) immediately
preceding the tenth calendar day preceding the Effective Time (the tenth day to
be determined by counting the day preceding the Effective Time as the first
day).
(c) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of
such share by the Closing Value. No person will be entitled to dividends,
voting rights, or any other rights as a BB&T shareholder in respect of any
fractional share.
I-31
<PAGE>
Section 6. 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 BB&T 1995 Omnibus Stock Incentive Plan (the "BB&T
Option Plan"), and shall be governed by the terms and conditions of the BB&T
Option Plan; provided, that in no event shall the vesting, exercise and
duration provisions of any Stock Option following conversion to an option under
the BB&T Option Plan be less favorable to the optionee than provided under the
individual stock option agreements as in effect under the Stock Option Plan
immediately preceding the Effective Time. In making such conversion, (i) the
number of shares of BB&T Common Stock subject to each such Stock Option shall
be the number of whole shares of BB&T (omitting any fractional share)
determined by multiplying the number of shares of Life Common Stock subject to
such Stock Option immediately prior to the Effective Time by the Exchange
Ratio, (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 Exchange Ratio and rounding up to the nearest cent, and (iii) no
restrictions on transfers shall be placed on shares of BB&T Common Stock
received through the exercise of the option except to the extent such
restrictions would have been placed on such shares under such Life plan or are
required by the Securities Laws. 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. BB&T and Life agree to take all
necessary steps to effectuate the foregoing provisions of this Section 6. Each
grant of a converted option to any individual who subsequent to the Merger will
be a director or officer of BB&T as construed under Rule 16b-3 shall, as a
condition to such conversion, be approved in accordance with the provisions of
Rule 16b-3.
Section 7. No Fractional Shares. Notwithstanding any other term or
provision hereof, no fraction of a share of BB&T Common Stock, and no
certificates or script therefor or other evidence of ownership thereof, will be
issued in connection with the conversion of Life Common Stock in the Merger,
and no right to receive cash in lieu thereof shall entitle the holder thereof
to any voting or other rights of a holder of shares or fractional share
interests of the Surviving Corporation. In lieu of such fractional shares, any
holder of shares who would otherwise be entitled to fractional shares of BB&T
Common Stock will, upon receipt by the Surviving Corporation of the letter of
transmittal and other documents described in Section 2.8(d) of the Agreement,
be paid the cash value of each such fraction, computed in accordance with the
ratio set forth in Section 5 above.
Section 8. 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
Boards of Directors of Life and BB&T Financial; and (ii) no such amendment made
subsequent to the submission of this Plan of Merger to the shareholders of Life
shall have any of the effects specified in Section 13.1-718.I of the VSCA
without the approval of the shareholders affected thereby.
I-32
<PAGE>
Appendix II
Sandler O'Neill & Partners, L.P. Telephone: 212-466-7700
Investment Banking Group 800-635-6855
Two World Trade Center, 104th Floor Facsimile: 212-466-7711
New York, New York 10048
Sandler O'Neill
January 12, 1998
Board of Directors
Life Bancorp, Inc.
109 East Main Street
Norfolk, VA 23510
Gentlemen:
Life Bancorp, Inc. ("Life"), BB&T Financial Corporation of Virginia ("BB&T
Financial") and BB&T Corporation ("BB&T") have entered into an Agreement and
Plan of Reorganization, dated as of October 29, 1997 (the "Agreement"),
pursuant to which Life will be merged with and into BB&T Financial (the
"Merger"). Upon consummation of the Merger, each share of Life common stock,
par value $0.01 per share, issued and outstanding immediately prior to the
Merger (the "Life Shares") will be converted into the right to receive 0.58
shares of BB&T common stock, par value $5.00 per share (together with the
rights attached pursuant to the BB&T Rights Agreement dated December 17, 1996,
the "BB&T Common Stock"), subject to increase to a maximum of 0.60 shares of
BB&T Common Stock if the Closing Value (as defined in the Agreement) of BB&T
Common Stock is less than $56.90 per share (the "Merger Consideration"). The
terms and conditions of the Merger are more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, of the Merger Consideration to the holders of the Life Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other
corporate transactions. In connection with this opinion, we have reviewed,
among other things: (i) the proposed Agreement and exhibits thereto; (ii) the
Stock Option Agreement, dated as of October 29, 1997, by and between Life and
BB&T; (iii) Life's audited consolidated financial statements and management's
discussion and analysis of financial condition and results of operations as
contained in its Annual Report on Form 10-K for the year ended December 31,
1996; (iv) BB&T's audited consolidated financial statements and management's
discussion and analysis of financial condition and results of operations as
contained in its Annual Report on Form 10-K for the year ended December 31,
1996; (v) Life's unaudited consolidated financial statements and management's
discussion and analysis of financial condition and results of operations
contained in its Quarterly Report on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1997, respectively; (vi) BB&T's unaudited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations contained in its Quarterly Report
on Form 10-Q for the quarters ended March 31, June 30, and September 30, 1997,
respectively; (vii) certain financial analyses and forecasts of Life prepared
by and reviewed with management of Life and the views of senior management of
Life regarding Life's past and current business operations, results thereof,
financial condition and future prospects; (viii) certain financial analyses and
forecasts of BB&T prepared by and reviewed with management of BB&T and the
views of senior management of BB&T regarding BB&T's past and current business
operations, results thereof, financial condition and future prospects; (ix) the
pro forma impact of the Merger on BB&T; (x) the publicly reported historical
price and trading activity for Life's and BB&T's common stock, including a
comparison of certain financial and stock market information for Life and BB&T
with similar publicly available information for certain other companies the
securities of which are publicly traded; (xi) the financial terms of recent
business combinations in the savings institution industry, to the extent
publicly available; (xii) the current market environment generally and the
banking environment in particular; and (xiii) such other information, financial
studies, analyses and investigations and financial, economic and market
criteria as we considered relevant. We were not asked to, and did not, solicit
indications of interest in a potential transaction from other third parties.
Sandler O'Neill & Partners, L.P., is a limited partnership, the sole general
partner of which is Sandler O'Neill & Partners Corp., a New York
Corporation.
<PAGE>
Board of Directors
Life Bancorp, Inc.
January 12, 1998
Page 2
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability therefor. We did not make an independent
evaluation or appraisal of the specific assets, the collateral securing assets
or the liabilities of Life or BB&T or any of their subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of Life and BB&T). With respect to the financial projections reviewed
with management, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performances of Life
and BB&T and that such performances will be achieved. We have also assumed that
there has been no material change in Life's or BB&T's assets, financial
condition, results of operations, business or prospects since September 30,
1997, the date of the last financial statements noted above. We have assumed
that Life and BB&T will remain as going concerns for all periods relevant to
our analyses, that the Merger will be accounted for as a pooling of interests
and that the conditions precedent in the Agreement are not waived.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect
this opinion. We have not undertaken to update, revise or reaffirm this opinion
or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the value of BB&T common stock will be
when issued to Life's shareholders pursuant to the Agreement or the prices at
which Life's or BB&T's common stock will trade at any time.
We have acted as Life's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for Life and have received compensation for such
services.
In the ordinary course of our business, we may actively trade the debt and
equity securities of Life and BB&T for our own account and for the accounts of
our customers and, accordingly, may at any time hold a long or short position
in such securities.
Our opinion is directed to the Board of Directors of Life in connection
with its consideration of the Merger and does not constitute a recommendation
to any stockholder of Life as to how such stockholder should vote at any
meeting of stockholders called to consider and vote upon the Merger. Our
opinion is not to be quoted or referred to, in whole or in part, in a
registration statement, prospectus, proxy statement or in any other document,
nor shall this opinion be used for any other purposes, without Sandler
O'Neill's prior written consent; provided, however, that we hereby consent to
the inclusion of this opinion as an appendix to the Proxy Statement/Prospectus
of Life and BB&T dated the date hereof.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Merger Consideration is fair, from a financial point of view,
to the holders of Life Shares.
Very truly yours,
Sandler O'Neill & Partners, L.P.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Sections 55-8-50 through 55-8-58 of the North Carolina Business
Corporation Act contain specific provisions relating to indemnification of
directors and officers of North Carolina corporations. In general, such
sections provide that: (i) a corporation must indemnify a director or officer
who is wholly successful in his defense of a proceeding to which he is a party
because of his status as such, unless limited by the articles of incorporation,
and (ii) a corporation may indemnify a director or officer if he is not wholly
successful in such defense, if it is determined as provided by statute that the
director or officer meets a certain standard of conduct, provided when a
director or officer is liable to the corporation or is adjudged liable on the
basis that personal benefit was improperly received by him, the corporation may
not indemnify him. A director or officer of a corporation who is a party to a
proceeding may also apply to a court for indemnification, and the court may
order indemnification under certain circumstances set forth in statute. A
corporation may, in its articles of incorporation or bylaws or by contract or
resolution of the board of directors, provide indemnification in addition to
that provided by statute, subject to certain conditions.
The registrant's bylaws provide for the indemnification of any director or
officer of the registrant against liabilities and litigation expenses arising
our of his status as such, excluding: (i) any liabilities or litigation
expenses relating to activities that were at the time taken known or believed
by such person to be clearly in conflict with the best interest of the
registrant and (ii) that portion of any liabilities or litigation expenses with
respect to which such person is entitled to receive payment under any insurance
policy.
The registrant's articles of incorporation provide for the elimination of
the personal liability of each director of the registrant to the fullest extent
permitted by law.
The registrant maintains directors and officers liability insurance that,
in general, insures: (i) the registrant's directors and officers against loss
by reason of any of their wrongful acts and (ii) the registrant against loss
arising from claims against the directors and officers by reason of their
wrongful acts, all subject to the terms and conditions contained in the policy.
Certain rules of the Federal Deposit Insurance Corporation limit the
ability of certain depository institutions, their subsidiaries and their
affiliated depository institution holding companies to indemnify affiliated
parties, including institution directors. In general, subject to the ability to
purchase directors and officers liability insurance and to advance professional
expenses under certain circumstances, the rules prohibit such institutions from
indemnifying a director for certain costs incurred with regard to an
administrative or enforcement action commenced by any federal banking agency
that results in a final order or settlement pursuant to which the director is
assessed a civil money penalty, removed from office, prohibited from
participating in the affairs of an insured depository institution or required
to cease and desist from or take an affirmative action described in Section
8(b) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(b)).
Item 21. Exhibits and Financial Statement Schedules
(a) The following documents are filed as exhibits to this registration
statement on Form S-4:
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- --------------------------------------------------------------------------------------------------------
<S> <C>
2 Agreement and Plan of Reorganization, dated as of October 29, 1997, among BB&T Corporation,
BB&T Financial Corporation of Virginia and Life Bancorp, Inc. (included as Appendix I to the Proxy
Statement/Prospectus)
3(a) Articles of Incorporation of BB&T Corporation, as amended (incorporated herein by reference to
Exhibit No. 3(a) to the registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and Exhibit No. 3(b) to the registrant's registration statement on Form S-3 filed
May 23, 1997 (Registration No. 333-27755))
3(b) Bylaws of BB&T Corporation, as amended (incorporated herein by reference to Exhibit No. 3.2 to the
registrant's registration statement on Form S-4 filed June 29, 1989 (Registration No. 33-29586) and
Exhibit No. 3(c) to the registrant's registration statement on Form S-4 filed May 6, 1997 (Registration
No. 333-26545))
5 Opinion of Womble Carlyle Sandridge & Rice, PLLC
8 Opinion of Womble Carlyle Sandridge & Rice, PLLC
23(a) Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibits 5 and 8)
23(b) Consent of Arthur Andersen LLP
23(c) Consent of Edmondson, LedBetter & Ballard, L.L.P.
23(d) Consent of Sandler O'Neill & Partners, L.P.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- ------------- ------------------------------------------------------------------------------------------
<S> <C>
24 Power of Attorney
99(a) Form of Life Bancorp, Inc. Proxy Card
99(b) Option Agreement, dated October 29, 1997, between BB&T Corporation and Life Bancorp, Inc.
</TABLE>
(b) Financial statement schedules: Not applicable.
Item 22. Undertakings
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes as follows: That prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
D. The registrant undertakes that every prospectus (i) that is filed
pursuant to Paragraph (C) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-2
<PAGE>
F. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
G. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Winston-Salem, State of North Carolina, on January 13, 1998.
BB&T CORPORATION
By: /s/ JERONE C. HERRING
----------------------------------
Name: Jerone C. Herring
Title: Executive Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-4 has been signed by the following
persons in the capacities indicated on January 13, 1998.
<TABLE>
<S> <C>
/s/ JOHN A. ALLISON IV* /s/ SCOTT E. REED*
- ---------------------------------- ----------------------------------
Name: John A. Allison IV Name: Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice President
Chief Executive Officer and Chief Financial Officer
(principal executive officer) (principal financial officer)
/s/ SHERRY A. KELLETT* /s/ PAUL B. BARRINGER*
- ---------------------------------- ----------------------------------
Name: Sherry A. Kellett Name: Paul B. Barringer
Title: Executive Vice President Title: Director
and Controller
(principal accounting officer)
/s/ ALFRED E. CLEVELAND* /s/ W. R. CUTHBERTSON, JR.*
- ---------------------------------- ----------------------------------
Name: Alfred E. Cleveland Name: W. R. Cuthbertson, Jr.
Title: Director Title: Director
/s/ RONALD E. DEAL* /s/ A. J. DOOLEY, SR.*
- ---------------------------------- ----------------------------------
Name: Ronald E. Deal Name: A. J. Dooley, Sr.
Title: Director Title: Director
/s/ JOE L. DUDLEY, SR.* /s/ TOM D. EFIRD*
- ---------------------------------- ----------------------------------
Name: Joe L. Dudley, Sr. Name: Tom D. Efird
Title: Director Title: Director
/s/ PAUL S. GOLDSMITH* /s/ L. VINCENT HACKLEY*
- ---------------------------------- ----------------------------------
Name: Paul S. Goldsmith Name: L. Vincent Hackley
Title: Director Title: Director
/s/ ERNEST F. HARDEE* /s/ JANE P. HELM*
- ---------------------------------- ----------------------------------
Name: Ernest F. Hardee Name: Jane P. Helm
Title: Director Title: Director
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
/s/ RICHARD JANEWAY, M.D.* /s/ J. ERNEST LATHEM, M.D.*
----------------------------------
- ----------------------------------
Name: Richard Janeway, M.D. Name: J. Ernest Lathem, M.D.
Title: Director Title: Director
/s/ JAMES H. MAYNARD* /s/ JOSEPH A. MCALEER, JR.*
- ---------------------------------- ----------------------------------
Name: James H. Maynard Name: Joseph A. McAleer, Jr.
Title: Director Title: Director
/s/ ALBERT O. MCCAULEY* /s/ L. GLENN ORR. JR.*
- ---------------------------------- ----------------------------------
Name: Albert O. McCauley Name: L. Glenn Orr, Jr.
Title: Director Title: Director
/s/ RICHARD L. PLAYER, JR.* /s/ C. EDWARD PLEASANTS, JR.*
- ---------------------------------- ----------------------------------
Name: Richard L. Player, Jr. Name: C. Edward Pleasants, Jr.
Title: Director Title: Director
/s/ NIDO R. QUBEIN* /s/ E. RHONE SASSER*
- ---------------------------------- ----------------------------------
Name: Nido R. Qubein Name: E. Rhone Sasser
Title: Director Title: Director
/s/ JACK E. SHAW* /s/ HAROLD B. WELLS*
- ---------------------------------- ----------------------------------
Name: Jack E. Shaw Name: Harold B. Wells
Title: Director Title: Director
</TABLE>
*By: /s/ JERONE C. HERRING
-----------------------------
Name: Jerone C. Herring
Title: Attorney-in-Fact
II-5
<PAGE>
EXHIBIT 5
January 13, 1998
BB&T Corporation
200 West Second Street
Winston-Salem, North Carolina 27102
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares to be issued pursuant to the Agreement and Plan of
Reorganization by and among BB&T Corporation ("BB&T"), BB&T Financial
Corporation of Virginia and Life Bancorp, Inc. dated as of October 29,
1997 (the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to BB&T in connection with the registration of
6,500,000 shares of its Common Stock, par value $5.00 per share (the "Common
Stock"), issuable pursuant to the Reorganization Agreement, as set forth in the
Registration Statement that is being filed on the date hereof by BB&T with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(5) of Regulation S-K.
In connection with the foregoing, we have examined such records,
documents, and proceedings as we have deemed relevant as a basis for the
opinion expressed herein, and we have relied upon an officer's certificate as
to certain factual matters.
Based on the foregoing, we are of the opinion that when (1) the
Registration Statement shall have been declared effective by order of the
Commission and (2) the shares of Common Stock have been issued upon the terms
and conditions set forth in the Reorganization Agreement and in accordance with
the Registration Statement, then the shares of Common Stock will be legally
issued, fully paid, and nonassessable.
We hereby consent to be named in the Registration Statement under the
heading "LEGAL MATTERS" as attorneys who passed upon the validity of the shares
of Common Stock and to the filing of a copy of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by Section 7 of the
Securities Act or other rules and regulations of the Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE,
A Professional Limited Liability
Company
By: /s/ GARZA BALDWIN, III
------------------------------------
Garza Baldwin, III
<PAGE>
EXHIBIT 8
January 13, 1998
BB&T Corporation
200 West Second Street
Winston-Salem, North Carolina 27101
Re: Registration Statement on Form S-4 (the "Registration Statement") with
respect to shares to be issued pursuant to the Agreement and Plan of
Reorganization, dated as of October 29, 1997 (the "Reorganization
Agreement"), by and among Life Bancorp, Inc. ("Life"), BB&T Corporation, a
North Carolina corporation ("BB&T"), and BB&T Financial Corporation of
Virginia, a Virginia corporation and wholly owned subsidiary of BB&T
("BB&T Financial-VA")
Ladies and Gentlemen:
We have acted as counsel to BB&T in connection with the registration of
6,500,000 shares of its Common Stock, par value $5.00 per share (the "BB&T
Common Stock"), issuable pursuant to the Reorganization Agreement, as set forth
in the Registration Statement that is being filed on the date hereof by BB&T
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). This opinion is
provided pursuant to the requirements of Item 21(a) of Form S-4 and Item
601(b)(8) of Regulation S-K. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Reorganization Agreement.
In the Merger, Life will merge into BB&T Financial-VA pursuant to Virginia
law, and each outstanding share of Life Common Stock (the only class
outstanding) is to be converted into a number of shares of BB&T Common Stock
determined under a formula in the Reorganization Agreement. Also, cash will be
paid in lieu of issuance of fractional shares. Life shareholders are not
entitled by state law to dissent from the Merger.
In giving this opinion we have reviewed, and with your permission we have
relied upon the representations and warranties contained in or the facts
described in, the Reorganization Agreement, the Registration Statement, and
certificates dated January 12, 1998 in which officers of Life and officers of
BB&T make certain representations on behalf of Life and BB&T regarding the
Merger (the "Tax Certificates"). We also have reviewed such other documents as
we have considered necessary and appropriate for the purposes of this opinion.
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates are correct as of the date of this opinion,
and any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification. As to all matters in
which a person or entity has represented that such person or entity either is
not a party to, or does not have, or is not aware of, any plan or intention,
understanding or agreement, we have assumed that there is in fact no such plan,
intention, understanding or agreement. We also assume that (a) the Merger will
be consummated in accordance with the Reorganization Agreement, (b) Life's only
outstanding stock (as that term is used in Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code")) is the Life Common Stock, and (c) the
Rights attached to the shares of BB&T Common Stock issued in the Merger will
not be exchanged by BB&T for any part of the value of the Life Common Stock,
and such Rights will have no ascertainable fair market value at the Effective
Time.
Based on the foregoing, and subject to the limitations herein, we are of
the opinion that under existing law, upon consummation of the Merger in
accordance with the Reorganization Agreement, for federal income tax purposes:
(1) The Merger will constitute a "reorganization" within the meaning of
Section 368 of the Code.
(2) No gain or loss will be recognized by Life or BB&T Financial-VA by
reason of the Merger.
(3) No gain or loss will be recognized by the shareholders of Life upon the
receipt of BB&T Common Stock (including any fractional share interest to
which they may be entitled) solely in exchange for their shares of Life
Common Stock.
(4) A shareholder of Life who receives cash in lieu of a fractional share
of BB&T Common Stock will recognize gain or loss as if the fractional
share has been received and then redeemed for cash equal to the amount
paid by BB&T in respect of such fractional share, subject to the
provisions and limitations of Section 302 of the Code.
(5) The tax basis in the BB&T Common Stock received by a Life shareholder
(including any fractional share interest deemed received) will be the
same as the tax basis in the Life Common Stock surrendered in exchange
therefor.
<PAGE>
(6) The holding period for BB&T Common Stock received in exchange for
shares of Life Common Stock will include the period during which the
shareholder held the shares of Life Common Stock surrendered in the
exchange, provided that the Life Common Stock was held as a capital
asset at the Effective Time.
We express no opinion as to the laws of any jurisdiction other than the
United States of America. Further, our opinion is limited to the specific
conclusions set forth above, and no other opinions are expressed or implied.
The opinions stated with respect to shares of Life Common Stock do not apply to
any stock rights, warrants or options to acquire Life Common Stock. The
opinions stated as to Life shareholders are general in nature and do not
necessarily apply to any particular Life shareholder, and, for example, may not
apply to shareholders who are corporations, trusts, dealers in securities,
financial institutions, insurance companies or tax exempt organizations; or to
persons who are not United States citizens or resident aliens or domestic
entities (partnerships or trusts), are subject to the alternative minimum tax
(to the extent that tax affects the tax consequences), or are subject to the
"golden parachute" provisions of the Code (to the extent that tax affects the
tax consequences); or to shareholders who acquired Life Common Stock pursuant
to employee stock options or otherwise as compensation if such shares are
subject to any restriction related to employment, who do not hold their shares
as capital assets, or who hold their shares as part of a "straddle" or
"conversion transaction."
This opinion represents our best legal judgment, but it has no binding
effect or official status of any kind. Changes to the Code or in regulations or
rulings thereunder, or changes by the courts in the interpretation of the
authorities relied upon, may be applied retroactively and may affect the
opinions expressed herein. Any material defect in any assumption or
representation on which we have relied would adversely affect our opinion.
We furnish this opinion to you solely to support the discussion set forth
under the headings "SUMMARY -- The Merger -- Certain Federal Income Tax
Consequences," "THE MERGER -- The Reorganization Agreement -- Conditions to the
Merger," "THE MERGER -- Certain Federal Income Tax Consequences of the Merger"
and "LEGAL MATTERS" in the Registration Statement, and we do not consent to its
use for any other purpose. We hereby consent to be named in the Registration
Statement under the foregoing headings and to the filing of a copy of this
opinion as Exhibit 8 to the Registration Statement. In giving this consent, we
do not admit that we are within the category of persons whose consent is
required by Section 7 of the Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
WOMBLE CARLYLE SANDRIDGE & RICE
A Professional Limited Liability
Company
By: /s/ JASPER L. CUMMINGS, JR.
------------------------------------
Jasper L. Cummings, Jr.
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated July 1, 1997,
included in BB&T Corporation's Form 8-K dated August 15, 1997, and to all
references to our firm included in this registration statement. Our report
dated January 14, 1997, included in BB&T Corporation's financial statements
previously filed on Form 10-K and incorporated by reference in this
registration statement is no longer appropriate since restated financial
statements have been presented giving effect to a business combination
accounted for as a pooling-of-interests.
/s/ ARTHUR ANDERSEN LLP
----------------------------------------
Charlotte, North Carolina,
January 12, 1998.
<PAGE>
EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report included in Life Bancorp, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1996 incorporated
herein by reference and to the reference to our firm under the heading
"Experts" in the Proxy Statement/Prospectus.
/s/ EDMONDSON, LEDBETTER & BALLARD, L.L.P.
-------------------------------------------
Norfolk, Virginia
January 12, 1998
<PAGE>
EXHIBIT 23(d)
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Life Bancorp, Inc. (the "Company") as Appendix II to the Proxy
Statement/Prospectus relating to the proposed merger of the Company with and
into BB&T Financial Corporation of Virginia contained in the Registration
Statement on Form S-4, filed with the Securities and Exchange Commission as of
the date hereof, and to the references to our firm and such opinion in such
Proxy Statement/ Prospectus. In giving such consent, we do not admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended (the "Act"), or the rules and
regulations of the Securities and Exchange Commission thereunder (the
"Regulations"), nor do we admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "experts" as used in
the Act or the Regulations.
SANDLER O'NEILL & PARTNERS, L.P.
January 13, 1998
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, being a director and/or officer of BB&T
Corporation (the "Company"), hereby nominates, constitutes and appoints John A.
Allison, Scott E. Reed and Jerone C. Herring, or any one of them severally, to
be his or her true and lawful attorney-in-fact and to sign in his or her name
and on his or her behalf in any and all capacities stated below, and to file
with the Securities and Exchange Commission (the "Commission"), a Registration
Statement on Form S-4 (the "Registration Statement") relating to the issuance
of shares of the Company's common stock, $5.00 par value per share, in
connection with the acquisition by the Company of Life Bancorp, Inc., a
Virginia corporation, and to file any and all amendments, including
post-effective amendments, to the Registration Statement, making such changes
in the Registration Statement as such attorney-in-fact deems appropriate, and
generally to do all such things on his or her behalf in any and all capacities
stated below to enable the Company to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Commission.
This Power of Attorney has been signed by the following persons in the
capacities indicated on December 16, 1997.
<TABLE>
<S> <C>
/s/ JOHN A. ALLISON IV /s/ SCOTT E. REED
- ---------------------------------- ----------------------------------
Name: John A. Allison IV Name: Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice President
Chief Executive Officer and Chief Financial Officer
(principal executive officer) (principal financial officer)
/s/ SHERRY A. KELLETT /s/ PAUL B. BARRINGER
- ---------------------------------- ----------------------------------
Name: Sherry A. Kellett Name: Paul B. Barringer
Title: Executive Vice President Title: Director
and Controller
(principal accounting officer)
/s/ ALFRED E. CLEVELAND /s/ W. R. CUTHBERTSON, JR.
- ---------------------------------- ----------------------------------
Name: Alfred E. Cleveland Name: W. R. Cuthbertson, Jr.
Title: Director Title: Director
/s/ RONALD E. DEAL /s/ A. J. DOOLEY, SR.
- ---------------------------------- ----------------------------------
Name: Ronald E. Deal Name: A. J. Dooley, Sr.
Title: Director Title: Director
/s/ JOE L. DUDLEY, SR. /s/ TOM D. EFIRD
- ---------------------------------- ----------------------------------
Name: Joe L. Dudley, Sr. Name: Tom D. Efird
Title: Director Title: Director
/s/ O. WILLIAM FENN, JR. /s/ PAUL S. GOLDSMITH
- ---------------------------------- ----------------------------------
Name: O. William Fenn, Jr. Name: Paul S. Goldsmith
Title: Director Title: Director
/s/ L. VINCENT HACKLEY /s/ ERNEST F. HARDEE
- ---------------------------------- ----------------------------------
Name: L. Vincent Hackley Name: Ernest F. Hardee
Title: Director Title: Director
</TABLE>
<PAGE>
<TABLE>
<S> <C>
/s/ JANE P. HELM /s/ RICHARD JANEWAY, M.D.
----------------------------------
- ----------------------------------
Name: Jane P. Helm Name: Richard Janeway, M.D.
Title: Director Title: Director
/s/ J. ERNEST LATHEM, M.D. /s/ JAMES H. MAYNARD
- ---------------------------------- ----------------------------------
Name: J. Ernest Lathem, M.D. Name: James H. Maynard
Title: Director Title: Director
/s/ JOSEPH A. MCALEER, JR. /s/ ALBERT O. MCCAULEY
- ---------------------------------- ----------------------------------
Name: Joseph A. McAleer, Jr. Name: Albert O. McCauley
Title: Director Title: Director
/s/ DICKSON MCLEAN, JR. /s/ CHARLES E. NICHOLS
- ---------------------------------- ----------------------------------
Name: Dickson McLean, Jr. Name: Charles E. Nichols
Title: Director Title: Director
/s/ L. GLENN ORR, JR. /s/ A. WINNIETT PETERS
- ---------------------------------- ----------------------------------
Name: L. Glenn Orr, Jr. Name: A. Winniett Peters
Title: Director Title: Director
/s/ RICHARD L. PLAYER, JR. /s/ C. EDWARD PLEASANTS, JR.
- ---------------------------------- ----------------------------------
Name: Richard L. Player, Jr. Name: C. Edward Pleasants, Jr.
Title: Director Title: Director
/s/ NIDO R. QUBEIN /s/ E. RHONE SASSER
- ---------------------------------- ----------------------------------
Name: Nido R. Qubein Name: E. Rhone Sasser
Title: Director Title: Director
/s/ JACK E. SHAW /s/ HAROLD B. WELLS
- ---------------------------------- ----------------------------------
Name: Jack E. Shaw Name: Harold B. Wells
Title: Director Title: Director
/s/ A. TAB WILLIAMS, JR.
- ----------------------------------
Name: A. Tab Williams, Jr.
Title: Director
</TABLE>
<PAGE>
EXHIBIT 99(a)
FRONT
[LOGO]
P R O X Y
LIFE BANCORP, INC.
SPECIAL MEETING FEBRUARY 23, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION
The undersigned shareholder of Life Bancorp, Inc., a Virginia corporation
("Life"), appoints the Board of Directors of Life or any successors thereto the
true and lawful attorneys-in-fact of the undersigned, with full power of
substitution and revocation, to vote all shares of stock of Life which the
undersigned is entitled to vote at the Special Meeting of Shareholders of Life
to be held at the Norfolk Waterside Marriott, 235 East Main Street, Norfolk,
Virginia, on Monday, February 23, 1998 at 10:00 a.m., Eastern Time and at any
adjournment thereof, with all powers the undersigned would possess if
personally present, as follows:
1. To approve an Agreement and Plan of Reorganization, dated as of October
29, 1997 (the "Reorganization Agreement"), by and among Life, BB&T Corporation,
a North Carolina corporation ("BB&T"), and BB&T Financial Corporation of
Virginia, a Virginia corporation and wholly owned subsidiary of BB&T, and a
related Plan of Merger (the "Plan of Merger"), pursuant to which each share of
common stock of Life will be converted into the right to receive shares of
common stock of BB&T and cash in lieu of any fractional share, in amounts to be
determined as described in the accompanying Proxy Statement/Prospectus. A copy
of the Reorganization Agreement and the Plan of Merger set forth therein is
attached to the Proxy Statement/Prospectus as Appendix I.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Any other matter that may be submitted to a vote of shareholders at the
Special Meeting.
(YOU ARE REQUESTED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY)
<PAGE>
BACK
[LOGO]
LIFE BANCORP, INC.
THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL ON THE REVERSE SIDE IF NO
INSTRUCTION TO THE CONTRARY IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED AT
THE SPECIAL MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
The undersigned hereby ratifies and confirms all that said proxies, or any of
them or their substitutes may lawfully do or cause to be done by virtue hereof,
and acknowledges receipt of the notice of the Special Meeting and the Proxy
Statement/ Prospectus accompanying it.
Dated , 1998
------------------------------
------------------------------
Please insert date of signing. Sign exactly as name appears at left. Where
stock is issued in two or more names, all should sign. If signing as attorney,
administrator, executor, trustee or guardian, give full title as such. A
corporation should sign by an authorized officer and affix seal.
<PAGE>
EXHIBIT 99(b)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of October 29, 1997, by and between LIFE BANCORP, INC. ("Life"), a Virginia
corporation ("Issuer"), and BB&T 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-Virginia ("BB&T Financial"), a wholly owned Subsidiary of Grantee,
with the result that Issuer will become a wholly owned subsidiary of Grantee;
and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant 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 1,959,668 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, $.01 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 $24.75.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event;
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, (D) 12 months after any termination of the Merger
Agreement (other than a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event and (E) subject to clause (D)
above, 12 months after termination of the Merger Agreement pursuant to Section
7.1 (e) thereof; provided further, that any purchase of shares upon exercise of
the Option shall be subject to compliance with applicable law, including,
without limitation, the Bank Holding Company Act (the "BHC Act"). Subject to
compliance with Section 12(h) hereof, the term "Holder" shall mean the holder
or holders of the Option from time to time, including initially Grantee. The
rights set forth in Section 8 shall terminate when the rights to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following events
subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to
effect an Acquisition Transaction (as defined below). As used herein, the
term "Acquisition Transaction" shall mean (A) a merger, consolidation or
similar transaction involving Issuer or any of its Subsidiaries (other
than transactions solely between Issuer's Subsidiaries 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; or
1
<PAGE>
(ii) any person (other than Grantee or any Subsidiary of Grantee) shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the Exchange
Act), other than a group of which Grantee or any of the Subsidiaries of
Grantee is a member, shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 15% or more of the
then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities
Act with respect to, a tender offer or exchange offer to purchase any
shares of Issuer Common Stock such that, upon consummation of such offer,
such person would own or control 15% or more of the then-outstanding
shares of Issuer Common Stock (such an offer being referred to herein as a
"Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose
of voting on the Merger Agreement, such meeting shall not have been held
or shall have been canceled prior to termination of the Merger Agreement,
or Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement, in each case after any
person (other than Grantee or any Subsidiary of Grantee) shall have (A)
made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice), whether
in draft or final form, under any federal or state statute or regulation
(including an application or notice filed under the BHC Act, the Bank
Merger Act, the Home Owners' Loan Act or the Change in Bank Control Act of
1978) seeking the Consent to an Acquisition Transaction from any federal
or state governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(d) Notwithstanding the foregoing, the obligation of Life to issue Option
Shares upon exercise of the Option shall be deferred (but shall not terminate):
(i) until the receipt of all required governmental or regulatory approvals or
consents necessary for Life to issue the Option Shares or Holder to exercise
the Option, or until the expiration or termination of any waiting period
required by law, or (ii) so long as any injunction or other order, decree or
ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Option Shares.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for
the closing (the "Closing") of such purchase (the "Closing Date"). If prior
Consent of any governmental or regulatory agency or authority is required in
connection with such purchase, Issuer shall cooperate with Holder in the filing
of the required notice or application for such Consent and the obtaining of
such Consent at Holder's expense, and the Closing shall occur not earlier than
three business days nor later than 15 business days following receipt of such
Consents (and expiration of any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a),
(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.
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(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 . 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 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) Grantee represents that it is acquiring the Option for Grantee's own
account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with, and declared effective by, the Securities
and Exchange Commission pursuant to Section 5 of the Securities Act, but
instead each is being offered in reliance upon the exemption from the
registration requirement provided by Section 4(2) thereof and the
representations and warranties made by Grantee in connection therewith. Grantee
represents that neither the Option nor the Option Shares will be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Laws, and that with respect to any transfer
or other disposition proposed to be made in reliance upon an exemption from
registration, such transfer or other disposition shall not be made unless Life
first receives an opinion of counsel in form and substance reasonably
acceptable to it regarding the availability of such exemption.
7. Adjustment upon Changes in Capitalization, etc.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option and the Purchase Price therefor shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after
the date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a)), the number of shares of Issuer Common
Stock subject to the Option shall be adjusted so that, after such issuance, it,
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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 (prior to
termination of the Option pursuant to Section 3(a) hereof): (i) to consolidate
with or merge into any person, other than Grantee or one of its Subsidiaries,
and shall not be the continuing or surviving corporation of such consolidation
or merger; (ii) to permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company; (iii) to permit
any person, other than Grantee or one of its Subsidiaries, to acquire all of
the outstanding shares of Issuer Common Stock pursuant to a statutory share
exchange; or (iv) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then, and
in each such case, the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
Grantee, 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
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, or the
transferee of all or substantially all of the Issuer's assets (or the
assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock issued by the
Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price per share
of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee), (y) the price
per share of the Issuer Common Stock to be paid by any person (other than
the Grantee) pursuant to an agreement with Issuer, and (z) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
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, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock"
shall be deemed to be references to "Substitute Option Issuer," "Substitute
Option," "Substitute Purchase Price" and "Substitute Common Stock,"
respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a), at the request of Holder
at any time commencing upon the first occurrence of a Repurchase Event (as
defined in Section 8(d)) and ending 12 months immediately thereafter, Issuer
shall repurchase from Holder the Option and all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of Issuer
Common Stock acquired by Holder pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined below)
for each share of Issuer Common Stock over (y) the Purchase Price (subject
to adjustment pursuant to Section 7), multiplied by the number of shares
of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase Price
(subject to adjustment pursuant to Section 7) paid (or, in the case of
Option Shares with respect to which the Option has been exercised but the
Closing Date has not occurred, payable) by Holder for each share of
Issuer Common Stock with respect to which the Option has been exercised
and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within ten business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and
that the same are then free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or the consent or approval of any
governmental or regulatory agency or authority is required in connection with
the payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer deliver
from time to time that portion of the Section 8 Repurchase Consideration that
it is not then so prohibited from paying and promptly file the required notice
or application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval), in which case the ten business day
period of time that
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would otherwise run pursuant to the preceding sentence for the payment of the
portion of the Section 8 Repurchase Consideration shall run instead from the
date on which, as the case may be, any required notification period has expired
or been terminated or such approval has been obtained and, in either event, any
requisite waiting period shall have passed. If any governmental or regulatory
agency or authority disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If any governmental or regulatory agency or authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by such agency or
authority, determine whether the repurchase should apply to the Option and/or
Option Shares and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares for which the
Option was exercisable at the Request Date less the sum of the number of shares
covered by the Option in respect of which payment has been made pursuant to
Section 8(a)(ii) and the number of shares covered by the portion of the Option
(if any) that has been repurchased. Holder shall notify Issuer of its
determination under the preceding sentence within five business days of receipt
of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's rights
under this Section 8 shall terminate on the date of termination of this Option
pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i), (ii) the price
per share of Issuer Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination transaction described
in Section 7(b)(i), 7(b)(ii), 7(b)(iii) or 7(b)(iv), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all
of Issuer's assets, the Applicable Price shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer (which
determination shall be conclusive for all purposes of this Agreement), divided
by the number of shares of the Issuer Common Stock outstanding at the time of
such sale. If the consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired actual
ownership or control, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which shall have acquired actual ownership
or control, of 50% or more of the then-outstanding shares of Issuer Common
Stock, or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii),
7(b)(iii) or 7(b)(iv) shall be consummated.
9. Registration Rights.
(a) For a period of 24 months following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subparagraph (c) below,
if requested by any Holder, including Grantee and any permitted transferee of
the Option Shares ("Selling Holder"), as expeditiously as possible prepare and
file a registration statement under the Securities Laws if necessary in order
to permit the sale or other disposition of any or all shares of Issuer Common
Stock or other securities that have been acquired by or are issuable to Selling
Holder upon exercise of the Option in accordance with the intended method of
sale or other disposition stated by the Selling Holder in such request,
including, without limitation, a "shelf" registration statement under Rule 415
under the Securities Act or any successor provision, and Issuer shall use its
best efforts to qualify such shares or other securities for sale under any
applicable state securities laws.
(b) If Issuer at any time after the exercise of the Option proposes to
register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to cause any such shares not to be so registered (i) if the underwriters in
good faith object for a valid business reason, or (ii) in the case of a
registration solely to implement a dividend reinvestment or similar plan, an
employee
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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 in the event that Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Laws pursuant to
subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(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 Option Shares then
outstanding.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of nine months
from the effective date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall
not be required to consent to general jurisdiction or qualify to do business in
any state where it is not otherwise required to so consent to such jurisdiction
or to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer will
pay all expenses (including without limitation registration fees, qualification
fees, blue sky fees and expenses (including the fees and expenses of counsel),
accounting expenses, legal expenses, including reasonable fees and expenses of
one counsel to the Selling Holders whose Option Shares are being registered,
printing expenses, reasonable expenses of underwriters, excluding discounts and
commissions but including liability insurance if Issuer so desires or the
underwriters so require, and the reasonable fees and expenses of any necessary
special experts) in connection with each registration pursuant to 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 or omission or alleged omission
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Holder, or by such underwriter, as the case may be,
for all such expenses, losses, claims, damages and liabilities caused by any
untrue or alleged untrue statement or omission or alleged omission that was
included by Issuer in any such registration statement or prospectus or
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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 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 the Selling Holders in accordance with and to the
extent permitted by any rule or regulation promulgated by the Commission from
time to time, including, without limitation, Rules 144 and 144A. Issuer shall
at its expense provide the Selling Holders with any information necessary in
connection with the completion and filing of any reports or forms required to
be filed by them under the Securities Laws, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the issuance and
the sale of the Option Shares and in connection with the exercise of the
Option, and will save Holder harmless, without limitation as to time, against
any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon
as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) is
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements
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providing for Options of different denominations entitling the holder thereof
to purchase in the aggregate the same number of shares of Issuer Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h)) 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 registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement
(or at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed,
it being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned or
transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
Grantee may assign or transfer its rights hereunder in whole or in part after
the occurrence of a Purchase Event. In the case of any permitted assignment or
transfer of the Option, Issuer shall do all things necessary to facilitate the
same, and the Holder to whom the Option is assigned or transferred shall make
the representations contained in Section 6 hereof (with Holder substituted for
Grantee) and shall agree in writing to the terms and conditions hereof. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
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(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.
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.
LIFE BANCORP, INC.
By: ------------------------------------
Name: -------------------------------
Title: --------------------------------
BB&T CORPORATION
By: ------------------------------------
Name: -------------------------------
Title: --------------------------------
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