<PAGE>
As Filed with the Securities and Exchange Commission on May 19, 1999
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)
North Carolina 6060 56-0939887
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification Number)
of incorporation or
organization)
----------------
200 West Second Street
Winston-Salem, North Carolina 27101
(336) 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
(336) 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:
Peter A. Zorn Walter G. Moeling, IV
Womble Carlyle Sandridge & Rice, PLLC Powell, Goldstein, Frazer & Murphy LLP
200 West Second Street, 17th Floor 191 Peachtree Street, N.E., Sixteenth
Winston-Salem, North Carolina 27101 Floor
----------------Atlanta, Georgia 30303
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>
Proposed
Proposed maximum
Title of each class of maximum aggregate
securities to be Amount to be offering offering Amount of
registered registered price per unit price registration fee
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$5.00 per share(1)..... 3,352,846 (2) $134,113,840(3) $11,219(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
($40.00) and low ($40.00) sales price of the common stock of First
Citizens Corporation on May 17, 1999 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 $26,065.44 paid upon the filing with the
Commission of the preliminary proxy materials of First Citizens
Corporation on May 5, 1999.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
FIRST CITIZENS CORPORATION
19 Jefferson Street
Newnan, Georgia 30263
----------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1999
----------------------------------------------
TO THE SHAREHOLDERS OF FIRST CITIZENS CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First Citizens Corporation, a Georgia corporation ("First
Citizens"), will be held in the Municipal Auditorium of the City of Newnan,
located at 25 Jefferson Street, Newnan, Georgia, on Wednesday, June 30, 1999
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 January 26, 1999 (the "Merger
Agreement"), between First Citizens and BB&T Corporation, a North
Carolina corporation ("BB&T"), and a related plan of merger, pursuant to
which First Citizens will merge with and into BB&T (the "Merger") and
each share of common stock of First Citizens then outstanding will be
converted into the right to receive 1.0789 shares of common stock of
BB&T, plus cash in lieu of any fractional share interest. A copy of the
Merger Agreement and the plan of merger set forth therein is attached to
the accompanying proxy statement/prospectus as Appendix A.
2. To transact such other business as may be properly brought before the
Meeting or at any and all adjournments or postponements thereof.
Shareholders of First Citizens of record at the close of business on May 17,
1999 are entitled to notice of and to vote at the Meeting. You are cordially
invited to attend the 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
Douglas J. Hertha
Secretary
Newnan, Georgia
May 27, 1999
Please complete, sign, date and return the enclosed proxy card promptly
whether or not you plan to be present at the Meeting. Failure to return a
properly executed proxy or to vote at the Meeting will have the same effect as
a vote against the Merger Agreement and the plan of merger. Please do not send
in any certificates for your shares at this time.
<PAGE>
[First Citizens logo]
SPECIAL MEETING OF SHAREHOLDERS
MERGER PROPOSAL--YOUR VOTE IS VERY IMPORTANT
The Board of Directors of First Citizens Corporation has unanimously
approved a merger combining First Citizens and BB&T Corporation. In the
merger, First Citizens shareholders will receive 1.0789 shares of BB&T common
stock for each share of First Citizens common stock and generally will not
recognize federal income tax gain or loss for the BB&T common stock they
receive. The merger will join First Citizens' strengths as a community banking
system covering the south metropolitan Atlanta area with BB&T's position as a
leading bank throughout the Carolinas, Virginia, the District of Columbia and
parts of Maryland, enabling the combined company to offer First Citizens'
customers a broad range of financial products and services.
At the Special Meeting, you will consider and vote on the merger agreement.
The merger cannot be completed unless holders of at least a majority of First
Citizens common stock approve it. The Board of Directors believes the merger
is in the best interests of First Citizens shareholders and unanimously
recommends that shareholders vote to approve the merger agreement. No vote of
BB&T shareholders is required to approve the merger agreement.
On May 17, 1999, the closing price of BB&T common stock was $38.06, making
the value of 1.0789 shares of BB&T common stock (which is what First Citizens
shareholders will receive for each share of First Citizens common stock) equal
to $41.06. The closing price of First Citizens common stock on that date was
$40.00. These prices will, however, fluctuate between now and the merger.
The date, time and place of the meeting are:
June 30, 1999
10:00 a.m.
Municipal Auditorium of the
City of Newnan
25 Jefferson Street
Newnan, Georgia
This proxy statement/prospectus provides you with detailed information about
the proposed merger. We encourage you to read this entire document carefully.
You can also obtain other information about First Citizens and BB&T from
documents filed with the Securities and Exchange Commission.
Whether or not you plan to attend the meeting, if you are a holder of First
Citizens common stock please take the time to vote by completing and mailing
the enclosed proxy card to us. If you fail to return your card or vote in
person, the effect will be a vote against approval of the merger agreement.
Your vote is very important. You can revoke your proxy by writing to First
Citizens' Secretary any time before the meeting or by attending the meeting
and voting in person.
On behalf of the Board of Directors of First Citizens, we urge you to vote
"FOR" approval and adoption of the merger agreement.
J. Littleton Glover, Jr.
Chairman of the Board of Directors
Tom Moat
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the BB&T common stock to be issued in the merger or
determined if this proxy statement/prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated May 19, 1999 and is expected to be
first mailed to shareholders of First Citizens on or about May 27, 1999.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A WARNING ABOUT FORWARD-LOOKING INFORMATION................................ iv
SUMMARY.................................................................... 1
MEETING OF SHAREHOLDERS.................................................... 8
General.................................................................. 8
Record Date, Voting Rights and Vote Required............................. 8
Voting and Revocation of Proxies......................................... 8
Solicitation of Proxies.................................................. 9
Recommendation of the First Citizens Board............................... 9
THE MERGER................................................................. 10
General.................................................................. 10
Background of and Reasons for the Merger................................. 10
Opinion of Financial Advisor to First Citizens........................... 12
Exchange Ratio........................................................... 17
Exchange of First Citizens Common Stock Certificates..................... 19
The Merger Agreement..................................................... 20
Interests of Certain Persons in the Merger............................... 25
Regulatory Considerations................................................ 27
Material Federal Income Tax Consequences of the Merger................... 29
Accounting Treatment..................................................... 30
The Option Agreement..................................................... 30
Effect on Employees, Employee Benefit Plans and Stock Options............ 33
Restrictions on Resales by Affiliates.................................... 35
INFORMATION ABOUT BB&T..................................................... 35
General.................................................................. 35
Operating Subsidiaries................................................... 35
Acquisitions............................................................. 36
Capital.................................................................. 38
Deposit Insurance Assessments............................................ 38
INFORMATION ABOUT FIRST CITIZENS........................................... 39
DESCRIPTION OF BB&T CAPITAL STOCK.......................................... 39
General.................................................................. 39
BB&T Common Stock........................................................ 40
BB&T Preferred Stock..................................................... 40
Shareholder Rights Plan.................................................. 40
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws........... 42
COMPARISON OF SHAREHOLDERS' RIGHTS......................................... 43
Authorized Capital Stock................................................. 43
Special Meetings of Shareholders and Action by Shareholders without a
Meeting................................................................. 44
Directors................................................................ 44
Dividends and Other Distributions........................................ 44
Notice of Shareholder Nominations and Shareholder Proposals.............. 45
Exculpation and Indemnification.......................................... 45
Mergers, Share Exchanges and Sales of Assets............................. 46
Anti-takeover Statutes................................................... 46
Amendments to Articles of Incorporation and Bylaws....................... 47
Shareholders' Rights of Dissent and Appraisal............................ 48
Liquidation Rights....................................................... 49
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SHAREHOLDER PROPOSALS....................................................... 50
OTHER BUSINESS.............................................................. 50
LEGAL MATTERS............................................................... 50
EXPERTS..................................................................... 50
WHERE YOU CAN FIND MORE INFORMATION......................................... 50
Appendix A--Agreement and Plan of Reorganization and Plan of Merger
Appendix B--Opinion of Morgan Keegan & Company, Inc.
</TABLE>
iii
<PAGE>
A WARNING ABOUT FORWARD-LOOKING INFORMATION
BB&T and First Citizens have each made forward-looking statements in this
document and in certain documents that we refer to in this document that are
subject to risks and uncertainties. These statements are based on the beliefs
and assumptions of the management of BB&T and First Citizens, and on
information currently available to them or, in the case of information that
appears under the heading "The Merger--BB&T's Reasons for the Merger" at page
10, information that was available to management of BB&T as of the date of the
merger agreement. Forward-looking statements include the information
concerning possible or assumed future results of operations of BB&T or First
Citizens set forth under "Summary," "The Merger--Background of, and Reasons
for, the Merger" and "The Merger--BB&T's Reasons for the Merger" and
statements preceded by, followed by or that include the words "believes,"
"expects," "anticipates," "intends," "plans," "estimates" or similar
expressions.
We have made statements in this document regarding estimated earnings per
share of BB&T and First Citizens on a stand alone basis, expected cost savings
from the merger, estimated restructuring charges relating to the merger,
estimated increases in First Citizens' fee income ratio and net interest
margin, the anticipated accretive effect of the merger and BB&T's anticipated
performance in future periods. With respect to estimated cost savings and
restructuring charges, BB&T has made assumptions about, among other things,
the extent of operational overlap between BB&T and First Citizens, the amount
of general and administrative expense consolidation, costs relating to
converting First Citizens' bank operations and data processing to BB&T's
systems, the size of anticipated reductions in fixed labor costs, the amount
of severance expenses, the extent of the charges that may be necessary to
align the companies' respective accounting reserve policies, and the costs
related to the merger. The realization of cost savings and the amount of
restructuring charges are subject to the risk that the foregoing assumptions
are inaccurate, and actual results may be materially different from those
expressed or implied by the forward-looking statements.
Moreover, any statements in this document about the anticipated accretive
effect of the merger and BB&T's anticipated performance in future periods are
subject to risks relating to, among other things, the following:
1. expected cost savings from the merger or other previously announced
mergers may not be fully realized or realized within the expected time-
frame;
2. deposit attrition, customer loss or revenue loss following the merger or
other previously announced mergers may be greater than expected;
3. competitive pressures among depository and other financial institutions
may increase significantly;
4. costs or difficulties related to the integration of the businesses of
BB&T and its merger partners, including First Citizens, may be greater
than expected;
5. changes in the interest rate environment may reduce margins;
6. general economic or business conditions, either nationally or in the
states or regions in which BB&T and First Citizens do business, may be
less favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit;
7. legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which BB&T and First
Citizens are engaged;
8. adverse changes may occur in the securities markets; and
9. competitors of BB&T and First Citizens may have greater financial
resources and develop products that enable those competitors to compete
more successfully than BB&T and First Citizens.
Management of each of BB&T and First Citizens believes the forward-looking
statements about its company are reasonable; however, shareholders of First
Citizens should not place undue reliance on them. Forward-looking statements
are not guarantees of performance. They involve risks, uncertainties and
assumptions. The future results and shareholder values of BB&T following
completion of the merger may differ materially from those expressed or implied
in these forward-looking statements. Many of the factors that will determine
these results and values are beyond BB&T's and First Citizens' ability to
control or predict.
iv
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the documents to which we refer you. See "Where You Can
Find More Information" on page 50.
Exchange Ratio to be 1.0789 Shares of BB&T Common Stock for each First Citizens
Share (Page 17)
If the merger is completed, you will receive 1.0789 shares of BB&T common
stock for each share of First Citizens stock you own, plus cash instead of any
fractional share. On May 17, 1999, the closing price of BB&T common stock was
$38.06, making the value of 1.0789 shares of BB&T common stock (which is what
First Citizens shareholders will receive for each share of First Citizens
common stock) equal to $41.06. Because the market price of BB&T stock
fluctuates, you will not know when you vote what the shares will be worth when
issued in the merger.
If the price of BB&T common stock is below $32.67 just before the merger and
the stock prices of certain other bank holding companies have not experienced
similar relative declines since the time that the companies agreed to merge,
First Citizens may terminate the merger agreement. If this were to happen, BB&T
could choose to proceed with the merger by increasing the consideration that
you would receive in the merger so that you would receive BB&T common stock
valued, shortly before the merger, at $35.25 for each share of First Citizens
common stock.
No Federal Income Tax on Shares Received in Merger (Page 29)
First Citizens shareholders generally will not recognize gain or loss for
federal income tax purposes for the shares of BB&T common stock they receive in
the merger. BB&T's attorneys have issued a legal opinion to this effect, which
we have included as an exhibit to the registration statement filed with the SEC
for the shares to be issued in the merger. First Citizens shareholders will be
taxed on cash received instead of any fractional share of BB&T common stock.
Tax matters are complicated, and tax results may vary among shareholders.We
urge you to contact your own tax advisor to understand fully how the merger
will affect you.
BB&T Dividend Policy Following the Merger
BB&T currently pays quarterly dividends of $.175 per share of common stock.
BB&T expects that it will continue to pay at least this amount in quarterly
dividends, but may change that policy based on business conditions, BB&T's
financial condition and earnings or other factors.
First Citizens Board Recommends Shareholder Approval (Page 9)
The First Citizens Board believes that the merger is in the best interests of
First Citizens shareholders and unanimously recommends that the shareholders
vote "FOR" approval of the merger agreement. The First Citizens Board believes
that, as a result of the merger, First Citizens shareholders will have less
financial risk and will experience greater stock value appreciation than they
would if First Citizens remained independent.
Exchange Ratio Fair to Shareholders According to First Citizens' Financial
Advisor (Page 12)
Morgan Keegan & Company, Inc. has given an opinion to the First Citizens
Board that, as of the date of this proxy statement/prospectus, the exchange
ratio in the merger is fair from a financial point of view to First Citizens
shareholders. The full text of this opinion is attached as Appendix B to this
proxy statement/prospectus. We encourage you to read the opinion carefully.
First Citizens has paid Morgan Keegan a retainer fee of $7,500 per quarter and
an initial advisory and opinion fee of $75,000 and has agreed to pay a final
advisory and opinion fee equal to 1.0% of the overall deal value, which amount
includes the retainer fee and the initial advisory and opinion fees.
Meeting to be held June 30, 1999 (Page 8)
First Citizens will hold the special shareholders' meeting at 10:00 a.m. on
Wednesday, June 30, 1999 at the Municipal Auditorium of the City of Newnan in
Newnan, Georgia. At the meeting, you will vote on
1
<PAGE>
the merger agreement. You will also conduct any other business that properly
arises.
The Companies (Page 35)
BB&T Corporation
200 West Second Street
Winston-Salem, NC 27101
(336) 733-2000
BB&T Corporation is a multi-bank holding company with more than $37.8 billion
in assets. It is the sixth largest bank holding company in the Southeast, and
through its banking subsidiaries operates 581 branch offices in the Carolinas,
Virginia, Maryland and Washington, D.C. BB&T ranks second in deposit market
share in North Carolina and third in South Carolina and maintains a significant
market presence in much of Virginia, as well as in Maryland and in Washington,
D.C.
First Citizens Corporation
19 Jefferson Street
Newnan, GA 30263
(770) 253-5017
First Citizens Corporation is the holding company for two subsidiary
financial institutions with approximately $410 million in assets and 13 branch
offices in the south metropolitan Atlanta area.
The Merger (Page 10)
In the merger, First Citizens will merge into BB&T, and First Citizens'
banking subsidiaries, through which it operates, will become wholly owned
subsidiaries of BB&T. In addition, First Citizens' indirect subsidiaries,
through which it offers mortgage banking and real estate appraisal services,
will become indirect subsidiaries of BB&T. The merger requires the approval of
the holders of at least a majority of the First Citizens common stock. If we
obtain this approval, we currently expect to complete the merger in the third
quarter of 1999.
We have attached the merger agreement and the related plan of merger
(Appendix A) at the back of this proxy statement/prospectus. We encourage you
to read the merger agreement, as it is the legal document that governs the
merger.
Majority First Citizens Shareholder Vote Required (Page 8)
Approval of the merger agreement requires the affirmative vote of the holders
of at least a majority of the outstanding shares of First Citizens common
stock. Your failure to vote will have the effect of a vote against approval of
the merger agreement. The directors and executive officers of First Citizens
together own about 19.07% of the shares entitled to be cast at the meeting, and
we expect them to vote their shares in favor of the merger.
Brokers who hold shares of First Citizens common stock as nominees will not
have authority to vote such shares with respect to the merger unless
shareholders provide voting instructions.
The merger does not require the approval of BB&T's shareholders.
Record Date Set at May 17, 1999; One Vote per Share of First Citizens Stock
(Page 8)
If you owned shares of First Citizens common stock at the close of business
on May 17, 1999, the record date, you are entitled to vote on the merger
agreement and any other matters considered at the meeting.
On the record date, there were 2,878,350 shares of First Citizens common
stock outstanding. You will have one vote at the meeting for each share of
First Citizens common stock you own on the record date.
Monetary Benefits to Management in the Merger (Page 25)
When considering the recommendation of the First Citizens Board, you should
be aware that some First Citizens directors and officers have interests in the
merger that differ from the interests of other First Citizens shareholders.
First Citizens' President and CEO Tom Moat has been offered a 5-year employment
agreement with a banking subsidiary of BB&T at his current salary (plus an
amount equal to the value of the benefits he will lose in the merger). Three
other members of management have been offered 3-year employment agreements at
their current salaries. These agreements will provide severance payments and
other benefits if there is a change in control of BB&T.
2
<PAGE>
Also, J. Littleton Glover, Jr., First Citizens' Chairman, will be elected to
the board of BB&T's North Carolina bank and will earn annual fees of $5,000
plus $1,000 per meeting attended, and Mr. Glover and the other First Citizens
directors will be offered positions on BB&T's advisory board for the Atlanta,
Georgia area and will receive annual fees not less than what they are now
receiving as First Citizens directors for at least two years after the merger.
The First Citizens Board was aware of these and other interests and
considered them before approving and adopting the merger agreement.
Conditions that Must be Satisfied for the Merger to Occur (Page 20)
The following conditions must be met for us to complete the merger:
. approval of the merger agreement by First Citizens shareholders;
. the absence of legal restraints that prevent the completion of the
merger;
. receipt of a legal opinion concerning the tax consequences of the
merger;
. the continuing accuracy of the parties' representations in the merger
agreement;
. the continuing effectiveness of the registration statement filed with
the SEC; and
. the ability to account for the merger as a pooling of interests.
We have received the approval of the Board of Governors of the Federal
Reserve System, the Georgia Department of Banking and Finance and the Virginia
Bureau of Financial Institutions, which are all of the required regulatory
approvals for the merger.
Termination and Amendment of the Merger Agreement (Page 24)
We can agree at any time to terminate the merger agreement without completing
the merger. Either company can also terminate the merger agreement in the
following circumstances:
. the merger is not completed by August 31, 1999;
. any of the conditions described above is not met; or
. the other company violates, in a material way, any of its
representations, warranties or obligations under the merger agreement.
Generally, the company seeking to terminate cannot itself be in violation of
the merger agreement so as to allow the other party to terminate.
We can agree to amend the merger agreement in any way, except that after the
shareholders' meeting we cannot decrease the consideration you will receive in
the merger. Either company can waive any of the requirements of the other
contained in the merger agreement, except that neither company can waive any
required regulatory approval. Neither company intends to waive the condition
that it receives a tax opinion. If a tax opinion is not available and the First
Citizens Board wishes to proceed with the merger, First Citizens will resolicit
its shareholders.
Option Agreement (Page 30)
As a condition to its offer to acquire First Citizens, and to discourage
other companies from acquiring First Citizens, BB&T required First Citizens to
grant BB&T a stock option that allows BB&T to buy up to 560,483 shares of First
Citizens' common stock. The exercise price of the option is $27.50 per share.
BB&T can exercise the option only if another party attempts to acquire control
of First Citizens. As of the date of this document, we do not believe that has
occurred.
BB&T to Use Pooling-of-Interests Accounting Treatment (Page 30)
BB&T will account for the merger as a pooling of interests. This will enhance
future earnings by avoiding the creation of goodwill relating to the merger and
enable BB&T to avoid charges against future earnings that would result from
amortizing goodwill. This accounting method also means that, after the merger,
BB&T will report financial results as if First Citizens had always been
combined with BB&T.
No Appraisal Rights (Page 48)
Under Georgia law, you have no right to an appraisal of your shares in
connection with the merger.
3
<PAGE>
Share Price Information (Page 5)
First Citizens common stock is listed on the Nasdaq National Market, and BB&T
common stock is listed on the New York Stock Exchange. On January 26, 1999, the
last full trading day before public announcement of the proposed merger, First
Citizens common stock closed at $30.125 and BB&T common stock closed at
$38.4375. On May 17, 1999, First Citizens common stock closed at $40.00 and
BB&T common stock closed at $38.06.
Listing of BB&T Stock
BB&T will list the shares of its common stock to be issued in the merger on
the New York Stock Exchange.
4
<PAGE>
Comparative Market Prices and Dividends
BB&T common stock is listed on the NYSE under the symbol "BBT." First
Citizens common stock is included on the Nasdaq National Market under the
symbol "FSTC." The table below shows the high and low closing prices of BB&T
common stock and First Citizens common stock and cash dividends paid per share
for the last two fiscal years plus the interim period. For BB&T, prices reflect
a 2-for-1 stock split on August 3, 1998. Shareholders should note that the
merger agreement restricts First Citizens' ability to pay dividends. See
page 22.
<TABLE>
<CAPTION>
BB&T First Citizens
---------------------- ----------------------
Cash Cash
High Low Dividend High Low Dividend
------ ------ -------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31, 1999.......... $40.44 $34.94 $.175 $40.88 $25.50 $.10
June 30, 1999 (through
May 17)................ 40.25 36.31 .175 42.00 37.13 .10
Quarter Ended
March 31, 1998.......... 33.84 29.03 .155 35.00 29.25 .08
June 30, 1998........... 34.06 32.03 .155 35.00 29.00 .08
September 30, 1998...... 36.03 28.00 .175 30.80 22.00 .09
December 31, 1998....... 40.63 27.31 .175 29.00 25.00 .10
For year 1998........... 40.63 27.31 .66 35.00 22.00 .35
Quarter Ended
March 31, 1997.......... 20.38 17.63 .135 17.17 14.17 .07
June 30, 1997........... 23.56 17.88 .135 18.00 15.50 .07
September 30, 1997...... 27.56 22.66 .155 23.33 17.50 .07
December 31, 1997....... 32.50 25.97 .155 35.50 22.67 .08
For year 1997........... 32.50 17.63 .58 35.50 14.17 .29
</TABLE>
The table below shows the closing price of BB&T common stock and First
Citizens common stock on January 26, 1999, the last full trading day before
public announcement of the proposed merger.
<TABLE>
<S> <C>
BB&T historical....................................................... $38.4375
First Citizens historical............................................. $ 30.125
First Citizens pro forma equivalent*.................................. $ 41.47
</TABLE>
- --------
* Calculated by multiplying BB&T's per share closing price by the exchange
ratio of 1.0789
5
<PAGE>
Selected Consolidated Financial Data
We are providing the following information to help you analyze the financial
aspects of the merger. We derived this information from audited financial
statements for 1994 through 1998, in the case of BB&T, and 1995 through 1999,
in the case of First Citizens, and unaudited financial statements, in the case
of BB&T, for the three months ended March 31, 1999. The information provided
for BB&T has been restated to include the account of MainStreet Financial
Corporation, which was acquired by BB&T on March 5, 1999 in a transaction
accounted for as a pooling of interests. This information is only a summary,
and you should read it in conjunction with our historical financial statements
(and related notes) contained in the annual and quarterly reports and other
documents that we have filed with the SEC. See "Where You Can Find More
Information" on page 50. You should not rely on the three-month information for
BB&T as being indicative of results expected for the entire year.
BB&T--Historical Financial Information
<TABLE>
<CAPTION>
As of/For the Three
Months Ended
March 31, As of/For the Years Ended December 31,
----------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except for per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ 344,377 $ 319,340 $ 1,317,129 $ 1,221,658 $ 1,119,910 $ 1,027,390 $ 988,203
Net income.............. 138,423 120,445 513,021 378,287 361,448 255,255 292,030
Diluted earnings per
share.................. .44 .39 1.65 1.23 1.17 .81 .94
Cash dividends paid per
share.................. .175 .155 .66 .58 .50 .43 .37
Book value per share.... 9.59 8.68 9.53 8.50 7.80 7.39 6.59
Total assets............ 37,791,490 34,243,806 36,388,330 33,165,141 29,134,267 27,396,168 25,868,138
Long-term debt.......... 5,187,639 3,942,804 4,964,797 3,750,484 2,392,688 1,544,236 1,104,699
</TABLE>
First Citizens--Historical Financial Information
<TABLE>
<CAPTION>
As of/For the Years Ended March 31,
--------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(Dollars in thousands, except for per share
amounts)
<S> <C> <C> <C> <C> <C>
Net interest income............... $ 15,725 $14, 931 $ 9,396 $ 5,900 $ 5,338
Net income........................ 3,376 7,215 2,652 4,050 1,620
Diluted earnings per share........ 1.13 2.42 1.05 1.81 .76
Cash dividends paid per share..... .37 .31 .29 .23 .15
Book value per share.............. 14.01 13.15 10.94 9.26 7.67
Total assets...................... 411,268 367,812 326,365 182,010 169,477
Long-term debt.................... 6,171 5,038 5,804 8,193 8,199
</TABLE>
6
<PAGE>
Comparative Per Share Data
We have summarized below the per share information for our companies on an
historical, pro forma combined and equivalent basis. You should read this
information in conjunction with our historical financial statements (and
related notes) contained in the annual and quarterly reports and other
documents we have filed with the SEC. See "Where You Can Find More Information"
on page 50. In order to conform to the per share data relating to BB&T common
stock, the per share data relating to First Citizens common stock has been
prepared by utilizing financial information at the calendar dates and periods
indicated rather than the fiscal dates and periods utilized by First Citizens
for financial reporting purposes. The BB&T pro forma information gives effect
to the merger accounted for as a pooling of interests, assuming that 1.0789
shares of BB&T common stock are issued for each outstanding share of First
Citizens common stock. First Citizens equivalent share amounts are calculated
by multiplying the pro forma basic and diluted earnings per share, historical
per share dividend and historical shareholders' equity by the exchange ratio of
1.0789 shares of BB&T common stock so that the per share amounts equate to the
respective values for one share of First Citizens common stock. You should not
rely on the pro forma information as being indicative of the historical results
that we would have had if we had been combined or the future results that we
will experience after the merger, nor should you rely on the three-month
information as being indicative of results expected for the entire year.
<TABLE>
<CAPTION>
As of/For the Year
As of/For the Ended
Three Months December 31,
Ended March 31, --------------------
1999 1998 1997 1996
--------------- ------ ------ ------
<S> <C> <C> <C> <C>
Earnings per common share
Basic
BB&T historical......................... $ 0.45 $ 1.69 $ 1.25 $ 1.19
First Citizens historical............... 0.46 1.05 2.31 1.83
Pro forma combined...................... 0.45 1.68 1.26 1.19
First Citizens pro forma equivalent..... 0.49 1.81 1.36 1.28
Diluted
BB&T historical......................... 0.44 1.65 1.23 1.17
First Citizens historical............... 0.44 1.00 2.17 1.71
Pro forma combined...................... 0.44 1.65 1.24 1.17
First Citizens pro forma equivalent..... 0.47 1.78 1.34 1.26
Cash dividends declared per common share
BB&T historical........................... .175 .66 .58 .50
First Citizens historical................. .10 .35 .30 .29
Pro forma combined........................ .175 .66 .58 .50
First Citizens pro forma equivalent....... .189 .71 .63 .54
Shareholders' equity per common share
BB&T historical........................... 9.59 9.53 8.50 7.80
First Citizens historical................. 14.03 13.64 12.68 10.12
Pro forma combined........................ 9.63 9.56 8.53 7.82
First Citizens pro forma equivalent....... 10.39 10.31 9.20 8.44
</TABLE>
7
<PAGE>
MEETING OF SHAREHOLDERS
General
We are providing this proxy statement/prospectus to the shareholders of
First Citizens as of the record date of May 17, 1999, along with a form of
proxy that the First Citizens Board is soliciting for use at a special meeting
of shareholders of First Citizens to be held on Wednesday, June 30, 1999 at
10:00 a.m., Eastern Time, at the Municipal Auditorium of the City of Newnan,
located at 25 Jefferson Street, Newnan, Georgia. At the meeting, the
shareholders of First Citizens will vote upon a proposal to approve the merger
agreement, which is dated as of January 26, 1999 and pursuant to which First
Citizens would merge with and into BB&T. Proxies may be voted on such other
matters as may properly come before the meeting at the discretion of the proxy
holders. The First Citizens Board knows of no such other matters except those
incidental to the conduct of the meeting. The merger agreement and the related
plan of merger are attached as Appendix A.
We request holders of the common stock of First Citizens to complete, date
and sign the accompanying proxy and return it promptly to First Citizens in
the enclosed postage prepaid envelope.
Record Date, Voting Rights and Vote Required
Only the holders of First Citizens common stock on the record date are
entitled to receive notice of and to vote at the meeting. On the record date,
there were 2,878,350 shares of First Citizens common stock outstanding, held
by approximately 750 holders of record. Each such share of First Citizens
common stock is entitled to one vote on each matter submitted at the meeting.
Approval of the merger agreement and the plan of merger requires the
affirmative vote of the holders of at least a majority of the outstanding
shares of First Citizens common stock. Failure of a holder of First Citizens
common stock to vote such shares will have the same effect as a vote "against"
the merger agreement and the plan of merger.
Except as described in the immediately preceding paragraph, action on any
other matters that shareholders consider at the meeting will be approved if a
quorum is present and the votes in favor of the matter constitute a majority
of the shares represented at the meeting and entitled to vote. Presence in
person or by proxy of a majority of the outstanding shares of First Citizens
common stock entitled to vote at the meeting will constitute a quorum.
As of the record date, the directors and executive officers of First
Citizens and their affiliates beneficially owned a total of 548,891 shares, or
19.07%, of the issued and outstanding shares of First Citizens common stock
(exclusive of shares that may be acquired pursuant to the exercise of stock
options). As of the record date, neither the directors and executive officers
of BB&T or their affiliates nor BB&T or its subsidiaries beneficially owned
any shares of First Citizens common stock.
Voting and Revocation of Proxies
The shares of First Citizens common stock represented by properly completed
proxies received at or before the time for the 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
merger agreement and the plan of merger. Proxies marked "FOR" approval of the
merger agreement and the plan of merger and executed but unmarked proxies will
be voted in the discretion of the persons named therein as to any proposed
adjournment of the meeting. Proxies which are voted "AGAINST" approval of the
merger agreement and the plan of merger will not be voted in favor of any
motion to adjourn the meeting to solicit more votes in favor of the merger.
Shares held in street name that have been designated by brokers on proxy
cards as not voted with respect to a proposal ("Broker Shares") will not be
counted as votes cast on the proposal. Shares with respect to which proxies
have been marked as abstentions also will not be counted as votes cast on the
proposal. Shares with
8
<PAGE>
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.
The proposal to adopt the merger agreement and the plan of merger is a "non-
discretionary" item, meaning that brokerage firms may not vote shares in their
discretion on behalf of a client if the client has not furnished voting
instructions. Because the proposal to adopt the merger agreement and the plan
of merger must be approved by the holders of at least a majority of the
outstanding shares of First Citizens common stock, abstentions and Broker
Shares will have the same effect as a vote against the merger at the meeting.
If any other matters are properly presented at the meeting and voted upon,
the proxies solicited hereby will be voted on such matters at the discretion
of the proxy holders named therein. The First Citizens Board is not aware of
any other business to be presented at the meeting other than matters
incidental to the conduct of the meeting.
A shareholder's attendance at the meeting will not automatically revoke his
or her proxy. A shareholder may, however, revoke a proxy any time before its
exercise by filing a written notice of revocation with, or by delivering a
duly executed proxy bearing a later date to, the Secretary of First Citizens
at First Citizens' principal executive offices before the meeting, or by
attending the meeting and voting in person. A shareholder's proxy will not be
revoked by his or her death or incapacity unless, before the shares are voted,
the Secretary of First Citizens or other person authorized to tabulate the
votes receives notice of the death or incapacity.
Because approval of the merger agreement and the plan of merger requires the
affirmative vote of the holders of at least a majority of the outstanding
shares of First Citizens common stock, abstentions and Broker Shares will have
the same effect as negative votes. Accordingly, the First Citizens Board urges
First Citizens' 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 First Citizens will each pay 50% of the cost of printing this proxy
statement/prospectus, and First Citizens will pay all other costs of
soliciting proxies. Directors, officers and other employees of First Citizens
or its subsidiaries may solicit proxies personally or by telephone or
facsimile. None of these people will receive any special compensation for
solicitation activities. First Citizens will arrange with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of stock held of record by such persons, and
First Citizens will reimburse these record holders for their reasonable out-
of-pocket expenses.
Recommendation of the First Citizens Board
The First Citizens Board has unanimously adopted the merger agreement and
the plan of merger and believes that the proposed transaction is fair to and
in the best interests of First Citizens and its shareholders. The First
Citizens Board unanimously recommends that First Citizens' shareholders vote
"FOR" approval of the merger agreement and the plan of merger. See "The
Merger--Background of and Reasons for the Merger."
Shareholders should not send in stock certificates with their proxy cards.
See "The Merger--Exchange of First Citizens Common Stock Certificates."
9
<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 merger agreement and the
plan of merger, which are attached to this proxy statement/prospectus as
Appendix A and incorporated herein by reference. All shareholders are urged to
read the appendices in their entirety.
General
In the merger, First Citizens will be merged with and into BB&T and BB&T
will be the surviving corporation. Shareholders of First Citizens will receive
shares of the common stock of BB&T in exchange for their shares of First
Citizens common stock. During the second quarter of 2000, BB&T intends to
merge First Citizens' subsidiary banks into a subsidiary bank of BB&T.
Background of and Reasons for the Merger
Background of the Merger; First Citizens' Reasons for the Merger
During the fourth quarter of 1998, First Citizens engaged Morgan Keegan and
Company, Inc. ("Morgan Keegan") to assist First Citizens in assessing its
strategic options and to serve as a financial advisor to First Citizens
concerning the financial aspects of a potential merger with one of several
different banking companies. Morgan Keegan maintains relationships with
regional banks interested in expanding into the Atlanta market and identified
several banks that were noted high performers in building and expanding
community bank franchises. Morgan Keegan then narrowed the list to two banks,
including BB&T, that it felt would be most interested in acquiring First
Citizens. Representatives of both banks had the opportunity to visit First
Citizens and the market area. Both banks verbally indicated a price range that
they would pay for First Citizens. Only the verbal offer of BB&T was deemed
sufficient to warrant further discussion. After negotiation regarding the
price and exchange ratio, BB&T then made a formal offer on January 4, 1999
which was negotiated through Morgan Keegan and resulted in the final offer and
definitive agreement. On January 25, 1999, the First Citizens Board
unanimously approved the merger and determined that the merger was in the best
interests of First Citizens and its shareholders.
Without assigning any relative or specific weights to the factors, the First
Citizens Board considered the following material factors:
. The value of the consideration to be received by First Citizens
shareholders relative to the book value and earnings per share of First
Citizens Common Stock;
. Certain information concerning the financial condition, results of
operations and business prospects of BB&T;
. The financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the terms of the proposed transaction with BB&T and
the potential future impact of a change in the rules relating to
pooling-of-interests accounting;
. The alternatives to the merger, including remaining an independent
institution;
. The competitive and regulatory environment for financial institutions
generally;
. The fact that the merger will enable First Citizens shareholders to
exchange their shares, in a tax-free transaction, for shares of common
stock of a regional company, the stock of which is widely held and
actively traded;
. The opinion of Morgan Keegan that the consideration to be received by
First Citizens shareholders as a result of the merger, or the exchange
ratio, is fair from a financial point of view; and
. The philosophy of BB&T regarding the treatment of employees and
customers as evidenced by other acquisitions.
10
<PAGE>
Each member of the First Citizens Board has agreed to vote his shares of
First Citizens stock in favor of the merger.
The First Citizens Board recommends that First Citizens shareholders vote
FOR approval of the merger agreement and the related plan of merger.
BB&T's Reasons for the Merger
One of BB&T's announced objectives is to pursue in-market and contiguous
state acquisitions of banks and thrifts within the $250 million to $10 billion
range. BB&T management believes that First Citizens is a well-run organization
that stresses customer service and loyalty and that its acquisition by BB&T
represents a substantial and beneficial expansion of BB&T's franchise into the
rapidly growing, metropolitan Atlanta area, the largest metropolitan
statistical area in the Southeast and a major financial center, and a base for
future market expansion opportunities in Georgia.
In connection with BB&T's consideration of the merger, management of BB&T
analyzed certain investment criteria designed to assess the impact of the
merger on BB&T and its shareholders. For the purpose of this analysis, BB&T
made the following assumptions:
. BB&T's and First Citizens' 1999 earnings per share on a stand alone
basis would be in line with the estimates published by First Call
Corporation.
. BB&T's earnings per share on a stand alone basis for periods after 1999
would increase at an assumed annual rate, determined solely for the
purpose of assessing the impact of the merger as described above, of
approximately 9%.
. First Citizens' earnings on a stand alone basis for periods after 1999
would increase at an assumed rate, determined solely for the purpose of
assessing the impact of the merger as described above, of approximately
12% from 2000 through 2003 and 9% thereafter, before applying the effect
of the assumptions described below.
. Annual cost savings of approximately $2.8 million, or 20% of First
Citizens' expense base, would be realized as a result of the merger,
with 25% of such cost savings achieved in 1999 and the remaining 75% in
2000.
. First Citizens' fee income ratio would ratably increase from 16.5% for
year-to-date as of September 1998 to 25% of total revenue for the full-
year 2003.
. First Citizens' net interest margin (non-FTE) would be maintained
annually at 4.58% of average earning assets.
Using the above assumptions, BB&T analyzed the merger to determine whether
it would have an accretive or dilutive effect on estimated earnings per share,
return on equity, return on assets and book value per share. This analysis
indicated that the merger would be accretive to book value in 1999 and to
estimated earnings per share and return on assets in 2000. BB&T excluded the
effect of an estimated one-time charge of $2.8 million, after income tax
benefits, related to consummating the merger from calculations of earnings per
share, return on equity and return on assets.
In addition to the analysis described above, BB&T performed an internal rate
of return analysis for this transaction. The purpose of this analysis was to
determine if the projected performance of First Citizens, after applying the
assumptions described above, would conform to BB&T's criteria. BB&T's current
minimum internal rate of return requirement for this type of investment is
15%. The analysis performed in connection with the First Citizens merger
indicated that the projected internal rate of return is 15.52%.
None of the above information has been updated since the date of the merger
agreement. There can be no certainty that the results reflected in the above
information will be achieved or that actual results will not vary
11
<PAGE>
materially from the estimated results. For more information concerning the
factors that could affect actual results, see "A Warning About Forward-Looking
Information" on page iv.
Opinion of Financial Advisor to First Citizens
First Citizens retained Morgan Keegan as its financial advisor to render an
opinion to the First Citizens Board concerning the fairness, from a financial
point of view, to First Citizens shareholders of the exchange ratio pursuant
to the merger agreement. Morgan Keegan was retained by First Citizens on the
basis of, among other things, its experience and expertise in the bank and
thrift industries. As part of its investment banking business, Morgan Keegan
is regularly engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for other various purposes.
On January 25, Morgan Keegan delivered its written opinion to the First
Citizens Board to the effect that, as of January 25, 1999 and based upon and
subject to certain matters stated in such opinion, the exchange ratio is fair,
from a financial point of view, to First Citizens shareholders. Morgan
Keegan's opinion was reconfirmed in writing as of the date of this proxy
statement/prospectus.
The full text of the written opinion of Morgan Keegan, confirmed as of the
date of this proxy statement/prospectus, which sets forth the assumptions
made, matters considered and limitations on the review undertaken, is attached
hereto as Appendix B and is incorporated herein by reference. First Citizens
shareholders are urged to read this opinion carefully in its entirety. Morgan
Keegan's opinion is directed only to the fairness to the First Citizens
shareholders, from a financial point of view, of the exchange ratio and does
not address any other aspect of the merger or related transactions and does
not constitute a recommendation to any shareholder as to how such shareholder
should vote at the meeting. The summary of the opinion of Morgan Keegan set
forth in this proxy statement/prospectus is qualified in its entirety by
reference to the full text of such opinion.
In arriving at its January 25, 1999 opinion, Morgan Keegan reviewed the
merger agreement and held discussions with certain senior officers, directors
and other representatives and advisors of First Citizens and certain senior
officers and other representatives and advisors of BB&T concerning the
businesses, operations and prospects of First Citizens and BB&T. Morgan Keegan
examined certain publicly available business and financial information
relating to First Citizens and BB&T as well as certain financial forecasts, to
the extent publicly available, and other data for First Citizens and BB&T
which were provided to Morgan Keegan by or otherwise discussed with the
respective management teams of First Citizens and BB&T, including information
relating to certain strategic implications and operational benefits
anticipated from the merger. Morgan Keegan reviewed the financial terms of the
merger as set forth in the merger agreement in relation to, among other
things: current and historical market prices and trading volumes of First
Citizens and BB&T common stock; the historical and publicly available
projected earnings and operating data of First Citizens and BB&T; and the
capitalization and financial condition of First Citizens and BB&T. Morgan
Keegan considered, to the extent publicly available, the financial terms of
certain other similar transactions recently effected which Morgan Keegan
considered relevant in evaluating the merger and analyzed certain financial,
stock market and other publicly available information relating to the
businesses of other companies whose businesses Morgan Keegan considered
relevant in evaluating those of First Citizens and BB&T. Morgan Keegan also
considered the relative contributions of First Citizens and BB&T to the
combined company. In addition to the foregoing, Morgan Keegan conducted such
other analyses and examinations and considered such other financial, economic
and market criteria as Morgan Keegan deemed appropriate to arrive at its
opinion. Morgan Keegan noted that its opinion was necessarily based upon
information available, and financial, stock market and other conditions and
circumstances existing and disclosed, to Morgan Keegan as of the date of its
opinion.
In conducting its review and rendering its opinion, Morgan Keegan assumed
and relied, without independent verification, upon the accuracy and
completeness of all financial and other information publicly available or
furnished to or otherwise reviewed by or discussed with Morgan Keegan. With
respect to financial forecasts and other information provided to or otherwise
reviewed by or discussed with Morgan Keegan, the management
12
<PAGE>
teams of First Citizens and BB&T advised Morgan Keegan that such forecasts and
other information were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the respective management teams
of First Citizens and BB&T as to the future financial performance of First
Citizens and BB&T and the strategic implications and operational benefits
anticipated from the Merger. Morgan Keegan assumed, with the consent of the
First Citizens Board, that the merger will be accounted for as a pooling of
interests in accordance with generally accepted accounting principles and as a
tax-free reorganization for federal income tax purposes. Morgan Keegan did not
express any opinion as to what the value of BB&T common stock actually will be
when issued pursuant to the merger or the price at which BB&T common stock
will trade subsequent to the merger. In addition, Morgan Keegan did not make
or obtain an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of First Citizens or BB&T nor did Morgan Keegan make
any physical inspection of the properties or assets of First Citizens or BB&T.
Morgan Keegan was not asked to consider, and its opinion does not address, the
relative merits of the merger as compared to any alternative business
strategies that might exist for First Citizens or the effect of any other
transaction in which First Citizens might engage. In addition, Morgan Keegan
was asked to and did assist in recommending the specific consideration payable
in the merger, along with First Citizens and BB&T through arms'-length
negotiations. No other limitations were imposed by First Citizens on Morgan
Keegan with respect to the investigations made or procedures followed by
Morgan Keegan in rendering its opinion.
The following is a summary of the principal analyses performed by Morgan
Keegan in connection with its January 25, 1999 opinion.
Summary Transaction Analysis. Morgan Keegan reviewed the terms of the
proposed transaction, including the consideration to be received and the
aggregate transaction value. Morgan Keegan reviewed the implied value of the
consideration offered based upon a market price per share of $39.25, which is
the average of the closing price per share of BB&T common stock on the New
York Stock Exchange (as reported by Bloomberg) during the twenty (20) trading
day period from December 23, 1998 through January 22, 1999. This indicates an
implied value of $42.35 per share of First Citizens common stock (assuming
2,811,550 shares outstanding, 296,097 options outstanding and an exchange
ratio of 1.0789 BB&T common stock shares for one (1) share of First Citizens
common stock, including any stock equivalents). The implied aggregate
transaction value was $129.4 million. Morgan Keegan calculated that, as of
January 25, 1999, the aggregate transaction value represented 33.56% of the
total assets of First Citizens at September 30, 1998, 3.31x First Citizens'
stated book value at September 30, 1998 and 24.48x First Citizens' earnings
for the trailing twelve months ended September 30, 1998.
Contribution Analysis. Morgan Keegan reviewed certain historical financial
and operating information for First Citizens, BB&T and the pro forma combined
entity resulting from the merger based on financial data reported by First
Citizens and BB&T. Morgan Keegan analyzed the relative balance sheet
contribution of First Citizens and BB&T for certain data to the combined
company on a pro forma basis as of December 31, 1998. This analysis indicated
that First Citizens would have contributed 1.21% to combined total assets,
1.27% to combined loans (net of allowances for loan losses), 1.56% to deposits
and 1.39% to tangible equity. Morgan Keegan also analyzed the relative income
statement contribution of First Citizens and BB&T for certain data to the
combined company on a pro forma basis. This analysis indicated that First
Citizens would have contributed 1.31% to combined net interest income for the
latest twelve months ("LTM") ended December 31, 1998, 1.03% to combined pretax
income and 1.02% to combined net income. Based on the consideration to be
received, the holders of outstanding First Citizens common stock would own
approximately 1.03% of the outstanding shares of BB&T common stock and 1.09%
of the outstanding shares of BB&T common stock on a fully diluted basis.
Comparable Company Analysis for First Citizens. Morgan Keegan reviewed and
compared certain financial information relating to First Citizens to
corresponding financial information, public market multiples and ratios for
eight publicly traded banks headquartered in the Southeast that it deemed to
be comparable to First Citizens. The companies Morgan Keegan used for the
purposes of this analysis were Community Federal Bancorp, Inc., First Bancorp,
First Federal Financial Corp., FNB Corp., Merit Holding Corporation, PAB
13
<PAGE>
Bankshares, Inc., South Alabama Bancorp., Inc. and SouthBancShares, Inc. These
are called the "comparable companies". Morgan Keegan calculated a range of
market multiples for the comparable companies by dividing market value per
share as of January 22, 1999 by each such company's LTM earnings per share
ended September 30, 1998 and by dividing market value by tangible book value
reported September 30, 1998. For the LTM results ended September 30, 1998,
Morgan Keegan also compared certain ratios (including, among other things,
return on latest assets, return on latest equity, loan loss reserve to total
loans, total equity capital to total assets and total loans to total deposits)
of the comparable companies to First Citizens.
First Citizens Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 71.14x 3.46x 1.64% 16.20% 1.68% 20.91% 106.97%
Low..................... 15.23x 1.01x 0.35% 1.70% 0.53% 7.15% 65.82%
Mean.................... 26.44x 2.26x 1.15% 10.82% 1.12% 12.60% 87.25%
Median.................. 20.32x 2.38x 1.20% 13.17% 1.17% 10.74% 87.31%
First Citizens.......... 16.29x 2.67x 1.37% 16.38% 1.46% 8.37% 79.95%
</TABLE>
Comparable Company Analysis for BB&T. Morgan Keegan reviewed and compared
certain financial information relating to BB&T to corresponding financial
information, public market multiples and ratios for twelve publicly traded
banks that it deemed to be comparable to BB&T. The companies Morgan Keegan
used for the purposes of this analysis were AmSouth Bancorporation, Comerica
Incorporated, Fifth Third Bancorp, First Security Corporation, Huntington
Bancshares, Inc., Marshall & Ilsley Corporation, Mercantile Bancorporation,
Inc., Regions Financial Corporation, SouthTrust Corporation, Summit Bancorp,
Union Planters Corporation and Wachovia Corporation. These are called the
"BB&T comparable companies." Morgan Keegan calculated a range of market
multiples for the comparable companies by dividing market value per share as
of January 22, 1999 by each such company's LTM earnings per share ended
September 30, 1998 and by dividing market value by tangible book value
reported September 30, 1998. For the LTM results ended September 30, 1998,
Morgan Keegan also compared certain ratios (including, among other things,
return on latest assets, return on latest equity, loan loss reserve to total
loans, total equity capital to total assets and total loans to total deposits)
of the comparable companies to BB&T.
BB&T Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 35.78x 6.58x 1.78% 24.46% 1.79% 9.68% 128.04%
Low..................... 15.10x 2.42x 0.82% 9.79% 1.20% 5.80% 84.39%
Mean.................... 20.54x 3.72x 1.30% 18.31% 1.48% 7.21% 98.63%
Median.................. 18.47x 3.54x 1.32% 18.39% 1.50% 7.03% 94.62%
BB&T.................... 22.29x 4.59x 1.43% 20.60% 1.40% 6.92% 101.61%
</TABLE>
Highly-Valued Comparable Company Analysis for BB&T. Morgan Keegan reviewed
and compared certain financial information relating to BB&T to corresponding
financial information, public market multiples and ratios for eight highly-
valued publicly traded banks that it deemed to be comparable to BB&T. The
companies Morgan Keegan used for the purposes of this analysis were AmSouth
Bancorporation, Fifth Third Bancorp, Firstar Corporation, Northern Trust
Corporation, State Street Corporation, SunTrust Corporation, Wachovia
Corporation and Zions Bancorporation. These are called the "highly valued
comparable companies." Morgan Keegan calculated a range of market multiples
for the comparable companies by dividing market value per share as of
14
<PAGE>
January 22, 1999 by each such company's LTM earnings per share ended September
30, 1998 and by dividing market value by tangible book value reported
September 30, 1998. For the LTM results ended September 30, 1998, Morgan
Keegan also compared certain ratios (including, among other things: return on
latest assets, return on latest equity, loan loss reserve to total loans,
total equity capital to total assets and total loans to total deposits) of the
comparable companies to BB&T.
BB&T Highly-Valued Comparable Company Table
<TABLE>
<CAPTION>
Market Value/
-----------------
LTM Tangible Return on Return on LLR/Total Equity/ Total Loans/
EPS Book Value Latest Assets Latest Equity Loans Total Assets Total Deposits
------ ---------- ------------- ------------- --------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
High.................... 42.99x 7.84x 1.78% 21.41% 1.79% 9.68% 117.58%
Low..................... 20.07x 2.99x 0.84% 14.90% 1.08% 3.94% 22.76%
Mean.................... 28.22x 5.38x 1.28% 19.01% 1.43% 6.84% 87.16%
Median.................. 27.62x 5.77x 1.23% 19.25% 1.45% 6.77% 94.89%
BB&T.................... 22.29x 4.59x 1.43% 20.60% 1.40% 6.92% 101.61%
</TABLE>
Stock Return Analysis. Morgan Keegan reviewed and analyzed the price
performance and the historical trading volume for First Citizens and BB&T's
common stock as well as the indices of the comparable companies and the highly
valued comparable companies and the Nasdaq Bank index, S&P Bank index and the
S&P 500.
Compound Annual Growth Rate--excluding dividends
(period ending 12/31/98)
<TABLE>
<CAPTION>
1 Year 3 Year 10 Year Volume(1)
------ ------ ------- ---------
<S> <C> <C> <C> <C>
First Citizens............................... (17.50) 40.66 15.22 0.07%
Comparable Companies......................... 6.66 27.19 16.96 0.03%
BB&T......................................... 22.47 45.36 20.25 0.13%
Comparable Companies......................... (2.81) 29.10 19.67 0.23%
Highly Valued Comparable Companies........... 34.89 46.47 26.74 0.24%
Nasdaq Bank index............................ (11.65) 22.19 15.37 NM
S&P Bank..................................... 3.94 27.90 21.53(2) NM
S&P 500...................................... 26.07 25.85 15.92 NM
</TABLE>
- --------
(1) Average daily volume divided by average diluted shares outstanding.
(2) Began on May 21, 1993.
Morgan Keegan considers the stock of First Citizens and BB&T to be liquid and
marketable.
Analysis of Selected Comparable Mergers and Acquisitions. In order to assess
market pricing for comparable mergers, Morgan Keegan reviewed overall merger
transactions in the banking industry using four different sets of parameters.
Morgan Keegan selected 19 transactions occurring between January 1, 1998 and
January 13, 1999, involving the sale of banks and thrifts located in the
Southeast with total assets between $200 million and $1 billion, 20
transactions occuring between July 1, 1998 and January 13, 1999, involving the
sale of banks and thrifts located in the United States with deal values
between $75 million and $150 million, 8 transactions occurring between July 1,
1998 and January 13, 1999, involving the sale of thrifts with deal values
between $75 million and $150 million and 25 transactions occurring between
January 1, 1998 and January 13, 1999, involving the sale of banks and thrifts
in Georgia. Because no transaction was considered identical to the merger, the
medians of the overall transaction multiples were considered more relevant
than the multiples for any specific transaction.
15
<PAGE>
Summary of Comparable Merger Medians
<TABLE>
<CAPTION>
U.S. U.S. First
Banks Thrifts Southeast Georgia Citizens(1)
----- ------- --------- ------- -----------
<S> <C> <C> <C> <C> <C>
Price/EPS (x)....................... 24.47 18.18 20.53 23.33 24.48
Price/Book (x)...................... 2.89 2.08 2.82 3.15 3.31
Price/Tangible Book (x)............. 2.98 2.42 3.12 3.15 4.01
Price/Assets (%).................... 23.73 20.34 28.79 30.76 33.56
Price/Deposits (%).................. 30.75 29.18 35.33 34.71 38.66
</TABLE>
- --------
(1) First Citizens ratios based on 9/30/98 actual results.
No company or transaction used in the comparable companies and comparable
transactions analyses for comparative purposes is identical to First Citizens
or the merger. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations concerning differences in
financial and operating characteristics of the companies and other factors.
Mathematical analysis (such as determining the average or median) is not, in
itself, a meaningful method of using comparable company or transaction data.
Discounted Cash Flow Analysis. Morgan Keegan performed a discounted cash
flow analysis of the projected cash flow available for dividends of First
Citizens for fiscal years 1999 through 2003, based on projections provided by
First Citizens management. Using this information, Morgan Keegan calculated a
range of equity values for First Citizens based on the sum of (a) the present
value of the cash flow available for dividends to First Citizens and (b) the
present value of the estimated terminal value for First Citizens assuming that
it was sold at the end of fiscal year 2003. In performing its discounted cash
flow analysis, Morgan Keegan assumed, among other things, discount rates of
11.0% to 15.0% and terminal multiples of net income of 12.0x to 16.0x. Those
discount rates and terminal multiples reflect Morgan Keegan's qualitative
judgements concerning the specific risk associated with such an investment and
the historical and projected operating performance of First Citizens. This
analysis resulted in a range of equity values for First Citizens of $96.07
million to $142.49 million, with a median of $117.58, or $31.74 to $47.07 per
diluted share, with a median of $38.84 per share.
In connection with its opinion confirmed as of the date of this proxy
statement/prospectus, Morgan Keegan performed procedures to update, as
necessary, certain of the analyses described above. Morgan Keegan reviewed the
assumptions on which the analyses described above were based and the factors
considered in connection therewith. Morgan Keegan did not perform any analyses
in addition to those described above in confirming its January 25, 1999
opinion.
The summary of the Morgan Keegan opinion set forth above does not purport to
be a complete description of the analyses performed by Morgan Keegan. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Morgan Keegan believes that its analyses and
the summary set forth above must be considered as a whole and that selecting
portions of its analyses, without considering all analyses, or of the above
summary, without considering all factors and analyses, would create an
incomplete view of the process underlying the analyses set forth in the
opinion. In addition, Morgan Keegan may have deemed various assumptions more
or less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to
represent the actual value of First Citizens or the combined company.
In performing its analyses, Morgan Keegan made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of First Citizens or BB&T.
The analyses performed by Morgan Keegan are not necessarily indicative of
actual values or actual future results, which may be significantly more or
less favorable than suggested by such analyses. Such analyses were prepared
solely as part of Morgan Keegan's analysis of the fairness, from a financial
point of view, of the consideration to be paid by BB&T. The analyses do not
purport to be appraisals or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the
present time or at any time in the future.
16
<PAGE>
First Citizens has agreed to pay Morgan Keegan a retainer fee of $7,500 per
quarter, payable in advance upon the signing of its engagement letter, an
initial advisory and opinion fee of $75,000, payable in cash upon delivery by
Morgan Keegan of the fairness opinion at the signing of the definitive
agreement, and a final advisory and opinion fee equal to 1.0% of the overall
deal value, which includes the retainer fee and the initial advisory and
opinion fee, payable in cash at closing. First Citizens has also agreed to
reimburse Morgan Keegan for its reasonable out-of-pocket expenses and to
indemnify Morgan Keegan against certain liabilities, including liabilities
under the federal securities laws.
Exchange Ratio
At the effective time of the merger, First Citizens will be merged with and
into BB&T, and BB&T will be the surviving corporation in the merger. In the
merger, each share of First Citizens common stock outstanding at the effective
time will be converted into the right to receive BB&T common stock at the
exchange ratio of 1.0789 shares of BB&T common stock for each share of First
Citizens common stock.
An upward adjustment to the exchange ratio could occur only if First
Citizens elected to terminate the merger agreement as described below, and
BB&T then elected to avoid termination of the merger agreement by increasing
the exchange ratio. Under no circumstances would the exchange ratio be less
than 1.0789 shares of BB&T common stock for each share of First Citizens
common stock.
First Citizens may elect to terminate the merger agreement and abandon the
merger if both of the following circumstances exist:
. the average closing price per share of BB&T common stock on the NYSE on
the five trading days (determined by excluding days on which the NYSE is
closed) before the Determination Date (defined below) (the "Closing
Value") is less than $32.67, and
. (a) the amount obtained by dividing the Closing Value by $38.4375 (such
amount, the "BB&T Ratio") is less than (b) 90% of the amount obtained by
dividing the Index Price on the Determination Date by the Index Price on
January 26, 1999 (these terms are defined below) (the amount determined
pursuant to clause (b), the "Index Ratio").
First Citizens may refuse to complete the merger pursuant to this provision
by giving 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
could elect to increase the exchange ratio so that holders of First Citizens
common stock would receive for each share of First Citizens common stock the
consideration that they would have received had the Closing Value been $32.67
(i.e., BB&T common stock having an implied market value of approximately
$35.25). Such an election would be made by giving notice to First Citizens of
the election and the revised exchange ratio, whereupon First Citizens would be
required to proceed with the merger with the adjusted exchange ratio in
accordance with all other terms of the merger agreement. First Citizens could
withdraw its notice of termination at any time during the ten-day period
following the Determination Date and elect to proceed with the merger at the
exchange ratio of 1.0789 if BB&T were to determine not to adjust the exchange
ratio. In no event would BB&T have any obligation to increase 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 of the merger.
"Index Group" means 12 bank holding companies comparable to BB&T and
designated in the merger agreement, the common stocks of all of which must
be publicly traded and as to which there may not have been, since January
26, 1999 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. If any such company or
17
<PAGE>
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 in 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 January 26, 1999 and the
Determination Date, the prices for the common stock of such company or BB&T
will be appropriately adjusted.
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above and in the merger agreement) of
the closing sales prices of the companies composing the Index Group.
These conditions reflect the parties' agreement that First Citizens'
shareholders will assume certain risks of decline in the market value of BB&T
common stock. If the value of BB&T common stock were to decline so that the
Closing Value was below $32.67, but the Closing Value did not reflect a
decline in the price of BB&T common stock from $38.4375 (the closing price of
BB&T common stock on January 26, 1999) (the "Starting Price") of more than 10%
in comparison to the stock prices of the Index Group as measured from January
26, 1999 to the Determination Date, then First Citizens' shareholders would
continue to assume the risk of decline in the value of BB&T common stock.
First Citizens will have the right to terminate the merger agreement only when
both (a) the Closing Value is less than $32.67 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
January 26, 1999 to the Determination Date.
If the First Citizens Board elects to terminate the merger 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 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 First Citizens' 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, First Citizens may elect to
withdraw its election to terminate and to proceed with the merger without
adjustment. In making this determination, the principal factors the First
Citizens Board would consider include whether the merger remains in the best
interest of First Citizens and its shareholders, despite the decline in the
BB&T common stock price, and whether the consideration to be received by First
Citizens shareholders remains fair from a financial point of view. Prior to
making any decision to terminate the merger agreement or to proceed with the
merger without adjustment of the exchange ratio, the First Citizens Board
would consult with its financial and other advisors and would consider all
financial and other information it deemed relevant to its decision, including
considerations relating to the necessity or desirability of resoliciting First
Citizens shareholders under the circumstances. If First Citizens elected not
to exercise its right to terminate the merger agreement, the exchange ratio
would remain 1.0789 and the dollar value of the consideration which the First
Citizens shareholders would receive for each share of First Citizens common
stock would be the value of 1.0789 shares of BB&T common stock at the
effective time. If the termination right were triggered and BB&T did not
increase the exchange ratio, the First Citizens Board could determine to
proceed with the merger at the 1.0789 exchange ratio. If First Citizens
decided to proceed on this basis, it would resolicit shareholders only if the
First Citizens Board believed that it had a fiduciary duty or otherwise
decided to do so.
The operation of the exchange ratio and the adjustment mechanism can be
illustrated by three scenarios. (For purposes of the numerical examples, the
Index Price, as of January 26, 1999, is deemed to be $100.)
. The first scenario is that the Closing Value of the BB&T common stock is
not less than $32.67. Under this scenario, the exchange ratio would be
1.0789 and there would be no potential adjustment to the exchange ratio
and no right on the part of First Citizens to terminate the merger
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 First Citizens shareholders would be not less than
$32.67.
. The second scenario is that the Closing Value is less than $32.67 but
the BB&T Ratio is equal to or above the Index Ratio. In this case, the
exchange ratio would be 1.0789 and there would be no right on
18
<PAGE>
the part of First Citizens to terminate the merger 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 First Citizens shareholders would
have fallen from a pro forma $41.47 as of January 26, 1999 to less than
$35.25 per share. For example, if the Closing Value were $25.75 and the
Index Price were $70.00, the BB&T Ratio would be 0.67, or $25.75
/ $38.4375, and the Index Ratio would be 0.63, or 0.9 times
($70.00 / $100.00). Based upon the assumed $25.75 Closing Value, the
consideration to be received by First Citizens shareholders would have
an implied market value of $27.78 per share.
. The third scenario is that both the Closing Value is less than $32.67
and the BB&T Ratio is less than the Index Ratio. In this case, First
Citizens would have the right to terminate the merger agreement. BB&T
would have the right, but not the obligation, to reinstate the merger
agreement by increasing the exchange ratio so that First Citizens
shareholders would receive shares of BB&T common stock having an implied
market value (based upon the Closing Value) equal to approximately
$35.25 per share. For example, if the Closing Value were $25.15 and the
Index Price were $90.00, the BB&T Ratio would be 0.65, or
$25.15 / $38.4375, and the Index Ratio would be 0.81, or 0.9 times
($90.00 / $100.00). Based upon the assumed $25.15 Closing Value, the
consideration to be received by First Citizens shareholders would have
an implied market value of $27.13 per share. If the First Citizens Board
elected to terminate the merger agreement, BB&T would have the right,
but not the obligation, to reinstate the merger agreement by increasing
the exchange ratio within five days to 1.4016, which represents $35.25
divided by the Closing Value. Based upon the assumed $25.15 Closing
Value, the new exchange ratio would represent a value to First Citizens
shareholders of $35.25 per share.
First Citizens 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 First Citizens common stock may be more or less than the Closing
Value. First Citizens shareholders are urged to obtain information on the
market 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 First Citizens 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 First Citizens Common Stock Certificates
At the effective time, by virtue of the merger and without any action on the
part of First Citizens or the holders of First Citizens common stock, each
share of First Citizens 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 First
Citizens common stock as described below, whole shares of BB&T common stock and
cash in lieu of any fractional share interest. Promptly after the effective
time, BB&T will deliver or mail to each First Citizens shareholder a form of
letter of transmittal and instructions for use in effecting the surrender of
the certificates that, immediately before the effective time, represented any
shares of First Citizens common stock. Upon surrender of these certificates or
other satisfactory evidence of ownership, 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 First Citizens 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 First Citizens common
stock will be deemed upon the effective time for all purposes to
19
<PAGE>
represent only the right to receive the merger consideration. No interest will
be paid or accrued on the merger consideration upon the surrender of the
certificate or certificates representing shares of First Citizens common
stock. With respect to any certificate for First Citizens 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 First
Citizens common stock outstanding immediately before the effective time will
be made on the stock transfer books of BB&T.
BB&T will pay any dividends or other distributions with a record date before
the effective time that have been declared or made by First Citizens in
respect of shares of First Citizens common stock in accordance with the terms
of the merger agreement and that remain unpaid at the effective time. To the
extent permitted by law, former shareholders of record of First Citizens 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 First Citizens common stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Citizens 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 merger 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 First Citizens
common stock until such holder surrenders such certificate for exchange as
described above. Upon surrender of such certificate, both the BB&T common
stock certificate and any undelivered dividends and cash payments payable
under the merger agreement (without interest) will be delivered and paid with
respect to each share of First Citizens common stock represented by such
certificate.
The Merger Agreement
Effective Date and Time of the Merger
The merger agreement provides that the closing of the merger will take place
on the business day designated by BB&T that is within 30 days following the
satisfaction of the conditions to the completion 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
Secretary of State of North Carolina and the Secretary of State of Georgia. 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 merger agreement
and the plan of merger is approved by the First Citizens shareholders and all
other conditions to the respective obligations of BB&T and First Citizens to
complete the merger have been satisfied. If the merger is approved at the
meeting, it is currently anticipated that the filing of the articles of merger
and the effective time will occur during the third quarter of 1999.
Conditions to the Merger
The obligations of BB&T and First Citizens to carry out the merger are
subject to satisfaction (or, if permissible, waiver) of the following
conditions at or before the effective time:
. all corporate action necessary to authorize the performance of the
merger agreement and the plan of merger must have been duly and validly
taken, including the approval of the shareholders of First Citizens of
the merger agreement and the plan of merger;
. BB&T's registration statement on Form S-4 relating to the merger
(including any post-effective amendments) must be effective under the
Securities Act of 1933, as amended (the "Securities Act"), no
proceedings may be pending or threatened by the SEC 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;
20
<PAGE>
. the parties must have received all regulatory approvals required in
connection with the transactions in the merger agreement, all notice
periods and waiting periods required with respect to the approvals must
have passed and all approvals must be in effect;
. neither BB&T nor First Citizens 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 completion of the
transactions in the merger agreement;
. First Citizens 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 First Citizens and BB&T, substantially to the effect
that the merger will constitute one or more reorganizations under
Section 368 of the Internal Revenue Code of 1986, as amended, and that
the shareholders of First Citizens will not recognize any gain or loss
to the extent that they exchange shares of First Citizens common stock
for shares of BB&T common stock; and
. BB&T must have received letters from Arthur Andersen, LLP, dated as of
the filing of the registration statement and as of the effective time,
to the effect that the merger will qualify for pooling-of-interests
accounting treatment.
The obligations of First Citizens to carry out the transactions in the
merger agreement are also subject to the satisfaction of the following
additional conditions at or before the effective time, unless, where
permissible, waived by First Citizens:
. BB&T must have performed in all material respects all obligations and
complied in all material respects with all covenants required by the
merger agreement;
. 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
. First Citizens must have received certain 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 merger 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 provided in the merger agreement or consented to in
writing by First Citizens. The representations and warranties of BB&T
concerning
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its authorization and the binding nature of the merger agreement and
. the absence of any conflict between the transactions in the merger
agreement and BB&T's articles of incorporation or 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 merger 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 in the merger
agreement are also subject to satisfaction of the following additional
conditions at or before the effective time, unless, where permissible, waived
by BB&T:
. 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 in the merger agreement as to render their completion
inadvisable or unduly burdensome;
21
<PAGE>
. First Citizens must have performed in all material respects all
obligations and complied in all material respects with all covenants
required by the merger agreement;
. BB&T must have received agreements from certain affiliates of First
Citizens concerning the shares of BB&T common stock to be received by
them; and
. BB&T must have received certain closing certificates and legal opinions
from First Citizens and its counsel.
In addition, all representations and warranties of First Citizens will be
evaluated as of the date of the merger 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 provided in the merger agreement or
consented to in writing by BB&T. The representations and warranties of First
Citizens concerning
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its ownership of its subsidiaries,
. its authorization and the binding nature of the merger agreement,
. the absence of conflict between the transactions in the merger agreement
and First Citizens' articles of incorporation or bylaws,
. its forbearance from taking any actions that would negatively affect the
pooling-of-interest or tax-free elements of the merger or the receipt of
necessary regulatory approvals and
. actions taken to exempt the merger from any applicable 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 First Citizens set forth in the merger
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
First Citizens.
Conduct of First Citizens' and BB&T's Business Prior to the Effective Time of
the Merger
Except with the prior consent of BB&T, before the effective time First
Citizens may not, and must cause each of its subsidiaries not to:
. carry on its business except in the ordinary course and in substantially
the same manner as previously conducted, or establish or acquire any new
subsidiary or engage in any new type of activity or expand any existing
activities;
. declare or pay any distribution on its capital stock, other than
regularly scheduled quarterly dividends of $0.10 per share of First
Citizens common stock payable on record dates and in amounts consistent
with past practices (except that any dividend declared or payable in the
quarterly period during which the effective time occurs may, unless
otherwise agreed, be declared with a record date before the effective
time only if the normal record date for payment of the corresponding
quarterly dividend on BB&T common stock is before the effective time);
. issue any shares of capital stock except under its stock option plans or
the option granted to BB&T in connection with the merger agreement;
. issue or authorize any rights to acquire capital stock or effect any
recapitalization, reclassification, stock dividend, stock split or
similar change in capitalization;
. amend its articles of incorporation or bylaws;
. impose or permit the imposition or existence of any lien, charge or
encumbrance on any share of stock held by it in any First Citizens
subsidiary or release any material right or cancel or compromise any
debt or claim, in each case other than in the ordinary course of
business;
22
<PAGE>
. merge with any other entity or permit any other entity to merge into it,
acquire control over any other entity or dispose of any assets or
acquire any assets, in each case other than in the ordinary course of
its business consistent with past practice;
. fail to comply in any material respect with any legal requirements
applicable to it and to the conduct of its business;
. increase the compensation of any of its directors, officers or employees
(excluding increases resulting from the exercise of outstanding
compensatory stock options), or pay or agree to pay any bonus or provide
any new employee benefit or incentive, except for increases or payments
made in the ordinary course under existing arrangements;
. enter into or substantially modify (except as may be required by law)
any employee benefit, incentive or welfare arrangement, or any related
trust agreement, relating to any of its directors, officers or other
employees (other than renewal of any of arrangement consistent with past
practice);
. solicit inquiries or proposals with respect to, furnish any information
relating to, or participate in any discussions concerning, any other
business combination with First Citizens or any First Citizens
subsidiary, 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 discussions are sought (except that this would not apply to an
unsolicited offer if First Citizens is advised by legal counsel that in
its opinion the failure to furnish information or negotiate would likely
constitute a breach of the fiduciary duty of the First Citizens Board to
the First Citizens shareholders);
. enter into (a) any material agreement or commitment not made in the
ordinary course, (b) any agreement, indenture or other instrument not
made in the ordinary course relating to the borrowing of money by First
Citizens or a First Citizens subsidiary or guarantee by First Citizens
or a First Citizens subsidiary of any obligation, (c) any agreement or
commitment relating to the employment or severance of a consultant or
the employment, severance or retention in office of any director,
officer or employee (except for the election of directors or the
reappointment of officers in the normal course) or (d) any contract,
agreement or understanding with a labor union;
. change its lending, investment or asset liability management policies in
any material respect, except as required by applicable law and except
that after shareholder approval of the merger agreement and receipt of
necessary regulatory approvals, First Citizens will cooperate with BB&T
to adopt policies, practices and procedures consistent with those used
by BB&T;
. change its methods of accounting in effect at March 31, 1998, except as
required by changes in accounting principles reasonably concurred in by
BB&T, or change any of its federal income tax reporting methods from
those used in the preparation of its tax returns for the year ended
March 31, 1998, except as required by changes in law;
. incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $25,000 for any one expenditure or
$100,000 in the aggregate;
. incur any new indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse
repurchase arrangements, in each case in the ordinary course;
. take any action that could reasonably be expected to (a) cause the
merger not to be accounted for as a pooling of interests or not to
constitute a tax-free reorganization as determined by BB&T, (b) result
in any inaccuracy of a representation or warranty that would permit
termination of the merger agreement or (c) cause any of the conditions
to the merger to fail to be satisfied;
. sell or agree to sell all or any part of the real property owned by
Jefferson Ventures, Inc., except as set forth in the Agreement for the
Sale and Purchase of Real Estate dated July 16, 1996 by and between
Peachtree City Holdings, L.L.C. and Jefferson Ventures, Inc., as amended
in December 1996 and on February 25, 1997;
23
<PAGE>
. dispose of any material assets other than in the ordinary course; or
. agree to do any of the foregoing.
Except with the prior consent of First Citizens, before the effective time
neither BB&T nor any subsidiary of BB&T may take any action that would or
might be expected to
. cause the merger not to constitute a pooling of interests or a tax-free
reorganization;
. result in any inaccuracy of a representation or warranty that would
allow for termination of the merger agreement;
. cause any of the conditions precedent to the transactions in the merger
agreement to fail to be satisfied;
. exercise the option agreement executed concurrently with the merger
agreement other than in accordance with its terms or dispose of shares
of First Citizens common stock acquired under that agreement other than
in accordance with its terms; or
. 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 First
Citizens may at any time (whether before or after approval of the merger
agreement and the plan of merger by the First Citizens 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 merger 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 merger
agreement or in the plan of merger or (c) the performance by the other party
of any of its obligations set out therein. The parties may also mutually amend
or supplement the merger agreement in writing at any time. No such extension,
waiver, amendment or supplement after approval by the First Citizens
shareholders of the merger agreement and the plan of merger, however, may
modify either the amount or the form of the consideration to be provided to
holders of First Citizens common stock upon completion of the merger.
If any of the conditions to the obligation of either party to complete the
merger is not fulfilled, such party will consider the materiality of such
nonfulfillment. In the case of the nonfulfillment of a condition to First
Citizens' obligations, First Citizens will, if it believes appropriate under
the circumstances, resolicit shareholder approval of the merger agreement and
the plan of merger and in connection therewith provide appropriate information
concerning such nonfulfillment.
The merger agreement may be terminated, and
. at any time before the effective time, by the mutual consent in writing
of BB&T and First Citizens;
. at any time before the effective time, by either party (a) in the event
of a material breach by the other party of any covenant or agreement
contained in the merger agreement or (b) in the event of an inaccuracy
of any representation or warranty of the other party contained in the
merger agreement that would provide the nonbreaching party the ability
to refuse to complete the merger under the applicable standard set forth
in the merger agreement (see "--Conditions to the Merger"); and, in the
case of (a) or (b), if such breach or inaccuracy has not been cured by
the earlier of 30 days following notice of such breach to the party
committing such breach or inaccuracy or the effective time;
. 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
complete the transactions in the merger agreement cannot be satisfied or
fulfilled before the date on which the effective time is to occur, and
the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings;
24
<PAGE>
. 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;
. at any time, by either party in writing, if the shareholders of First
Citizens do not approve the merger agreement and the plan of merger;
. at any time following August 31, 1999, 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
. by First Citizens, pursuant to the provisions of the merger agreement
described above under "--Exchange Ratio."
If the merger agreement is terminated pursuant to any of the provisions
described above, both the merger agreement and the plan of merger will become
void and have no effect, except that (a) provisions in the merger 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.
Each party to the merger agreement will pay all expenses incurred by it in
connection with the merger agreement and the merger, except that printing
expenses and SEC registration fees incurred in connection with the
registration statement will be paid 50% by BB&T and 50% by First Citizens.
Interests of Certain Persons in the Merger
Certain members of First Citizens' management, including all of its
directors, have interests in the merger that are in addition to their
interests as shareholders of First Citizens generally. The First Citizens
Board was aware of these factors and considered them, among other matters, in
approving the merger agreement.
Employment Agreements
In connection with the merger, it is anticipated that Branch Banking and
Trust Company, BB&T's North Carolina banking subsidiary ("BB&T-NC" or the
"Employer") will enter into a five-year employment agreement with Tom Moat and
a three-year employment agreement with each of Charles M. Barnes, Donald C.
Phillips and Douglas J. Hertha (with Mr. Moat, the "Executives"). The
employment agreements will provide for the employment of Mr. Moat as a Senior
Vice President of BB&T-NC and Messrs. Barnes, Phillips and Hertha as Vice
Presidents of BB&T-NC.
Each of the employment agreements provides that the Executive in question
will receive a base salary at least equal to that previously received from
First Citizens, with the potential for an annual increase based on the
Employer's performance and the Executive's performance (except that Mr. Moat
will also receive an amount equal to the value of the benefits he will lose in
the merger).
Each of the Executives will be entitled to participate in any bonus or
incentive plan, whether it provides for awards in cash or securities, made
available to similarly situated officers, or such other similar plans for
which the Executive may become eligible and designated a participant. Each
Executive also will receive, on the same basis as other similarly situated
officers of the Employer, employee pension and welfare benefits and group
employee benefits such as sick leave, vacation, group disability and health,
dental, life and accident insurance and similar indirect compensation that may
be extended to similarly situated officers.
Each Executive's employment agreement provides that, if the Employer
terminates the Executive's employment other than because of disability or for
cause, the Executive will, if he complies with certain noncompetition
provisions, be entitled to receive an annual salary equal to the highest
amount of cash compensation (including bonuses) received during any of the
preceding three calendar years ("Termination Compensation") for the remainder
of what would otherwise have been the term of the agreement. In addition,
25
<PAGE>
each Executive would continue to receive health insurance coverage and other
group employee benefits from the Employer on the same terms as were in effect
before the termination, either under the Employer's plans or comparable
coverage, during the time payments of Termination Compensation are made.
Each of the employment agreements provides that the Executive may
voluntarily terminate employment for "Good Reason" (defined below) until
twelve months after a "Change of Control" (defined below) of the Employer or
BB&T and (a) be entitled to receive in a lump sum (1) any compensation due but
not yet paid through the date of termination and (2) 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 receive health insurance coverage and other group employee
benefits for a period of three years following termination of employment by
the Executive on the same terms as were in effect either (1) at the date of
termination or (2) at the date of the Change of Control, if such plans and
programs in effect before the Change of Control were, considered together as a
whole, materially more generous to the officers of the Employer than such
plans and programs at the date of termination.
"Good Reason" means any of the following events occurring without the
Executive's consent:
. the assignment to the Executive of duties inconsistent with the position
and status of the Executive's title;
. a reduction in the Executive's pay grade or base salary as then in
effect, or the exclusion of the Executive from participation in benefit
plans in which he previously participated;
. an involuntary relocation of the Executive more than 100 miles (35 miles
for Mr. Moat) from the location where the Executive worked immediately
before a Change in Control, or the breach by the Employer of any
material provision of the employment agreement; or
. any purported termination of the employment of the Executive by the
Employer not effected in accordance with the employment agreement.
A "Change of Control" would be deemed to occur if
. any person or group of persons (as defined in the Securities Exchange
Act of 1934, as amended, the "Securities Exchange Act") together with
its affiliates, excluding employee benefit plans of the Employer or
BB&T, is or becomes the beneficial owner of securities of the Employer
or BB&T representing 20% or more of the combined voting power of the
Employer's or BB&T's then outstanding securities;
. as a result of a tender offer or exchange offer for the purchase of
securities of the Employer 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;
. 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 beforehand continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 40% of the combined
voting power of the voting securities of BB&T or the other surviving
entity outstanding immediately after the merger or consolidation;
. 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
. any other event occurs that the BB&T Board determines should constitute
a Change of Control.
26
<PAGE>
In addition, Mr. Moat's agreement provides that, if he were to resign from
employment during the period beginning with the one year anniversary of his
employment agreement and ending twelve months thereafter, other than for "Good
Reason" or disability, he would be entitled to receive Termination
Compensation and the other benefits described above for the 36-month period
beginning with the date of his resignation.
If any of the payments to be made under the employment agreements would
constitute a "parachute payment," as defined in Section 280G of the Internal
Revenue Code, the payments would be reduced by the smallest amount necessary
so that no portion of such payments would be a "parachute payment." A
"parachute payment" generally is a payment which is contingent on a change in
the control of the corporation and the present value of which equals or exceed
three times the "base amount," which is generally defined as the Executive's
annualized includable compensation for the "base period," which is generally
the most recent five taxable years of the Executive ending before the date of
the change in control. Sections 280G and 4999 of the Internal Revenue Code
generally provide that if "parachute payments" are paid to an individual,
everything above the base amount will be subject to a 20% excise tax payable
by the individual (in addition to the payment of regular income taxes on the
payments), as well as be nondeductible by the employer for federal income tax
purposes.
The Executives' employment agreements will supersede any of their existing
employment agreements and change of control arrangements with First Citizens
or its subsidiaries. Any dispute arising under any of the employment
agreements that is not resolved by the parties will be submitted to binding
arbitration.
First Citizens Board of Directors
In connection with the merger, BB&T will offer each member of the First
Citizens Board a seat on its Advisory Board for the Atlanta, Georgia area. For
two years after the effective time, those members will receive, as
compensation for service on the Advisory Board, member's fees (annual retainer
and attendance fees) equal in amount each year to the annual retainer and
schedule of attendance fees for directors of First Citizens in effect on
January 1, 1999. These Advisory Board members will thereafter receive fees in
accordance with BB&T's standard schedule of Advisory Board service fees. For
two years after the effective time, no such member may be prohibited from
serving because he or she has reached the maximum age for Advisory Board
service (currently age 70). In addition to the foregoing, J. Littleton Glover,
Jr. will be appointed to the BB&T-NC Board. Members of the BB&T-NC board
receive an annual retainer of $5,000 plus $1,000 for each meeting attended.
Indemnification of Directors and Officers
The merger agreement provides that BB&T or one of its subsidiaries will
maintain for three years after the effective time directors' and officers'
liability insurance covering directors and officers of First Citizens for acts
or omissions before the effective time. This insurance will provide at least
the same coverage and amounts as contained in First Citizens' policy on the
date of the merger agreement, unless the annual premium on the policy would
exceed 150% of the annual premium payments on First Citizens' policy, in which
case BB&T would maintain the most advantageous policies of directors' and
officers' liability insurance obtainable for a premium equal to this amount.
BB&T has also agreed to indemnify all individuals who are or have been
officers, directors or employees of First Citizens or any First Citizens
subsidiary before the effective time from any acts or omissions in these
capacities before the effective time to the fullest extent that such
indemnification is provided under First Citizens' articles of incorporation or
bylaws on the date hereof and is permitted under North Carolina law.
Regulatory Considerations
Bank holding companies (such as BB&T and First Citizens) and their
depository institution subsidiaries 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
27
<PAGE>
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 Form 10-K of BB&T and Form 10-KSB of First Citizens
incorporated by reference herein. See "Where You Can Find More Information" on
page 50. Those discussions 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 subsidiary bank mergers 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 Board of Governors of the Federal
Reserve System under Sections 3 and 4 of the Bank Holding Company Act of 1956.
In considering the approval of a transaction such as the merger, this act
requires the Federal Reserve to review the financial and managerial resources
and future prospects of the bank holding companies and the banks concerned and
the convenience and needs of the communities to be served. The Federal Reserve
also is required to evaluate whether the merger would result in a monopoly or
would be in furtherance of any combination or conspiracy or attempt to
monopolize the business of banking in any part of the United States or
otherwise would substantially lessen competition or tend to create a monopoly
or which in any manner would be in restraint of trade, unless it finds the
anti-competitive effects of the proposed transaction are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
Where a transaction, such as the merger, is the acquisition by a bank
holding company of a bank located in a state other than the home state of the
bank holding company (in this case North Carolina), the Bank Holding Company
Act authorizes the Federal Reserve to approve the transaction without regard
to whether such transaction is prohibited under the laws of any state,
provided the bank holding company is adequately capitalized and adequately
managed and certain other limitations are not exceeded. BB&T is considered
well-capitalized and well-managed under the Federal Reserve's Regulation Y,
and the transaction does not exceed the other limitations.
The Federal Reserve also must review the nonbanking activities being
acquired in the merger (such as operating a savings institution and a service
corporation) to determine whether the acquisition of such activities
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 First
Citizens Bank, 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. By statute, the Federal Reserve is required
to forward a copy of the notice required to be filed by BB&T to the Office of
Thrift Supervision for its review and comment. However, because bank holding
companies that acquire savings institutions are exempt from the provisions of
federal law relating to savings and loan holding companies, BB&T is not
required to file a separate application with the Office of Thrift Supervision
for approval of the merger.
The Georgia Department of Banking and Finance also must approve the merger
under the bank holding company act provisions of the Official Code of Georgia,
which permit an out-of-state bank holding company to acquire a bank having
banking offices in Georgia. In evaluating the transaction, the Department will
consider the effect of the transaction upon competition, the convenience and
needs of the community to be served, the financial history of the acquiring
holding company and the bank to be acquired, the condition of the acquiring
holding company and the bank to be acquired including capital, management and
earnings prospects, the existence of insider transactions, the adequacy of
disclosure of the terms of the acquisition and the equitable treatment of
minority shareholders of the bank to be acquired.
28
<PAGE>
BB&T also is required to provide notice to the Virginia Bureau of Financial
Institutions under the bank holding company act provisions of the Virginia
Code, which permit an out-of-state bank holding company that controls a
Virginia bank, such as BB&T, to acquire a bank outside of Virginia, such as
First Citizens Bank of Georgia, if the Bureau approves the transaction. The
Bureau is required to approve the transaction if it determines that the
transaction would not be detrimental to the safety and soundness of the
Virginia bank.
All of the required applications and notices for the merger have been
submitted to the appropriate regulatory agencies and have been obtained.
However, there is no assurance that the U.S. Department of Justice or a state
attorney general will not challenge the merger (or the subsidiary bank mergers
discussed below) or, if such a challenge is made, as to the results thereof.
The Subsidiary Bank Mergers
Although not required by the terms of the merger agreement or the plan of
merger, BB&T expects to effect the subsidiary bank mergers during the second
quarter of 2000. The subsidiary bank mergers are each subject to approval of
the Federal Deposit Insurance Corporation under the Bank Merger Act. 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 any subsidiary 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 subsidiary bank
merger in any section of the country may be to substantially 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 subsidiary 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 of 1977 in meeting the credit needs of
the 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 subsidiary bank mergers and an opportunity
for the public to comment on the applications in writing and to request a
hearing.
The North Carolina Commissioner of Banks also must approve the subsidiary
bank mergers under the bank merger act provisions of the North Carolina
General Statutes. In its review of the subsidiary bank mergers, the N.C.
Commissioner is required to consider whether the interests of the depositors,
creditors and shareholders of each institution are protected, whether the
merger is in the public interest and whether the merger is for legitimate
purposes.
BB&T-NC also is required under Georgia law to provide prior notice of the
subsidiary bank mergers to the Georgia Department of Banking and Finance.
BB&T and First Citizens are not aware of any other governmental approvals or
actions that are required for completion of the merger or the subsidiary bank
mergers, except as described above. Should any other approval or action be
required, it is currently expected 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 completion of the merger or would not be
conditioned in a manner that would cause BB&T to abandon the merger in the
manner permitted by the merger agreement.
Material Federal Income Tax Consequences of the Merger
The following is a summary description of the material anticipated federal
income tax consequences of the merger generally applicable to the shareholders
of First Citizens and to BB&T and First Citizens. 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,
29
<PAGE>
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 Internal Revenue Code (to the extent that tax affects the
tax consequences of the merger); persons who acquired First Citizens 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." No ruling has been or will
be requested from the IRS with respect to the tax effects of the merger. The
federal income tax laws are complex, and a shareholder's individual
circumstances may affect the tax consequences to the shareholder.
Consequently, each First Citizens shareholder is urged to consult his or her
own tax advisor regarding the tax consequences, including the applicable
United States federal, state, local, and foreign tax consequences, of the
merger to him or her.
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
Internal Revenue Code; (b) no gain or loss will be recognized by BB&T or First
Citizens by reason of the merger; (c) the shareholders of First Citizens will
recognize no gain or loss for federal income tax purposes to the extent BB&T
common stock is received in the merger in exchange for First Citizens common
stock; (d) a shareholder of First Citizens 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 First Citizens 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 First
Citizens common stock will include the period during which the shareholder
held the shares of First Citizens common stock surrendered in the exchange,
provided that the First Citizens common stock was held as a capital asset at
the effective time.
The completion of the merger is conditioned upon the receipt by BB&T and
First Citizens 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. Neither party intends to waive this condition. If the
tax opinion were not available and the First Citizens Board wished to proceed
with the merger, First Citizens would resolicit its shareholders.
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 First Citizens 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 First Citizens, 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 First Citizens 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 pro forma
financial information contained in this proxy statement/prospectus has been
prepared using the pooling-of-interests method of accounting. If the merger
does not qualify for pooling-of-interests accounting treatment, BB&T may, in
its discretion, terminate the transaction.
The Option Agreement
General
As a condition to BB&T entering into the merger agreement, First Citizens
(as issuer) entered into an agreement with BB&T (as grantee), pursuant to
which First Citizens granted an option to BB&T to purchase
30
<PAGE>
from First Citizens up to 560,483 shares of First Citizens common stock
(subject to adjustment in certain circumstances) at a price of $27.50 per
share (subject to adjustment under certain circumstances). The purchase of any
shares of First Citizens 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 of 1956, and to BB&T's compliance with its
covenants in the merger agreement.
The option agreement is intended to increase the likelihood that the merger
will be completed in accordance with the terms set forth in the merger
agreement. Consequently, certain aspects of the option agreement may have the
effect of discouraging persons who, before the effective time, might be
interested in acquiring all of or a significant interest in First Citizens
from considering or proposing such an acquisition, even if they were prepared
to offer to pay consideration to shareholders of First Citizens with a higher
current market price than the BB&T common stock to be received for First
Citizens common stock pursuant to the merger agreement.
The option agreement is filed as an exhibit to the registration statement,
and the following discussion is qualified in its entirety by reference to the
option agreement. See "Where You Can Find More Information" on page 50.
Exercisability
If BB&T is not in material breach of the option agreement or its covenants
and agreements contained in the merger 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 prior to its termination, as described below, following the
happening of either of the following events (each a "Purchase Event"):
. without BB&T's prior consent, First Citizens authorizes, recommends,
publicly proposes (or publicly announces an intention to authorize,
recommend or propose) or enters into an agreement with any third party
to effect any of the following (each an "Acquisition Transaction"): (a)
a merger, consolidation or similar transaction involving First Citizens
or any of its significant subsidiaries, (b) the sale, lease, exchange or
other disposition of 15% or more of the consolidated assets or deposits
of First Citizens and its subsidiaries or (c) the issuance, sale or
other disposition of securities representing 15% or more of the voting
power of First Citizens or any of its significant subsidiaries; or
. any third party or group of third parties acquires or has the right to
acquire beneficial ownership of securities representing 20% or more of
the outstanding shares of First Citizens common stock.
The obligation of First Citizens to issue shares of First Citizens common
stock upon exercise of the option will be deferred (but will not terminate)
(a) 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 (b) 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 merger agreement
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(as defined below) (other than a termination by BB&T based on either a
material breach by First Citizens of a covenant or agreement in the merger
agreement or an inaccuracy in First Citizens' representations or warranties in
the merger 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 merger 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 merger agreement based on the
failure of the shareholders of First Citizens to approve the merger agreement
and the plan of merger.
31
<PAGE>
A "Preliminary Purchase Event" is defined as either of the following:
. the commencement by any third party of a tender or exchange offer such
that it would thereafter own 20% or more of the outstanding shares of
First Citizens common stock or the filing of a registration statement
with respect to such an offer, or
. the failure of the shareholders of First Citizens to approve the merger
agreement, the failure of the meeting to have been held, the
cancellation of the meeting prior to the termination of the merger
agreement or the First Citizens Board having withdrawn or modified in
any manner adverse to BB&T its recommendations with respect to the
merger agreement, in any case after a third party: (a) proposes to
engage in an Acquisition Transaction, (b) 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 20% or more of the
outstanding shares of First Citizens common stock or (c) 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 First Citizens, 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 First Citizens 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 First Citizens 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), First
Citizens must, if the option has not terminated, and subject to any required
regulatory approval, repurchase from the holder (a) the option and (b) all
shares of First Citizens 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:
. the aggregate purchase price paid by the holder for any shares of First
Citizens common stock acquired pursuant to the option with respect to
which the holder then has beneficial ownership, plus
. the excess, if any, of (a) the Applicable Price (as defined in the
option agreement) for each share of First Citizens common stock over the
purchase price, multiplied by (b) the number of shares of First Citizens
common stock with respect to which the option has not been exercised,
plus
. the excess, if any, of (a) the Applicable Price over the purchase price
paid (or, in the case of shares of First Citizens 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 First Citizens common stock with respect to
which the option has been exercised and with respect to which the holder
then has beneficial ownership, multiplied by (b) 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
Securities Exchange Act) is formed that has acquired actual ownership or
control of, 50% or more of the then outstanding shares of First Citizens
common stock, or (b) any of the merger or other business combination
transactions set forth in the paragraph below describing substitute options is
completed.
Substitute Options
If, before the termination of the option agreement, First Citizens enters
into an agreement:
. to consolidate with or merge into any third party and will not be the
continuing or surviving corporation of the consolidation or merger;
32
<PAGE>
. to permit any third party to merge into First Citizens with First
Citizens as the continuing or surviving corporation, but, in connection
therewith, the then outstanding shares of First Citizens common stock
are changed into or exchanged for stock or other securities of First
Citizens or any other person or cash or any other property, or the
outstanding shares of First Citizens common stock after the merger
represent less than 50% of the outstanding shares and share equivalents
of the merged company;
. to permit any third party to acquire all of the outstanding shares of
First Citizens common stock pursuant to a statutory share exchange; or
. 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 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 First Citizens'
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 First Citizens 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 First
Citizens 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
Each employee of First Citizens at the effective time who becomes an
employee of BB&T or a BB&T subsidiary immediately following 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 the BB&T employer, subject to the terms of such plans and
programs. Service with First Citizens will be deemed to be service with the
BB&T employer for the purpose of determining eligibility to participate and
vesting (if applicable) in such welfare plans and programs, but not for the
purpose of computing benefits, if any, determined in whole or in part with
reference to service. In addition, if the first plan year of participation by
First Citizens employees and their dependents in a group health plan of the
BB&T employer is a partial plan year, the BB&T employer will cause its group
health plan to credit toward deductible and other out-of-pocket limitations
any expenses incurred by such persons under First Citizens' group health plan
during that portion of the BB&T employer's plan year during which such persons
were covered under First Citizens' group health plan.
Each employee of First Citizens or a First Citizens subsidiary who becomes
an employee of BB&T or a BB&T subsidiary and who is terminated after the
effective time (excluding any employee who has an existing employment or
special termination agreement) will be entitled to severance pay in accordance
with the general severance policy maintained by BB&T if and to the extent such
employee is entitled to severance pay under the policy. An employee's service
with First Citizens or a First Citizens subsidiary 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.
BB&T has agreed to honor all employment agreements, severance agreements and
deferred compensation agreements that First Citizens and its subsidiaries have
with their current and former employees and directors and which have been
disclosed to BB&T, except to the extent any such agreements are superseded or
terminated at or after the effective time.
33
<PAGE>
BB&T will provide, to the extent required by Section 4980B of the Internal
Revenue Code and Section 601 et seq. of ERISA, health continuation coverage
satisfying for any First Citizens employee and eligible dependents thereof who
incur a "qualifying event", as defined therein, on or prior to the effective
time.
401(k) Plan
BB&T shall cause the 401(k) plan of First Citizens to be merged with the
401(k) plan maintained by BB&T and its subsidiaries, and the account balances
of former employees of First Citizens or its subsidiaries who are participants
in the First Citizens plan will be transferred to the accounts of such
employees 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, except as required to comply with the
provisions of Section 411(d)(6) of the Internal Revenue Code and the
regulations thereunder (and subject to BB&T's right to terminate such plan).
For purposes of administering the 401(k) plan, service with First Citizens and
its subsidiaries will be deemed to be service with BB&T or its subsidiaries
for eligibility and vesting purposes, but not for purposes of benefit accrual.
Stock Options
At the effective time, each stock option granted under the First Citizens
Stock Option and Incentive Plan and the First Citizens Directors' Nonincentive
Stock Option Plan then outstanding, whether or not exercisable, will be
converted into rights with respect to BB&T common stock. Unless it elects to
substitute options as described below, BB&T will assume each of these stock
options in accordance with the terms of the applicable First Citizens stock
option plan, except that (a) BB&T and the compensation committee of the BB&T
Board will be substituted for First Citizens and the First Citizens Board
administering the stock option plans, (b) each stock option may be exercised
solely for shares of BB&T common stock, (c) the number of shares of BB&T
common stock subject to each stock option will be the number of whole shares
(omitting any fractional share) determined by multiplying the number of shares
of First Citizens common stock subject to the stock option by the exchange
ratio and (d) the per share exercise price for each stock option will be
adjusted by dividing the per share exercise price for the stock option by the
exchange ratio and rounding up to the nearest cent.
As an alternative to assuming the stock options, BB&T may choose to
substitute as of the effective time options under the BB&T Corporation 1995
Omnibus Stock Incentive Plan or any other duly adopted comparable plan for all
or a part of the stock options, subject to the conditions that the
requirements of (c) and (d) in the preceding paragraph will apply, the
substitution may not constitute a modification, extension or renewal of any
stock options that are incentive stock options and the substituted options
will continue in effect on the same terms and conditions as provided in the
stock options and the stock option plan granting each stock option.
Each stock option that is an incentive stock option will be adjusted as
required by Section 424 of the Internal Revenue Code to continue as an
incentive stock option and not to constitute a modification, extension or
renewal within the meaning of Section 424(h) of the Internal Revenue Code.
BB&T has reserved and will continue to reserve adequate shares of BB&T
common stock for the exercise of any converted or substitute options. As soon
as practicable after the effective time, if it has not already done so, and to
the extent First Citizens has a registration statement in effect or an
obligation to file a registration statement, BB&T will file a registration
statement under the Securities Act with respect to the shares of BB&T common
stock subject to converted or substitute options and will use its reasonable
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as such converted or substitute options remain
outstanding.
BB&T will deliver to each participant in the stock option plans who receives
converted or substitute options an appropriate notice setting forth the
participant's rights in this regard.
Based on stock options outstanding as of the date of execution of the merger
agreement and subsequent exercises, options to purchase an aggregate of up to
approximately 229,303 shares of First Citizens common
34
<PAGE>
stock may be outstanding at the effective time. Any shares of First Citizens
common stock issued pursuant to the exercise of stock options under the stock
option plans before the effective time will be converted into shares of BB&T
common stock and cash in lieu of any fractional share interest in the same
manner as other outstanding shares of First Citizens 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 First Citizens at the effective time
may be resold by them (a) 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 and (b) following the
satisfaction of the requirements of the SEC's Accounting Series Release Nos.
130 and 135 relating to publication of financial results of the post-merger
combined operations of BB&T and First Citizens. Those who may be deemed
affiliates of First Citizens generally include individuals or entities that
directly, or indirectly through one or more intermediaries, control, are
controlled by or are under common control with First Citizens and include
directors and certain executive officers of First Citizens. 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 merger agreement requires First Citizens to use its best efforts to
cause each of its affiliates to deliver to BB&T a written agreement to the
effect generally 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 in
compliance with (a) the Securities Act and the rules and regulations
promulgated thereunder and (b) the requirements of the accounting releases
described above.
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,
Virginia, Maryland and the District of Columbia 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, Virginia, Maryland and the District of Columbia.
BB&T's principal commercial bank subsidiaries are BB&T-NC, Branch Banking and
Trust Company of South Carolina ("BB&T-SC") and Branch Banking and Trust
Company of Virginia ("BB&T-VA"). 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), BB&T Financial
Corporation of Virginia (which in turn owns all of the issued and outstanding
shares of BB&T-VA and all of the issued and outstanding shares of the eleven
affiliate banks of the former MainStreet Financial Corporation ("MainStreet"))
and Scott and Stringfellow, Inc.
Operating Subsidiaries
BB&T-NC, BB&T's largest subsidiary, is the oldest bank in North Carolina and
currently operates through 345 banking offices throughout North Carolina and
35 offices in metropolitan Washington, D.C. and Maryland. 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
35
<PAGE>
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 90 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 offers a full range of commercial and retail banking services
through 62 banking offices in the Hampton Roads and Richmond areas and the
southern, central and southwestern regions of Virginia.
The eleven affiliate banks (including a trust company subsidiary) of
MainStreet provide full-service banking and trust services throughout
Virginia, southern Maryland and metropolitan Washington, D.C.
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.
Scott & Stringfellow, Inc. ("Scott & Stringfellow"), a full-service retail
brokerage, institutional equity and debt underwriting, investment advisory
services, corporate finance, equity trading and equity research firm, was
acquired on March 26, 1999 and was merged with Craigie Incorporated, which
specialized in the origination, trading and distribution of fixed income
securities and equity products in both the public and private capital markets,
on May 5, 1999.
Phillips Factors Corporation buys and manages account receivables primarily
in the furniture, textiles and home furnishings-related industries. W.E.
Stanley & Company, Inc. is primarily engaged in actuarial and employee group,
health and welfare benefit plan consulting, plan administration, and the
design, communication and administration of all types of corporate retirement
plans. Sheffield Financial Corp. ("Sheffield") specializes in loans to small
commercial lawn care businesses across the country. BB&T Bankcard Corporation
is a special purpose credit card bank.
Acquisitions
BB&T's profitability and market share have been enhanced through both
internal growth and acquisitions of both financial and nonfinancial
institutions during recent years. BB&T's most recent acquisitions include the
following:
On June 18, 1998, BB&T completed the acquisition of Dealers Credit Inc.
("DCI"), a commercial finance company based in Menomonee Falls, Wisconsin that
specializes in extending secured, installment loan credit and direct financing
lease credit to commercial, agricultural, municipal and consumer end-users of
turf care equipment, outdoor power equipment, agricultural equipment and
related products. DCI was merged into Refloat, Inc., the holding company for
Sheffield, and its assets were transferred to Sheffield immediately
thereafter.
On June 30, 1998, BB&T completed the acquisition of W.E. Stanley & Company,
Inc. and two of its sister companies (collectively, "W.E. Stanley"). W.E.
Stanley operates as a wholly owned subsidiary of BB&T-NC under the name W.E.
Stanley & Company, Inc.
On July 1, 1998, BB&T completed the acquisition of Franklin Bancorporation,
Inc. ("Franklin") in a transaction accounted for as a pooling-of-interests.
Franklin National Bank of Washington D.C., the banking
36
<PAGE>
subsidiary of Franklin, operated ten banking offices in the metropolitan
Washington, D.C. area and was merged into BB&T-NC on February 22, 1999.
BB&T completed the acquisition of Maryland Federal Bancorp, Inc., a unitary
savings and loan holding company and the sole shareholder of Maryland Federal
Bank ("MFB"), on September 30, 1998 and effected the merger of MFB, which had
28 branch offices in the metropolitan Washington D.C. and southern Maryland
areas, into BB&T-NC in November 1998. MFB specialized in the business of
attracting deposits from the general public and investing such deposits
primarily in permanent loans secured by first liens on one-to-four family
residential properties and, to a lesser extent, commercial real estate located
in MFB's market area and in consumer loans.
On March 5, 1999, BB&T acquired MainStreet. With $2.3 million in assets,
MainStreet operated 46 full-service banking offices in Virginia and three in
Maryland.
BB&T acquired Scott & Stringfellow Financial, Inc., the holding company of
Scott & Stringfellow, on March 26, 1999. Scott & Stringfellow has 32 offices
in the Carolinas, Virginia and West Virginia and manages more than $10 billion
in total assets for clients.
On January 28, 1999, BB&T announced that it had agreed to acquire Mason-
Dixon Bancshares, Inc. ("Mason-Dixon") in a tax-free transaction to be
accounted for as a pooling of interests in which Mason-Dixon shareholders
would receive 1.30 shares of BB&T common stock for each share of Mason-Dixon
common stock. The transaction is valued, based on BB&T's closing price of
$38.44 on January 26, at $256.9 million. Mason-Dixon's branch network includes
23 banking offices, 12 consumer finance offices and three mortgage loan
offices in Maryland and is expected to extend BB&T's presence in the
economically strong markets in central Maryland.
On February 25, 1999, BB&T announced that it had agreed to acquire Matewan
BancShares Inc. ("Matewan") in a tax-free transaction. In the transaction,
Matewan common shareholders would receive 0.67 shares of BB&T common stock for
each share of Matewan common stock and Matewan preferred shareholders would
receive 0.8375 shares of BB&T common stock for each share of Matewan preferred
stock. Through its banking subsidiaries, Matewan National Bank and Matewan
FSB, Matewan operates 22 banking offices and one mortgage loan office in
southwestern Virginia, southern West Virginia and eastern Kentucky and is
expected to strengthen BB&T's western Virginia franchise and to expand such
franchise into southern West Virginia and eastern Kentucky.
On April 28, 1999, BB&T announced that it had agreed to acquire First
Liberty Financial Corp. ("First Liberty") in a tax-free transaction to be
accounted for as a pooling-of-interests. Based on BB&T's closing price of $39
per share on April 26, 1999, First Liberty shareholders would receive 0.8525
of a share of BB&T common stock for each share of First Liberty common stock,
or $33.25 per share. The final exchange ratio will be determined based on a
pricing period prior to closing and will be not less than 0.85 shares of BB&T
common stock for each share of First Liberty common stock or more than 0.87
shares of BB&T common stock for each share of First Liberty common stock.
First Liberty, which has approximately $1.7 billion in assets and operates 39
banking offices and 13 consumer finance offices in Macon and Savannah,
Georgia, is expected to expand BB&T's presence into economically strong
markets in Georgia.
BB&T expects to continue to take advantage of the consolidation of the
financial services industry by 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.
37
<PAGE>
Capital
The Federal Reserve has established a minimum requirement for a bank holding
company's ratio of capital to risk-weighted assets (including on-balance sheet
activities and certain off-balance sheet activities, such as standby letters
of credit) of 8%. At least half of a bank holding company's 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 March 31, 1999, BB&T's Tier 1 and total capital ratios
were 9.7% and 14.2%, respectively. Effective January 1, 1998, the Federal
Reserve is also 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 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 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 generally are 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 March 31, 1999 was 6.9%. 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, these capital
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 state bank subsidiaries are subject that are substantially
similar to those requirements established by the Federal Reserve described
above. The Office of the Comptroller of the Currency also has similar
regulations that would apply to BB&T's national bank subsidiaries. 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 March 31, 1999.
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 34% of the deposits
of BB&T-NC and BB&T-SC and a portion of the deposits of BB&T-VA (related to
the banks' acquisition of various savings associations) are subject to
assessments imposed by the Savings Association Insurance Fund ("SAIF") of the
FDIC.
The FDIC has established the same assessment rates for both BIF-insured and
SAIF-insured deposits, effective January 1, 1997. For the semi-annual period
beginning December 30, 1998, 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. However, because legislation enacted in 1996 requires
that both SAIF-insured and BIF-insured deposits pay a pro rata portion of
38
<PAGE>
the interest due on the obligations issued by the Financing Corporation, the
FDIC is currently assessing BIF-insured deposits an additional 1.22 basis
points per $100 of deposits, and SAIF-insured deposits an additional 6.10
basis points per $100 of deposits, in each case on an annualized basis, to
cover those obligations.
INFORMATION ABOUT FIRST CITIZENS
First Citizens is a Georgia corporation and a bank/thrift holding company
located on the south side of the metropolitan Atlanta area. First Citizens
provides financial services through its two subsidiary financial institutions,
a federal savings bank and a state-chartered commercial bank, which offer a
variety of banking and other financial services to individuals and businesses
in the counties of Coweta, Fayette, Henry, Clayton and Troup in Georgia.
First Citizens was formed on August 22, 1996 when Newnan Savings Bank, FSB
(now First Citizens Bank) reorganized into a holding company structure. In
this reorganization, each shareholder of Newnan Savings Bank received stock in
the new parent company on a one-for-one basis. At the same time, the new
holding company acquired Southside Financial Group, Inc., the parent company
of Citizens Bank & Trust of Fayette County (now known as First Citizens Bank
of Georgia). In connection with this acquisition, First Citizens issued
136,990 shares of stock to Southside shareholders.
As of March 31, 1997, First Citizens acquired Tara Bankshares Corporation,
the parent company of Tara State Bank, issuing 221,773 shares of its stock to
Tara shareholders. First Citizens operated the three banking subsidiaries as
separate entities until February 12, 1999, when First Citizens Bank of Clayton
County (formerly Tara State Bank) merged into First Citizens Bank of Georgia.
First Citizens Bank of Georgia operates banking offices in Fayetteville,
Riverdale, and Jonesboro, Georgia.
First Citizens' savings bank subsidiary, First Citizens Bank, is a federally
chartered thrift located in Newnan, Georgia. It maintains a total of 10
offices in Newnan, Peachtree City, LaGrange, Stockbridge, and Hogansville,
Georgia. First Citizens Bank also has two wholly owned subsidiaries, Citizens
Mortgage Group, Inc., an operating subsidiary, and Newnan Financial Services,
Inc., a service corporation which offers real estate appraisal services.
Newnan Financial's subsidiary, Jefferson Ventures, Inc., holds certain tracts
of undeveloped land at White Oak Golf and Lake Community in Newnan, Georgia.
Additional information about First Citizens can be found in First Citizens'
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1998,
Quarterly Report on Form 10-Q for the quarter ended December 31, 1998 and
audited financial statements for the fiscal year ended March 31, 1999, all of
which accompany this Proxy Statement/Prospectus.
DESCRIPTION OF BB&T CAPITAL STOCK
General
The authorized capital stock of BB&T consists of 500,000,000 shares of BB&T
common stock, par value $5.00 per share and 5,000,000 shares of preferred
stock, par value $5.00 per share. As of May 14, 1999, there were 307,875,228
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 Series B
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 First
Citizens common stock outstanding at the record date, it is estimated that
approximately 3,105,451 shares of BB&T common stock would be issued in the
merger.
39
<PAGE>
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 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 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. BB&T
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 BB&T's articles of incorporation, 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 BB&T common stock with respect to the payment
of dividends or amounts paid 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").
40
<PAGE>
Initially, the Rights will be attached to all BB&T common stock certificates
representing shares then outstanding, and no separate Rights Certificates (as
defined in the Rights Agreement) 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 completed 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 (1) 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 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 (2) 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.
If 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
41
<PAGE>
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 $36.25 at such time, the holder of each valid
Right would be entitled to purchase eight 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.
If, 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 if
certain events occur.
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 or her 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 if the Rights become exercisable for
stock (or other consideration) of BB&T or for common stock of the acquiring
company as set forth above.
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 SEC. 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 "Where You Can Find More Information" on page 50.
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws
Provisions of the North Carolina Business Corporation Act (the "NCBCA") and
BB&T's articles of incorporation and bylaws may be deemed to have an anti-
takeover effect and, together with 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 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 and BB&T's articles of incorporation and bylaws that
may be deemed to have anti-takeover effects on BB&T.
42
<PAGE>
Control Share Acquisition 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
BB&T's articles of incorporation and bylaws classify the BB&T Board and
permit the removal of directors only for cause. This could make it more
difficult for a third party to acquire, or discourage 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 BB&T's bylaws, meetings of the shareholders may be called only by the
Chief Executive Officer, President, Secretary or the BB&T Board. Shareholders
of BB&T may not request that a special meeting of shareholders be called. This
provision could delay 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 time, holders of First Citizens 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 First
Citizens common stock. Since BB&T is organized under the laws of the State of
North Carolina and First Citizens is organized under the laws of the State of
Georgia, differences in the rights of holders of BB&T common stock and those
of holders of First Citizens common stock arise from differing provisions of
the NCBCA and the Georgia Business Corporation Code (the "GBCC") 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 First Citizens common stock. The identification of
specific 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 the GBCC and the governing corporate
instruments of BB&T and First Citizens, to which the shareholders of First
Citizens are referred.
Authorized Capital Stock
BB&T
BB&T's authorized capital stock consists of 500,000,000 shares of BB&T
common stock and 5,000,000 shares of BB&T preferred stock. BB&T's articles of
incorporation 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 May
14, 1999, there were 307,875,228 shares of BB&T common stock 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."
43
<PAGE>
First Citizens
First Citizens' authorized capital stock consists of 8,000,000 shares of
First Citizens common stock, par value $1.00 per share and 8,000,000 shares of
First Citizens preferred stock, without par value. As of May 17, 1999, there
were 2,878,350 shares of First Citizens common stock outstanding. No shares of
First Citizens preferred stock were issued and outstanding as of such date.
Special Meetings of Shareholders and Action by Shareholders without a Meeting
BB&T
Special meetings of the shareholders of BB&T may be called at any time by
BB&T's Chief Executive Officer, President or Secretary or by the BB&T Board.
Under the NCBCA, shareholders of a North Carolina corporation may take action
without a meeting by one or more written consents signed by all shareholders
entitled to vote on the matter in question, provided that any required notice
is given to any shareholders not entitled to vote on such matter.
First Citizens
Special meetings of the shareholders of First Citizens may be called at any
time by the First Citizens Board, by the President or upon the written request
of shareholders owning an aggregate of not less than 25% of the outstanding
shares of capital stock entitled to vote. First Citizens' bylaws provide that
any action required or permitted to be taken by First Citizens shareholders
may be taken without a meeting by consent in writing setting forth the action
to be taken and signed by those persons who would be entitled to vote at a
meeting those shares having voting power to cast at least the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote were present and voted.
Directors
BB&T
BB&T's articles of incorporation and 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 21
directors. The BB&T Board is divided into three classes, with directors
serving staggered three-year terms. Under BB&T's articles of incorporation and
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.
First Citizens
First Citizens' articles of incorporation state that the board of directors
shall consist of not less than five nor more than 25 directors. The bylaws
provide that the number of directors within this range may be fixed from time
to time by the First Citizens Board or by the shareholders. The First Citizens
Board presently consists of five members. Like the BB&T Board, the First
Citizens Board is divided into three classes, with directors serving staggered
three-year terms. Also like BB&T, holders of First Citizens stock do not have
cumulative voting rights in the election of directors. First Citizens' bylaws
provide that any director may be removed from office without cause only upon
the affirmative vote of the holders of at least two-thirds of the outstanding
shares and may be removed with cause upon the affirmative vote of the holders
of a majority of the outstanding shares.
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
44
<PAGE>
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.
First Citizens
First Citizens shareholders are entitled to dividends when declared by the
First Citizens Board unless the company is insolvent or the dividend payment
would render it insolvent. As in the case of BB&T, the ability of First
Citizens to pay dividends depends on the earnings of its subsidiary bank, and
management cannot predict with any certainty whether and to what extent
dividends would be paid to shareholders in the future if First Citizens
remained independent.
Notice of Shareholder Nominations and Shareholder Proposals
BB&T
BB&T's 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. BB&T's 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. In addition, a shareholder intending to make a proposal for
consideration at a regularly scheduled annual meeting of shareholders that is
not intended to be included in the proxy statement for such meeting 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
such shareholder's intention. 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.
In accordance with Rule 14a-8, as promulgated by the SEC pursuant to the
Securities Exchange Act, shareholder proposals intended to be included in the
proxy statement and presented at a regularly scheduled annual meeting must be
received by BB&T no later than 120 days before the anniversary of the date
that the previous year's proxy statement was first mailed to shareholders.
Where the annual meeting has been changed by more than 30 days from the date
of the prior year's meeting, or for special meetings, the proposal must be
submitted within a reasonable time before BB&T begins to print and mail its
proxy materials.
First Citizens
First Citizens' bylaws do not establish advance notice procedures for
shareholder proposals or the nomination, other than by direction of the First
Citizens Board, of candidates for election as directors.
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
45
<PAGE>
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. BB&T's articles of
incorporation 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. BB&T's 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.
First Citizens
First Citizens' bylaws contain certain provisions which provide
indemnification to directors and officers of First Citizens that is broader
than the protection expressly mandated in the GBCC. The indemnification
provisions in the bylaws require First Citizens to indemnify persons who are
parties to any civil, criminal, administrative or investigative action, suit
or proceeding by reason of the fact that the person was or is a director,
officer, employee or agent of First Citizens. These persons would be
indemnified against expenses (including, but not limited to, attorneys' fees
and court costs) and against any judgments, fines and amounts paid in
settlement incurred by them. These persons may also be entitled to the advance
of any such expenses prior to the final disposition of the proceeding if they
have provided an undertaking to repay First Citizens if it is ultimately
determined that they are not entitled to indemnification. The bylaws provide
that First Citizens shall indemnify a director, officer, employee or agent if
that individual acted in a manner he or she believed in good faith to be in or
not opposed to the best interests of First Citizens and, in the case of a
criminal proceeding, he or she had no reasonable cause to believe his or her
conduct was unlawful.
Mergers, Share Exchanges and Sales of Assets
BB&T
The NCBCA generally requires that any merger, share exchange or sale of all
or 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. Approval of a merger
by the shareholders of the surviving corporation is not required in certain
instances, however, including (as in the case of the merger with First
Citizens) a merger in which the number of voting shares outstanding
immediately after the merger, plus the number of voting shares issuable as a
result of the merger, does not exceed by more than 20% the number of voting
shares outstanding immediately before the merger. BB&T is also subject to
certain statutory anti-takeover provisions. See "--Anti-takeover Statutes."
First Citizens
The articles of incorporation of First Citizens provide that, with certain
exceptions, any merger or consolidation involving First Citizens or the sale
or disposition of all or substantially all of its assets will require the
affirmative vote of the holders of at least two-thirds of the outstanding
shares of First Citizens stock. However, if (a) two-thirds of the First
Citizens Board approves the merger or similar transaction prior to its
consummation or (b) First Citizens is engaged in a merger or similar
transaction with a subsidiary, the applicable provisions of the GBCC would
govern and the shareholder approval of the transaction would require a
favorable vote by a majority of all votes entitled to be cast.
Anti-takeover Statutes
BB&T
The North Carolina Control Share Acquisition Act applies to BB&T. This 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
46
<PAGE>
shareholders. The 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 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, which requires
that certain business combinations with existing shareholders either be
approved by a supermajority of the other shareholders or meet certain "fair
price" requirements.
First Citizens
The GBCC provides for certain voting rules and fair price requirements
concerning business combinations with "interested shareholders." This
provision is designed to protect shareholders of Georgia corporations against
the inequities of certain tactics which have been utilized in hostile takeover
attempts. Under the fair price provisions, business combinations with
interested shareholders (generally, an interested shareholder is the
beneficial owner of 10% or more of the corporation's voting shares) must meet
one of three criteria designed to protect minority shareholders: (a) the
transaction must be unanimously approved by the "continuing directors" of the
corporation (generally, directors who served prior to the time the interested
shareholder acquired 10% ownership and who are unaffiliated with the
interested shareholder), or (b) the transaction must be approved by two-thirds
of the continuing directors and a majority of shares held by shareholders
other than the interested shareholder, or (c) the terms of the transaction
must meet specified fair pricing criteria and certain other tests which are
intended to assure that all shareholders receive a fair price and equivalent
consideration for their shares regardless at which point in time they sell to
the acquiring party.
Fair price requirements are not applicable to any corporation unless they
are specifically incorporated in the bylaws of the corporation. First
Citizens' bylaws do not contain the requirements.
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 approved by a majority of the
votes cast within each voting group entitled to vote. BB&T's articles of
incorporation and bylaws also require the affirmative vote of more than two-
thirds of the outstanding shares entitled to vote to approve an amendment to
BB&T's articles of incorporation or bylaws amending, altering or repealing the
portions of such articles of incorporation or bylaws relating to
classification and staggered terms of the BB&T Board, removal of directors or
any requirement for a supermajority vote on such an amendment. The NCBCA
provides that a North Carolina corporation's bylaws may be amended by its
shareholders, and BB&T's articles of incorporation authorize the BB&T Board to
amend BB&T's bylaws.
First Citizens
The GBCC provides that a Georgia corporation's articles of incorporation and
bylaws may be amended if the amendment is approved by a majority of the shares
entitled to vote. However, First Citizens' articles and bylaws require the
affirmative vote of two-thirds of the outstanding shares entitled to vote to
approve an amendment to any article or bylaw amending, altering or repealing a
portion of an article or bylaw relating to
47
<PAGE>
classification and staggered terms of the board, number of directors, removal
of directors, limitation of directors' liability, supermajority voting
requirements for certain mergers or other business combinations, relevant
factors for board consideration on such a transaction, or any requirement for
a supermajority vote on such an amendment. Except as described above, the
affirmative vote of a majority of all directors or a majority of all shares
entitled to elect directors is required to amend the bylaws. The bylaws of
First Citizens provide for amendment by the shareholders at any annual or
special meeting or by the First Citizens Board.
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 or her shares
in the event of any of the following corporate transactions:
. completion of a plan of merger to which the corporation is a party,
unless (a) the corporation is a parent merging with a subsidiary
pursuant to a particular NCBCA provision for such transactions; (b) 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 (c) the shares in question are then redeemable by the corporation at
a price not greater than the cash to be received for such shares;
. completion 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;
. completion 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;
. an amendment to the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it
(a) alters or abolishes a preferential right of the shares; (b) 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; (c) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (d) excludes or limits
the right of shares to vote on any matter; (e) 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 (f) changes
the corporation into a nonprofit corporation or cooperative
organization; or
. 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 (1) cash, (2)
shares in another corporation that are either listed on a national securities
exchange or held by more than 2,000 record shareholders or (3) 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 or her shares must follow specific
procedural requirements as set forth in the NCBCA in order to maintain such
right and obtain such payment.
48
<PAGE>
First Citizens
Under the GBCC (subject to certain exceptions), any shareholder of a Georgia
corporation who objects to a merger and who fully complies with all of the
dissenters' provisions (but not otherwise) shall be entitled to demand and
receive payment for all (but not less than all) of his or her shares if the
proposed merger is consummated. A shareholder who objects to a merger and
desires to receive payment of the "fair value" of his or stock:
. must file a written objection to the merger with the corporation either
prior to the shareholders' meeting, or at the meeting but before the
vote is taken, and the written objection must contain a statement that
the shareholder intends to demand payment for his or her shares if the
merger is approved;
. must either abstain from voting or vote against approval of the merger;
and
. must demand payment and deposit his or her certificate(s) in accordance
with the terms of the dissenters' notice sent to the dissenting
shareholder following approval of the merger.
If all of the above conditions are satisfied in full, the resulting
corporation is required to make a written offer within 10 days of receiving
the payment demand, or within 10 days after the consummation of the merger,
whichever is later, to each dissenting shareholder to purchase all of such
shareholder's shares at a specific price. If the resulting corporation and any
dissenting shareholder are unable to agree on the fair value of the shares
within 60 days, the resulting corporation will commence a proceeding in the
superior court of the county in which the resulting corporation is
headquartered to determine the rights of the dissenting shareholder and the
fair value of his or her shares. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value.
However, holders of First Citizens common stock do not have appraisal rights
in connection with the BB&T merger because, as of the record date, shares of
First Citizens common stock were listed on the Nasdaq National Market and the
shares of BB&T common stock are held by at least 2,000 record shareholders.
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 (a) the subsidiary's creditors, except to the extent that
BB&T may itself be a creditor with recognized claims against the subsidiary,
and (b) 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
from mutual to stock form.
First Citizens
In the event of the liquidation, dissolution or winding up of the affairs of
First Citizens, after the payment in full of debts and other liabilities, the
remaining assets would be distributed to the shareholders in proportion to
their respective interests.
Like BB&T, since First Citizens is a bank holding company, its rights and
the rights of its creditors and of its shareholders to participate in the
assets of any subsidiary upon the latter's liquidation or recapitalization may
be subject to the prior claims of (a) the subsidiary's creditors, except to
the extent that First Citizens may itself
49
<PAGE>
be a creditor with recognized claims against the subsidiary, and (b) any
interests in the liquidation account established by First Citizens Bank
(formerly Newnan Savings Bank, FSB) for the benefit of eligible account
holders in connection with its conversion from mutual to stock form.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have presented at the next annual
meeting of shareholders, which will not be held if the merger is completed,
and included in First Citizens' proxy materials must be received at the main
office of First Citizens, 19 Jefferson Street, Newnan, Georgia 30263, no later
than April 30, 2000. If such proposal is in compliance with all of the
requirements of Rule 14a-8 of the Securities Exchange Act, it will be included
in First Citizens' proxy statement and set forth on the form of proxy issued
for the next annual meeting of shareholders, if applicable. Shareholders
wishing to present proposals at such meeting (but not include them in First
Citizens' proxy materials) must also give notice of such proposals to First
Citizens no later than June 15, 2000. It is urged that any proposals be sent
by certified mail, return receipt requested.
OTHER BUSINESS
The First Citizens Board is not aware of any business to come before the
meeting other than those matters described in this proxy statement/prospectus.
However, if any other matters should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
LEGAL MATTERS
The validity of the shares of BB&T common stock 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 38,000 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 April 30,
1999, 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, 1998 to reflect the acquisition by BB&T of MainStreet
Financial Corporation on March 5, 1999, have been audited by Arthur Andersen
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 First Citizens Corporation and its
subsidiaries which are incorporated by reference in this proxy
statement/prospectus from First Citizens' Annual Report on Form 10-KSB for the
year ended March 31, 1998 have been audited by Mauldin & Jenkins, LLC,
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 giving said report.
WHERE YOU CAN FIND MORE INFORMATION
BB&T and First Citizens file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or certain other information that the companies file with
the SEC at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago,
50
<PAGE>
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public
from commercial document retrieval services and at the Internet world wide web
site maintained by the SEC at "http://www.sec.gov." Reports, proxy statements
and other information should also be available for inspection at the offices
of the NYSE, for BB&T, and Nasdaq, for First Citizens.
BB&T has filed the registration statement to register with the SEC the BB&T
common stock to be issued to First Citizens shareholders in the merger. This
proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of BB&T. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in
BB&T's registration statement or the exhibits to the registration statement.
The SEC allows First Citizens and BB&T to "incorporate by reference"
information into this proxy statement/prospectus, which means that the
companies can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated
by reference is considered part of this proxy statement/prospectus, except for
any information superseded by information contained directly in this proxy
statement/prospectus or in later filed documents incorporated by reference in
this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that First Citizens and BB&T have previously filed with the SEC.
These documents contain important information about First Citizens and BB&T
and their businesses.
BB&T SEC Filings (File No. 1-10853)
<TABLE>
<S> <C>
Annual Report on Form 10-K For the fiscal year ended December 31, 1998
Quarterly Reports on Form 10-Q For the fiscal quarter ended March 31, 1999
Current Reports on Form 8-K Filed January 8, 1999, January 14, 1999,
January 27, 1999 (two filings), January 28,
1999, February 25, 1999 (amended on April 28,
1999), April 9, 1999, April 12, 1999, April
28, 1999 (three filings) and April 30, 1999
Registration Statement on Form Filed January 10, 1997
8-A (concerning BB&T's
shareholder rights plan)
First Citizens SEC Filings (File No. 333-4304)
Annual Report on Form 10-KSB For the fiscal year ended March 31, 1998
Quarterly Reports on Form 10-Q For the fiscal quarters ended June 30, 1998,
September 30, 1998 and December 31, 1998
Current Reports on Form 8-K Filed July 2, 1998 and February 8, 1999
The description of First Filed July 1, 1996
Citizens common stock in First
Citizens' Registration
Statement on Form S-4
</TABLE>
First Citizens and BB&T also incorporate by reference additional documents
that may be filed with the SEC between the date of this proxy
statement/prospectus and the completion of the merger or the termination of
the merger agreement. These include periodic reports, such as Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
as well as proxy statements.
BB&T has supplied all information contained or incorporated by reference in
this proxy statement/prospectus relating to BB&T, and First Citizens has
supplied all such information relating to First Citizens before the merger.
51
<PAGE>
If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the
companies, the SEC or the SEC's Internet web site as described above.
Documents incorporated by reference are available from the companies without
charge, excluding all exhibits except those that the companies have
specifically incorporated by reference in this proxy statement/prospectus.
Shareholders may obtain documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
Shareholder Reporting Douglas J. Hertha
BB&T Corporation Corporate Secretary
Post Office Box 1290 19 Jefferson Street
Winston-Salem, North Carolina 27104 Newnan, Georgia 30264
(336) 733-3021 (770) 253-5017
If you would like to request documents from us, please do so by June 23, 1999
to receive them before the meeting.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. BB&T and First Citizens have not
authorized anyone to provide you with information that is different from what
is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated May 19, 1999. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than that date. Neither the mailing of this proxy
statement/prospectus to shareholders nor the issuance of BB&T common stock in
the merger creates any implication to the contrary.
52
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST CITIZENS CORPORATION
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I DEFINITIONS..................................................... A-1
ARTICLE II THE MERGER..................................................... A-5
2.1 Merger........................................................... A-5
2.2 Filing; Plan of Merger........................................... A-5
2.3 Effective Time................................................... A-6
2.4 Closing.......................................................... A-6
2.5 Effect of Merger................................................. A-6
2.6 Further Assurances............................................... A-6
2.7 Merger Consideration............................................. A-6
2.8 Conversion of Shares; Payment of Merger Consideration............ A-7
2.9 Conversion of Stock Options...................................... A-8
2.10 No Right to Dissent.............................................. A-9
2.11 Merger of Subsidiaries........................................... A-9
2.12 Anti-Dilution.................................................... A-9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FIRST CITIZENS.............. A-9
3.1 Capital Structure................................................ A-9
3.2 Organization, Standing and Authority............................. A-10
3.3 Ownership of Subsidiaries........................................ A-10
3.4 Organization, Standing and Authority of the Subsidiaries......... A-10
3.5 Authorized and Effective Agreement............................... A-10
3.6 Securities Filings; Financial Statements; Statements True........ A-11
3.7 Minute Books..................................................... A-11
3.8 Adverse Change................................................... A-11
3.9 Absence of Undisclosed Liabilities............................... A-11
3.10 Properties....................................................... A-12
3.11 Environmental Matters............................................ A-12
3.12 Loans; Allowance for Loan Losses................................. A-12
3.13 Tax Matters...................................................... A-13
3.14 Employees; Compensation; Benefit Plans........................... A-14
3.15 Certain Contracts................................................ A-16
3.16 Legal Proceedings; Regulatory Approvals.......................... A-16
3.17 Compliance with Laws; Filings.................................... A-17
3.18 Brokers and Finders.............................................. A-17
3.19 Repurchase Agreements; Derivatives............................... A-17
3.20 Deposit Accounts................................................. A-18
3.21 Related Party Transactions....................................... A-18
3.22 Certain Information.............................................. A-18
3.23 Tax and Regulatory Matters....................................... A-18
3.24 State Takeover Laws.............................................. A-18
3.25 Labor Relations.................................................. A-18
3.26 Fairness Opinion................................................. A-18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T......................... A-19
4.1 Capital Structure of BB&T........................................ A-19
4.2 Organization, Standing and Authority of BB&T..................... A-19
4.3 Authorized and Effective Agreement............................... A-19
4.4 Organization, Standing and Authority of BB&T Subsidiaries........ A-19
4.5 Securities Documents; Statements True............................ A-20
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
4.6 Financial Statements............................................. A-20
4.7 Certain Information.............................................. A-20
4.8 Tax and Regulatory Matters....................................... A-20
4.9 Share Ownership.................................................. A-20
4.10 Legal Proceedings; Regulatory Approvals.......................... A-20
ARTICLE V COVENANTS....................................................... A-21
5.1 First Citizens Shareholder Meeting............................... A-21
5.2 Registration Statement; Proxy Statement/Prospectus............... A-21
5.3 Plan of Merger; Reservation of Shares............................ A-21
5.4 Additional Acts.................................................. A-21
5.5 Best Efforts..................................................... A-22
5.6 Certain Accounting Matters....................................... A-22
5.7 Access to Information............................................ A-22
5.8 Press Releases................................................... A-23
5.9 Forbearances of First Citizens................................... A-23
5.10 Employment Agreements............................................ A-24
5.11 Affiliates....................................................... A-25
5.12 Section 401(k) Plan; Other Employee Benefits..................... A-25
5.13 Directors and Officers Protection................................ A-26
5.14 Forbearances of BB&T............................................. A-26
5.15 Reports.......................................................... A-26
5.16 Exchange Listing................................................. A-26
5.17 Advisory Board for Georgia Market Area........................... A-27
5.18 Board of Directors of BB&T....................................... A-27
5.19 No Sale of Jefferson Property.................................... A-27
ARTICLE VI CONDITIONS PRECEDENT........................................... A-27
6.1 Conditions Precedent--BB&T and First Citizens.................... A-27
6.2 Conditions Precedent--First Citizens............................. A-28
6.3 Conditions Precedent--BB&T....................................... A-28
ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT.................... A-29
7.1 Termination...................................................... A-29
7.2 Effect of Termination............................................ A-31
7.3 Survival of Representations, Warranties and Covenants............ A-31
7.4 Waiver........................................................... A-32
7.5 Amendment or Supplement.......................................... A-32
ARTICLE VIII MISCELLANEOUS................................................ A-32
8.1 Expenses......................................................... A-32
8.2 Entire Agreement................................................. A-32
8.3 No Assignment.................................................... A-32
8.4 Notices.......................................................... A-32
8.5 Specific Performance............................................. A-33
8.6 Captions......................................................... A-33
8.7 Counterparts..................................................... A-33
8.8 Governing Law.................................................... A-34
ANNEXES
Annex A Articles of Merger...............................................
Annex B Employment Agreement with Tom Moat...............................
Annex C Employment Agreement with Charles M. Barnes......................
Annex D Employment Agreement with Donald C. Phillips.....................
Annex E Employment Agreement with Doug Heartha...........................
</TABLE>
A-ii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of January
26, 1999, is among FIRST CITIZENS CORPORATION (including, with respect to all
periods prior to its inception on August 22, 1996, its predecessor, Newnan
Savings Bank, FSB, "First Citizens"), a Georgia corporation having its
principal office at Newnan, Georgia, and BB&T CORPORATION ("BB&T"), a North
Carolina corporation having its principal office at Winston-Salem, North
Carolina;
R E C I T A L S:
The parties desire that First Citizens shall be merged with and into BB&T
(said transaction being hereinafter referred to as the "Merger") pursuant to a
plan of merger (the "Plan of Merger") substantially in the form attached as
Annex A hereto, and the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby. As a condition and inducement to BB&T's
willingness to enter into the Agreement, First Citizens is concurrently
granting to BB&T an option to acquire, under certain circumstances, 560,483
shares of the common stock, par value $1.00 per share, of First Citizens.
Now, Therefore, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any Person, who directly or
indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with such Person and, without limiting the
generality of the foregoing, includes any executive officer or director of
such Person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be filed
with the office of the Secretary of State of North Carolina, as provided in
Section 55-11-05 of the NCBCA, and with the office of the Secretary of State
of Georgia, as provided in Section 14-2-1105 of the GBCC.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended.
"BB&T Common Stock" shall mean the shares of voting common stock, par value
$5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Option Agreement" shall mean the Stock Option Agreement dated as of
even date herewith, as amended from time to time, under which BB&T has an
option to purchase shares of First Citizens Common Stock, which shall be
executed immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust
Company of Virginia.
A-1
<PAGE>
"Business Day" shall mean all days other than Saturdays, Sundays and Federal
Reserve holidays.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the First Citizens 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 other laws and regulations relating to
emissions, discharges, releases, or threatened releases of any Hazardous
Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Morgan Keegan & Company, Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1997, 1996, and 1995, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1997, 1996, and 1995, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1997, and (b) with respect to First Citizens, (i) the
consolidated statements of financial condition (including related notes and
schedules, if any) of First Citizens as of March 31, 1998, March 31, 1997 and
March 31, 1996, and the related consolidated statements of income and retained
earnings, and cash flows (including related notes and schedules, if any) for
each of the three years ended March 31, 1998, March 31, 1997 and March 31,
1996 as filed by First Citizens in Securities Documents and (ii) the
consolidated statements of financial condition of First Citizens (including
related notes and schedules, if any) and the related consolidated statements
of income and retained earnings, and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by First Citizens
with respect to periods ended subsequent to March 31, 1998.
A-2
<PAGE>
"First Citizens Common Stock" shall mean the shares of voting common stock,
par value $1.00 per share, of First Citizens. The First Citizens Common Stock
has no Rights attached, except as provided in Section 3.1.
"First Citizens Disclosure Memorandum" shall mean the written information in
one or more documents, each of which is entitled "First Citizens Disclosure
Memorandum" and dated on or before the date of this Agreement and delivered
not later than ten days following the date of execution of this Agreement by
First Citizens to BB&T, and describing in reasonable detail the matters
contained therein. Each disclosure made therein shall be in existence on the
date of this Agreement and shall specifically reference each Section of this
Agreement under which such disclosure is made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced.
"First Citizens Subsidiaries" shall mean First Citizens Bank, First Citizens
Bank of Fayette County, First Citizens Bank of Clayton County, Citizens
Mortgage Group, Inc., Newnan Financial Services, Inc., Jefferson Ventures,
Inc., and any and all other Subsidiaries of First Citizens as of the date
hereof and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of First Citizens after the date hereof and held as a
Subsidiary by First Citizens at the Effective Time.
"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the
relevant date.
"GBCC" shall mean the Georgia Business Corporation Code, as amended.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or
regulation, including but not limited to petroleum products; (iii) asbestos;
(iv) radon; (v) poly-chlorinated biphiphenyls and (vi) such other materials,
substances or waste which are otherwise dangerous, hazardous, harmful to human
health or the environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or First Citizens shall mean an event,
change, or occurrence which, individually or together with any other event,
change or occurrence, (i) has a material adverse effect on the financial
condition, results of operations, business or business prospects of BB&T and
the BB&T Subsidiaries taken as a whole, or First Citizens and the First
Citizens Subsidiaries taken as a whole, or (ii) materially impairs the ability
of BB&T or First Citizens to perform its obligations under this Agreement or
to consummate the Merger and the other transactions contemplated by this
Agreement; provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) actions and omissions of BB&T or First Citizens
taken with the prior written consent of the other in contemplation of the
transactions contemplated hereby and (b) the direct effects of compliance with
this Agreement on the operating performance of the parties, including expenses
incurred by the parties in consummating the transactions contemplated by this
Agreement or relating to any litigation arising as a result of the Merger.
"NCBCA" shall mean the North Carolina Business Corporation Act, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of First
Citizens to solicit their votes in connection with a proposal to approve this
Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed
A-3
<PAGE>
with the Commission under the Securities Act, with respect to the BB&T Common
Stock to be issued in connection with the transactions contemplated by this
Agreement.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests (other than rights
pursuant to the Rights Agreement described under the definition of "BB&T
Common Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939 as amended; and the rules
and regulations of the Commission promulgated thereunder.
"Stock Option" shall mean, collectively, any option granted under the Stock
Option Plans, outstanding and unexercised on the date hereof to acquire shares
of First Citizens Common Stock, aggregating 291,147 shares.
"Stock Option Plans" shall mean First Citizens' Stock Option and Incentive
Plan and First Citizens' Directors' Nonincentive 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.
A-4
<PAGE>
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the following sections:
<TABLE>
<S> <C>
Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
BB&T Ratio Section 7.1(h)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(b)
Constituent Corporations Section 2.1
Converted Value Section 7.1(h)
Determination Date Section 7.1(h)
Effective Time Section 2.3
Employer Entity Section 5.12(c)
Exchange Ratio Section 2.7(a)
First Citizens Introduction
Index Group Section 7.1(h)
Index Price Section 7.1(h)
Merger Recitals
Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Starting Date Section 7.1(h)
Surviving Corporation Section 2.1(a)
</TABLE>
ARTICLE II
The Merger
2.1 Merger
BB&T and First Citizens are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA. At the Effective
Time:
(a) First Citizens shall be merged with and into BB&T in accordance with
the applicable provisions of the NCBCA and the GBCC, with BB&T being the
surviving corporate entity (hereinafter sometimes referred to as the
"Surviving Corporation").
(b) The separate existence of First Citizens shall cease and the Merger
shall in all respects have the effect provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall become the Bylaws of
the Surviving Corporation.
2.2 Filing; Plan of Merger
The Merger shall not become effective unless this Agreement and the Plan of
Merger are duly approved by shareholders holding at least a majority of the
shares of First Citizens Common Stock. Upon fulfillment or waiver of the
conditions specified in Article VI and provided that this Agreement has not
been terminated pursuant to Article VII, the Constituent Corporations will
cause the Articles of Merger to be executed and filed with the Secretary of
State of North Carolina and the Secretary of State of Georgia, as provided in
Section 55-11-05 of
A-5
<PAGE>
the NCBCA and Section 14-2-1105 of the GBCC, respectively. The Plan of Merger
is incorporated herein by reference, and adoption of this Agreement by the
Boards of Directors of the Constituent Corporations and approval by the
shareholders of First Citizens shall constitute adoption and approval of the
Plan of Merger.
2.3 Effective Time
The Merger shall be effective at the day and hour specified in the Articles
of Merger as filed as provided in Section 2.2 (herein sometimes referred to as
the "Effective Time").
2.4 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions
to Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing),
or such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of First Citizens
shall cease, and the Surviving Corporation shall thereupon and thereafter, to
the extent consistent with its Articles of Incorporation, possess all of the
rights, privileges, immunities and franchises, of a public as well as a
private nature, of each of the Constituent Corporations; and all property,
real, personal and mixed, and all debts due on whatever account, and all other
choses in action, and each and every other interest of or belonging to or due
to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate or any interest therein vested in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall thenceforth
be responsible for all the liabilities, obligations and penalties of each of
the Constituent Corporations; and any claim, existing action or proceeding,
civil or criminal, pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place; and any judgment
rendered against either of the Constituent Corporations may be enforced
against the Surviving Corporation. Neither the rights of creditors nor any
liens upon the property of either of the Constituent Corporations shall be
impaired by reason of the Merger.
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in
law or any other actions are necessary, desirable or proper to vest, perfect
or confirm of record or otherwise, in the Surviving Corporation, the title to
any property or rights of the Constituent Corporations acquired or to be
acquired by reason of, or as a result of, the Merger, the Constituent
Corporations agree that such Constituent Corporations and their proper
officers and directors shall and will execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and that the proper officers and directors of the Surviving
Corporation are fully authorized and directed in the name of the Constituent
Corporations or otherwise to take any and all such actions.
2.7 Merger Consideration
As used herein, the term "Merger Consideration" shall mean the number of
shares of BB&T Common Stock (to the nearest one-ten thousandth of a share) to
be exchanged for each share of First Citizens Common Stock issued and
outstanding as of the Effective Time and cash (without interest) to be payable
in exchange for
A-6
<PAGE>
any fractional share of BB&T Common Stock which would otherwise be
distributable to a First Citizens shareholder as provided in Section 2.8(d),
determined as follows:
(a) The number of shares of BB&T Common Stock to be issued for each
issued and outstanding share of First Citizens Common Stock shall be in the
ratio (the "Exchange Ratio") of 1.0789 shares of BB&T Common Stock for each
share of First Citizens Common Stock.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of
such share by the Closing Value. The "Closing Value" shall mean the average
closing price per share of BB&T Common Stock on the NYSE Composite
Transaction List (as reported by The Wall Street Journal--Eastern Edition)
for the five trading days (determined by excluding days on which the NYSE
is closed) ending on the tenth calendar day immediately preceding the
Effective Time (the tenth day to be determined by counting the first
calendar day preceding the Effective Time as the first day).
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of First Citizens or the holders of record of First Citizens Common
Stock, each share of First Citizens Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and shall
represent the right to receive, upon surrender of the certificate representing
such share of First Citizens Common Stock (as provided in subsection (d)
below), the Merger Consideration.
(b) Each share of the common stock of BB&T issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of First Citizens Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration. No interest will be paid or accrued
on the Merger Consideration upon the surrender of the certificate or
certificates representing shares of First Citizens Common Stock. With respect
to any certificate for First Citizens Common Stock that has been lost or
destroyed, BB&T shall pay the Merger Consideration attributable to such
certificate upon receipt of a surety bond or other adequate indemnity as
required in accordance with BB&T's standard policy, and evidence reasonably
satisfactory to BB&T of ownership of the shares represented thereby. After the
Effective Time, no transfer of the shares of First Citizens Common Stock
outstanding immediately prior to the Effective Time shall be made on the stock
transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each First Citizens shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of First
Citizens Common Stock. Upon surrender of such certificates or other evidence
of ownership meeting the requirements of Section 2.8(c), together with such
letter of transmittal duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably requested,
BB&T shall promptly cause the transfer to the persons entitled thereto of the
Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other distributions
with a record date prior to the Effective Time which have been declared or
made by First Citizens in respect of shares of First Citizens Common Stock in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time, subject to compliance by First Citizens with section 5.9(b).
To the extent permitted by law, former shareholders of record of First
Citizens shall be entitled to vote after the Effective Time at any meeting of
BB&T shareholders the number of whole shares of BB&T Common Stock into which
their respective shares of First Citizens Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing First Citizens 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,
A-7
<PAGE>
the record date for which is at or after the Effective Time, the declaration
shall include dividends or other distributions on all shares of BB&T Common
Stock issuable pursuant to this Agreement, but no dividend or other
distribution payable to the holders of record of BB&T Common Stock as of any
time subsequent to the Effective Time shall be delivered to the holder of any
certificate representing First Citizens Common Stock until such holder
surrenders such certificate for exchange as provided in this Section 2.8. Upon
surrender of such certificate, both the BB&T Common Stock certificate and any
undelivered dividends and cash payments payable hereunder (without interest)
shall be delivered and paid with respect to the shares of First Citizens
Common Stock represented by such certificate.
2.9 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding (and which by
its terms does not lapse on or before the Effective Time), whether or not then
exercisable, shall be converted into and become rights with respect to BB&T
Common Stock, and BB&T shall assume each Stock Option in accordance with the
terms of the Stock Option Plans, except that from and after the Effective Time
(i) BB&T and its Compensation Committee shall be substituted for First
Citizens and its Board of Directors administering the Stock Option Plans, (ii)
each Stock Option assumed by BB&T may be exercised solely for shares of BB&T
Common Stock, (iii) the number of shares of BB&T Common Stock subject to each
such Stock Option shall be the number of whole shares of BB&T (omitting any
fractional share) determined by multiplying the number of shares of First
Citizens Common Stock subject to such Stock Option immediately prior to the
Effective Time by the Exchange Ratio, and (iv) the per share exercise price
under each such Stock Option shall be adjusted by dividing the per share
exercise price under each such Stock Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the foregoing, BB&T may at its
election substitute as of the Effective Time options under the BB&T
Corporation 1995 Omnibus Stock Incentive Plan or any other duly adopted
comparable plan (in either case, the "BB&T Option Plan") for all or a part of
the Stock Options, subject to the following conditions: (A) the requirements
of (iii) and (iv) above shall be met; (B) such substitution shall not
constitute a modification, extension or renewal of any of the Stock Options
which are incentive stock options; and (C) the substituted options shall
continue in effect on the same terms and conditions as provided in the Stock
Options and the Stock Option Plans granting each Stock Option. Each grant of a
converted or substitute option to any individual who subsequent to the Merger
will be a director or officer of BB&T as construed under Rule 16b-3 shall, as
a condition to such conversion or substitution, be approved in accordance with
the provisions of Rule 16b-3. Each Stock Option which is an incentive stock
option shall be adjusted as required by Section 424 of the Code, and the
Regulations promulgated thereunder, so as to continue as an incentive stock
option under Section 424(a) of the Code, and so as not to constitute a
modification, extension, or renewal of the option within the meaning of
Section 424(h) of the Code. BB&T and First Citizens agree to take all
necessary steps to effectuate the foregoing provisions of this Section 2.9. As
soon as practicable following the Effective Time, BB&T shall deliver to the
participants in the Stock Option Plans an appropriate notice setting forth
such participant's rights pursuant thereto. BB&T has reserved and shall
continue to reserve adequate shares of BB&T Common Stock for delivery upon
exercise of any converted or substitute options. As soon as practicable after
the Effective Time, if it has not already done so, and to the extent First
Citizens shall have a registration statement in effect or an obligation to
file a registration statement, BB&T shall file a registration statement on
Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of BB&T Common Stock subject to
converted or substitute options and shall use its reasonable efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so
long as such converted or substitute options remain outstanding. With respect
to those individuals, if any, who subsequent to the Merger may be subject to
the reporting requirements under Section 16(a) of the Exchange Act, BB&T shall
administer the Stock Option Plans assumed pursuant to this Section 2.9 (or the
BB&T Option Plan, if applicable) in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent necessary to preserve for
such individuals the benefits of Rule 16b-3 to the extent such benefits were
available to them prior to the Effective Time. First Citizens hereby
represents that the Stock Option Plans in their current forms comply with Rule
16b-3 to the extent, if any, required as of the date hereof.
A-8
<PAGE>
(b) As soon as practicable following the Effective Time, BB&T shall deliver
to the participants receiving converted options under the BB&T Option Plan an
appropriate notice setting forth such participant's rights pursuant thereto.
2.10 No Right to Dissent
Nothing in the Articles of Incorporation or Bylaws, and no resolution of
First Citizens or any First Citizens Subsidiary, provides or would provide to
any person, including without limitation the First Citizens shareholders, upon
execution of this Agreement, the Plan of Merger or the BB&T Option Agreement
and consummation of the transactions contemplated hereby and thereby, rights
of dissent and appraisal of any kind.
2.11 Merger of Subsidiaries
In the event that BB&T shall request, First Citizens shall take such
actions, and shall cause the First Citizens Subsidiaries to take such actions,
as may be required in order to effect, at the Effective Time, the merger of
one or more of the First Citizens Subsidiaries with and into, in each case,
one of the BB&T Subsidiaries or any other Subsidiary of BB&T.
2.12 Anti-Dilution
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case
of a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
Representations and Warranties of First Citizens
Except as Disclosed, First Citizens represents and warrants to BB&T as
follows (the representations and warranties herein of First Citizens are made
subject to the applicable standard set forth in Section 6.3(a), and no such
representation or warranty shall be deemed to be inaccurate unless the
inaccuracy would permit BB&T to refuse to consummate the Merger under such
applicable standard):
3.1 Capital Structure
The authorized capital stock of First Citizens consists of 8,000,000 shares
of First Citizens Common Stock, par value $1.00 per share, and 8,000,000
shares of First Citizens Preferred stock, without par value. As of the date
hereof, 2,816,500 shares of First Citizens Common Stock are issued and
outstanding. No other classes of capital stock of First Citizens, common or
preferred, are authorized, issued or outstanding. All outstanding shares of
First Citizens Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. No shares of capital stock have been reserved
for any purpose, except for (i) shares of First Citizens Common Stock reserved
in connection with the Stock Option Plans, and (ii) 560,483 shares of First
Citizens Common Stock reserved in connection with the BB&T Option Agreement.
First Citizens has granted options to acquire 291,147 shares of First Citizens
Common Stock under the Stock Option Plans, which options remain outstanding as
of the date hereof. Except as set forth in this Section 3.1, there are no
Rights authorized, issued or outstanding with respect to, nor are there any
agreements, understandings or commitments relating to the right of any First
Citizens shareholder to own, to vote or to dispose of, the capital stock of
First Citizens. Holders of First Citizens Common Stock do not have preemptive
rights.
A-9
<PAGE>
3.2 Organization, Standing and Authority
First Citizens is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. First Citizens is not required to be
qualified to do business in any other state of the United States or foreign
jurisdiction.
3.3 Ownership of Subsidiaries
Section 3.3 of the First Citizens Disclosure Memorandum lists all of the
First Citizens Subsidiaries and, with respect to each, its jurisdiction of
organization, jurisdictions in which it is qualified or otherwise licensed to
conduct business, the number of shares or ownership interests owned by First
Citizens (directly or indirectly), the percentage ownership interest so owned
by First Citizens and its business activities. The outstanding shares of
capital stock or other equity interests of the First Citizens Subsidiaries are
validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by First Citizens free and clear of
all liens, claims and encumbrances or preemptive rights of any person. No
Rights are authorized, issued or outstanding with respect to the capital stock
or other equity interests of the First Citizens Subsidiaries, and there are no
agreements, understandings or commitments relating to the right of First
Citizens to own, to vote or to dispose of said interests. None of the shares
of capital stock or other equity interests of the First Citizens Subsidiaries
have been issued in violation of the preemptive rights of any person. Section
3.3 of the First Citizens Disclosure Memorandum also lists all shares of
capital stock or other securities or ownership interests of any corporation,
partnership, joint venture, or other organization (other than the First
Citizens Subsidiaries) owned directly or indirectly by First Citizens.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Citizens Subsidiary which is a depository institution is a
federally chartered savings association or a Georgia chartered bank with its
deposits insured by the FDIC. Each of the First Citizens Subsidiaries is
validly existing and in good standing under the laws of its jurisdiction of
organization. Each of the First Citizens Subsidiaries has full power and
authority to carry on its business as now conducted, and is duly qualified to
do business in each jurisdiction Disclosed with respect to it. No First
Citizens Subsidiary is required to be qualified to do business in any other
state of the United States or foreign jurisdiction, or is engaged in any type
of activities that have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) First Citizens has all requisite corporate power and authority to enter
into and (subject to receipt of all necessary governmental approvals and the
receipt of approval of the First Citizens shareholders of this Agreement and
the Plan of Merger) to perform all of its obligations under this Agreement,
the Articles of Merger and the BB&T Option Agreement. The execution and
delivery of this Agreement, the Articles of Merger and the BB&T Option
Agreement, and consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action, except, in the case of this Agreement and the Plan of Merger, the
approval of the First Citizens shareholders pursuant to and to the extent
required by applicable law. This Agreement, the Plan of Merger and the BB&T
Option Agreement constitute legal, valid and binding obligations of First
Citizens, and each is enforceable against First Citizens in accordance with
its terms, in each such case subject to (i) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship, receivership, or
other similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity (whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by First Citizens with any of
the provisions hereof or thereof, shall (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of First
Citizens or any First Citizens Subsidiary, (ii) constitute or
A-10
<PAGE>
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of First Citizens or any First Citizens
Subsidiary pursuant to, any note, bond, mortgage, indenture, license, permit,
contract, agreement or other instrument or obligation, or (iii) subject to
receipt of all required governmental approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to First Citizens
or any First Citizens Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing
with, or consent of, any public body or authority is necessary for the
consummation by First Citizens of the Merger and the other transactions
contemplated in this Agreement.
3.6 Securities Filings; Financial Statements; Statements True
(a) First Citizens has timely filed all Securities Documents required by the
Securities Laws to be filed since March 31, 1995. First Citizens has Disclosed
or made available to BB&T a true and complete copy of each Securities Document
filed by First Citizens with the Commission after March 31, 1994 and prior to
the date hereof, which are all of the Securities Documents that First Citizens
was required to file during such period. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of First Citizens fairly present or will fairly
present, as the case may be, the consolidated financial position of First
Citizens and the First Citizens Subsidiaries as of the dates indicated and the
consolidated statements of income and retained earnings, changes in
shareholders' equity and statements of cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end audit adjustments that are not material in amount or
effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by First Citizens or any First Citizens 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 First Citizens and each of the First Citizens
Subsidiaries contain or will contain at Closing accurate records of all
meetings and other corporate actions of their respective shareholders and
Boards of Directors (including committees of the Board of Directors), and the
signatures contained therein are the true signatures of the persons whose
signatures they purport to be.
3.8 Adverse Change
Since March 31, 1998, First Citizens and the First Citizens Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent,
except as disclosed in the most recent First Citizens Financial Statements, or
entered into any transactions with Affiliates, in each case other than in the
ordinary course of business consistent with past practices, nor has there been
any adverse change or any event involving a prospective adverse change in the
business, financial condition, results of operations or business prospects of
First Citizens or any of the First Citizens Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Citizens and the
First Citizens Subsidiaries are disclosed in the most recent Financial
Statements of First Citizens or were incurred in the ordinary course of its
business since the date of First Citizens' most recent Financial Statements.
A-11
<PAGE>
3.10 Properties
(a) First Citizens and the First Citizens Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults
or equitable interests, to all of the properties and assets, real and
personal, tangible and intangible, reflected on the consolidated balance sheet
included in the Financial Statements of First Citizens as of March 31, 1998 or
acquired after such date, except for (i) liens for current taxes not yet due
and payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount
or extent, or (iv) dispositions and encumbrances for adequate consideration
(b) All leases and licenses pursuant to which First Citizens or any First
Citizens 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) First Citizens and the First Citizens Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither First Citizens
nor any First Citizens Subsidiary has received any communication alleging that
First Citizens or the First Citizens Subsidiary is not in such compliance, and
there are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) There are no pending Environmental Claims, neither First Citizens nor
any First Citizens Subsidiary has received notice of any pending Environmental
Claims, and there are no conditions or facts existing which might reasonably
be expected to result in legal, administrative, arbitral or other proceedings
asserting Environmental Claims or other claims, causes of action or
governmental investigations of any nature seeking to impose, or that could
result in the imposition of, any liability arising under any Environmental
Laws upon (i) First Citizens or any First Citizens Subsidiary, (ii) any person
or entity whose liability for any Environmental Claim First Citizens or any
First Citizens Subsidiary has or may have retained or assumed, either
contractually or by operation of law, (iii) any real or personal property
owned or leased by First Citizens or any First Citizens Subsidiary, or any
real or personal property which First Citizens or any First Citizens
Subsidiary has or is judged to have managed or supervised or participated in
the management of, or (iv) any real or personal property in which First
Citizens or any First Citizens Subsidiary holds a security interest securing a
loan recorded on the books of First Citizens or any First Citizens Subsidiary.
Neither First Citizens nor any First Citizens Subsidiary is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any
liability under any Environmental Laws.
(c) First Citizens and the First Citizens Subsidiaries are in compliance
with all recommendations contained in any environmental audits, analyses and
surveys received by First Citizens relating to all real and personal property
owned or leased by First Citizens or any First Citizens Subsidiary and all
real and personal property of which First Citizens or any First Citizens
Subsidiary has or is judged to have managed or supervised or participated in
the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim, or other claim or action or governmental investigation
that could result in the imposition of any liability arising under any
Environmental Laws, against First Citizens or any First Citizens Subsidiary or
against any person or entity whose liability for any Environmental Claim First
Citizens or any First Citizens 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 First Citizens and the First Citizens
Subsidiaries are valid and properly documented, and were made in the ordinary
course of business. Neither the terms of such loans, nor any of the loan
documentation, nor the manner in which such loans have been administered and
serviced, nor First Citizens'
A-12
<PAGE>
procedures and practices of approving or rejecting loan applications, violates
any federal, state or local law, rule, regulation or ordinance applicable
thereto, including, without limitation, the TILA, Regulations O and Z of the
Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as amended,
and state laws, rules and regulations relating to consumer protection,
installment sales and usury.
(b) The allowances for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of First Citizens are adequate as
of their respective dates under the requirements of GAAP and applicable
regulatory requirements and guidelines.
3.13 Tax Matters
(a) First Citizens and the First Citizens Subsidiaries and each of their
predecessors have timely filed (or requests for extensions have been timely
filed and any such extensions either are pending or have been granted and have
not expired) all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns,
and withholding and employment tax returns) and have paid, or where payment is
not required to have been made, have set up an adequate reserve or accrual for
the payment of, all taxes required to be paid in respect of the periods
covered by such returns and, as of the Effective Time, will have paid, or
where payment is not required to have been made, will have set up an adequate
reserve or accrual for the payment of, all taxes for any subsequent periods
ending on or prior to the Effective Time. Neither First Citizens nor any First
Citizens Subsidiary has or will have any liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established. First
Citizens and the First Citizens Subsidiaries have paid, or where payment is
not required to have been made have set up an adequate reserve or accrual for
payment of, all taxes required to be paid or accrued for the preceding or
current fiscal year for which a return is not yet due.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by First Citizens and the First Citizens Subsidiaries are complete and
accurate. Neither First Citizens nor any First Citizens Subsidiary is
delinquent in the payment of any tax, assessment or governmental charge. No
deficiencies for any tax, assessment or governmental charge have been
proposed, asserted or assessed (tentatively or otherwise) against First
Citizens or any First Citizens Subsidiary which have not been settled and
paid. There are currently no agreements in effect with respect to First
Citizens or any First Citizens Subsidiary to extend the period of limitations
for the assessment or collection of any tax. No audit examination or
deficiency or refund litigation with respect to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither First Citizens nor any of the First Citizens Subsidiaries is a
party to any tax allocation or sharing agreement or has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was First Citizens or a First Citizens
subsidiary) or has any liability for taxes of any person (other than First
Citizens and the First Citizens Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law) as
a transferee or successor or by contract or otherwise.
(e) Each of First Citizens and the First Citizens Subsidiaries is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and tax withholding requirements under
federal, state, and local tax laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Code.
(f) Neither First Citizens nor any of the First Citizens 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.
A-13
<PAGE>
3.14 Employees; Compensation; Benefit Plans
(a) Compensation. First Citizens has Disclosed a complete and correct list
of the name, age, position, rate of compensation and any incentive
compensation arrangements, bonuses or commissions or fringe or other benefits,
whether payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of First Citizens and of each First Citizens
Subsidiary and each other person (in each case other than as an employee) to
whom First Citizens or any First Citizens Subsidiary pays or provides, or has
an obligation, agreement (written or unwritten), policy or practice of paying
or providing, retirement, health, welfare or other benefits of any kind or
description whatsoever.
(b) Employee Benefit Plans.
(i) First Citizens has Disclosed an accurate and complete list of all
Plans, as defined below, contributed to, maintained or sponsored by First
Citizens or any First Citizens Subsidiary, to which First Citizens or any
First Citizens 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 First Citizens or any First
Citizens Subsidiary is a member. For purposes of this Agreement, the term
"Plan" shall mean a plan, arrangement, agreement or program described in
the foregoing provisions of this Section 3.14(b)(i) and which is: (A) a
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive
plan, agreement or arrangement, whether or not funded and whether or not
terminated, (B) an employment agreement, (C) a personnel policy or fringe
benefit plan, policy, program or arrangement providing for benefits or
perquisites to current or former employees, officers, directors or agents,
whether or not funded, and whether or not terminated, including, without
limitation, benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical, sick leave, severance, medical, dental,
hospitalization, life insurance and other types of insurance, or (D) any
other employee benefit plan as defined in Section 3(3) of ERISA, whether or
not funded and whether or not terminated.
(ii) Neither First Citizens nor any First Citizens Subsidiary contributes
to, has an obligation to contribute to or otherwise has any liability or
potential liability with respect to (A) any multiemployer plan as defined
in Section 3(37) of ERISA, (B) any plan of the type described in Sections
4063 and 4064 of ERISA or in Section 413 of the Code (and regulations
promulgated thereunder), or (C) any plan which provides health, life
insurance, accident or other "welfare-type" benefits to current or future
retirees or former employees or directors, their spouses or dependents,
other than in accordance with Section 4980B of the Code or applicable state
continuation coverage law.
(iii) None of the Plans obligates First Citizens or any First Citizens
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA
has incurred any "accumulated funding deficiency" as such term is defined
in such Sections of ERISA and the Code, whether or not waived, and each
Plan has always fully met the funding standards required under Title I of
ERISA and Section 412 of the Code. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) has occurred with respect
A-14
<PAGE>
to any such Plan, and the PBGC has not commenced or threatened the
termination of any Plan. None of the assets of First Citizens or any First
Citizens Subsidiary is the subject of any lien arising under Section 302(f)
of ERISA or Section 412(n) of the Code, neither First Citizens nor any
First Citizens Subsidiary has been required to post any security pursuant
to Section 307 of ERISA or Section 401(a)(29) of the Code, and there are no
facts which could be expected to give rise to such lien or such posting of
security. No event has occurred and no condition exists that would subject
First Citizens or any First Citizens Subsidiary to any tax under Sections
4971, 4972, 4976, 4977 or 4979 of the Code or to a fine or penalty under
Section 502(c) of ERISA.
(v) Each Plan that is intended to be qualified under Section 401(a) of
the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to the qualification under
the Code of such Plan and the tax exempt status of such related trust, and
nothing has occurred since the date of such determination letter that could
adversely affect the qualification of such Plan or the tax exempt status of
such related trust.
(vi) No underfunded "defined benefit plan" (as such term is defined in
Section 3(35) of ERISA) has been, during the five years preceding the
Closing Date, transferred out of the controlled group of corporations
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code) of
which First Citizens or any First Citizens 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.
(viii) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code, whether by statutory, class or
individual exemption) has occurred with respect to any Plan which would
result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409 or
502(i) of ERISA. Neither First Citizens nor, to the best knowledge of First
Citizens, any First Citizens Subsidiary, any trustee, administrator or
other fiduciary of any Plan, or any agent of any of the foregoing has
engaged in any transaction or acted or failed to act in a manner that could
subject First Citizens or any First Citizens Subsidiary to any liability
for breach of fiduciary duty under ERISA or any other applicable law.
(ix) With respect to each Plan, all reports and information required to
be filed with any government agency or distributed to Plan participants and
their beneficiaries have been duly and timely filed or distributed.
(x) First Citizens and each First Citizens Subsidiary has been and is
presently in compliance with all of the requirements of Section 4980B of
the Code.
(xi) Neither First Citizens nor any First Citizens Subsidiary has a
liability as of March 31, 1998 under any Plan that, to the extent
disclosure is required under GAAP, is not reflected on the consolidated
balance sheet included in the Financial Statements of First Citizens as of
March 31, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) First Citizens' or any
First Citizens Subsidiary's obligation to make contributions or any other
payments to fund benefits accrued under the Plans as of the date of this
Agreement or (B) the benefits accrued or payable with respect to any
participant under the Plans (except to the extent benefits may be deemed
increased by accelerated vesting, accelerated allocation of previously
unallocated Plan assets or by the conversion of all stock options in
accordance with Section 2.9 hereof).
A-15
<PAGE>
(xiii) With respect to each Plan, First Citizens has Disclosed or made
available to BB&T, true, complete and correct copies of (A) all documents
pursuant to which the Plans are maintained, funded and administered,
including summary plan descriptions, (B) the three most recent annual
reports (Form 5500 series) filed with the IRS (with attachments), (C) the
three most recent actuarial reports, if any, (D) the three most recent
financial statements, (E) all governmental filings for the last three
years, including, without limitation, excise tax returns and reportable
events filings, and (F) all governmental rulings, determinations, and
opinions (and pending requests for governmental rulings, determinations,
and opinions) during the past three years.
(xiv) Each of the Plans as applied to First Citizens and any First
Citizens Subsidiary may be amended or terminated at any time by action of
First Citizens' Board of Directors, or such First Citizens' Subsidiary's
Board of Directors, as the case may be, or a committee of such Board of
Directors or duly authorized officer, in each case subject to the terms of
the Plan and compliance with applicable laws and regulations (and limited,
in the case of multiemployer plans, to termination of the participation of
First Citizens or a First Citizens Subsidiary thereunder).
3.15 Certain Contracts
(a) Neither First Citizens nor any First Citizens Subsidiary is a party to,
is bound or affected by, or receives benefits under (i) any agreement,
arrangement or commitment, written or oral, the default of which would have a
Material Adverse Effect, whether or not made in the ordinary course of
business (other than loans or loan commitments made or certificates or
deposits received in the ordinary course of the banking business), or any
agreement restricting its business activities, including, without limitation,
agreements or memoranda of understanding with regulatory authorities, (ii) any
agreement, indenture or other instrument, written or oral, relating to the
borrowing of money by First Citizens or any First Citizens Subsidiary or the
guarantee by First Citizens or any First Citizens Subsidiary of any such
obligation, which cannot be terminated within less than 30 days after the
Closing Date by First Citizens or any First Citizens Subsidiary (without
payment of any penalty or cost, except with respect to Federal Home Loan Bank
or Federal Reserve Bank advances), (iii) any agreement, arrangement or
commitment, written or oral, relating to the employment of a consultant,
independent contractor or agent, or the employment, election or retention in
office of any present or former director or officer, which cannot be
terminated within less than 30 days after the Closing Date by First Citizens
or any First Citizens Subsidiary (without payment of any penalty or cost), or
that provides benefits which are contingent, or the application of which is
altered, upon the occurrence of a transaction involving First Citizens of the
nature contemplated by this Agreement or the BB&T Option Agreement, or (iv)
any agreement or plan, written or oral, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the BB&T Option Agreement or the value of
any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the BB&T Option Agreement. Each
matter Disclosed pursuant to this Section 3.15(a) is in full force and effect
as of the date hereof.
(b) Neither First Citizens nor any First Citizens 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 First Citizens,
threatened against First Citizens or any First Citizens Subsidiary or against
any asset, interest, plan or right of First Citizens or any First Citizens
Subsidiary, or, to the best knowledge of First Citizens, against any officer,
director or employee of any of them in their capacity as such. There are no
actions, suits or proceedings instituted, pending or, to the best knowledge of
First Citizens, threatened against any present
A-16
<PAGE>
or former director or officer of First Citizens or any First Citizens
Subsidiary that would reasonably be expected to give rise to a claim against
First Citizens or any First Citizens Subsidiary for indemnification. There are
no actual or, to the best knowledge of First Citizens, threatened actions,
suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or in the BB&T Option Agreement. To the best
knowledge of First Citizens, no fact or condition relating to First Citizens
or any First Citizens Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent First Citizens or BB&T from
obtaining all of the federal and state regulatory approvals contemplated
herein.
3.17 Compliance with Laws; Filings
Each of First Citizens and each First Citizens Subsidiary is in compliance
with all statutes and regulations (including, but not limited to, the CRA, the
TILA and regulations promulgated thereunder, and other consumer banking laws),
and has obtained and maintained all permits, licenses and registrations
applicable to the conduct of its business, and neither First Citizens nor any
First Citizens Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation, (ii) threatening to revoke any permit, license, registration,
or other government authorization, or (iii) restricting or in any way limiting
its operations. Neither First Citizens nor any First Citizens 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 March 31, 1995, First Citizens and each of the First Citizens
Subsidiaries have filed all reports, registrations, notices and statements,
and any amendments thereto, that it was required to file with federal and
state regulatory authorities, including, without limitation, the OTS,
Commission, FDIC, Federal Reserve Board and applicable state Regulators. Each
such report, registration, notice and statement, and each amendment thereto,
complied with applicable legal requirements.
3.18 Brokers and Finders
Neither First Citizens nor any First Citizens Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder
or financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, in the Plan of Merger or
in the BB&T Option Agreement, except for an obligation payable at the Closing
to the Financial Advisor, the nature and extent of which has been Disclosed,
for investment banking services, and except for fees to accountants and
lawyers.
3.19 Repurchase Agreements; Derivatives
(a) With respect to all agreements currently outstanding pursuant to which
First Citizens or any First Citizens Subsidiary has purchased securities
subject to an agreement to resell, First Citizens or the First Citizens
Subsidiary has a valid, perfected first lien or security interest in the
securities or other collateral securing such agreement, and the value of such
collateral equals or exceeds the amount of the debt secured thereby. With
respect to all agreements currently outstanding pursuant to which First
Citizens or any First Citizens Subsidiary has sold securities subject to an
agreement to repurchase, neither First Citizens nor the First Citizens
Subsidiary has pledged collateral in excess of the amount of the debt secured
thereby. Neither First Citizens nor any First Citizens Subsidiary has pledged
collateral in excess of the amount required under any interest rate swap or
other similar agreement currently outstanding.
(b) Neither First Citizens nor any First Citizens 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.
A-17
<PAGE>
3.20 Deposit Accounts
The deposit accounts of the First Citizens Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by
federal law, and the First Citizens Subsidiaries have paid all premiums and
assessments and filed all reports required to have been paid or filed under
all rules and regulations applicable to the FDIC.
3.21 Related Party Transactions
First Citizens has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
First Citizens or any First Citizens Subsidiary is a party with any director,
executive officer or 5% shareholder of First Citizens or any person,
corporation, or enterprise controlling, controlled by or under common control
with any of the foregoing. All such transactions, investments and loans are on
terms no less favorable to First Citizens than could be obtained from
unrelated parties.
3.22 Certain Information
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of First Citizens to vote on the Plan of Merger, the
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by First Citizens, (i)
shall comply with the applicable provisions of the Securities Laws, and (ii)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
3.23 Tax and Regulatory Matters
Neither First Citizens nor any First Citizens Subsidiary has taken or agreed
to take any action which would or could reasonably be expected to (i) cause
the Merger not to be accounted for as a pooling-of-interests or not to
constitute a reorganization under Section 368 of the Code or (ii) impede or
delay receipt of any consents of regulatory authorities referred to in Section
5.4(b) or result in failure of the condition in Section 6.3(b).
3.24 State Takeover Laws
First Citizens and each First Citizens 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.
3.25 Labor Relations
Neither First Citizens nor any First Citizens Subsidiary is the subject of
any claim or allegation that it has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state law) or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment, nor is First Citizens or any First Citizens
Subsidiary party to any collective bargaining agreement. There is no strike or
other labor dispute involving First Citizens or any First Citizens Subsidiary,
pending or threatened, or to the best knowledge of First Citizens, is there
any activity involving any employees of First Citizens or any First Citizens
Subsidiary seeking to certify a collective bargaining unit or engaging in any
other organization activity.
3.26 Fairness Opinion
First Citizens has received from the Financial Advisor an opinion that, as
of the date hereof, the Merger Consideration is fair to the shareholders of
First Citizens from a financial point of view.
A-18
<PAGE>
ARTICLE IV
Representations and Warranties of BB&T
BB&T represents and warrants to First Citizens as follows (the
representations and warranties herein of BB&T are made subject to the
applicable standard set forth in Section 6.2(a), and no such representation or
warranty shall be deemed to be inaccurate unless the inaccuracy would permit
First Citizens to refuse to consummate the Merger under such applicable
standard):
4.1 Capital Structure of BB&T
The authorized capital stock of BB&T consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which 2,000,000 shares have
been designated as Series B Junior Participating Preferred Stock and the
remainder are undesignated, and none of which shares are issued and
outstanding, and (ii) 500,000,000 shares of BB&T Common Stock of which
290,210,766 shares were issued and outstanding on December 31, 1998. All
outstanding shares of BB&T Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. The shares of BB&T Common Stock
reserved as provided in Section 5.3 are free of any Rights and have not been
reserved for any other purpose, and such shares are available for issuance as
provided pursuant to the Plan of Merger. Holders of BB&T Common Stock do not
have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
BB&T is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
(a) BB&T has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals) perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of BB&T. This Agreement and the Plan of Merger attached hereto constitute
legal, valid and binding obligations of BB&T, and each is enforceable against
BB&T in accordance with its terms, in each case subject to (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship, receivership or other
similar laws in effect from time to time relating to or affecting the
enforcement of the rights of creditors; and (ii) general principles of equity.
(b) Neither the execution and delivery of this Agreement or the Articles of
Merger, nor consummation of the transactions contemplated hereby, nor
compliance by BB&T with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of BB&T or any BB&T Subsidiary, (ii) constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of BB&T or any BB&T Subsidiary pursuant
to, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to BB&T or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing
with, or consent of, any public body or authority is necessary for the
consummation by BB&T of the Merger and the other transactions contemplated in
this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
Each of the BB&T Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. BB&T owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of the
A-19
<PAGE>
BB&T Subsidiaries. Each of the BB&T Subsidiaries (i) has full power and
authority to carry on its business as now conducted and (ii) is duly qualified
to do business in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or the conduct of its business
requires such qualification.
4.5 Securities Documents; Statements True
BB&T has timely filed all Securities Documents required by the Securities
Laws to be filed since December 31, 1995. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by BB&T or any other BB&T Subsidiary to
First Citizens contains or will contain any untrue statement of material fact
or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.6 Financial Statements
The Financial Statements of BB&T fairly present or will fairly present, as
the case may be, the consolidated financial position of BB&T and the BB&T
Subsidiaries as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity and changes in cash flows for the
periods then ended (subject, in the case of unaudited interim statements, to
the absence of any notes and to normal year-end audit adjustments that are not
material in amount or effect) in conformity with GAAP consistently applied.
4.7 Certain Information
When the Proxy Statement/Prospectus is mailed, and at all times subsequent
to such mailing up to and including the time of the meeting of shareholders of
First Citizens to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of
the Securities Laws, and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
4.8 Tax and Regulatory Matters
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any action
which would or could reasonably be expected to (i) cause the Merger not to be
accounted for as a pooling-of-interests or not to constitute a reorganization
under Section 368 of the Code, or (ii) materially impede or delay receipt of
any consents of regulatory authorities referred to in Section 5.4(b) or result
in failure of the condition in Section 6.3(b).
4.9 Share Ownership
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of First Citizens Common Stock.
4.10 Legal Proceedings; Regulatory Approvals
There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings instituted, which present a claim to restrain or prohibit
the transactions contemplated herein. To the best knowledge of BB&T, no fact
or condition relating to BB&T or any BB&T Subsidiary exists (including,
without limitation, noncompliance with the CRA) that would prevent BB&T or
First Citizens from obtaining all of the federal and state regulatory
approvals contemplated herein.
A-20
<PAGE>
ARTICLE V
Covenants
5.1 First Citizens Shareholder Meeting
First Citizens shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and
by approving execution of this Agreement, the Board of Directors of First
Citizens agrees that it shall, at the time the Proxy Statement/Prospectus is
mailed to the shareholders of First Citizens, recommend that First Citizens'
shareholders vote for such approval; provided, that the Board of Directors of
First Citizens may withdraw or refuse to make such recommendation only if the
Board of Directors shall determine in good faith that such recommendation
should not be made in light of its fiduciary duty to First Citizens'
shareholders after consideration of (i) written advice of legal counsel that,
in the opinion of such counsel, such recommendation or the failure to withdraw
or modify such recommendation would more likely than not constitute a breach
of the fiduciary duty of the Board of Directors to the shareholders of First
Citizens, and (ii) either (A) the written withdrawal by the Financial Advisor
of its opinion referred to in Section 3.26 or (B) the delivery to the Board of
Directors of written advice from the Financial Advisor that the Merger
Consideration is either not fair or inadequate to the First Citizens
shareholders 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. First Citizens 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 First Citizens shall use their
reasonable best efforts to cause the Proxy Statement/Prospectus to be approved
by the Commission for mailing to the First Citizens shareholders, and such
Proxy Statement/Prospectus shall, on the date of mailing, conform in all
material respects to the requirements of the Securities Laws and the
applicable rules and regulations of the Commission thereunder. First Citizens
shall cause the Proxy Statement/Prospectus to be mailed to shareholders in
accordance with all applicable notice requirements under the Securities Laws
and the GBCC.
5.3 Plan of Merger; Reservation of Shares
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T undertakes and agrees (i) to
adopt the Plan of Merger and (ii) to pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient
to effect the Merger, BB&T shall take all appropriate action as may be
required to increase the number of shares of BB&T Common Stock reserved for
such purpose.
5.4 Additional Acts
(a) First Citizens agrees to take such actions requested by BB&T as may be
reasonably necessary to modify the structure of, or to substitute parties to
(so long as such substitute is BB&T, a BB&T Subsidiary or any other Subsidiary
of BB&T) the transactions contemplated hereby, provided that such
modifications do not change the Merger Consideration or abrogate the covenants
and other agreements contained in this Agreement, including, without
limitation, the covenant not to take any action that would substantially delay
or impair the prospects of completing the Merger pursuant to this Agreement
and the Plan of Merger.
A-21
<PAGE>
(b) As promptly as practicable after the date hereof, BB&T and First
Citizens shall submit notice or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board and any other
federal, state or local government agency, department or body to which notice
is required or advisable, including without limitation the OTS, or from which
approval is required for consummation of the Merger and the other transactions
contemplated hereby. First Citizens and BB&T each represents and warrants to
the other that all information included (or submitted for inclusion)
concerning it, its respective Subsidiaries, and any of its respective
directors, officers and shareholders, shall be true, correct and complete in
all material respects as of the date presented.
(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)) to any individual who, subsequent to consummation
of the Merger, will be a director or officer of BB&T under Rule 16b-3 of the
Exchange Act.
5.5 Best Efforts
Each of BB&T and First Citizens shall use, and shall cause each of their
respective Subsidiaries to use, its best efforts in good faith to (i) furnish
such information as may be required in connection with and otherwise cooperate
in the preparation and filing of the documents referred to in Sections 5.2 and
5.4 or elsewhere herein, and (ii) take or cause to be taken all action
necessary or desirable on its part to fulfill the conditions in Article VI,
including, without limitation, executing and delivering, or causing to be
executed and delivered, such representations, certificates and other
instruments or documents as may be reasonably requested by BB&T's legal
counsel for such counsel to issue the opinion contemplated by Section 6.1(e),
and to consummate the transactions herein contemplated at the earliest
possible date. Neither BB&T nor First Citizens shall take, or cause, or to the
best of its ability permit to be taken, any action that would substantially
delay or impair the prospects of completing the Merger pursuant to this
Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
First Citizens shall cooperate with BB&T concerning accounting and financial
matters necessary or appropriate to facilitate the Merger (taking into account
BB&T's policies, practices and procedures), including, without limitation,
issues arising in connection with record keeping, loan classification,
valuation adjustments, levels of loan loss reserves and other accounting
practices; provided, that any action taken pursuant to this Section 5.6 shall
not be deemed to constitute or result in the breach of any representation or
warranty of First Citizens contained in this Agreement.
5.7 Access to Information
First Citizens and BB&T will each keep the other advised of all material
developments relevant to its business and the businesses of its Subsidiaries,
and to consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
First Citizens shall afford to representatives of BB&T access, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments and records of First Citizens and
the First Citizens Subsidiaries and, during such period, shall make available
all information concerning their businesses as may be reasonably requested. No
investigation pursuant to this Section 5.7 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations
hereunder of, either party hereto. Each party hereto shall, and shall cause
each of its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this 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.
A-22
<PAGE>
5.8 Press Releases
BB&T and First Citizens shall agree with each other as to the form and
substance of any press release related to this Agreement and the Plan of
Merger or the transactions contemplated hereby and thereby, and consult with
each other as to the form and substance of other public disclosures related
thereto; provided, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which in
the opinion of its counsel is required by law.
5.9 Forbearances of First Citizens
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, First Citizens shall not, and shall cause each of the
First Citizens Subsidiaries not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, or
establish or acquire any new Subsidiary or engage in any new type of
activity or expand any existing activities;
(b) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock, other than regularly scheduled quarterly
dividends of $0.10 per share of First Citizens Common Stock payable on
record dates and in amounts consistent with past practices; provided that
any dividend declared or payable on the shares of First Citizens Common
Stock for the quarterly period during which the Effective Time occurs
shall, unless otherwise agreed upon in writing by BB&T and First Citizens,
be declared with a record date prior to the Effective Time only if the
normal record date for payment of the corresponding quarterly dividend to
holders of BB&T Common Stock is before the Effective Time;
(c) issue any shares of its capital stock (including treasury shares),
except pursuant to the Stock Option Plans or the BB&T Option Agreement;
(d) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or encumbrance on
any share of stock held by it in any First Citizens Subsidiary, or permit
any such lien, charge or encumbrance to exist; or waive or release any
material right or cancel or compromise any debt or claim, in each case
other than in the ordinary course of business;
(g) merge with any other entity or permit any other entity to merge into
it, or consolidate with any other entity; acquire control over any other
entity; or liquidate, sell or otherwise dispose of any assets or acquire
any assets other than in the ordinary course of its business consistent
with past practices;
(h) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of
its business;
(i) increase the rate of compensation of any of its directors, officers
or employees (excluding increases in compensation resulting from the
exercise of compensatory stock options outstanding as of the date of this
Agreement), or pay or agree to pay any bonus to, or provide any new
employee benefit or incentive to, any of its directors, officers or
employees, except for increases or payments made in the ordinary course of
business consistent with past practice pursuant to plans or arrangements in
effect on the date hereof;
(j) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees; provided, however, that this subparagraph shall not prevent
renewal of any of the foregoing consistent with past practice;
(k) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
A-23
<PAGE>
portion of the assets of, or a substantial equity interest in, First
Citizens or any First Citizens Subsidiary or any business combination with
First Citizens or any First Citizens Subsidiary other than as contemplated
by this Agreement; or authorize any officer, director, agent or affiliate
of First Citizens or any First Citizens Subsidiary to do any of the above;
or fail to notify BB&T immediately if any such inquiries or proposals are
received, any such information is requested or required, or any such
negotiations or discussions are sought to be initiated; provided, that this
subsection (k) shall not apply to furnishing information, negotiations or
discussions following an unsolicited offer if, as a result of such offer,
First Citizens is advised in writing by legal counsel that in its opinion
the failure to so furnish information or negotiate would likely constitute
a breach of the fiduciary duty of First Citizens' Board of Directors to the
First Citizens shareholders;
(l) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any agreement, indenture or
other instrument not made in the ordinary course of business relating to
the borrowing of money by First Citizens or a First Citizens Subsidiary or
guarantee by First Citizens or a First Citizens Subsidiary of any
obligation, (iii) any agreement, arrangement or commitment relating to the
employment or severance of a consultant or the employment, severance,
election or retention in office of any present or former director, officer
or employee (this clause shall not apply to the election of directors by
shareholders or the reappointment of officers in the normal course), or
(iv) any contract, agreement or understanding with a labor union;
(m) change its lending, investment or asset liability management policies
in any material respect, except as may be required by applicable law,
regulation, or directives, and except that after approval of the Agreement
and the Plan of Merger by its shareholders and after receipt of the
requisite regulatory approvals for the transactions contemplated by this
Agreement and the Plan of Merger, First Citizens shall cooperate in good
faith with BB&T to adopt policies, practices and procedures consistent with
those utilized by BB&T, effective on or before the Closing Date;
(n) change its methods of accounting in effect at March 31, 1998, except
as required by changes in GAAP concurred in by BB&T, which concurrence
shall not be unreasonably withheld, or change any of its methods of
reporting income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns for the year
ended March 31, 1998, except as required by changes in law or regulation;
(o) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $25,000, for any one expenditure, or
$100,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse
repurchase arrangements in the ordinary course of business;
(q) take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling-of-interests or not
to constitute a reorganization under Section 368 of the Code as determined
by BB&T, (ii) result in any inaccuracy of a representation or warranty
herein which would allow for a termination of this Agreement, or (iii)
cause any of the conditions precedent to the transactions contemplated by
this Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary course of
business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements with Tom Moat substantially in the form of Annex B hereto, with
Charles M. Barnes substantially in the form of Annex C hereto, with Donald C.
Phillips substantially in the form of Annex D hereto and with Douge Heartha
substantially in the form of Exhibit E hereto.
A-24
<PAGE>
5.11 Affiliates
First Citizens shall use its best efforts to cause all persons who are
Affiliates of First Citizens to deliver to BB&T promptly following this
Agreement a written agreement providing that such person will not dispose of
BB&T Common Stock received in the Merger except in compliance with the
Securities Act and the rules and regulations promulgated thereunder and except
as consistent with qualifying the transactions contemplated hereby for pooling
of interests accounting treatment, and in any event shall use its best efforts
to cause such affiliates to deliver to BB&T such written agreement prior to
the Closing Date.
5.12 Section 401(k) Plan; Other Employee Benefits
(a) BB&T shall cause the 401(k) plan of First Citizens 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 First Citizens or the First Citizens
Subsidiaries who are participants in the First Citizens 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, except as required to comply with the provisions of Section 411(d)(6) of
the Code and Regulations thereunder (and subject to BB&T's right to terminate
such plan). For purposes of administering the 401(k) plan, service with First
Citizens and the First Citizens Subsidiaries shall be deemed to be service
with BB&T or the BB&T Subsidiaries for participation and vesting purposes, but
not for purposes of benefit accrual.
(b) Each employee of First Citizens at the Effective Time who becomes an
employee immediately following the Effective Time of BB&T, a BB&T Subsidiary
or any other Subsidiary of BB&T ("Employer Entity") shall be eligible to
participate in the group hospitalization, medical, dental, life, disability
and other welfare benefit plans and programs available to employees of the
Employer Entity, subject to the terms of such plans and programs; provided,
that service with First Citizens shall be deemed to be service with the
Employer Entity for the purpose of determining eligibility to participate and
vesting (if applicable) in such welfare plans and programs, but not for the
purpose of computing benefits, if any, determined in whole or in part with
reference to service. In addition, if the first plan year of participation by
First Citizens employees and their dependents in the group health plan of any
Employer Entity is a partial plan year, the Employer Entity shall cause its
group health plan to credit toward deductible and other out-of-pocket
limitations any expenses incurred by such persons under First Citizens' group
health plan during that portion of the Employer Entity's plan year during
which such persons were covered under First Citizens' group health plan.
(c) Each employee of First Citizens or a First Citizens Subsidiary who
becomes an employee of an Employer Entity and is terminated by such or another
Employer Entity subsequent to the Effective Time, excluding any employee who
has an existing employment or special termination agreement which is
Disclosed, shall be entitled to severance pay in accordance with the general
severance policy maintained by BB&T, if and to the extent that such employee
is entitled to severance pay under such policy. Such employee's service with
First Citizens or a First Citizens Subsidiary shall be treated as service with
BB&T for purposes of determining the amount of severance pay, if any, under
BB&T's severance policy.
(d) BB&T agrees to honor all employment agreements, severance agreements and
deferred compensation agreements that First Citizens and the First Citizens
Subsidiaries have with their current and former employees and directors and
which have been Disclosed to BB&T pursuant to this Agreement, except to the
extent any such agreements shall be superseded or terminated at the Closing or
following the Closing Date. Except for the agreements described in the
preceding sentence, the Stock Option Plans, First Citizens' employee stock
purchase plan and other employee benefit plans of First Citizens shall be
terminated as of the Effective Time.
(e) BB&T shall provide, to the extent required by Section 4980B of the Code
and Section 601 et seq. of ERISA, health continuation coverage satisfying for
any First Citizens employee and eligible dependents thereof who incur a
"qualifying event," as defined therein, on or prior to the Closing Date.
A-25
<PAGE>
5.13 Directors and Officers Protection
BB&T or a BB&T Subsidiary shall provide and keep in force for a period of
three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of First Citizens for
acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in First Citizens'
policy on the date hereof; provided, that in no event shall the annual premium
on such policy exceed 150% of the annual premium payments on First Citizens'
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 First Citizens or any First Citizens
Subsidiary prior to the Effective Time from any acts or omissions in such
capacities prior to the Effective Time, to the extent that such
indemnification is provided pursuant to the Articles of Incorporation or
Bylaws of First Citizens on the date hereof and is permitted under the NCBCA.
5.14 Forbearances of BB&T
Except with the prior written consent of First Citizens, which consent shall
not be arbitrarily or unreasonably withheld, between the date hereof and the
Effective Time, neither BB&T nor any BB&T Subsidiary shall take any action
which would or might be expected to (i) cause the business combination
contemplated hereby not to be accounted for as a pooling-of-interests or not
to constitute a reorganization under Section 368 of the Code; (ii) result in
any inaccuracy of a representation or warranty herein which would allow for
termination of this Agreement; (iii) cause any of the conditions precedent to
the transactions contemplated by this Agreement to fail to be satisfied; (iv)
exercise the BB&T Option Agreement other than in accordance with its terms, or
dispose of the shares of First Citizens Common Stock issuable upon exercise of
the option rights conferred thereby other than as permitted by the terms
thereof; or (v) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to the
conduct of its business.
5.15 Reports
Each of First Citizens and BB&T shall file (and shall cause the First
Citizens Subsidiaries and the BB&T Subsidiaries, respectively, to file),
between the date of this Agreement and the Effective Time, all reports
required to be filed by it with the Commission and any other regulatory
authorities having jurisdiction over such party, and shall deliver to BB&T or
First Citizens, as the case may be, copies of all such reports promptly after
the same are filed. If financial statements are contained in any such reports
filed with the Commission, such financial statements will fairly present the
consolidated financial position of the entity filing such statements as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to the absence
of notes and to normal recurring year-end adjustments that are not material).
As of their respective dates, such reports filed with the Commission will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to a
regulatory authority other than the Commission shall be prepared in accordance
with requirements applicable to such reports.
5.16 Exchange Listing
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of First Citizens 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.
A-26
<PAGE>
5.17 Advisory Board for Georgia Market Area
As of the Effective Time, BB&T shall offer to each of the members of the
Board of Directors of First Citizens a seat on the Advisory Board for the
Atlanta, Georgia area. For two years following the Effective Time, the
Advisory Board members appointed pursuant to this Section 5.17 and who
continue to serve shall receive, as compensation for service on the Advisory
Board, Advisory Board member's fees (annual retainer and attendance fees)
equal in amount each year (prorated for any partial year) to the annual
retainer and schedule of attendance fees for directors of First Citizens in
effect on January 1, 1999. Following such two-year period, Advisory Board
Members, if they continue to serve in such capacity, shall receive fees in
accordance with BB&T's standard schedule of fees for service thereon as in
effect from time to time. For two years after the Effective Time, no such
Advisory Board member shall be prohibited from serving thereon because he or
she shall have attained the maximum age for service thereon (currently age
70). First Citizens shall use its best efforts to cause each member of its
Board of Directors to enter into an agreement with BB&T on or before the
Closing Date providing that such member will not engage in activities
competitive with BB&T for two years following the Effective Time.
5.18 Board of Directors of BB&T
As of the Effective Time, Branch Banking and Trust Company, a North Carolina
banking corporation, shall elect J. Littleton Glover, Jr. to its Board of
Directors, to serve until its next annual meeting (subject to the right of
removal for cause) and thereafter so long as he is elected and qualifies.
5.19 No Sale of Jefferson Property
Except as set forth in the Agreement for the Sale and Purchase of Real
Estate dated July 16, 1996 by and between Peachtree City Holdings, L.L.C. and
Jefferson Ventures, Inc., as amended on December , 1996 and February 25,
1997, First Citizens shall not, and shall cause each of the First Citizens
Subsidiaries not to, sell or agree to sell all or any part of the real
property owned by Jefferson Ventures, Inc. after the date hereof without the
prior written consent of BB&T.
ARTICLE VI
Conditions Precedent
6.1 Conditions Precedent--BB&T and First Citizens
The respective obligations of BB&T and First Citizens to effect the
transactions contemplated by this Agreement shall be subject to satisfaction
or waiver of the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the Plan of Merger, and consummation
of the transactions contemplated hereby and thereby, shall have been duly
and validly taken, including, without limitation, the approval of the
shareholders of First Citizens of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall
be pending or to the knowledge of BB&T threatened by the Commission to
suspend the effectiveness of such Registration Statement and the BB&T
Common Stock to be issued as contemplated in the Plan of Merger shall have
either been registered or be subject to exemption from registration under
applicable state securities laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement and the
Plan of Merger, all notice periods and waiting periods with respect to such
approvals shall have passed and all such approvals shall be in effect;
(d) None of BB&T, any of the BB&T Subsidiaries, First Citizens or any of
the First Citizens 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;
A-27
<PAGE>
(e) First Citizens and BB&T shall have received an opinion of BB&T's
legal counsel, in form and substance satisfactory to First Citizens and
BB&T, substantially to the effect that the Merger will constitute one or
more reorganizations under Section 368 of the Code and that the
shareholders of First Citizens will not recognize any gain or loss to the
extent that such shareholders exchange shares of First Citizens 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-interests accounting treatment.
6.2 Conditions Precedent--First Citizens
The obligations of First Citizens to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction of the following
additional conditions at or prior to the Effective Time, unless waived by
First Citizens pursuant to Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in
writing by First Citizens. The representations and warranties of BB&T set
forth in Sections 4.1, 4.2 (except as relates to qualification), 4.3(a),
4.3(b)(i) and 4.4 (except as relates to qualification) shall be true and
correct (except for inaccuracies which are de 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 First Citizens a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.1(d), 6.2(a) and 6.2(b) hereof, to the extent applicable
to BB&T, have been satisfied and that there are no actions, suits, claims,
governmental investigations or procedures instituted, pending or, to the
best of such officer's knowledge, threatened that reasonably may be
expected to have a Material Adverse Effect on BB&T or that present a claim
to restrain or prohibit the transactions contemplated herein or in the Plan
of Merger.
(d) First Citizens shall have received opinions of counsel to BB&T in the
form reasonably acceptable to First Citizens' 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 First Citizens 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
A-28
<PAGE>
designated in the case of any representation and warranty which
specifically relates to an earlier date), except as otherwise contemplated
by this Agreement or consented to in writing by BB&T. The representations
and warranties of First Citizens set forth in Sections 3.1, 3.2 (except the
last sentence thereof), 3.3, 3.4 (except the last sentence thereof),
3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be true and correct (except for
inaccuracies which are de minimis in amount). There shall not exist
inaccuracies in the representations and warranties of First Citizens set
forth in this Agreement (including the representations and warranties set
forth in the Sections designated in the preceding sentence) such that the
effect of such inaccuracies individually or in the aggregate has, or is
reasonably likely to have, a Material Adverse Effect on First Citizens and
the First Citizens Subsidiaries taken as a whole.
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of
BB&T, would so materially adversely affect the business or economic
benefits to BB&T of the transactions contemplated by this Agreement as to
render consummation of such transactions inadvisable or unduly burdensome.
(c) First Citizens shall have performed in all material respects all
obligations and complied in all material respects with all covenants
required by this Agreement.
(d) First Citizens shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that
the conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c)
hereof, to the extent applicable to First Citizens, 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 First Citizens or that present a claim to restrain or prohibit
the transactions contemplated herein or in the Plan of Merger.
(e) BB&T shall have received opinions of counsel to First Citizens in the
form reasonably acceptable to BB&T's legal counsel.
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 hereof to the extent necessary, in the reasonable
judgment of BB&T, to 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) hereof in the case of First Citizens and Section 6.3(a) hereof in
the case of BB&T; and, in the case of (i) or (ii), if such breach or
inaccuracy has not been cured by the earlier of thirty days following
written notice of such breach to the party committing such breach or the
Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be
satisfied or fulfilled prior to the Closing Date, and the party giving the
notice is not in breach of any of its representations, warranties,
covenants or undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 hereof are
denied, and the time period for appeals and requests for reconsideration
has run.
A-29
<PAGE>
(e) At any time, by either party hereto in writing, if the shareholders
of First Citizens do not approve the Agreement and the Plan of Merger.
(f) At any time following August 31, 1999 by either party hereto in
writing, if the Effective Time has not occurred by the close of business on
such date, and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to 11:59 p.m. on March 15, 1999 by BB&T in writing,
if BB&T determines in its sole good faith judgment, through review of
information Disclosed by First Citizens, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Citizens and of the First Citizens Subsidiaries, taken as a whole, are
materially adversely different from BB&T's reasonable expectations with
respect thereto on the date of execution of this Agreement; provided that
BB&T shall inform First Citizens upon such termination as to the reasons
for BB&T's determination. The fact that First Citizens has Disclosed
information shall not prevent BB&T from terminating this Agreement pursuant
to this Section 7.1(g) on account of such information.
(h) By First Citizens at any time during the five-day period commencing
after the Determination Date if both of the following conditions are
satisfied:
(1) the Closing Value shall be less than $32.67; and
(2) (i) the quotient obtained by dividing the Closing Value by
$38.4375 (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 First Citizens
determines not to consummate the Merger pursuant to this Section 7.1(h), it
shall give prompt written notice of its election to terminate to BB&T, which
notice may be withdrawn at any time prior to the lapse of the ten-day period
commencing on the Determination Date. During the five-day period commencing
with its receipt of such notice, BB&T shall have the option, with respect to a
failure to satisfy the condition in clause (1), to elect to increase the
Exchange Ratio to a number such that the value (based on the Closing Value) of
the amount of BB&T Common Stock to be received in the Merger for each share of
First Citizens Common Stock shall equal the value (based on the Closing Value)
that would have been received if the Closing Value were $32.67. The election
contemplated by the preceding sentence shall be made by giving notice to First
Citizens of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 7.1(h), and this
Agreement shall remain in effect in accordance with its terms (except as the
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(h). 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(h), the following terms shall have the
meanings indicated:
"Closing Value" shall have the meaning provided in Section 2.7(b).
"Determination Date" shall mean the tenth calendar day preceding the date
designated by BB&T as the Closing Date.
"Index Group" shall mean the 12 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination
Date, any public announcement of a proposal for such company to be acquired or
for such company to acquire another company or companies in transactions with
a value exceeding 25% of the acquiror's market capitalization. In the event
that any such company or companies are removed from the Index Group, the
weights (which have been determined based upon the number of shares of
outstanding common stock) shall be
A-30
<PAGE>
redistributed proportionately for purposes of determining the Index Price. The
12 bank holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
%
Bank Holding Companies Weighting
---------------------- ---------
<S> <C>
Wachovia Corporation............................................ 9.64
Fifth Third Bancorp............................................. 12.69
Comerica Incorporation.......................................... 7.40
Summit Bancorp.................................................. 8.23
Mercantile Bancorporation, Inc.................................. 7.48
First Security Corporation...................................... 8.95
Huntington Bancshares Inc....................................... 10.06
SouthTrust Corporation.......................................... 7.86
Regions Financial Corporation................................... 10.52
Marshall & Ilsley Corp.......................................... 5.05
AmSouth Bancorporation.......................................... 5.67
Union Planters Corp............................................. 6.45
------
Total........................................................... 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted average (weighted in
accordance with the "% Weighting" listed above) of the closing sales prices of
the companies composing the Index Group (determined as provided with respect
to the Closing Value).
"Starting Date" shall mean the date of this Agreement.
If any company belonging to the Index Group or BB&T declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or BB&T
shall be appropriately adjusted for the purposes of applying this Section
7.1(h).
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated pursuant to
Section 7.1 hereof, both this Agreement and the Plan of Merger shall become
void and have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1 hereof,
respectively, shall survive any such termination and (ii) a termination
pursuant to Section 7.1(b) hereof shall not relieve the breaching party from
liability for a breach of the covenant, agreement, representation or warranty
giving rise to such termination. The BB&T Option Agreement shall be governed
by its own terms.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or the Plan
of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other
than covenants that by their terms are to be performed after the Effective
Time (including Sections 5.13, 5.17 and 5.18), provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive BB&T or First Citizens (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
First Citizens, the aforesaid representations, warranties and covenants being
material inducements to consummation by BB&T and First Citizens of the
transactions contemplated herein.
A-31
<PAGE>
7.4 Waiver
Except with respect to any required regulatory approval, each party hereto,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of the Agreement and the Plan of Merger
by the First Citizens shareholders) extend the time for the performance of any
of the obligations or other acts of the other party hereto and may waive (i)
any inaccuracies of the other party in the representations or warranties
contained in this Agreement, the Plan of Merger or any document delivered
pursuant hereto or thereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other party, or satisfaction of any of the
conditions precedent to its obligations, contained herein or in the Plan of
Merger, or (iii) the performance by the other party of any of its obligations
set out herein or therein; provided that no such extension or waiver, or
amendment or supplement pursuant to this Section 7.4, executed after approval
by the First Citizens shareholders of this Agreement and the Plan of Merger,
shall reduce either the Exchange Ratio or the payment terms for fractional
interests.
7.5 Amendment or Supplement
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of BB&T and First Citizens, subject to the
proviso to Section 7.4.
ARTICLE VIII
Miscellaneous
8.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Agreement, including,
without limitation, fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and printing
costs incurred in connection with the Registration Statement and the Proxy
Statement/Prospectus shall be borne 50% by BB&T and 50% by First Citizens.
8.2 Entire Agreement
This Agreement, including the documents and other writings referenced herein
or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto,
written or oral, entered into on or before the date hereof. The terms and
conditions of this Agreement and the BB&T Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and thereto and their
respective successors. Nothing in this Agreement or the BB&T Option Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and thereto, and their respective successors, any rights,
remedies, obligations or liabilities, except for the rights of directors and
officers of First Citizens to enforce rights in Sections 5.13, 5.17 and 5.18.
8.3 No Assignment
Except for a substitution of parties pursuant to Section 5.4(a), none of the
parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent
by nationally recognized overnight express courier or by facsimile
transmission, addressed or directed as follows:
A-32
<PAGE>
If to First Citizens:
Tom Moat
J. Littleton Glover, Jr.
First Citizens Corporation
19 Jefferson Street
Newnan, Georgia 30263
Telephone: 770-253-5017
Fax: 770-683-6010
With a required copy to:
Walter G. Moeling, IV
Powell, Goldstein, Frazer and Murphy LLP
191 Peachtree Street, N.E., Sixteenth Floor
Atlanta, Georgia 30303
Telephone: 404-572-6600
Fax: 404-572-6999
If to BB&T:
Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 336-733-3088
Fax: 336-733-2296
With a required copy to:
William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 336-721-3624
Fax: 336-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Specific Performance
First Citizens acknowledges that the First Citizens Common Stock and the
First Citizens business and assets are unique, and that if First Citizens
fails to consummate the transactions contemplated by this Agreement such
failure will cause irreparable harm to BB&T for which there will be no
adequate remedy at law, BB&T shall be entitled, in addition to its other
remedies at law, to specific performance of this Agreement if First Citizens
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.
A-33
<PAGE>
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their
duly authorized officers, all as of the day and year first above written.
BB&T Corporation
/s/ John A. Allison, IV
By: _________________________________
Name: John A. Allison, IV
Title: Chairman and CEO
FIRST CITIZENS CORPORATION
/s/ J. Littleton Glover
By: _________________________________
Name: J. Littleton Glover
Title: Chairman
A-34
<PAGE>
APPENDIX B
January 25, 1999
Board of Directors
First Citizens Corporation
19 Jefferson Street
Newnan, GA 30263
Gentlemen:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of First Citizens Corporation (the "Company") of the
Exchange Ratio in connection with its proposed merger with BB&T Corporation
("BB&T") (the "Transaction") pursuant to and in accordance with the terms of
the Agreement and Plan of Reorganization (the "Agreement") entered into by and
between BB&T and the Company. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Agreement.
You have advised us that, pursuant to the Agreement, BB&T and the Company
will merge (the "Merger") with and into BB&T and that the Company's banking
subsidiary will become a wholly owned bank subsidiary of BB&T. Each share of
the Company's Common Stock (excluding shares held by Company shareholders who
have perfected their dissenter' rights of appraisal) issued and outstanding at
the Effective Time shall be converted into 1.0789 shares of BB&T Common Stock.
In addition, each stock option outstanding shall be converted at the above
Exchange Ratio into and become rights with respect to BB&T Common Stock.
Morgan Keegan & Company, Inc. ("Morgan Keegan"), as part of its investment
banking business, is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various purposes. We have been retained by the Board of
Directors of the Company to serve as its financial advisor. Morgan Keegan will
receive a fee for serving as financial advisor and for rendering this opinion.
We have not advised any party in connection with the Transaction other than
the Company and we make no recommendation to the shareholders of the Company.
In connection with our opinion, we have (1) reviewed the Agreement; (2) held
discussions with various members of management and representatives of the
Company and BB&T concerning each company's historical and current operations,
financial condition and prospects; (3) reviewed historical consolidated
financial and operating data that was publicly available or furnished to us by
the Company and BB&T; (4) reviewed internal financial analyses, financial and
operating forecasts, reports and other information prepared by officers and
representatives of the Company; (5) reviewed certain publicly available
information with respect to certain other companies that we believe to be
comparable to the Company and BB&T and the trading markets for such other
companies' securities; (6) reviewed certain publicly available information
concerning the terms of certain other transactions that we deemed relevant to
our inquiry; (7) considered the relative contributions of the Company and BB&T
to the combined company; and (8) conducted such other financial studies,
analyses and investigations as we deemed appropriate for the purpose of this
opinion.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information provided us or publicly available and have assumed and
relied upon the representations and warranties of the Company and BB&T
contained in the Agreement. We have not been engaged to, and have not
independently attempted to, verify any of such information. We have also
relied upon the managements of the Company and BB&T as to the reasonableness
and achievability of the financial and operating projections and the
assumptions and bases therefor provided to us and, with your consent, we have
assumed that such projections reflect the best currently available estimates
and judgments of such respective managements of the Company and BB&T and that
such projections and forecasts will be realized in the amounts and time
periods currently estimated by the managements of the Company and BB&T. We
have not been engaged to assess the achievability of such projections or the
assumptions on which they were based and
B-1
<PAGE>
express no view as to such projections or assumptions. In addition, we have
not conducted a physical inspection or appraisal of any of the assets,
properties or facilities of either the Company or BB&T nor have we been
furnished with any such evaluation or appraisal. We have also assumed that the
conditions to the Transaction would be consummated on a timely basis in the
manner contemplated in the Agreement. Our opinion is based upon analyses of
the foregoing factors in light of our assessment of general economic,
financial and market conditions as they exist and can be evaluated by us as of
the date hereof. We express no opinion as to the price or trading range at
which shares of BB&T Common Stock will trade following the date hereof, or the
price or trading range at which BB&T Common Stock will trade upon completion
of the Transaction.
Morgan Keegan has not previously provided investment banking services, but
has provided fixed income services, to the Company. In the ordinary course of
business, we do not serve as a market maker for the Company or BB&T Common
Stock and do not trade shares for our own account. However, we may trade
shares for our customers.
It is understood that this opinion is not to be quoted or referred to, in
whole or in part (including excerpts or summaries), in any filing, report,
document, release or other communication used in connection with the
Transaction (unless required to be quoted or referred to by applicable
regulatory requirements), nor shall this opinion be used for any other
purposes, without our prior written consent, which consent shall not be
unreasonably withheld. Furthermore, our opinion is directed to the Board of
Directors of the Company and does not constitute a recommendation to any
shareholder of the Company as to how such shareholder should vote at the
shareholders' meeting to be held in connection with the Transaction.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to the Company's
shareholders.
Yours very truly,
/s/ Morgan Keegan & Company, Inc.
_____________________________________
Morgan Keegan & Company, Inc.
B-2
<PAGE>
May 19, 1999
Board of Directors
First Citizens Corporation
19 Jefferson Street
Newman, GA 30263
Gentlemen:
By letter of January 25, 1999 (the "Prior Opinion"), we provided to you our
opinion relating to the proposed merger with BB&T Corporation. Subject to the
qualifications, conditions, and assumptions contained therein, we hereby
confirm to you the matters stated in our Prior Opinion, as if restated in
their entirety, as of this date.
Very truly yours,
/s/ Morgan Keegan & Company, Inc.
Morgan Keegan & Company, Inc.
B-3
<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, except that 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
out 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. (S)
1818(b)).
II-1
<PAGE>
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
------- -----------
<C> <S>
2 Agreement and Plan of Reorganization dated as of January 25, 1999
between BB&T Corporation and First Citizens Corporation (included as
Appendix A to the Proxy Statement/Prospectus)
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 Exhibit
5)
23(b) Consent of McGuire, Woods, Battle & Boothe, LLP (included in Exhibit
8)
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Mauldin & Jenkins, LLC
23(e) Consent of Morgan Keegan & Company, Inc.
24 Power of Attorney
99(a) Form of First Citizens Corporation Proxy Card
99(b) Option Agreement, dated January 26, 1999, between BB&T Corporation and
First Citizens Corporation
</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.
II-2
<PAGE>
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.
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 May 19, 1999.
BB&T Corporation
/s/ Jerone C. Herring
By: _________________________________
Jerone C. Herring
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 May 19, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John A. Allison IV* Chairman of the Board and Chief Executive
______________________________________ Officer (principal executive officer)
John A. Allison IV
/s/ Scott E. Reed* Senior Executive Vice President and Chief
______________________________________ Financial Officer (principal financial
Scott E. Reed officer)
/s/ Sherry A. Kellett* Executive Vice President and Controller
______________________________________ (principal accounting officer)
Sherry A. Kellett
/s/ Paul B. Barringer* Director
______________________________________
Paul B. Barringer
/s/ Alfred E. Cleveland* Director
______________________________________
Alfred E. Cleveland
/s/ W. R. Cuthbertson, Jr.* Director
______________________________________
W. R. Cuthbertson, Jr.
/s/ Ronald E. Deal* Director
______________________________________
Ronald E. Deal
/s/ A. J. Dooley, Sr.* Director
______________________________________
A. J. Dooley, Sr.
Director
______________________________________
Tom D. Efird
/s/ Paul S. Goldsmith* Director
______________________________________
Paul S. Goldsmith
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ L. Vincent Hackley* Director
______________________________________
L. Vincent Hackley
/s/ Jane P. Helm* Director
______________________________________
Jane P. Helm
/s/ Richard Janeway, M.D.* Director
______________________________________
Richard Janeway, M.D.
/s/ J. Ernest Lathem, M.D.* Director
______________________________________
J. Ernest Lathem, M.D.
/s/ James H. Maynard* Director
______________________________________
James H. Maynard
/s/ Joseph A. McAleer, Jr.* Director
______________________________________
Joseph A. McAleer, Jr.
/s/ Albert O. McCauley* Director
______________________________________
Albert O. McCauley
/s/ Richard L. Player, Jr.* Director
______________________________________
Richard L. Player, Jr.
/s/ C. Edward Pleasants, Jr.* Director
______________________________________
C. Edward Pleasants, Jr.
/s/ Nido R. Qubein* Director
______________________________________
Nido R. Qubein
/s/ E. Rhone Sasser* Director
______________________________________
E. Rhone Sasser
/s/ Jack E. Shaw* Director
______________________________________
Jack E. Shaw
/s/ Harold B. Wells* Director
______________________________________
Harold B. Wells
/s/ Jerone C. Herring
*By: _________________________________
Jerone C. Herring
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
Garza Baldwin, III
Direct Dial: 704-331-4907
Direct Fax: 704-338-7816
E-mail: [email protected]
May 19, 1999
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 by and between BB&T Corporation ("BB&T") and First Citizens
Corporation dated as of January 26, 1999 (the "Merger Agreement")
Ladies and Gentlemen:
We have acted as counsel to BB&T in connection with the registration of
3,352,846 shares of its Common Stock, par value $5.00 per share (the "Common
Stock"), issuable pursuant to the Merger 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 the shares of
Common Stock have been issued upon the terms and conditions set forth in the
Merger Agreement, the shares of Common Stock will be validly 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
GB/WAD
<PAGE>
Neil G. O'Rourke
Direct Dial: 336-721-3752
Direct Fax: 336-726-6997
E-mail: [email protected]
May 19, 1999
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 January 26, 1999 (the "Reorganization
Agreement"), by and between First Citizens Corporation, a Georgia
corporation ("First Citizens"), and BB&T Corporation, a North Carolina
corporation ("BB&T")
Ladies and Gentlemen:
We have acted as counsel to BB&T in connection with the registration of
3,352,846 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, First Citizens will merge into BB&T pursuant to North
Carolina and Georgia law, and each outstanding share of First Citizens 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. First
Citizens shareholders are 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 May 19, 1999 in which officers of First Citizens and officers
of BB&T make certain representations on behalf of First Citizens 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
<PAGE>
BB&T Corporation
May 19, 1999
Page 2
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) First Citizen'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 First Citizens 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 First Citizens 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 First Citizens or BB&T by
reason of the Merger.
(3) No gain or loss will be recognized by the shareholders of First
Citizens 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 First Citizens Common Stock.
(4) A shareholder of First Citizens 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 First
Citizens shareholder (including any fractional share interest
deemed received) will be the same as the tax basis in the First
Citizens Common Stock surrendered in exchange therefor.
(6) The holding period for BB&T Common Stock received (including any
fractional share interest deemed received) in exchange for shares
of First Citizens Common Stock will include the period during
which the shareholder held the shares of First Citizens Common
Stock surrendered in the exchange, provided
<PAGE>
BB&T Corporation
May 19, 1999
Page 3
that the First Citizens 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 First Citizens Common Stock do not
apply to any stock rights, warrants or options to acquire First Citizens Common
Stock. The opinions stated as to First Citizens shareholders are general in
nature and do not necessarily apply to any particular First Citizens
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 First Citizens 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-No Federal Income Tax on Shares Received in Merger,"
"THE MERGER--The Merger Agreement--Conditions to the Merger," "THE MERGER-
Material 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/ Neil G. O'Rourke
--------------------------
Neil G. O'Rourke
<PAGE>
EXHIBIT 23(c)
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 April 30, 1999,
included in BB&T Corporation's Form 8-K dated April 30, 1999, and to all
references to our firm included in this registration statement. Our report dated
January 29, 1999, 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
May 19, 1999
<PAGE>
EXHIBIT 23(d)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report included in First Citizens
Corporation's Annual Report on Form 10-KSB for the year ended March 31, 1998
incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the Proxy Statement/Prospectus.
/s/ MAULDIN & JENKINS, LLC
Atlanta, Georgia
May 19, 1999
<PAGE>
EXHIBIT 23(e)
CONSENT OF MORGAN KEEGAN & COMPANY, INC.
Pursuant to the penultimate paragraph of our letter to the Board of Directors of
First Citizens Corporation dated January 25, 1999, we hereby consent to the use
of our opinion attached as Appendix B to the Registration Statement on Form S-4
of BB&T Corporation, and confirmed as of this date, and to the references to
such opinion and to our firm contained in the section titled "-Opinion of
Financial Advisor to First Citizens" of the proxy statement/prospectus that is a
part of said Registration Statement.
May 19, 1999 /s/ MORGAN KEEGAN & COMPANY, INC.
<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 First Citizens Corporation, a Georgia
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 February 23, 1999.
/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/ Tom D. Efird /s/ Paul S. Goldsmith
- -------------------------------------- --------------------------------------
Name: Tom D. Efird Name: Paul S. Goldsmith
Title: Director Title: Director
/s/ L. Vincent Hackley
- --------------------------------------
Name: L. Vincent Hackley
Title: Director
/s/ Jane P. Helm /s/ Richard Janeway, M.D.
- -------------------------------------- --------------------------------------
<PAGE>
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/ 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
<PAGE>
PROXY
FIRST CITIZENS CORPORATION
19 Jefferson Street
Newnan, Georgia 30263
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
CITIZENS CORPORATION. The undersigned hereby appoints Charles M. Barnes and
Douglas Hertha and either of them, as Proxies, each with the power to appoint
substitutions, and hereby authorizes each of them to represent and to vote, as
designated on the reverse side hereof, all of the shares of Common Stock of
First Citizens Corporation held of record by the undersigned on May 17, 1999 at
the Special Meeting of Shareholders to be held on June 30, 1999 or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREBY
BY THE UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS PROPERLY EXECUTED BUT NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND
PLAN OF REORGANIZATION AND RELATED PLAN OF MERGER REFERENCED IN ITEM 1.
(See Reverse Side)
<PAGE>
1. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE the Agreement and Plan of
Reorganization dated as of January 26, 1999, and a related Plan of Merger,
pursuant to which First Citizens will merge with and into BB&T Corporation,
and each share of Common Stock of First Citizens outstanding immediately
prior thereto will be converted into the right to receive shares of Common
Stock of BB&T, as described in the accompanying proxy statement/prospectus.
[_] FOR [_] AGAINST [_] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon any other
business which properly comes before the meeting and any adjournments
thereof.
Please sign exactly as your name appears. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND MAIL THE
CARD IN THE ENCLOSED ENVELOPE.
DATED: __________________________, 1999
Signature______________________________________
DATED: __________________________, 1999
Signature______________________________________
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of January 26, 1999 by and between FIRST CITIZENS CORPORATION, a Georgia
corporation ("First Citizens" or "Issuer"), and BB&T CORPORATION, a North
Carolina corporation ("Grantee").
R E C I T A L S:
- - - - - - - -
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Reorganization, dated this date (the "Merger Agreement"), providing for,
among other things, the merger of Issuer with and into Grantee; and
WHEREAS, as a condition and inducement to Grantee's execution of the Merger
Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to
grant to Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 560,483 shares (as adjusted as set forth herein, the "Option Shares,"
which term shall refer to the Option Shares before and after any transfer of
such Option Shares), of the common stock of Issuer, par value $1.00 per share
("Issuer Common Stock"), at a purchase price per Option Share (subject to
adjustment as set forth herein, the "Purchase Price") equal to $27.50.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) subject to clause (E) below, termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (as hereinafter defined) (other than a termination
of the Merger Agreement by Grantee pursuant to Section 7.1(b)
<PAGE>
thereof (a "Default Termination")), (C) 12 months after a Default Termination,
(D) 12 months after any termination of the Merger Agreement (other than a
Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event, and (E) subject to clause (D) above, 12 months after
termination of the Merger Agreement pursuant to Section 7.1(e) thereof; provided
further, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law, including, without limitation, the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). Subject to
compliance with Section 12(h) hereof, the term "Holder" shall mean the holder or
holders of the Option from time to time, including initially Grantee. The rights
set forth in Section 8 hereof shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following events
subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its Subsidiaries (other than
transactions solely between Issuer's Subsidiaries or between Issuer's
Subsidiaries and Issuer), (B) the disposition, by sale, lease, exchange or
otherwise, of assets of Issuer or any of its Subsidiaries representing in
either case 15% or more of the consolidated assets of Issuer and its
Subsidiaries (other than a sale of loan receivables in a financing
transaction in the normal course of business consistent with past
practices), or (C) the issuance, sale or other disposition (including by
way of merger, consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or any of
its Subsidiaries; or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of the
Subsidiaries of Grantee is a member, shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 20%
or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 20% 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
-2-
<PAGE>
(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 First Citizens 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 First Citizens to issue the Option Shares or
Holder to exercise the Option, or until the expiration or termination of any
waiting period required by law, or (ii) so long as any injunction or other
order, decree or ruling issued by any federal or state court of competent
jurisdiction is in effect which prohibits the sale or delivery of the Option
Shares.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"). If prior consent
of any governmental or regulatory agency or authority is required in connection
with such purchase, Issuer shall cooperate with Holder in the filing of the
required notice or application for such consent and the obtaining of such
consent at Holder's expense, and the Closing shall occur not earlier than three
business days nor later than 15 business days following receipt of such consents
(and expiration of any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this Agreement
to the Issuer at the address of the Issuer referenced in Section 12(f) hereof.
-3-
<PAGE>
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no preemptive rights, and (B) if the Option
is exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter evidencing Holder's agreement not to offer, sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF JANUARY 26,
1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 hereof upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
-4-
<PAGE>
or other securities which may be issuable pursuant to Section 7 hereof, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges, and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) Grantee represents that it is acquiring the Option for Grantee's
own account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with and declared effective by the Commission
pursuant to Section 5 of the Securities Act, but instead each is being offered
in reliance upon the exemption from the registration requirement provided by
Section 4(2) thereof and the representations and warranties made by Grantee in
connection therewith. Grantee represents that neither the Option nor the Option
Shares will be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Laws, and that with
respect to any transfer or other disposition proposed to be made in reliance
upon an exemption from registration, such transfer or other disposition shall
not be made unless First Citizens 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, when added to the
number of shares of Issuer Common Stock previously issued pursuant hereto,
equals 19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
-5-
<PAGE>
(b) In the event that Issuer shall enter into an agreement (prior to
termination of the Option pursuant to Section 3(a) hereof): (i) to consolidate
with or merge into any person, other than Grantee or one of its Subsidiaries,
and Issuer shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one of
its Subsidiaries, to merge into Issuer, and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; (iii) to permit any person, other than
Grantee or one of its Subsidiaries, to acquire all of the outstanding shares of
Issuer Common Stock pursuant to a statutory share exchange; or (iv) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Grantee, deemed granted by either
(x) the Acquiring Corporation (as defined below), (y) any person that controls
the Acquiring Corporation, or (z) in the case of a merger described in clause
(ii), the Issuer (in each case, such person being referred to as the "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be identical to those of the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee. The Substitute Option Issuer shall
also enter into an agreement with the then-holder or holders of the Substitute
Option in substantially the same form as this Agreement, which agreement shall
be applicable to the Substitute Option.
(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).
-6-
<PAGE>
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of the Issuer Common Stock at which a Tender Offer or Exchange
Offer therefor has been made by any person (other than Grantee), (y) the
price per share of the Issuer Common Stock to be paid by any person (other
than the Grantee) pursuant to an agreement with Issuer, and (z) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market System within the six-month period immediately preceding
the agreement; provided, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining
assets of Issuer as determined by a nationally recognized investment
banking firm selected by Grantee (or by a majority in interest of the
Grantees if there shall be more than one Grantee (a "Grantee Majority")),
divided by the number of shares of the Issuer Common Stock outstanding at
the time of such sale. In the event that an exchange offer is made for the
Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm mutually selected by Grantee and Issuer (or if
applicable, Acquiring Corporation). (If there shall be more than one
Grantee, any such selection shall be made by a Grantee Majority.)
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one-year period immediately
preceding effectiveness of the consolidation, merger, share exchange or
sale in question, but in no event higher than the closing price of the
shares of the Substitute Common Stock on the day preceding the
effectiveness of such consolidation, merger, share exchange or sale;
provided, that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by Issuer, the person merging into Issuer or by any company which
controls or is controlled by such merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing sections shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be 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
-7-
<PAGE>
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 hereof shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a) hereof, at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by the
number of shares of Issuer Common Stock with respect to which the Option
has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has been
exercised and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial 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
-8-
<PAGE>
Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in part, or to require
that Issuer deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying and promptly file
the required notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such approval), in which case the
ten business day period of time that would otherwise run pursuant to the
preceding sentence for the payment of the portion of the Section 8 Repurchase
Consideration shall run instead from the date on which, as the case may be, any
required notification period has expired or been terminated or such approval has
been obtained and, in either event, any requisite waiting period shall have
passed. If any governmental or regulatory agency or authority disapproves of any
part of Issuer's proposed repurchase pursuant to this Section 8, Issuer shall
promptly give notice of such fact to Holder. If any governmental or regulatory
agency or authority prohibits the repurchase in part but not in whole, then
Holder shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such agency or authority, determine whether the repurchase
should apply to the Option and/or Option Shares and to what extent to each, and
Holder shall thereupon have the right to exercise the Option as to the number of
Option Shares for which the Option was exercisable at the Request Date less the
sum of the number of shares covered by the Option in respect of which payment
has been made pursuant to Section 8(a)(ii) and the number of shares covered by
the portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within five
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) hereof.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Sections 7(b)(i), 7(b)(ii), 7(b)(iii) or 7(b)(iv) hereof, or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on the
Nasdaq National Market (or if Issuer Common Stock is not quoted on the Nasdaq
National Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) during the 60 business days
preceding the Request Date; provided, however, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by an independent nationally recognized
investment banking firm selected by Holder and reasonably acceptable to Issuer
(which determination shall be conclusive for all purposes of this Agreement),
divided by the number of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered, paid or received pursuant
to either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
-9-
<PAGE>
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired actual
ownership or control, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which shall have acquired actual ownership or
control, of 50% or more of the then-outstanding shares of Issuer Common Stock,
or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii),
7(b)(iii) or 7(b)(iv) shall be consummated.
9. Registration Rights.
(a) For a period of 24 months following termination of the Merger
Agreement, Issuer shall, subject to the conditions of subsection (c) below, if
requested by any Holder, including Grantee and any permitted transferee of the
Option Shares ("Selling Holder"), as expeditiously as possible prepare and file
a registration statement under the Securities Laws if necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that have been acquired by or are issuable to Selling Holder
upon exercise of the Option in accordance with the intended method of sale or
other disposition stated by the Selling Holder in such request, including,
without limitation, a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best efforts
to qualify such shares or other securities for sale under any applicable state
securities laws.
(b) If Issuer at any time after the exercise of the Option proposes
to register any shares of Issuer Common Stock under the Securities Laws in
connection with an underwritten public offering of such Issuer Common Stock,
Issuer will promptly give written notice to Holder of its intention to do so
and, upon the written request of Holder given within 30 days after receipt of
any such notice (which request shall specify the number of shares of Issuer
Common Stock intended to be included in such underwritten public offering by
Selling Holder), Issuer will cause all such shares, the holders of which shall
have requested participation in such registration, to be so registered and
included in such underwritten public offering; provided, that Issuer may elect
to cause any such shares not to be so registered (i) if the underwriters in good
faith object for a valid business reason, or (ii) in the case of a registration
solely to implement a dividend reinvestment or similar plan, an employee benefit
plan or a registration filed on Form S-4 or any successor form, or a
registration filed on a form which does not permit registration of resales;
provided, further, that such election pursuant to clause (i) may be made only
one time. If some but not all the shares of Issuer Common Stock, with respect to
which Issuer shall have received requests for registration pursuant to this
subsection (b), shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Selling Holders and any
other person (other than Issuer or any person exercising demand registration
rights in connection with such registration) who or which is permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each Selling Holder bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subsection (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided, that
Issuer
-10-
<PAGE>
may delay any registration of Option Shares required pursuant to subsection (a)
above for a period not exceeding 90 days in the event that Issuer shall in good
faith determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Laws pursuant to
subsection (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine months from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall
not be required to consent to general jurisdiction or qualify to do business in
any state where it is not otherwise required to so consent to such jurisdiction
or to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses, including reasonable fees and
expenses of one counsel to the Selling Holders whose Option Shares are being
registered, printing expenses, reasonable expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so desires
or the underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant to
subsection (a) or (b) above (including the related offerings and sales by
Selling Holders) and all other qualifications, notifications or exemptions
pursuant to subsection (a) or (b) above. Underwriting discounts and commissions
relating to Option Shares and any other expenses incurred by such Selling
Holders in connection with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under subsection (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against
-11-
<PAGE>
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
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such holder or such underwriter, as the case may be,
expressly for such use.
Promptly upon receipt by a party indemnified under this
subsection (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subsection (e), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not relieve it
of any liability which it may otherwise have to any indemnified party under this
subsection (e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided,, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party agrees
to pay them, (ii) the indemnifying party fails to assume the defense of such
action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be entitled
to assume the defense of such action notwithstanding its obligation to bear fees
and expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided, for in this subsection (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, all Selling Holders and the underwriters from the offering of the
securities and also the relative fault of Issuer, all Selling Holders and the
underwriters
-12-
<PAGE>
in connection with the statements or omissions which resulted in such expenses,
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, that in no case shall any Selling Holder be responsible, in the
aggregate, for any amount in excess of the net offering proceeds attributable to
its Option Shares included in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any holder to indemnify shall be
several and not joint with other holders.
In connection with any registration pursuant to subsection (a) or
(b) above, Issuer and each Selling Holder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this subsection (e).
(f) Issuer shall comply with all reporting requirements and will do
all such other things as may be necessary to permit the expeditious sale at any
time of any Option Shares by the Selling Holders in accordance with and to the
extent permitted by any rule or regulation promulgated by the Commission from
time to time, including, without limitation, Rules 144 and 144A. Issuer shall at
its expense provide the Selling Holders with any information necessary in
connection with the completion and filing of any reports or forms required to be
filed by them under the Securities Laws, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issuer will pay all stamp taxes in connection with the issuance
and the sale of the Option Shares and in connection with the exercise of the
Option, and will save Holder harmless, without limitation as to time, against
any and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the Nasdaq
National Market or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon as
practicable.
11. Division of Option. This Agreement (and the Option granted hereby) is
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if
-13-
<PAGE>
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided, herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h) hereof) any
rights or remedies hereunder. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or a federal or
state governmental or regulatory agency or authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option does not permit Holder to acquire,
or does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided, in Sections 3 and 8 hereof (as adjusted pursuant to
Section 7 hereof), it is the express intention of Issuer to allow Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible without any amendment or modification hereof.
(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
-14-
<PAGE>
or certified mail (return receipt requested) to the parties at the addresses set
forth in the Merger Agreement (or at such other address for a party as shall be
specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
or transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
Grantee may assign or transfer its rights hereunder in whole or in part after
the occurrence of a Purchase Event. In the case of any permitted assignment or
transfer of the Option, Issuer shall do all things necessary to facilitate the
same, and the Holder to whom the Option is assigned or transferred shall make
the representations contained in Section 6 hereof (with Holder substituted for
Grantee) and shall agree in writing to the terms and conditions hereof. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided, for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
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.
FIRST CITIZENS CORPORATION BB&T CORPORATION
By: /s/ J. Littleton Glover By: /s/ John A. Allison, IV
Name: J. Littleton Glover Name: John A. Allison, IV
Title: Chairman Title: Chairman and CEO
-15-
