<PAGE>
As Filed with the Securities and Exchange Commission on March 1, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
BB&T CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 6060 56-0939887
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number)
Identification Number)
of incorporation or
organization) ---------------
200 West Second Street
Winston-Salem, North Carolina 27101
(336) 733-2000
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
Jerone C. Herring, Esq.
200 West Second Street, 3rd Floor
Winston-Salem, North Carolina 27101
(336) 733-2180
(Name, address, including Zip Code, and telephone number,
including area code, of agent for service)
---------------
The Commission is requested to send copies of
all communications to:
Peter A. Zorn, Esq. Walter G. Moeling, Esq.
Womble Carlyle Sandridge & Rice, Powell, Goldstein, Frazer & Murphy LLP
PLLC 1919 Peachtree Street, N.E., 16th Floor
200 West Second Street, 17th Floor Atlanta, Georgia 30303
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
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<TABLE>
<CAPTION>
Proposed
Proposed maximum
Title of each class of maximum aggregate Amount of
securities to be Amount to be offering price offering registration
registered registered per unit price fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$5.00 per share(1).... 4,166,762 (2) $93,258,668(3) $24,620.29
</TABLE>
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(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
($16.875) and low ($16.25) sales price of the common stock of First
Banking Company of Southeast Georgia on February 28, 2000 as reported on
The Nasdaq Stock Market's National Market System.
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.
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<PAGE>
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
40 North Main Street
Statesboro, Georgia 30459
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 8, 2000
----------------
TO THE SHAREHOLDERS OF FIRST BANKING COMPANY OF SOUTHEAST GEORGIA:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of First Banking Company of Southeast Georgia, a Georgia
corporation ("First Banking Company"), will be held in the Community Room of
the Statesboro Mall branch of First Bulloch Bank and Trust, U.S. Highway 80
East, Statesboro, Georgia, on Thursday, June 8, 2000 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 December 14, 1999 (the "Merger Agreement"),
between First Banking Company and BB&T Corporation, a North Carolina
corporation ("BB&T"), and a related plan of merger, pursuant to which First
Banking Company will merge with and into BB&T (the "Merger"). In the
Merger, each share of common stock of First Banking Company outstanding at
the effective time will be converted into the right to receive 0.74 of a
share of common stock of BB&T, plus cash in lieu of any fractional share of
BB&T common stock. 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 Banking Company of record at the close of business on
April 15, 2000 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
_____________________________________
James Eli Hodges
President and CEO
Statesboro, Georgia
May , 2000
Please complete, sign, date and return the enclosed proxy card promptly
whether or not you plan to be present at the Meeting. Failure to return a
properly executed proxy or to vote at the Meeting will have the same effect as
a vote against the Merger Agreement and the plan of merger. Please do not send
in any certificates for your shares at this time.
<PAGE>
[First Banking Company logo]
Special Meeting of Shareholders
MERGER PROPOSAL--YOUR VOTE IS VERY IMPORTANT
The Board of Directors of First Banking Company of Southeast Georgia has
approved a merger combining First Banking Company and BB&T Corporation. In the
merger, you will receive 0.74 of a share of BB&T common stock for each share
of First Banking Company common stock that you own.
You generally will not recognize gain or loss for federal income tax
purposes on the BB&T common stock you receive.
The merger will join First Banking Company's strengths as a community bank
covering southeast Georgia with BB&T's position as a leading bank throughout
the Carolinas, Virginia, Washington D.C. and parts of Maryland, Georgia, West
Virginia and Kentucky, enabling the combined company to offer First Banking
Company'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 the
shares of First Banking Company common stock approve it. First Banking
Company's Board of Directors believes the merger is in the best interests of
First Banking Company shareholders and recommends that the shareholders vote
to approve the merger agreement. No vote of BB&T shareholders is required to
approve the merger agreement.
BB&T common stock is listed on the New York Stock Exchange under the symbol
"BBT." On April , 2000, the closing price of BB&T common stock was $ ,
making the value of 0.74 of a share of BB&T common stock equal to $ . The
closing price of First Banking Company common stock on that date was $ .
These prices will, however, fluctuate between now and the merger.
The special meeting will be held on Thursday, June 8, 2000 in Community Room
of the Statesboro Mall branch of First Bulloch Bank and Trust, U.S. Highway 80
East, Statesboro, Georgia.
This proxy statement/prospectus provides you with detailed information about
the proposed merger. We encourage you to read this entire document carefully.
In addition, this proxy statement/prospectus incorporates important business
and financial information about BB&T and First Banking Company from other
documents that we have not included in the proxy statement/prospectus. You may
obtain copies of these other documents without charge by requesting them in
writing or by telephone at any time prior to June 1, 2000 from the appropriate
company at the following addresses:
Shareholder Corporate
Reporting Secretary
BB&T Corporation First Banking Company of
Post Office Box Southeast
1290 Georgia
Winston-Salem, 40 North Main
North Street
Carolina 27102 Statesboro, Georgia 30459
(336) 733-3021 (912) 764-6611
Whether or not you plan to attend the meeting, please take the time to vote
by completing and mailing the enclosed proxy card to us. If you fail to return
your proxy card and fail to vote in person, the effect will be the same as a
vote against the merger agreement. Your vote is very important. You can revoke
your proxy by writing to First Banking Company's Secretary at any time before
the meeting or by attending the meeting and voting in person.
On behalf of the Board of Directors of First Banking Company, I urge you to
vote "FOR" approval and adoption of the merger agreement.
James Eli Hodges
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved of 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 April , 2000 and is expected to
be first mailed to shareholders of First Banking Company on or about May ,
2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
A WARNING ABOUT FORWARD-LOOKING INFORMATION................................. iii
SUMMARY..................................................................... 1
MEETING OF SHAREHOLDERS..................................................... 8
General................................................................... 8
Record Date, Voting Rights and Vote Required.............................. 8
Voting and Revocation of Proxies.......................................... 9
Solicitation of Proxies................................................... 9
Recommendation of the First Banking Company Board......................... 9
THE MERGER.................................................................. 10
General................................................................... 10
Background of and Reasons for the Merger.................................. 10
Opinion of Financial Advisor to First Banking Company..................... 12
Exchange Ratio............................................................ 14
Exchange of First Banking Company Stock Certificates...................... 14
The Merger Agreement...................................................... 15
Interests of Certain Persons in the Merger................................ 20
Regulatory Considerations................................................. 22
Material Federal Income Tax Consequences of the Merger.................... 24
Accounting Treatment...................................................... 25
The Option Agreement...................................................... 25
Effect on Employees, Employee Benefit Plans and Stock Options............. 28
Restrictions on Resales by Affiliates..................................... 29
INFORMATION ABOUT BB&T...................................................... 30
General................................................................... 30
Operating Subsidiaries.................................................... 30
Acquisitions.............................................................. 31
Capital................................................................... 32
Deposit Insurance Assessments............................................. 33
INFORMATION ABOUT FIRST BANKING COMPANY..................................... 33
DESCRIPTION OF BB&T CAPITAL STOCK........................................... 34
General................................................................... 34
BB&T Common Stock......................................................... 34
BB&T Preferred Stock...................................................... 34
Shareholder Rights Plan................................................... 35
Other Anti-Takeover Provisions............................................ 37
COMPARISON OF SHAREHOLDERS' RIGHTS.......................................... 37
Authorized Capital Stock.................................................. 38
Special Meetings of Shareholders.......................................... 38
Directors................................................................. 38
Dividends and Other Distributions......................................... 39
Shareholder Nominations and Shareholder Proposals......................... 39
Discharge of Duties; Exculpation and Indemnification...................... 40
Mergers, Share Exchanges and Sales of Assets.............................. 40
Anti-takeover Statutes.................................................... 41
Amendments to Articles of Incorporation and Bylaws........................ 42
Shareholders' Rights of Dissent and Appraisal............................. 42
Liquidation Rights........................................................ 43
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SHAREHOLDER PROPOSALS....................................................... 44
OTHER BUSINESS.............................................................. 44
LEGAL MATTERS............................................................... 44
EXPERTS..................................................................... 44
WHERE YOU CAN FIND MORE INFORMATION......................................... 47
</TABLE>
Appendix A--Agreement and Plan of Reorganization and Plan of Merger (excluding
certain annexes)
Appendix B--Opinion of USBA Holdings, Ltd. [to be updated]
ii
<PAGE>
A WARNING ABOUT FORWARD-LOOKING INFORMATION
BB&T and First Banking Company have each made forward-looking statements in
this document and in other documents to which this document refers that are
subject to risks and uncertainties. These statements are based on the beliefs
and assumptions of the management of BB&T and First Banking Company 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" on
page , information that was available to management of BB&T as of the date
of the merger agreement, and should be read in connection with the notices
about forward-looking statements made by each of BB&T and First Banking
Company in its reports filed under the Securities Exchange Act of 1934.
Forward-looking statements include the information concerning possible or
assumed future results of operations of BB&T or First Banking Company set
forth under "Summary" and "The Merger-- Background of and Reasons for the
Merger" and statements preceded by, followed by or that include the words
"believes," "expects," "assumes," "anticipates," "intends," "plans,"
"estimates" or other similar expressions. See "Where You Can Find More
Information" on page .
BB&T and First Banking Company have made statements in this document
regarding estimated earnings per share of BB&T and First Banking Company on a
stand-alone basis, expected cost savings from the merger, estimated
restructuring charges relating to the merger, estimated increases in First
Banking Company's 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 Banking Company, the amount of general and administrative expense
consolidation, costs relating to converting First Banking Company'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.
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. the loss of deposits, customers or revenues 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 Banking Company, may be
greater than expected;
5. changes in the interest rate environment may reduce margins, the volumes
or values of loans made or held;
6. general economic or business conditions, either nationally or in the
states or regions in which BB&T and First Banking Company 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
Banking Company are engaged;
8. adverse changes may occur in the securities markets; and
9. competitors of BB&T and First Banking Company may have greater financial
resources and develop products that enable those competitors to compete
more successfully than BB&T and First Banking Company.
Management of BB&T and First Banking Company believes the forward-looking
statements about its company are reasonable; however, shareholders of First
Banking Company 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
Banking Company's ability to control or predict.
iii
<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 .
Exchange Ratio for Holders of First Banking Company Common Stock to be 0.74 of
a Share of BB&T Common Stock for each Share of First Banking Company Common
Stock
If the merger is completed, you will receive 0.74 of a share of BB&T common
stock for each share of First Banking Company common stock you own, plus cash
instead of any fractional share.
On April , 2000, the closing price of BB&T common stock was $ , making
the value of 0.74 of a share of BB&T common stock equal to $ . 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 )
You generally will not recognize gain or loss for federal income tax
purposes on the shares of BB&T common stock you 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. You will be taxed, however, on any cash that you
receive instead of any fractional share of BB&T common stock. Tax matters are
complicated, and the tax consequences of the merger 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 regular quarterly dividends of $0.20 per share of its
common stock. Over the past five years, BB&T has had a dividend payout ratio
in the range of approximately 36.5% to 39.5% of recurring earnings and a
compound growth rate of the annualized dividend of 14.9% Consistent with this
history, BB&T management intends to recommend to the BB&T Board of Directors
that BB&T's regular quarterly dividend be increased from $0.20 to $0.23 per
share for the third quarter of 2000, subject to business conditions, BB&T's
financial condition, earnings and other factors.
First Banking Company Board Recommends Shareholder Approval (Page )
The First Banking Company Board of Directors believes that the merger is in
the best interests of First Banking Company shareholders and recommends that
you vote "FOR" approval of the merger agreement. The First Banking Company
Board believes that, as a result of the merger, you will have less financial
risk and will experience greater value than you would if First Banking Company
remained independent.
Exchange Ratio Fair to Shareholders According to First Banking Company's
Financial Advisor (Page )
USBA Holdings, Ltd. has given an opinion to the First Banking Company Board
that, as of the date of this proxy statement/prospectus, the exchange ratio in
the merger is fair from a financial point of view to you as First Banking
Company 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 Banking Company has agreed to pay to USBA Holdings a fee
equal to one percent of the consideration to be received by the First Banking
Company shareholders in the merger for its counsel and for rendering its
fairness opinion. See "The Merger--Opinion of Financial Advisor to First
Banking Company" on page .
Meeting to be held June 8, 2000 (Page )
First Banking Company will hold the special shareholders' meeting at 2:00
p.m. on Thursday, June 8, 2000 in the Community Room of the Statesboro Mall
branch of First Bulloch Bank and Trust, U.S. Highway 80 East, Statesboro,
Georgia. At the meeting, you will vote on the merger agreement and conduct any
other business that properly arises.
1
<PAGE>
The Companies (Page )
BB&T Corporation
200 West Second Street
Winston-Salem, NC 27101
(336) 733-2000
BB&T is a multi-bank holding company with more than $45.5 billion in assets.
It is the sixth largest bank holding company in the Southeast and, through its
banking and thrift subsidiaries, operates 687 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 Virginia, Maryland,
Georgia and Washington, D.C.
First Banking Company of Southeast Georgia
40 North Main Street
Statesboro, GA 30459
(912) 764-6611
First Banking Company, with approximately $426 million in assets, is the
holding company for First Bulloch Bank & Trust Company, Metter Banking Company,
First National Bank of Effingham and Wayne National Bank, which operate a total
of 12 banking offices and provide customary banking, corporate, pension,
personal trust and other financial services. First Banking Company's primary
market areas are Bulloch, Candler, Effingham, Wayne and the surrounding
counties in southeast Georgia.
The Merger (Page )
In the merger, First Banking Company will merge into BB&T, and First Banking
Company's banking subsidiaries, through which it operates, will become wholly
owned subsidiaries of BB&T. If the First Banking Company shareholders approve
the merger agreement at the special meeting, we currently expect to complete
the merger in the second quarter of 2000.
We have attached the merger agreement and the
related plan of merger (Appendix A) at the back of this proxy
statement/prospectus. We encourage you to read the merger agreement, as it is
the legal document that governs the merger.
Majority First Banking Company Shareholder Vote Required (Page )
Approval of the merger agreement requires the affirmative vote of the holders
of at least a majority of the outstanding shares of First Banking Company
common stock. If you fail to vote, it will have the effect of a vote against
the merger agreement and the merger. The directors and executive officers of
First Banking Company together own about % of the shares entitled to be cast
at the meeting, and we expect them to vote their shares in favor of the merger
agreement and the merger.
Brokers who hold shares of First Banking Company common stock as nominees
will not have authority to vote them with respect to the merger unless the
beneficial owners of those shares provide voting instructions.
The merger does not require the approval of BB&T's shareholders.
Record Date Set at April 15, 2000; One Vote per Share of First Banking Company
Common Stock (Page )
If you owned shares of First Banking Company common stock at the close of
business on April 15, 2000, the record date, you are entitled to vote on the
merger agreement and other matters that may be properly considered at the
meeting, if any.
On the record date, there were [5,592,274] shares of First Banking Company
common stock outstanding. You will have one vote at the meeting for each share
of First Banking Company common stock that you owned on the record date.
Monetary Benefits to Management (Page )
When considering the recommendation of the First Banking Company Board, you
should be aware that some of First Banking Company's directors and officers
have interests in the merger that differ from the interests of other First
Banking Company shareholders.
. First Banking Company's President and Chief Executive Officer, James Eli
Hodges, has agreed to a 5-year employment agreement with Branch Banking
and Trust Company, pursuant to which he would serve as a Senior Vice
President; and
2
<PAGE>
. each of , , and has been offered a 3-year employment
agreement with Branch Banking and Trust Company, pursuant to which he or
she would serve as [an officer]. [to be updated]
Each of these employment agreements is at the employee's current salary,
subject to a customary annual review, plus an amount equal to the value of
benefits lost as a result of the merger and provides that the employee will be
eligible to receive an annual bonus. Also, the employment agreement for Mr.
Hodges provides that he will be eligible to be granted stock options annually
in accordance with BB&T's option plan.
In addition, the members of the board of directors of each of First Banking
Company's bank subsidiaries who execute a noncompetition and nonsolicitation
agreement satisfactory to BB&T will be offered a position on BB&T's local
advisory board for the bank's market area and, for at least two years after the
merger, will receive annual fees not less than those that they are now
receiving as members of their respective boards of directors.
The First Banking Company Board was aware of these and other interests and
considered them when it approved and adopted the merger agreement.
Conditions that Must be Satisfied for the Merger to Occur (Page )
The following conditions must be met for us to complete the merger:
. approval of the merger agreement by the First Banking Company
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;
. the ability to account for the merger as a pooling of interests; and
. the execution and delivery by James Eli Hodges of an employment
agreement with Branch Banking and Trust Company substantially in the
form attached to the merger agreement.
Another condition to the merger, which has already been met, is the receipt
by BB&T of the approvals of the Board of Governors of the Federal Reserve
System, the Georgia Department of Banking and Finance and the Virginia Bureau
of Financial Institutions.
Termination and Amendment of the Merger Agreement (Page )
We can agree at any time to terminate the merger agreement without completing
the merger. Either company can also terminate the merger agreement in the
following circumstances:
. the merger is not completed by August 31, 2000;
. any of the conditions that must be satisfied to complete the merger 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 in a way that would 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 that you will
receive in the merger. Either company can waive any of the requirements of the
other company contained in the merger agreement, except that neither company
can waive any required regulatory approval or the satisfaction of any condition
imposed by law. Neither company intends to waive the condition that it receives
a tax opinion. If a tax opinion is not available and the First Banking Company
Board determines to proceed with the merger, First Banking Company will
resolicit its shareholders.
3
<PAGE>
Option Agreement (Page )
As a condition to its offer to acquire First Banking Company, and to
discourage other companies from acquiring First Banking Company, BB&T required
First Banking Company to grant BB&T a stock option that allows BB&T to buy up
to 1,112,862 shares of First Banking Company's common stock. The exercise price
of the option is $19.00 per share. Generally, BB&T can exercise the option only
if another party attempts to acquire control of First Banking Company. As of
the date of this document, we do not believe that has occurred.
BB&T to Use Pooling-of-Interests Accounting Treatment (Page )
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
will 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 Banking Company had
always been combined with BB&T.
No Appraisal Rights (Page )
Under Georgia law, you do not have the right to dissent from the merger and
to demand a statutory appraisal of the value of your shares.
Share Price Information (Page )
First Banking Company common stock is listed on the National Market System of
The Nasdaq Stock Market and BB&T common stock is listed on the New York Stock
Exchange. On December 14, 1999, the last full trading day before public
announcement of the proposed merger, First Banking Company common stock closed
at $22.50, and BB&T common stock closed at $29.50. On April , 2000, First
Banking Company common stock closed at $ , and BB&T common stock closed at
$ .
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 Banking
Company common stock is listed on the National Market System of The Nasdaq
Stock Market under the symbol "FBCG" The table below shows the high and low
closing prices of BB&T common stock and First Banking Company common stock and
cash dividends paid per share for the last two fiscal years plus the interim
period. For BB&T, amounts reflect a 2-for-1 stock split on August 3, 1998. The
merger agreement restricts First Banking Company's ability to increase
dividends. See page . [to be updated]
<TABLE>
<CAPTION>
BB&T First Banking Company
---------------------------- -----------------------------
High Low Cash Dividend High Low Cash Dividend
------ ------- ------------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended
March 31, 2000......... $ $ $ .20 $ $ $
June 30, 2000 (through
April , 2000).......
Quarter Ended
March 31, 1999......... 40.44 34.94 .175 23.50 20.00 0.15
June 30, 1999.......... 40.25 33.81 .175 25.60 19.50 0.15
September 30, 1999..... 36.63 30.50 .20 30.00 19.00 0.17
December 31, 1999...... 36.94 27.31 .20 26.00 17.63 0.17
For year 1999.......... 40.44 27.31 .75 30.00 17.63 0.64
Quarter Ended
March 31, 1998......... 33.84 29.03 .155 27.20 20.80 0.13
June 30, 1998.......... 34.06 32.03 .155 27.00 23.80 0.13
September 30, 1998..... 36.03 28.00 .175 28.75 24.00 0.13
December 31, 1998...... 40.63 27.31 .175 26.50 22.25 0.13
For year 1998.......... 40.63 27.31 .66 28.75 20.80 0.52
</TABLE>
The table below shows the closing price of BB&T common stock and First
Banking Company common stock on December 14, 1999, the last full trading day
before public announcement of the proposed merger.
<TABLE>
<S> <C>
BB&T historical.................................................. $29.50
First Banking Company historical................................. $22.50
First Banking Company pro forma equivalent*...................... $21.83
</TABLE>
- --------
* calculated by multiplying BB&T's per share closing price by the exchange
ratio of 0.74
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 1995 through 1999 and unaudited financial statements for the
three months ended March 31, 2000. The information provided for BB&T has been
restated to include the accounts of Premier Bancshares, Inc., which was
acquired by BB&T on January 13, 2000 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 . You
should not rely on the three-month information as being indicative of results
expected for the entire year or for any future interim period. [to be updated]
BB&T--Historical Financial Information
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
As of/For the
Three Months
Ended March 31, As of/For the Years Ended December 31,
----------------- ----------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------ ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ $ 390,697 $1,651,552 $ 1,497,486 $ 1,383,797 $ 1,256,556 $ 1,141,455
Net income.............. 154,007 614,360 566,947 429,022 399,119 290,707
Basic earnings per
share.................. 0.45 1.78 1.66 1.27 1.18 0.90
Diluted earnings per
share.................. 0.44 1.75 1.63 1.25 1.16 0.87
Cash dividends paid per
share.................. 0.175 0.75 0.66 0.58 0.50 0.43
Book value per share.... 9.80 9.76 9.67 8.68 8.05 8.04
Total assets............ 42,826,247 45,478,877 41,243,750 37,489,552 32,932,082 30,621,861
Long-term debt.......... 5,666,542 5,520,484 5,450,081 2,839,210 2,551,604 1,654,156
</TABLE>
First Banking Company--Historical Financial Information
(Dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
As of/For the
Three Months
Ended March 31, As of/For the Years Ended December 31,
---------------- ---------------------------------------
2000 1999 1999 1998 1997 1996 1995
------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ $ 4,992 $21,034 $20,065 $19,148 $18,149 $16,459
Net income.............. 1,383 6,938 6,664 6,489 6,002 5,204
Basic earnings per
share.................. .25 1.24 1.22 1.22 1.14 .99
Diluted earnings per
share.................. .25 1.24 1.22 1.21 1.12 .98
Cash dividends paid per
share.................. .15 .64 .52 .47 .38 .31
Book value per share.... 9.54 9.91 9.50 8.77 7.94 7.19
Total assets............ 436,481 426,142 446,288 462,281 427,271 388,016
Long-term debt.......... -- -- -- -- -- --
</TABLE>
6
<PAGE>
Comparative Per Share Data
We have summarized below the per share information for our companies on a
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 .
The BB&T pro forma information gives effect to the merger accounted for as a
pooling of interests, assuming that 0.74 of a share of BB&T common stock is
issued for each outstanding share of First Banking Company common stock. First
Banking Company 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 exchange ratio of 0.74
of a share of BB&T common stock so that the per share amounts equate to the
respective values for one share of First Banking Company common stock. You
should not rely on the pro forma information as being indicative of the
historical results that we would have had if we had been combined or the future
results that we will experience after the merger, nor should you rely on the
three-month information as being indicative of results expected for the entire
year or for any future interim period. [to be updated]
<TABLE>
<CAPTION>
As of/For the As of/For the
Three Months Year Ended
Ended December 31,
March 31, -----------------
2000 1999 1998 1997
------------- ----- ----- -----
<S> <C> <C> <C> <C>
Earnings per common share
Basic
BB&T historical............................... $ $1.78 $1.66 $1.27
First Banking Company historical.............. 1.24 1.22 1.22
Pro forma combined............................ 1.78 1.66 1.27
First Banking Company pro forma equivalent.... 1.32 1.23 0.94
Diluted
BB&T historical............................... 1.75 1.63 1.25
First Banking Company historical.............. 1.24 1.22 1.21
Pro forma combined............................ 1.75 1.63 1.25
First Banking Company pro forma equivalent.... 1.30 1.21 0.93
Cash dividends paid per common share
BB&T historical............................... .75 .66 .58
First Banking Company historical.............. .64 .52 .47
Pro forma combined............................ .75 .66 .58
First Banking Company pro forma equivalent.... .56 .49 .43
Shareholders' equity per common share
BB&T historical............................... 9.76 9.67 8.68
First Banking Company historical.............. 9.91 9.50 8.77
Pro forma combined............................ 9.81 9.71 8.72
First Banking Company pro forma equivalent.... 7.26 7.18 6.45
</TABLE>
7
<PAGE>
MEETING OF SHAREHOLDERS
General
We are providing this proxy statement/prospectus to First Banking Company
shareholders of record as of April 15, 2000, along with a form of proxy that
the First Banking Company Board is soliciting for use at a special meeting of
shareholders of First Banking Company to be held on Thursday, June 8, 2000 at
2:00 p.m., Eastern Time, in the Community Room of the Statesboro Mall branch
of First Bulloch Bank and Trust, U.S. Highway 80 East, Statesboro, Georgia. At
the meeting, the shareholders of First Banking Company will vote upon a
proposal to approve the merger agreement, dated as of December 14, 1999,
pursuant to which First Banking Company would merge into BB&T. Proxies may be
voted on other matters that may properly come before the meeting, if any, at
the discretion of the proxy holders. The First Banking Company Board knows of
no such other matters except those incidental to the conduct of the meeting.
The merger agreement (excluding certain annexes) and the related plan of
merger are attached as Appendix A.
Whether or not you expect to attend the meeting, your vote is important. We
request that you complete, date and sign the accompanying proxy and return it
promptly to First Banking Company in the enclosed postage prepaid envelope.
Record Date, Voting Rights and Vote Required
Only the holders of First Banking Company common stock on the record date
are entitled to receive notice of and to vote at the meeting. On the record
date, there were [5,592,274] shares of First Banking Company common stock
outstanding, held by approximately holders of record. Each such
share of First Banking Company 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 Banking Company common stock. If you do not vote your shares,
it will have the same effect as a vote "against" the merger agreement and the
plan of merger.
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 given voting
instructions. Accordingly, shares held in street name that have been
designated by brokers on proxy cards as not voted with respect to that
proposal ("broker non-vote shares") will not be counted as votes cast on it.
Shares with respect to which proxies have been marked as abstentions also will
not be counted as votes cast on that proposal.
Action on other matters, if any, that are properly presented at the meeting
for consideration of the shareholders 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. A quorum will be present if a
majority of the outstanding shares of First Banking Company common stock
entitled to vote is represented at the meeting in person or by proxy. Shares
with respect to which proxies have been marked as abstentions and broker non-
vote shares will be treated as shares present for purposes of determining
whether a quorum is present. The First Banking Company Board is not aware of
any other business to be presented at the meeting other than matters
incidental to the conduct of the meeting.
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 Banking Company common stock, abstentions and broker non-vote
shares will have the same effect as votes against the merger. Accordingly, the
First Banking Company Board urges you to complete, date and sign the
accompanying proxy and return it promptly in the enclosed postage prepaid
envelope.
8
<PAGE>
You should not send in your stock certificates with your proxy cards. See
"The Merger--Exchange of First Banking Company Stock Certificates" on page .
As of the record date, the directors and executive officers of First Banking
Company and their affiliates beneficially owned a total of
shares, or %, of the issued and outstanding shares of First Banking
Company common stock (exclusive of shares that may be acquired pursuant to the
exercise of stock options), and the directors and executive officers of BB&T,
their affiliates, BB&T and its subsidiaries did not own any of the outstanding
shares of First Banking Company common stock.
Voting and Revocation of Proxies
The shares of First Banking Company common stock represented by properly
completed proxies received at or before the time for the meeting (or any
adjournment) 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 proxy holders 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. If any other matters are properly presented at the
meeting and voted upon, the proxies solicited hereby will be voted on those
matters at the discretion of the proxy holders named therein.
Your attendance at the meeting will not automatically revoke your proxy. You
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 Banking Company at First Banking
Company's principal executive offices before the meeting, or by attending the
meeting and voting in person by written ballot.
Solicitation of Proxies
BB&T and First Banking Company will each pay 50% of the cost of printing
this proxy statement/ prospectus, and First Banking Company will pay all other
costs of soliciting proxies. Directors, officers and other employees of First
Banking Company or its subsidiaries may solicit proxies personally, by
telephone or facsimile or otherwise. None of these people will receive any
special compensation for solicitation activities. First Banking Company 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 Banking Company will reimburse these
record holders for their reasonable out-of-pocket expenses.
Recommendation of the First Banking Company Board
The First Banking Company Board has 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 Banking Company and its shareholders. The First
Banking Company Board recommends that First Banking Company'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 .
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 to this proxy statement/prospectus, 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 Banking Company will be merged with BB&T and BB&T will
be the surviving corporation. Shareholders of First Banking Company will
receive shares of the common stock of BB&T in exchange for their shares of
First Banking Company common stock. During the first quarter of 2001, BB&T
intends to merge First Banking Company's subsidiary banks into one or more
subsidiaries of BB&T.
Background of and Reasons for the Merger
Background of the Merger; First Banking Company's Reasons for the Merger and
Recommendation of Directors.
During the spring and summer of 1999, management of First Banking Company,
working with its financial advisor, USBA Holdings, Ltd., and a committee of
the First Banking Company Board composed of C. Arthur Howard, E. Raybon
Anderson, Dan J. Parrish, Jr., W.A. Crider, Jr., Harry S. Matthews and James
Eli Hodges, held several meetings to review and update First Banking Company's
Strategic Plan. The resulting Strategic Plan contemplated that First Banking
Company would undertake a more aggressive geographic expansion effort to
utilize existing capital and to take advantage of its location relative to the
Interstate 16 and Interstate 95 corridors. As part of the process of assessing
the feasibility of the proposed Strategic Plan, the Committee requested that
USBA Holdings compare it to an alternative plan that would focus on a less
aggressive geographic expansion or on a possible sale of the Company.
At a meeting held on July 29, 1999, USBA Holdings reviewed with the
committee the results of its analysis, which indicated that, given the
attractive nature of First Banking Company's performance and franchise, its
long term earnings objectives and shareholder value might be best enhanced
through a combination with a larger institution. The committee concluded that
potential merger partners for First Banking Company should be those bank
holding companies that could generally provide significant liquidity, enhanced
earnings growth, outstanding service to the communities in which First Banking
Company operates and investment grade securities.
During the third and fourth quarters of 1999, USBA Holdings, working with
management of First Banking Company, identified five institutions which
appeared substantially to meet the criteria established by the committee and
approached these institutions regarding their interest in acquiring First
Banking Company. These initial efforts produced expressions of interest from
three of the institutions. Based on the relative prices offered by these three
institutions, as well as the other factors identified by the committee and set
forth in the preceding paragraph, USBA Holdings entered into extensive
negotiations with BB&T. Following these discussions, BB&T substantially
increased its initial offer to acquire First Banking Company. BB&T's increased
offer was presented to the committee at a meeting on December 9, 1999, and the
committee unanimously approved recommending approval of BB&T's proposal to
acquire First Banking Company to the full First Banking Company Board. On
December 10, 1999, the committee met with the full First Banking Company Board
to review the BB&T offer. Following an extensive analysis and presentation,
the First Banking Company Board overwhelmingly approved a motion authorizing
management to negotiate a definitive agreement. On December 14, 1999, the
First Banking Company Board approved the definitive agreement.
10
<PAGE>
In making its determination to approve the agreement whereby First Banking
Company would be acquired by BB&T and without assigning any relative or
specific weight to any particular factor, the First Banking Company Board
considered the following material factors:
. the accretion of earnings per share available to shareholders of First
Banking Company based upon BB&T's offer;
. the value of the consideration to be received by First Banking Company
shareholders relative to the book value and earnings per share of First
Banking Company's common stock;
. the financial condition, results of operations and business prospects of
BB&T;
. the financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected
combinations with the terms of the proposed transaction with BB&T and
the potential future impact of a change in the rules relating to
pooling-of-interests accounting;
. alternatives to the merger, including remaining an independent
institution;
. the competitive and regulatory environment for financial institutions
generally;
. the fact that the merger would enable First Banking Company shareholders
to exchange their shares, in a tax-free transaction, for shares of
common stock of a regional company, the stock of which is widely held
and actively traded;
. the opinion of USBA Holdings, given verbally, as of the date that the
First Banking Company Board approved the merger that the consideration
to be received by First Banking Company shareholders as a result of the
merger was fair from a financial point of view; and
. the philosophy of BB&T regarding the treatment of employees and
customers in other acquisitions.
Your Board of Directors Recommends That You Vote "FOR" the Merger Agreement
---
and the 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's management believes that First Banking Company is a quality
institution with a strong commitment to personal service and that its
acquisition by BB&T represents a substantial and beneficial expansion of
BB&T's franchise into southeast Georgia, including the Savannah area. BB&T's
management further believes that the merger will benefit First Banking
Company's customers by giving them access to a broader product line that
includes insurance, mutual funds, annuities, and trust, retail brokerage,
investment banking, treasury and international banking services.
In connection with BB&T's consideration of the merger, its management
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 and 2000 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 subsequent years
would increase at an assumed annual rate, determined solely for the
purpose of assessing the impact of the merger as described above, of
12%.
. First Banking Company's 1999 earnings per share would be in line with
its management's estimate of $1.25 and First Banking Company's 2000
earnings per share would be $1.43.
. First Banking Company's earnings on a stand-alone basis for periods
after 2000 would increase at an assumed rate, determined solely for the
purpose of assessing the impact of the merger as described above, of
approximately 12%, before applying the effect of the assumptions
described below.
11
<PAGE>
. Annual cost savings of approximately $3.6 million, or 25% of First
Banking Company's expense base, would be realized as a result of the
merger, 40% in 2000 and 60% in 2001.
. First Banking Company's core net interest margin (non-fully taxable
equivalent) would be maintained annually at 5.44%.
. First Banking Company's core fee income ratio would be increased to 25%
by 2005.
. BB&T would be able to enhance performance through effective management
of First Banking Company's balance sheet.
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 estimated earnings per share,
return on assets and book value in all years and to return on equity by 2001.
BB&T excluded from calculations of earnings per share, return on equity and
return on assets the effect of an estimated one-time charge of $6.0 million,
after income tax benefits, related to consummating the merger.
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 Banking Company, 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 Banking
Company merger indicated that the projected internal rate of return is 20.94%.
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 Banking Company
USBA Holdings, Ltd. is a financial services consulting and advisory firm
located in Atlanta, Georgia. As part of its advisory business, USBA engages in
the review of the fairness of bank acquisition transactions from a financial
perspective and in the valuation of banks and other businesses and their
securities in connection with mergers, acquisitions and other transactions.
Neither USBA nor any of its affiliates has a material financial interest in
First Banking Company or BB&T. USBA was selected to advise the First Banking
Company Board based upon its familiarity with First Banking Company, the
regional community banking industry and its knowledge of the banking industry
as a whole.
USBA rendered its verbal opinion to the First Banking Company Board on
December 14, 1999 that the consideration to be received by the holders of
First Banking Company common stock under the merger agreement was fair to such
shareholders from a financial point of view. [To be updated to discuss written
opinion as of Date of proxy statement/prospectus] [A copy of the USBA fairness
opinion, which sets forth certain assumptions made, matters considered and
limitations on the review undertaken, is attached as Appendix B to this proxy
statement/prospectus and should be read in its entirety. The summary of the
USBA fairness opinion set forth herein is qualified in its entirety by
reference to the text of the USBA fairness opinion.]
USBA was engaged by First Banking Company to render the fairness opinion and
to act as an advisor to the First Company Board during the negotiations with
BB&T for which a fee equal to one percent (1%) of the aggregate consideration
to be received by First Banking Company shareholders in the merger (valued
based on the average closing price of BB&T common stock on the fifteen (15)
trading days immediately preceding the date of the closing) will be paid upon
the closing.
In arriving at its fairness opinion, USBA performed merger analysis
described below. USBA also reviewed certain publicly available business and
financial information relating to First Banking Company and BB&T. USBA also
considered certain financial and stock market data of First Banking Company
and BB&T, compared
12
<PAGE>
that data with similar data for certain other publicly-held banks and bank
holding companies and considered the financial terms of certain other recent
comparable community bank acquisition transactions in the United States, as
further discussed below. USBA also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria that it deemed relevant. In connection with its review, USBA
did not independently verify the foregoing information and relied on such
information as being complete and accurate in all material respects. Financial
forecasts prepared by First Banking Company management and submitted to USBA
were based on assumptions believed by USBA to be reasonable and to reflect
currently available information, but USBA did not independently verify such
information. USBA did not make an independent evaluation or appraisal of the
assets of First Banking Company or BB&T.
In connection with rendering its fairness opinion, USBA performed a variety
of financial analyses, including those summarized below. The summary set forth
below does not purport to be a complete description of the analyses performed
by USBA in this regard. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Accordingly, notwithstanding the separate factors summarized
below, USBA believes that its analyses must be considered as a whole and that
selecting portions of its analyses and the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. In performing its analyses, USBA
made numerous assumptions with respect to industry performance, business and
economic conditions and other matters, many of which are beyond First Banking
Company's or BB&T's control. The analyses performed by USBA are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses. No
company or transaction considered as a comparison in the analyses is identical
to First Banking Company, BB&T or the merger. Accordingly, an analysis of the
results of such comparisons is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operation
characteristics of companies and other factors that could affect the public
trading value of the companies involved in such comparisons. In addition, the
analyses do not purport to be appraisals or reflect the process by which or
the prices at which businesses actually may be sold or the prices at which any
securities may trade at the present time or at any time in the future.
Merger Analysis: The merger consideration to be received by First Banking
Company shareholders is based on a defined exchange ratio equal to 0.74. Each
share of First Banking Company common stock will be converted into the right
to receive 0.74 shares of BB&T common stock. The December 13, 1999 closing
price for BB&T common stock was $29.9375 per share. Based on the December 13,
1999 closing price for BB&T, the transaction value equals $22.15 per share for
each of the 5,597,166 average fully-diluted shares of First Banking Company
common stock. This aggregate and per share value equals 2.27 times the
September 30, 1999 book value of First Banking Company and 19.08 times First
Banking Company's trailing-12 months earnings. This value equals 29.6% of
total assets as of September 30, 1999. [to be updated]
Comparable Transactions Analysis: USBA reviewed the merger as of December
13, 1999 for the purpose of determining purchase premiums, or transaction
multiples, that could be used in comparing the merger with other transactions.
USBA reviewed the purchase premiums paid in 217 transactions that were
announced from July 1, 1996 to December 1, 1999 involving selling institutions
headquartered in the Southeastern United States (Alabama, Florida, Georgia and
South Carolina), the regional comparable group. In addition, USBA utilized
specific criteria to develop two select comparable transactions, the select
comparable group, for review. On average, the regional comparable transactions
reported an announced deal price to book value of 2.27 times, an announced
deal price to earnings of 19.3 times, and a purchase price as a percent of
assets of 22.1%. On average, the select comparable transactions reported an
announced deal price to book value of 2.03 times, an announced deal price to
earnings of 15.82 times, and a purchase price as a percent of assets of 23.3%.
Due to the more definitive criteria utilized in their selection, the select
comparable group was deemed to be a better proxy for transaction value. The
transaction multiples for the merger with BB&T each rank well within the range
of the regional and select comparable transactions. [to be updated]
13
<PAGE>
After consideration of the foregoing criteria, USBA concluded that, based on
the structure of the merger agreement and the analyses it performed, the
consideration to be received by the shareholders of First Banking Company is
fair from a financial point of view.
Exchange Ratio
In the merger, each share of First Banking Company common stock outstanding
at the effective time will be converted into the right to receive 0.74 of a
share of BB&T common stock.
You 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 your certificates for shares of
First Banking Company common stock may be more or less than the closing price
per share of BB&T common stock at any other time. You 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 .
No fractional shares of BB&T common stock will be issued in the merger. If
you would otherwise be entitled to a fractional share of BB&T common stock in
the merger, you will be paid an amount in cash determined by multiplying the
fractional part of the share of BB&T common stock by the closing price per
share of BB&T common stock as reported on NYSEnet.com at 4:00 p.m. eastern
time on the date that the effective time of the merger occurs.
Exchange of First Banking Company Stock Certificates
At the effective time, by virtue of the merger and without any action on the
part of First Banking Company or the First Banking Company shareholders,
shares of First Banking Company common stock will be converted into and will
represent the right to receive, upon surrender of the certificate representing
such shares as described below, whole shares of BB&T common stock and cash
instead of any fractional share interest. Promptly after the effective time,
BB&T will deliver or mail to you a form of letter of transmittal and
instructions for surrender of your First Banking Company stock certificates.
When you properly surrender your certificates or provide other satisfactory
evidence of ownership, and return the letter of transmittal duly executed and
completed in accordance with its instructions and any other documents as may
be reasonably requested, BB&T will promptly deliver to you the merger
consideration to which you are entitled.
You should not send in your stock certificates until you receive the letter
of transmittal and instructions.
Until surrendered as described above, each outstanding First Banking Company
stock certificate 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 any cash payable for fractional shares as part of the
merger consideration upon the surrender of the certificate or certificates
representing shares of First Banking Company common stock. With respect to any
First Banking Company stock certificate 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 Banking Company common stock outstanding
immediately prior to the effective time will be made on BB&T's stock transfer
books.
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 Banking Company in
respect of shares of First Banking Company 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, you 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 your shares of First Banking Company common
stock are converted, regardless of whether you have exchanged your First
Banking Company
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stock certificates for BB&T stock certificates. Whenever a dividend or other
distribution is declared by BB&T on the BB&T common stock, the record date for
which is 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 after the effective time will be delivered to you until you surrender
your First Banking Company stock certificate for exchange as described above.
Upon surrender of your First Banking Company stock 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 to you with respect to each share of First Banking Company common stock
represented by your certificate.
The Merger Agreement
Effective Date and Time of the Merger
The merger agreement provides that the closing of the merger will take place
on the business day designated by BB&T that is within 30 days following the
satisfaction of the conditions to the completion of the merger, or a later
date mutually acceptable to the parties. 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 Banking Company shareholders
and all other conditions to the respective obligations of BB&T and First
Banking Company 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 second quarter
of 2000.
Conditions to the Merger
The obligations of BB&T and First Banking Company 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 Banking
Company 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, no proceedings may be pending or, to
BB&T's knowledge, 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 provided 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 Banking Company 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 provided in the merger agreement; and
. First Banking Company 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 Banking Company 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 Banking Company will not
recognize any gain or loss to the extent that they exchange shares of
First Banking Company common stock for shares of BB&T common stock.
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The obligations of First Banking Company 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 Banking Company:
. 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 Banking Company must have received certain closing certificates
and legal opinions from BB&T and its counsel.
In addition, all representations and warranties of BB&T will be evaluated as
of the date of the merger agreement and at the effective time as though made
at 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 Banking Company. The representations and warranties of BB&T
concerning:
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its authorization of, 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 be any inaccuracies in the representations
and warranties of BB&T 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 the consummation of
such transactions inadvisable or unduly burdensome;
. First Banking Company must have performed in all material respects all
of its obligations and complied in all material respects with all of its
covenants required by the merger agreement;
. BB&T must have received agreements from certain affiliates of First
Banking Company 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 Banking Company 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 an employment agreement substantially in the
form attached to the merger agreement executed by James Eli Hodges.
In addition, all representations and warranties of First Banking Company
will be evaluated at the date of the merger agreement and at the effective
time as though made on and at 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
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otherwise provided in the merger agreement or consented to in writing by BB&T.
The representations and warranties of First Banking Company concerning:
. its capitalization,
. its and its subsidiaries' organization and authority to conduct
business,
. its ownership of its subsidiaries and other equity interests,
. its authorization of, and the binding nature of, the merger agreement,
. the absence of conflict between the transactions in the merger agreement
and First Banking Company's articles of incorporation or bylaws,
. its forbearance from taking any actions that would negatively affect the
pooling-of-interests accounting treatment for, or the tax-free elements
of, the merger or the receipt of necessary regulatory approvals and
. actions taken to exempt the merger from any applicable anti-takeover
laws
must be true and correct (except for inaccuracies that are de minimis in
amount). Moreover, there must not be any inaccuracies in the representations
and warranties of First Banking Company 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 Banking Company.
Conduct of First Banking Company'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 of the
merger, First Banking Company and its subsidiaries may not:
. carry on its business except in the ordinary course and in substantially
the same manner as previously conducted, or establish or acquire any new
subsidiary or engage in any new type of activity or expand any existing
activities;
. declare or pay any distribution on its capital stock, other than
regularly scheduled quarterly dividends of $0.17 per share payable with
respect to First Banking Company common stock on record dates consistent
with past practice (except that, unless otherwise agreed, any dividend
declared or payable for the quarterly period during which the effective
time occurs may 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 pursuant to First Banking
Company's 1997 Stock Option Plan with respect to options outstanding as
of the date of the merger agreement or pursuant to the option granted to
BB&T in connection with the merger agreement;
. issue or authorize any rights to acquire capital stock or effect any
recapitalization, reclassification, stock dividend, stock split or
similar change in capitalization;
. amend its articles of incorporation or bylaws;
. impose or permit the imposition or existence of any lien, charge or
encumbrance on any share of stock held by it in any First Banking
Company 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 practices;
. 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
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provide any new employee benefit or incentive, except for increases or
payments made in the ordinary course of business consistent with past
practice pursuant to existing plans or arrangements;
. enter into or substantially modify (except as may be required by law)
any employee benefit, incentive or welfare arrangement, or any related
trust agreement, relating to any of its directors, officers or other
employees (other than renewal of any of arrangement consistent with past
practice);
. solicit inquiries or proposals with respect to, furnish any information
relating to, or participate in any discussions concerning, any other
business combination with First Banking Company or any First Banking
Company subsidiary, or fail to notify BB&T immediately if any such
inquiry or proposal is received, any such information is requested or
required or any such discussions are sought (except that this would not
apply to furnishing information, negotiations or discussions following
an unsolicited offer if First Banking Company 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 Banking Company Board to the First Banking Company shareholders);
. enter into (a) any material agreement or commitment other than in the
ordinary course, (b) any agreement, indenture or other instrument other
than in the ordinary course relating to the borrowing of money by First
Banking Company or a First Banking Company subsidiary or guarantee by
First Banking Company or a First Banking Company 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, regulation
or directives, and except that, after approval of the merger agreement
and the merger by the First Banking Company shareholders and after
receipt of the requisite regulatory approvals for the transactions
contemplated by the merger agreement, First Banking Company will
cooperate in good faith with BB&T to adopt policies, practices and
procedures consistent with those utilized by BB&T, effective at or
before the effective time;
. change its methods of accounting in effect at December 31, 1998, except
as required by changes in accounting principles agreed with 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 December 31,
1998, except as required by changes in law;
. incur any new commitments for capital expenditures or obligations to
make capital expenditures in excess of $25,000 for any one expenditure
or $100,000 in the aggregate;
. incur any new indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse
repurchase arrangements, in each case in the ordinary course of
business;
. take any action that would or 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;
. dispose of any material assets other than in the ordinary course of
business; or
. agree to do any of the foregoing.
Except with the prior consent of First Banking Company (not to be
arbitrarily or unreasonably withheld), before the effective time, neither BB&T
nor any subsidiary of BB&T may take any action that would or might be expected
to:
. cause the merger not to constitute a pooling of interests or a tax-free
reorganization,
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. 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 contemplated
by the merger agreement to fail to be satisfied;
. exercise the option agreement executed concurrently with the merger
agreement other than in accordance with its terms or dispose of shares
of First Banking Company 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 or other condition
imposed by law, BB&T or First Banking Company may at any time (whether before
or after approval of the merger agreement and the plan of merger by the First
Banking Company 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 in the
merger agreement or in the plan of merger. The parties may also mutually amend
or supplement the merger agreement in writing at any time. However, no
extension, waiver, amendment or supplement which would reduce either the
exchange ratio or the payment terms for fractional interests to be provided to
holders of First Banking Company common stock upon completion of the merger
will be made after the First Banking Company shareholders approve the merger
agreement and the plan of merger.
If any of the conditions to the obligation of either party to complete the
merger is not fulfilled, that party will consider the materiality of such
nonfulfillment. In the case of the nonfulfillment of a condition to First
Banking Company's obligations, First Banking Company will, if it determines it
appropriate under the circumstances, resolicit shareholder approval of the
merger agreement and the plan of merger and provide appropriate information
concerning the obligation that has not been satisfied.
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 Banking Company;
. 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 in the
merger agreement (see "--Conditions to the Merger"); and, in either
case, if the breach or inaccuracy has not been cured by the earlier of
30 days following notice of the breach or inaccuracy to the party
committing it 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 contemplated by the merger agreement cannot be
satisfied or fulfilled before the effective time, 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
Banking Company do not approve the merger agreement and the plan of
merger; or
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. at any time following August 31, 2000, 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 the termination and (b)
a termination for an uncured breach of a covenant or agreement or inaccuracy
in a representation or warranty will not relieve the breaching party from
liability for that breach or inaccuracy.
Each party will pay the expenses it incurs in connection with the merger
agreement and the merger, except that printing expenses and SEC filing fees
incurred in connection with the registration statement and this proxy
statement/prospectus will be paid 50% by BB&T and 50% by First Banking
Company.
Interests of Certain Persons in the Merger
Certain members of First Banking Company's management have interests in the
merger that are in addition to their interests as First Banking Company
shareholders. The First Banking Company Board was aware of these factors and
considered them, among other matters, in approving the merger agreement and
the merger.
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 a five-year employment agreement with James Eli Hodges and expects to
enter into a three-year employment agreement with each of ,
, and . The employment
agreements will provide, respectively, for the employment of Mr. Hodges as a
Senior Vice President of BB&T-NC and each of , ,
and as an [officer] of BB&T-NC. [to be
updated]
The employment agreements provide that the employee will receive a base
salary at least equal to that previously received from First Banking Company
(subject to an annual review based on the performance of Employer and the
employee) plus an amount equal to the value of benefits lost as a result of
the merger and will be eligible to receive an annual bonus payment pursuant to
the terms of BB&T's Amended and Restated Short Term Incentive Plan. In
addition, Mr. Hodges will also be eligible to be granted stock options
annually under BB&T's Amended and Restated 1995 Omnibus Stock Incentive Plan
or a successor plan on the same basis as similarly situated officers of
Employer; provided that the number of options granted to Mr. Hodges as of the
first BB&T grant date will be equitably adjusted by BB&T so as to avoid
duplication of such options with options to acquire First Banking Company
common stock, if any, granted to Mr. Hodges during the twelve-month period
ending on that first BB&T grant date.
The employment agreements further provide that the employee will receive, on
the same basis as other similarly situated officers of BB&T-NC, employee
pension and welfare 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, such
benefits to commence as of a date determined by not later than January 1
following the close of the year in which the last of First Banking Company's
bank subsidiaries is merged into BB&T or one of its subsidiaries. Until that
date, First Banking Company plans that provide benefits of the same type or
class as a corresponding BB&T plan will continue in effect for the employees.
Each employment agreement provides that, if BB&T-NC terminates the
employee's employment other than because of disability or for cause and if the
employee complies with certain noncompetition provisions, he or she will be
entitled to receive as "Termination Compensation" an annual salary equal to
the highest amount of cash compensation (including bonuses) received during
any of the preceding three calendar years for the period
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commencing on the date of the termination and ending at the end of the
original term of the agreement. In addition, each employee will continue to
receive health insurance coverage and other group employee benefits from, and
to participate in retirement plans of, BB&T-NC on the same terms as were in
effect before the termination, either under BB&T-NC's plans or comparable
coverage, during the time payments of Termination Compensation are made.
Each employment agreement further provides that, in the event of a "Change
of Control" (as defined below) of the Employer or BB&T, the employee may
voluntarily terminate employment for "Good Reason" (as defined below) until
twelve months after the Change of Control 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 agreement, to receive health insurance coverage and other
group employee welfare 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 BB&T-NC 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
consent of the employee in question:
. the assignment to him or her of duties inconsistent with the position
and status of his or her title;
. a reduction in his or her pay grade or base salary as then in effect, or
the exclusion of him or her from participation in benefit plans in which
he or she previously participated;
. an involuntary relocation of him or her more than 30 miles from the
location where he or she worked immediately before a Change in Control,
or the Employer's breach of any material provision of the employment
agreement; or
. any purported termination of his or her employment by BB&T-NC not
effected in accordance with the employment agreement.
A "Change of Control" would be deemed to occur if:
. any person or group of persons (as defined in the Securities Exchange
Act of 1934, as amended) together with its affiliates, excluding
employee benefit plans of BB&T-NC or BB&T, is or becomes the beneficial
owner of securities of BB&T-NC or BB&T representing 20% or more of the
combined voting power of BB&T-NC's or BB&T's then outstanding
securities;
. as a result of a tender offer or exchange offer for the purchase of
securities of BB&T-NC or BB&T (other than an offer by BB&T for its own
securities), or as a result of a proxy contest, merger, consolidation or
sale of assets, or as a result of any combination of the foregoing,
individuals who at the beginning of any two-year period constitute the
BB&T Board, plus new directors whose election or nomination for election
by BB&T's shareholders is approved by a vote of at least two-thirds of
the directors still in office who were directors at the beginning of the
two-year period, cease for any reason during the two-year period to
constitute at least two-thirds of the members of the BB&T Board;
. the shareholders of BB&T approve a merger or consolidation of BB&T with
any other corporation or entity, regardless of which entity is the
survivor, other than a merger or consolidation that would result in the
voting securities of BB&T outstanding immediately beforehand continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 40% of the combined
voting power of the voting securities of BB&T or the other surviving
entity outstanding immediately after the merger or consolidation;
. the shareholders of BB&T approve a plan of complete liquidation or
winding-up of BB&T or an agreement for the sale or disposition by BB&T
of all or substantially all of BB&T's assets; or
. any other event occurs that the BB&T Board determines should constitute
a Change of Control.
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If any of the payments to be made under any of 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."
" 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
exceeds three times the "base amount," which is generally defined as an
individual's annualized includable compensation for the "base period," which
is generally the most recent five taxable years 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 employees with First
Banking Company or its subsidiaries.
BB&T's Advisory Boards
At the effective time of the merger, BB&T will offer each member of the
board of directors of each bank subsidiary of First Banking Company a seat on
BB&T's local advisory boards for such bank's market area, conditional upon
BB&T's receipt of a noncompetition agreement from such director. 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) at least equal in amount each year to those that they were receiving as
of December 1, 1999 as members of their respective boards of directors. 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 member of BB&T-NC's local advisory boards will be
prohibited from serving because he or she has reached the maximum age for
advisory board service (currently age 70).
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 Banking Company
for acts or omissions occurring before the effective time. This insurance will
provide at least the same coverage and amounts as contained in First Banking
Company'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 Banking Company'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 that amount. BB&T has also agreed to
indemnify all individuals who are or have been officers, directors, employees
of First Banking Company or a First Banking Company subsidiary prior to the
effective time of the merger from any acts or omissions in such capacities
prior to the effective time of the merger to the extent such indemnification
is provided pursuant to First Banking Company's existing articles of
incorporation and permitted under the North Carolina Business Corporation Act.
Regulatory Considerations
Bank holding companies (such as BB&T and First Banking Company) and their
depository institution subsidiaries are highly regulated institutions, with
numerous federal and state laws and regulations governing their activities.
These institutions are subject to ongoing supervision, regulation and periodic
examination by various federal and state financial institution regulatory
agencies. Detailed discussions of this 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 of First Banking Company incorporated by
reference in this proxy statement/prospectus. 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. See "Where You Can Find More Information" on page .
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The merger and the subsidiary bank mergers are subject to regulatory
approvals, as set forth below. To the extent that the following information
describes statutes and regulations, it is qualified in its entirety by
reference to those particular statutes and regulations.
The Merger
The merger is subject to approval by the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act of 1956. In considering the
approval of a transaction such as the merger, this Act requires the Federal
Reserve to review the financial and managerial resources and future prospects
of the bank holding companies and the banks concerned and the convenience and
needs of the communities to be served. The Federal Reserve also is required to
evaluate whether the merger would result in a monopoly or would be in
furtherance of any combination or conspiracy or attempt to monopolize the
business of banking in any part of the United States or otherwise would
substantially lessen competition or tend to create a monopoly or which in any
manner would be in restraint of trade, unless it finds the anti-competitive
effects of the proposed transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the communities to be served.
Where a transaction, such as the merger, involves the acquisition by a bank
holding company of a bank located in a state other than the home state of the
bank holding company (in this case North Carolina), the Bank Holding Company
Act authorizes the Federal Reserve to approve the transaction without regard
to the laws of any state, provided the bank holding company is adequately
capitalized and adequately managed and certain other limitations are not
exceeded. BB&T is considered well-capitalized and well-managed under the
Federal Reserve's Regulation Y, and the transaction does not exceed the other
limitations.
The Georgia Department of Banking and Finance also must approve the merger
under the bank holding company act provisions of the Official Code of Georgia,
which permit an out-of-state bank holding company to acquire a bank having
banking offices in Georgia. In evaluating the transaction, the Department will
consider the effect of the transaction upon competition, the convenience and
needs of the communities to be served, the financial history of the acquiring
holding company and the bank to be acquired, the condition of the acquiring
holding company and the bank to be acquired including capital, management and
earnings prospects, the existence of insider transactions, the adequacy of
disclosure of the terms of the acquisition and the equitable treatment of the
minority shareholders of the bank to be acquired.
BB&T also is required to provide notice to the Virginia Bureau of Financial
Institutions under the bank holding company act provisions of the Virginia
Code, which permit an out-of-state bank holding company that controls a
Virginia bank, such as BB&T, to acquire a bank outside of Virginia, such as
First Bulloch Bank & Trust Company, Metter Banking Company, First National
Bank of Effingham and Wayne National Bank, if the Bureau approves the
transaction. The Bureau is required to approve the transaction if it
determines that the transaction would not be detrimental to the safety and
soundness of the Virginia bank.
All of the required applications and notices for the merger were submitted
to the appropriate regulatory agencies, and BB&T received the approval of the
Federal Reserve Bank of Richmond on February 25, 2000, the Georgia Department
of Banking and Finance on February 24, 2000 and the Virginia Bureau of
Financial Institutions on February 10, 2000. There can be no assurance,
however, that the U.S. Department of Justice or a state attorney general will
not challenge the merger (or the subsidiary bank mergers discussed below) or,
if such a challenge is made, as to the results thereof.
The Subsidiary Bank Mergers
Although not required by the terms of the merger agreement or the plan of
merger and not a condition to the merger, BB&T expects to effect the mergers
of First Banking Company's banking subsidiaries into BB&T-NC during the first
quarter of 2001. The subsidiary bank mergers are each subject to approval of
the Federal Deposit Insurance Corporation under the Bank Merger Act. In
granting its approval under the Bank Merger Act,
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the FDIC must consider the financial and managerial resources and future
prospects of the existing and proposed institutions and the convenience and
needs of the communities to be served. Further, the FDIC may not approve any
subsidiary bank merger if it would result in a monopoly, if it would be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States, if the
effect of the subsidiary bank merger in any section of the country may be to
substantially lessen competition or to tend to create a monopoly or if it
would be in any other manner in restraint of trade, unless the FDIC finds that
the anticompetitive effects of the subsidiary bank merger are clearly
outweighed in the public interest by the probable effect of such merger in
meeting the convenience and needs of the communities to be served. In
addition, the FDIC must take into account the record of performance of the
existing and proposed institutions under the Community Reinvestment Act of
1977 in meeting the credit needs of the community, including low- and
moderate-income neighborhoods, served by the institutions. Applicable
regulations also require publication of notice of the applications for
approval of the subsidiary bank mergers and an opportunity for the public to
comment on the applications in writing and to request a hearing.
The North Carolina Commissioner of Banks also must approve the subsidiary
bank mergers under the bank merger act provisions of the North Carolina
General Statutes. In its review of the subsidiary bank mergers, the N.C.
Commissioner is required to consider whether the interests of the depositors,
creditors and shareholders of each institution are protected, whether the
merger is in the public interest and whether the merger is for legitimate
purposes.
BB&T-NC also is required under Georgia law to provide prior notice to, and
to obtain prior approval from, the Georgia Department of Banking and Finance
before consummating the subsidiary bank mergers.
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 Banking Company and to BB&T and First Banking Company. 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 Banking Company 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 Banking Company shareholder is urged to consult his
or her own tax advisor regarding the tax consequences, including the
applicable United States federal, state, local, and foreign tax consequences,
of the merger to him or her.
In the opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to BB&T:
(a) the merger will constitute a reorganization under Section 368 of the
Internal Revenue Code; (b) no gain or loss will be recognized by BB&T or First
Banking Company by reason of the merger; (c) the shareholders of First Banking
Company 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
Banking Company common stock; (d) a shareholder of First Banking Company who
receives cash instead 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 the fractional share; (e) the tax basis in the BB&T common stock
received
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by a shareholder (including any fractional share interest deemed received)
will be the same as the tax basis in the First Banking Company 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 Banking Company common stock will include the
period during which the shareholder held the shares of First Banking Company
common stock surrendered in exchange, provided that the First Banking Company
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 Banking Company 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 is not available and the First Banking Company Board
determines to proceed with the merger, First Banking Company will 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
this accounting method, holders of First Banking Company 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 First Banking Company
shares for shares of BB&T common stock. Accordingly, the book value of the
assets, liabilities and shareholders' equity of First Banking Company, 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
Banking Company 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 BB&T determines in its discretion that the merger will not
qualify for pooling-of-interests accounting treatment, it may, in its
discretion, terminate the transaction.
The Option Agreement
General
As a condition to BB&T entering into the merger agreement, First Banking
Company (as issuer) entered into an agreement with BB&T (as grantee), pursuant
to which First Banking Company granted an option to BB&T to purchase from
First Banking Company up to 1,112,862 shares of First Banking Company common
stock (subject to adjustment in certain circumstances) at a price of $19.00
per share (subject to adjustment under certain circumstances). The purchase of
any shares of First Banking Company 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 Banking
Company from considering or proposing such an acquisition, even if they were
prepared to offer to pay consideration to shareholders of First Banking
Company with a higher current market price than the BB&T common stock to be
received for First Banking Company common stock pursuant to the merger
agreement.
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 .
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Exercisability
If BB&T is not in material breach of the option agreement or its covenants
and agreements contained in the 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 Banking Company 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 Banking Company 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 Banking Company and its
subsidiaries or (c) the issuance, sale or other disposition of
securities representing 15% or more of the voting power of First Banking
Company 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 Banking Company common stock.
The obligation of First Banking Company to issue shares of First Banking
Company 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 Banking Company of a covenant or agreement in the
merger agreement or an inaccuracy in First Banking Company'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 Banking Company 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 Banking Company common stock or the filing of a registration
statement with respect to such an offer, or
. the failure of the shareholders of First Banking Company 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 Banking Company 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 Banking Company 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 Banking Company, 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 Banking Company 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 Banking Company 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
Banking Company 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 Banking Company 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
Banking Company 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 Banking Company common stock
over the purchase price, multiplied by (b) the number of shares of First
Banking Company common stock with respect to which the option has not
been exercised, plus
. the product of (a) the excess, if any, of the Applicable Price over the
purchase price paid (or payable in the case of the exercise of the
option for which the closing date has not occurred) by the holder for
each share of First Banking Company common stock with respect to which
the option has been exercised and with respect to which the holder then
has beneficial ownership (or the right to beneficial ownership if the
option is exercised but the closing date has not occurred) 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 Banking
Company 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 Banking Company
enters into an agreement:
. to consolidate with or merge into any third party and First Banking
Company will not be the continuing or surviving corporation of the
consolidation or merger;
. to permit any third party to merge into First Banking Company with First
Banking Company as the continuing or surviving corporation, but, in
connection therewith, the then outstanding shares of First Banking
Company common stock are changed into or exchanged for stock or other
securities of First Banking Company or any other person or cash or any
other property, or the outstanding shares of First Banking Company
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 Banking Company 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,
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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 Banking
Company's assets or (y) any person controlling the continuing or surviving
corporation or transferee. The number of shares subject to the substitute
option and the exercise price per share will be determined in accordance with
a formula in the option agreement. To the extent possible, the substitute
option will contain terms and conditions that are the same as those in the
option agreement.
Registration Rights
The option agreement grants to BB&T and any permitted transferee of the
option certain rights to require First Banking Company 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
Banking Company 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
As of a date determined by BB&T to be not later than January 1 following the
close of the calendar year in which the last of First Banking Company's bank
subsidiaries is merged into BB&T or one of its subsidiaries, BB&T will cause
First Banking Company's 401(k) plan either to be merged with BB&T's 401(k)
plan or terminated, in each case subject to all applicable regulatory or
governmental approvals. Each employee of First Banking Company or a First
Banking Company subsidiary at the effective time who becomes an employee
immediately following the effective time (and who is an employee as of the
above-referenced date determined by BB&T) (a "transferred employee") of BB&T
or a BB&T subsidiary (a "BB&T employer") will be eligible to participate in
BB&T's 401(k) plan (subject to compliance with eligibility requirements and to
BB&T's right to terminate such plan). Until the date determined by BB&T, BB&T
will continue in effect First Banking Company's 401(k) plan for the benefit of
participating employees. For purposes of administering BB&T's 401(k) plan,
service by a transferred employee with First Banking Company and the First
Banking Company subsidiaries will be deemed to be service with BB&T or its
subsidiaries for participation and vesting purposes, but not for purposes of
benefit accrual.
Each transferred employee 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
eligibility requirements and other terms of the plans and programs and to the
right of the BB&T employer to terminate the plans and programs) commencing,
with respect to each such plan or program, on a date determined by BB&T no
later than January 1 following the close of the calendar year in which the
last of First Banking Company's bank subsidiaries is merged into BB&T or one
of its subsidiaries. Until that date, the BB&T employer will continue in
effect for the benefit of the transferred employees those welfare benefit
plans and programs of First Banking Company that it determines, in its sole
discretion, provide benefits of the same type or class as a corresponding plan
or program maintained by the BB&T employer. For purposes of administering each
such plan or program, service with First Banking Company will be deemed to be
service with BB&T or its subsidiaries 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 (except as otherwise
provided in the following paragraph).
Each transferred employee who is terminated after the effective time
(excluding any employee who has an existing employment or special termination
agreement that was disclosed to BB&T as of the date of the merger agreement)
will be entitled to severance pay in accordance with BB&T's general severance
policy if and to the extent such employee is entitled to severance pay under
the policy. An employee's service with First Banking Company or a First
Banking Company 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.
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BB&T has agreed to honor all employment agreements, severance agreements and
deferred compensation agreements that First Banking Company and its
subsidiaries have with their current and former employees and directors and
which have been disclosed to BB&T pursuant to the merger agreement, except to
the extent any such agreements are superseded or terminated at or after the
effective time. Except for the agreements described in the preceding sentence
or as otherwise provided in the merger agreement, First Banking Company's
Target Benefit Plan and other employee benefit plans of First Banking Company
and its subsidiaries will be either terminated or, in the sole discretion of
BB&T, merged into comparable BB&T plans, effective as determined in the sole
discretion of BB&T.
Stock Options
At the effective time, each stock option then outstanding, whether or not
exercisable, granted under First Banking Company's 1997 Stock Option Plan 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 First Banking Company 1997 Stock
Option Plan, except that (a) BB&T and the compensation committee of the BB&T
Board will be substituted for First Banking Company and the committee of the
First Banking Company Board administering its stock option plan, (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 Banking Company common stock subject
to the stock option by 0.74 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 0.74 and rounding up to the nearest cent.
As an alternative to assuming the stock options, BB&T may choose to
substitute options under the BB&T Corporation 1995 Omnibus Stock Incentive
Plan or any other comparable plan for all or a part of the stock options,
subject to the adjustments described in (c) and (d) in the preceding paragraph
and the condition that the substituted options continue in effect on the same
terms and conditions provided in First Banking Company's stock option plan and
the stock option agreement governing the 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, 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 the
registration statement (and maintain the current status of the related
prospectus or prospectuses) for so long as the converted or substitute options
remain outstanding.
BB&T will deliver to each participant in the stock option plan who receives
converted or substitute options an appropriate notice setting forth the
participant's rights with respect to the converted or substitute options.
Based on stock options outstanding as of the date of the merger agreement
and subsequent exercises, options to purchase an aggregate of approximately
[38,438] shares of First Banking Company common stock may be outstanding at
the effective time. Any shares of First Banking Company common stock issued
pursuant to the exercise of stock options under the stock option plan before
the effective time will be converted into shares of BB&T common stock and cash
instead of any fractional share interest in the same manner as other
outstanding shares of First Banking Company 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
shares received by "persons" who are deemed to be "affiliates" (as
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these terms are defined under the Securities Act) of First Banking Company at
the effective time may be resold by them (a) only in transactions registered
under the Securities Act or permitted by the resale provisions of Rule 145
under the Securities Act or as otherwise permitted by the Securities Act and
(b) following the publication of financial results of at least 30 days of
post-merger combined operations of BB&T and First Banking Company (as required
by the SEC's Accounting Series Release Nos. 130 and 135). Persons who may be
deemed affiliates of First Banking Company 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 Banking
Company and include directors and certain executive officers of First Banking
Company. The restrictions on resales by an affiliate extend also to related
parties of the affiliate, including parties related by marriage who live in
the same home as the affiliate.
The merger agreement requires First Banking Company to use its best efforts
to cause each of its affiliates to deliver to BB&T a written agreement to the
effect generally that he or she 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 related rules and regulations
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, Washington D.C., Georgia, West Virginia and Kentucky
primarily through its commercial banking and thrift 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,
Washington D.C., Georgia, West Virginia and Kentucky. 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"), excluding bank subsidiaries of recently acquired bank holding
companies that are expected to be merged into BB&T-NC during 2000. 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 339 banking offices throughout North Carolina and
57 offices in metropolitan Washington, D.C. and Maryland. [to be updated]
BB&T-NC provides a wide range of banking and trust services in its local
market for retail and commercial customers, including small and mid-size
businesses, public agencies and local governments 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., 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.
Other subsidiaries of BB&T-NC include Raleigh, North Carolina-based BB&T
Insurance Services, Inc., which offers life, property and casualty and title
insurance on an agency basis, and 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 88 banking offices. BB&T-SC provides a
wide range of banking and trust services in its local market for retail and
commercial customers, including small and mid-size businesses, public
agencies, local governments and individuals.
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BB&T-VA offers a full range of commercial and retail banking services
through 104 banking offices throughout Virginia.
Scott & Stringfellow, Inc., 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.
Regional Acceptance Corporation specializes in indirect financing for
consumer purchases of mid-model and late-model used automobiles. BB&T Factors
Corporation buys and manages account receivables primarily in the furniture,
textile 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. 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 internal
growth and acquisitions of both financial and nonfinancial institutions during
recent years. BB&T's most recent acquisitions include the following:
On July 9, 1999, BB&T acquired First Citizens Corporation in a tax-free
transaction accounted for as a pooling of interests. First Citizens operated
13 banking offices and one mortgage loan office in the south metropolitan
Atlanta area. It is expected that First Citizens Bank and First Citizens Bank
of Georgia, subsidiary banks of BB&T (as the successor to First Citizens),
will be merged into BB&T-NC during the third quarter of 2000.
On July 14, 1999, BB&T acquired Mason-Dixon Bancshares, Inc. in a tax-free
transaction accounted for as a pooling of interests. 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 central
Maryland. It is expected that Carroll County Bank and Trust Company and Bank
of Maryland, subsidiary banks of BB&T (as the successor to Mason-Dixon), will
be merged into BB&T-NC during the first quarter of 2000. [to be updated]
On August 27, 1999, BB&T acquired Matewan Bancshares Inc. in a tax-free
transaction. 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. BB&T's
acquisition of Matewan expands its franchise into southern West Virginia and
eastern Kentucky. It is expected that Matewan National Bank and Matewan FSB,
subsidiary banks of BB&T (as the successor to Matewan), will be merged into
BB&T-NC or BB&T-VA during the second quarter of 2000. [to be updated]
On November 17, 1999, BB&T announced that it had agreed to acquire Hardwick
Holding Company in a transaction to be accounted for as a pooling of
interests. In the transaction, valued at $138.7 million based on BB&T closing
price on November 15, Hardwick shareholders would receive, depending on the
average reported closing price of BB&T common stock over a five-day period
ending shortly before the merger becomes effective, not less than 0.9010 or
more than 0.9320 of a share of BB&T common stock for each share of Hardwick
common stock. Through its banking subsidiaries, Hardwick operates nine banking
offices in northwest Georgia. The acquisition of Hardwick, expected to close
in the second quarter of 2000, would expand BB&T's presence into northwest
Georgia.
On November 19, 1999, BB&T acquired First Liberty Financial Corp. in a tax-
free transaction accounted for as a pooling of interests. First Liberty
operated 38 banking offices and 13 consumer finance offices in Georgia
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and Tennessee and its acquisition by BB&T expands BB&T's presence in Georgia.
It is expected that First Liberty Bank, a subsidiary bank of BB&T (as the
successor to First Liberty), will be merged into BB&T-NC during the second
quarter of 2000. [to be updated]
On January 13, 2000, BB&T acquired Premier Bancshares Inc. ("Premier") in a
tax-free transaction accounted for as a pooling of interests. Through its
banking subsidiaries, Premier operated 32 banking offices in Atlanta and North
Georgia and, though Premier Lending, 10 mortgage banking offices. The
acquisition of Premier expands BB&T's presence in the metropolitan Atlanta
market. It is expected that Premier Bank, a subsidiary bank of BB&T (as the
successor to Premier), will be merged into BB&T-NC during the third quarter of
2000.
On February 7, 2000, BB&T announced that it had agreed to acquire One Valley
Bancorp, Inc. in a transaction to be accounted for as a pooling of interests.
In the transaction, valued at $1.2 billion based on BB&T closing price on
February 4, One Valley shareholders would receive 1.28 shares of BB&T common
stock for each share of One Valley common stock. Through its nine banking
subsidiaries, One Valley operates 123 banking offices, 76 in West Virginia and
47 in central Virginia. The acquisition of One Valley, expected to close in
the third quarter of 2000, would give BB&T the highest market share in West
Virginia.
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 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, acquisitions sometimes result in significant front-end
charges against earnings, although cost savings, especially incident to in-
market acquisitions, 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. This is called 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. This is called Tier 2 capital. Tier 1
capital and Tier 2 capital combined are referred to as total capital. At March
31, 2000, BB&T's Tier 1 and total capital ratios were % and %,
respectively. Since January 1, 1998, the Federal Reserve has required 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 forms of 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 equal to 3% for
bank holding companies that meet specified criteria, including having the
highest regulatory rating. Bank holding companies that do not meet the
specified criteria generally are required to maintain a leverage ratio of from
at least 100 to 200 basis points above the stated minimum. BB&T's leverage
ratio at March 31, 2000 was %. 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
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will continue to consider a "tangible Tier 1 leverage ratio" (deducting all
intangibles) in evaluating proposals for expansion or new activity.
The FDIC has adopted minimum risk-based and leverage ratio regulations to
which BB&T's state bank subsidiaries are subject that are substantially
similar to those requirements established by the Federal Reserve. The Office
of the Comptroller of the Currency also has similar regulations that would
apply to BB&T's national bank subsidiaries. Under federal banking laws,
failure to meet the minimum regulatory capital requirements could subject a
banking institution to a variety of enforcement remedies available to federal
regulatory authorities, including, in the most severe cases, the termination
of deposit insurance by the FDIC and placing the institution into
conservatorship or receivership. The capital ratios of each of BB&T's bank
subsidiaries exceeded all minimum regulatory capital requirements as of March
31, 2000.
Deposit Insurance Assessments
The deposits of each of BB&T's bank subsidiaries are insured by the FDIC up
to the limits required by law. A majority of the deposits of the banks are
subject to the deposit insurance assessments of the Bank Insurance Fund 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 of the FDIC.
For the semi-annual period beginning December 30, 1999, 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 both BIF-insured
deposits and SAIF-insured deposits an additional 2.120 basis points per $100
of deposits on an annualized basis to cover those obligations.
Additional information about BB&T can be found in BB&T's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, and Current Reports on Form 8-
K dated January 12, 2000, February 7, 2000, February 9, 2000 and April ,
2000 [to be updated], all of which are incorporated by reference in this proxy
statement/prospectus. See "Where You Can Find More Information" on page .
INFORMATION ABOUT FIRST BANKING COMPANY
First Banking Company is a bank holding company organized on October 27,
1981. All of First Banking Company's business is presently conducted by its
wholly owned subsidiaries, First Bulloch Bank & Trust Company, Metter Banking
Company, First National Bank of Effingham and Wayne National Bank, which are
engaged in bank and bank-related activities. First Banking Company does not
engage in any non-bank activities.
First Bulloch Bank & Trust Company was organized under the laws of the State
of Georgia in 1934 as a state banking corporation. On December 31, 1985,
Metter Financial Services, Inc. combined with First Banking Company and Metter
Financial Services' subsidiary, Metter Banking Company, became a wholly owned
subsidiary of First Banking Company. On August 27, 1996 FNB Bancshares, Inc.
combined with First Banking Company and First National Bank of Effingham,
FNB's subsidiary, became a wholly owned subsidiary of First Banking Company.
On April 2, 1999, First Banking Company acquired Wayne Bancorp, Inc. and, its
subsidiary, Wayne National Bank became a wholly owned subsidiary of First
Banking Company.
As of December 31, 1999, First Banking Company had consolidated assets of
approximately $426 million, consolidated deposits of approximately $340
million and consolidated shareholders' equity of approximately $55 million.
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As of December 31, 1999, First Bulloch Bank & Trust Company operated a
headquarters building, four branches and eight ATM installations, and Metter
Banking Company had a headquarters building, a drive-in facility, three ATM
installations and a supermarket branch office. First National Bank of
Effingham had a headquarters building, two branch offices and three ATM
installations. Wayne National Bank operated a headquarters building and one
branch office.
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 April , 2000, there were
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 and are reserved for issuance in
connection with BB&T's shareholder rights plan. See "--Shareholder Rights
Plan" on page . Based on the number of shares of First Banking Company
common stock outstanding at the record date, it is estimated that
approximately shares of BB&T common stock would be issued in the
merger.
BB&T Common Stock
Each share of BB&T common stock is entitled to one vote on all matters
submitted to a vote at any meeting of shareholders. Holders of BB&T common
stock are entitled to receive dividends when, as, and if declared by the 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 that the BB&T Board may set 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 shareholder rights plan provide that the holders 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 shares
of BB&T preferred stock, or merely the existing authorization of the BB&T
Board to issue shares of BB&T preferred stock, may tend to discourage or
impede a merger or other change in control of BB&T. See "--Shareholder Rights
Plan" on page .
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Shareholder Rights Plan
BB&T has adopted a shareholder rights plan that grants BB&T's shareholders
the right to purchase securities or other property of BB&T upon the occurrence
of certain triggering events involving a potentially hostile takeover of BB&T.
Like other shareholder rights plans, BB&T's plan is intended to give the BB&T
Board the opportunity to assess the fairness and appropriateness of a proposed
transaction in order to determine whether it is in the best interests of BB&T
and its shareholders and to encourage potential hostile acquirors to negotiate
with the BB&T Board. BB&T's plan, also like other shareholder rights plans,
could also have the unintended effect of discouraging a business combination
that shareholders believe to be in their best interests.
The terms of the rights are set forth in the Rights Agreement, dated as of
December 17, 1996, between BB&T and BB&T-NC, as Rights Agent and are
summarized below:
On December 17, 1996, the BB&T Board declared a dividend of one right for
each outstanding share of BB&T common stock, payable to shareholders of record
at the close of business on January 17, 1997. One right has also been
distributed, and will also be distributed in the future, for each share of
BB&T common stock issued between January 17, 1997 and the occurrence of a
"distribution date," as described in the next paragraph. Each right entitles
the holder to purchase from BB&T 1/100th of a share of BB&T Junior Preferred
Stock (which is substantially equivalent to one share of BB&T common stock) at
a price of $145.00, subject to anti-dilution adjustments, or, under certain
circumstances, other securities or property.
Initially, the rights are attached to all BB&T common stock certificates and
are not exercisable until a distribution date occurs. A "distribution date"
will occur, and the rights will separate from shares of BB&T common stock and
become exercisable, 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, (b) 10 business days following the commencement of a tender offer or
exchange offer (or the offeror's receipt of regulatory or shareholder approval
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 next paragraph.
The BB&T Board will declare a person to be an adverse person upon its
determinations (a) that the 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) the beneficial ownership by the 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 the person or to cause pressure on BB&T to take
action or enter into a transaction or series of transactions intended to
provide the 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 the action or entering into such
transactions or series of transactions at that time or (2) the 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 (3) the 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.
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.
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It is expected that as long as the rights are exercisable only for 1/100th
of a share of BB&T Junior Preferred Stock at an exercise price of $145.00,
BB&T's shareholders would not find it economic to exercise the rights.
However, under the circumstances described below, the rights may be exercised
for an amount of BB&T common stock or other property (including BB&T Junior
Preferred Stock) having a value equal to two times the exercise price. The
Rights Agreement provides that if the BB&T Board determines that a person is
an adverse person or, at any time following the distribution date, a person
becomes the beneficial owner of 25% or more of the then outstanding shares of
BB&T common stock, a holder of a right will thereafter have the right to
receive at the time specified in the Rights Agreement, in lieu of 1/100th of a
share of BB&T Junior Preferred Stock, (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). Following
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, however, until such time as they 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 a triggering event described in the preceding paragraph would
entitle its holder to purchase $290.00 worth of BB&T common stock (or cash,
securities or other property, as noted above) for $145.00. Assuming that the
BB&T common stock was determined as provided in the Rights Agreement to have a
value of $29.00 at such time the holder of each valid right would be entitled
to purchase 10 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 five shares of BB&T common stock (or cash, securities or other
property, as noted above).
In addition, if, at any time following the date on which there has been a
public announcement that 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, (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, a 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 shares 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.
The rights 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.
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 public
announcement that an acquiring person has become such or, if earlier, 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 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
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rights become exercisable for stock (or other consideration) of BB&T or for
common stock of the acquiring company.
Other than those provisions relating to the principal economic terms of the
rights, any of the provisions of the Rights Agreement may be amended by the
BB&T Board before the distribution date. After the distribution date, the
provisions of the Rights Agreement may be amended by the BB&T Board in order
to cure any ambiguity, to make changes that do not adversely affect the
interests of holders of rights (excluding the interests of any acquiring
person or adverse person) or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time
period governing redemption may be made when the rights are not redeemable.
The Rights Agreement is filed as an exhibit to a registration statement on
Form 8-A dated January 10, 1997 that has been filed by BB&T with the SEC. This
registration statement and the Rights Agreement are incorporated by reference
in this proxy statement/prospectus, and reference is made to them for the
complete terms of the Rights Agreement and the rights. The foregoing
discussion is qualified in its entirety by reference to the Rights Agreement.
See "Where You Can Find More Information" on page .
Other Anti-Takeover Provisions
Provisions of the North Carolina Business Corporation Act and BB&T's
articles of incorporation and bylaws described below 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 its shareholders.
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" on page .
Provisions Regarding the BB&T Board
BB&T's articles of incorporation and bylaws separate the BB&T Board into
classes 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" on page .
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.
The procedures governing the submission of nominations for directors and
other proposals by shareholders may also have a deterrent effect on
shareholder actions designed to result in change of control in BB&T. See
"Comparison of Shareholders' Rights--Shareholder Nominations and Shareholder
Proposals" on page .
COMPARISON OF SHAREHOLDERS' RIGHTS
At the effective time, holders of First Banking Company 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
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holders of First Banking Company common stock. Since BB&T is organized under
the laws of the State of North Carolina and First Banking Company 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 Banking Company common
stock arise from differing provisions of the NCBCA and 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 Banking Company 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 Banking Company, to which
the shareholders of First Banking Company 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 series. As of April ,
2000, there were shares of BB&T common stock outstanding. No shares
of BB&T preferred stock were issued and outstanding as of that 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" on page .
First Banking Company
First Banking Company's authorized capital stock consists of 10,000,000
shares of First Banking Company common stock, par value $1.00 per share. As of
April , 2000, there were [5,592,274] shares of First Banking Company common
stock outstanding.
Special Meetings of Shareholders
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.
First Banking Company
Special meetings of the shareholders of First Banking Company may be called
at any time by the First Banking Company Board, by the President, or upon the
written request of shareholders owning an aggregate of not less than 25% of
the outstanding shares of capital stock entitled to vote. First Banking
Company's bylaws provide that any action required or permitted to be taken by
First Banking Company shareholders may be taken without a meeting by consent
in writing setting forth the action to be taken and signed by all the
shareholders who would be entitled to vote at a meeting.
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
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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 Banking Company
First Banking Company's articles of incorporation state that its board of
directors shall consist of nine or more members. The First Banking Company
Board presently consists of 13 members. Like the BB&T Board, the First Banking
Company Board is divided into three classes, with directors serving staggered
three-year terms. Also like BB&T, holders of First Banking Company stock do
not have cumulative voting rights in the election of directors. First Banking
Company's articles of incorporation provide that any director may be removed
from office without cause only upon the affirmative vote of the holders of at
least eighty percent (80%) of the outstanding shares and may be removed with
cause upon the affirmative vote of the holders of a majority of the
outstanding shares.
Dividends and Other Distributions
BB&T
The NCBCA prohibits a North Carolina corporation from making any
distributions to shareholders, including the payment of cash dividends, that
would render it insolvent or unable to meet its obligations as they become due
in the ordinary course of business. BB&T is not subject to any other express
regulatory restrictions on payments of dividends and other distributions. The
ability of BB&T to pay distributions to the holders of BB&T common stock will
depend, however, to a large extent upon the amount of dividends its bank
subsidiaries, which are subject to restrictions imposed by regulatory
authorities, pay to BB&T. In addition, the Federal Reserve could oppose a
distribution by BB&T if it determined that such a distribution would harm
BB&T's ability to support its bank subsidiaries. There can be no assurances
that dividends will be paid in the future. The declaration, payment and amount
of any such future dividends would depend on business conditions, operating
results, capital, reserve requirements and the consideration of other relevant
factors by the BB&T Board.
First Banking Company
First Banking Company shareholders are entitled to dividends when declared
by the First Banking Company Board, unless the company is insolvent or the
dividend payment would render it insolvent. As in the case of BB&T, the
ability of First Banking Company to pay dividends depends on the earnings of
its subsidiary banks, and management cannot predict with any certainty whether
and to what extent dividends would be paid to shareholders in the future if
First Banking Company remained independent.
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 one
of its committees, 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 the nomination in writing to the
Secretary of BB&T at least 60 days before the one year anniversary of the most
recent 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 at least 60 days before the one year anniversary of the most recent
annual meeting
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of shareholders of the 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 the proposal.
In accordance with SEC Rule 14a-8 under 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 at
least 120 days before the anniversary of the date that the previous year's
proxy statement was first mailed to shareholders. As provided in the SEC
rules, if the annual meeting date 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 Banking Company
First Banking Company's bylaws do not establish advance notice procedures
for shareholder proposals or the nomination, other than by direction of the
First Banking Company Board, of candidates for election as directors.
Discharge of Duties; Exculpation and Indemnification
BB&T
The NCBCA requires that a director of a North Carolina corporation discharge
his or her duties as a director (a) in good faith, (b) with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances and (c) in a manner the director reasonably believes to be in
the best interests of the corporation. The NCBCA expressly provides that a
director facing a change of control situation is not subject to any different
duties or to 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, to the fullest extent permitted by applicable law, against
liabilities arising out of his or her status as a director or officer,
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 Banking Company
The GBCC requires that a director discharge his or her duties as director
subject to several general standards of care. Each director must act in a
manner he or she believes in good faith to be in the best interests of the
corporation. Additionally, a director must exercise the care of an ordinarily
prudent person in a like position and in similar circumstances. First Banking
Company's bylaws contain certain provisions which provide indemnification to
directors and officers of the Company that is broader than the protection
expressly mandated in the GBCC. The indemnification provisions in the bylaws
require First Banking Company to indemnify persons who are parties to any
civil, criminal, administrative or investigative action, suit or proceeding by
reason of the fact that the person was or is a director, officer, employee or
agent of First Banking Company. These persons would be indemnified against
expenses (including, but not limited to, attorneys' fees) and against any
judgments, fines and amounts paid in settlement incurred by them. The bylaws
provide that First Banking Company shall indemnify a director, officer,
employee or agent if that individual acted in a manner he or she believed in
good faith to be in or not opposed to the best interests of First Banking
Company and, in the case of a criminal proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful.
Mergers, Share Exchanges and Sales of Assets
BB&T
The NCBCA generally requires that any merger, share exchange or sale of all
or substantially all the assets of a corporation otherwise than in the
ordinary course of business must be approved by the affirmative vote of
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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 Banking Company) 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" below.
First Banking Company
The GBCC generally provides that approval of these transactions requires a
recommendation by the board of directors to the shareholders and approval by
the shareholders by a majority of all the votes entitled to be cast by all
shares entitled to vote on the transaction. As permitted by the GBCC, First
Banking Company's articles of incorporation provide that, with certain
exceptions, any merger or consolidation involving First Banking Company or the
sale or disposition of all or substantially all of its assets will require the
affirmative vote of the holders of at least eighty percent (80%) of the
outstanding shares of First Banking Company stock, except that, if (a) eighty
percent (80%) of the Board approves the merger or similar transaction prior to
its consummation or (b) First Banking Company is engaged in a merger or
similar transaction with a subsidiary, the applicable provisions of the GBCC
would govern and the transaction would require approval of the holders of only
a majority of all votes entitled to be cast.
Anti-takeover Statutes
BB&T
The North Carolina Control Share Acquisition Act applies to BB&T. This Act
is designed to protect shareholders of publicly owned North Carolina
corporations based within the state against certain changes in control and to
provide shareholders with the opportunity to vote on whether to afford voting
rights to certain types of 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 have no voting rights until
they 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 shares in excess of the
thresholds, any officer of the corporation and any employee of the corporation
who is also a director of the corporation. If voting rights are conferred on
the acquired shares, all shareholders of the corporation have the right to
require that their shares be redeemed at the highest price paid per share by
the acquiror for any of the acquired shares.
The North Carolina Shareholder Protection Act requires that certain business
combinations with existing shareholders either be approved by a supermajority
of the other shareholders or meet certain "fair price" requirements. BB&T has
elected to opt out of the North Carolina Shareholder Protection Act, as
permitted by that Act.
First Banking Company
The GBCC provides for certain voting rules and fair price requirements
concerning business combinations with "interested shareholders." This 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); (b) the transaction must be approved by two-thirds of
the continuing directors and a majority of shares held by shareholders other
than the interested shareholder, or (c) the terms of the transaction must meet
specified fair pricing criteria and certain other tests which are intended to
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assure that all shareholders receive a fair price and equivalent consideration
for their shares regardless at which point in time they sell to the acquiring
party.
Fair price requirements are not applicable to any corporation unless they
are specifically incorporated in the bylaws of the corporation. First Banking
Company's bylaws do not contain the requirements.
Amendments to Articles of Incorporation and Bylaws
BB&T
The NCBCA provides generally that a North Carolina corporation's articles of
incorporation may be amended only upon approval by a majority of the votes
cast within each voting group entitled to vote. BB&T's articles of
incorporation and bylaws impose a greater requirement, the affirmative vote of
more than two-thirds of the outstanding shares entitled to vote, to approve an
amendment that would amend, alter or repeal the provisions of the 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 board of directors or its shareholders, except
that, unless the articles of incorporation or a bylaw adopted by the
shareholders provides otherwise, the board of directors may not amend a bylaw
approved by the shareholders. BB&T's articles of incorporation authorize the
BB&T Board to amend BB&T's bylaws.
First Banking Company
The GBCC provides that a Georgia corporation's articles of incorporation and
bylaws may be amended if the amendment is approved by a majority of the shares
entitled to vote. However, as permitted by the GBCC, First Banking Company's
articles of incorporation and bylaws require the affirmative vote of eighty
percent (80%) of the outstanding shares entitled to vote to amend, alter or
repeal a portion any article or bylaw relating to classification and staggered
terms of the board, number of directors, removal of directors, supermajority
voting requirements for certain mergers or other business combinations,
relevant factors for board consideration on such a transaction, or any
requirement for a supermajority vote on such an amendment. Except for those
matters described in the preceding sentence, the affirmative vote of a
majority of all directors or a majority of all shares entitled to elect
directors is required to amend the bylaws. The bylaws of First Banking Company
provide for amendment by the shareholders at any annual or special meeting or
by the First Banking Company Board.
Shareholders' Rights of Dissent and Appraisal
BB&T
The NCBCA provides that dissenters' rights are not available to the holders
of shares of a corporation, such as BB&T, that are either listed on a national
securities exchange or held by more than 2,000 record shareholders 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. BB&T's articles of incorporation do not authorize any special
dissenters' rights.
First Banking Company
Holders of First Banking Company common stock do not have appraisal rights
in connection with the merger into BB&T because, as of the record date, shares
of First Banking Company common stock were listed on the National Market
System of The Nasdaq Stock Market and the shares of BB&T common stock were
listed on the New York Stock Exchange.
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The foregoing is an exception to the general rule under the GBCC that 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 her
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.
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 the savings associations from
mutual to stock form.
First Banking Company
In the event of the liquidation, dissolution or winding up of the affairs of
First Banking Company, after the payment in full of debts and other
liabilities, the remaining assets would be distributed to the shareholders in
proportion to their respective interests.
Like BB&T, since First Banking Company is a bank holding company, its rights
and the rights of its creditors and of its shareholders to participate in the
assets of any subsidiary upon the latter's liquidation or recapitalization may
be subject to the prior claims of the subsidiary's creditors, except to the
extent that First Banking Company may itself be a creditor with recognized
claims against the subsidiary.
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SHAREHOLDER PROPOSALS
In the event that the merger is not completed, any proposal which a
shareholder wishes to have presented at the next annual meeting of
shareholders and included in First Banking Company's proxy materials must be
received at the main office of First Banking Company, 40 North Main Street,
Statesboro, Georgia 30459, no later than June 30, 2000. If such proposal is in
compliance with all of the requirements of Rule 14a-8 of the Securities
Exchange Act, it will be included in First Banking Company's proxy statement
and set forth on the form of proxy issued for the next annual meeting of
shareholders, if applicable. Shareholders wishing to present proposals at such
meeting (but not include them in First Banking Company's proxy materials) must
also give notice of such proposals to First Banking Company no later than June
30, 2000. It is urged that any proposals be sent by certified mail, return
receipt requested.
OTHER BUSINESS
The First Banking Company 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 by this proxy
statement/prospectus 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 54,000 shares of BB&T common stock.
EXPERTS
The consolidated financial statements of BB&T Corporation and its
subsidiaries which are incorporated by reference in this proxy
statement/prospectus from BB&T's Current Report on Form 8-K dated April ,
2000 [to be updated], 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, 1999 to reflect the acquisition by BB&T of Premier
Bancshares, Inc. on January 13, 2000, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of First Banking Company of Southeast
Georgia and its subsidiaries, which are incorporated by reference in this
proxy statement/prospectus from First Banking Company's Annual Report on Form
10-K for the year ended December 31, 1999, have been audited by ,
independent auditors, as indicated in their reports with respect thereto, and
are incorporated by reference herein in reliance upon the reports of such firm
given upon its authority as an expert in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
BB&T and First Banking Company 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
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and other information should also be available for inspection at the offices
of the NYSE, in the case of BB&T, and Nasdaq, in the case of First Banking
Company.
BB&T has filed the registration statement to register with the SEC the BB&T
common stock to be issued to First Banking Company shareholders in the merger.
This proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of BB&T. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in
BB&T's registration statement or the exhibits to the registration statement.
The SEC allows First Banking Company 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 Banking Company and BB&T have previously filed with the
SEC. These documents contain important information about First Banking Company
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, 1999*
Quarterly Reports on Form 10-Q For the fiscal quarter ended March 31, 2000*
Current Reports on Form 8-K Filed January 12, 2000, February 7, 2000,
February 9,
2000 and April , 2000
Registration Statement on Form
8-A Filed September 4, 1991
Registration Statement on Form Filed January 10, 1997
8-A (concerning BB&T's
shareholder rights plan)
First Banking Company SEC Filings (File No. 0-10853)
Annual Report on Form 10-K For the fiscal year ended December 31, 1999*
Quarterly Reports on Form 10-Q For the fiscal quarter ended March 31, 2000*
Current Reports on Form 8-K
</TABLE>
<TABLE>
<S> <C>
Registration Statement on Form 8-A/A (describing
First Banking Company common stock)
</TABLE>
First Banking Company 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 Banking Company
has supplied all such information relating to First Banking Company before the
merger.
- --------
* To be filed prior to the effective date of the registration statement.
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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 Corporate Secretary
BB&T Corporation First Banking Company of Southeast
Post Office Box 1290 Georgia
Winston-Salem, North Carolina 27102 40 North Main Street
(336) 733-3021 Statesboro, Georgia 30459
(912) 764-6611
If you would like to request documents from us, please do so by June 1, 2000
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 Banking Company
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 April , 2000. 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.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
and
BB&T CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
ARTICLE I
THE MERGER............................................................. A-1
1.1 Definitions...................................................... A-1
1.2 Terms Defined Elsewhere.......................................... A-4
ARTICLE II
THE MERGER............................................................. A-5
2.1 Merger........................................................... A-5
2.2 Filing; Plan of Merger........................................... A-5
2.3 Effective Time................................................... A-5
2.4 Closing.......................................................... A-5
2.6 Further Assurances............................................... A-6
2.8 Conversion of Shares; Payment of Merger Consideration............ A-6
2.9 Conversion of Stock Options...................................... A-7
2.10 No Right to Dissent.............................................. A-8
2.11 Merger of Subsidiaries........................................... A-8
2.12 Anti-Dilution.................................................... A-8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST BANKING........................ A-8
3.1 Capital Structure................................................ A-8
3.2 Organization, Standing and Authority............................. A-9
3.3 Ownership of Subsidiaries........................................ A-9
3.4 Organization, Standing and Authority of the Subsidiaries......... A-9
3.5 Authorized and Effective Agreement............................... A-9
3.6 Securities Filings; Financial Statements; Statements True........ A-10
3.7 Minute Books..................................................... A-10
3.8 Adverse Change................................................... A-10
3.9 Absence of Undisclosed Liabilities............................... A-11
3.10 Properties....................................................... A-11
3.11 Environmental Matters............................................ A-11
3.12 Loans; Allowance for Loan Losses................................. A-12
3.13 Tax Matters...................................................... A-12
3.14 Employees; Compensation; Benefit Plans........................... A-13
3.15 Certain Contracts................................................ A-15
3.16 Legal Proceedings; Regulatory Approvals.......................... A-16
3.17 Compliance with Laws; Filings.................................... A-16
3.18 Brokers and Finders.............................................. A-16
3.19 Repurchase Agreements; Derivatives............................... A-16
3.20 Deposit Accounts................................................. A-17
3.21 Related Party Transactions....................................... A-17
3.23 Tax and Regulatory Matters....................................... A-17
3.24 State Takeover Laws.............................................. A-17
3.25 Labor Relations.................................................. A-17
3.26 Fairness Opinion................................................. A-18
3.27 Year 2000 Compliance............................................. A-18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T................................. A-18
4.1 Capital Structure of BB&T........................................ A-18
4.2 Organization, Standing and Authority of BB&T..................... A-18
</TABLE>
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<TABLE>
<C> <S> <C>
4.3 Authorized and Effective Agreement............................... A-19
4.4 Organization, Standing and Authority of BB&T Subsidiaries........ A-19
4.5 Securities Documents; Statements True............................ A-19
4.6 Certain Information.............................................. A-19
4.7 Tax and Regulatory Matters....................................... A-20
4.8 Share Ownership.................................................. A-20
4.9 Legal Proceedings; Regulatory Approvals.......................... A-20
ARTICLE V
COVENANTS.............................................................. A-20
5.1 First Banking Shareholder Meeting................................ A-20
5.2 Registration Statement; Proxy Statement/Prospectus............... A-20
5.3 Best Efforts..................................................... A-21
5.4 Plan of Merger; Reservation of Shares............................ A-21
5.5 Additional Acts.................................................. A-21
5.6 Certain Accounting Matters....................................... A-21
5.7 Access to Information............................................ A-21
5.8 Press Releases................................................... A-22
5.9 Forbearances of First Banking.................................... A-22
5.10 Employment Agreements............................................ A-24
5.11 Affiliates....................................................... A-24
5.12 Section 401(k) Plan; Other Employee Benefits..................... A-24
5.13 Directors and Officers Protection................................ A-25
5.14 Forbearances of BB&T............................................. A-25
5.15 Reports.......................................................... A-25
5.16 Exchange Listing................................................. A-26
5.17 Advisory Boards.................................................. A-26
ARTICLE VI
CONDITIONS PRECEDENT................................................... A-26
6.1 Conditions Precedent--BB&T and First Banking..................... A-26
6.2 Conditions Precedent--First Banking.............................. A-27
6.3 Conditions Precedent--BB&T....................................... A-27
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT............................. A-28
7.1 Termination...................................................... A-28
7.2 Effect of Termination............................................ A-29
7.3 Survival of Representations, Warranties and Covenants............ A-29
7.4 Waiver........................................................... A-29
7.5 Amendment or Supplement.......................................... A-29
ARTICLE VIII
MISCELLANEOUS.......................................................... A-30
8.1 Expenses......................................................... A-30
8.2 Entire Agreement................................................. A-30
8.3 No Assignment.................................................... A-30
8.4 Notices.......................................................... A-30
8.5 Specific Performance............................................. A-31
8.6 Captions......................................................... A-31
8.7 Counterparts..................................................... A-31
8.8 Governing Law.................................................... A-31
</TABLE>
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<TABLE>
<S> <C>
ANNEXES
Annex A Articles of Merger
Annex B Employment Agreement with James E. Hodges (omitted)
Annex C Employment Agreement Form for up to Four Additional Employees (omitted)
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
December 14, 1999, is among FIRST BANKING COMPANY OF SOUTHEAST GEORGIA ("First
Banking"), a Georgia corporation having its principal office at Statesboro,
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 Banking 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 Banking is concurrently
granting to BB&T an option to acquire, under certain circumstances, 1,112,862
shares of the common stock, par value $1.00 per share, of First Banking.
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
The Merger
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 other 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 Banking 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.
"Benefit Plan Determination Date" shall mean, with respect to any employee
pension or welfare benefit plan or program maintained by First Banking at the
Effective Time, the date determined by BB&T with respect
A-1
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to each such plan or program which shall be not later than January 1 following
the close of the calendar year in which the last of the First Banking
Subsidiaries which is a bank is merged into BB&T or one of the BB&T
Subsidiaries.
"Business Day" shall mean all days other than Saturdays, Sundays and Federal
Reserve holidays.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, as amended, 42 U.S.C. 9601 et seq.
"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 Banking 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 USBA Holdings, Ltd.
"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 Banking, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of First Banking as of December 31, 1998, 1997 and 1996, and the related
consolidated statements of income and retained earnings, and cash flows
(including related notes and
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schedules, if any) for each of the three years ended December 31, 1998, 1997
and 1996 as filed by First Banking in Securities Documents and (ii) the
consolidated statements of financial condition of First Banking (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 Banking
with respect to periods ended subsequent to December 31, 1998.
"First Banking Common Stock" shall mean the shares of voting common stock,
par value $1.00 per share, of First Banking. The First Banking Common Stock
has no Rights attached, except as provided in Section 3.1.
"First Banking Disclosure Memorandum" shall mean the written information in
one or more documents, each of which is entitled "First Banking Disclosure
Memorandum" and dated on or before the date of this Agreement and delivered
not later than the date of execution of this Agreement by First Banking 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 Banking Subsidiaries" shall mean First Bulloch Bank & Trust Company,
Metter Banking Company, First National Bank of Effingham, Wayne National Bank,
and any and all other Subsidiaries of First Banking as of the date hereof and
any corporation, bank, savings association, or other organization acquired as
a Subsidiary of First Banking after the date hereof and held as a Subsidiary
by First Banking 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 Banking shall mean an event,
change, or occurrence which, individually or together with any other event,
change or occurrence, (i) has a material adverse effect on the financial
condition, results of operations, business or business prospects of BB&T and
the BB&T Subsidiaries taken as a whole, or First Banking and the First Banking
Subsidiaries taken as a whole, or (ii) materially impairs the ability of BB&T
or First Banking 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 Banking 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.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of First
Banking to solicit their votes in connection with a proposal to approve this
Agreement and the Plan of Merger.
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"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed with the Commission
under the Securities Act, with respect to the BB&T Common Stock to be issued
in connection with the transactions contemplated by this Agreement.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests (other than rights
pursuant to the Rights Agreement described under the definition of "BB&T
Common Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939 as amended; and the rules
and regulations of the Commission promulgated thereunder.
"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 Banking Common Stock, aggregating 38,438 shares.
"Stock Option Plan" shall mean First Banking's 1997 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)
First Banking Introduction
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
Surviving Corporation Section 2.1(a)
Transferred Employee Section 5.12(b)
</TABLE>
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ARTICLE II
The Merger
2.1 Merger
BB&T and First Banking are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the GBCC. At the
Effective Time:
(a) First Banking 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 Banking 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 Banking 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 Banking shall constitute adoption and
approval of the Plan of Merger.
2.3 Effective Time
The Merger shall be effective at the day and hour specified in the Articles
of Merger as filed as provided in Section 2.2 (herein sometimes referred to as
the "Effective Time").
2.4 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions
to Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing),
or such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of First Banking
shall cease, and the Surviving Corporation shall thereupon and thereafter, to
the extent consistent with its Articles of Incorporation, possess all of the
rights, privileges, immunities and franchises, of a public as well as a
private nature, of each of the Constituent Corporations; and all property,
real, personal and mixed, and all debts due on whatever account, and all other
choses in action, and each and every other interest of or belonging to or due
to each of the Constituent Corporations shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; and the title to any real estate or any interest therein vested in
either of the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall thenceforth
be responsible for all the liabilities, obligations and penalties of each of
the Constituent Corporations; and any claim, existing action or proceeding,
civil or criminal, pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation
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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 Banking 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 Banking 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 Banking Common Stock (the "Exchange Ratio") shall
be 0.74.
(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 4:00
p.m. eastern time closing price per share of BB&T Common Stock on the NYSE on
the Closing Date as reported on NYSEnet.com.
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 Banking or the holders of record of First Banking Common
Stock, each share of First Banking 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 Banking 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 Banking 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 Banking Common Stock. With respect
to any certificate for First Banking Common Stock that has been lost or
destroyed, BB&T shall pay the Merger Consideration attributable to such
certificate upon receipt of a surety bond or other adequate indemnity as
required in accordance with BB&T's standard policy, and evidence reasonably
satisfactory to BB&T of ownership of the shares represented thereby. After the
Effective Time, no transfer of the shares of First Banking Common Stock
outstanding immediately prior to the Effective Time shall be made on the stock
transfer books of the Surviving Corporation.
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(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each First Banking 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
Banking 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 Banking in respect of shares of First Banking Common Stock in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time, subject to compliance by First Banking with section 5.9(b). To
the extent permitted by law, former shareholders of record of First Banking
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 Banking Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Banking 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 Banking 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 Banking 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 Plan, except that from and after the Effective Time
(i) BB&T and its Compensation Committee shall be substituted for First Banking
and the Committee of First Banking's Board of Directors administering the
Stock Option Plan, (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 Banking 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 Plan granting each Stock
Option. Each grant of a converted or substitute option to any individual who
subsequent to the Merger will be a director or officer of BB&T as construed
under Rule 16b-3 shall, as a condition to such conversion or substitution, be
approved in accordance with the provisions of Rule 16b-3. Each Stock Option
which is an incentive stock option shall be adjusted as required by Section
424 of the Code, and the Regulations promulgated thereunder, so as to continue
as an incentive stock option under Section 424(a) of the Code, and so as not
to constitute a modification, extension, or renewal of the option within the
meaning of Section 424(h) of the Code. BB&T and First Banking agree to take
all necessary steps to effectuate the foregoing provisions of this Section
2.9. BB&T has reserved and shall continue to reserve adequate shares of
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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, 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 Plan
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 Banking hereby represents that the Stock Option Plan in
its current form complies 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 No Right to Dissent
Nothing in the Articles of Incorporation or the Bylaws of First Banking or
any First Banking Subsidiary provides or would provide to any person,
including without limitation the First Banking shareholders, upon execution of
this Agreement, the Plan of Merger or the BB&T Option Agreement and
consummation of the transactions contemplated hereby and thereby, rights of
dissent and appraisal of any kind.
2.11 Merger of Subsidiaries
In the event that BB&T shall request, First Banking shall take such actions,
and shall cause the First Banking 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 Banking Subsidiaries with and into, in each case, one of the BB&T
Subsidiaries.
2.12 Anti-Dilution
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case
of a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
Representations and Warranties of First Banking
Except as Disclosed, First Banking represents and warrants to BB&T as
follows (the representations and warranties herein of First Banking 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 Banking consists of 10,000,000 shares
of First Banking Common Stock, par value $1.00 per share. As of the date
hereof, 5,592,274 shares of First Banking Common Stock are issued and
outstanding. No other classes of capital stock of First Banking, common or
preferred, are authorized, issued or outstanding. All outstanding shares of
First Banking 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,
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except for (i) shares of First Banking Common Stock reserved in connection
with the Stock Option Plan, and (ii) 1,112,862 shares of First Banking Common
Stock reserved in connection with the BB&T Option Agreement. First Banking has
granted options to acquire 38,438 shares of First Banking Common Stock under
the Stock Option Plan, which options remain outstanding as of the date hereof.
Except as set forth in this Section 3.1, there are no Rights authorized,
issued or outstanding with respect to, nor are there any agreements,
understandings or commitments relating to the right of any First Banking
shareholder to own, to vote or to dispose of, the capital stock of First
Banking. Holders of First Banking Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
First Banking 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 Banking 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 Banking Disclosure Memorandum lists all of the
First Banking 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
Banking (directly or indirectly), the percentage ownership interest so owned
by First Banking and its business activities. The outstanding shares of
capital stock or other equity interests of the First Banking Subsidiaries are
validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by First Banking 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 Banking Subsidiaries, and there are no
agreements, understandings or commitments relating to the right of First
Banking to own, to vote or to dispose of said interests. None of the shares of
capital stock or other equity interests of the First Banking Subsidiaries have
been issued in violation of the preemptive rights of any person. Section 3.3
of the First Banking 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
Banking Subsidiaries and stock or other securities held in a fiduciary
capacity) owned directly or indirectly by First Banking.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Banking Subsidiary which is a depository institution is a
national bank or Georgia chartered bank with its deposits insured by the FDIC.
Each of the First Banking Subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization. Each of the First
Banking 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 Banking 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 Banking 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 Banking shareholders of this Agreement and
the Plan of Merger) to perform all of its obligations under this Agreement,
the Articles of Merger and the BB&T Option Agreement. The execution and
delivery of this Agreement, the Articles of Merger and the BB&T Option
Agreement, and consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action, except, in the case of this Agreement and the Plan of Merger, the
approval of the First Banking 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
Banking, and each is enforceable against First Banking in accordance with its
terms, in each such case subject to (i) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship,
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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 Banking 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
Banking or any First Banking 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 Banking or any First Banking 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 Banking or any First Banking
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 Banking of the Merger and the other transactions
contemplated in this Agreement.
3.6 Securities Filings; Financial Statements; Statements True
(a) First Banking has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1996. First Banking has
Disclosed or made available to BB&T a true and complete copy of each
Securities Document filed by First Banking with the Commission after December
31, 1996 and prior to the date hereof, which are all of the Securities
Documents that First Banking 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 Banking fairly present or will fairly
present, as the case may be, the consolidated financial position of First
Banking and the First Banking Subsidiaries as of the dates indicated and the
consolidated statements of income and retained earnings, changes in
shareholders' equity and statements of cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end audit adjustments that are not material in amount or
effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by First Banking or any First Banking 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 Banking and each of the First Banking Subsidiaries
contain or will contain at Closing accurate records of all meetings and other
corporate actions of their respective shareholders and Boards of Directors
(including committees of the Board of Directors), and the signatures contained
therein are the true signatures of the persons whose signatures they purport
to be.
3.8 Adverse Change
Since December 31, 1998, First Banking and the First Banking Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent,
except as disclosed in the most recent First Banking Financial Statements, or
entered into any transactions with Affiliates, in each case other than in the
ordinary course of
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business consistent with past practices, nor has there been any adverse change
or any event involving a prospective adverse change in the business, financial
condition, results of operations or business prospects of First Banking or any
of the First Banking Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Banking and the
First Banking Subsidiaries are disclosed in the most recent Financial
Statements of First Banking or are normally recurring business obligations
incurred in the ordinary course of its business since the date of First
Banking's most recent Financial Statements.
3.10 Properties
(a) First Banking and the First Banking 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 Banking as of December 31, 1998
or acquired after such date, except for (i) liens for current taxes not yet
due and payable, (ii) pledges to secure deposits and other liens incurred in
the ordinary course of banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount
or extent, or (iv) dispositions and encumbrances for adequate consideration in
the ordinary course of business.
(b) All leases and licenses pursuant to which First Banking or any First
Banking 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 Banking and the First Banking Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither First Banking nor
any First Banking Subsidiary has received any communication alleging that
First Banking or the First Banking 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 Banking nor any
First Banking 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 Banking or any First Banking Subsidiary, (ii) any person
or entity whose liability for any Environmental Claim First Banking or any
First Banking 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 Banking or any First Banking Subsidiary, or any real
or personal property which First Banking or any First Banking 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 Banking or any First
Banking Subsidiary holds a security interest securing a loan recorded on the
books of First Banking or any First Banking Subsidiary. Neither First Banking
nor any First Banking Subsidiary is subject to any agreement, order, judgment,
decree or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any liability under any Environmental Laws.
(c) First Banking and the First Banking Subsidiaries are in compliance with
all recommendations contained in any environmental audits, analyses and
surveys received by First Banking relating to all real and personal property
owned or leased by First Banking or any First Banking Subsidiary and all real
and personal property of which First Banking or any First Banking 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 Banking or any First Banking Subsidiary or
against any person or entity whose liability for any Environmental Claim First
Banking or any First Banking Subsidiary has or may have retained or assumed,
either contractually or by operation of law.
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3.12 Loans; Allowance for Loan Losses
(a) All of the loans on the books of First Banking and the First Banking
Subsidiaries are valid and properly documented, 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 Banking'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 Banking are adequate as
of their respective dates under the requirements of GAAP and applicable
regulatory requirements and guidelines.
3.13 Tax Matters
(a) First Banking and the First Banking 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 Banking nor any First
Banking 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 Banking
and the First Banking 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 Banking and the First Banking Subsidiaries are complete and
accurate. Neither First Banking nor any First Banking 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 Banking or any First Banking
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to First Banking or any First Banking
Subsidiary to extend the period of limitations for the assessment or
collection of any tax. No audit examination or deficiency or refund litigation
with respect to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither First Banking nor any of the First Banking 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 Banking or a First Banking
subsidiary) or has any liability for taxes of any person (other than First
Banking and the First Banking 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 Banking and the First Banking Subsidiaries is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and tax withholding requirements under
federal, state, and local tax laws, and such records identify with specificity
all accounts subject to backup withholding under Section 3406 of the Code.
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(f) Neither First Banking nor any of the First Banking 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 Banking 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 Banking and of each First Banking
Subsidiary and each other person (in each case other than as an employee) to
whom First Banking or any First Banking 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 Banking has Disclosed an accurate and complete list of all
Plans, as defined below, contributed to, maintained or sponsored by First
Banking or any First Banking Subsidiary, to which First Banking or any
First Banking 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 Banking or any First Banking
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 Banking nor any First Banking 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 Banking or any First Banking
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA
has incurred any "accumulated funding deficiency" as such term is defined
in such Sections of ERISA and the Code, whether or not waived, and each
Plan has always fully met the funding standards required under Title I of
ERISA and Section 412 of
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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, and
with respect to which the requirement for filing has not been waived) 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 Banking
or any First Banking Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code, neither First
Banking nor any First Banking 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 Banking or any First Banking 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 Banking or any First Banking Subsidiary is a member or was a
member during such five-year period.
(vii) As of December 31, 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.
(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 Banking nor, to the best knowledge of First
Banking, any First Banking 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 Banking or any First Banking 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 Banking and each First Banking Subsidiary has been and is
presently in compliance with all of the requirements of Section 4980B of
the Code.
(xi) Neither First Banking nor any First Banking Subsidiary has a
liability as of December 31, 1998 under any Plan that, to the extent
disclosure is required under GAAP, is not reflected on the consolidated
balance sheet included in the Financial Statements of First Banking as of
December 31, 1998 or otherwise Disclosed.
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(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) First Banking's or any
First Banking 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.
(xiii) With respect to each Plan, First Banking 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 Banking and any First Banking
Subsidiary may be amended or terminated at any time by action of First
Banking's Board of Directors, or such First Banking'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
Banking or a First Banking Subsidiary thereunder).
3.15 Certain Contracts
(a) Neither First Banking nor any First Banking 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 Banking or any First Banking Subsidiary or the
guarantee by First Banking or any First Banking Subsidiary of any such
obligation, which cannot be terminated within less than 30 days after the
Closing Date by First Banking or any First Banking 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 Banking or
any First Banking Subsidiary (without payment of any penalty or cost), or that
provides benefits which are contingent, or the application of which is
altered, upon the occurrence of a transaction involving First Banking 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 Banking nor any First Banking 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.
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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 Banking,
threatened against First Banking or any knowledge of First Banking, 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 Banking, no fact or condition relating to First
Banking or any First Banking Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent First Banking or BB&T from
obtaining all of the federal and state regulatory approvals contemplated
herein.instituted, pending or, to the best knowledge of First Banking,
threatened against First Banking or any First Banking Subsidiary or against
any asset, interest, plan or right of First Banking or any First Banking
Subsidiary, or, to the best knowledge of First Banking, 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 Banking, threatened against any present or former director or officer of
First Banking or any First Banking Subsidiary that would reasonably be
expected to give rise to a claim against First Banking or any First Banking
Subsidiary for indemnification. There are no actual or, to the best knowledge
of First Banking, 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 Banking, no fact or
condition relating to First Banking or any First Banking Subsidiary exists
(including, without limitation, noncompliance with the CRA) that would prevent
First Banking or BB&T from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of First Banking and each First Banking 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 Banking nor any
First Banking 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 Banking nor any First Banking Subsidiary is
subject to any regulatory or supervisory cease and desist order, agreement,
directive, memorandum of understanding or commitment, and none of them has
received any communication requesting that it enter into any of the foregoing.
Since December 31, 1995, First Banking and each of the First Banking
Subsidiaries has filed all reports, registrations, notices and statements, and
any amendments thereto, that it was required to file with federal and state
regulatory authorities, including, without limitation, the Commission, 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 Banking nor any First Banking Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder
or financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, in the Plan of Merger or
in the BB&T Option Agreement, except for an obligation to the Financial
Advisor for investment banking services, the nature and extent of which has
been Disclosed, 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 Banking or any First Banking Subsidiary has purchased securities subject
to an agreement to resell, First Banking or the First Banking Subsidiary has a
valid, perfected first lien or security interest in the securities or other
collateral securing such agreement, and the value of such collateral equals or
exceeds the amount of the debt secured thereby. With respect to all agreements
currently outstanding pursuant to which First Banking or any First Banking
Subsidiary has sold securities subject to an agreement to repurchase, neither
First Banking nor the First Banking Subsidiary
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has pledged collateral in excess of the amount of the debt secured thereby.
Neither First Banking nor any First Banking Subsidiary has pledged collateral
in excess of the amount required under any interest rate swap or other similar
agreement currently outstanding.
(b) Neither First Banking nor any First Banking Subsidiary is a party to or
has agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor, or collar financial contract, or any other
interest rate or foreign currency protection contract not included on its
balance sheets in the Financial Statements, which is a financial derivative
contract (including various combinations thereof), except for options and
forwards entered into in the ordinary course of its mortgage lending business
consistent with past practice and current policy.
3.20 Deposit Accounts
The deposit accounts of the First Banking Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by
federal law, and the First Banking 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 Banking has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
First Banking or any First Banking Subsidiary is a party with any director,
executive officer or 5% shareholder of First Banking 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 Banking 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 Banking 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 Banking, (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 Banking nor any First Banking Subsidiary has taken or agreed
to take any action which would or could reasonably be expected to (i) cause
the Merger not to be accounted for as a pooling- of-interests or not to
constitute a reorganization under Section 368 of the Code or (ii) impede or
delay receipt of any consents of regulatory authorities referred to in Section
5.4(b) or result in failure of the condition in Section 6.3(b).
3.24 State Takeover Laws
First Banking and each First Banking 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 law shall be activated or applied as a
result of such transactions.
3.25 Labor Relations
Neither First Banking nor any First Banking 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 Banking or any First Banking Subsidiary
party to any collective bargaining agreement. There is no strike or other
labor dispute involving First Banking or any First Banking Subsidiary, pending
or threatened, or
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to the best knowledge of First Banking, is there any activity involving any
employees of First Banking or any First Banking Subsidiary seeking to certify
a collective bargaining unit or engaging in any other organization activity.
3.26 Fairness Opinion
First Banking has received from the Financial Advisor an opinion that, as of
the date hereof, the Merger Consideration is fair to the shareholders of First
Banking from a financial point of view.
3.27 Year 2000 Compliance
All Systems (as defined below) and all components thereof will function in
accordance with applicable specifications, documentation and warranties prior
to, during and after the calendar year 2000. Prior to, during and after the
calendar year 2000, each of the Systems will accurately accept date-related
records and information for the years 2000 and following and perform
computations respecting or based on such date-related information in an
accurate and appropriate manner. No change in any calendar year shall
adversely affect the accurate performance of any Systems nor cause any Systems
or any of their components to operate in a manner not in accordance with
applicable specifications, documentation or warranties. For the purpose of
this paragraph, "Systems" includes all proprietary and third-party software
and computers and other automated machines or systems of any kind used or
operated by First Banking (including but not limited to systems relating to
the operation of buildings and facilities such as elevators, escalators and
automated HVAC systems).
ARTICLE IV
Representations and Warranties
of BB&T
BB&T represents and warrants to First Banking 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 Banking 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
318,538,910 shares were issued and outstanding as of October 31, 1999. All
outstanding shares of BB&T Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. The shares of BB&T Common Stock
reserved as provided in Section 5.3 are free of any Rights and have not been
reserved for any other purpose, and such shares are available for issuance as
provided pursuant to the Plan of Merger. Holders of BB&T Common Stock do not
have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
BB&T is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
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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, 1995. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by BB&T or any other BB&T Subsidiary to
First Banking 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 Banking to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of
the Securities Laws, and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
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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).
4.8 Share Ownership
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of First Banking Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings instituted, which present a claim to restrain or prohibit
the transactions contemplated herein. To the best knowledge of BB&T, no fact
or condition relating to BB&T or any BB&T Subsidiary exists (including,
without limitation, noncompliance with the CRA) that would prevent BB&T or
First Banking from obtaining all of the federal and state regulatory approvals
contemplated herein.
ARTICLE V
Covenants
5.1 First Banking Shareholder Meeting
First Banking 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
Banking agrees that it shall, at the time the Proxy Statement/Prospectus is
mailed to the shareholders of First Banking, recommend that First Banking's
shareholders vote for such approval; provided, that the Board of Directors of
First Banking 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 Banking's
shareholders after consideration of (i) written advice of legal counsel that,
in the opinion of such counsel, such recommendation or the failure to withdraw
or modify such recommendation could reasonably be expected to constitute a
breach of the fiduciary duty of the Board of Directors to the shareholders of
First Banking, and (ii) a written determination from the Financial Advisor
that the Merger Consideration is not fair or is inadequate to the First
Banking shareholders from a financial point of view, accompanied by a detailed
analysis of the reasons for such determination.
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 Banking will
furnish to BB&T the 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 Banking shall use their reasonable best efforts to cause the
Proxy Statement/Prospectus to be approved by the Commission for mailing to the
First Banking 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 Banking 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.
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5.3 Best Efforts
Each of BB&T and First Banking 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 Banking 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.
5.4 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 acknowledges that it (i) has
adopted the Plan of Merger and (ii) will pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient
to effect the Merger, BB&T shall take all appropriate action as may be
required to increase the number of shares of BB&T Common Stock reserved for
such purpose.
5.5 Additional Acts
(a) First Banking 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 Banking
shall submit notice or applications for prior approval of the transactions
contemplated herein to the Federal Reserve Board and any other federal, state
or local government agency, department or body to which notice is required or
from which approval is required for consummation of the Merger and the other
transactions contemplated hereby. First Banking and BB&T each represents and
warrants to the other that all information included (or submitted for
inclusion) concerning it, its respective Subsidiaries, and any of its
respective directors, officers and shareholders, shall be true, correct and
complete in all material respects as of the date presented.
5.6 Certain Accounting Matters
First Banking shall cooperate with BB&T concerning accounting and financial
matters necessary or appropriate to facilitate the Merger (taking into account
BB&T's policies, practices and procedures), including, without limitation,
issues arising in connection with record keeping, loan classification,
valuation adjustments, levels of loan loss reserves and other accounting
practices; provided, that any action taken pursuant to this Section 5.6 shall
not be deemed to constitute or result in the breach of any representation or
warranty of First Banking contained in this Agreement.
5.7 Access to Information
First Banking 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 Banking shall
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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 Banking and the First Banking
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 Banking shall agree with each other as to the form and
substance of any press release related to this Agreement and the Plan of
Merger or the transactions contemplated hereby and thereby, and consult with
each other as to the form and substance of other public disclosures related
thereto; provided, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which in
the opinion of its counsel is required by law.
5.9 Forbearances of First Banking
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, First Banking shall not, and shall cause each of the First
Banking 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 $.17 per share of First Banking 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 Banking Common Stock
for the quarterly period during which the Effective Time occurs shall,
unless otherwise agreed upon in writing by BB&T and First Banking, be
declared with a record date prior to the Effective Time only if the normal
record date for payment of the corresponding quarterly dividend to holders
of BB&T Common Stock is before the Effective Time;
(c) issue any shares of its capital stock (including treasury shares),
except pursuant to the Stock Option Plan with respect to the options
outstanding on the date hereof or pursuant to the BB&T Option Agreement;
(d) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or encumbrance on
any share of stock held by it in any First Banking 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
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this Agreement), or pay or agree to pay any bonus to, or provide any new
employee benefit or incentive to, any of its directors, officers or
employees, except for increases or payments made in the ordinary course of
business consistent with past practice pursuant to plans or arrangements in
effect on the date hereof;
(j) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees; provided, however, that this subparagraph shall not prevent
renewal of any of the foregoing consistent with past practice;
(k) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity interest in, First
Banking or any First Banking Subsidiary or any business combination with
First Banking or any First Banking Subsidiary other than as contemplated by
this Agreement; or authorize any officer, director, agent or affiliate of
First Banking or any First Banking 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 Banking 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 Banking's Board of Directors to the
First Banking shareholders;
(l) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any agreement, indenture or
other instrument not made in the ordinary course of business relating to
the borrowing of money by First Banking or a First Banking Subsidiary or
guarantee by First Banking or a First Banking 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 Banking shall cooperate in good
faith with BB&T to adopt policies, practices and procedures consistent with
those utilized by BB&T, effective on or before the Closing Date;
(n) change its methods of accounting in effect at December 31, 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 December 31, 1998, except as required by changes in law
or regulation;
(o) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $25,000, for any one expenditure, or
$100,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse
repurchase arrangements in the ordinary course of business;
(q) take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling-of-interests or not
to constitute a reorganization under Section 368 of the Code as determined
by BB&T, (ii) result in any inaccuracy of a representation or warranty
herein which would allow for a termination of this Agreement, or (iii)
cause any of the conditions precedent to the transactions contemplated by
this Agreement to fail to be satisfied;
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(r) dispose of any material assets other than in the ordinary course of
business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements with James E. Hodges substantially in the form of Annex B hereto
and with up to four additional employees of First Banking substantially in the
form of Annex C hereto.
5.11 Affiliates
First Banking shall use its best efforts to cause all persons who are
Affiliates of First Banking to deliver to BB&T promptly following this
Agreement a written agreement providing that such person will not dispose of
BB&T Common Stock received in the Merger except in compliance with the
Securities Act and the rules and regulations promulgated thereunder and except
as consistent with qualifying the transactions contemplated hereby for pooling
of interests accounting treatment, and in any event shall use its best efforts
to cause such affiliates to deliver to BB&T such written agreement prior to
the Closing Date.
5.12 Section 401(k) Plan; Other Employee Benefits
(a) Effective on the Benefit Plan Determination Date with respect to the
401(k) plan of First Banking, BB&T shall cause the 401(k) plan of First
Banking either to be merged with the 401(k) plan maintained by BB&T and the
BB&T Subsidiaries or terminated, in each case subject to the receipt of all
applicable regulatory or governmental approvals. Each employee of First
Banking at the Effective Time who becomes an employee immediately following
the Effective Time of BB&T or a BB&T Subsidiary ("Employer Entity") and is an
employee of an Employer Entity as of the Benefit Plan Determination Date shall
be eligible to participate in BB&T's 401(k) plan (subject to complying with
eligibility requirements and to BB&T's right to terminate such plan). Until
the Benefit Plan Determination Date, BB&T shall continue in effect for the
benefit of participating employees the Section 401(k) plan of First Bankings.
For purposes of administering BB&T's 401(k) plan, service with First Banking
and the First Banking Subsidiaries shall be deemed to be service with BB&T or
the BB&T Subsidiaries for participation and vesting purposes, but not for
purposes of benefit accrual.
(b) Each employee of First Banking or a First Banking Subsidiary at the
Effective Time who becomes an employee immediately following the Effective
Time of an Employer Entity (a "Transferred Employee") shall be eligible to
participate in 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, as of the
Benefit Plan Determination Date with respect to each such plan or program,
conditional upon the Transferred Employee's being employed by an Employer
Entity as of such Benefit Plan Determination Date. With respect to any welfare
benefit plan or program of First Banking which the Employer Entity determines,
in its sole discretion, provides benefits of the same type or class as a
corresponding plan or program maintained by the Employer Entity, the Employer
Entity shall continue such First Banking plan or program in effect for the
benefit of the Transferred Employees until they shall become eligible to
become participants in the corresponding plan or program maintained by the
Employer Entity (and, with respect to any such plan or program, subject to
complying with eligibility requirements and subject to the right of the
Employer Entity to terminate such plan or program). For purposes of
administering each such plan or program, service with First Banking 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 (except as otherwise
provided in (c) below).
(c) Each Transferred Employee who is terminated by an 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
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First Banking or a First Banking Subsidiary shall be treated as service with
BB&T for purposes of determining the amount of severance pay, if any, under
BB&T's severance policy.
(d) BB&T agrees to honor all employment agreements, severance agreements and
deferred compensation agreements that First Banking and the First Banking
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 and except as otherwise provided in this Agreement, First
Banking's Target Benefit Plan and other employee benefit plans of First
Banking shall be terminated or, in the sole discretion of BB&T, merged into
comparable plans of BB&T, effective as BB&T shall determine in its sole
discretion.
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 Banking for
acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in First Banking'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 Banking'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 Banking or any First Banking
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
Banking on the date hereof and is permitted under the NCBCA.
5.14 Forbearances of BB&T
Except with the prior written consent of First Banking, which consent shall
not be arbitrarily or unreasonably withheld, between the date hereof and the
Effective Time, neither BB&T nor any BB&T Subsidiary shall take any action
which would or might be expected to (i) cause the business combination
contemplated hereby not to be accounted for as a pooling-of-interests or not
to constitute a reorganization under Section 368 of the Code; (ii) result in
any inaccuracy of a representation or warranty herein which would allow for
termination of this Agreement; (iii) cause any of the conditions precedent to
the transactions contemplated by this Agreement to fail to be satisfied; (iv)
exercise the BB&T Option Agreement other than in accordance with its terms, or
dispose of the shares of First Banking 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 Banking and BB&T shall file (and shall cause the First Banking
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 Banking, as
the case may be, copies of all such reports promptly after the same are filed.
If financial statements are contained in any such reports filed with the
Commission, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to the absence of notes
and to normal recurring year-end adjustments that are not material). As of
their respective dates, such reports filed with the Commission will comply in
all material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or
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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 Banking Common Stock
pursuant to the Merger, and BB&T shall give all notices and make all filings
with the NYSE required in connection with the transactions contemplated
herein.
5.17 Advisory Boards
As of the Effective Time, BB&T shall offer to the members of the Boards of
Directors of each First Banking Subsidiary that is a bank a seat on the
BB&TAdvisory Board for the area in which each such bank is located. For two
years following the Effective Time, the Advisory Board members appointed
pursuant to this Section 5.17 and who continue to serve shall receive, as
compensation for service on the Advisory Board, Advisory Board member's fees
(annual retainer and attendance fees) equal in amount each year (prorated for
any partial year) to the annual retainer and schedule of attendance fees for
directors of the corresponding First Banking Subsidiary in effect on December
1, 1999. Following such two-year period, Advisory Board Members, if they
continue to serve in such capacity, shall receive fees in accordance with
BB&T's standard schedule of fees for service thereon as in effect from time to
time. For two years after the Effective Time, no such Advisory Board member
shall be prohibited from serving thereon because he or she shall have attained
the maximum age for service thereon (currently age 70). Membership of any
person or any Advisory Board shall be conditional upon execution by such
person of an agreement providing that such member will not engage in
activities competitive with BB&T for two years following the Effective Time.
ARTICLE VI
Conditions Precedent
6.1 Conditions Precedent--BB&T and First Banking
The respective obligations of BB&T and First Banking to effect the
transactions contemplated by this Agreement shall be subject to satisfaction
or waiver of the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the Plan of Merger, and consummation
of the transactions contemplated hereby and thereby, shall have been duly
and validly taken, including, without limitation, the approval of the
shareholders of First Banking 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 Banking or any of
the First Banking 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 Banking and BB&T shall have received an opinion of BB&T's legal
counsel, in form and substance satisfactory to First Banking and BB&T,
substantially to the effect that the Merger will constitute
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one or more reorganizations under Section 368 of the Code and that the
shareholders of First Banking will not recognize any gain or loss to the
extent that such shareholders exchange shares of First Banking Common Stock
for shares of BB&T Common Stock.
6.2 Conditions Precedent--First Banking
The obligations of First Banking 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 Banking 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 Banking. 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 minimus 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 Banking a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.1(d), 6.2(a) and 6.2(b), to the extent applicable to
BB&T, have been satisfied and that there are no actions, suits, claims,
governmental investigations or procedures instituted, pending or, to the
best of such officer's knowledge, threatened that reasonably may be
expected to have a Material Adverse Effect on BB&T or that present a claim
to restrain or prohibit the transactions contemplated herein or in the Plan
of Merger.
(d) First Banking shall have received opinions of counsel to BB&T in the
form reasonably acceptable to First Banking's legal counsel.
(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 Banking 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 Banking 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 Banking 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 Banking and the First Banking
Subsidiaries taken as a whole.
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(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of
BB&T, would so materially adversely affect the business or economic
benefits to BB&T of the transactions contemplated by this Agreement as to
render consummation of such transactions inadvisable or unduly burdensome.
(c) First Banking shall have performed in all material respects all
obligations and complied in all material respects with all covenants
required by this Agreement.
(d) First Banking shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that
the conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to
the extent applicable to First Banking, 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
Banking 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 Banking in the
form reasonably acceptable to BB&T's legal counsel.
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 to the extent necessary, in the reasonable
judgment of BB&T, to ensure that the Merger will be accounted for as a
pooling of interests under GAAP and to promote compliance with Rule 145
promulgated by the Commission.
(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.
(h) BB&T shall have received an Employment Agreement substantially in the
form of Annex B hereto executed by James E. Hodges.
ARTICLE VII
Termination, Default, Waiver And Amendment
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement,
which inaccuracy would provide the nonbreaching party the ability to refuse
to consummate the Merger under the applicable standard set forth in Section
6.2(a) in the case of First Banking and Section 6.3(a) in the case of BB&T;
and, in the case of (i) or (ii), if such breach or inaccuracy has not been
cured by the earlier of 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 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 Banking do not approve the Agreement and the Plan of Merger.
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(f) At any time following August 31, 2000 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.
(g) At any time prior to 11:59 p.m. on February 28, 2000 by BB&T in
writing, if BB&T determines in its sole good faith judgment, through review
of information Disclosed by First Banking, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Banking and of the First Banking Subsidiaries, taken as a whole, are
materially adversely different from BB&T's reasonable expectations with
respect thereto on the date of execution of this Agreement; provided that
BB&T shall inform First Banking upon such termination as to the reasons for
BB&T's determination. The fact that First Banking 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, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for 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 and 5.17); provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive BB&T or First Banking (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 Banking, the aforesaid representations, warranties and covenants being
material inducements to consummation by BB&T and First Banking 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 Banking 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 Banking 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 Banking, 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 Banking.
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 Banking to enforce rights in Sections 5.13 and 5.17.
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 Banking:
James E. Hodges
First Banking Company of Southeast Georgia
40 North Main Street
Post Office Box 878
Statesboro, Georgia 30459
Telephone: 912-764-6611
Fax: 912-489-1252
With a required copy to:
Walter G. Moeling
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
16th Floor
Atlanta, Georgia 30303
Telephone: 404-572-6600
Fax: 404-572-6999
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If to BB&T:
Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 336-733-3088
Fax: 336-733-2296
With a required copy to:
William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 336-721-3624
Fax:336-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Specific Performance
First Banking acknowledges that the First Banking Common Stock and the First
Banking business and assets are unique, and that if First Banking 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 Banking 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]
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<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 Banking Company of Southeast
Georgia
/s/ James Eli Hodges
By: _________________________________
Name: James Eli Hodges
Title: President
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<PAGE>
ANNEX A
ARTICLES OF MERGER
OF
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
WITH AND INTO
BB&T CORPORATION
The undersigned corporations, pursuant to Section 14-2-1105 of the Georgia
Business Corporation Code (the "GBCC") and Section 55-11-05 of the North
Carolina Business Corporation Act (the "NCBCA"), hereby execute the following
Articles of Merger.
ONE
The merger of First Banking Company of Southeast Georgia, a Georgia
corporation ("First Banking"), with and into BB&T Corporation, a North
Carolina corporation ("BB&T"), shall be in accordance with the Plan of Merger
attached hereto as Exhibit I (the "Plan of Merger").
TWO
The Plan of Merger was submitted to the shareholders of First Banking by its
Board of Directors in accordance with the provisions of Section 14-2-1103 of
the GBCC and Section 55-11-03 of the NCBCA and was duly approved in the manner
prescribed by law by the shareholders of First Banking on the day of
, 2000. The shareholders of BB&T were not required to approve the Plan
of Merger.
THREE
BB&T undertakes to request publication of a notice of filing of these
Articles of Merger and to make payment therefor as required by Section 14-2-
1105.1(b) of the GBCC.
FOUR
These Articles of Merger shall become effective at 11:59 p.m. on ,
2000.
[Remainder of Page Intentionally Left Blank]
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The undersigned, each of BB&T and First Banking, declares that the facts
herein stated are true as of , 2000.
BB&T Corporation
By:_______________________________
Name:
Title:
First Banking Company of Southeast
Georgia
By:_______________________________
Name:
Title:
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<PAGE>
EXHIBIT I
PLAN OF MERGER
OF
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
WITH AND INTO
BB&T CORPORATION
Section 1. Corporations Proposing to Merge and Surviving Corporation. First
Banking Company of Southeast Georgia, a Georgia corporation ("First Banking"),
shall be merged (the "Merger") with and into BB&T Corporation, a North
Carolina corporation ("BB&T"), pursuant to the terms and conditions of this
Plan of Merger (the "Plan of Merger") and of the Agreement and Plan of
Reorganization, dated as of December 14, 1999 (the "Agreement"), by and
between First Banking and BB&T. The effective time for the Merger (the
"Effective Time") shall be set forth in the Articles of Merger to be filed
with the Secretary of State of Georgia and the Secretary of State of North
Carolina. BB&T shall continue as the surviving corporation (the "Surviving
Corporation") in the Merger and the separate corporate existence of First
Banking shall cease.
Section 2. Effects of the Merger. The Merger shall have the effects set
forth in Section 14-2-1106 of the Georgia Business Corporation Code (the
"GBCC") and Section 55-11-06 of the North Carolina Business Corporation Act
(the "NCBCA").
Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and the Bylaws of BB&T as in effect immediately prior to the
Effective Time shall become the Articles of Incorporation and Bylaws of the
Surviving Corporation following the Effective Time until changed in accordance
with their terms and the NCBCA.
Section 4. Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of First Banking or the holders of the voting common stock, par value
$1.00 per share, of First Banking ("First Banking Common Stock"), each share
of First Banking 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
Banking Common Stock (as provided in Section 4(d)), the Merger Consideration
(as defined in Section 5).
(b) Each share of the common stock of BB&T, par value $5.00 per share ("BB&T
Common Stock") issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of First Banking Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration and any declared and unpaid
dividends with respect to First Banking Common Stock. No interest will be paid
or accrued on any cash payable for fractional shares as part of the Merger
Consideration (or upon any dividend or other distribution) upon the surrender
of the certificate or certificates representing shares of First Banking Common
Stock. With respect to any certificate for First Banking Common Stock that has
been lost or destroyed, BB&T shall pay the Merger Consideration attributable
to such certificate upon receipt of a surety bond or other adequate indemnity
as required in accordance with BB&T's standard policy, and evidence reasonably
satisfactory to BB&T of ownership of the shares represented thereby. Upon and
after the Effective Time, First Banking's transfer books shall be closed and
no transfer of the shares of First Banking Common Stock outstanding
immediately prior to the Effective Time shall be made.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each First Banking 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
Banking Common Stock. Upon proper surrender of such certificates or other
evidence of ownership meeting the requirements of Section 4(c), together with
such letter of transmittal duly executed and completed in accordance with the
instructions thereto,
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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
and any declared and unpaid dividends with respect First Banking Common Stock.
(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 Banking in respect of shares of First Banking Common Stock in
accordance with the terms of the Agreement and which remain unpaid at the
Effective Time, subject to compliance by First Banking with Section 5.9(b) of
the Agreement. To the extent permitted by law, former shareholders of record
of First Banking 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 Banking Common Stock are
converted, regardless of whether such holders have exchanged their
certificates representing First Banking Common Stock for certificates
representing BB&T Common Stock in accordance with the provisions of the
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 the 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 Banking Common Stock until
such holder surrenders such certificate for exchange as provided in this
Section 4. 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 Banking Common Stock represented by such certificate.
Section 5. Merger Consideration.
(a) As used herein, the term "Merger Consideration" shall mean the portion
of a share of BB&T Common Stock to be exchanged for each share of First
Banking 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 Banking
shareholder as provided in Section 5(b). The portion of a share of BB&T Common
Stock to be issued for each issued and outstanding share of First Banking
Common Stock shall be .74.
(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 4:00 p.m.
eastern time closing price per share of BB&T Common Stock on the New York
Stock Exchange on the Closing Date, as reported on NYSEnet.com.
Section 6. Amendment. At any time before the Effective Time, this Plan of
Merger may be amended, provided that no such amendment executed after approval
by the First Banking shareholders of the Agreement and this Plan of Merger
shall modify either the amount or the form of the consideration to be provided
to holders of First Banking Common Stock upon consummation of the Merger.
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<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)).
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<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 December 14, 1999
between BB&T Corporation and First Banking Company of Southeast
Georgia (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 *
23(e) Consent of USBA Holdings, Ltd.*
24 Power of Attorney
99(a) Form of First Banking Company of Southeast Georgia Proxy Card
99(b) Option Agreement dated December 14, 1999 between BB&T Corporation and
First Banking Company of Southeast Georgia
</TABLE>
- --------
* To be filed by amendment
(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.
II-2
<PAGE>
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
D. The registrant undertakes that every prospectus (i) that is filed
pursuant to Paragraph (C) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
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 March 1, 2000.
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 March 1, 2000.
<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
Director
______________________________________
Joseph A. McAleer, Jr.
/s/ Albert O. McCauley* Director
______________________________________
Albert O. McCauley
/s/ Richard L. Player, Jr.* Director
______________________________________
Richard L. Player, Jr.
/s/ C. Edward Pleasants, Jr.* Director
______________________________________
C. Edward Pleasants, Jr.
/s/ Nido R. Qubein* Director
______________________________________
Nido R. Qubein
/s/ E. Rhone Sasser* Director
______________________________________
E. Rhone Sasser
/s/ Jack E. Shaw* Director
______________________________________
Jack E. Shaw
/s/ Harold B. Wells* Director
______________________________________
Harold B. Wells
/s/ Jerone C. Herring
*By: _________________________________
Jerone C. Herring
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each of the undersigned, being a director and/or officer of BB&T
Corporation (the "Company"), hereby nominates, constitutes and appoints John A.
Allison, Scott E. Reed and Jerone C. Herring, or any one of them severally, to
be his or her true and lawful attorney-in-fact and to sign in his or her name
and on his or her behalf in any and all capacities stated below, and to file
with the Securities and Exchange Commission (the "Commission"), a Registration
Statement on Form S-4 (the "Registration Statement") relating to the issuance of
shares of the Company's common stock, $5.00 par value per share, in connection
with the acquisition by the Company of First Banking Company of Southeast
Georgia, a Georgia corporation, and to file any and all amendments, including
post-effective amendments, to the Registration Statement, making such changes in
the Registration Statement as such attorney-in-fact deems appropriate, and
generally to do all such things on his or her behalf in any and all capacities
stated below to enable the Company to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Commission.
This Power of Attorney has been signed by the following persons in the
capacities indicated on February 22, 2000.
/s/ John A. Allison, IV /s/ Scott E. Reed
- -------------------------------------- --------------------------------------
Name: John A. Allison IV Name: Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice President
Chief Executive Officer and Chief Financial Officer
(principal executive officer) (principal financial officer)
/s/ Sherry A. Kellett /s/ Paul B. Barringer
- -------------------------------------- --------------------------------------
Name: Sherry A. Kellett Name: Paul B. Barringer
Title: Executive Vice President Title: Director
and Controller
(principal accounting officer)
/s/ Alfred E.Cleveland /s/ W. R. Cuthbertson, Jr.
- -------------------------------------- --------------------------------------
Name: Alfred E. Cleveland Name: W. R. Cuthbertson, Jr.
Title: Director Title: Director
/s/ Ronald E. Deal /s/ A. J. Dooley, Sr.
- -------------------------------------- --------------------------------------
Name: Ronald E. Deal Name: A. J. Dooley, Sr.
Title: Director Title: Director
/s/ Tom D. Efird /s/ Paul S. Goldsmith
- -------------------------------------- --------------------------------------
Name: Tom D. Efird Name: Paul S. Goldsmith
Title: Director Title: Director
/s/ L. Vincent Hackley /s/ Jane P. Helm
- -------------------------------------- --------------------------------------
Name: L. Vincent Hackley Name: Jane P. Helm
Title: Director Title: Director
<PAGE>
/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
- -------------------------------------- ______________________________________
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. /s/ Nido R. Qubein
- -------------------------------------- --------------------------------------
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
/s/ Harold B. Wells
- --------------------------------------
Name: Harold B. Wells
Title: Director
<PAGE>
EXHIBIT 99(a)
PROXY
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
40 North Main Street
Statesboro, Georgia 30459
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
BANKING COMPANY OF SOUTHEAST GEORGIA. The undersigned hereby appoints
JAMES ELI HODGES AND C. ARTHUR HOWARD, or either of them, as the lawful
attorneys and proxies of the undersigned, each with full power and substitution,
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 Banking
Company of Southeast Georgia held of record by the undersigned on April 15, 2000
at the Special Meeting of Shareholders to be held on June 8, 2000 and any
adjournments 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 AND IN
THEIR DISCRETION ON OTHER MATTERS.
(See Reverse Side)
<PAGE>
1. TO APPROVE the Agreement and Plan of Reorganization dated as of
December 14, 1999, and a related Plan of Merger and the merger provided
therein, pursuant to which First Banking Company of Southeast Georgia will
merge with and into BB&T Corporation, and each outstanding share of Common
Stock of First Banking Company of Southeast Georgia will be converted into
the right to receive shares of Common Stock of BB&T, as described in the
accompanying proxy statement/prospectus. The Agreement and Plan of
Reorganization and the Plan of Merger are attached to the proxy
statement/prospectus as Appendix A.
[_] 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. This Proxy votes all
shares held in all capacities.
PLEASE MARK, SIGN, DATE AND MAIL THE
CARD IN THE ENCLOSED ENVELOPE.
DATED: __________________________, 2000
Signature______________________________________
DATED: __________________________, 2000
Signature______________________________________
<PAGE>
EXHIBIT 99(b)
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into as
of December 14, 1999 by and between FIRST BANKING COMPANY OF SOUTHEAST GEORGIA,
a Georgia corporation ("First Banking" 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 1,112,862 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 $.50
per share ("Issuer Common Stock"), at a purchase price per Option Share (subject
to adjustment as set forth herein, the "Purchase Price") equal to $19.00.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event (as
hereinafter defined); provided, that the Option shall terminate and be of no
further force and effect upon the earliest to occur of (A) the Effective Time,
(B) subject to clause (E) below, termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event or
a Preliminary Purchase Event (as hereinafter defined) (other than a termination
of the Merger Agreement by Grantee pursuant to Section 7.1(b) thereof (a
"Default Termination")), (C) 12 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:
<PAGE>
(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any Subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) a merger, consolidation or similar
transaction involving Issuer or any of its Subsidiaries (other than
transactions solely between Issuer's Subsidiaries or between Issuer's
Subsidiaries and Issuer), (B) the disposition, by sale, lease, exchange or
otherwise, of assets of Issuer or any of its Subsidiaries representing in
either case 15% or more of the consolidated assets of Issuer and its
Subsidiaries (other than a sale of loan receivables in a financing
transaction in the normal course of business consistent with past
practices), or (C) the issuance, sale or other disposition (including by
way of merger, consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or any of
its Subsidiaries; or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act), other than a group of which Grantee or any of the
Subsidiaries of Grantee is a member, shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 15%
or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation of
such offer, such person would own or control 15% or more of the then-
outstanding shares of Issuer Common Stock (such an offer being referred to
herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have approved
the Merger Agreement at the meeting of such shareholders held for the
purpose of voting on the Merger Agreement, such meeting shall not have been
held or shall have been canceled prior to termination of the Merger
Agreement, or Issuer's Board of Directors shall have withdrawn or modified
in a manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement, in each case after any
person (other than Grantee or any Subsidiary of Grantee) 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 Banking 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 Banking 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
<PAGE>
Holder in the filing of the required notice or application for such consent and
the obtaining of such consent at Holder's expense, and the Closing shall occur
not earlier than three business days nor later than 15 business days following
receipt of such consents (and expiration of any mandatory waiting periods).
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer referenced in Section 12(f)
hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
hereof, (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever and subject to no preemptive rights, and (B) if the Option
is exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter evidencing Holder's agreement not to offer, sell or otherwise dispose of
such Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
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 DECEMBER 14, 1999. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST
THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to enter
into this Agreement and, subject to its obtaining any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the exercise of
the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of Issuer Common Stock necessary for Holder to
exercise the Option, and Issuer will take all necessary corporate action to
authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 hereof upon
exercise of the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common Stock
or other securities which may be issuable pursuant to Section 7 hereof, upon
issuance pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges, and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
<PAGE>
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 Banking 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.
(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
<PAGE>
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).
(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).
<PAGE>
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the shares of Substitute
Common Stock are in no way distinguishable from or have lesser economic value
than other shares of common stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 hereof shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock" shall
be deemed to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a) hereof, at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending 12 months immediately
thereafter, Issuer shall repurchase from Holder the Option and all shares of
Issuer Common Stock purchased by Holder pursuant hereto with respect to which
Holder then has beneficial ownership. The date on which Holder exercises its
rights under this Section 8 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired by Holder pursuant to the Option with
respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has been
exercised and with respect to which Holder then has beneficial ownership,
multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or the consent or approval of any governmental
or regulatory agency or authority is required in connection with the payment of
all or any portion of the Section 8 Repurchase Consideration, Holder shall have
the ongoing option to revoke its request for repurchase pursuant to Section 8,
in whole or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such approval), in which case the ten business day period of time that would
otherwise run pursuant to the preceding sentence for the payment of the portion
of the Section 8 Repurchase Consideration shall run instead from the date on
which, as the case may be, any required notification period has expired or been
terminated or such approval has been obtained and, in either event, any
requisite waiting period shall have passed. If any governmental or regulatory
agency or authority disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If any governmental or regulatory agency or authority prohibits the
repurchase in part but not in whole, then Holder shall have the right (i) to
revoke the repurchase request or (ii) to the extent permitted by
<PAGE>
such agency or authority, determine whether the repurchase should apply to the
Option and/or Option Shares and to what extent to each, and Holder shall
thereupon have the right to exercise the Option as to the number of Option
Shares for which the Option was exercisable at the Request Date less the sum of
the number of shares covered by the Option in respect of which payment has been
made pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall notify
Issuer of its determination under the preceding sentence within five business
days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) hereof.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Sections 7(b)(i), 7(b)(ii), 7(b)(iii) or 7(b)(iv) hereof, or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on the
Nasdaq National Market (or if Issuer Common Stock is not quoted on the Nasdaq
National Market, the highest bid price per share as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Holder) during the 60 business days
preceding the Request Date; provided, however, that in the event of a sale of
less than all of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of the
remaining assets of Issuer as determined by an independent nationally recognized
investment banking firm selected by Holder and reasonably acceptable to Issuer
(which determination shall be conclusive for all purposes of this Agreement),
divided by the number of shares of the Issuer Common Stock outstanding at the
time of such sale. If the consideration to be offered, paid or received pursuant
to either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired actual
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
<PAGE>
such election pursuant to clause (i) may be made only one time. If some but not
all the shares of Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this subsection (b), shall be
excluded from such registration, Issuer shall make appropriate allocation of
shares to be registered among Selling Holders and any other person (other than
Issuer or any person exercising demand registration rights in connection with
such registration) who or which is permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in the proportion
that the number of shares requested to be registered by each Selling Holder
bears to the total number of shares requested to be registered by all persons
then desiring to have Issuer Common Stock registered for sale.
(c) Issuer shall use all reasonable efforts to cause each
registration statement referred to in subsection (a) above to become effective
and to obtain all consents or waivers of other parties which are required
therefor and to keep such registration statement effective, provided,, that
Issuer may delay any registration of Option Shares required pursuant to
subsection (a) above for a period not exceeding 90 days in the event that Issuer
shall in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subsection (a) above:
(i) prior to the occurrence of a Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a registration
referred to in subsection (b) above pursuant to which the Selling Holders
concerned were afforded the opportunity to register such shares under the
Securities Laws and such shares were registered as requested; and
(v) unless a request therefor is made to Issuer by Selling
Holders holding at least 25% or more of the aggregate number of Option
Shares then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the expiration of
nine months from the effective date of such registration statement. Issuer shall
use all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided,, that Issuer shall
not be required to consent to general jurisdiction or qualify to do business in
any state where it is not otherwise required to so consent to such jurisdiction
or to so qualify to do business.
(d) Except where applicable state law prohibits such payments, Issuer
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses, including reasonable fees and
expenses of one counsel to the Selling Holders whose Option Shares are being
registered, printing expenses, reasonable expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so desires
or the underwriters so require, and the reasonable fees and expenses of any
necessary special experts) in connection with each registration pursuant to
subsection (a) or (b) above (including the related offerings and sales by
Selling Holders) and all other qualifications, notifications or exemptions
pursuant to subsection (a) or (b) above. Underwriting discounts and commissions
relating to Option Shares and any other expenses incurred by such Selling
Holders in connection with any such registration shall be borne by such Selling
Holders.
(e) In connection with any registration under subsection (a) or (b)
above Issuer hereby indemnifies the Selling Holders, and each underwriter
thereof, including each person, if any, who controls such holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue statement of a
material fact contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not
<PAGE>
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 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.
<PAGE>
(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 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.
<PAGE>
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment; Transfer. Neither this Agreement nor any of the
rights, interests or obligations hereunder or under the Option shall be assigned
or transferred by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee and
Grantee may assign or transfer its rights hereunder in whole or in part after
the occurrence of a Purchase Event. In the case of any permitted assignment or
transfer of the Option, Issuer shall do all things necessary to facilitate the
same, and the Holder to whom the Option is assigned or transferred shall make
the representations contained in Section 6 hereof (with Holder substituted for
Grantee) and shall agree in writing to the terms and conditions hereof. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option
by Holder, Issuer and Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided, for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
[remainder of page intentionally left blank]
<PAGE>
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 BANKING COMPANY OF BB&T CORPORATION
SOUTHEAST GEORGIA
By: ____________________________ By: ____________________________
Name: ______________________ Name: ______________________
Title:______________________ Title:______________________
