<PAGE>
As Filed with the Securities and Exchange Commission on September 15, 1999
Registration No. 333 -
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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)
6060
North Carolina (Primary Standard Industrial 56-0939887
(State or other Classification Code Number) (I.R.S. Employer
jurisdiction of Identification Number)
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, Esq. Richard A. Hills, Jr., Esq.
Womble Carlyle Sandridge & Rice, First Liberty Financial Corp.
PLLC 6491 Peachtree Industrial Boulevard
200 West Second Street, 17th Floor Atlanta, Georgia 30360
Winston-Salem, North Carolina 27101
---------------
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: [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Proposed
Title of each class of maximum maximum Amount of
securities to be Amount to be offering price aggregate registration
registered registered per unit offering price fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$5.00 per share(1)..... 13,288,069 (2) $426,707,373.40(3) $28,783(4)
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</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
($28.125) and low ($27.75) sales price of the common stock of First
Liberty Financial Corp. on September 9, 1999 as reported on The Nasdaq
Stock Market's National Market System.
(4) Pursuant to Rule 457(b), the registration fee has been reduced by an
amount equal to the fee of $89,842 paid upon the filing with the
Commission of the preliminary proxy materials of First Liberty Financial
Corp. on August 6, 1999.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
FIRST LIBERTY FINANCIAL CORP.
201 Second Street
Macon, Georgia 31297
----------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 27, 1999
----------------------------------------------
TO THE SHAREHOLDERS OF FIRST LIBERTY FINANCIAL CORP.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First Liberty Financial Corp., a Georgia corporation ("First
Liberty"), will be held in the Ballroom of the Crowne Plaza Hotel, located at
108 First Street, Macon, Georgia, on Wednesday, October 27, 1999 at 2:00 p.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 April 27, 1999, as amended on September
3, 1999 (the "Merger Agreement"), between First Liberty and BB&T
Corporation, a North Carolina corporation ("BB&T"), and a related plan
of merger, pursuant to which First Liberty will merge with and into BB&T
(the "Merger") and each share of common stock of First Liberty then
outstanding will be converted into the right to receive not less than
0.85 or more than 0.87 of a share 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 Liberty of record at the close of business on
September 8, 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
[SIGNATURE OF RICHARD A HILLS, JR.
APPEARS HERE]
Macon, Georgia Richard A. Hills, Jr.
September 22, 1999 Secretary
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>
[LOGO OF FIRST LIBERTY FINACIAL CORP. APPEARS HERE]
SPECIAL MEETING OF SHAREHOLDERS
MERGER PROPOSAL--YOUR VOTE IS VERY IMPORTANT
The Board of Directors of First Liberty Financial Corp. has unanimously
approved a merger combining First Liberty and BB&T Corporation. In the merger,
First Liberty shareholders will receive, depending on the average reported
closing price of BB&T common stock over a ten-day period ending shortly before
the merger becomes effective, not less than 0.85 or more than 0.87 of a share
of BB&T common stock for each share of First Liberty 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 Liberty's strengths as a
community banking system covering Macon and Savannah, Georgia and the
surrounding areas 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 Liberty's 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
Liberty common stock approve it. The Board of Directors believes the merger is
in the best interests of First Liberty 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 September 13, 1999, the closing price of BB&T common stock was $32.375,
making the value of 0.87 a share of BB&T common stock, which is what First
Liberty shareholders will receive for each share of First Liberty common stock
(assuming the average reported closing price of BB&T common stock over the
ten-day pricing period is equal to the closing price on September 13), equal
to $28.17. The closing price of First Liberty common stock on September 13,
1999 was $27.75. These prices will, however, fluctuate between now and the
merger.
The date, time and place of the meeting are:
October 27, 1999
2:00 p.m.
Ballroom, Crowne Plaza Hotel
108 First Street
Macon, Georgia
This proxy statement/prospectus provides you with detailed information about
the proposed merger. I encourage you to read this entire document carefully.
You can also obtain other information about First Liberty 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
Liberty 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
Liberty's Secretary any time before the meeting or by attending the meeting
and voting in person.
On behalf of the Board of Directors of First Liberty, I urge you to vote
"FOR" approval and adoption of the merger agreement.
/s/ Robert F. Hatcher
Robert F. Hatcher
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 September 15, 1999 and is expected
to be first mailed to shareholders of First Liberty on or about September 22,
1999.
<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 Liberty Board................................ 9
THE MERGER................................................................. 10
General.................................................................. 10
Background of and Reasons for the Merger................................. 10
Opinion of Financial Advisor to First Liberty............................ 12
Exchange Ratio........................................................... 19
Exchange of First Liberty Common Stock Certificates...................... 20
The Merger Agreement..................................................... 21
Interests of Certain Persons in the Merger............................... 26
Regulatory Considerations................................................ 29
Material Federal Income Tax Consequences of the Merger................... 31
Accounting Treatment..................................................... 32
The Option Agreement..................................................... 32
Effect on Employees, Employee Benefit Plans and Stock Options............ 35
Restrictions on Resales by Affiliates.................................... 36
INFORMATION ABOUT BB&T..................................................... 37
General.................................................................. 37
Operating Subsidiaries................................................... 37
Acquisitions............................................................. 38
Capital.................................................................. 39
Deposit Insurance Assessments............................................ 40
INFORMATION ABOUT FIRST LIBERTY............................................ 41
DESCRIPTION OF BB&T CAPITAL STOCK.......................................... 42
General.................................................................. 42
BB&T Common Stock........................................................ 42
BB&T Preferred Stock..................................................... 42
Shareholder Rights Plan.................................................. 42
Certain Provisions of the NCBCA, BB&T Articles and BB&T Bylaws........... 45
COMPARISON OF SHAREHOLDERS' RIGHTS......................................... 46
Authorized Capital Stock................................................. 46
Special Meetings of Shareholders and Action by Shareholders without a
Meeting................................................................. 46
Directors................................................................ 47
Dividends and Other Distributions........................................ 47
Notice of Shareholder Nominations and Shareholder Proposals.............. 48
Exculpation and Indemnification.......................................... 48
Mergers, Share Exchanges and Sales of Assets............................. 49
Anti-takeover Statutes................................................... 50
Amendments to Articles of Incorporation and Bylaws....................... 51
Shareholders' Rights of Dissent and Appraisal............................ 51
Liquidation Rights....................................................... 53
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SHAREHOLDER PROPOSALS..................................................... 53
OTHER BUSINESS............................................................ 53
LEGAL MATTERS............................................................. 53
EXPERTS................................................................... 54
WHERE YOU CAN FIND MORE INFORMATION....................................... 54
Appendix A--Agreement and Plan of Reorganization and Plan of Merger, as
amended
Appendix B--Opinion of Sandler O'Neill & Partners, L.P.
</TABLE>
iii
<PAGE>
A WARNING ABOUT FORWARD-LOOKING INFORMATION
BB&T and First Liberty 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 Liberty, 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
11, 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
Liberty 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 Liberty on a stand-alone basis, expected cost savings
from the merger, estimated restructuring charges relating to the merger,
estimated increases in First Liberty's 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 Liberty, the amount
of general and administrative expense consolidation, costs relating to
converting First Liberty's 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 Liberty, 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 Liberty 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
Liberty are engaged;
8. adverse changes may occur in the securities markets; and
9. competitors of BB&T and First Liberty may have greater financial
resources and develop products that enable those competitors to compete
more successfully than BB&T and First Liberty.
Management of each of BB&T and First Liberty believes the forward-looking
statements about its company are reasonable; however, shareholders of First
Liberty 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 Liberty's 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 54.
Exchange Ratio to be not less than 0.85 or more than 0.87 of a Share of BB&T
Common Stock for each First Liberty Share (Page 19)
If the merger is completed, you will receive a portion of a share of BB&T
common stock for each share of First Liberty common stock you own, plus cash
instead of any fractional share. The portion of a share of BB&T common stock
that you will receive will depend on the average reported closing price of such
stock over a ten-day period ending shortly before the merger becomes effective:
. If the average reported closing price over such ten-day period is at
least $38.22 but not more than $39.12, you will receive a number of
shares of BB&T common stock equal to $33.25 divided by such ten-day
average for each share of First Liberty common stock you own;
. if the average reported closing price over such ten-day period is less
than $38.22, you will receive 0.87 of a share of BB&T common stock for
each share of First Liberty common stock that you own; and
. if the average reported closing price over such ten-day period is more
than $39.12, you will receive 0.85 of a share for each share of First
Liberty common stock that you own.
On September 13, 1999, the closing price of BB&T common stock was $32.375,
making the value of 0.87 of a share of BB&T common stock, which is what First
Liberty shareholders will receive for each share of First Liberty common stock
(assuming the average reported closing price of BB&T common stock over the ten
day pricing period is equal to the closing price on September 13), equal to
$28.17. 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.
No Federal Income Tax on Shares Received in Merger (Page 31)
First Liberty 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 Liberty 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 $.20 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 Liberty Board Recommends Shareholder Approval (Page 11)
The First Liberty Board believes that the merger is in the best interests of
First Liberty shareholders and unanimously recommends that the shareholders
vote "FOR" approval of the merger agreement. The First Liberty Board believes
that, as a result of the merger, First Liberty shareholders will have less
financial risk and will experience greater stock value appreciation than they
would if First Liberty remained independent.
Exchange Ratio Fair to Shareholders According to First Liberty's Financial
Advisor (Page 12)
Sandler O'Neill & Partners, L.P. has given an opinion to the First Liberty
Board that, as of the date of this proxy statement/prospectus, the exchange
ratio
1
<PAGE>
in the merger is fair, from a financial point of view, to First Liberty
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 Liberty has agreed to pay Sandler O'Neill a transaction fee in connection
with the merger, the amount of which is contingent upon completion of the
merger. Based on the closing price of First Liberty common stock on September
13, 1999 (the latest practicable date prior to the date of this proxy
statement/prospectus), First Liberty would pay Sandler O'Neill a transaction
fee of approximately $2,121,990. In addition, First Liberty has paid Sandler
O'Neill a fee of $250,000 for rendering its fairness opinion, which will be
credited against that portion of the transaction fee due upon completion of the
merger.
Meeting to be held October 27, 1999 (Page 8)
First Liberty will hold the special shareholders' meeting at 2:00 p.m. on
Wednesday, October 27, 1999 in the Ballroom of the Crowne Plaza Hotel in Macon,
Georgia. At the meeting, you will vote on the merger agreement and conduct any
other business that properly arises.
The Companies (Page 37)
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 $42.1 billion
in assets. It is the sixth largest bank holding company in the Southeast, and
through its banking subsidiaries operates 612 branch offices in the Carolinas,
Virginia, Maryland, Washington, D.C., Georgia, West Virginia and Kentucky. 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 Liberty Financial Corp.
201 Second Street
Macon, GA 31297
(912) 722-7400
First Liberty Financial Corp. is a savings and loan holding company with
approximately $1.7 billion in assets that operates 38 banking offices in
Georgia and 13 consumer finance offices in Georgia and Tennessee.
The Merger (Page 10)
In the merger, First Liberty will merge into BB&T, and First Liberty's
banking subsidiaries, through which it operates, will become wholly owned
subsidiaries of BB&T. In addition, First Liberty's indirect subsidiaries,
through which it offers mortgage banking, consumer finance and equipment
leasing services, will become indirect subsidiaries of BB&T. The merger
requires the approval of the holders of at least a majority of the First
Liberty common stock. If we obtain this approval, we currently expect to
complete the merger in the fourth quarter of 1999.
We have attached the merger agreement, as amended, 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 Liberty 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 Liberty 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 Liberty
together own about 30% 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 Liberty 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 September 8, 1999; One Vote per Share of First Liberty
Common Stock (Page 8)
If you owned shares of First Liberty common stock at the close of business on
September 8, 1999,
2
<PAGE>
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 14,264,996 shares of First Liberty common
stock outstanding. You will have one vote at the meeting for each share of
First Liberty common stock you own on the record date.
Monetary Benefits to Management in the Merger (Page 26)
When considering the recommendation of the First Liberty Board, you should
be aware that some First Liberty directors and officers have interests in the
merger that differ from the interests of other First Liberty shareholders.
. First Liberty's President and CEO Robert F. Hatcher has been offered an
employment agreement with a banking subsidiary of BB&T at an annual
salary of $340,250 to extend until November 15, 2006 (his sixty-fifth
birthday); and
. five other members of management have been offered three-year employment
agreements; two other members of management have been offered eighteen-
month employment agreements; and two other members of management have
been offered twelve-month employment agreements; and
. each of these employment agreements is at the recipient's current salary
plus an agreed upon amount equal to the value of benefits lost as a
result of the merger and will provide severance payments and other
benefits if there is a change in control of BB&T.
Also, Robert F. Hatcher will be elected to the board of BB&T's North
Carolina bank, for which he will earn annual fees of $5,000 plus $1,000 per
meeting attended, and will be named chairman of BB&T's advisory board for the
State of Georgia, for which he will earn $1,000 per meeting attended;
provided, that Mr. Hatcher will not earn the foregoing fees at any time during
which he is serving as an employee of BB&T or an affiliate of BB&T. In
addition, the members of the advisory boards of First Liberty shall be offered
positions on BB&T's area advisory boards for their respective market areas
and, for at least two years after the merger, will receive annual fees not
less than those that First Liberty advisory board members are now receiving.
The First Liberty 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 21)
The following conditions must be met for us to complete the merger:
. approval of the merger agreement by First Liberty 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.
The merger cannot be completed without the approval of the Board of
Governors of the Federal Reserve System and the Georgia Department of Banking
and Finance. In June 1999, BB&T filed the required applications seeking
approval of the merger. On July 30, 1999, BB&T received approval from the
Federal Reserve Bank of Richmond (the delegate of the Board of Governors) and
on August 23, 1999 BB&T received approval of the Georgia Department of Banking
and Finance.
Termination and Amendment of the Merger Agreement (Page 25)
We can agree at any time to terminate the merger agreement without
completing the merger.
3
<PAGE>
Either company can also terminate the merger agreement in the following
circumstances:
. the merger is not completed by December 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 Liberty Board wishes to proceed with the merger, First Liberty will
resolicit its shareholders.
Option Agreement (Page 32)
As a condition to its offer to acquire First Liberty, and to discourage
other companies from acquiring First Liberty, BB&T required First Liberty to
grant BB&T a stock option that allows BB&T to buy up to 2,838,708 shares of
First Liberty's common stock. The exercise price of the option is $25.00 per
share. BB&T can exercise the option only if another party attempts to acquire
control of First Liberty. As of the date of this document, we do not believe
that has occurred.
BB&T to Use Pooling-of-Interests Accounting Treatment (Page 32)
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 Liberty had always
been combined with BB&T.
No Appraisal Rights (Page 51)
Under Georgia law, you have no right to an appraisal of your shares in
connection with the merger.
Share Price Information (Page 5)
First Liberty common stock is listed on the National Market System of The
Nasdaq Stock Market, Inc. under the symbol "FLFC", and BB&T common stock is
listed on the New York Stock Exchange under the symbol "BBT." On April 27,
1999, the last full trading day before public announcement of the proposed
merger, First Liberty common stock closed at $23.25 and BB&T common stock
closed at $39.25. On September 13, 1999, First Liberty common stock closed at
$27.75 and BB&T common stock closed at $32.375.
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 Liberty
common stock is listed on the National Market System of The Nasdaq Stock
Market, Inc. under the symbol "FLFC." The table below shows the high and low
closing prices of BB&T common stock and First Liberty 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. For First
Liberty, prices reflect a 3-for-2 stock split on April 27, 1998. Shareholders
should note that the merger agreement restricts First Liberty's ability to pay
dividends. See page 23.
<TABLE>
<CAPTION>
BB&T First Liberty
--------------------------- ---------------------------
High Low Cash Dividend High Low Cash Dividend
------ ------ ------------- ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
December 31, 1998...... $22.69 $17.00 $.095
March 31, 1999......... $40.44 $34.94 $.175 22.13 18.19 .095
June 30, 1999.......... 40.25 33.81 .175 32.13 19.81 .095
September 30, 1999
(through September
13)................... 36.63 32.38 .20 30.75 27.75 --
Quarter Ended
December 31, 1997...... 22.50 15.25 .073
March 31, 1998......... 33.84 29.03 .155 22.92 19.95 .073
June 30, 1998.......... 34.06 32.03 .155 25.38 22.00 .075
September 30, 1998..... 36.03 28.00 .175 25.50 18.50 .075
December 31, 1998...... 40.63 27.31 .175
For year 1998.......... 40.63 27.31 .66 25.50 17.00 .296
Quarter Ended
December 31, 1996...... 14.33 11.00 .067
March 31, 1997......... 20.38 17.63 .135 15.00 12.17 .067
June 30, 1997.......... 23.56 17.88 .135 15.00 14.00 .067
September 30, 1997..... 27.56 22.66 .155 16.67 14.50 .067
December 31, 1997...... 32.50 25.97 .155
For year 1997.......... 32.50 17.63 .58 16.67 11.00 .268
</TABLE>
The table below shows the closing price of BB&T common stock and First
Liberty common stock on April 27, 1999, the last full trading day before public
announcement of the proposed merger.
<TABLE>
<S> <C>
BB&T historical.................................................. $39.25
First Liberty historical......................................... $23.25
First Liberty pro forma equivalent*.............................. $33.36
</TABLE>
- --------
* calculated by multiplying BB&T's per share closing price by an assumed
exchange ratio of 0.85 (which is what the exchange ratio would be if the
average reported closing price of BB&T common stock over the ten day pricing
period is equal to the closing price on April 27)
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 and unaudited financial statements for the six
months ended June 30, 1999, in the case of BB&T, and for the nine months ended
June 30, 1999, in the case of First Liberty. The information provided for BB&T
has been restated to include the accounts of MainStreet Financial Corporation,
First Citizens Corporation and Mason-Dixon Bancshares, Inc., which were
acquired by BB&T on March 5, 1999, July 9, 1999 and July 14, 1999,
respectively, in transactions accounted for as poolings of interests. The
information provided for First Liberty has been restated to include the
accounts of Vidalia Bancshares, Inc., which was acquired by First Liberty on
April 1, 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 54. You should not rely on the
six-month information for BB&T or the nine-month information for First Liberty
as being indicative of results expected for the entire year.
BB&T--Historical Financial Information
<TABLE>
<CAPTION>
As of/For the Six
Months Ended
June 30, 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..... $ 737,983 $ 669,236 $ 1,369,989 $ 1,267,848 $ 1,158,858 $ 1,056,956 $ 1,012,939
Net income.............. 297,999 256,988 527,254 394,661 372,536 266,604 300,262
Basic earnings per
share.................. .94 .82 1.68 1.26 1.19 .84 .97
Diluted earnings per
share.................. .92 .80 1.65 1.24 1.17 .82 .94
Cash dividends paid per
share.................. .35 .31 .66 .58 .50 .43 .37
Book value per share.... 9.35 8.81 9.62 8.59 7.91 7.69 6.87
Total assets............ 40,791,790 35,630,930 37,903,119 34,523,133 30,301,706 28,343,959 26,545,187
Long-term debt.......... 5,495,172 4,541,449 5,300,536 3,918,156 2,485,710 1,601,574 1,137,295
First Liberty--Historical Financial Information
<CAPTION>
As of/For the Nine
Months Ended
June 30, As of/For the Years Ended September 30,
----------------------- -----------------------------------------------------------
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..... 43,704 41,801 56,187 52,685 46,340 40,310 33,165
Net income.............. 14,615 11,169 15,957 10,919 11,241 11,389 8,941
Basic earnings per
share.................. 1.02 .80 1.14 .79 .83 .94 .79
Diluted earnings per
share.................. 1.00 .78 1.12 .76 .82 .86 .73
Cash dividends paid per
share.................. .276 .201 .272 .238 .179 .162 .131
Book value per share.... 9.27 8.92 8.93 8.12 7.99 7.47 7.09
Total assets............ 1,708,492 1,570,276 1,568,107 1,474,679 1,358,232 1,192,124 937,302
Long-term debt.......... 112,303 29,032 112,315 104,906 36,144 23,832 31,380
</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 54. In order to conform to the per share data relating to BB&T common
stock, the six-month per share data relating to First Liberty common stock has
been prepared by utilizing financial information at the calendar date and
period indicated rather than the fiscal date and period utilized by First
Liberty for financial reporting purposes. The year end per share data relating
to BB&T is as of December 31 of each year indicated and the year end per share
data relating to First Liberty is as of September 30 of each year indicated.
The BB&T pro forma information gives effect to the merger accounted for as a
pooling of interests, assuming that .87 of a share of BB&T common stock is
issued for each outstanding share of First Liberty common stock. First Liberty
equivalent share amounts are calculated by multiplying the pro forma basic and
diluted earnings per share, BB&T's historical per share dividend and the pro
forma shareholders' equity by the assumed exchange ratio of .87 of a share of
BB&T common stock so that the per share amounts equate to the respective values
for one share of First Liberty 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 six-month information as being
indicative of results expected for the entire year.
<TABLE>
<CAPTION>
As of/For the Six As of/For
Months Ended the Fiscal Year Ended
June 30, -----------------------
1999 1998 1997 1996
----------------- ------- ------- -------
<S> <C> <C> <C> <C>
Earnings per common share
Basic
BB&T historical................... $.94 $ 1.68 $ 1.26 $ 1.19
First Liberty historical.......... .69 1.14 .79 .83
Pro forma combined................ .94 1.67 1.25 1.18
First Liberty pro forma
equivalent....................... .82 1.45 1.09 1.03
Diluted
BB&T historical................... .92 1.65 1.24 1.17
First Liberty historical.......... .68 1.12 .76 .82
Pro forma combined................ .92 1.63 1.23 1.16
First Liberty pro forma
equivalent....................... .80 1.42 1.07 1.01
Cash dividends declared per common
share
BB&T historical..................... .35 .66 .58 .50
First Liberty historical............ .186 .272 .238 .179
Pro forma combined.................. .35 .66 .58 .50
First Liberty pro forma equivalent.. .31 .57 .50 .44
Shareholders' equity per common
share
BB&T historical..................... 9.35 9.62 8.59 7.91
First Liberty historical............ 9.27 8.93 8.12 7.99
Pro forma combined.................. 9.40 9.64 8.62 7.95
First Liberty pro forma equivalent.. 8.18 8.39 7.50 6.92
</TABLE>
7
<PAGE>
MEETING OF SHAREHOLDERS
General
We are providing this proxy statement/prospectus to the shareholders of
First Liberty as of the record date of September 8, 1999, along with a form of
proxy that the First Liberty Board is soliciting for use at a special meeting
of shareholders of First Liberty to be held on Wednesday, October 27, 1999 at
2:00 p.m., Eastern Time, in the Ballroom of the Crowne Plaza Hotel, located at
108 First Street, Macon, Georgia. At the meeting, the shareholders of First
Liberty will vote upon a proposal to approve the merger agreement, which is
dated as of April 27, 1999, was amended on September 3, 1999 and pursuant to
which First Liberty 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 Liberty Board knows of no such other matters
except those incidental to the conduct of the meeting. The merger agreement,
as amended, and the related plan of merger are attached as Appendix A.
We request holders of the common stock of First Liberty to complete, date
and sign the accompanying proxy and return it promptly to First Liberty in the
enclosed postage prepaid envelope.
Record Date, Voting Rights and Vote Required
Only the holders of First Liberty common stock on the record date are
entitled to receive notice of and to vote at the meeting. On the record date,
there were 14,264,996 shares of First Liberty common stock outstanding, held
by 1,014 holders of record. Each such share of First Liberty 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 Liberty common stock. Failure of a holder of First Liberty
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 Liberty
common stock entitled to vote at the meeting will constitute a quorum.
As of the record date, the directors and executive officers of First Liberty
and their affiliates beneficially owned a total of 4,214,411 shares, or
29.54%, of the issued and outstanding shares of First Liberty 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 Liberty common stock.
Voting and Revocation of Proxies
The shares of First Liberty 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 Liberty 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 Liberty 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 Liberty at
First Liberty's 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 Liberty 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 Liberty common stock, abstentions and Broker Shares will have
the same effect as negative votes. Accordingly, the First Liberty Board urges
First Liberty's 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 Liberty will each pay 50% of the cost of printing this proxy
statement/prospectus, and First Liberty will pay all other costs of soliciting
proxies. Directors, officers and other employees of First Liberty 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 Liberty 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 Liberty will reimburse these record holders for their reasonable out-of-
pocket expenses. In addition, First Liberty intends to use the services of
Corporate Investor Communications, Inc., a professional proxy solicitation
firm, to help with soliciting proxies for the meeting, at an estimated cost of
$4,500 plus individual solicitation and out-of-pocket expenses.
Recommendation of the First Liberty Board
The First Liberty 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 Liberty and its shareholders. The First Liberty
Board unanimously recommends that First Liberty's shareholders vote "FOR"
approval of the merger agreement and the plan of merger. See "The Merger--
Background of and Reasons for the Merger" on page 10.
Shareholders should not send in stock certificates with their proxy cards.
See "The Merger--Exchange of First Liberty Common Stock Certificates" on page
20.
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 Liberty will be merged with and into BB&T and BB&T will
be the surviving corporation. Shareholders of First Liberty will receive
shares of the common stock of BB&T in exchange for their shares of First
Liberty common stock. During the second quarter of 2000, BB&T intends to merge
First Liberty's subsidiary savings bank, First Liberty Bank, into a subsidiary
bank of BB&T.
Background of and Reasons for the Merger
Background of the Merger; First Liberty's Reasons for the Merger
Since approximately 1993, the First Liberty Board has periodically
evaluated, as part of its strategic planning process, whether to remain
independent or to seek a merger partner. As of June 1998, First Liberty had
determined to remain independent and, although it had not adopted a formal
policy, had informally reiterated that position from time to time and had
routinely told potential acquirors that it intended to remain independent.
In June 1998, Robert F. Hatcher, President and Chief Executive Officer of
First Liberty, was contacted by telephone by Burney F. Warren, Executive Vice
President for Acquisitions of BB&T. Mr. Hatcher had not met Mr. Warren at that
time and had had no prior contact with any representative of BB&T. Mr. Warren
told Mr. Hatcher that he was interested in discussing a combination of the two
companies. Mr. Hatcher told him that First Liberty was not for sale, but that
he would be glad to listen. Mr. Warren said he would call again to make an
appointment for a meeting. Mr. Hatcher informed the First Liberty Board of Mr.
Warren's call at its Corporate Strategy Committee meeting on June 24, 1998.
On July 14, 1998, Mr. Warren visited Mr. Hatcher in Macon, Georgia and
discussed the business and acquisition philosophy of BB&T and other matters of
a general nature, but no specific terms of a proposed transaction were
discussed. Following this meeting, there were several telephone calls between
Mr. Warren and Mr. Hatcher, but still no specific terms of a proposed
transaction were discussed. As a result of his on-going discussions with Mr.
Warren, Mr. Hatcher had determined that the two companies had similar
corporate values and corporate cultures and conducted their respective
community banking businesses in a similar manner. There were no other
potential merger partners with which First Liberty was having discussions.
On August 18, 1998, Mr. Hatcher went to Winston-Salem, North Carolina to
visit BB&T's offices. He met with John A. Allison IV, BB&T's Chief Executive
Officer, and other BB&T representatives. Mr. Allison gave a general
presentation about BB&T. No specific terms of a proposed transaction were
discussed at this meeting.
On September 21, 1998, Mr. Warren again went to Macon to meet with Mr.
Hatcher. Mr. Warren expressed BB&T's desire to acquire First Liberty, and
there was a discussion of social issues and other business terms, including
BB&T's approach to doing business and the effects of a merger on First
Liberty's employees, community boards of directors and corporate boards of
directors. No discussions regarding pricing were held at this time.
On December 18, 1998, Mr. Hatcher again visited Winston-Salem and met with
Mr. Allison, Mr. Warren, and other BB&T executive officers. At this meeting,
BB&T made a proposal to acquire First Liberty at a price of $30.00 per share
of First Liberty common stock. Following that meeting, Mr. Hatcher reported
BB&T's proposal to the First Liberty Board, and it determined that BB&T's
offer was too low relative to its perceived value of First Liberty based upon
internal analyses. Later that month or in early January, Mr. Hatcher informed
Mr. Warren that BB&T's offer was not acceptable and that he would meet with
the First Liberty Board in late
10
<PAGE>
January to discuss whether to continue to remain independent and whether to
retain an investment banker. On January 27, 1999, the First Liberty Board
voted to retain an investment banker.
On January 14, 1999, Mr. Hatcher and David L. Hall, First Liberty's Chief
Financial Officer, met with Christopher Quackenbush, Thomas W. Killian, and
James J. Gallagher of Sandler O'Neill & Partners ("Sandler O'Neill") at its
offices in New York. First Liberty and Sandler O'Neill had previously
discussed the possibility of Sandler O'Neill assisting First Liberty in its
own acquisition work but had not discussed a proposed sale of First Liberty.
Mr. Hatcher informed Sandler O'Neill that First Liberty had been approached by
BB&T and of the discussions to date.
In early February 1999, Mr. Warren contacted Mr. Hatcher by telephone and
arranged a meeting to be held on February 12, 1999 in Greenville, South
Carolina between Mr. Hatcher, Mr. Hall, Mr. Warren and W. R. Rowan of BB&T. At
that meeting, discussions related largely to the management philosophies and
operations of a BB&T region. There were no price discussions at this meeting.
Later in February, there were further discussions between BB&T and Sandler
O'Neill, acting on behalf of First Liberty, but no progress toward a proposed
transaction was made. At its meeting on February 24, 1999, the First Liberty
Board determined that continued discussions with BB&T were not resolving the
price disparity and that further discussions would not be productive at that
time and decided to terminate negotiations with BB&T, a message that was
communicated to BB&T by Sandler O'Neill.
BB&T again initiated discussions through Sandler O'Neill in mid-March. On
April 14, 1999, a meeting was held in Atlanta between Mr. Warren, Mr. Hatcher,
Mr. Hall, Mr. Quackenbush, and Mr. Gallagher to reopen negotiations for BB&T
to acquire First Liberty. At this meeting, the terms of a proposed
transaction, including price, were discussed. BB&T proposed a higher price
than earlier in the negotiations, but still not one acceptable to First
Liberty, and no agreement was reached. On April 20, 1999, the parties reached
an agreement in principle. Sandler O'Neill advised the First Liberty Board
that the price was fair, from a financial point of view, to First Liberty's
shareholders, and the First Liberty Board deemed BB&T's increased offer
acceptable.
On April 27, 1999, the First Liberty Board held a special meeting and
approved the proposed merger. On April 26, 1999, the last trading day prior to
the First Liberty Board meeting, BB&T common stock closed at $39.00, for an
implied transaction value, based on an assumed exchange ratio of 0.85, of
$33.15 per share of First Liberty common stock, and First Liberty common stock
closed at $23.25. Each member of the First Liberty Board has agreed to vote
his shares of First Liberty common stock in favor of the merger.
The First Liberty Board recommends that First Liberty 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 Liberty 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
economically strong markets in Georgia, including Macon and Savannah.
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 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%.
11
<PAGE>
. First Liberty's income statement and balance sheet growth on a stand-
alone basis would increase at an assumed rate, determined solely for the
purpose of assessing the impact of the merger as described above, of
approximately 10% for 2001 and thereafter, before applying the effect of
the assumptions described below.
. Annual cost savings of approximately $11.4 million, or 25% of First
Liberty's 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 Liberty's fee income ratio would ratably increase from 20.0% for
quarter-to-date as of March 1999 to 25% of total revenue for the full-
year 2001.
. First Liberty's net interest margin (non-FTE) would be increased over
five years to 4.30% 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, to
estimated earnings per share (and cash basis earnings per share) in 2000 and
return on assets (and cash basis return on assets) in 2001. BB&T excluded the
effect of an estimated one-time charge of $11.0 million, after income tax
benefits, related to consummating the merger from calculations of earnings per
share, return on equity and return on assets. BB&T's analysis also indicated
that the merger would cause accelerated dividend growth potential in 2000.
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 Liberty, 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 Liberty merger
indicated that the projected internal rate of return is 15.03%.
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 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 iii.
Opinion of Financial Advisor to First Liberty
By letter agreement dated as of February 5, 1999, First Liberty retained
Sandler O'Neill as an independent financial advisor in connection with First
Liberty's consideration of a possible business combination with BB&T. Sandler
O'Neill is a nationally recognized investment banking firm whose principal
business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler O'Neill is regularly engaged in the
valuation of financial institutions and their securities in connection with
mergers and acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to First Liberty in connection
with the merger and participated in certain of the negotiations leading to the
merger agreement. In connection with Sandler O'Neill's engagement, the First
Liberty Board also requested Sandler O'Neill to render its opinion as to the
fairness, from a financial point of view, of the exchange ratio to the First
Liberty shareholders. Representatives of Sandler O'Neill attended the First
Liberty Board meeting on April 27, 1999 at which the First Liberty Board
considered the merger agreement and delivered to the First Liberty Board its
opinion that, as of such date, the exchange ratio was fair, from a financial
point of view, to the First Liberty shareholders. Sandler O'Neill has also
delivered to the First Liberty Board a written opinion dated the date of this
proxy statement/prospectus (the "Sandler Opinion") which is substantially
identical to the April 27, 1999 opinion. The full text of the Sandler Opinion
is attached as Appendix B to this proxy statement/prospectus. The Sandler
Opinion outlines the procedures followed, assumptions made, matters considered
and qualifications and limitations on the review undertaken by Sandler O'Neill
in rendering the opinion. The Sandler Opinion is incorporated by reference
into this
12
<PAGE>
description of the opinion and this description is qualified in its entirety
by reference to the Sandler Opinion. First Liberty shareholders are urged to
carefully read the Sandler Opinion in connection with their consideration of
the proposed merger.
The Sandler Opinion was directed to the First Liberty Board and was provided
to the First Liberty Board for its information in considering the merger. The
Sandler Opinion is directed only to the fairness, from a financial point of
view, of the exchange ratio to First Liberty shareholders. It does not address
the underlying business decision of First Liberty to engage in the merger or
any other aspect of the merger and is not a recommendation to any First
Liberty shareholder as to how such shareholder should vote at the special
meeting with respect to the merger or any other related matter.
In rendering its April 27, 1999 opinion, Sandler O'Neill performed a variety
of financial analyses. The following is a summary of the material analyses
performed by Sandler O'Neill, but is not a complete description of all the
analyses underlying Sandler O'Neill's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portions of the factors and analyses considered without considering
all factors and analyses, or attempting to ascribe relative weights to some or
all such factors and analyses, could create an incomplete view of the
evaluation process underlying its opinion.
In performing its analyses, Sandler O'Neill made numerous assumptions with
respect to industry performance, business and economic conditions and various
other matters, many of which cannot be predicted and are beyond the control of
First Liberty, BB&T and Sandler O'Neill. The analyses performed by Sandler
O'Neill are not necessarily indicative of actual values or future results,
which may be significantly more or less favorable than suggested by such
analyses. Sandler O'Neill prepared its analyses solely for purposes of
rendering its opinion and provided such analyses to the First Liberty Board at
the April 27, 1999 meeting. Estimates on the values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities may actually be sold. Such estimates are inherently
subject to uncertainty and actual values may be materially different.
Accordingly, Sandler O'Neill's analyses do not necessarily reflect the value
of First Liberty common stock or BB&T common stock or the prices at which
First Liberty common stock or BB&T common stock may be sold at any time.
Summary of Proposal. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of BB&T common stock on April
26, 1999 of $39.00 and an exchange ratio of 0.8500, Sandler O'Neill calculated
an implied transaction value per share of First Liberty common stock of
$33.15. The implied aggregate transaction value was $487.7 million, based upon
the implied transaction value of $33.15 per share and 14.7 million fully
diluted shares of First Liberty common stock outstanding, which was determined
using the treasury stock method at the implied value. Based upon the implied
transaction value and First Liberty's March 31, 1999 financial information,
Sandler O'Neill calculated the following ratios:
<TABLE>
<S> <C>
Transaction value per share/Tangible book value per share......... 3.83x
Transaction value per share/Book value per share.................. 3.52x
Transaction value per share/Last twelve months' earnings per
share............................................................ 26.7x
Transaction value per share/Last twelve months' Core earnings per
share............................................................ 24.2x
</TABLE>
For purposes of Sandler O'Neill's analyses, earnings per share were based on
fully diluted earnings per share. Core earnings per share excluded non-
recurring expenses of $0.13 per share related to First Liberty's June 19, 1998
merger with Southland Bank Corp. Sandler O'Neill noted that at an exchange
ratio of 0.8500, the First Liberty common stock dividend would effectively be
increased from an annualized rate of $0.380 per share to an annualized rate of
$0.595 per share of BB&T common stock as a result of this transaction.
13
<PAGE>
Stock Trading History. Sandler O'Neill reviewed the history of the reported
trading prices and volume of First Liberty common stock and BB&T common stock,
and the relationship between the movements in the prices of First Liberty
common stock and the BB&T common stock, respectively, to movements in certain
stock indices, including the Standard & Poor's 500 Index (the "S&P Index"),
the NASDAQ Bank Index (the "Bank Index") and, in the case of First Liberty,
the median performance of a composite group of publicly traded regional
savings institutions selected by Sandler O'Neill and, in the case of BB&T, the
median performance of a composite group of regional commercial banks selected
by Sandler O'Neill. During the one year period ended April 26, 1999, the First
Liberty common stock outperformed the Bank Index and its composite peer group
and underperformed the S&P Index. In that same period, BB&T common stock
outperformed each of the indices to which it was compared.
Comparable Company Analysis. Sandler O'Neill used publicly available
information to compare selected financial and market trading information,
including balance sheet composition, asset quality ratios, loan loss reserve
levels, profitability, capital adequacy, dividends and trading multiples, for
First Liberty, one group of savings institutions and two groups of commercial
banks. The group of savings institutions consisted of First Liberty and the
following six publicly traded regional savings institutions (the "Regional
Savings Institution Group"): BankUnited Financial Corp., First Financial
Holdings Inc., Harbor Florida Bancshares Inc., Eagle Bancshares, Coastal
Financial Corp. and CENIT Bancorp Inc. The first group of commercial banks
consisted of the following fourteen publicly traded regional commercial banks
(the "Regional Commercial Bank Group"): First Citizens Bancorp of SC, WesBanco
Inc., Triangle Bancorp Inc., First Charter Corp., Hamilton Bancorp Inc.,
Alabama National BanCorp., Simmons First National Corp., Premier Bancshares
Inc., Capital City Bank Group Inc., Seacoast Banking Corp. of FL, Peoples
Holding Co., Century South Banks Inc., First Community Bancshares Inc. and
Anchor Financial Corp. Sandler O'Neill also compared First Liberty to a group
of thirteen publicly traded commercial banks which had a return on average
equity (based on last twelve months' earnings) of greater than 16% and a price
to tangible book value of greater than 205% (the "Highly Valued Group"). The
Highly Valued Group included the following institutions: TrustCo Bank Corp. of
NY, Park National Corp., Chittenden Corp., National Penn Bancshares Inc.,
Greater Bay Bancorp, Cathay Bancorp Inc., Hamilton Bancorp Inc., CVB Financial
Corp., Mississippi Valley Bancshares, Sterling Bancshares Inc., Premier
Bancshares Inc., Harleysville National Corp. and Frontier Financial Corp. The
analysis compared publicly available financial information for First Liberty
as of and for each of the years ended September 30, 1993 through September 30,
1997 and as of and for the twelve months ended March 31, 1999 and the median
data for each of the Regional Savings Institution Group, the Regional
Commercial Bank Group and the Highly Valued Group as of and for each of the
years ended December 31, 1993 through December 31, 1998.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
BB&T and two different groups of commercial banks. The first group consisted
of BB&T and the following eleven publicly traded large regional commercial
banks (the "Large Regional Commercial Bank Group"): BankAmerica Corp., First
Union Corp., SunTrust Banks Inc., Wachovia Corp., SouthTrust Corp., Regions
Financial Corp., Union Planters Corp., First American Corp., AmSouth Bancorp,
Colonial BancGroup Inc. and Synovus Financial Corp. The second group consisted
of BB&T and the following seven publicly traded large commercial banks which
had a return on average equity (based on last twelve months' earnings) of
greater than 16% and a price to tangible book value of greater than 260% (the
"Large Highly Valued Group"). The Large Highly Valued Group was comprised of
KeyCorp, PNC Bank Corp., Mellon Bank Corp., Comerica Inc., Summit Bancorp,
Fifth Third Bancorp and First Security Corp. The analysis compared publicly
available financial information for BB&T and the median data for each of the
Large Regional Commercial Bank Group and the Large Highly Valued Group as of
and for each of the years ended December 31, 1993 through December 31, 1997
and as of and for the twelve months ended March 31, 1999.
No company included in the above analysis is identical to BB&T or First
Liberty. Accordingly, an analysis of comparable companies is not mathematical;
rather, it involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies and
other factors that could
14
<PAGE>
affect the public trading values or merger transaction values, as the case may
be, of BB&T and First Liberty and the companies to which they are being
compared.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed certain
other merger or acquisition transactions announced during the twelve months
prior to April 26, 1999 involving publicly traded commercial banks as acquired
institutions. Sandler O'Neill reviewed 328 transactions announced nationwide
with transaction values greater than $15 million ("Nationwide Commercial Bank
Transactions") and 19 transactions announced nationwide with transaction
values greater than $200 million and less than $1 billion ("Large Nationwide
Commercial Bank Transactions"). Sandler O'Neill reviewed the ratios of deal
price to last four quarters' earnings per share, deal price to last twelve
months' core earnings per share, deal price to book value, deal price to
tangible book value, tangible book premium to core deposits, deal price to
total deposits and deal price to total assets and computed high, low, mean,
and median ratios and premiums for the respective groups of transactions.
These multiples were applied to First Liberty's financial information as of
and for the twelve months ended March 31, 1999. As illustrated in the
following table, Sandler O'Neill derived an imputed range of values per share
of First Liberty common stock of $22.50 to $29.04 based upon the median
multiples for Nationwide Commercial Bank Transactions and $29.25 to $33.98
based upon the median multiples for Large Nationwide Commercial Bank
Transactions. As calculated by Sandler O'Neill, the implied transaction value
per share of First Liberty common stock in the merger was $33.15.
<TABLE>
<CAPTION>
Large Nationwide
Nationwide Commercial Commercial
Bank Transactions Bank Transactions
------------------------- ---------------------
Median Implied Median Implied
Multiple Value Multiple Value
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Deal price/LTM earnings per
share....................... 21.20x $ 26.29 24.81x $ 30.76
Deal price/LTM Core earnings
per share................... 21.20x 29.04 24.81x 33.98
Deal price/Book value........ 2.50x 23.55 3.21x 30.29
Deal price/Tangible book
value....................... 2.60x 22.50 3.38x 29.25
Deal price/Total deposits.... 26.62% 22.69 37.88% 32.29
Tangible book premium/Core
deposits.................... 19.06% 23.94 30.06% 32.86
Deal price/Total assets...... 23.09% 26.67 29.26% 33.80
</TABLE>
Sandler O'Neill reviewed certain other merger or acquisition transactions
announced during the six months prior to April 26, 1999 involving publicly
traded commercial banks as acquired institutions. Sandler O'Neill reviewed 125
transactions announced nationwide with transaction values greater than $15
million ("Last Six Months' Nationwide Commercial Bank Transactions") and 8
transactions announced nationwide with transaction values greater than $200
million and less than $1 billion ("Last Six Months' Large Nationwide
Commercial Bank Transactions"). Sandler O'Neill reviewed the ratios of deal
price to last four quarters' earnings per share, deal price to last twelve
months' core earnings per share, deal price to book value, deal price to
tangible book value, tangible book premium to core deposits, deal price to
total deposits and deal price to total assets and computed high, low, mean,
and median ratios and premiums for the respective groups of transactions.
These multiples were applied to First Liberty's financial information as of
and for the twelve months ended March 31, 1999. As illustrated in the
following table, Sandler O'Neill derived an imputed range of values per share
of First Liberty common stock of $21.44 to $29.06 based upon the median
multiples for Last Six Months' Nationwide Commercial Bank Transactions and
$27.31 to $32.28 based upon the median multiples for Last Six Months' Large
Nationwide Commercial Bank Transactions. As calculated by Sandler O'Neill, the
implied transaction value per share of First Liberty common stock in the
merger was $33.15.
15
<PAGE>
<TABLE>
<CAPTION>
Last Six Months Last Six Months
Nationwide Large Nationwide
Commercial Bank Commercial Bank
Transactions Transactions
---------------- ----------------
Median Implied Median Implied
Multiple Value Multiple Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Deal price/LTM earnings per share............ 21.21x $26.30 23.57x $29.22
Deal price/LTM Core earnings per share....... 21.21x 29.06 23.57x 32.28
Deal price/Book value........................ 2.34x 22.03 2.90x 27.31
Deal price/Tangible book value............... 2.48x 21.44 3.31x 28.65
Deal price/Total deposits.................... 26.26% 22.39 35.37% 30.15
Tangible book premium/Core deposits.......... 17.39% 22.60 28.26% 31.40
Deal price/Total assets...................... 22.58% 26.08 24.77% 28.61
</TABLE>
Sandler O'Neill reviewed certain other merger or acquisition transactions
announced during the twelve months prior to April 26, 1999 involving publicly
traded savings institutions as acquired institutions. Sandler O'Neill reviewed
72 transactions announced nationwide with transaction values greater than $15
million ("Nationwide Savings Institution Transactions") and 7 transactions
announced nationwide with transaction values greater than $200 million and
less than $1 billion ("Large Nationwide Savings Institution Transactions").
Sandler O'Neill reviewed the ratios of deal price to last four quarters'
earnings per share, deal price to last twelve months' core earnings per share,
deal price to book value, deal price to tangible book value, tangible book
premium to core deposits, deal price to total deposits and deal price to total
assets and computed high, low, mean, and median ratios and premiums for the
respective groups of transactions. These multiples were applied to First
Liberty's financial information as of and for the twelve months ended March
31, 1999. As illustrated in the following table, Sandler O'Neill derived an
imputed range of values per share of First Liberty common stock of $16.87 to
$34.35 based upon the median multiples for Nationwide Savings Institution
Transactions and $22.96 to $37.72 based upon the median multiples for Large
Savings Institution Nationwide Transactions. As calculated by Sandler O'Neill,
the implied transaction value per share of First Liberty common stock in the
merger was $33.15.
<TABLE>
<CAPTION>
Nationwide Large Nationwide
Savings Savings
Institutions Institutions
Transactions Transactions
---------------- ----------------
Median Implied Median Implied
Multiple Value Multiple Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Deal price/LTM earnings per share............ 25.07x $31.09 27.53x $34.14
Deal price/LTM Core earnings per share....... 25.07x 34.35 27.53x 37.72
Deal price/Book value........................ 1.95x 18.38 2.47x 23.26
Deal price/Tangible book value............... 1.95x 16.87 2.65x 22.96
Deal price/Total deposits.................... 30.45% 25.96 39.80% 33.93
Tangible book premium/Core deposits.......... 16.83% 22.14 21.98% 26.31
Deal price/Total assets...................... 21.47% 24.80 24.52% 28.33
</TABLE>
Sandler O'Neill reviewed certain other merger or acquisition transactions
announced during the six months prior to April 26, 1999 involving publicly
traded savings institutions as acquired institutions. Sandler O'Neill reviewed
28 transactions announced nationwide with transaction values greater than $15
million ("Last Six Months' Nationwide Savings Institution Transactions") and
three transactions announced nationwide with transaction values greater than
$200 million and less than $1 billion ("Last Six Months' Large Nationwide
Savings Institution Transactions"). Sandler O'Neill reviewed the ratios of
deal price to last four quarters' earnings per share, deal price to last
twelve months' core earnings per share, deal price to book value, deal price
to tangible book value, tangible book premium to core deposits, deal price to
total deposits and deal price to total assets and computed high, low, mean,
and median ratios and premiums for the respective groups of transactions.
These multiples were applied to First Liberty's financial information as of
and for the twelve months ended March 31, 1999. As illustrated in the
following table, Sandler O'Neill derived an imputed range of values per share
of First Liberty common stock of $18.10 to $32.40 based upon the median
multiples for Last Six Months' Nationwide Savings Institution Transactions and
$28.07 to $34.17 based upon the median multiples for
16
<PAGE>
Last Six Months' Large Nationwide Savings Institution Transactions. As
calculated by Sandler O'Neill, the implied transaction value per share of
First Liberty common stock in the merger was $33.15.
<TABLE>
<CAPTION>
Last Six Months Last Six Months
Nationwide Large Nationwide
Savings Savings
Institutions Institutions
Transactions Transactions
---------------- ----------------
Median Implied Median Implied
Multiple Value Multiple Value
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Deal price/LTM earnings per share............ 23.65x $29.33 20.49x $25.41
Deal price/LTM Core earnings per share....... 23.65x 32.40 20.49x 28.07
Deal price/Book value........................ 1.95x 18.43 3.33x 31.40
Deal price/Tangible book value............... 2.09x 18.10 3.33x 28.84
Deal price/Total deposits.................... 25.96% 22.13 39.80% 33.93
Tangible book premium/Core deposits.......... 12.28% 18.46 31.68% 34.17
Deal price/Total assets...................... 19.99% 23.09 27.63% 31.92
</TABLE>
No company involved in the transactions included in the above analysis is
identical to BB&T or First Liberty and no transaction included in the above
analysis is identical to the merger. Accordingly, an analysis of comparable
transactions is not mathematical; rather, it involves complex considerations
and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the
public trading values or merger transaction values, as the case may be, of
BB&T and First Liberty and the companies to which they are being compared.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill also
performed an analysis which estimated the future stream of after-tax dividend
flows of First Liberty through its fiscal year 2005 under various
circumstances, assuming First Liberty's current dividend payout ratio and
assuming that First Liberty performed in accordance with the earnings
forecasts of its management. To approximate the terminal value of First
Liberty common stock at September 30, 2005, Sandler O'Neill applied price to
earnings multiples ranging from 16.0x to 26.0x and applied multiples of
tangible book value ranging from 200% to 450%. The dividend income streams and
terminal values were then discounted to present values using different
discount rates ranging from 9.0% to 15.0% chosen to reflect different
assumptions regarding required rates of return of holders or prospective
buyers of First Liberty common stock. As illustrated in the following table,
this analysis indicated an imputed range of values per share of First Liberty
common stock of $20.90 to $42.26 when applying the price/earnings multiples
and $18.89 to $52.90 when applying multiples of tangible book value. As
calculated by Sandler O'Neill, the implied transaction value per share of
First Liberty common stock in the merger was $33.15.
<TABLE>
<CAPTION>
Price/Earnings Tangible Book Value
Multiples Multiples
--------------------------------- -------------------------------
Discount Rate 16.0x 26.0x 2.0x 4.5x
------------- ------- ------- ------ ------
<S> <C> <C> <C> <C>
9.0% $ 26.82 $ 42.26 $25.33 $52.90
11.0 24.67 38.80 22.95 47.70
13.0 22.70 35.64 20.81 43.03
15.0 20.90 32.75 18.89 38.86
</TABLE>
In connection with its analysis, Sandler O'Neill considered and discussed
with the First Liberty Board how the present value analysis would be affected
by changes in the underlying assumptions, including variations with respect to
the growth rate of assets, net interest spread, non-interest income, non-
interest expenses and dividend payout ratio. Sandler O'Neill noted that the
discounted dividend stream and terminal value analysis is a widely used
valuation methodology, but the results of such methodology are highly
dependent upon the numerous assumptions that must be made, and the results
thereof are not necessarily indicative of actual values or future results.
Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential pro
forma effects of the merger, based upon a transaction value of $33.15 and
assuming that the price of BB&T common stock was $39.00 per share, BB&T's and
First Liberty's current and projected income statements and balance sheets,
and assumptions
17
<PAGE>
regarding the economic environment, accounting and tax treatment of the
merger, charges associated with the merger, operating efficiencies and other
adjustments discussed with the senior managements of First Liberty and BB&T.
Sandler O'Neill assumed a closing date for the merger of September 30, 1999.
As illustrated in the following table, this analysis indicated that the merger
would be accretive to BB&T's earnings per share for the twelve months ended
September 30, 2000 and accretive to tangible book value per share of BB&T
common stock as of September 30, 2000. The actual results achieved by BB&T may
vary from projected results and the variations may be material.
<TABLE>
<CAPTION>
Twelve months ended September 30, 2000
--------------------------------------
<S> <C>
BB&T Projected stand-alone GAAP earnings per share................... $ 2.07
BB&T Pro forma GAAP earnings per share............................... $ 2.09
BB&T Stand-alone tangible book value per share....................... $10.43
BB&T Pro forma tangible book value per share......................... $10.51
BB&T Stand-alone Cash earnings per share............................. $ 2.19
BB&T Pro forma Cash earnings per share............................... $ 2.21
</TABLE>
In connection with rendering its April 27, 1999 opinion, Sandler O'Neill
reviewed, among other things: (1) the merger agreement and exhibits thereto;
(2) the stock option agreement between First Liberty and BB&T; (3) certain
publicly available financial statements of First Liberty and other historical
financial information provided by First Liberty that Sandler O'Neill deemed
relevant; (4) certain publicly available financial statements of BB&T that
Sandler O'Neill deemed relevant; (5) certain financial analyses and forecasts
of First Liberty prepared by and/or reviewed with management of First Liberty
and the views of senior management of First Liberty regarding First Liberty's
past and current business, results of operations, financial condition and
future prospects; (6) consensus earnings per share estimates for BB&T
published by First Call for the years ending 1999 and 2000 and the views of
senior management of BB&T regarding BB&T's past and current business, results
of operations, financial condition and future prospects; (7) the pro forma
impact of the merger; (8) the publicly reported historical price and trading
activity for First Liberty common stock and BB&T common stock, including a
comparison of certain financial and stock market information for First Liberty
and BB&T with similar publicly available information for certain other
companies the securities of which are publicly traded; (9) the financial terms
of recent business combinations in the savings institution industry, to the
extent publicly available; (10) the current market environment generally and
the banking environment in particular; and (11) such other information,
financial studies, analyses and investigations and financial, economic and
market criteria as Sandler O'Neill considered relevant. Sandler O'Neill was
not asked to, and did not, solicit indications of interest in a potential
transaction from other third parties.
In connection with rendering the Sandler Opinion, Sandler O'Neill confirmed
the appropriateness of its reliance on the analyses used to render its April
27, 1999 opinion by performing procedures to update certain of such analyses
and by reviewing the assumptions upon which such analyses were based and the
other factors considered in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and relied
upon the accuracy and completeness of all the financial information, analyses
and other information that was publicly available or otherwise furnished to,
reviewed by or discussed with it, and Sandler O'Neill does not assume any
responsibility or liability for independently verifying the accuracy or
completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of First Liberty or BB&T
or any of their respective subsidiaries, or the collectability of any such
assets, nor was it furnished with any such evaluations or appraisals. Sandler
O'Neill is not an expert in the evaluation of allowances for loan losses and
it has not made an independent evaluation of the adequacy of the allowance for
loan losses of First Liberty or BB&T, nor has it reviewed any individual
credit files relating to First Liberty or BB&T. With First Liberty's consent,
Sandler O'Neill has assumed that the respective allowances for loan losses for
both First Liberty and BB&T are adequate to cover such losses and will be
adequate on a pro forma basis for the combined entity. In addition, Sandler
O'Neill has not conducted any physical inspection of the properties or
facilities of First Liberty or BB&T. With respect to all financial projections
reviewed with First
18
<PAGE>
Liberty's management and the published earnings per share estimates of BB&T
used by Sandler O'Neill in its analyses, Sandler O'Neill assumed that they had
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of those preparing them of the respective future
financial performances of First Liberty and BB&T and that such performances
will be achieved. Sandler O'Neill expressed no opinion as to such financial
projections or estimates or the assumptions on which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. Sandler O'Neill assumed, in all respects material to its
analysis, that all of the representations and warranties contained in the
merger agreement and all related agreements are true and correct, that each
party to such agreements will perform all of the covenants required to be
performed by such party under such agreements and that the conditions
precedent in the merger agreement are not waived. Sandler O'Neill also
assumed, with First Liberty's consent, that there has been no material change
in First Liberty's and BB&T's assets, financial condition, results of
operations, business, or prospects since the date of the last publicly filed
financial statements available to them, that First Liberty and BB&T will
remain as going concerns for all periods relevant to its analyses, and that
the merger will be accounted for as a pooling of interests and will qualify as
a tax-free reorganization for federal income tax purposes.
First Liberty has agreed to pay Sandler O'Neill a transaction fee in
connection with the merger, which is contingent upon the consummation of the
merger. Based on the closing price of First Liberty common stock on September
13, 1999 (the latest practicable date prior to the date of this proxy
statement/prospectus), First Liberty would pay Sandler O'Neill a transaction
fee of approximately $2,121,990. First Liberty has paid Sandler O'Neill a fee
of $250,000 for rendering its fairness opinion, which will be credited against
that portion of the transaction fee due upon consummation of the merger. First
Liberty has also agreed to reimburse Sandler O'Neill for its reasonable out-
of-pocket expenses incurred in connection with its engagement and to indemnify
Sandler O'Neill and its affiliates and their respective partners, directors,
officers, employees, agents, and controlling persons against certain expenses
and liabilities, including liabilities under securities laws.
In the ordinary course of its business as a broker-dealer, Sandler O'Neill
may purchase securities from and sell securities to First Liberty and BB&T and
may actively trade the equity or debt securities of First Liberty and BB&T and
their respective affiliates for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Exchange Ratio
At the effective time of the merger, First Liberty 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 Liberty common stock outstanding at the effective
time will be converted into the right to receive a portion of a share of BB&T
common stock that will depend on the average reported closing price of BB&T
common stock on the New York Stock Exchange Composite Transaction List for the
ten trading days (determined by excluding days on which the NYSE is closed)
ending on the tenth calendar day preceding the effective time of the merger
(the "Closing Value"):
. if the Closing Value is at least $38.22 but not more than $39.12, each
share of First Liberty common stock will be converted into the right to
receive a number of shares of BB&T common stock equal to $33.25 divided
by the Closing Value;
. if the Closing Value is less than $38.22, each share of First Liberty
common stock will be converted into the right to receive 0.87 of a share
of BB&T common stock; and
. if the Closing Value is more than $39.12, each share of First Liberty
common stock will be converted into the right to receive 0.85 of a share
of BB&T common stock.
First Liberty 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 Liberty common stock may be more or less than
the Closing Value. First Liberty
19
<PAGE>
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"
on page 5.
No fractional shares of BB&T common stock will be issued in the merger.
Holders of First Liberty 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 Liberty Common Stock Certificates
At the effective time, by virtue of the merger and without any action on the
part of First Liberty or the holders of First Liberty common stock, each share
of First Liberty 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 Liberty
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 Liberty 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 Liberty 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 Liberty 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 Liberty
common stock will be deemed upon the effective time for all purposes to
represent only the right to receive the merger consideration. No interest will
be paid or accrued on the merger consideration upon the surrender of the
certificate or certificates representing shares of First Liberty common stock.
With respect to any certificate for First Liberty 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 Liberty 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 Liberty in respect
of shares of First Liberty 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 Liberty 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 Liberty common stock are converted, regardless of whether such
holders have exchanged their certificates representing First Liberty 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 Liberty 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
Liberty common stock represented by such certificate.
20
<PAGE>
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 after September 30, 1999 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 Liberty
shareholders and all other conditions to the respective obligations of BB&T
and First Liberty 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 fourth quarter
of 1999.
Conditions to the Merger
The obligations of BB&T and First Liberty 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 Liberty 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;
. 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 Liberty 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; and
. First Liberty 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 Liberty 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 Liberty will not recognize any gain or loss to the
extent that they exchange shares of First Liberty common stock for
shares of BB&T common stock.
The obligations of First Liberty 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 Liberty:
. 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 Liberty must have received certain closing certificates and legal
opinions from BB&T and its counsel.
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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 Liberty. 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;
. First Liberty 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
Liberty concerning the shares of BB&T common stock to be received by
them;
. BB&T must have received certain closing certificates and legal opinions
from First Liberty and its counsel;
. 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; and
. BB&T must have received executed employment agreements from Robert F.
Hatcher, Lee B. Murphey and Larry D. Flowers, in each case with
substantially the terms described elsewhere herein.
In addition, all representations and warranties of First Liberty 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
Liberty 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 Liberty's amended and restated articles of incorporation or
bylaws,
. its forbearance from taking any actions that would negatively affect the
pooling-of-interests or tax-free elements of the merger or the receipt
of necessary regulatory approvals and
. actions taken to exempt the merger from any applicable anti-takeover
laws
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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 Liberty 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 Liberty.
Conduct of First Liberty's 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
Liberty 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 $.095 per share of First
Liberty 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,
Employee Savings and Stock Ownership Plan 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, except that, on or before the earlier
to occur of November 30, 1999 and the effective time of the merger,
First Liberty may, consistent with past practice and subject to the
restriction on increasing compensation set forth below, grant stock
options for First Liberty's fiscal year ending September 30, 1999 based
on First Liberty's financial performance for such fiscal year (1) to
purchase up to 116,850 shares of First Liberty common stock in the
aggregate to approximately 40 First Liberty employees under its stock
option plans based upon each such employee's performance under the First
Liberty Performance Excellence Plan and (2) to purchase up to 116,000
shares of First Liberty common stock in the aggregate to approximately
11 executive officers and nine directors of First Liberty under its
stock option plans; provided, that any First Liberty employee to whom
any such options are issued who would otherwise be eligible to receive
stock options from BB&T in the first quarter of 2000 will not be so
eligible;
. 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 Liberty
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;
. 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
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employees (other than renewal of any of arrangement consistent with past
practice or amendment of First Liberty's Shareholder Rights Plan only to
extend its term, if and to the extent that BB&T determines that such
amendment will not cause the merger not to be accounted for as a pooling
of interests);
. solicit inquiries or proposals with respect to, furnish any information
relating to, or participate in any discussions concerning, any other
business combination with First Liberty or any First Liberty 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 Liberty 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 Liberty Board to
the First Liberty shareholders);
. enter into (a) any material agreement or commitment not made in the
ordinary course, (b) any material agreement, indenture or other
instrument not made in the ordinary course relating to the borrowing of
money by First Liberty or a First Liberty subsidiary or guarantee by
First Liberty or a First Liberty 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 Liberty will cooperate with BB&T
to adopt policies, practices and procedures consistent with those used
by BB&T and in accordance with generally accepted accounting principles
and all applicable regulations;
. change its methods of accounting in effect at September 30, 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
September 30, 1998, except as required by changes in law;
. incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $100,000 for any one expenditure or
$1,000,000 in the aggregate;
. incur any new indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank, draws on its
existing line of credit with SunTrust 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;
. except in connection with the possible sale of two of its branches as
disclosed to BB&T as of the date of the merger agreement, 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 Liberty, 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;
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. exercise the option agreement executed concurrently with the merger
agreement other than in accordance with its terms or dispose of shares
of First Liberty 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
Liberty may at any time (whether before or after approval of the merger
agreement and the plan of merger by the First Liberty 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 Liberty
shareholders of the merger agreement and the plan of merger, however, may
modify the amount of the consideration to be provided to holders of First
Liberty 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
Liberty's obligations, First Liberty 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 the merger may be abandoned:
. at any time before the effective time, by the mutual consent in writing
of BB&T and First Liberty;
. 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 material breach of any of its
representations, warranties, covenants or undertakings;
. 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
Liberty do not approve the merger agreement and the plan of merger; or
. at any time following December 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 material breach of any of
its representations, warranties, covenants or undertakings.
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
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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 Liberty.
Interests of Certain Persons in the Merger
Certain members of First Liberty's management, including all of its
directors, have interests in the merger that are in addition to their
interests as shareholders of First Liberty generally. The First Liberty Board
was aware of these factors and considered them, among other matters, in
approving the merger agreement.
Employment Agreements
In connection with the merger, Branch Banking and Trust Company, BB&T's
North Carolina banking subsidiary ("BB&T-NC" or the "Employer") will enter
into an employment agreement with Robert F. Hatcher, with a term ending on
November 15, 2006 (Mr. Hatcher's sixty-fifth birthday) and a three-year
employment agreement with each of Larry D. Flowers and Lee B. Murphey. It is
also anticipated that BB&T-NC will enter into a three-year employment
agreement with each of J. Larry Wallace, George A. Molloy and Robert W. Aiken
(together with Messrs. Hatcher, Flowers and Murphey, the "Senior Executives"),
an eighteen-month employment agreement with each of Charles G. Davis and David
L. Hall and a twelve-month employment agreement with each of Marian M. Mackle
and Richard A. Hills, Jr. (Messrs. Davis, Hall, Hills and Ms. Mackle,
collectively, the "Executives"); provided, that the employment agreements with
each of the Executives may be terminated early by the Executive as of the date
on which the conversion of First Liberty's data processing systems to those of
BB&T-NC is completed. The employment agreements will provide, respectively,
for the employment of Mr. Hatcher as Chairman of the Georgia State Advisory
Board and President of the Georgia operations of BB&T-NC, Mr. Flowers as
Regional President of BB&T-NC, Mr. Aiken as President of New South Financial
Services, Mr. Molloy as President of Liberty Mortgage Corporation, and Messrs.
Murphey, Wallace, Davis, Hall and Hills and Ms. Mackle as Senior Vice
Presidents of BB&T-NC.
Each of the employment agreements provides that the Senior Executive or
Executive in question will receive a base salary at least equal to that
previously received from First Liberty (plus an agreed upon amount equal to
the value of benefits lost as a result of the merger) with, in the case of
Messrs. Hatcher, Flowers, Murphey and Wallace, an annual increase in base
salary each year of the term of his employment agreement in the same
percentage as the average percentage increase of officers of BB&T for such
year. The base salary of Messrs. Molloy and Aiken, as well as each Executive,
will be reviewed in accordance with Employer's standard policies and
procedures for similarly situated officers.
Mr. Hatcher will be eligible to receive an annual bonus payment calculated
at a target level of 25% of his base salary (with a maximum bonus payment not
to exceed 50% of his base salary) pursuant to the terms of BB&T's Amended and
Restated Short Term Incentive Plan and will be granted annually stock options
having a value of 42% of his base salary at the time of the grant under BB&T's
Amended and Restated 1995 Omnibus Stock Incentive Plan. The targets for
achieving various levels of Mr. Hatcher's annual bonus will be determined in
good faith by BB&T for each year. If Mr. Hatcher elects to become an
independent consultant of BB&T-NC as provided below, he would no longer be
entitled to receive a bonus or a grant of stock options.
Each of the other Senior 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 Senior Executive may become eligible and designated a participant,
and to receive stock options under the above-referenced Omnibus Stock
Incentive Plan on the same basis as other similarly situated officers of
Employer, except that no Senior Executive to whom options are issued for First
Liberty's fiscal year ending September 30, 1999 as permitted by the merger
agreement will receive stock options from BB&T in the first quarter of 2000.
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Each Senior Executive and Executive 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 Senior Executive's employment agreement provides that, if the Employer
terminates the Senior Executive's employment other than because of disability
or for cause, the Senior 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 ("Senior Executive Termination
Compensation") for the remainder of what would otherwise have been the term of
the agreement. In addition, each Senior 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 Senior
Executive Termination Compensation are made.
Each Executive's employment agreement provides that, if the Employer
terminates the Executive's employment other than because of disability or for
cause, or in the event the Executive voluntarily terminates his or her
employment within thirty days after the end of the term of the applicable
employment agreement or, if earlier, as of the date on which the conversion of
First Liberty's data processing systems to those of Employer is completed, the
Executive will, if he or she complies with certain noncompetition provisions,
be entitled to receive, in full satisfaction of all obligations of the
Employer under such employment agreement, a lump sum payment equal to two
times his base salary (in the case of Messrs. Davis and Hall) or her or his
base salary (in the case of Ms. Mackle and Mr. Hills) ("Executive Termination
Compensation").
Each of the employment agreements provides that, in the event of a "Change
of Control" (as defined below) of the Employer or BB&T, the Senior Executive
or the Executive may voluntarily terminate employment for "Good Reason" (as
defined below) until the earlier of twelve months after the Change of Control
or the end of the term of the employment agreement 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 his or her Termination Compensation times 2.99, and (b) continue for the
remainder of the term of the employment agreement (except, in the case of Mr.
Hatcher, for a period of three years following his termination of employment)
to receive health insurance coverage and other group employee benefits on the
same terms as were in effect either (1) at the date of termination or (2) 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, at the
date of the Change of Control.
"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
in the case of Mr. Aiken) from the location where the Executive worked
immediately before a Change in Control (or, in the cases of Mr. Hills
and Mr. Molloy, outside the metropolitan Atlanta area), 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.
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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;
. any other event occurs that the BB&T Board determines should constitute
a Change of Control; or
. in the case of Mr. Aiken, a transfer by BB&T of control or of
substantially all the assets of NewSouth Financial Services, Inc.
("NewSouth") to Associates First Capital Corporation or any subsidiary
thereof.
Mr. Hatcher's agreement provides that, at any time after the earlier of
eighteen months following the effective date of the merger or the date on
which the conversion of First Liberty's data processing systems to those of
Employer is completed, Mr. Hatcher may elect to relinquish his
responsibilities as President of Georgia Operations and to become an
independent consultant to Employer, while retaining the position of Chairman
of the Georgia State Advisory Board. As a consultant, Mr. Hatcher would,
subject to the direction of Employer, render services in the nature of
customer and community relations, business development, employee relations and
general advice and assistance relating to Employer's customers and employees
and to the growth and development in Georgia of the business of Employer. Such
services would be rendered at such times as are mutually agreeable to Employer
and Mr. Hatcher and as would be reasonably convenient to both Employer and Mr.
Hatcher. While acting as a consultant, Mr. Hatcher would not be entitled to
earn his base salary or the bonus or to be granted the stock options described
above but would receive as compensation for such services and for certain
noncompetition, nonsolicitation and other covenants (i) an annual amount equal
to the average of his base salary payable for the twelve complete calendar
months preceding the start of his service as an independent consultant, (ii)
health insurance and life insurance benefits comparable to the group employee
benefits which Employer may from time to time extend to its officers, at a
cost to Mr. Hatcher no greater than the cost to such officers, (iii) a
retirement benefit payable directly by Employer economically equivalent to the
benefit he would have received under Employer's defined benefit pension plan
(and reduced by any duplicative benefits payable under such defined benefit
plan) if he had been an employee of Employer during the period in which he
serves as an independent consultant, (iv) a benefit economically equivalent to
the benefit he would have been entitled to receive under Employer's 401(k)
plan if he were a participant in such plan, based on compensation deferrals by
Mr. Hatcher during the period in which he serves as an independent consultant
and investment performance of investment options available under such plan as
selected from time to time by Mr. Hatcher and (v) the same disability benefits
that he received as an employee of Employer (or their economic equivalent).
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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 Senior
Executive's or the Executive's annualized includable compensation for the
"base period," which is generally the most recent five taxable years of the
Senior Executive or 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 employment agreements will supersede any of the existing employment
agreements and change of control arrangements of the Senior Executives and the
Executives with First Liberty or its subsidiaries; provided that, pursuant to
the change of control provision in his 1990 employment agreement with First
Liberty, Mr. Hatcher will be entitled to receive a lump sum payment equal to
two years' salary upon completion of the merger.
First Liberty Advisory Boards
In connection with the merger, BB&T will offer each member of the advisory
boards of First Liberty a seat on BB&T's Advisory Boards for their respective
market areas. 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 members of the advisory boards of
First Liberty 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, Robert F. Hatcher will be appointed to the BB&T-NC Board and will
be named chairman of BB&T's advisory board for the State of Georgia. Members
of the BB&T-NC board receive an annual retainer of $5,000 plus $1,000 for each
meeting attended, and members of BB&T's advisory board for the State of
Georgia will receive a fee of $1,000 per meeting attended. None of the
foregoing fees are to be paid to any member of the BB&T-NC board or any member
of any of BB&T's advisory boards who is also an employee of BB&T or an
affiliate of BB&T.
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 Liberty for acts
or omissions before the effective time. This insurance will provide at least
the same coverage and amounts as contained in First Liberty's 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 Liberty's 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 Liberty or any First Liberty
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 Liberty's amended and restated
articles of incorporation or bylaws on the date hereof and is permitted under
Georgia law. If BB&T or its subsidiary maintaining the insurance provided for
above or any successors or assigns consolidates with or merges into any other
entity and is not the continuing or surviving entity of the consolidation or
merger, or shall transfer all or substantially all of its assets to any
entity, proper provision will be made so that the successor or assign of BB&T
or its subsidiary will assume the obligations provided for above.
Regulatory Considerations
Bank holding companies (such as BB&T) and savings and loan holding companies
(such as First Liberty) and their depository institution subsidiaries are
highly regulated institutions, with numerous federal and state laws
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and regulations governing their activities. Among these laws and regulations
are requirements of prior approval by applicable government regulatory
authorities in connection with acquisition and merger transactions such as the
merger, as summarized below. In addition, these institutions are subject to
ongoing supervision, regulation and periodic examination by various federal
and state financial institution regulatory agencies. Detailed discussions of
such ongoing regulatory oversight and the laws and regulations under which it
is carried out can be found in the Annual Reports on Form 10-K of BB&T and
Form 10-K of First Liberty incorporated by reference herein. See "Where You
Can Find More Information" on page 54. 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 merger are subject to certain regulatory
approvals, as set forth below. To the extent that the following information
describes statutes and regulations, it is qualified in its entirety by
reference to those particular statutes and regulations.
The Merger
The merger is subject to approval by the Federal Reserve Bank of Richmond,
under delegated authority, under the Bank Holding Company Act of 1956. Under
that act, a bank holding company, such as BB&T, may not acquire direct or
indirect ownership or control of a company, such as First Liberty, that
operates a savings institution (which is a permissible nonbanking activity
under the act) unless the Federal Reserve determines that the acquisition of
such company's nonbanking 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 Liberty 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, BB&T is required to file a notice of the merger with the Federal
Reserve, and the Federal Reserve is required to forward said notice to the
Office of Thrift Supervision for its review and comment. 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
Annotated, which permit an out-of-state bank holding company to acquire a
savings institution having 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
and condition of the acquiring holding company and the savings institution 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
savings institution to be acquired.
All of the required applications and notices for the merger were submitted
to the appropriate regulatory agencies. BB&T received the approval of the
Federal Reserve Bank of Richmond on July 30, 1999 and the approval of the
Georgia Department of Banking and Finance on August 23, 1999. In approving the
merger, the Georgia Department stated the following:
The Department's review of the [merger] application does not include an
evaluation of the proposed transaction from the financial perspective
of the individual shareholders of First Liberty. Further, no
shareholder should construe an approval of the [merger] application by
the Department to be a recommendation that the shareholders vote to
approve the proposal [to approve the merger]. Each shareholder entitled
to vote should evaluate the proposal to determine the personal
financial impact of the proposed transaction. Shareholders not fully
knowledgeable in such matters are advised to obtain the assistance of
competent professionals in evaluating all aspects of the proposal,
including any determination that the completion of the proposed
transaction is in the best financial interest of the shareholder.
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The Subsidiary Merger
Although not required by the terms of the merger agreement or the plan of
merger, BB&T expects to effect the subsidiary merger during the second quarter
of 2000. The subsidiary merger is 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 the subsidiary 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 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 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 merger 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
merger under the bank merger act provisions of the North Carolina General
Statutes. In its review of the subsidiary merger, 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 merger to the Georgia Department of Banking and Finance.
BB&T and First Liberty are not aware of any other governmental approvals or
actions that are required for completion of the merger or the subsidiary
merger, 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 Liberty and to BB&T and First Liberty. This summary is not intended
to be a complete description of all of the federal income tax consequences of
the merger. No information is provided with respect to the tax consequences of
the merger under any other tax laws, including applicable state, local and
foreign tax laws. In addition, the following discussion may not be applicable
with respect to certain specific categories of shareholders, including but not
limited to persons who are corporations, trusts, dealers in securities,
financial institutions, insurance companies or tax exempt organizations;
persons who are not United States citizens or resident aliens or domestic
entities (partnerships or trusts); persons who are subject to alternative
minimum tax (to the extent that tax affects the tax consequences of the
merger) or are subject to the "golden parachute" provisions of the Internal
Revenue Code (to the extent that tax affects the tax consequences of the
merger); persons who acquired First Liberty 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 Liberty 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.
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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
Liberty by reason of the merger; (c) the shareholders of First Liberty 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 Liberty common
stock; (d) a shareholder of First Liberty 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 Liberty 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
Liberty common stock will include the period during which the shareholder held
the shares of First Liberty common stock surrendered in the exchange, provided
that the First Liberty 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 Liberty 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 Liberty Board wished to proceed
with the merger, First Liberty 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 Liberty 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 Liberty, 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 Liberty 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 Liberty (as
issuer) entered into an agreement with BB&T (as grantee), pursuant to which
First Liberty granted an option to BB&T to purchase from First Liberty up to
2,838,708 shares of First Liberty common stock (subject to adjustment in
certain circumstances) at a price of $25.00 per share (subject to adjustment
under certain circumstances). The purchase of any shares of First Liberty
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 Liberty from
considering or proposing such an acquisition, even if they were prepared to
offer to pay consideration to shareholders of First Liberty with a higher
current market price than the BB&T common stock to be received for First
Liberty common stock pursuant to the merger agreement.
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The option agreement is filed as an exhibit to the registration statement,
of which this proxy statement/ prospectus is a part, and the following
discussion is qualified in its entirety by reference to the option agreement.
See "Where You Can Find More Information" on page 54.
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 Liberty 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 Liberty
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 Liberty and its subsidiaries or (c) the issuance, sale or other
disposition of securities representing 15% or more of the voting power
of First Liberty 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 15% or more of
the outstanding shares of First Liberty common stock.
The obligation of First Liberty to issue shares of First Liberty 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 Liberty of a covenant or agreement in the merger
agreement or an inaccuracy in First Liberty's 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 Liberty to approve the merger agreement
and the plan of merger.
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 15% or more of the outstanding shares of
First Liberty common stock or the filing of a registration statement
with respect to such an offer, or
. the failure of the shareholders of First Liberty 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 Liberty 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 15% or more of the
outstanding shares of First Liberty 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.
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To the knowledge of BB&T and First Liberty, 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 Liberty 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 Liberty 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
Liberty 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 Liberty 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
Liberty 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 Liberty common stock over the
purchase price, multiplied by (b) the number of shares of First Liberty
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 Liberty 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 Liberty 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 Liberty 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 Liberty 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;
. to permit any third party to merge into First Liberty with First Liberty
as the continuing or surviving corporation, but, in connection
therewith, the then outstanding shares of First Liberty common stock are
changed into or exchanged for stock or other securities of First Liberty
or any other person or cash or any other property, or the outstanding
shares of First Liberty 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 Liberty 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 Liberty's
assets or (y) any person controlling the
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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 Liberty 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
Liberty 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 Liberty 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 Liberty 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.
Coverage under the group health plans of First Liberty and its subsidiaries
will be deemed "creditable coverage" within the meaning of ERISA Section
701(c) for purposes of any preexisting condition limitation which may apply
under any group health plan maintained by the BB&T employer, except that no
coverage prior to a "significant break in coverage" as defined in ERISA
Section 701(c)(2) shall be counted as "creditable coverage."
Each employee of First Liberty or a First Liberty 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 Liberty or a First Liberty 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, including without limitation, outstanding
obligations under First Liberty's Nonqualified Deferred Compensation Plan,
that First Liberty 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.
401(k) Plan; Termination of First Liberty Employee Savings and Stock
Ownership Plan
BB&T shall cause the First Liberty Employee Savings and Stock Ownership Plan
(the "First Liberty ESSOP") to be merged with the BB&T 401(k) plan, and the
account balances of former employees of First Liberty or the First Liberty
Subsidiaries who are participants in the First Liberty ESSOP 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 Internal Revenue Code and regulations thereunder (and subject to BB&T's
right to terminate such plan).
Each employee of First Liberty at the effective time of the merger who
becomes an employee of BB&T or a BB&T subsidiary immediately following the
effective time will be eligible to participate in BB&T's 401(k) plan (subject
to BB&T's right to terminate such plan). For purposes of administering BB&T's
401(k) plan,
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service with First Liberty and the First Liberty subsidiaries will 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.
Stock Options
At the effective time, each stock option granted under the First Liberty
1992 Stock Incentive Plan and the First Liberty Director 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 Liberty stock option plan, except that
(a) BB&T and the compensation committee of the BB&T Board will be substituted
for First Liberty and the compensation and benefits committee of the First
Liberty 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 Liberty 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 Liberty 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 (775,796) and the maximum number of options
permitted under the merger agreement to be granted by First Liberty prior to
the effective time (232,850), options to purchase an aggregate of up to
approximately 1,008,646 shares of First Liberty common stock may be
outstanding at the effective time. Any shares of First Liberty 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 Liberty 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 Liberty at the effective time
may be resold by them only (a) in transactions registered under the Securities
Act or permitted by the resale provisions of Rule 145
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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 Liberty. Those who
may be deemed affiliates of First Liberty 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 Liberty and
include directors and certain executive officers of First Liberty. 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 Liberty 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, the District of Columbia, Georgia, West Virginia and
Kentucky 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 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 342 banking offices throughout North Carolina and
57 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 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.
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BB&T-VA offers a full range of commercial and retail banking services
through 104 banking offices in the Hampton Roads and Richmond areas and the
southern, central, southwestern and northeastern regions of Virginia.
Regional Acceptance Corporation ("RAC"), of Greenville, North Carolina, was
acquired on September 1, 1996. RAC, which has 28 branch offices in North
Carolina, South Carolina, Tennessee and Virginia, specializes in indirect
financing for consumer purchases of mid-model and late-model used automobiles.
Scott & Stringfellow, Inc. ("Scott & Stringfellow"), acquired on March 26,
1999, provides services in retail brokerage, institutional equity and debt
underwriting, investment advice, corporate finance, equity trading and equity
research and, on May 5, 1999, was merged with another subsidiary of BB&T,
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.
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:
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 Financial Corporation
("MainStreet"). With approximately $2 billion in assets, MainStreet operated
46 full-service banking offices in Virginia and three in Maryland and provided
full-service banking and trust services throughout Virginia, southern Maryland
and metropolitan Washington, D.C.
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 July 9, 1999, BB&T acquired First Citizens Corporation ("First Citizens")
in a tax-free transaction accounted for as a pooling of interests in which
First Citizens shareholders received 1.0789 shares of BB&T common stock for
each share of First Citizens common stock. First Citizens operated 13 banking
offices and one mortgage loan office in the south metropolitan Atlanta area.
On July 14, 1999, BB&T acquired Mason-Dixon Bancshares, Inc. ("Mason-Dixon")
in a tax-free transaction accounted for as a pooling of interests in which
Mason-Dixon shareholders received 1.30 shares of BB&T common stock for each
share of Mason-Dixon common stock. Mason-Dixon's branch network included 23
banking offices, 12 consumer finance offices and three mortgage loan offices
in Maryland and extends BB&T's presence in the economically strong markets in
central Maryland.
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On July 28, 1999, BB&T announced that it had agreed to buy Premier
Bancshares Inc. ("Premier") in a tax-free transaction to be accounted for as a
pooling of interests. In the transaction, Premier common shareholders would
receive .5155 of a share of BB&T common stock for each share of Premier common
stock and Premier preferred shareholders would receive a number of shares of
BB&T common stock equal to the quotient of $60.00 divided by the value of BB&T
common stock over a pricing period prior to the closing. Through its banking
subsidiaries, Premier operates 32 banking offices in Atlanta and North Georgia
and, though Premier Lending, 10 mortgage banking offices. The acquisition of
Premier, expected to close in the first quarter of 2000, is expected to expand
BB&T's presence in the economically strong metropolitan Atlanta market.
On August 27, 1999, BB&T acquired Matewan Bancshares Inc. ("Matewan") in a
tax-free transaction. In the transaction, Matewan common shareholders received
0.67 shares of BB&T common stock for each share of Matewan common stock and
Matewan preferred shareholders received 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 operated 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.
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.
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 June 30, 1999, BB&T's Tier 1 and total capital ratios
were 9.4% and 13.5%, 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 June 30, 1999 was 6.6%. 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
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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 June 30, 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 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.
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INFORMATION ABOUT FIRST LIBERTY
First Liberty is a savings and loan holding company headquartered in Macon,
Georgia which owns and operates First Liberty Bank and its wholly owned
subsidiaries, Liberty Mortgage Corporation ("Liberty Mortgage"), NewSouth and
OFC Capital Corporation ("OFC Capital"). At June 30, 1999, First Liberty had
total assets of approximately $1.7 billion, total deposits of approximately
$1.2 billion and stockholders' equity of approximately $132 million.
First Liberty Bank is a federally chartered stock savings bank headquartered
in Macon, Georgia which serves Macon, Savannah and other Georgia cities
through its home office and 37 full-service branch offices. First Liberty Bank
operates as a system of community banks under a single charter, along with a
residential construction loan production office located in Atlanta, Georgia.
Based on total assets at June 30, 1999, First Liberty Bank is the largest
savings institution headquartered in Georgia.
Through Liberty Mortgage, First Liberty Bank operates a mortgage banking
business through correspondent relationships in all of its market areas and
certain other states. Liberty Mortgage originates permanent first mortgage
loans on residential properties for First Liberty Bank's portfolio and for
sale in the secondary market. As of June 30, 1999, Liberty Mortgage had
originated approximately $746 million of permanent residential mortgage loans
for the fiscal year. Liberty Mortgage's loan servicing portfolio was
approximately $1.7 billion at June 30, 1999, including approximately $124
million of loans serviced for First Liberty Bank.
First Liberty organized NewSouth in fiscal 1996 to engage in the consumer
finance business. NewSouth now operates 13 offices, including 11 in Georgia
and two in Tennessee.
In June 1998, First Liberty acquired by merger Southland Bank Corporation of
Georgia and merged Southland's two bank subsidiaries into First Liberty Bank.
In August 1998, First Liberty acquired OFC Capital, a commercial leasing
company. In April 1999, First Liberty acquired by merger Vidalia Bancshares,
Inc.
Additional information about First Liberty can be found in First Liberty's
Annual Report on Form 10-K for the fiscal year ended September 30, 1998,
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1998, March
31, 1999 and June 30, 1999, and Current Report on Form 8-K filed on July 30,
1999, all of which are incorporated by reference in this Proxy
Statement/Prospectus.
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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 September 1, 1999, there were
318,206,581 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 Liberty common stock outstanding at the record date, it is estimated
that approximately 12,410,547 shares of BB&T common stock would be issued in
the merger (assuming an exchange ratio of .87).
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.
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Notwithstanding these purposes and intentions of shareholder rights plans,
such plans, including that of BB&T, could have the effect of discouraging a
business combination that shareholders believe to be in their best interests.
The provisions of BB&T's shareholder rights plan are discussed below.
On December 17, 1996, the BB&T Board declared a dividend distribution of one
right (a "Right," and collectively the "Rights") for each outstanding share of
BB&T common stock to shareholders of record at the close of business on
January 17, 1997. One Right will also be distributed for each share of BB&T
common stock issued between January 17, 1997 and the occurrence of a
"Distribution Date" (described in the next paragraph). Each Right entitles the
registered holder to purchase from BB&T a unit consisting of one-hundredth of
a share (a "Unit") of BB&T Junior Preferred Stock at a Purchase Price of
$145.00 per Unit, subject to adjustment, or, under certain circumstances,
other securities or property. The description and terms of the Rights are set
forth in the Rights Agreement, dated as of December 17, 1996, between BB&T and
BB&T-NC in the capacity of Rights Agent (the "Rights Agreement").
Initially, the Rights will be attached to all BB&T common stock certificates
representing shares then outstanding, and no separate Rights Certificates (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
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stock, each holder of a Right will thereafter have the right to receive at the
time specified in the Rights Agreement, (a) upon exercise and payment of the
exercise price, BB&T common stock (or, in certain circumstances, cash,
property or other securities of BB&T) having a value equal to two times the
exercise price of the Right or (b) at the discretion of the BB&T Board, upon
exercise and without payment of the exercise price, BB&T common stock (or, in
certain circumstances, cash, property or other securities of BB&T) having a
value equal to the difference between the exercise price of the Right and the
value of the consideration that would be payable under clause (a).
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person or Adverse Person will be null and void. Rights will not
become exercisable following the occurrence of either of the events set forth
above, however, until such time as the Rights are no longer redeemable by BB&T
as set forth below.
For example, at an exercise price of $145.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $290.00 worth of BB&T common stock (or other consideration,
as noted above) for $145.00. Assuming that the BB&T common stock had a per
share value of $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
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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."
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.
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" on page 48.
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COMPARISON OF SHAREHOLDERS' RIGHTS
At the effective time, holders of First Liberty 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
Liberty common stock. Since BB&T is organized under the laws of the State of
North Carolina and First Liberty 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 Liberty 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 Liberty 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 Liberty, to which the shareholders of First
Liberty 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
September 1, 1999, there were 318,206,581 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."
First Liberty
First Liberty's authorized capital stock consists of 100,000,000 shares of
First Liberty common stock, par value $1.00 per share and 5,000,000 shares of
First Liberty preferred stock, no par value. As of September 8, 1999, there
were 14,264,996 shares of First Liberty common stock outstanding. No shares of
First Liberty 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 Liberty
Under First Liberty's bylaws, special meetings of the shareholders may be
called at any time by the Chairman of the Board, the President or a majority
of the First Liberty Board and shall be called by the Chairman of the Board,
the President or the Secretary upon the written request of the holders of not
less than 30% of all the outstanding capital stock entitled to vote at the
meeting. The GBCC presently provides that a corporation must hold a special
meeting of shareholders if the holders of at least 25%, or such greater or
lesser percentage as
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may be provided in the articles of incorporation or bylaws, of all the votes
entitled to be cast on any issue proposed to be considered at the proposed
special meeting sign, date and deliver to the corporation's Secretary one or
more written demands for the meeting describing the purpose or purposes for
which it is to be held. Under First Liberty's bylaws, any action that may be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action taken, shall be given by all of
the shareholders entitled to vote on the subject matter of the consent.
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 Liberty
Pursuant to First Liberty's amended and restated articles of incorporation,
the First Liberty Board is divided into three classes as nearly equal in
number as possible, with the term of office of one class expiring each year.
At each annual meeting of the shareholders of First Liberty, the directors of
one class are elected to hold office for a term expiring at the third annual
meeting following their election and until their successors have been duly
elected and qualified. During the intervals between annual meetings of
shareholders, any vacancy occurring in the First Liberty Board caused by the
resignation, removal, death or other incapacity of one or more directors, and
any newly created directorships resulting from an increase in the number of
directors, shall be filled by a majority vote of the directors then in office,
whether or not such directors constitute a quorum. Each director elected by
the First Liberty Board to fill a vacancy holds office for the unexpired term
in respect of which such vacancy occurred.
The First Liberty Board consists of not less than six nor more than 15
members, with the precise number to be fixed by resolution of the First
Liberty Board from time to time. The minimum number of directors may be
reduced below six and the maximum number of directors may be increased above
15 only upon the affirmative vote of the shareholders of record holding two-
thirds of the then outstanding shares of stock of each class of the
corporation entitled to vote in elections for directors at a meeting of
shareholders called for that purpose. Pursuant to the GBCC, directors of First
Liberty may be removed by the shareholders with or without cause. Holders of
First Liberty common stock do not have cumulative voting rights in the
election of directors.
Dividends and Other Distributions
BB&T
The NCBCA prohibits a North Carolina corporation from making any
distributions to shareholders, including the payment of cash dividends, that
would render it insolvent or unable to meet its obligations as they become due
in the ordinary course of business. BB&T is not subject to other express
regulatory restrictions on payments of dividends and other distributions. The
ability of BB&T to pay distributions to the holders of BB&T common stock will
depend, however, to a large extent upon the amount of dividends its bank
subsidiaries, which are subject to restrictions imposed by regulatory
authorities, pay to BB&T. In addition, the Federal Reserve could oppose a
distribution by BB&T if it determined that such a distribution would harm
BB&T's ability to support its bank subsidiaries. There can be no assurances
that dividends will be paid in the future. The declaration, payment and amount
of any such future dividends would depend on business conditions, operating
results, capital, reserve requirements and the consideration of other relevant
factors by the BB&T Board.
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First Liberty
Payment of dividends on First Liberty common stock will be subject to the
GBCC. The GBCC provides, among other things, that dividends may be paid in
cash, property or stock unless First Liberty is insolvent or the dividend
payment would render it insolvent.
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 Liberty
First Liberty's bylaws provide that a shareholder wishing to nominate a
person as a candidate for election to the First Liberty Board must submit such
nomination in writing to the Secretary of First Liberty at least 20 days prior
to the date of the annual meeting of shareholders at which such nominee will
be considered for election. If First Liberty's nominating committee, comprised
of the First Liberty Board, shall fail or refuse to make nominations for
candidates for election to the First Liberty board at least 20 days prior to
an annual meeting of shareholders, nominations for directors may be made at
such annual meeting by any shareholder entitled to vote, and any such
nominations must be voted upon at the annual meeting.
As with BB&T, 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 First Liberty 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 First Liberty
begins to print and mail its proxy materials.
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
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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 Liberty
As permitted by the GBCC, First Liberty's amended and restated articles of
incorporation contain provisions which eliminate the personal liability of
directors for monetary damages to First Liberty or its shareholders for breach
of their fiduciary duties as directors, except to the extent such elimination
of liability is prohibited by the GBCC. In accordance with the GBCC, these
provisions do not limit the liability of any director for any appropriation of
a business opportunity of First Liberty in violation of the director's duty;
for acts or omissions which involve intentional misconduct or a knowing
violation of law; for any dividend payment, stock repurchase, stock redemption
or distribution in liquidation that was prohibited under Georgia law; or for
any transaction from which the director derived an improper personal benefit.
These provisions do not limit or eliminate the rights of First Liberty or any
shareholder to seek an injunction or any other non-monetary relief in the
event of a breach of a director's fiduciary duty. In addition, these
provisions apply only to claims against a director arising out of his role as
a director and do not relieve a director from liability for violations of
statutory law such as certain liabilities imposed on a director under the
federal securities laws.
In addition, First Liberty's amended and restated articles of incorporation
provide for the indemnification of both directors and officers for expenses
incurred by them in connection with the defense or settlement of claims
asserted against them in their capacities as directors and officers. In
certain cases, this right of indemnification extends to judgments or penalties
assessed against them.
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
Liberty) 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 Liberty
The GBCC generally requires that any plan of merger or share exchange be
approved by (i) a majority of all the votes entitled to be cast on the plan by
all shares entitled to vote on the plan, voting as a single voting group, and
(ii) a majority of all the votes entitled to be cast by holders of the shares
of each voting group entitled to vote separately on the plan as a voting group
by the articles of incorporation. Generally, approval of a merger or share
exchange by the shareholders of the surviving corporation or the acquiring
corporation, respectively, is not required if (i) the articles of
incorporation of the surviving or acquiring corporation will not differ from
its articles before the merger or share exchange, (ii) each share of stock of
the surviving or acquiring corporation outstanding immediately before the
effective date of the merger or share exchange is to be an identical
outstanding or reacquired share immediately after the merger or share
exchange, and (iii) the number and kind of shares outstanding immediately
after the merger or share exchange, plus the number of shares and derivative
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securities issued pursuant to the merger or share exchange, will not exceed
the total number of shares of the surviving or acquiring corporation
authorized for issuance by its articles of incorporation immediately before
the merger or share exchange. The GBCC generally provides that a corporation
may sell, lease, exchange, or otherwise dispose of all or substantially all of
its property if such action is approved by a majority of all the votes
entitled to be cast on the transaction.
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 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 Liberty
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), provided that there are at least three continuing
directors at the time of such approval; (b) the transaction must be approved
by two-thirds of the continuing directors and a majority of the votes entitled
to be cast by holders of voting shares, other than voting shares beneficially
owned by 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.
Fair price requirements are not applicable to any corporation unless they
are specifically incorporated in the bylaws of the corporation. First
Liberty's bylaws do not incorporate the fair price requirements of the GBCC.
First Liberty's amended and restated articles of incorporation require the
affirmative vote of the holders of not less than 80% of the then outstanding
shares of First Liberty common stock (including the affirmative vote of the
holders of at least 80% of the then outstanding shares of First Liberty common
stock other than those beneficially owned by an interested shareholder) in
order to effect certain business combinations with interested shareholders.
However, this supermajority vote is not required if either (i) the business
combination is approved by two-thirds of the members of the First Liberty
Board who are unaffiliated with the interested shareholder and
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by two-thirds of the full First Liberty Board or (ii) the terms of the
business combination meet specified fair pricing criteria and tests.
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 Liberty
The GBCC provides generally that a Georgia corporation's articles of
incorporation may be amended if the amendment is approved by a majority of the
votes entitled to be cast on the amendment by each voting group entitled to
vote. First Liberty's amended and restated articles of incorporation require
such a majority vote. The GBCC generally provides that a Georgia corporation's
bylaws may be amended by the corporation's board of directors or by the
corporation's shareholders, except that a bylaw limiting the authority of the
board of directors or establishing staggered terms for directors may only be
adopted, amended or repealed by the shareholders. First Liberty's bylaws
authorize an amendment to the bylaws by a two-thirds vote of the full First
Liberty Board or by a majority vote of the votes cast by the shareholders.
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
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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.
First Liberty
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 Liberty common stock do not have appraisal rights
in connection with the BB&T merger because, as of the record date, shares of
First Liberty common stock were listed on the National Market System of The
Nasdaq Stock Market, Inc. and the shares of BB&T common stock are held by at
least 2,000 record shareholders.
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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 Liberty
In the event of the liquidation, dissolution or winding up of the affairs of
First Liberty, after there shall have been paid to or set aside for the
holders of any class of stock having preferences over the First Liberty common
stock in the event of such liquidation, dissolution or winding up the full
amounts of which they are respectively entitled, the holders of the First
Liberty common stock and the holders of any class or series of stock entitled
to participate therewith as to distribution of assets, shall be entitled,
after payment or provision for payment of all debts and liabilities of First
Liberty, to receive the remaining assets of First Liberty available for
distribution, in cash or in kind.
SHAREHOLDER PROPOSALS
Any proposal that 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 Liberty's proxy materials must be received at the main
office of First Liberty, 201 Second Street, Macon, Georgia 31297 no later than
October 15, 1999. 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 Liberty's proxy statement and set forth on the form of proxy issued
for the next annual meeting of shareholders, if applicable. In addition, the
proxy solicited for the next annual meeting of shareholders will confer
discretionary authority to vote on any shareholder proposal presented at such
meeting unless notice of such proposal is given to First Liberty no later than
November 15, 1999. It is urged that any proposals be sent by certified mail,
return receipt requested.
OTHER BUSINESS
The First Liberty 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, Washington, D.C., 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.
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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 September 3,
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 acquisitions by BB&T of MainStreet
Financial Corporation on March 5, 1999, First Citizens Corporation on July 9,
1999 and Mason-Dixon Bancshares, Inc. on July 14, 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.
With respect to the unaudited historical consolidated financial information
of First Liberty Financial Corp. for the three-month periods ended December
31, 1998 and 1997 and the six-month periods ended March 31, 1999 and 1998
incorporated by reference in this proxy statement/prospectus,
PricewaterhouseCoopers LLP reported that they have applied limited procedures
in accordance with professional standards for a review of such information.
However, their separate reports dated February 12, 1999 and May 14, 1999
incorporated by reference herein, state that they did not audit and they do
not express an opinion on the unaudited historical consolidated financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on
the unaudited historical consolidated financial information because those
reports are not a "report" or a "part" of the registration statement prepared
or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7
and 11 of the Act.
The supplemental consolidated financial statements of First Liberty
Financial Corp. incorporated by reference in this proxy statement/prospectus
from First Liberty's Current Report on Form 8-K filed on July 30, 1999 have
been audited by PricewaterhouseCoopers LLP, independent accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein in reliance on such report given upon the authority of that
firm as experts in auditing and accounting.
The consolidated financial statements of First Liberty Financial Corp.
incorporated by reference in this proxy statement/prospectus from First
Liberty's Annual Report on Form 10-K for the year ended September 30, 1998
have been audited by PricewaterhouseCoopers LLP, independent accountants, as
indicated in their report with respect thereto, and are incorporated by
reference herein in reliance on such report given upon the authority of that
firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
BB&T and First Liberty 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, 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
Liberty.
BB&T has filed the registration statement to register with the SEC the BB&T
common stock to be issued to First Liberty 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.
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The SEC allows First Liberty 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 Liberty and BB&T have previously filed with the SEC.
These documents contain important information about First Liberty 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 quarters ended March 31, 1999
and June 30, 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), April 30, 1999,
July 14, 1999, July 29, 1999 and September 3,
1999
Registration Statement on Form Filed January 10, 1997
8-A (concerning BB&T's
shareholder rights plan)
First Liberty SEC Filings (File No. 0-14417)
Annual Report on Form 10-K For the fiscal year ended September 30, 1998
Quarterly Reports on Form 10-Q For the fiscal quarters ended December 31,
1998, March 31, 1999 and June 30, 1999
Current Reports on Form 8-K Filed July 30, 1999
The description of First Liberty Filed April 15, 1986
common stock in First Liberty's
Registration Statement on Form 8-A
</TABLE>
First Liberty 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 Liberty has
supplied all such information relating to First Liberty before the merger.
55
<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 Richard A. Hills, Jr.
BB&T Corporation Secretary
Post Office Box 1290 First Liberty Financial Corp.
Winston-Salem, North Carolina 27104 201 Second Street
(336) 733-3021 Macon, Georgia 31297
(912) 743-0911
If you would like to request documents from us, please do so by October 20,
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 Liberty 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 September 15, 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.
56
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST LIBERTY FINANCIAL CORP.
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I
DEFINITIONS.............................................................. A-1
ARTICLE II
THE MERGER............................................................... A-5
2.1Merger................................................................ A-5
2.2Filing; Plan of Merger................................................ A-5
2.3Effective Time........................................................ A-5
2.4Closing............................................................... A-5
2.5Effect of Merger...................................................... A-5
2.6Further Assurances.................................................... A-6
2.7Merger Consideration.................................................. A-6
2.8Conversion of Shares; Payment of Merger Consideration................. A-6
2.9Conversion of Stock Options........................................... A-7
2.10Merger of Subsidiaries............................................... A-8
2.11Anti-Dilution........................................................ A-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST LIBERTY.......................... A-8
3.1Capital Structure..................................................... A-8
3.2Organization, Standing and Authority.................................. A-9
3.3Ownership of Subsidiaries............................................. A-9
3.4Organization, Standing and Authority of the Subsidiaries.............. A-9
3.5Authorized and Effective Agreement.................................... A-9
3.6Securities Filings; Financial Statements; Statements True............. A-10
3.7Minute Books.......................................................... A-10
3.8Adverse Change........................................................ A-11
3.9Absence of Undisclosed Liabilities.................................... A-11
3.10Properties........................................................... A-11
3.11Environmental Matters................................................ A-11
3.12Loans; Allowance for Loan Losses..................................... A-12
3.13Tax Matters.......................................................... A-12
3.14Employees; Compensation; Benefit Plans............................... A-13
3.15Certain Contracts.................................................... A-15
3.16Legal Proceedings; Regulatory Approvals.............................. A-16
3.17Compliance with Laws; Filings........................................ A-16
3.18Brokers and Finders.................................................. A-16
3.19Repurchase Agreements; Derivatives................................... A-17
3.20Deposit Accounts..................................................... A-17
3.21Related Party Transactions........................................... A-17
3.22Certain Information.................................................. A-17
3.23Tax and Regulatory Matters........................................... A-17
3.24State Takeover Laws; Shareholder Rights Plan......................... A-18
3.25Labor Relations...................................................... A-18
3.26No Right to Dissent.................................................. A-18
3.27Fairness Opinion..................................................... A-18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T................................... A-18
4.1Capital Structure of BB&T............................................. A-18
</TABLE>
i
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<TABLE>
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<S> <C>
4.2Organization, Standing and Authority of BB&T.......................... A-18
4.3Authorized and Effective Agreement.................................... A-19
4.4Organization, Standing and Authority of BB&T Subsidiaries............. A-19
4.5Securities Documents; Statements True................................. A-19
4.6Certain Information................................................... A-19
4.7Tax and Regulatory Matters............................................ A-20
ARTICLE V
COVENANTS................................................................ A-20
5.1First Liberty Shareholder Meeting..................................... A-20
5.2Registration Statement; Proxy Statement/Prospectus.................... A-20
5.3Plan of Merger; Reservation of Shares................................. A-20
5.4Additional Acts....................................................... A-21
5.5Best Efforts.......................................................... A-21
5.6Certain Accounting Matters............................................ A-21
5.7Access to Information................................................. A-22
5.8Press Releases........................................................ A-22
5.9Forbearances of First Liberty......................................... A-22
5.10Employment Agreements................................................ A-24
5.11Affiliates........................................................... A-24
5.12Section 401(k) Plan; ESSOP; Other Employee Benefits.................. A-24
5.13Directors and Officers Protection.................................... A-25
5.14Forbearances of BB&T................................................. A-26
5.15Reports.............................................................. A-26
5.16Exchange Listing..................................................... A-26
5.17Advisory Board for Georgia Area...................................... A-27
5.18Board of Directors of Branch Banking and Trust Company............... A-27
ARTICLE VI
CONDITIONS PRECEDENT..................................................... A-27
6.1Conditions Precedent--BB&T and First Liberty.......................... A-27
6.2Conditions Precedent--First Liberty................................... A-28
6.3Conditions Precedent--BB&T............................................ A-28
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT............................... A-29
7.1Termination........................................................... A-29
7.2Effect of Termination................................................. A-30
7.3Survival of Representations, Warranties and Covenants................. A-30
7.4Waiver................................................................ A-30
7.5Amendment or Supplement............................................... A-31
ARTICLE VIII
MISCELLANEOUS............................................................ A-31
8.1Expenses.............................................................. A-31
8.2Entire Agreement...................................................... A-31
8.3No Assignment......................................................... A-31
8.4Notices............................................................... A-31
8.5Specific Performance.................................................. A-32
8.6Captions.............................................................. A-32
8.7Counterparts.......................................................... A-32
8.8Governing Law......................................................... A-32
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ANNEXES
Annex A Articles of Merger
Annexes B-1 through B-10 Employment Agreements with Officers
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of April
27, 1999, is by and between FIRST LIBERTY FINANCIAL CORP. ("First Liberty"), a
Georgia corporation having its principal office at Macon, 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 Liberty 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 Liberty is concurrently
granting to BB&T an option to acquire, under certain circumstances, 2,838,708
shares of the common stock, par value $1.00 per share, of First Liberty.
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 Liberty Common Stock, which shall be
executed immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust
Company of Virginia.
"Business Day" shall mean all days other than Saturdays, Sundays and Federal
Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act, as amended (42 U.S.C. 9601 et seq.).
A-1
<PAGE>
"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 Liberty 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 without limitation
CERCLA, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901
et seq., and other laws and regulations relating to emissions, discharges,
releases, or threatened releases of any Hazardous Substances, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Sandler O'Neill & Partners, L.P.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1998, 1997, and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1998, 1997, and 1996, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1998, and (b) with respect to First Liberty, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of First Liberty as of September 30, 1998, September 30, 1997 and
September 30, 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 September 30, 1998, September 30, 1997
and September 30, 1996 as filed by First Liberty in Securities Documents and
(ii) the consolidated statements of financial condition of First Liberty
(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
Liberty with respect to periods ended subsequent to September 30, 1998.
"First Liberty Common Stock" shall mean the shares of voting common stock,
par value $1.00 per share, of First Liberty, with rights attached pursuant to
Shareholder Rights Plan dated August 2, 1989.
A-2
<PAGE>
"First Liberty Disclosure Memorandum" shall mean the written information in
one or more documents, each of which is entitled "First Liberty Disclosure
Memorandum" and dated on or before the date of this Agreement and delivered
not later than seven days after the date of execution of this Agreement by
First Liberty 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 Liberty ESSOP" shall mean the First Liberty Financial Corp. Employee
Savings and Stock Ownership Plan.
"First Liberty Subsidiaries" shall mean First Liberty Bank, Liberty Mortgage
Corporation, NewSouth Financial Services, Inc., OFC Capital Corporation and
any and all other Subsidiaries of First Liberty as of the date hereof and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of First Liberty after the date hereof and held as a Subsidiary by
First Liberty 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 Liberty shall mean an event,
fact, change, or occurrence which, individually or together with any other
event, fact, 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 Liberty and the
First Liberty Subsidiaries taken as a whole, or (ii) materially impairs the
ability of BB&T or First Liberty 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 Liberty
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.
"Performance Excellence Plan" shall mean the First Liberty Financial Corp.
Performance Excellence Plan.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of First
Liberty 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 Liberty Common Stock, aggregating 771,314 shares.
"Stock Option Plans" shall mean the First Liberty Financial Corp. 1992 Stock
Incentive Plan and the First Liberty Financial Corp. 1995 Director 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.
1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the following sections:
<TABLE>
<S> <C>
Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(c)
Constituent Corporations Section 2.1
Effective Time Section 2.3
Employer Entity Section 5.12(a)
Exchange Ratio Section 2.7(a)
Merger Recitals
Merger Consideration Section 2.7(a)
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
First Liberty Introduction
Surviving Corporation Section 2.1(a)
</TABLE>
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<PAGE>
ARTICLE II
The Merger
2.1 Merger
BB&T and First Liberty are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the GBCC. At the
Effective Time:
(a) First Liberty 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 Liberty 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 Liberty Common Stock. Upon fulfillment or waiver of the
conditions specified in Article VI and provided that this Agreement has not
been terminated pursuant to Article VII, the Constituent Corporations will
cause the Articles of Merger to be executed and filed with the Secretary of
State of North Carolina and the Secretary of State of Georgia, as provided in
Section 55-11-05 of the NCBCA and Section 14-2-1105 of the GBCC, respectively.
The Plan of Merger is incorporated herein by reference, and adoption of this
Agreement by the Boards of Directors of the Constituent Corporations and
approval by the shareholders of First Liberty 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 a date after September
30, 1999 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 Liberty
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
A-5
<PAGE>
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of
the Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in
law or any other actions are necessary, desirable or proper to vest, perfect
or confirm of record or otherwise, in the Surviving Corporation, the title to
any property or rights of the Constituent Corporations acquired or to be
acquired by reason of, or as a result of, the Merger, the Constituent
Corporations agree that such Constituent Corporations and their proper
officers and directors shall and will execute and deliver all such proper
deeds, assignments and assurances in law and do all things necessary,
desirable or proper to vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and that the proper officers and directors of the Surviving
Corporation are fully authorized and directed in the name of the Constituent
Corporations or otherwise to take any and all such actions.
2.7 Merger Consideration
(a) As used herein, the term "Merger Consideration" shall mean the number of
shares of BB&T Common Stock (to the nearest ten thousandth of a share) to be
exchanged for each share of First Liberty Common Stock issued and outstanding
as of the Effective Time and cash (without interest) to be payable in exchange
for any fractional share of BB&T Common Stock which would otherwise be
distributable to a First Liberty shareholder as provided in Section 2.7(b).
The number of shares of BB&T Common Stock to be issued for each issued and
outstanding share of First Liberty Common Stock (the "Exchange Ratio") shall
equal the quotient of $33.25 divided by the Closing Value (as defined in
Section 2.7(b)), except that, in the event the Closing Value is less than
$38.22, the Exchange Ratio shall be 0.87 and, in the event the Closing Value
is more than $39.12, the Exchange Ratio shall be 0.85.
(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 ten trading
days (determined by excluding days on which the NYSE is closed) ending on the
tenth calendar day 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 Liberty or the holders of record of First Liberty Common
Stock, each share of First Liberty 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 Liberty 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 Liberty 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 Liberty Common Stock. With respect
to any certificate for First Liberty Common Stock that has been lost or
destroyed, BB&T
A-6
<PAGE>
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 Liberty 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 Liberty 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
Liberty 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 Liberty in respect of shares of First Liberty Common Stock in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time, subject to compliance by First Liberty with Section 5.9(b). To
the extent permitted by law, former shareholders of record of First Liberty
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 Liberty Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Liberty Common Stock for certificates representing BB&T Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by BB&T on the BB&T Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares of BB&T Common Stock issuable
pursuant to this Agreement, but 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 Liberty 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 Liberty 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 Liberty
and its Compensation and Benefits Committee 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 Liberty 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
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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 Liberty 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
Liberty 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 Liberty 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.
(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 Merger of Subsidiaries
In the event that BB&T shall request, First Liberty shall take such actions,
and shall cause the First Liberty 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 Liberty Subsidiaries with and into, in each case, one of the BB&T
Subsidiaries.
2.11 Anti-Dilution
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case
of a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
Representations and Warranties of First Liberty
Except as Disclosed, First Liberty represents and warrants to BB&T as
follows (the representations and warranties herein of First Liberty 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 Liberty consists of 100,000,000 shares
of First Liberty Common Stock, par value $1.00 per share, and 5,000,000 shares
of First Liberty preferred stock, no par value. As of the date
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hereof, 14,264,867 shares of First Liberty Common Stock are issued and
outstanding and no shares of First Liberty preferred stock are outstanding. No
other classes of capital stock of First Liberty, common or preferred, are
authorized, issued or outstanding. All outstanding shares of First Liberty
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 Liberty Common Stock reserved in connection
with the Stock Option Plans and the Performance Excellence Plan, and (ii)
2,838,708 shares of First Liberty Common Stock reserved in connection with the
BB&T Option Agreement. First Liberty has granted options to acquire 771,314
shares of First Liberty Common Stock under the Stock Option Plans, which
options remain outstanding as of the date hereof, and may issue additional
options based on First Liberty's financial performance for its fiscal year
ending September 30, 1999 to purchase up to 116,850 shares of First Liberty
Common Stock under the Performance Excellence Plan and up to 116,000 shares of
First Liberty Common Stock under the Stock Option Plans. 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 Liberty shareholder to own, to vote or to
dispose of, the capital stock of First Liberty. Holders of First Liberty
Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
First Liberty 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 Liberty 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 Liberty Disclosure Memorandum lists all of the
First Liberty 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
Liberty (directly or indirectly), the percentage ownership interest so owned
by First Liberty and its business activities. The outstanding shares of
capital stock or other equity interests of the First Liberty Subsidiaries are
validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by First Liberty 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 Liberty Subsidiaries, and there are no
agreements, understandings or commitments relating to the right of First
Liberty to own, to vote or to dispose of said interests. None of the shares of
capital stock or other equity interests of the First Liberty Subsidiaries have
been issued in violation of the preemptive rights of any person. Section 3.3
of the First Liberty 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
Liberty Subsidiaries) owned directly or indirectly by First Liberty.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Liberty Subsidiary which is a depository institution is a
federally chartered savings association with its deposits insured by the FDIC.
Each of the First Liberty Subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization. Each of the First
Liberty 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 Liberty 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 Liberty 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 Liberty shareholders of this Agreement
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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 Liberty 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
Liberty, and each is enforceable against First Liberty 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 Liberty 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
Liberty or any First Liberty Subsidiary, (ii) constitute or result in a breach
of any term, condition or provision of, or constitute a default under, or give
rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of First Liberty or any First Liberty 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 Liberty or any First Liberty
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 Liberty of the Merger and the other transactions
contemplated in this Agreement.
3.6 Securities Filings; Financial Statements; Statements True
(a) First Liberty has timely filed all Securities Documents required by the
Securities Laws to be filed since September 30, 1995. First Liberty has
Disclosed or made available to BB&T a true and complete copy of each
Securities Document filed by First Liberty with the Commission after September
30, 1995 and prior to the date hereof, which are all of the Securities
Documents that First Liberty 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 Liberty fairly present or will fairly
present, as the case may be, the consolidated financial position of First
Liberty and the First Liberty 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 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 Liberty or any First Liberty 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 Liberty and each of the First Liberty Subsidiaries
contain or will contain at Closing accurate records of all meetings and other
corporate actions of their respective shareholders and Boards
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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 September 30, 1998, First Liberty and the First Liberty Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent,
except as disclosed in the most recent First Liberty 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 fact or event involving a prospective adverse change
in the business, financial condition, results of operations or business
prospects of First Liberty or any of the First Liberty Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Liberty and the
First Liberty Subsidiaries are disclosed in the most recent Financial
Statements of First Liberty or are normally recurring business obligations
incurred in the ordinary course of its business since the date of First
Liberty's most recent Financial Statements.
3.10 Properties
(a) First Liberty and the First Liberty 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 Liberty as of September 30, 1998
or acquired after such date, except for (i) liens for current taxes not yet
due and payable, (ii) pledges to secure deposits and other liens incurred in
the ordinary course of banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount
or extent, or (iv) dispositions and encumbrances for adequate consideration in
the ordinary course of business.
(b) All leases and licenses pursuant to which First Liberty or any First
Liberty 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 Liberty and the First Liberty Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither First Liberty nor
any First Liberty Subsidiary has received any communication alleging that
First Liberty or the First Liberty 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 Liberty nor any
First Liberty 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 Liberty or any First Liberty Subsidiary, (ii) any person
or entity whose liability for any Environmental Claim First Liberty or any
First Liberty 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 Liberty or any First Liberty Subsidiary, or any real
or personal property which First Liberty or any First Liberty 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 Liberty or any First
Liberty Subsidiary holds a security interest securing a loan recorded on the
books of First Liberty or any First Liberty Subsidiary. Neither First Liberty
nor any First Liberty 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.
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(c) First Liberty and the First Liberty Subsidiaries are in compliance with
all recommendations contained in any environmental audits, analyses and
surveys received by First Liberty relating to all real and personal property
owned or leased by First Liberty or any First Liberty Subsidiary and all real
and personal property of which First Liberty or any First Liberty 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 Liberty or any First Liberty Subsidiary or
against any person or entity whose liability for any Environmental Claim First
Liberty or any First Liberty 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 Liberty and the First Liberty
Subsidiaries are valid and properly documented and were made in the ordinary
course of business, and the security therefor, if any, is valid and properly
perfected. Neither the terms of such loans, nor any of the loan documentation,
nor the manner in which such loans have been administered and serviced, nor
First Liberty's procedures and practices of approving or rejecting loan
applications, violates any federal, state or local law, rule, regulation or
ordinance applicable thereto, including, without limitation, the TILA,
Regulations O and Z of the Federal Reserve Board, the CRA, the Equal Credit
Opportunity Act, as amended, and state laws, rules and regulations relating to
consumer protection, installment sales and usury.
(b) The allowances for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of First Liberty are adequate as
of their respective dates under the requirements of GAAP and applicable
regulatory requirements and guidelines.
3.13 Tax Matters
(a) First Liberty and the First Liberty 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 Liberty nor any First
Liberty 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 Liberty
and the First Liberty 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 Liberty and the First Liberty Subsidiaries are complete and
accurate. Neither First Liberty nor any First Liberty 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 Liberty or any First Liberty
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to First Liberty or any First Liberty
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.
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(d) Neither First Liberty nor any of the First Liberty 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 Liberty or a First Liberty
subsidiary) or has any liability for taxes of any person (other than First
Liberty and the First Liberty 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 Liberty and the First Liberty 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 Liberty nor any of the First Liberty Subsidiaries has made
any payments, is obligated to make any payments, or is a party to any contract
that could obligate it to make any payments that would be disallowed as a
deduction under Section 280G or 162(m) of the Code.
3.14 Employees; Compensation; Benefit Plans
(a) Compensation. First Liberty 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 Liberty and of each First Liberty
Subsidiary and each other person (in each case other than as an employee) to
whom First Liberty or any First Liberty 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 Liberty has Disclosed an accurate and complete list of all
Plans, as defined below, contributed to, maintained or sponsored by First
Liberty or any First Liberty Subsidiary, to which First Liberty or any
First Liberty 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 Liberty or any First Liberty
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 Liberty nor any First Liberty 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 Liberty or any First Liberty
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
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Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA
has incurred any "accumulated funding deficiency" as such term is defined
in such Sections of ERISA and the Code, whether or not waived, and each
Plan has always fully met the funding standards required under Title I of
ERISA and Section 412 of the Code. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) has occurred with respect to any such Plan, and the
PBGC has not commenced or threatened the termination of any Plan. None of
the assets of First Liberty or any First Liberty Subsidiary is the subject
of any lien arising under Section 302(f) of ERISA or Section 412(n) of the
Code, neither First Liberty nor any First Liberty 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 Liberty or any First
Liberty 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 Liberty or any First Liberty Subsidiary is a member or was a
member during such five-year period.
(vii) As of September 30, 1998, the fair market value of the assets of
each Plan that is a tax qualified defined benefit plan equaled or exceeded,
and as of the Closing Date will equal or exceed, the present value of all
vested and nonvested liabilities thereunder determined in accordance with
reasonable actuarial methods, factors and assumptions applicable to a
defined benefit plan on an ongoing basis. With respect to each Plan that is
subject to the funding requirements of Section 412 of the Code and Section
302 of ERISA, all required contributions for all periods ending prior to or
as of the Closing Date (including periods from the first day of the then-
current plan year to the Closing Date and including all quarterly
contributions required in accordance with Section 412(m) of the Code) shall
have been made. With respect to each other Plan, all required payments,
premiums, contributions, reimbursements or accruals for all periods ending
prior to or as of the Closing Date shall have been made. No tax qualified
Plan has any unfunded liabilities. The First Liberty ESSOP has not incurred
any debt to acquire shares of First Liberty Common Stock, and there is no
suspense account maintained under the First Liberty ESSOP.
(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 Liberty nor, to the best knowledge of First
Liberty, any First Liberty
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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 Liberty or any First
Liberty 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 Liberty and each First Liberty Subsidiary has been and is
presently in compliance with all of the requirements of Section 4980B of
the Code.
(xi) Neither First Liberty nor any First Liberty Subsidiary has a
liability as of September 30, 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 Liberty as of
September 30, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) First Liberty's or any
First Liberty 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).
(xiii) With respect to each Plan, First Liberty 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 Liberty and any First Liberty
Subsidiary may be amended or terminated at any time by action of First
Liberty's Board of Directors, or such First Liberty's Subsidiary's Board of
Directors, as the case may be, or a committee of such Board of Directors or
duly authorized officer, in each case subject to the terms of the Plan and
compliance with applicable laws and regulations (and limited, in the case
of multiemployer plans, to termination of the participation of First
Liberty or a First Liberty Subsidiary thereunder).
3.15 Certain Contracts
(a) Neither First Liberty nor any First Liberty 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 Liberty or any First Liberty Subsidiary or the
guarantee by First Liberty or any First Liberty Subsidiary of any such
obligation, which cannot be terminated within less than 30 days after the
Closing Date by First Liberty or any First Liberty 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 Liberty or
any First Liberty Subsidiary (without payment of any penalty or cost), or that
provides benefits which are contingent, or the
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application of which is altered, upon the occurrence of a transaction
involving First Liberty 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 Liberty nor any First Liberty 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 Liberty,
threatened against First Liberty or any First Liberty Subsidiary or against
any asset, interest, plan or right of First Liberty or any First Liberty
Subsidiary, or, to the best knowledge of First Liberty, 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 Liberty, threatened against any present or former director or officer of
First Liberty or any First Liberty Subsidiary that would reasonably be
expected to give rise to a claim against First Liberty or any First Liberty
Subsidiary for indemnification. There are no actual or, to the best knowledge
of First Liberty, 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 Liberty, no fact or
condition relating to First Liberty or any First Liberty Subsidiary exists
(including, without limitation, noncompliance with the CRA) that would prevent
First Liberty or BB&T from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of First Liberty and each First Liberty 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 Liberty nor any
First Liberty 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 Liberty nor any First Liberty 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 September 30, 1996, First Liberty and each of the First Liberty
Subsidiaries has filed all reports, registrations, notices and statements, and
any amendments thereto, that it was required to file with federal and state
regulatory authorities, including, without limitation, the OTS, Commission,
FDIC, Federal Reserve Board and applicable state regulators. Each such report,
registration, notice and statement, and each amendment thereto, complied with
applicable legal requirements.
3.18 Brokers and Finders
Neither First Liberty nor any First Liberty 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
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Option Agreement, except for an obligation to the Financial Advisor, the
nature and extent of which has been Disclosed, for investment banking
services, and except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
(a) With respect to all agreements currently outstanding pursuant to which
First Liberty or any First Liberty Subsidiary has purchased securities subject
to an agreement to resell, First Liberty or the First Liberty 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, except to the extent required
by the Federal Home Bank of Atlanta. With respect to all agreements currently
outstanding pursuant to which First Liberty or any First Liberty Subsidiary
has sold securities subject to an agreement to repurchase, neither First
Liberty nor the First Liberty Subsidiary has pledged collateral in excess of
the amount of the debt secured thereby. Neither First Liberty nor any First
Liberty Subsidiary has pledged collateral in excess of the amount required
under any interest rate swap or other similar agreement currently outstanding.
(b) Neither First Liberty nor any First Liberty 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,
liquidity management and interest rate risk management, in each case
consistent with past practice and current policy.
3.20 Deposit Accounts
The deposit accounts of the First Liberty Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by
federal law, and the First Liberty 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 Liberty has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
First Liberty or any First Liberty Subsidiary is a party with any director,
executive officer or 5% shareholder of First Liberty 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 Liberty 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 Liberty 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 Liberty, (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 Liberty nor any First Liberty 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).
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3.24 State Takeover Laws; Shareholder Rights Plan
First Liberty and each First Liberty Subsidiary have taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable moratorium, fair price, business combination, control share
or other anti-takeover laws, and no such laws shall be activated or applied as
a result of such transactions. Such transactions shall not trigger or create
any rights in First Liberty shareholders to receive distribution of any shares
of capital stock of First Liberty or any other rights pursuant to the First
Liberty Shareholder Rights Plan dated August 2, 1989, as amended or extended,
or otherwise affect the capital structure or capitalization of First Liberty.
3.25 Labor Relations
Neither First Liberty nor any First Liberty 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 Liberty or any First Liberty Subsidiary
party to any collective bargaining agreement. There is no strike or other
labor dispute involving First Liberty or any First Liberty Subsidiary, pending
or threatened, or to the best knowledge of First Liberty, is there any
activity involving any employees of First Liberty or any First Liberty
Subsidiary seeking to certify a collective bargaining unit or engaging in any
other organization activity.
3.26 No Right to Dissent
Nothing in the Articles of Incorporation or the Bylaws of First Liberty or
any First Liberty Subsidiary provides or would provide to any person,
including without limitation the First Liberty 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.
3.27 Fairness Opinion
First Liberty has received from the Financial Advisor an opinion that, as of
the date hereof, the Merger Consideration is fair to the shareholders of First
Liberty from a financial point of view.
ARTICLE IV
Representations and Warranties of BB&T
BB&T represents and warrants to First Liberty 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 Liberty 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,
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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 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, 1996. 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 Liberty contains or will contain any untrue statement of material fact
or will omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.6 Certain Information
When the Proxy Statement/Prospectus is mailed, and at all times subsequent
to such mailing up to and including the time of the meeting of shareholders of
First Liberty to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein
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relating to BB&T, (i) shall comply with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
4.7 Tax and Regulatory Matters
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any action
which would or could reasonably be expected to (i) cause the Merger not to be
accounted for as a pooling-of-interests or not to constitute a reorganization
under Section 368 of the Code, or (ii) materially impede or delay receipt of
any consents of regulatory authorities referred to in Section 5.4(b) or result
in failure of the condition in Section 6.3(b).
ARTICLE V
Covenants
5.1 First Liberty Shareholder Meeting
First Liberty 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
Liberty agrees that it shall, at the time the Proxy Statement/Prospectus is
mailed to the shareholders of First Liberty, recommend that First Liberty's
shareholders vote for such approval; provided, that the Board of Directors of
First Liberty 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 Liberty'
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
Liberty, and (ii) either (A) the written withdrawal by the Financial Advisor
of its opinion referred to in Section 3.27 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 Liberty
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 Liberty 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 Liberty shall use their
reasonable best efforts to cause the Proxy Statement/Prospectus to be approved
by the Commission for mailing to the First Liberty 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 Liberty
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, if not adopted as of the date hereof, and (ii) to
pay or cause to be paid when due the Merger Consideration. BB&T has reserved
for issuance such number
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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 Liberty agrees to take such actions requested by BB&T as may be
reasonably necessary to modify the structure of, or to substitute parties to
(so long as such substitute is BB&T or a BB&T Subsidiary) the transactions
contemplated hereby, provided that such modifications do not change the Merger
Consideration or abrogate the covenants and other agreements contained in this
Agreement, including, without limitation, the covenant not to take any action
that would substantially delay or impair the prospects of completing the
Merger pursuant to this Agreement and the Plan of Merger.
(b) As promptly as practicable after the date hereof, BB&T and First Liberty
shall submit notice or applications for prior approval of the transactions
contemplated herein to the Federal Reserve Board, the OTS and any other
federal, state or local government agency, department or body to which notice
is required or from which approval is required for consummation of the Merger
and the other transactions contemplated hereby. First Liberty 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 Liberty 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 Liberty 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 Liberty 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
be in accordance with GAAP and all regulations applicable to First Liberty and
shall not be deemed to constitute or result in the breach of any
representation or warranty of First Liberty contained in this Agreement.
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5.7 Access to Information
First Liberty 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 Liberty 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 Liberty and the
First Liberty 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.
5.8 Press Releases
BB&T and First Liberty shall mutually agree 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 Liberty
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, First Liberty shall not, and shall cause each of the First
Liberty 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 $.095 per share of First Liberty 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 Liberty Common
Stock for the quarterly period during which the Effective Time occurs
shall, unless otherwise agreed upon in writing by BB&T and First Liberty,
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 (it being the
express intention of the parties that shareholders of First Liberty receive
not more than one dividend in the calendar quarter in which the Effective
Time occurs);
(c) issue any shares of its capital stock (including treasury shares),
except pursuant to the Stock Option Plans, the First Liberty ESSOP 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, except that, on or before the earlier to occur of November
30, 1999 and the Effective Time, First Liberty may, consistent with past
practice and subject to Section 5.9(i), grant stock options for First
Liberty's fiscal year ending September 30, 1999 based on First Liberty's
financial performance for such fiscal year (1) to purchase up to 116,850
shares of First Liberty Common Stock in the aggregate to approximately 40
First Liberty employees under the Performance Excellence Plan and (2) to
purchase up to 116,000 shares of First Liberty Common Stock in the
aggregate to approximately 11 executive officers and nine directors of
First Liberty under the Stock Option Plans; provided, that any First
Liberty employee to whom any such options are issued who would otherwise be
eligible to receive stock options from BB&T in the first quarter of 2000
shall not be so eligible;
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(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 Liberty 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 Section 5.9(j) shall not prevent
(1) renewal of any of the foregoing consistent with past practice or (2)
amendment of the First Liberty Shareholder Rights Plan dated August 2, 1989
only to extend the term of such Rights Plan, if and to the extent
determined by BB&T in its sole reasonable discretion that such amendment
will not cause the Merger not to be accounted for as a pooling-of-
interests;
(k) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, First
Liberty or any First Liberty Subsidiary or any business combination with
First Liberty or any First Liberty Subsidiary other than as contemplated by
this Agreement; or authorize any officer, director, agent or affiliate of
First Liberty or any First Liberty 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 Liberty 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 Liberty's Board of Directors to the
First Liberty shareholders;
(l) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any material agreement,
indenture or other instrument not made in the ordinary course of business
relating to the borrowing of money by First Liberty or a First Liberty
Subsidiary or guarantee by First Liberty or a First Liberty 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 Liberty shall cooperate
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in good faith with BB&T to adopt policies, practices and procedures
consistent with those utilized by BB&T and in accordance with GAAP and all
applicable regulations, effective on or before the Closing Date;
(n) change its methods of accounting in effect at September 30, 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 September 30, 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 $100,000, for any one expenditure, or
$1,000,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank, draws on its
existing line of credit with SunTrust Bank and reverse repurchase
arrangements, in each case 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) except in connection with the sale of two of its branches as
Disclosed, 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 as of the Effective Time with certain executives of First Liberty
substantially in the forms attached respectively as Annexes B-1 through B-10.
5.11 Affiliates
First Liberty shall use its best efforts to cause all persons who are
Affiliates of First Liberty 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; ESSOP; Other Employee Benefits
(a) Each employee of First Liberty at the Effective Time who becomes an
employee immediately following the Effective Time of BB&T or a BB&T Subsidiary
("Employer Entity") shall be eligible to participate in BB&T's 401(k) plan
(subject to BB&T's right to terminate such plan). For purposes of
administering BB&T's 401(k) plan, service with First Liberty and the First
Liberty 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) (i) Each participant in the First Liberty ESSOP not fully vested will
become fully vested in his or her First Liberty ESSOP account as of the
Effective Time. As soon as practicable after the execution of this Agreement,
First Liberty and BB&T will cooperate to cause the First Liberty ESSOP to be
amended and other action taken, in a manner reasonably acceptable to First
Liberty and BB&T, to provide that the First Liberty ESSOP will terminate upon
the Effective Time. Between the date hereof and the Effective Time, First
Liberty or a First Liberty Subsidiary shall make contributions to the First
Liberty ESSOP in accordance with the provisions of the First Liberty ESSOP and
consistent with past practice. First Liberty and BB&T agree that, subject to
the
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conditions described herein, as soon as practicable after the Effective Time,
participants in the First Liberty ESSOP shall be entitled at their election to
have the assets in their First Liberty ESSOP accounts either distributed to
them in a lump sum or rolled over to another tax-qualified plan (including the
BB&T 401(k) plan to the extent permitted by such plan) or individual
retirement account.
(ii) The actions relating to termination of the First Liberty ESSOP will be
adopted conditional upon the consummation of the Merger and upon receiving a
favorable determination letter from the IRS with regard to the continued
qualification of the First Liberty ESSOP. First Liberty and BB&T will
cooperate in submitting appropriate requests for any such determination letter
to the IRS and will use their best efforts to seek the issuance of such letter
as soon as practicable following the date hereof. First Liberty and BB&T will
adopt such additional amendments to the First Liberty ESSOP as may be required
by the IRS as a condition to granting such determination letter, provided that
such amendments do not (i) substantially change the terms outlined herein,
(ii) have a Material Adverse Effect on First Liberty or (iii) result in an
additional material liability to BB&T.
(iii) As of and following the Effective Time, BB&T shall cause the First
Liberty ESSOP to be maintained for the exclusive benefit of employees and
other persons who were participants or beneficiaries therein prior to the
Effective Time, and shall proceed with termination of the First Liberty ESSOP
through distribution of its assets in accordance with its terms (subject to
the amendments described herein and as otherwise may be required to comply
with applicable law or to obtain a favorable determination from the IRS as to
the continuing qualified status of the First Liberty ESSOP); provided,
however, that no such termination distributions from the First Liberty ESSOP
shall occur after the Effective Time until a favorable determination letter
has been received from the IRS.
(c) Each employee of First Liberty at the Effective Time who becomes an
employee immediately following the Effective Time of an Employer Entity shall
be eligible to participate in the group hospitalization, medical, dental,
life, disability and other welfare benefit plans and programs available to
employees of the Employer Entity, subject to the terms of such plans and
programs; provided, that service with First Liberty 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. Coverage under the group health plans of
First Liberty and the First Liberty Subsidiaries will be deemed "creditable
coverage" within the meaning of ERISA Section 701(c) for purposes of any
preexisting condition limitation which may apply under any group health plan
maintained by an Employer Entity; provided, however, that no coverage prior to
a "significant break in coverage" as defined in ERISA Section 701(c)(2) shall
be counted as "creditable coverage."
(d) Each employee of First Liberty or a First Liberty 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 Liberty or a First Liberty Subsidiary shall be treated as service with
BB&T for purposes of determining the amount of severance pay, if any, under
BB&T's severance policy.
(e) BB&T agrees to honor all employment agreements, severance agreements and
deferred compensation agreements, including without limitation outstanding
obligations under First Liberty's Nonqualified Deferred Compensation Plan,
that First Liberty and the First Liberty 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, Performance Excellence Plan and other employee benefit plans of First
Liberty shall be terminated as of the Effective Time.
5.13 Directors and Officers Protection
BB&T or a BB&T Subsidiary shall provide and keep in force for a period of
three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of First Liberty for
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acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in First Liberty's
policy on the date hereof; provided, that in no event shall the annual premium
on such policy exceed 150% of the annual premium payments on First Liberty's
policy in effect as of the date hereof (the "Maximum Amount"). If the amount
of the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, BB&T shall use its reasonable efforts to maintain
the most advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount. Notwithstanding the
foregoing, BB&T further agrees to indemnify all individuals who are or have
been officers, directors or employees of First Liberty or any First Liberty
Subsidiary prior to the Effective Time from any acts or omissions in such
capacities prior to the Effective Time, to the extent that such
indemnification is provided pursuant to the Articles of Incorporation of First
Liberty on the date hereof and is permitted under the GBCC. If BB&T or the
BB&T Subsidiary maintaining the insurance provided for in this Section 5.13 or
any successors or assigns shall consolidate with or merge into any other
entity and shall not be the continuing or surviving entity of the
consolidation or merger, or shall transfer all or substantially all of its
assets to any entity, proper provision shall be made so that the successor or
assign of BB&T or the BB&T Subsidiary shall assume the obligations in this
Section 5.13. This Section 5.13 is intended for the benefit of and shall be
enforceable by each indemnified officer and director and their respective
heirs and representatives.
5.14 Forbearances of BB&T
Except with the prior written consent of First Liberty, 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 Liberty 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 Liberty and BB&T shall file (and shall cause the First Liberty
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 Liberty, 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 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 Liberty 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.
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5.17 Advisory Board for Georgia Area
As of the Effective Time, Robert F. Hatcher shall be named chairman of the
BB&T Advisory Board for the State of Georgia (the "State Advisory Board"), the
initial members of which are to be chosen by Robert F. Hatcher and BB&T. The
State Advisory Board shall meet not more than six times per year, and members
shall receive a fee of $1,000 per meeting attended. In addition, the Advisory
Boards of First Liberty in existence on the date hereof shall continue in
effect as Area Advisory Boards of BB&T for their respective market areas
("Area Advisory Boards"). For two years following the Effective Time, the Area
Advisory Board members appointed pursuant to this Section 5.17 and who
continue to serve shall receive, as compensation for service on an Area
Advisory Board, 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 members of the Advisory Boards of First Liberty in
effect on January 1, 1999, if any. Following such two-year period, Area
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 Area 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).
5.18 Board of Directors of Branch Banking and Trust Company
As of the Effective Time, Branch Banking and Trust Company, a North Carolina
banking corporation, shall elect Robert F. Hatcher 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.
ARTICLE VI
Conditions Precedent
6.1 Conditions Precedent--BB&T and First Liberty
The respective obligations of BB&T and First Liberty 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 by the
shareholders of First Liberty 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 Liberty or any of
the First Liberty Subsidiaries shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement;
and
(e) First Liberty and BB&T shall have received an opinion of BB&T's legal
counsel, in form and substance satisfactory to First Liberty 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 Liberty will not recognize any gain or loss to the extent that such
shareholders exchange shares of First Liberty Common Stock for shares of
BB&T Common Stock.
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6.2 Conditions Precedent--First Liberty
The obligations of First Liberty 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 Liberty 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 Liberty. 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 Liberty 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 Liberty shall have received opinions of counsel to BB&T in the
form reasonably acceptable to First Liberty's legal counsel; and
(e) The shares of BB&T Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
6.3 Conditions Precedent--BB&T
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant
to Section 7.4:
(a) All representations and warranties of First Liberty shall be
evaluated as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time (or on the date designated in
the case of any representation and warranty which specifically relates to
an earlier date), except as otherwise contemplated by this Agreement or
consented to in writing by BB&T. The representations and warranties of
First Liberty 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 Liberty 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 Liberty and the First Liberty
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;
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(c) First Liberty shall have performed in all material respects all
obligations and complied in all material respects with all covenants
required by this Agreement;
(d) First Liberty 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 Liberty, 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 Liberty 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 Liberty 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;
(g) BB&T shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective
Time, addressed to BB&T, in form and substance reasonably satisfactory to
BB&T, from Arthur Andersen, LLP to the effect that the Merger will qualify
for pooling-of-interests accounting treatment; and
(h) BB&T shall have received Employment Agreements substantially in the
form of Annex B-1, B-2 and B-3 executed by Robert F. Hatcher, Lee B.
Murphey and Larry D. Flowers, respectively.
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 Liberty 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 material breach of any of its representations, warranties,
covenants or undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 hereof are
denied, and the time period for appeals and requests for reconsideration
has run.
(e) At any time, by either party hereto in writing, if the shareholders
of First Liberty do not approve the Agreement and the Plan of Merger.
(f) At any time following December 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 material breach of any
of its representations, warranties, covenants or undertakings herein.
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(g) At any time prior to 11:59 p.m. on June 15, 1999 by BB&T in writing,
if BB&T determines in its sole good faith judgment, through review of
information Disclosed by First Liberty, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Liberty and of the First Liberty 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 (which
reasonable expectations were formed without regard to any Disclosed
information); provided that BB&T shall inform First Liberty upon such
termination as to the reasons for BB&T's determination. The fact that First
Liberty has Disclosed information shall not prevent BB&T from terminating
this Agreement pursuant to this Section 7.1(g) on account of such
information.
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated pursuant to
Section 7.1 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 Liberty (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 Liberty, the aforesaid representations, warranties and covenants being
material inducements to consummation by BB&T and First Liberty of the
transactions contemplated herein.
7.4 Waiver
Except with respect to any required regulatory approval, each party hereto,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of the Agreement and the Plan of Merger
by the First Liberty 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 Liberty 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 Liberty, subject to the
proviso to Section 7.4.
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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 Liberty.
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 Liberty to enforce rights in Sections 5.13, 5.17 and 5.18.
8.3 No Assignment
Except for a substitution of parties pursuant to Section 5.4(a), none of the
parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent
by nationally recognized overnight express courier or by facsimile
transmission, addressed or directed as follows:
If to First Liberty:
Robert F. Hatcher
First Liberty Financial Corp.
201 Second Street
Macon, Georgia 31297
Telephone: 912-722-7400
Fax: 912-722-7288
With a required copy to:
Richard A. Hills, Jr.
First Liberty Financial Corp.
6491 Peachtree Industrial Boulevard
Atlanta, Georgia 31297
Telephone: 770-936-3252
Fax: 770-936-3323
A-31
<PAGE>
If to BB&T:
Scott E. Reed
BB&T Corporation
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 Liberty acknowledges that the First Liberty Common Stock and the First
Liberty business and assets are unique, and that if First Liberty 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 Liberty shall, without cause,
refuse to consummate the transactions contemplated by this Agreement.
8.6 Captions
The captions contained in this Agreement are for reference only and are not
part of this Agreement.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[remainder of page intentionally left blank]
A-32
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their
duly authorized officers, all as of the day and year first above written.
BB&T Corporation
/s/ John A. Allison IV
By: _________________________________
Name: John A. Allison IV
Title: Chairman and Chief
Executive Officer
First Liberty Financial Corp.
/s/ Robert F. Hatcher
By: _________________________________
Name: Robert F. Hatcher
Title: President and Chief
Executive Officer
Robert F. Hatcher, Lee B. Murphey and Larry D. Flowers hereby agree to
execute and deliver to BB&T at Closing the Employment Agreements substantially
in the form of Annex B-1, B-2 and B-3, respectively.
/s/ Robert F. Hatcher
__________________________________
Robert F. Hatcher
/s/ Lee B. Murphey
__________________________________
Lee B. Murphey
/s/ Larry D. Flowers
__________________________________
Larry D. Flowers
A-33
<PAGE>
FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (the
"Amendment") is entered into this 3rd day of September, 1999 by and between
FIRST LIBERTY FINANCIAL CORP. ("First Liberty"), a Georgia corporation having
its principal office at Newman, Georgia, and BB&T CORPORATION ("BB&T"), a
North Carolina corporation having its principal office at Winston-Salem, North
Carolina;
RECITALS:
Pursuant to the Agreement and Plan of Reorganization dated as of April 27,
1999 (the "Merger Agreement"), First Liberty and BB&T agreed that, subject to
the satisfaction of certain conditions contained in the Agreement, First
Liberty would be merged into BB&T (the "Merger") pursuant to a Plan of Merger
attached as an exhibit to the Agreement. Section 5.12(b) of the Merger
Agreement provides that First Liberty and BB&T will cooperate to cause the
First Liberty Financial Corp. Employee Savings and Stock Ownership Plan (the
"First Liberty ESSOP") to be amended and other action taken to provide that
the First Liberty ESSOP will terminate upon the effective time of the Merger.
Each of First Liberty and BB&T desire to amend the Merger Agreement to provide
instead that the First Liberty ESSOP shall be merged into BB&T's 401(k) plan.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. The Merger Agreement shall be and hereby is amended by deleting
Section 5.12(b) (including subsections i-iii thereof) in its entirety and
substituting therefore a new Section 5.12(b) as follows:
"BB&T shall cause the First Liberty ESSOP 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 Liberty or the First Liberty
Subsidiaries who are participants in the First Liberty ESSOP 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)."
2. First Liberty hereby represents that Robert F. Hatcher, as President
and Chief Executive Officer of First Liberty, is duly authorized to execute
and deliver this Amendment on behalf of First Liberty and that this
Amendment is valid and binding on First Liberty.
3. Except as otherwise provided herein, the Merger Agreement and the
terms and conditions thereof shall continue in full force and effect.
A-34
<PAGE>
IN WITNESS WHEREOF, this First Amendment to Agreement and Plan of
Reorganization is hereby executed in behalf of the parties hereto as of the day
and year first above stated.
First Liberty Financial Corp.
/s/ Robert F. Hatcher
By: _________________________________
Name: Robert F. Hatcher
Title: President and Chief
Executive Officer
BB&T Corporation
/s/ John A. Allison IV
By: _________________________________
Name: John A. Allison IV
Title: Chairman and Chief
Executive Officer
A-35
<PAGE>
[SANDLER O'NEILL LETTERHEAD]
APPENDIX B
September 15, 1999
Board of Directors
First Liberty Financial Corp.
201 Second Street
Macon, GA 31297
Ladies and Gentlemen:
First Liberty Financial Corp. ("First Liberty") and BB&T Corporation
("BB&T") have entered into an Agreement and Plan of Reorganization, dated as
of April 27, 1999 (the "Agreement"), pursuant to which First Liberty will be
merged with and into BB&T (the "Merger"). Upon consummation of the Merger,
each share of First Liberty common stock, par value $1.00 per share (together
with the rights attached thereto issued pursuant to the Shareholder Rights
Plan of First Liberty dated as of August 2, 1989 and amended as of February
16, 1993, the "First Liberty Shares"), issued and outstanding immediately
prior to the Merger will be converted into the right to receive that number of
shares of BB&T common stock, par value $5.00 per share (together with the
rights attached thereto issued pursuant to the Rights Agreement dated as of
December 17, 1996 between BB&T and Branch Banking and Trust Company, as Rights
Agent), as shall be equal to the quotient of $33.25 divided by the Closing
Value (as defined in the Agreement) of BB&T common stock (the "Exchange
Ratio"); provided, however, that if the Closing Value is less than $38.22, the
Exchange Ratio shall be 0.87 and if the Closing Value is greater than $39.12,
the Exchange Ratio shall be 0.85. The terms and conditions of the Merger are
more fully set forth in the Agreement. You have requested our opinion as to
the fairness, from a financial point of view, of the Exchange Ratio to the
holders of First Liberty Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other
corporate transactions. In connection with this opinion, we have reviewed,
among other things: (i) the Agreement and exhibits thereto; (ii) the Stock
Option Agreement, dated April 27, 1999, by and between First Liberty and BB&T;
(iii) certain publicly available financial statements of First Liberty and
other historical financial information provided by First Liberty that we
deemed relevant; (iv) certain publicly available financial statements of BB&T
that we deemed relevant; (v) certain financial analyses and forecasts of First
Liberty prepared by and/or reviewed with management of First Liberty and the
views of senior management of First Liberty regarding First Liberty's past and
current business, results of operations, financial condition and future
prospects; (vi) consensus earnings per share estimates for BB&T published by
First Call for the years ending 1999 and 2000 and the views of senior
management of BB&T regarding BB&T's past and current business, results of
operations, financial condition and future prospects; (vii) the pro forma
impact of the Merger; (viii) the publicly reported historical price and
trading activity for First Liberty's and BB&T's common stock, including a
comparison of certain financial and stock market information for First Liberty
and BB&T with similar publicly available information for certain other
companies the securities of which are publicly traded; (ix) the financial
terms of recent business combinations in the savings institution industry, to
the extent publicly available; (x) the current market environment generally
and the banking environment in particular; and (xi) such other information,
financial studies, analyses and investigations and financial, economic and
market criteria as we considered relevant. In connection with our engagement,
we were not asked to, and did not, solicit indications of interest in a
potential transaction from other third parties.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability for verifying the accuracy or completeness
thereof. We did not make an independent evaluation or appraisal of the
specific assets, the collateral securing assets or the liabilities (contingent
or otherwise) of First Liberty or
B-1
<PAGE>
BB&T or any of their subsidiaries, or the collectibility of any such assets,
nor have we been furnished with any such evaluations or appraisals. We did not
make an independent evaluation of the adequacy of the allowance for loan
losses of First Liberty or BB&T nor have we reviewed any individual credit
files relating to First Liberty or BB&T. We have assumed that the respective
aggregate allowances for loan losses for both First Liberty and BB&T are
adequate to cover such losses and will be adequate on a pro forma basis for
the combined entity. With respect to the financial projections reviewed with
First Liberty's management and the published earnings per share estimates of
BB&T, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of those
preparing them of the respective future financial performances of First
Liberty and BB&T and that such performances will be achieved, and we express
no opinion as to such financial projections or estimates or the assumptions on
which they are based. We have also assumed that there has been no material
change in First Liberty's or BB&T's assets, financial condition, results of
operations, business or prospects since the date of the most recent financial
statements made available to us. We have assumed in all respects material to
our analysis that First Liberty and BB&T will remain as going concerns for all
periods relevant to our analyses, that all of the representations and
warranties contained in the Agreement and all related agreements are true and
correct, that each party to such agreements will perform all of the covenants
required to be performed by such party under such agreements, that the
conditions precedent in the Agreement are not waived and that the Merger will
be accounted for as a pooling of interests and will qualify as a tax-free
reorganization for federal income tax purposes.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of,
the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We
are expressing no opinion herein as to what the value of BB&T common stock
will be when issued to First Liberty's shareholders pursuant to the Agreement
or the prices at which First Liberty's or BB&T's common stock will trade at
any time.
We have acted as First Liberty's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We will also receive a fee for
rendering this opinion.
In the ordinary course of our business as a broker-dealer, we may purchase
securities from and sell securities to First Liberty and BB&T. We may also
actively trade the equity or debt securities of First Liberty and BB&T for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities.
Our opinion is directed to the Board of Directors of First Liberty in
connection with its consideration of the Merger and does not constitute a
recommendation to any shareholder of First Liberty as to how such shareholder
should vote at any meeting of shareholders called to consider and vote upon
the Merger. Our opinion is not to be quoted or referred to, in whole or in
part, in a registration statement, prospectus, proxy statement or in any other
document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent, provided, however, that we hereby
consent to the inclusion of this opinion as an appendix to First Liberty's and
BB&T's Joint Proxy Statement/Prospectus dated the date hereof and to the
reference to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of First Liberty Shares.
Very truly yours,
/s/ Sandler O'Neil & Partners, L.P.
B-2
<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 April 27, 1999
between BB&T Corporation and First Liberty Financial Corp. (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 Womble Carlyle Sandridge & Rice, PLLC (included in
Exhibit 8)
23(c) Consent of Arthur Andersen LLP
23(d) Consent of PricewaterhouseCoopers LLP
23(e) Consent of Sandler O'Neill & Partners, L.P.
24 Power of Attorney
99(a) Form of First Liberty Financial Corp. Proxy Card
99(b) Option Agreement, dated April 27, 1999, between BB&T Corporation and
First Liberty Financial Corp.
</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 September 15, 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 September 15, 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.
/s/ Tom D. Efird* 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.
Director
______________________________________
Nido R. Qubein
/s/ E. Rhone Sasser* Director
______________________________________
E. Rhone Sasser
/s/ Jack E. Shaw* Director
______________________________________
Jack E. Shaw
Director
______________________________________
Harold B. Wells
/s/ Jerone C. Herring
*By: _________________________________
Jerone C. Herring
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
2 Agreement and Plan of Reorganization dated as of April 27, 1999
between BB&T Corporation and First Liberty Financial Corp., as amended
(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
Letter of PricewaterhouseCoopers LLP re Unaudited Interim Financial
15 Information
Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit
23(a) 5)
Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit
23(b) 8)
23(c) Consent of Arthur Andersen LLP
23(d) Consent of PricewaterhouseCoopers LLP
23(e) Consent of Sandler O'Neill & Partners, L.P.
24 Power of Attorney
99(a) Form of First Liberty Financial Corp. Proxy Card
99(b) Option Agreement, dated April 27, 1999, between BB&T Corporation and
First Liberty Financial Corp.
</TABLE>
<PAGE>
Garza Baldwin, III
Direct Dial: 704-331-4907
Direct Fax: 704-338-7816
E-mail: [email protected]
September 15, 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 Liberty
Financial Corp. dated as of April 27, 1999, as amended (the "Merger
Agreement")
Ladies and Gentlemen:
We have acted as counsel to BB&T in connection with the registration of
13,288,069 shares of its common stock, par value $5.00 per share (the "Shares"),
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 issued upon the
terms and conditions set forth in the Merger Agreement, the Shares 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
/s/Garza Baldwin, III
By:-------------------------------------
Garza Baldwin, III
GB/WAD
<PAGE>
Neil G. O'Rourke
Direct Dial: 336-721-3752
Direct Fax: 336-726-6997
E-mail: [email protected]
September 15, 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 April 27, 1999, as amended
(the "Reorganization Agreement"), by and between First Liberty
Financial Corp., a Georgia corporation ("First Liberty"), 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
13,288,069 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 Liberty will merge into BB&T pursuant to North
Carolina and Georgia law, and each outstanding share of First Liberty 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 Liberty
shareholders are not entitled by state law to dissent from the Merger.
In giving this opinion we have reviewed, and with your permission we
have relied upon the representations and warranties contained in or the facts
described in the Reorganization Agreement, the Registration Statement, and
certificates dated September 15, 1999 in which officers of First Liberty and
officers of BB&T make certain representations on behalf of First Liberty and
BB&T, respectively, 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.
<PAGE>
BB&T Corporation
September 15, 1999
Page 2
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates are true, correct and complete as of the date
of this opinion, and any representation or statement made "to the best of
knowledge" or similarly qualified is correct without such qualification. As to
all matters in which a person or entity has represented that such person or
entity either is not a party to, or does not have, or is not aware of, any plan
or intention, understanding or agreement, we have assumed that there is in fact
no such plan, intention, understanding or agreement. We also assume that (a) the
Merger will be consummated in accordance with the Reorganization Agreement, (b)
First Liberty'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 Liberty
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 Liberty 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 Liberty or BB&T
by reason of the Merger.
(3) No gain or loss will be recognized by the shareholders of
First Liberty 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
Liberty Common Stock.
(4) A shareholder of First Liberty 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
Liberty shareholder (including any fractional share interest
deemed received) will be the same as the tax basis in the
First Liberty 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 Liberty Common Stock will include the
period during which the shareholder held the shares of
<PAGE>
BB&T Corporation
September 15, 1999
Page 3
First Liberty Common Stock surrendered in the exchange,
provided that the First Liberty 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 Liberty Common Stock do not
apply to any stock rights, warrants or options to acquire First Liberty Common
Stock. The opinions stated as to First Liberty shareholders are general in
nature and do not necessarily apply to any particular First Liberty 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
Liberty 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>
September 15, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our reports dated February 12, 1999 and May 14, 1999 on our
reviews of interim financial information of First Liberty Financial Corp.
included in the Company's quarterly reports on Form 10-Q for the quarters ended
December 31, 1998 and March 31, 1999 are incorporated by reference in BB&T
Corporation's Registration Statement on Form S-4 dated September 15, 1999.
Very truly yours,
PricewaterhouseCoopers LLP
<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
September 3, 1999, included in BB&T Corporation's Form 8-K dated September 3,
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 one or more business
combinations accounted for as poolings of interests.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina
September 15, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of BB&T Corporation of our report dated October 30, 1998
relating to the consolidated financial statements appearing in First Liberty
Financial Corp.'s Annual Report on Form 10-K for the year ended September 30,
1998 and of our report dated July 14, 1999 relating to the supplemental
consolidated financial statements appearing in First Liberty Financial Corp.'s
Current Report on Form 8-K filed July 30, 1999. We also consent to the reference
to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Atlanta, Georgia
September 15, 1999
<PAGE>
EXHIBIT 23(e)
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board
of Directors of First Liberty Financial Corp. (the "Company") as Appendix B to
the Proxy Statement/Prospectus relating to the proposed merger of the Company
with and into BB&T Corporation contained in the Registration Statement on Form
S-4, filed with the Securities and Exchange Commission on the date hereof, and
to the references to our firm and such opinion in such Proxy Statement/
Prospectus. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended (the "Act"), or the rules and regulations of the
Securities and Exchange Commission thereunder (the "Regulations"), nor do we
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Act or the
Regulations.
/s/ Sandler O'Neill & Partners, L.P.
September 15, 1999
<PAGE>
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 Liberty Financial Corp., 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 June 22, 1999.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
<S> <C>
/s/ John A. Allison IV /s/ Scott E. Reed
- ----------------------------------------------------------------------------------------------
Name: John A. Allison IV Name: Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice President
Chief Executive Officer and Chief Financial Officer
(principal executive officer) (principal financial officer)
- ----------------------------------------------------------------------------------------------
/s/ Sherry A. Kellett /s/ Paul B. Barringer
- ----------------------------------------------------------------------------------------------
Name: Sherry A. Kellett Name: Paul B. Barringer
Title: Executive Vice President Title: Director
and Controller
(principal accounting officer)
- ----------------------------------------------------------------------------------------------
/s/ Alfred E. Cleveland /s/ W. R. Cuthbertson, Jr.
- ----------------------------------------------------------------------------------------------
Name: Alfred E. Cleveland Name: W. R. Cuthbertson, Jr.
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ Ronald E. Deal /s/ A. J. Dooley, Sr.
- ----------------------------------------------------------------------------------------------
Name: Ronald E. Deal Name: A. J. Dooley, Sr.
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ Tom D. Efird /s/ Paul S. Goldsmith
- ----------------------------------------------------------------------------------------------
Name: Tom D. Efird Name: Paul S. Goldsmith
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
<S> <C>
/s/ L. Vincent Hackley /s/ Jane P. Helm
- ----------------------------------------------------------------------------------------------
Name: L. Vincent Hackley Name: Jane P. Helm
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ Richard Janeway, M.D. /s/ J. Ernest Lathem, M.D.
- ----------------------------------------------------------------------------------------------
Name: Richard Janeway, M.D. Name: J. Ernest Lathem, M.D.
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ James H. Maynard /s/ Joseph A. McAleer, Jr.
- ----------------------------------------------------------------------------------------------
Name: James H. Maynard Name: Joseph A. McAleer, Jr.
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ Albert O. McCauley /s/ Richard L. Player, Jr.
- ----------------------------------------------------------------------------------------------
Name: Albert O. McCauley Name: Richard L. Player, Jr.
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ C. Edward Pleasants, Jr.
- ----------------------------------------------------------------------------------------------
Name: C. Edward Pleasants, Jr. Name: Nido R. Qubein
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
/s/ E. Rhone Sasser /s/ Jack E. Shaw
- ----------------------------------------------------------------------------------------------
Name: E. Rhone Sasser Name: Jack E. Shaw
Title: Director Title: Director
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------
Name: Harold B. Wells
Title: Director
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PROXY
FIRST LIBERTY FINANCIAL CORP.
201 Second Street
Macon, Georgia 31297
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
LIBERTY FINANCIAL CORP. The undersigned hereby appoints Thomas H. McCook, Robert
F. Hatcher and Richard A. Hills, Jr. and any 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 Liberty Financial Corp. held of record by the undersigned
on September 8, 1999 at the Special Meeting of Shareholders to be held on
October 27, 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 April 27, 1999, as amended, and a related Plan
of Merger, pursuant to which First Liberty Financial Corp. will merge with
and into BB&T Corporation, and each share of Common Stock of First Liberty
Financial Corp. 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 April 27, 1999 by and between FIRST LIBERTY FINANCIAL CORP., a Georgia
corporation ("First Liberty" 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 2,838,708 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 $25.00.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) subject to clause (E) below, termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (as hereinafter
<PAGE>
defined) (other than a termination of the Merger Agreement by Grantee pursuant
to Section 7.1(b) thereof (a "Default Termination")), (C) 12 months after a
Default Termination, (D) 12 months after any termination of the Merger Agreement
(other than a Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event, and (E) subject to clause (D) above, 12 months
after termination of the Merger Agreement pursuant to Section 7.1(e) thereof;
provided further, that any purchase of shares upon exercise of the Option shall
be subject to compliance with applicable law, including, without limitation, the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). Subject to
compliance with Section 12(h) hereof, the term "Holder" shall mean the holder or
holders of the Option from time to time, including initially Grantee. The rights
set forth in Section 8 hereof shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its Subsidiaries (other than
transactions solely between Issuer's Subsidiaries or between Issuer's
Subsidiaries and Issuer), (B) the disposition, by sale, lease, exchange or
otherwise, of assets of Issuer or any of its Subsidiaries representing in
either case 15% or more of the consolidated assets of Issuer and its
Subsidiaries (other than a sale of loan receivables in a financing
transaction in the normal course of business consistent with past
practices), or (C) the issuance, sale or other disposition (including by
way of merger, consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or any of
its Subsidiaries; or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of the
Subsidiaries of Grantee is a member, shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 15% or more of the
then-outstanding shares of Issuer
-2-
<PAGE>
Common Stock (such an offer being referred to herein as a "Tender Offer" or
an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved
the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been
held or shall have been canceled prior to termination of the Merger
Agreement, or Issuer's Board of Directors shall have withdrawn or modified
in a manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement, in each case after any
person (other than Grantee or any Subsidiary of Grantee) shall have (A)
made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an Exchange
Offer, or (C) filed an application (or given a notice), whether in draft or
final form, under any federal or state statute or regulation (including an
application or notice filed under the BHC Act, the Bank Merger Act, the
Home Owners' Loan Act or the Change in Bank Control Act of 1978) seeking
the consent to an Acquisition Transaction from any federal or state
governmental or regulatory authority or agency.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Notwithstanding the foregoing, the obligation of First Liberty 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 Liberty 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.
<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 APRIL 27, 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.
<PAGE>
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 hereof upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 7 hereof, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges, and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.
(b) Grantee represents that it is acquiring the Option for Grantee's
own account and not with a view to, or for sale in connection with, any
distribution of the Option or the Option Shares. Grantee represents that it is
aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with and declared effective by the Commission
pursuant to Section 5 of the Securities Act, but instead each is being offered
in reliance upon the exemption from the registration requirement provided by
Section 4(2) thereof and the representations and warranties made by Grantee in
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 Liberty 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.
<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).
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(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
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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
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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.
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(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
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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
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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
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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
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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
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or certified mail (return receipt requested) to the parties at the addresses set
forth in the Merger Agreement (or at such other address for a party as shall be
specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
or transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
Grantee may assign or transfer its rights hereunder in whole or in part after
the occurrence of a Purchase Event. In the case of any permitted assignment or
transfer of the Option, Issuer shall do all things necessary to facilitate the
same, and the Holder to whom the Option is assigned or transferred shall make
the representations contained in Section 6 hereof (with Holder substituted for
Grantee) and shall agree in writing to the terms and conditions hereof. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by
Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided, for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
FIRST LIBERTY FINANCIAL CORP. BB&T CORPORATION
By: /s/ Robert F. Hatcher By: /s/ John A. Allison IV
Name: Robert F. Hatcher Name: John A. Allison IV
Title:President and Chief Title:Chairman and Chief
Executive Officer Executive Officer
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