AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FLORIDAFIRST BANCORP, INC.
and
BB&T CORPORATION
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................1
1.1 Definitions.......................................................1
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1.2 Terms Defined Elsewhere...........................................6
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ARTICLE II THE MERGER.......................................................8
2.1 Merger............................................................8
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2.2 Filing; Plan of Merger............................................8
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2.3 Effective Time....................................................8
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2.4 Closing...........................................................9
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2.5 Effect of Merger..................................................9
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2.6 Further Assurances................................................9
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2.7 Merger Consideration.............................................10
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2.8 Conversion of Shares; Payment of Merger Consideration............11
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2.9 Conversion of Stock Options......................................12
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2.10 No Right to Dissent............................................14
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2.11 Anti-Dilution...................................................14
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF FLORIDAFIRST.................14
3.1 Capital Structure................................................14
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3.2 Organization, Standing and Authority.............................15
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3.3 Ownership of Subsidiaries........................................15
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3.4 Organization, Standing and Authority of the Subsidiaries.........15
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3.5 Authorized and Effective Agreement...............................16
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3.6 Securities Filings; Financial Statements; Statements True........16
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3.7 Minute Books.....................................................17
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3.8 Adverse Change...................................................17
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3.9 Absence of Undisclosed Liabilities...............................18
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3.10 Properties......................................................18
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3.11 Environmental Matters...........................................18
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3.12 Loans; Allowance for Loan Losses................................19
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3.13 Tax Matters.....................................................20
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3.14 Employees; Compensation; Benefit Plans..........................21
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3.15 Certain Contracts...............................................24
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3.16 Legal Proceedings; Regulatory Approvals.........................25
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3.17 Compliance with Laws; Filings...................................26
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3.18 Brokers and Finders.............................................26
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3.19 Repurchase Agreements; Derivatives..............................26
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3.20 Deposit Accounts................................................27
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3.21 Related Party Transactions......................................27
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3.22 Certain Information.............................................27
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3.23 Tax and Regulatory Matters......................................28
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3.24 State Takeover Laws.............................................28
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3.25 Labor Relations.................................................28
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3.26 Fairness Opinion................................................28
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3.27 No Right to Dissent.............................................28
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T..........................29
4.1 Capital Structure of BB&T........................................29
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4.2 Organization, Standing and Authority of BB&T.....................29
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4.3 Authorized and Effective Agreement...............................29
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4.4 Organization, Standing and Authority of BB&T Subsidiaries........30
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4.5 Securities Documents; Statements True............................30
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4.7 Certain Information..............................................31
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4.8 Tax and Regulatory Matters.......................................31
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4.9 Share Ownership..................................................31
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4.9 Legal Proceedings; Regulatory Approvals..........................31
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ARTICLE V COVENANTS........................................................32
5.1 FloridaFirst Shareholder Meeting.................................32
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5.2 Registration Statement; Proxy Statement/Prospectus...............33
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5.3 Plan of Merger; Reservation of Shares............................33
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5.4 Additional Acts..................................................34
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5.5 Best Efforts.....................................................34
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5.6 Certain Accounting Matters.......................................34
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5.7 Access to Information............................................35
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5.8 Press Releases...................................................35
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5.9 Forbearances of FloridaFirst.....................................35
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5.10 Employment Agreements...........................................38
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5.11 Affiliates......................................................38
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5.12 Section 401(k) Plan; Other Employee Benefits....................39
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5.13 Directors' and Officers' Protection.............................41
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5.14 Forbearances of BB&T............................................41
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5.15 Reports.........................................................41
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5.16 Exchange Listing................................................42
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5.17 Advisory Board..................................................42
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ARTICLE VI CONDITIONS PRECEDENT............................................43
6.1 Conditions Precedent - BB&T and FloridaFirst.....................43
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6.2 Conditions Precedent - FloridaFirst..............................44
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6.3 Conditions Precedent - BB&T......................................45
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ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT.....................46
7.1 Termination......................................................46
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7.2 Effect of Termination............................................49
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7.3 Survival of Representations, Warranties and Covenants............49
7.4 Waiver...........................................................50
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7.5 Amendment or Supplement..........................................50
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ARTICLE VIII MISCELLANEOUS.................................................50
8.1 Expenses.........................................................50
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8.2 Entire Agreement.................................................50
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8.3 No Assignment....................................................51
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8.4 Notices..........................................................51
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8.5 Specific Performance.............................................52
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8.6 Captions.........................................................52
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8.7 Counterparts.....................................................52
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8.8 Governing Law....................................................52
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ANNEXES
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Annex A Articles of Merger
Annex B Employment Agreement with Gregory C. Wilkes
Annex C Employment Agreements with Kerry P. Charlet, William H. Cloyd and
Donald A. Burdett
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
October 2, 2002 is among FLORIDAFIRST BANCORP, INC. ("FloridaFirst"), a Florida
corporation having its principal office at Lakeland, Florida 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 FloridaFirst shall be merged 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, FloridaFirst is concurrently granting to BB&T an
option to acquire, under certain circumstances, 1,060,000 shares of the common
stock, par value $.10 per share, of FloridaFirst.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
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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 Florida Department of
State, as provided in Section 607.1105 of the FBCA.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended, and rules and regulations promulgated thereunder.
"Bank Secrecy Act" shall mean the Federal Bank Secrecy Act of 1970, as
amended, and rules and regulations promulgated thereunder.
"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 FloridaFirst 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 each employee
pension or welfare benefit plan or program maintained by FloridaFirst at the
Effective Time, the date determined by BB&T when FloridaFirst participants in
such plan or program become eligible to participate in a corresponding plan or
program maintained by BB&T and the BB&T Subsidiaries, which shall be not later
than January 1 following the close of the calendar year in which FloridaFirst is
merged into a banking subsidiary of BB&T.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"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, and
rules and regulations promulgated thereunder.
"Disclosed" shall mean disclosed in the FloridaFirst 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
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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, and rules and regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FBCA" shall mean the Florida Business Corporation Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Sandler, O'Neill & Partners, L.P.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 2001, 2000, and 1999, 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,
2001, 2000, and 1999, 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 and 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, 2001, and (b) with respect to FloridaFirst, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of FloridaFirst or its predecessors as of September 30, 2001, 2000 and
1999, and the related consolidated statements of income and shareholders'
equity, and cash flows (including related notes and schedules, if any) for each
of the three years ended September 30, 2001, 2000 and 1999 as filed by
FloridaFirst (following April 6, 1999) in
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Securities Documents and by its predecessors (prior to April 6, 1999) and (ii)
the consolidated statements of financial condition of FloridaFirst (including
related notes and schedules, if any) and the related consolidated statements of
income and shareholders' equity, and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by FloridaFirst with
respect to periods ended subsequent to September 30, 2001.
"FloridaFirst Common Stock" shall mean the shares of voting common stock,
par value $.10 per share, of FloridaFirst.
"FloridaFirst Disclosure Memorandum" shall mean the written information in
one or more documents, each of which is entitled "FloridaFirst 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 FloridaFirst 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. Inclusion of a given item in the FloridaFirst Disclosure Memorandum
shall not be deemed to be a conclusion or admission that such item (or any other
item) is material or has a Material Adverse Effect.
"FloridaFirst Subsidiaries" shall mean FloridaFirst Bank and any and all
other Subsidiaries of FloridaFirst as of the date hereof and any corporation,
bank, savings association, or other organization acquired as a Subsidiary of
FloridaFirst after the date hereof and held as a Subsidiary by FloridaFirst 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.
"Gramm-Leach-Bliley Act" shall mean the Gramm-Leach-Bliley Act of 1999, as
amended and rules and regulations promulgated thereunder.
"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 FloridaFirst shall mean an event,
change, or occurrence which, individually or together with any other event,
change or occurrence, (i) has or is reasonably likely to have a material adverse
effect on the financial condition,
4
results of operations or business of BB&T and the BB&T Subsidiaries taken as a
whole, or FloridaFirst and the FloridaFirst Subsidiaries taken as a whole, or
(ii) materially impairs the ability of BB&T or FloridaFirst 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 FloridaFirst 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; provided that with respect to FloridaFirst, only if and to the
extent any such expenses payable to third parties are Disclosed by FloridaFirst
or incurred by FloridaFirst following the date hereof as permitted by this
Agreement.
"NCBCA" shall mean the North Carolina Business Corporation Act, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or group of entities, or governmental body.
"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of
FloridaFirst to solicit their votes in connection with a proposal to approve
this Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed 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
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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 in each case 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
FloridaFirst Common Stock.
"Stock Option Plans" shall mean FloridaFirst's 1999 Stock Option Plan and
2002 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).
"Superior Offer" shall mean a proposal or offer to acquire or purchase all
or a substantial portion of the assets of or a substantial equity interest in,
or to effect any recapitalization, liquidation or dissolution involving or a
business combination or other similar transaction with, FloridaFirst or any
FloridaFirst Subsidiary (including, without limitation, a tender offer or
exchange offer to purchase FloridaFirst Common Stock) other than as contemplated
by this Agreement: (i) that did not arise from or involve a breach or violation
by FloridaFirst of Section 5.9(k) or any other provision of this Agreement; (ii)
that the FloridaFirst Board of Directors determines in its good faith judgment,
based, among other things, on advice of the Financial Advisor, to be more
favorable to the FloridaFirst shareholders than the Merger; and (iii) the
financing for the implementation of which, to the extent required, is then
committed or in the good faith reasonable judgment of the FloridaFirst Board of
Directors, based, among other things, on advice of the Financial Advisor, is
capable of being obtained by the party making the proposal or offer.
"TILA" shall mean the Truth in Lending Act, as amended, and rules and
regulations promulgated thereunder.
"USA PATRIOT Act" shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, as amended, and rules and regulations promulgated thereunder.
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1.2 Terms Defined Elsewhere
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The capitalized terms set forth below are defined in the following
sections:
Agreement Introduction
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Average Closing Price Section 7.1(g)
BB&T ......... Introduction
BB&T Option Plan Section 2.9(a)
Cash Amount Section 2.7(b)
Cash Election Section 2.7(a)
Cash/Stock Election Section 2.7(a)
Cash/Stock Exchange Ratio Section 7.1(g)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(d)
Consideration Value Section 2.7(c)
Constituent Corporations Section 2.1
Converted Value Section 7.1(g)
Determination Date Section 7.1(g)
Effective Time Section 2.3
Electing Shareholder Section 2.7(a)
Employer Entity Section 5.12(a)
ESOP Section 5.12(e)
Excess Cash Amount Section 2.7(b)
Exchange Ratio Section 2.7(a)
FloridaFirst Introduction
Index Group Section 7.1(g)
Index Price Section 7.1(g)
Merger Recitals
Merger Consideration Section 2.7(a)
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Starting Date Section 7.1(g)
Stock Election Section 2.7(a)
Surviving Corporation Section 2.1(a)
Transferred Employee Section 5.12(a)
Unadjusted Cash Amount Section 2.7(b)
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ARTICLE IITHE MERGER
2.1 Merger
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BB&T and FloridaFirst are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the FBCA. At the
Effective Time:
(a) FloridaFirst shall be merged into BB&T in accordance with the
applicable provisions of the NCBCA and the FBCA, with BB&T being the surviving
corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of FloridaFirst shall cease and the Merger shall
in all respects have the effects provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall be the Bylaws of the
Surviving Corporation.
2.2 Filing; Plan of Merger
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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 FloridaFirst 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 Department of State of Florida, as provided in Section 55-11-05
of the NCBCA and Section 607.1105 of the FBCA 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 FloridaFirst shall constitute adoption and approval of the Plan
of Merger.
2.3 Effective Time
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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").
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2.4 Closing
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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
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From and after the Effective Time, the separate existence of FloridaFirst
shall cease, and the Surviving Corporation shall thereupon and thereafter, to
the extent consistent with its Articles of Incorporation, possess all of the
rights, privileges, immunities and franchises, of a public as well as a private
nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all other choses
in action, and each and every other interest of or belonging to or due to each
of the Constituent Corporations shall be taken and deemed to be transferred to
and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
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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.
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2.7 Merger Consideration
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(a) As used herein, the term "Merger Consideration" shall mean the
consideration described in (i), (ii) or (iii) below, as elected as provided in
Section 2.8(d) by each FloridaFirst shareholder (the "Electing Shareholder"),
and subject to adjustment as provided in paragraphs (b) and (c) of this Section
2.7:
(i) .66 (the "Exchange Ratio") shares of BB&T Common Stock (to the nearest
ten thousandth of a share) to be exchanged for each share of FloridaFirst Common
Stock owned by the Electing Shareholder as of the Effective Time (the "Stock
Election"); or
(ii) .363 shares of BB&T Common Stock (to the nearest ten thousandth of a
share) and $11.25 in cash to be exchanged for each share of FloridaFirst Common
Stock owned by the Electing Shareholder as of the Effective Time (the
"Cash/Stock Election"); or
(iii) $25.00 in cash for each share of FloridaFirst Common Stock owned by
the Electing Shareholder as of the Effective Time (the "Cash Election")
(b) Notwithstanding paragraph (a) preceding, in no event shall the
aggregate amount of cash Merger Consideration payable to FloridaFirst
shareholders choosing the Cash/Stock Election and the Cash Election exceed the
product of $11.25 multiplied by the number of shares of FloridaFirst Common
Stock outstanding at the close of business on the Closing Date (the "Cash
Amount"). In the event that the amount of cash payable pursuant to the
Cash/Stock Election and the Cash Election (without adjustment as provided in
this paragraph (b), herein the "Unadjusted Cash Amount") would exceed the Cash
Amount (the "Excess Cash Amount"), the Merger Consideration with respect to each
share of FloridaFirst Common Stock subject to the Cash Election shall be
adjusted as follows: (i) by decreasing the cash amount which would be payable
with respect to each such share pursuant to the Cash Election (determined with
reference to the Unadjusted Cash Amount) by the amount determined by dividing
the Excess Cash Amount by the number of such shares; and (ii) by adding a
fractional share of BB&T Common Stock determined by multiplying the Exchange
Ratio by a fraction, the numerator of which is the Excess Cash Amount per share
and the denominator of which is $25.00.
(c) Notwithstanding the foregoing, in no event shall the Cash Amount exceed
55% of the value of the aggregate Merger Consideration, determined by valuing
shares of BB&T Common Stock at Closing Value (the "Consideration Value"). In the
event that the Cash Amount would exceed 55% of the Consideration Value, and if
BB&T and FloridaFirst are unable to negotiate a mutually acceptable revised
pricing formula, either of BB&T or FloridaFirst may terminate this Agreement by
providing notice to the other.
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(d) Cash (without interest) will be payable in exchange for any fractional
share of BB&T Common Stock which would otherwise be distributable to a
FloridaFirst shareholder. 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 as reported on NYSEnet.com for the five trading days
(determined by excluding days on which the NYSE is closed) ending on the trading
day preceding the Closing Date.
2.8 Conversion of Shares; Payment of Merger Consideration
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(a) At the Effective Time, by virtue of the Merger and without any action
on the part of FloridaFirst or the holders of record of FloridaFirst Common
Stock, each share of FloridaFirst 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 FloridaFirst Common Stock (as provided in subsection (d) below),
the Merger Consideration.
(b) Each share of 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 FloridaFirst 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 FloridaFirst Common Stock. No interest will be paid or accrued on the
Merger Consideration upon the surrender of the certificate or certificates
representing shares of FloridaFirst Common Stock. With respect to any
certificate for FloridaFirst 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,
FloridaFirst's transfer books shall be closed and no transfer of the shares of
FloridaFirst Common Stock outstanding immediately prior to the Effective Time
shall be made on the stock transfer books of the Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each FloridaFirst shareholder a form of letter of transmittal and
instructions for electing the form of Merger Consideration in Section 2.7(a)(i),
(ii) or (iii), and for effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of FloridaFirst
Common Stock. Upon proper 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
11
Consideration in the form elected. An election of the form of Merger
Consideration shall be final and irrevocable when received by BB&T. If, for any
reason, BB&T does not receive a properly filed election of the form of Merger
Consideration in Section 2.7(a)(i), (ii) or (iii) from any person entitled to
the Merger Consideration by 5:00 p.m., Winston-Salem, North Carolina, time on
the thirtieth day following the mailing of the letter of transmittal and
instructions, such person shall be deemed to have made the Cash/Stock Election
in Section 2.7(a)(ii) for all purposes herein.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time that have been
declared or made by FloridaFirst in respect of shares of FloridaFirst Common
Stock in accordance with the terms of this Agreement and that remain unpaid at
the Effective Time, subject to compliance by FloridaFirst with Section 5.9(b).
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 FloridaFirst Common Stock until such holder surrenders
such certificate for exchange as provided in this Section 2.8. Upon surrender of
such certificate, both the Merger Consideration (without interest) and any
undelivered dividends payable hereunder (without interest) shall be delivered
and paid with respect to the shares of FloridaFirst Common Stock represented by
such certificate.
2.9 Conversion of Stock Options
---------------------------
(a) At the Effective Time, each Stock Option then outstanding (and which by
its terms does not lapse on or before the Effective Time), whether or not then
exercisable, shall be converted into and become rights with respect to BB&T
Common Stock, and BB&T shall assume each Stock Option in accordance with the
terms of the Stock Option Plans, subject to the following provisions from and
after the Effective Time: (i) BB&T and its Compensation Committee shall be
substituted for FloridaFirst and the Committee under the Stock Option Plans with
respect to administering the Stock Option Plans, (ii) each Stock Option assumed
by BB&T may be exercised solely for shares of BB&T Common Stock, (iii) the
number of shares of BB&T Common Stock subject to each such Stock Option shall be
the number of whole shares of BB&T (omitting any fractional share) determined by
multiplying the number of shares of FloridaFirst 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
12
met; (B) such substitution shall not constitute a modification, extension or
renewal of any of the Stock Options; and (C) the substituted options shall
continue in effect on the same terms and conditions as provided in the stock
option agreements governing each Stock Option and in the Stock Option Plans.
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
Commission 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 FloridaFirst 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 BB&T Common Stock
for delivery upon exercise of any converted or substitute options. As soon as
practicable after the Effective Time, if it has not already done so, and to the
extent FloridaFirst shall have a registration statement in effect or an
obligation to file a registration statement, BB&T shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of BB&T Common Stock subject to
converted or substitute options and shall use its reasonable efforts to maintain
the effectiveness of such registration statement (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
converted or substitute options remain outstanding. With respect to those
individuals, if any, who subsequent to the Merger may be subject to the
reporting requirements under Section 16(a) of the Exchange Act, BB&T shall
administer the Stock Option Plans assumed pursuant to this Section 2.9 (or the
BB&T Option Plan, if applicable) in a manner that complies with Rule 16b-3
promulgated under the Exchange Act to the extent necessary to preserve for such
individuals the benefits of Rule 16b-3 to the extent such benefits were
available to them prior to the Effective Time. FloridaFirst hereby represents
that the Stock Option Plans in their current form comply with Rule 16b-3 to the
extent, if any, required as of the date hereof. Stock Options may be exercised
prior to the Effective Time to the extent they may be exercised pursuant to
their respective terms.
(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.
(c) Eligibility to receive stock option grants following the Effective Time
with respect to BB&T Common Stock shall be determined by BB&T in accordance with
its plans and procedures as in effect from time to time, and subject to any
contractual obligations.
13
2.10 No Right to Dissent
-------------------
Nothing in the Articles of Incorporation or the Bylaws of FloridaFirst
provides or would provide to any person, including without limitation the
FloridaFirst 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 Anti-Dilution
-------------
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend or other similar recapitalization, and the record date thereof (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Merger Consideration in Section 2.7(a)
and (b) shall be proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FLORIDAFIRST
Except as Disclosed, FloridaFirst represents and warrants to BB&T as
follows (the representations and warranties herein of FloridaFirst 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 it is
inaccurate to the extent that BB&T would be entitled to refuse to consummate the
Merger pursuant to Section 7.1(b)(ii) on account of such inaccuracy):
3.1 Capital Structure
-----------------
The authorized capital stock of FloridaFirst consists of 80,0000,000 shares
of FloridaFirst Common Stock and 20,000,000 shares of FloridaFirst preferred
stock, $.10 par value. FloridaFirst has 5,378,452 shares of FloridaFirst Common
Stock issued and outstanding, and no shares of FloridaFirst preferred stock
issued and outstanding. No other classes of capital stock of FloridaFirst,
common or preferred, are authorized, issued or outstanding. All outstanding
shares of FloridaFirst capital stock have been duly authorized and are validly
issued, fully paid and nonassessable. No shares of capital stock have been
reserved for any purpose, except for (i) shares of FloridaFirst Common Stock
reserved in connection with the Stock Option Plans, and (ii) 1,060,000 shares of
FloridaFirst Common Stock reserved in connection with the BB&T Option Agreement.
FloridaFirst has granted options to acquire 578,772 shares of FloridaFirst
Common Stock under the Stock Option Plans or outstanding agreements and awards,
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 FloridaFirst shareholder to
14
own, to vote or to dispose of, the capital stock of FloridaFirst. Holders of
FloridaFirst Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
------------------------------------
FloridaFirst is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. FloridaFirst 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 FloridaFirst Disclosure Memorandum lists all of the
FloridaFirst 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
FloridaFirst (directly or indirectly), the percentage ownership interest so
owned by FloridaFirst and its business activities. The outstanding shares of
capital stock or other equity interests of the FloridaFirst Subsidiaries are
validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by FloridaFirst free and clear of all
liens, claims and encumbrances. No Rights are authorized, issued or outstanding
with respect to the capital stock or other equity interests of the FloridaFirst
Subsidiaries, and there are no agreements, understandings or commitments
relating to the right of FloridaFirst to own, to vote or to dispose of said
interests. None of the shares of capital stock or other equity interests of the
FloridaFirst Subsidiaries have been issued in violation of the preemptive rights
of any person. Section 3.3 of the FloridaFirst 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
FloridaFirst Subsidiaries and stock or other securities held in a fiduciary
capacity) owned directly or indirectly by FloridaFirst.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each of the FloridaFirst Subsidiaries is validly existing and in good
standing under the laws of its jurisdiction of organization. Each of the
FloridaFirst Subsidiaries has full power and authority to carry on its business
as now conducted, and is duly qualified to do business and in good standing in
each jurisdiction Disclosed with respect to it. No FloridaFirst 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.
15
3.5 Authorized and Effective Agreement
----------------------------------
(a) FloridaFirst 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 FloridaFirst shareholders of this Agreement and the
Plan of Merger) to perform all of its obligations under this Agreement, the Plan
of Merger and the BB&T Option Agreement. The execution and delivery of this
Agreement, the Articles of Merger (which contains the Plan 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 FloridaFirst 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 FloridaFirst, and
each is enforceable against FloridaFirst in accordance with its terms, in each
such case subject to (i) bankruptcy, fraudulent transfer, insolvency,
moratorium, reorganization, conservatorship, receivership, or other similar laws
from time to time in effect relating to or affecting the enforcement of the
rights of creditors of FDIC-insured institutions or the enforcement of
creditors' rights generally; and (ii) general principles of equity (whether
applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by FloridaFirst 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 FloridaFirst or any
FloridaFirst 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
FloridaFirst or any FloridaFirst 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 FloridaFirst or any FloridaFirst 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
FloridaFirst of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Filings; Financial Statements; Statements True
---------------------------------------------------------
(a) FloridaFirst and any predecessor issuer has timely filed all Securities
Documents required by the Securities Laws to be filed since April 6, 1999.
FloridaFirst has Disclosed or made available to BB&T a true and complete copy of
each Securities Document filed by FloridaFirst after April 6, 1999 and prior to
the date hereof, which are all of the Securities Documents that FloridaFirst was
required to file during such period. At the time filed (or, if amended or
superseded by a filing prior to the date hereof, on the
16
date of such filing), such Securities Documents complied with the applicable
legal requirements 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 FloridaFirst fairly present or will fairly
present, as the case may be, the consolidated financial position of FloridaFirst
and the FloridaFirst Subsidiaries as of the dates indicated and the consolidated
statements of income, shareholders' equity and 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 FloridaFirst or any FloridaFirst 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 FloridaFirst and each of the FloridaFirst 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 September 30, 2001, FloridaFirst and the FloridaFirst Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent, except
as disclosed in the most recent FloridaFirst Financial Statements, or entered
into any transactions with Affiliates, in each case other than in the ordinary
course of business consistent with past practices, nor has there been any
adverse change or any event that has resulted in or is reasonably likely to
result in an adverse change in the business, financial condition or results of
operations of FloridaFirst or any of the FloridaFirst Subsidiaries.
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of FloridaFirst and the
FloridaFirst Subsidiaries are disclosed in the most recent Financial Statements
of FloridaFirst or are normally recurring business obligations incurred in the
ordinary course of its business since the date of FloridaFirst's most recent
Financial Statements.
17
3.10 Properties
----------
(a) FloridaFirst and the FloridaFirst 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 FloridaFirst as of September 30, 2001 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 FloridaFirst or any
FloridaFirst Subsidiary, as lessee or licensee, leases or licenses rights to
real or personal property are valid and enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium or other laws affecting the enforceability of creditors' rights
generally and except for general principles of equity (whether applied in a
court of law or in equity).
3.11 Environmental Matters
---------------------
(a) FloridaFirst and the FloridaFirst Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither FloridaFirst nor
any FloridaFirst Subsidiary has received any communication alleging that
FloridaFirst or the FloridaFirst 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 FloridaFirst nor any
FloridaFirst 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)
FloridaFirst or any FloridaFirst Subsidiary, (ii) any person or entity whose
liability for any Environmental Claim FloridaFirst or any FloridaFirst
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
FloridaFirst or any FloridaFirst Subsidiary, or any real or personal property
which FloridaFirst or any FloridaFirst 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 FloridaFirst or any FloridaFirst Subsidiary holds a
security interest securing a loan recorded on the books of FloridaFirst or any
FloridaFirst Subsidiary. Neither FloridaFirst nor any FloridaFirst Subsidiary is
subject to any agreement, order, judgment, decree or memorandum by or
18
with any court, governmental authority, regulatory agency or third party
imposing any liability under any Environmental Laws.
(c) FloridaFirst and the FloridaFirst Subsidiaries are in compliance with
all recommendations contained in any environmental audits, analyses and surveys
received by FloridaFirst relating to all real and personal property owned or
leased by FloridaFirst or any FloridaFirst Subsidiary and all real and personal
property of which FloridaFirst or any FloridaFirst 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 FloridaFirst or any FloridaFirst Subsidiary or against any person
or entity whose liability for any Environmental Claim FloridaFirst or any
FloridaFirst Subsidiary has or may have retained or assumed, either
contractually or by operation of law.
3.12 Loans; Allowance for Loan Losses
--------------------------------
(a) All of the loans on the books of FloridaFirst and the FloridaFirst
Subsidiaries are valid and properly documented and were made in the ordinary
course of business, and the security therefor, if any, is valid and properly
perfected. Neither the terms of such loans, nor any of the loan documentation,
nor the manner in which such loans have been administered and serviced, nor
FloridaFirst'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 FloridaFirst are, in the
reasonable good faith judgment of management of FloridaFirst, adequate as of
their respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
-----------
(a) FloridaFirst and the FloridaFirst 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
19
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 FloridaFirst nor any
FloridaFirst Subsidiary has or will have any liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
FloridaFirst and the FloridaFirst 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 FloridaFirst and the FloridaFirst Subsidiaries are complete and
accurate. Neither FloridaFirst nor any FloridaFirst 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 FloridaFirst or any FloridaFirst
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to FloridaFirst or any FloridaFirst 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 FloridaFirst nor any of the FloridaFirst 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 FloridaFirst or a FloridaFirst subsidiary)
or has any liability for taxes of any person (other than FloridaFirst and the
FloridaFirst 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 FloridaFirst and the FloridaFirst Subsidiaries is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and tax withholding requirements under federal, state, and local tax
laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Code.
(f) Neither FloridaFirst nor any of the FloridaFirst 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.
20
3.14 Employees; Compensation; Benefit Plans
--------------------------------------
(a) Compensation. FloridaFirst 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 FloridaFirst and of each FloridaFirst
Subsidiary and each other person (in each case other than as an employee) to
whom FloridaFirst or any FloridaFirst 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) FloridaFirst has Disclosed an accurate and complete list of all
Plans, as defined below, contributed to, maintained or sponsored by
FloridaFirst or any FloridaFirst Subsidiary, to which FloridaFirst or any
FloridaFirst 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 FloridaFirst or any FloridaFirst
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) that 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 FloridaFirst nor any FloridaFirst 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.
21
(iii) None of the Plans obligates FloridaFirst or any FloridaFirst
Subsidiary to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change in control," as such term is
used in Section 280G of the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA
has incurred any "accumulated funding deficiency" as such term is defined
in such Sections of ERISA and the Code, whether or not waived, and each
Plan has always fully met the funding standards required under Title I of
ERISA and Section 412 of the Code. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (except for routine payment of premiums) has
been or is expected to be incurred with respect to any Plan that is subject
to Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) for which the PBGC has not waived notice 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 FloridaFirst
or any FloridaFirst Subsidiary is the subject of any lien arising under
Section 302(f) of ERISA or Section 412(n) of the Code, neither FloridaFirst
nor any FloridaFirst 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 FloridaFirst or any FloridaFirst 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
22
of Sections 414(b), (c), (m) and (o) of the Code) of which FloridaFirst or
any FloridaFirst Subsidiary is a member or was a member during such
five-year period.
(vii) As of September 30, 2001, 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 FloridaFirst nor, to the knowledge of
FloridaFirst, any FloridaFirst 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 FloridaFirst or any FloridaFirst 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) FloridaFirst and each FloridaFirst Subsidiary has been and is
presently in compliance with all of the requirements of Section 4980B of
the Code.
(xi) Neither FloridaFirst nor any FloridaFirst Subsidiary has a
liability as of September 30, 2001 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 FloridaFirst as of
September 30, 2001 or otherwise Disclosed.
23
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) FloridaFirst's or any
FloridaFirst 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, FloridaFirst 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 FloridaFirst and any
FloridaFirst Subsidiary may be amended or terminated at any time by action
of FloridaFirst's Board of Directors, or such FloridaFirst'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
FloridaFirst or a FloridaFirst Subsidiary thereunder).
3.15 Certain Contracts
-----------------
(a) Neither FloridaFirst nor any FloridaFirst 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
FloridaFirst or any FloridaFirst Subsidiary or the guarantee by FloridaFirst or
any FloridaFirst Subsidiary of any such obligation, which cannot be terminated
within less than 30 days after the Closing Date by FloridaFirst or any
FloridaFirst 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
24
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 FloridaFirst or any FloridaFirst 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 FloridaFirst 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 FloridaFirst nor any FloridaFirst Subsidiary is in default
under any agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of FloridaFirst, threatened
against FloridaFirst or any FloridaFirst Subsidiary or against any asset,
interest, Plan or right of FloridaFirst or any FloridaFirst Subsidiary, or, to
the knowledge of FloridaFirst, 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 knowledge of FloridaFirst, threatened against any
present or former director or officer of FloridaFirst or any FloridaFirst
Subsidiary that would reasonably be expected to give rise to a claim against
FloridaFirst or any FloridaFirst Subsidiary for indemnification. There are no
actual or, to the knowledge of FloridaFirst, 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 knowledge of
FloridaFirst, no fact or condition relating to FloridaFirst or any FloridaFirst
Subsidiary exists (including, without limitation, noncompliance with the CRA or
the USA PATRIOT ACT) that would prevent FloridaFirst or BB&T from obtaining all
of the federal and state regulatory approvals contemplated herein.
3.17 Compliance with Laws; Filings
-----------------------------
Each of FloridaFirst and each FloridaFirst 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, the
customer information
25
privacy provisions of the Gramm-Leach-Bliley Act, and the anti-money-laundering
provisions of the Bank Secrecy Act as amended by the USA PATRIOT ACT), and has
obtained and maintained all permits, licenses and registrations applicable to
the conduct of its business, and neither FloridaFirst nor any FloridaFirst
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 FloridaFirst nor any FloridaFirst Subsidiary is subject to
any regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and none of them has received any
communication requesting that it enter into any of the foregoing. Since
September 30, 2001, FloridaFirst and each of the FloridaFirst 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 FDIC, the Office of Thrift
Supervision, 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 FloridaFirst nor any FloridaFirst 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, 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
FloridaFirst or any FloridaFirst Subsidiary has purchased securities subject to
an agreement to resell, FloridaFirst or the FloridaFirst 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 FloridaFirst or any FloridaFirst Subsidiary has
sold securities subject to an agreement to repurchase, neither FloridaFirst nor
the FloridaFirst Subsidiary has pledged collateral in excess of the amount of
the debt secured thereby. Neither FloridaFirst nor any FloridaFirst Subsidiary
has pledged collateral in excess of the amount required under any interest rate
swap or other similar agreement currently outstanding.
26
(b) Neither FloridaFirst nor any FloridaFirst 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 FloridaFirst are insured by the FDIC to the maximum
extent permitted by federal law, and FloridaFirst has 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
--------------------------
FloridaFirst has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
FloridaFirst or any FloridaFirst Subsidiary is a party with any director,
executive officer or 5% shareholder of FloridaFirst 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 FloridaFirst 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 FloridaFirst 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 FloridaFirst, (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.
27
3.23 Tax and Regulatory Matters
--------------------------
Neither FloridaFirst nor any FloridaFirst Subsidiary has taken or agreed to
take any action which would or could reasonably be expected to (i) cause the
Merger not to constitute a reorganization under Section 368 of the Code or (ii)
materially impede or delay receipt of any consents of regulatory authorities
referred to in Section 5.4(b) or result in failure of the condition in Section
6.3(b).
3.24 State Takeover Laws
-------------------
FloridaFirst and each FloridaFirst 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. Neither the Articles of Incorporation nor the Bylaws of
FloridaFirst, nor any other document of FloridaFirst or to which FloridaFirst is
a party, contains a provision that requires more than a majority of the shares
of FloridaFirst Common Stock entitled to vote, or the vote or approval of any
other class of capital stock or voting security, to approve the Merger or any
other transactions contemplated in this Agreement.
3.25 Labor Relations
---------------
Neither FloridaFirst nor any FloridaFirst 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 FloridaFirst or any FloridaFirst Subsidiary party to any
collective bargaining agreement. There is no strike or other labor dispute
involving FloridaFirst or any FloridaFirst Subsidiary, pending or threatened, or
to the knowledge of FloridaFirst, is there any activity involving any employees
of FloridaFirst or any FloridaFirst Subsidiary seeking to certify a collective
bargaining unit or engaging in any other organization activity.
3.26 Fairness Opinion
----------------
FloridaFirst has received from the Financial Advisor an opinion that, as of
the date hereof, the Merger Consideration is fair to the shareholders of
FloridaFirst from a financial point of view.
3.27 No Right to Dissent
-------------------
Nothing in the Articles of Incorporation or the Bylaws of FloridaFirst
provides or would provide to any person, including without limitation the
holders of FloridaFirst Common Stock, upon execution of this Agreement or the
Plan of Merger and consummation of the transactions contemplated hereby and
thereby, rights of dissent and appraisal of any kind.
28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to FloridaFirst 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 it is inaccurate to the extent that
FloridaFirst would be entitled to refuse to consummate the Merger pursuant to
Section 7.1(b)(ii) on account of such inaccuracy):
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)
1,000,000,000 shares of BB&T Common Stock of which 475,535,863 shares were
issued and outstanding as of June 30, 2002. 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 financial holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
(a) BB&T has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals) perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of BB&T. This Agreement and the Plan of Merger attached hereto constitute
legal, valid and binding obligations of BB&T, and each is enforceable against
BB&T in accordance with its terms, in each case subject to (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship,
29
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, Authority and Ownership 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; Financial Statements; Statements True
-----------------------------------------------------------
(a) BB&T has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1998. 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.
30
(b) The Financial Statements of BB&T fairly present or will fairly present,
as the case may be, the consolidated financial position of BB&T and its
Subsidiaries as of the dates indicated and the consolidated statements of
income, shareholders' equity and 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 BB&T or any BB&T Subsidiary to FloridaFirst 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
FloridaFirst to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
4.7 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
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);
provided, that nothing contained herein shall limit the ability of BB&T to
exercise its rights under the BB&T Option Agreement,
4.8 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of FloridaFirst Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actual or, to the knowledge of BB&T, threatened actions, suits
or proceedings instituted, which present a claim to restrain or prohibit the
transactions contemplated herein. To the knowledge of BB&T, no fact or condition
relating to BB&T or any BB&T Subsidiary exists (including, without limitation,
noncompliance with the
31
CRA or the USA PATRIOT ACT) that would prevent BB&T or FloridaFirst from
obtaining all of the federal and state regulatory approvals contemplated herein.
All BB&T Subsidiaries have received a CRA rating of no less than "satisfactory"
on their most recent CRA examinations.
4.10 Adverse Change
--------------
Since December 31, 2001, BB&T and the BB&T Subsidiaries have not incurred
any liability, whether accrued, absolute or contingent, except as disclosed in
the most recent BB&T Financial Statements and except for registered debt,
issuances of bank notes and other financing transactions, or entered into any
transactions with Affiliates, in each case other than in the ordinary course of
business consistent with past practices, nor has there been any adverse change
or any event involving a prospective adverse change in the financial condition,
results of operations or stockholders' equity of BB&T or any of the BB&T
Subsidiaries.
4.11 Rights Agreement
----------------
Execution of this Agreement and consummation of the Merger will not result
in the grant of any rights to any person under the Rights Agreement described in
the definition of BB&T Common Stock in Section 1.1 hereof.
ARTICLE V
COVENANTS
5.1 FloridaFirst Shareholder Meeting
--------------------------------
FloridaFirst 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 FloridaFirst
agrees that it shall, at the time the Proxy Statement/Prospectus is mailed to
the shareholders of FloridaFirst, recommend that FloridaFirst's shareholders
vote for such approval; provided, that the Board of Directors of FloridaFirst
may withdraw, modify, or condition such recommendation only if the Board of
Directors shall determine in good faith, after consultation with outside legal
counsel, that such recommendation should be withdrawn, modified or conditioned
in light of its fiduciary duty to FloridaFirst's shareholders following a
Superior Offer. At the time of execution of this Agreement, each member of the
Board of Directors of FloridaFirst has executed an agreement with BB&T
obligating the director to vote all shares over which such director has voting
control in favor the Plan of Merger.
32
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. FloridaFirst will furnish
to BB&T the information required to be included in the Registration Statement
with respect to its business and affairs before it is filed with the Commission
and again before any amendments are filed, and shall have the right to review
and consult with BB&T on the form of, and any characterizations of such
information included in, the Registration Statement prior to the filing with the
Commission. Such Registration Statement, at the time it becomes effective and on
the Effective Time, shall in all material respects conform to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission. The Registration Statement shall include the form of Proxy
Statement/Prospectus. BB&T and FloridaFirst shall use all reasonable efforts to
cause the Proxy Statement/Prospectus to be approved by the Commission for
mailing to the FloridaFirst 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. FloridaFirst shall cause the Proxy
Statement/Prospectus to be mailed to shareholders in accordance with all
applicable notice requirements under the Securities Laws, the FBCA and the rules
and regulations of the Nasdaq; provided, that BB&T shall notify FloridaFirst as
promptly as reasonably practicable if BB&T shall receive notice of a stop order
issued by the Commission with respect to the Registration Statement or the Proxy
Statement/Prospectus.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T acknowledges that it (i) has
adopted and approved this Agreement and 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.
33
5.4 Additional Acts
---------------
(a) FloridaFirst 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 be reasonably likely to 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 FloridaFirst
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. FloridaFirst 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.
5.5 Best Efforts
------------
Each of BB&T and FloridaFirst 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 FloridaFirst
shall take, or cause, or to the best of its ability permit to be taken, any
action that would substantially delay or impair the prospects of completing the
Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
--------------------------
Following approval of the Plan of Merger by the FloridaFirst shareholders
and receipt of the requisite regulatory approvals for the transactions
contemplated by this Agreement and the Plan of Merger, FloridaFirst shall
cooperate with BB&T concerning (i) 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
34
adjustments, levels of loan loss reserves and other accounting practices, and
(ii) FloridaFirst's lending, investment or asset/liability management policies;
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
FloridaFirst contained in this Agreement.
5.7 Access to Information
---------------------
FloridaFirst 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,
FloridaFirst shall afford to representatives of BB&T access, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments and records of FloridaFirst and the
FloridaFirst 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 FloridaFirst 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 FloridaFirst
----------------------------
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, FloridaFirst shall not, and shall cause each of the
FloridaFirst 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;
35
(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 $.06 per share of FloridaFirst Common
Stock payable on record date and in amounts consistent with past
practices; provided that any dividend declared or payable on the
shares of FloridaFirst Common Stock in the quarterly period during
which the Effective Time occurs shall unless otherwise agreed upon in
writing by BB&T and FloridaFirst, 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 exercise of Stock Options 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 except such
amendments as may be necessary to consummate the Merger;
(f) impose or permit imposition, of any lien, charge or
encumbrance on any share of stock held by it in any FloridaFirst
Subsidiary, or permit any such lien, charge or encumbrance to exist;
or waive or release any material right or cancel or compromise any
debt or claim, in each case other than in the ordinary course of
business;
(g) merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control
over any other entity; or liquidate, sell or otherwise dispose of any
assets or acquire any assets other than in the ordinary course of its
business consistent with past practices;
(h) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and
to the conduct of its business;
(i) increase the rate of compensation of any of its directors,
officers or employees (excluding increases in compensation resulting
from the exercise of compensatory stock options outstanding as of the
date of this Agreement), or pay or agree to pay any bonus to, or
provide any new employee benefit or incentive to, any of its
directors, officers or employees, except for increases or payments
made in the ordinary course of business consistent with past practice
pursuant to plans or arrangements in effect on the date hereof;
36
(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, or any recapitalization, liquidation or dissolution
involving or a business combination or similar transaction with,
FloridaFirst or any FloridaFirst Subsidiary other than as contemplated
by this Agreement; or authorize any officer, director, agent or
affiliate of FloridaFirst or any FloridaFirst 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 Section 5.9(k) shall not apply to furnishing
information to or participating in negotiations or discussions with
any Person that has made, or that the FloridaFirst Board of Directors
determines in good faith is reasonably likely to make, a Superior
Offer, if the FloridaFirst Board of Directors determines in good
faith, after consultation with outside legal counsel, that it should
take such actions in light of its fiduciary duty to FloridaFirst's
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 FloridaFirst
or a FloridaFirst Subsidiary or guarantee by FloridaFirst or a
FloridaFirst 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 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, FloridaFirst
shall cooperate in good faith with BB&T to adopt policies, practices
and
37
procedures consistent with those utilized by BB&T, effective on or
before the Closing Date;
(n) change its methods of accounting in effect at September 30,
2001 except as required by changes in GAAP concurred in by BB&T, which
concurrence shall not be unreasonably withheld, or change any of its
methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal income
tax returns for the year ended September 30, 2001, 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 $50,000, for any one
expenditure, or $150,000, 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 constitute a reorganization under
Section 368 of the Code as determined by BB&T, (ii) result in any
inaccuracy of a representation or warranty herein which would allow
for a termination of this Agreement, or (iii) cause any of the
conditions precedent to the transactions contemplated by this
Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary
course of business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements with Gregory C. Wilkes substantially in the form of Annex B attached
hereto, and with Kerry P. Charlet, William H. Cloyd and Donald A. Burdett
substantially in the form of Annex C attached hereto.
5.11 Affiliates
----------
FloridaFirst shall use its best efforts to cause all persons who are
Affiliates of FloridaFirst to deliver to BB&T promptly following execution of
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 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.
38
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 FloridaFirst, BB&T shall cause such plan to be merged with the
401(k) plan maintained by BB&T and the BB&T Subsidiaries, or to be frozen or to
be terminated, in each case as determined by BB&T and subject to the receipt of
all applicable regulatory or governmental approvals. Each employee of
FloridaFirst at the Effective Time (i) who is a participant in the 401(k) plan
of FloridaFirst, (ii) who becomes an employee immediately following the
Effective Time of BB&T or of any subsidiary of BB&T ("Employer Entity"), and
(iii) who continues in the employment of an Employer Entity until the Benefit
Plan Determination Date for the 401(k) plan, shall be eligible to participate in
BB&T's 401(k) plan as of the Benefit Plan Determination Date. Any other former
employee of FloridaFirst who is employed by an Employer Entity on or after the
Benefit Plan Determination Date shall be eligible to be a participant in the
BB&T 401(k) plan upon complying with eligibility requirements. All rights to
participate in BB&T's 401(k) plan are subject to BB&T's right to amend or
terminate the 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 FloridaFirst. For purposes of administering BB&T's 401(k) plan, service
with FloridaFirst and the FloridaFirst Subsidiaries shall be deemed to be
service with BB&T for participation and vesting purposes, but not for purposes
of benefit accrual. Each employee of FloridaFirst or a FloridaFirst Subsidiary
at the Effective Time who becomes an employee immediately following the
Effective Time of an Employer Entity is referred to herein as a "Transferred
Employee."
(b) Each 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 for
each such plan or program, conditional upon the Transferred Employee's being
employed by an Employer Entity as of such Benefit Plan Determination Date and
subject to complying with eligibility requirements of the respective plans and
programs. With respect to health care coverages, participation in BB&T's plans
may be subject to availability of HMO options. In any case in which HMO coverage
is not available, substitute coverage will be provided which may not be fully
comparable to the HMO coverage. With respect to any welfare benefit plan or
program of FloridaFirst that 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 FloridaFirst plan or program in effect for the benefit of the Transferred
Employees so long as they remain eligible to participate and 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). If the first
plan year of participation in any group health plan of an Employer Entity by a
39
Transferred Employee is a partial year, the Employer Entity will give such
Transferred Employee and his or her dependents credit toward deductibles and
out-of-pocket maximums for eligible expenses incurred by such persons under the
FloridaFirst group health plan during that portion of that plan year that
precedes entry into the group health plans of the Employer Entity. For purposes
of administering the welfare plans and programs subject to this Section 5.12(b),
service with FloridaFirst 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 Section 5.12(c)).
(c) Except to the extent of commitments herein or other contractual
commitments, if any, specifically made or assumed hereunder by BB&T, neither
BB&T nor any Employer Entity shall have any obligation arising from the Merger
to continue any Transferred Employees in its employ or in any specific job or to
provide to any Transferred Employee any specified level of compensation or any
incentive payments, benefits or perquisites. Each Transferred Employee who is
terminated by an Employer Entity subsequent to the Effective Time, excluding any
employee who has a then existing contract providing for severance, shall be
entitled to severance pay in accordance with the general severance policy of
BB&T then in effect or the general severance policy of FloridaFirst as in effect
on September 1, 2002, if and to the extent that such Transferred Employee is
entitled to severance pay under the applicable policy. Prior to the Closing
Date, FloridaFirst shall determine which of such severance policies shall be
applicable and shall give BB&T notice thereof, and the selected severance policy
shall apply with respect to all Transferred Employees. If BB&T shall not receive
such notice prior to the Closing Date, FloridaFirst shall be deemed to have
selected the BB&T severance policy. Each Transferred Employee's service with
FloridaFirst or a FloridaFirst 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, and each Transferred Employee's service with BB&T or a
Subsidiary of BB&T shall be treated as service with FloridaFirst for purposes of
determining the amount of severance pay, if any, under FloridaFirst's severance
policy.
(d) BB&T agrees to honor (i) the FloridaFirst Bank 1999 Restricted Stock
Plan and 2002 Restricted Stock Plan, (ii) all employment agreements, severance
agreements and deferred compensation agreements that FloridaFirst and the
FloridaFirst 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 plan and agreements
described in the preceding sentence and except as otherwise provided in this
Section 5.12, the employee benefit plans of FloridaFirst shall, in the sole
discretion of BB&T, be frozen, terminated or merged into comparable plans of
BB&T, effective as BB&T shall determine in its sole discretion.
40
(e) Notwithstanding and without limiting the generality of Section 5.12(d),
as soon as practicable following the date hereof but in any event prior to the
Effective Time, FloridaFirst shall take any and all action necessary to
terminate the FloridaFirst Bank Employee Stock Ownership Plan ("ESOP") as of the
Effective Time, to repay any outstanding indebtedness thereof and to allocate
shares of FloridaFirst Common Stock and other trust assets held thereby to the
participants therein in accordance with the terms thereof as in effect on the
date hereof. The ESOP shall not make any purchases of shares of FloridaFirst
Common Stock after the date hereof.
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 FloridaFirst for acts
or omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in FloridaFirst'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 FloridaFirst'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 FloridaFirst or any FloridaFirst Subsidiary prior to
the Effective Time from any acts or omissions in such capacities prior to the
Effective Time, and to advance indemnifiable expenses, to the extent that such
indemnification or advance is provided or permitted pursuant to the Articles of
Incorporation or Bylaws of FloridaFirst on the date hereof and is permitted
under the FBCA and the NCBCA.
5.14 Forbearances of BB&T
--------------------
Except with the prior written consent of FloridaFirst, between the date
hereof and the Effective Time, neither BB&T nor any BB&T Subsidiary shall take
any action which is reasonably likely to (i) cause the business combination
contemplated hereby not to constitute a reorganization under Section 368 of the
Code; (ii) result in any inaccuracy of a representation or warranty herein that
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; or (iv) 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 FloridaFirst and BB&T shall file (and shall cause the FloridaFirst
Subsidiaries and the BB&T Subsidiaries, respectively, to file), between the date
of this
41
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 FloridaFirst, 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, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to the
absence of notes and to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the Commission
will comply in all material respects with the Securities Laws and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to a
regulatory authority other than the Commission shall be prepared in accordance
with requirements applicable to such reports.
5.16 Exchange Listing
----------------
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of FloridaFirst 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 Board
--------------
Following the Effective Time, as of a date selected by BB&T (the "Advisory
Board Establishment Date") no later than the effective time of the merger of the
last FloridaFirst subsidiary which is a savings institution into a banking
subsidiary of BB&T, BB&T shall offer to each of the members of the Board of
Directors of FloridaFirst a seat on the Advisory Board for the Lakeland, Florida
area. During the period following the Effective Time and until the Advisory
Board Establishment Date, the directors of FloridaFirst shall continue to serve
as such so long as they continue to meet the requirements for serving, and in
applying this Section 5.17 service during such period as a director shall be
deemed to be service as an Advisory Board member. For two years following the
Effective Time, the Advisory Board members appointed pursuant to this Section
5.17 who are not employees of BB&T or a BB&T Affiliate or under contract with
BB&T or any BB&T Affiliate, 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 FloridaFirst in effect on September 1, 2002. 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
42
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). In the event BB&T shall establish a Florida
State Advisory Board prior to the date that Nis H. Nissen, III shall attain his
70th birthday, Nis H. Nissen, III shall be offered a seat on the Florida State
Advisory Board. Membership of any person on any Advisory Board shall be
conditional upon execution of an agreement providing that such person will not
engage in activities competitive with BB&T for two years following the Effective
Time or, if longer, the period that he or she is a member of the Advisory Board.
5.18 Amendment to FloridaFirst's Articles of Incorporation
-----------------------------------------------------
At the FloridaFirst shareholder meeting described in Section 5.1, or prior
thereto, FloridaFirst shall submit to its shareholders for approval an amendment
to its Articles of Incorporation deleting therefrom the five-year prohibition on
acquisitions of more than ten percent of its common stock.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and FloridaFirst
--------------------------------------------
The respective obligations of BB&T and FloridaFirst 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
FloridaFirst 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;
43
(d) None of BB&T, any of the BB&T Subsidiaries, FloridaFirst or any of the
FloridaFirst 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) FloridaFirst and BB&T shall have received an opinion of BB&T's legal
counsel, in form and substance satisfactory to FloridaFirst and BB&T,
substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of
FloridaFirst will not recognize any gain or loss to the extent that such
shareholders exchange shares of FloridaFirst Common Stock for shares of BB&T
Common Stock.
(f) The shareholders of FloridaFirst shall have approved the amendment
described in Section 5.18.
6.2 Conditions Precedent - FloridaFirst
-----------------------------------
The obligations of FloridaFirst 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 FloridaFirst
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 FloridaFirst. The
representations and warranties of BB&T set forth in Sections 4.1, 4.2 (except as
relates to qualification), 4.3(a), 4.3(b)(i) and 4.4 (except as relates to
qualification) shall be true and correct (except for inaccuracies which are de
minimis). There shall not exist inaccuracies in the representations and
warranties of BB&T set forth in this Agreement 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 FloridaFirst 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.
44
(d) FloridaFirst shall have received opinions of counsel to BB&T in the
form reasonably acceptable to FloridaFirst'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 FloridaFirst 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 FloridaFirst set forth in Sections
3.1, 3.2 (except as it relates to qualification), 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). There shall not exist
inaccuracies in the representations and warranties of FloridaFirst set forth in
this 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
FloridaFirst (evaluated without regard to the Merger).
(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) FloridaFirst shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) FloridaFirst 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 FloridaFirst, 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 FloridaFirst 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 FloridaFirst in the
form reasonably acceptable to BB&T's legal counsel.
45
(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 promote compliance with Rule 145 promulgated by the Commission.
(g) Each of Gregory C. Wilkes, Kerry P. Charlet, William H. Cloyd and
Donald A. Burdett shall have continued in the employment of FloridaFirst until
the Closing Date (or shall have failed to do so solely because of his death or
disability qualifying him for disability benefits under FloridaFirst's long-term
disability plan), and each (if he has not died or incurred a disability) shall
have delivered to BB&T a Certificate stating that he intends to enter into the
employment of Branch Banking and Trust Company as of the Effective Time and that
the Employment Agreement entered into between each and Branch Banking and Trust
Company, dated October 2, 2002, is effective with respect to him.
(h) 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.
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 FloridaFirst 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, or at any time prior to the Effective Time by BB&T if the
condition in Section 6.3(b) shall not be met.
46
(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
FloridaFirst do not approve the Agreement and
the Plan of Merger.
(f) At any time following May 31, 2003 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) Automatically on the Determination Date, without any action on the part
of BB&T or FloridaFirst, if both of the following conditions are satisfied:
(1) the Converted Value shall be less than $19.11; and
(2) (i) the quotient obtained by dividing the Average Closing
Price by $23.89 shall be less than (ii) 90% of the quotient obtained
by dividing the Index Price on the Determination Date by the Index
Price on the last trading day preceding the Starting Date;
provided, that during the five-day period commencing with the Determination
Date, BB&T shall have the option to elect to increase the Exchange Ratio to a
number such that the Converted Value shall be no less than $19.11; and the
number of shares of BB&T Common Stock to be exchanged for each share of
FloridaFirst Common Stock pursuant to the Cash/Stock Election (the "Cash/Stock
Exchange Ratio") shall be adjusted to equal 55% of the revised Exchange Ratio.
The election contemplated by the preceding sentence shall be made by giving
notice to FloridaFirst of such election and the revised Exchange Ratio and
Cash/Stock Exchange Ratio, whereupon no termination shall have occurred pursuant
to this Section 7.1(g), and this Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio and Cash/Stock Exchange Ratio shall
have been so modified). If the Closing Date shall occur during the five-day
period such option is in effect, the Closing Date shall be extended until the
fifth Business Day following the close of such five-day period.
For purposes of this Section 7.1(g), the following terms shall have the
meanings indicated:
"Converted Value" shall mean the product of the Average Closing Price
multiplied by the Exchange Ratio.
"Average Closing Price" shall mean the average closing price per share of
the BB&T Common Stock on the NYSE as reported on NYSEnet.com for the five
trading
47
days (determined by excluding days on which the NYSE is closed) ending on the
trading day preceding the Determination Date.
"Determination Date" shall mean the tenth calendar day preceding the date
BB&T has set for the Closing Date (the tenth day to be determined by counting
the day preceding such date as the first day).
"Index Group" shall mean the fourteen bank holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which have been determined based upon the number of shares of outstanding
common stock) shall be redistributed proportionately for purposes of determining
the Index Price. The fourteen bank holding companies and the weights attributed
to them are as follows:
Bank Holding Companies % Weighting
AmSouth Bancorporation 8.5%
Comerica Incorporated 4.1%
Fifth Third Bancorp 13.7%
KeyCorp 10.1%
National City Corporation 14.4%
PNC Financial Services Group, Inc. 6.7%
Regions Financial Corporation 5.2%
SouthTrust Corporation 8.2%
SunTrust Banks, Inc. 6.7%
Union Planters Corporation 4.7%
UnionBanCal Corporation 3.7%
Popular, Inc. 3.1%
Huntington Bancshares Incorporated 5.7%
Marshal & Ilsley Corporation 5.0%
Total 100.0%
======
"Index Price" on a given date shall mean the weighted average (weighted in
accordance with the "% Weighting" listed above) of the closing sales prices of
the companies comprising the Index Group (determined as of the Starting Date and
as of the Determination Date) based on the average closing price per share (as
reported by The Wall Street Journal) for the five trading days ending on the
trading day preceding the Starting Date or the Determination Date), whichever is
applicable.
"Starting Date" shall mean the date of this Agreement.
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If any company belonging to the Index Group or BB&T declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or BB&T
shall be appropriately adjusted for the purposes of applying this Section
7.1(g).
(h) At any time, by either party hereto in writing, if the condition in
Section 2.7(c) permitting either to terminate this Agreement shall have
occurred.
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, and no termination
of this Agreement or the Plan of Merger pursuant to Section 7.1 shall be
interpreted as a consent by BB&T to any action or matter that would have the
effect of diminishing or adversely affecting BB&T's rights under the BB&T Option
Agreement.
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 FloridaFirst (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 FloridaFirst, the aforesaid
representations, warranties and covenants being material inducements to
consummation by BB&T and FloridaFirst 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 FloridaFirst 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
49
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 FloridaFirst shareholders of this Agreement and the Plan of Merger, shall
reduce the Exchange Ratio or the amount or form of the Merger Consideration.
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 FloridaFirst, subject to the
proviso to Section 7.4.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
--------
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Agreement, including,
without limitation, fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and printing
costs incurred in connection with the Registration Statement and the Proxy
Statement/Prospectus shall be borne 50% by BB&T and 50% by FloridaFirst.
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 FloridaFirst to
enforce rights in Sections 5.13 and 5.17.
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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 FloridaFirst:
Gregory C. Wilkes
FloridaFirst Bancorp, Inc.
205 East Orange Street
Lakeland, Florida 33801-4611
Telephone: 863-688-6811
Fax: 863-686-6642
With a required copy to:
Richard Fisch
Malizia Spidi & Fisch, P.C.
Suite 340 West
Washington, D.C. 20005
Telephone: 202-434-4665
Fax: 202-434-4661
51
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
One West Fourth Street
Winston-Salem, North Carolina 27101
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
--------------------
FloridaFirst acknowledges that the FloridaFirst Common Stock and the
FloridaFirst business and assets are unique, and that if FloridaFirst 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 FloridaFirst 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.
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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.
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