Exhibit 2(c)
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION
("Reorganization Agreement" or "Agreement"), dated as of
December 7, 1993, between L.S.B. BANCSHARES, INC. OF
SOUTH CAROLINA ("LSB"), a South Carolina corporation
having its home office at 309 Columbia Avenue, P.O.
Box 8, Lexington, South Carolina 29071, and BB&T
FINANCIAL CORPORATION ("BB&T"), a North Carolina
corporation having its home office at 223 West Nash
Street, Wilson, North Carolina 27893.
W I T N E S S E T H
WHEREAS, the parties hereto desire that LSB shall
be merged with and into BB&T Financial Corporation of
South Carolina ("BB&T-SC"), a South Carolina corporation
which is a wholly owned subsidiary of BB&T (said
transaction being hereinafter referred to as the
"Merger") pursuant to a plan of merger in the form
attached hereto as Annex A ("Plan of Merger");
WHEREAS, the parties hereto desire that The
Lexington State Bank ("Lexington") and The Community
Bank of South Carolina ("Community"), each wholly owned
South Carolina chartered bank subsidiaries of LSB, shall
be merged ("Bank Mergers") with and into Branch Banking
and Trust Company of South Carolina, BB&T-SC's wholly
owned South Carolina chartered bank subsidiary ("Branch
Bank-SC") pursuant to one or more Plans of Merger, in
form or forms to be specified by BB&T and agreeable to
LSB ("Bank Merger Agreement"); and
WHEREAS, the parties desire to provide for
certain undertakings, conditions, representations,
warranties and covenants in connection with the
transactions contemplated hereby;
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 do hereby agree
as follows:
ARTICLE I
DEFINITIONS
"Bank Holding Company Act" shall mean the Bank
Holding Company Act of 1956, as amended.
"BB&T Common Stock" shall mean the shares of
common stock, par value $2.50 per share, of BB&T.
"BB&T Average Closing Price" shall mean the
average per share closing price of BB&T Common Stock as
reported on the Nasdaq/National Market System for the
ten consecutive trading days ending on the tenth
business day prior to the Closing Date.
"BB&T Subsidiary" shall mean each of BB&T-SC,
Branch Bank-SC and Branch Banking and Trust Company, a
North Carolina chartered bank subsidiary of BB&T.
"Closing Date" shall mean the date specified
pursuant to Section 4.11 hereof as the date on which the
parties hereto shall close the transactions contemplated
herein.
"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.
"Effective Date" shall mean the date specified
pursuant to Section 4.11 hereof as the effective date of
the Merger.
"Environmental Claim" means any written notice
from any governmental authority or third party alleging
potential liability (including, without limitation,
potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources
damages, property damages, personal injuries or
penalties) arising out of, based upon, or resulting from
the presence, or release into the environment, of any
Materials of Environmental Concern.
"Environmental Laws" means all applicable
federal, state and local laws and regulations, including
the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, that relate to
pollution or protection of human health or the
environment.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
"FDIA" shall mean the Federal Deposit Insurance
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 Statements" shall mean (a) with
respect to BB&T, (i) the consolidated balance sheets
(including related notes and schedules, if any) of BB&T
as of December 31, 1992 and 1991 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,
1992, 1991 and 1990 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
related statements of income, shareholders' equity and
cash flows (including related notes and schedules, if
any) included in Securities Documents filed by BB&T with
respect to periods ended subsequent to December 31,
1992, and (b) with respect to LSB, (i) the consolidated
balance sheets (including related notes and schedules,
if any) of LSB as of December 31, 1992 and 1991 and the
related consolidated statements of income, changes in
shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years
ended December 31, 1992, 1991 and 1990 as filed by LSB
in Securities Documents and (ii) the consolidated
balance sheets of LSB (including related notes and
schedules, if any) and related statements of income,
changes in shareholders' equity and cash flows
(including related notes and schedules, if any) included
in Securities Documents filed by LSB with respect to
periods ended subsequent to December 31, 1992.
"LSB Subsidiaries" shall mean Lexington,
Community and any other corporation, bank, savings
association, partnership, Joint Venture, or other
organization more than 10% of the stock or ownership
interest of which is owned, directly or indirectly, by
LSB, as Previously Disclosed.
"Joint Venture" shall mean any joint venture,
partnership or similar arrangement in which LSB or any
LSB Subsidiary is a member, party to or partner (whether
general or limited), as Previously Disclosed.
"Material Adverse Effect" shall mean a material
adverse effect on the financial condition, results of
operations, business or prospects of LSB, Lexington and
Community, taken as a whole.
"Materials of Environmental Concern" means
pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other materials
regulated under Environmental Laws.
"Option Agreement" shall mean the Option
Agreement dated as of even date herewith between LSB and
BB&T, which shall be executed immediately following
execution of this Reorganization Agreement.
"Previously Disclosed" shall mean disclosed in
(i) a Securities Document delivered by one party to the
other on or prior to the execution of this
Reorganization Agreement or (ii) a letter from the party
delivered and dated not later than December 14, 1993
making such disclosure specifically referring to this
Agreement and delivered to the other party, provided
that such letter is not materially inconsistent with a
draft of such letter delivered to the other party and
dated on or prior to the date of this Agreement. Any
matter included, whether aggregated or not, in Financial
Statements shall be deemed to be Previously Disclosed.
"Proxy Statement" shall mean the proxy statement
together with any supplements thereto sent to
shareholders of LSB to solicit their votes in connection
with this Agreement and the Plan of Merger.
"Registration Statement" shall mean the
registration statement with respect to the BB&T Common
Stock to be issued in the Merger as declared effective
by the Commission under the Securities Act.
"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, 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.
"SCBCA" shall mean the South Carolina Business
Corporation Act, as amended.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Securities Documents" shall mean all reports,
proxy statements, registration statements and all
similar documents filed, or required to be filed,
pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act;
the Exchange Act; the Investment Company Act of 1940, as
amended; the Investment Advisers Act of 1940, as
amended; the Trust Indenture Act of 1939, as amended;
and the rules and regulations of the Commission
promulgated thereunder.
"State Board" shall mean the South Carolina State
Board of Financial Institutions.
"TILA" shall mean the Truth in Lending Act, as
amended.
Other terms used herein are defined in the
preamble and elsewhere in this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF LSB
LSB represents and warrants to BB&T as follows:
2.1 Capital Structure
The authorized capital stock of LSB consists of
5,000,000 shares of common stock, par value $2.50 per
share ("LSB Common Stock"). As of the date hereof,
there were 2,688,028 shares of LSB Common Stock issued
and outstanding and 1,390,838 shares of LSB Common Stock
reserved for issuance in connection with the pending
acquisition of The Dorn Banking Company, LSB Dividend
Reinvestment Plan and the Option Agreement. All
outstanding shares of LSB Common Stock have been duly
issued and are validly outstanding, fully paid and
nonassessable. No other classes of capital stock of LSB
are authorized. There are no Rights authorized, issued
or outstanding with respect to the capital stock of LSB.
Shareholders of LSB do not have preemptive rights.
2.2 Organization, Standing and Authority
LSB is a corporation duly organized, validly
existing and in good standing under the laws of the
State of South Carolina with full corporate power and
authority to carry on its business as now conducted and
does not do business in any other states of the United
States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business
requires qualification to do business. LSB is
registered as a bank holding company with the Federal
Reserve Board under the Bank Holding Company Act.
2.3 Ownership of LSB Subsidiaries
LSB does not own, directly or indirectly, any
outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings
association, partnership, Joint Venture, or other
organization, except for the LSB Subsidiaries. The
outstanding shares of capital stock or other ownership
interests of the LSB Subsidiaries are validly issued and
outstanding, fully paid and nonassessable and all such
shares are directly or indirectly owned by LSB free and
clear of all liens, claims and encumbrances or
preemptive rights of any person. No Rights are
authorized, issued or outstanding with respect to the
capital stock or other ownership interests of any LSB
Subsidiaries and there are no agreements, understandings
or commitments relating to the right of LSB to vote or
to dispose of said shares or other ownership interests.
None of the shares of capital stock of any LSB
Subsidiary has been issued in violation of the
preemptive rights of any person.
2.4 Organization, Standing and Authority
of the LSB Subsidiaries
Each of the LSB Subsidiaries is a corporation or
partnership duly organized, validly existing and in good
standing under the laws of South Carolina. Lexington
and Community each are duly organized South Carolina
chartered banks. Each of the LSB Subsidiaries: (i) has
full corporate power and authority to carry on its
business as now conducted; (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, except where failure to so qualify would
not have a Material Adverse Effect; and (iii) is not
engaged in any activities that have not been Previously
Disclosed.
2.5 Authorized and Effective Agreement
a. LSB 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 shareholders of LSB of the Plan of Merger)
to perform all of its obligations under this
Reorganization Agreement, the Plan of Merger, the Bank
Merger Agreement and the Option Agreement. The
execution and delivery of this Reorganization Agreement,
the Plan of Merger, the Bank Merger Agreement and the
Option Agreement and consummation of the transactions
contemplated hereby and thereby, have been duly and
validly authorized by all necessary corporate action in
respect thereof on the part of LSB, and in the case of
the Bank Merger Agreement, Lexington and Community,
except, in the case of this Reorganization Agreement and
the Plan of Merger, the approval of LSB shareholders
pursuant to and to the extent required by applicable
law. This Reorganization Agreement, the Plan of Merger
and the Option Agreement constitute legal, valid and
binding obligations of LSB, each of which is enforceable
against LSB in accordance with its respective 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 rights of creditors of FDIC-insured
institutions or the enforcement of creditors' rights
generally, (ii) laws relating to the safety and
soundness of depository institutions and their holding
companies, and (iii) general principles of equity, and
except that the availability of equitable remedies or
injunctive relief is within the discretion of the
appropriate court.
b. Neither the execution and delivery of this
Reorganization Agreement, the Plan of Merger and the
Option Agreement in the case of LSB, or the Bank Merger
Agreement in the case of Lexington and Community, nor
consummation of the transactions contemplated hereby or
thereby, nor compliance by LSB or Lexington or Community
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, charter or by-laws of
LSB or any LSB 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 material property or asset of LSB
or any LSB Subsidiary pursuant to, any note, bond,
mortgage, indenture, license, agreement or other
instrument or obligation, which breach, default, right,
lien, charge, or encumbrance would have a Material
Adverse Effect, or, (iii) subject to receipt of all
required governmental approvals, violate any order,
writ, injunction, decree, statute, rule or regulation
applicable to LSB or any LSB Subsidiary.
2.6 Securities Documents and Reports
LSB has timely filed all Securities Documents
required by the Securities Laws since December 31, 1987,
and such Securities Documents complied in all material
respects with the Securities Laws as in effect at the
times of such filings. LSB and the LSB Subsidiaries
have in all material respects timely filed all reports
required to be filed with the Federal Reserve Board, the
FDIC and the State Board and such reports complied in
all material respects with applicable law and
regulations as in effect at the times of such filings.
2.7 Financial Statements; Minute Books
The Financial Statements of LSB fairly present or
will fairly present, as the case may be, the
consolidated financial position of LSB and the LSB
Subsidiaries as of the dates indicated and the
consolidated results of operations, changes in
shareholders' equity and statements of cash flows for
the periods then ended (subject, in the case of
unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect)
in conformity with generally accepted accounting
principles applicable to financial institutions applied
on a consistent basis (except as stated therein). The
minute books of LSB and the LSB Subsidiaries contain
legally sufficient records of all meetings and other
corporate actions of its shareholders and Board of
Directors (including committees of its Board of
Directors).
2.8 Material Adverse Change
LSB has not, on a consolidated basis, suffered
any material adverse change in its business, financial
condition, results of operations or prospects since
December 31, 1992.
2.9 Absence of Undisclosed Liabilities
Neither LSB nor any LSB Subsidiary has any
liability (contingent or otherwise) that is material to
LSB on a consolidated basis or that, when combined with
all similar liabilities, would be material to LSB on a
consolidated basis, except as has been Previously
Disclosed and except for liabilities made in the
ordinary course of its business consistent with past
practices since the date of LSB's most recent Financial
Statements.
2.10 Properties
a. LSB and the LSB Subsidiaries have good and
marketable title free and clear of all liens,
encumbrances, charges, defaults or equitable interests
to all of the properties and assets, real and personal,
reflected on the consolidated balance sheet included in
the Financial Statements of LSB as of December 31, 1992
or acquired after such date, except (i) liens for
current taxes not yet due and payable, (ii) pledges to
secure deposits and other liens incurred in the ordinary
course of banking business, (iii) such imperfections of
title, easements and encumbrances, if any, as are not
material in character, amount or extent,
(iv) dispositions and encumbrances for adequate
consideration in the ordinary course of business, or
(v) as Previously Disclosed.
b. All material leases pursuant to which LSB or
any LSB Subsidiary, as lessee, leases real or personal
property, are, with respect to LSB or the LSB
Subsidiary, valid and enforceable in accordance with
their respective 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 rights of creditors of
FDIC-insured institutions or the enforcement of
creditors' rights generally, (ii) laws relating to the
safety and soundness of depository institutions and
their holding companies, and (iii) general principles of
equity, and except that the availability of equitable
remedies or injunctive relief is within the discretion
of the appropriate court.
2.11 Environmental Matters
a. LSB and the LSB Subsidiaries are in
substantial compliance with all Environmental Laws.
Neither LSB nor any LSB Subsidiary has received any
communication alleging that LSB or any LSB Subsidiary is
not in such compliance and, to the best knowledge of
LSB, there are no present circumstances that would
prevent or interfere with the continuation of such
compliance.
b. LSB has not received notice of any pending,
and is not aware of any threatened, 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, on LSB
or any LSB Subsidiary of any liability arising under any
Environmental Laws upon (i) LSB or any LSB Subsidiary,
(ii) any person or entity whose liability for any
Environmental Claim LSB or any LSB Subsidiary has or may
have retained either contractually or by operation of
law, (iii) any real or personal property owned or leased
by LSB or any LSB Subsidiary, or any real or personal
property which LSB or any LSB Subsidiary has been, or
is, judged to have managed or to have supervised or to
have participated in the management of, or (iv) any real
or personal property in which LSB or any LSB Subsidiary
holds a security interest securing a loan recorded on
the books of LSB or any LSB Subsidiary. Neither LSB nor
any LSB Subsidiary is subject to any agreement, order,
judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party
imposing any such liability.
c. With respect to all real and personal
property owned or leased by LSB or any LSB Subsidiary,
or all real and personal property which LSB or any LSB
Subsidiary has been, or is, judged to have managed or to
have supervised or to have participated in the
management of, LSB has provided BB&T with access to
copies of any environmental audits, analyses and surveys
that have been prepared relating to such properties (a
list of all of which has been Previously Disclosed). To
the best of LSB's knowledge, LSB and the LSB
Subsidiaries are in compliance in all material respects
with all recommendations contained in any such
environmental audits, analyses and surveys.
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 LSB or any LSB Subsidiary or
against any person or entity whose liability for any
Environmental Claim LSB or any LSB Subsidiary has or may
have retained or assumed either contractually or by
operation of law.
2.12 Allowance for Loan Losses
The allowance for loan losses reflected on the
consolidated balance sheets included in the Financial
Statements of LSB is or will be adequate in the opinion
of LSB's management in all material respects as of their
respective dates under the requirements of generally
accepted accounting principles applicable to banks and
bank holding companies to provide for reasonably
anticipated losses on outstanding loans net of
recoveries.
2.13 Tax Matters
a. LSB and the LSB Subsidiaries, and each of
their predecessors, have timely filed (or requests for
extensions have been timely filed and any such
extensions have been granted and have not expired) all
federal, state and material local (and, if applicable,
foreign) tax returns required by applicable law to be
filed by them (including, without limitation, estimated
tax returns, income tax returns, information returns,
and withholding and employment tax returns) and have
paid, or where payment is not required to have been
made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of
the periods covered by such returns and, as of the
Effective Date, 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
Date. Neither LSB nor any of the LSB Subsidiaries will
have any material liability for any such taxes in excess
of the amounts so paid or reserves or accruals so
established.
b. All federal, state and local (and, if
applicable, foreign) tax returns filed by LSB and the
LSB Subsidiaries are complete and accurate in all
material respects. Neither LSB nor any of the LSB
Subsidiaries is delinquent in the payment of any
material tax, assessment or governmental charge. No
deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed
(tentatively or otherwise) against LSB or any LSB
Subsidiary which have not been settled and paid. There
are currently no agreements in effect with respect to
LSB or any LSB 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 are pending.
2.14 Employee Benefit Plans
a. LSB has Previously Disclosed true and
complete copies of all stock option, employee stock
purchase and stock bonus plans, qualified pension or
profit-sharing plans, deferred compensation, bonus or
group insurance contracts and any other incentive,
welfare or employee benefit plans or agreements
maintained for the benefit of employees or former
employees of LSB or any LSB Subsidiary together with
(i) the most recent actuarial and financial reports
prepared with respect to any qualified plans, (ii) the
most recent annual reports filed with any government
agency, and (iii) all rulings and determination letters
and any open requests for rulings or letters that
pertain to any qualified plan.
b. Neither LSB nor any other LSB Subsidiary (or
any pension plan maintained by any of them) has incurred
any material liability to the Pension Benefit Guaranty
Corporation or the Internal Revenue Service with respect
to any pension plan qualified under Section 401 of the
Code except liabilities to the Pension Benefit Guaranty
Corporation pursuant to Section 4007 of ERISA, all of
which have been fully paid. No reportable event under
Section 4043(b) of ERISA has occurred with respect to
any such pension plan.
c. Neither LSB nor any LSB Subsidiary
participates in, or has incurred any liability under
Section 4201 of ERISA for a complete or partial
withdrawal from, a multiemployer plan (as such term is
defined in ERISA).
d. A favorable determination letter has been
issued by the Internal Revenue Service with respect to
each "employee pension plan" (as defined in Section 3(2)
of ERISA) of LSB or any LSB Subsidiary to the effect
that such plan is qualified under Section 401 of the
Code and tax exempt under Section 501 of the Code. No
such letter has been revoked or, to LSB's knowledge,
threatened to be revoked and LSB does not know of any
ground on which such revocation may be based. Neither
LSB nor any LSB Subsidiary has a material liability
under any such plan that is not reflected on the
consolidated balance sheet included in the Financial
Statements of LSB as of December 31, 1992.
e. Except as Previously Disclosed, 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) has
occurred with respect to any employee benefit plan
maintained by LSB or any LSB Subsidiary (i) which would
result in the imposition, directly or indirectly, of a
material excise tax under Section 4975 of the Code, or
(ii) the correction of which would have a Material
Adverse Effect.
2.15 Certain Contracts
a. Except as Previously Disclosed, neither LSB
nor any LSB Subsidiary is a party to, is bound or
affected by, or receives benefits under (i) any material
agreement, arrangement or commitment whether or not made
in the ordinary course of business (other than loans or
loan commitments or certificates of deposit made in the
ordinary course of banking business by Lexington or
Community), or any agreement materially restricting its
business activities, including, without limitation,
agreements or memoranda of understanding with regulatory
authorities, (ii) any agreement, indenture or other
instrument relating to the borrowing of money by LSB or
any LSB Subsidiary or the guarantee by LSB or any LSB
Subsidiary of any such obligation, which cannot be
terminated within less than 30 days after the Closing
Date by LSB or the LSB Subsidiaries (without payment of
any penalty or cost by LSB or an LSB Subsidiary),
(iii) any agreement, arrangement or commitment relating
to the employment of a consultant 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 LSB or the
LSB Subsidiaries (without payment of any penalty or cost
by LSB or an LSB Subsidiary), or (iv) any contract,
agreement or understanding with a labor union, in each
case whether written or oral.
b. Neither LSB nor any LSB Subsidiary is in
default, which default would have a material adverse
effect on LSB on a consolidated basis or the
transactions contemplated herein, under any material
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.
2.16 Legal Proceedings; Regulatory Approvals
Except as Previously Disclosed, at the date
hereof, there are no actions, suits, claims,
governmental investigations or proceedings instituted,
pending or, to the best knowledge of LSB, threatened (or
unasserted but considered by LSB to be probable of
assertion and which, if asserted, would have at least a
reasonable probability of an unfavorable outcome)
against LSB or any LSB Subsidiary or against any asset,
interest, or right of LSB or any LSB Subsidiary, or
against any officer, director or employee of any of them
that in any such case, if decided adversely, might have
a Material Adverse Effect (or, in the case of threatened
actions, suits, claims, governmental investigations or
proceedings, is likely, in the reasonable judgment of
LSB's Chief Executive Officer, after due inquiry of such
other persons as may be necessary to make such a
judgment, to have a Material Adverse Effect). Except as
Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of
LSB and each of the directors and executive officers of
LSB and each LSB Subsidiary, threatened (or unasserted
but considered probable of assertion and which if
asserted would have at least a reasonable probability of
an unfavorable outcome) against any present or former
director or officer of LSB or any LSB Subsidiary that
might give rise to a claim for indemnification as
contemplated by Section 4.13(a) hereof, and to the best
of the knowledge of LSB and each of its directors and
executive officers and each of the directors and
executive officers of each LSB Subsidiary, there is no
reasonable basis for any such action, suit or
proceeding. To the knowledge of LSB, there are no
actual or threatened actions, suits or proceedings which
present a claim to restrain or prohibit the transactions
contemplated herein, in the Plan of Merger, the Option
Agreement, or the Bank Merger Agreement. No fact or
condition (including but not limited to compliance with
the CRA) relating to LSB or any LSB Subsidiary known to
LSB exists that would prevent LSB or BB&T from obtaining
all of the federal and state regulatory approvals
contemplated herein.
2.17 Compliance with Laws
Except as Previously Disclosed, each of LSB and
the LSB Subsidiaries is in compliance in all material
respects with all statutes and regulations (including,
but not limited to, the CRA and regulations promulgated
thereunder, the TILA and regulations promulgated
thereunder and other consumer banking laws) applicable
and material to the conduct of its business (except for
any violations not material to the business, operations
or financial condition of LSB and the LSB Subsidiaries
on a consolidated basis), and neither LSB nor any LSB
Subsidiary has received notification that has not
elapsed, 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 and which violation would
have a Material Adverse Effect on a consolidated basis,
(ii) threatening to revoke any license, franchise,
permit or government authorization, or (iii) restricting
or in any way limiting its operations. Neither LSB nor
any LSB 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 they enter into any of the foregoing.
Without limiting the generality of the foregoing, each
LSB Subsidiary has timely filed all currency transaction
reports required to be filed and taken all other actions
required under the Currency and Foreign Transactions
Reporting Act, as amended, codified at 31 U.S.C. (S) 5301
et seq., and its implementing regulations.
2.18 Brokers and Finders
Neither LSB nor any LSB Subsidiary nor any of
their respective officers, directors or employees has
employed any broker, finder or financial advisor or
incurred any liability of LSB or the LSB Subsidiaries
for any fees or commissions in connection with the
transactions contemplated herein, in the Plan of Merger
or in the Option Agreement (except for fees to
accountants and lawyers and The Carson Medlin Company).
2.19 Insurance
LSB and the LSB Subsidiaries each currently
maintain insurance in the amounts and for the coverages
Previously Disclosed. Except as Previously Disclosed,
neither LSB nor any LSB Subsidiary has received any
notice of a premium increase or cancellation or a
failure to renew with respect to any insurance policy or
bond, and within the last three years, neither LSB nor
any LSB Subsidiary has been refused any insurance
coverage sought or applied for, and neither LSB nor any
LSB Subsidiary has any reason to believe that existing
insurance coverage cannot be renewed as and when the
same shall expire, upon terms and conditions as
favorable as those presently in effect, other than
possible increases in premiums or unavailability of
coverage that do not result from any extraordinary loss
experience on the part of LSB or any LSB Subsidiary.
2.20 Repurchase Agreements
Except as Previously Disclosed, or where no
Material Adverse Effect would result: (i) with respect
to all agreements currently outstanding pursuant to
which LSB or any LSB Subsidiary has purchased securities
subject to an agreement to resell, LSB and the LSB
Subsidiary have 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; and (ii) with respect to all agreements
currently outstanding pursuant to which LSB or any LSB
Subsidiary has sold securities subject to an agreement
to repurchase, LSB and the LSB Subsidiary have not
pledged collateral materially in excess of the amount of
the debt secured thereby. Neither LSB nor any LSB
Subsidiary has pledged collateral materially in excess
of the amount required under any interest rate swap or
other similar agreement currently outstanding.
2.21 Deposit Accounts of Lexington and Community
The deposit accounts of Lexington and Community
are insured by the Bank Insurance Fund of the FDIC to
the maximum extent permitted by federal law, and
Lexington and Community have paid all premiums and
assessments and filed all reports required to have been
paid or filed under the FDIA.
2.22 Loans
a. With respect to each loan on the books and
records of LSB or any LSB Subsidiary, including unfunded
portions of outstanding lines of credit and loan
commitments: (i) such loan is a valid loan; (ii) its
principal balance as shown on the books and records of
LSB or any LSB Subsidiary is true and correct as of the
last date shown thereon; (iii) all purported signatures
on and executions of any document in connection with
such loan are genuine; (iv) all related documentation
has been signed or executed by all necessary parties;
(v) LSB and the LSB Subsidiaries have custody of all
documents or microfilm records thereof related to such
loan (as such documents relate to the matters described
in clauses (i)-(iv) and (vi)-(vii) hereof); (vi) to the
extent secured, such loan has been secured by valid
liens and security interests which have been perfected;
and (vii) such loan is the legal, valid and binding
obligation of the obligor named therein, subject to
bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles. All
loans on the books and records of LSB or any LSB
Subsidiary have been originated and administered in
accordance with the terms of the underlying notes
related thereto. Neither the terms of such loans, nor
any of the loan documentation, nor the manner in which
such loans have been administered and serviced, violates
any federal, state or local law, rule, regulation or
ordinance applicable thereto, including, without
limitation, Regulation O of the Federal Reserve Board,
12 C.F.R. (S) 563.43, the TILA, Regulation Z of the
Federal Reserve Board, the Equal Credit Opportunity Act,
as amended, and state laws, rules and regulations
relating to consumer protection, installment sales and
usury. Notwithstanding anything else contained in this
Section 2.22(a), the representations and warranties
contained in this Section shall be considered to have
been made only to the extent that nonconformance with
such representation or warranty as to any loan or group
of loans would (i) after giving effect to LSB's reserve
for loan losses, have a Material Adverse Effect, or
(ii) except to the extent Previously Disclosed, cause
BB&T reasonably to conclude that the loan documentation
and records maintained by LSB and the LSB Subsidiaries
are not maintained in accordance with BB&T's lending
procedures and requirements.
b. LSB has Previously Disclosed all investments
and loans, including loan guarantees, to which LSB or
any LSB Subsidiary is a party with any director,
executive, officer or 5% shareholder of LSB or any
person, corporation, or enterprise controlling,
controlled by or under common control with any of the
foregoing.
2.23 Certain Information
When the Proxy Statement is mailed, and at the
time of the meeting of shareholders of LSB to vote upon
the Plan of Merger, the Proxy Statement and all
amendments or supplements thereto, with respect to all
information set forth therein furnished by LSB relating
to LSB and the LSB Subsidiaries, (i) shall comply in all
material respects 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.
2.24 Effect of Representations and Warranties
The representations and warranties contained in
this Article II are made for the purpose of assigning to
LSB the economic risk of the material falsity or
inaccuracy of those representations and warranties, or
nonconformance of the facts related thereto. Any
non-material falsity, nonconformity or inaccuracy in any
representation or warranty (except for those expressed
as being within the actual knowledge of LSB or any LSB
Subsidiaries or an officer thereof where such
representation or warranty is made falsely) shall not
form the basis for any claim by BB&T against LSB, any
LSB Subsidiary, or any of their respective officers,
directors or agents, that LSB, any LSB Subsidiary, or
such officers, directors or agents, have made a willful,
reckless or negligent misrepresentation or otherwise
engaged in deceitful conduct. Nothing in this Section
shall otherwise limit the right of BB&T to terminate
this Agreement in accordance with Section 6.1 or take
such other actions as are permitted by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to LSB as follows:
3.1 Capital Structure of BB&T and BB&T-SC
The authorized capital stock of BB&T consists
of (i) 4,000,000 shares of preferred stock, par value
$2.50 per share, and (ii) 50,000,000 shares of BB&T
Common Stock, of which 32,246,028 shares are issued and
outstanding. All outstanding shares of BB&T Common
Stock have been duly issued and are validly outstanding,
fully paid and nonassessable. As of the date of this
Agreement, BB&T has reserved 3,367,843 shares of BB&T
Common Stock for issuance under its benefit plans,
convertible securities and Dividend Reinvestment Plan.
Except as set forth herein, there are no Rights
authorized, issued or outstanding with respect to the
capital stock of BB&T. None of the shares of capital
stock of BB&T has been issued in violation of the
preemptive rights of any person.
The authorized capital stock of BB&T-SC
consists of 20,000,000 shares of common stock, of which
1,427,188 shares are issued and outstanding, and all of
such shares are owned by BB&T. All outstanding shares
of BB&T-SC Common Stock have been duly issued and are
validly outstanding, fully paid and nonassessable.
There are no Rights authorized, issued or outstanding
with respect to the capital stock of BB&T-SC. None of
the shares of capital stock of BB&T-SC has been issued
in violation of the preemptive rights of any person.
3.2 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
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 and where failure
to so qualify would have a material adverse effect on
the financial condition, results of operation, or
business of BB&T on a consolidated basis. BB&T is
registered as a bank holding company under the Bank
Holding Company Act.
3.3 Authorized and Effective Agreement
a. BB&T has all requisite corporate power and
authority to enter into and perform all of its
obligations under this Reorganization Agreement and the
Option Agreement. The execution and delivery of this
Reorganization Agreement and the Option Agreement and
consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the
part of BB&T. This Reorganization Agreement and the
Option Agreement constitute legal, valid and binding
obligations of BB&T, in each such case enforceable
against it in accordance with their respective terms
subject to (i) bankruptcy, insolvency, moratorium,
reorganization, conservatorship, receivership or other
similar laws in effect from time to time relating to or
affecting the enforcement of the rights of creditors of
FDIC-insured institutions or the enforcement of
creditors' rights generally, (ii) laws relating to the
safety and soundness of depository institutions and
their holding companies, and (iii) general principles of
equity, and except that the availability of remedies or
injunctive relief is within the discretion of the
appropriate court.
b. Neither the execution and delivery of this
Reorganization Agreement nor the Option Agreement, in
the case of BB&T, nor the Plan of Merger in the case of
BB&T and BB&T-SC, nor the Bank Merger Agreement in the
case of Branch Bank-SC, nor consummation of the
transactions contemplated hereby or thereby, nor
compliance by BB&T, BB&T-SC and Branch Bank-SC 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 by-laws 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
which would have a material adverse effect on the
business, operations or financial conditions of BB&T and
the BB&T Subsidiaries taken as a whole, or (iii) violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to BB&T or any BB&T Subsidiary.
3.4 Organization, Standing and
Authority of BB&T Subsidiaries
Each BB&T Subsidiary is a duly organized
corporation, validly existing and in good standing under
applicable laws. Each BB&T Subsidiary (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 and where failure to so qualify would have
a material adverse effect on the financial condition,
results of operations, business or prospects of BB&T on
a consolidated basis. BB&T-SC is registered as a bank
holding company under the Bank Holding Company Act.
3.5 Securities Documents
BB&T has timely filed all Securities Documents
required by the Securities Laws since December 31, 1987
and such Securities Documents complied in all material
respects with the Securities Laws as in effect at the
times of such filings.
3.6 Financial Statements
The Financial Statements of BB&T fairly present
or will fairly present, as the case may be, the
consolidated financial position of BB&T and the BB&T
Subsidiaries as of the dates indicated and the
consolidated results of operations, changes in
shareholders' equity and changes in cash flows for the
periods then ended in conformity with generally accepted
accounting principles applicable to financial
institutions applied on a consistent basis.
3.7 Material Adverse Change
BB&T has not, on a consolidated basis, suffered
any material adverse change in its business, financial
condition, results of operations or prospects since
December 31, 1992.
3.8 Legal Proceedings; Regulatory Approvals
At the date hereof, there are no actions, suits,
claims, governmental investigations or proceedings
instituted, pending or, to the best knowledge of BB&T,
threatened against BB&T or any BB&T Subsidiary or
against any asset, interest or right of BB&T or any BB&T
Subsidiary, or against any officer, director or employee
of any of them that, if decided adversely, might have a
material adverse effect on the financial condition,
results of operations, business or prospects of BB&T on
a consolidated basis. To the knowledge of BB&T, there
are no actual or threatened actions, suits or
proceedings which present a claim to restrain or
prohibit the transactions contemplated herein or in the
Plan of Merger. No fact or condition (including but not
limited to CRA compliance) relating to BB&T or any BB&T
Subsidiary known to BB&T exists that would prevent BB&T
from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.9 Ownership of BB&T Subsidiaries
The outstanding shares of capital stock or other
ownership interests of the BB&T Subsidiaries are validly
issued and outstanding, fully paid and nonassessable,
and all such shares are directly or indirectly owned by
BB&T free and clear of all liens, claims and
encumbrances or preemptive rights of any person. No
Rights are authorized, issued or outstanding with
respect to the capital stock or other ownership
interests of any BB&T Subsidiary and there are no
agreements, understandings or commitments relating to
the right of BB&T to vote or to dispose of said shares
or other ownership interests.
3.10 Absence of Undisclosed Liabilities
Neither BB&T nor any BB&T Subsidiary has any
liability (contingent or otherwise) that is material to
BB&T on a consolidated basis or that, when combined with
all similar liabilities, would be material to BB&T on a
consolidated basis, except as disclosed in the Financial
Statements of BB&T and except for liabilities made in
the ordinary course of its business consistent with past
practices since the date of BB&T's most recent Financial
Statements.
3.11 Allowance for Loan Losses
The allowance for loan losses reflected on the
consolidated balance sheets included in the Financial
Statements of BB&T is or will be in the opinion of
BB&T's management adequate in all material respects as
of their respective dates under the requirements of
generally accepted accounting principles applicable to
banks and bank holding companies to provide for
reasonably anticipated losses on outstanding loans net
of recoveries.
3.12 Tax Matters
a. BB&T and the BB&T Subsidiaries, and each of
their predecessors, have timely filed 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, are
contesting payment thereof in good faith, or have set up
an adequate reserve or accrual for the payment of, all
taxes required to be paid in respect of the periods
covered by such returns and, as of the Effective Date,
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 Date which
are not being contested in good faith. Neither BB&T nor
any of the BB&T Subsidiaries will to BB&T's knowledge
have any material liability for any such taxes in excess
of the amounts so paid or reserves or accruals so
established.
b. All federal, state and local (and, if
applicable, foreign) tax returns filed by BB&T and the
BB&T Subsidiaries are complete and accurate in all
material respects. Neither BB&T nor any of the BB&T
Subsidiaries is delinquent in the payment of any tax,
assessment or governmental charge, and none of them has
requested any extension of time within which to file any
tax returns in respect of any fiscal year or portion
thereof which have not since been filed. No
deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed
(tentatively or otherwise) against BB&T or any BB&T
Subsidiary which have not been settled and paid. There
currently are no agreements in effect with respect to
BB&T or any BB&T Subsidiary to extend the period of
limitations for the assessment or collection of any tax.
3.13 Compliance with Laws
Each of BB&T and the BB&T Subsidiaries is in
material compliance with all statutes and regulations
(including, but not limited to, CRA and regulations
promulgated thereunder, TILA and regulations promulgated
thereunder and other consumer banking laws) applicable
and material to the conduct of its business (except for
any violations not material to the business, operations
or financial condition of BB&T and its subsidiaries
taken as a whole), and neither BB&T nor any BB&T
Subsidiary has received notification that has not
elapsed, been withdrawn or abandoned from any agency or
department of federal, state or local government (i)
asserting a violation or possible violation of any such
statute or regulation, and which violations would have a
material adverse effect on the business, operations or
financial condition of BB&T and the BB&T Subsidiaries
taken as a whole, (ii) threatening to revoke any
license, franchise, permit or government authorization,
or (iii) restricting or in any way limiting its
operations. Neither BB&T nor any BB&T 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 they enter
into any of the foregoing. Without limiting the
generality of the foregoing, each BB&T Subsidiary has
timely filed all currency transaction reports required
to be filed and taken all other actions required under
the Currency and Foreign Transactions Reporting Act as
amended, codified at 31 U.S.C. (S) 5301 et seq., and its
implementing regulations.
3.14 Certain Information
When the Proxy Statement is mailed, and at all
times subsequent to such mailing up to and including the
time of the meeting of shareholders of LSB to vote on
the Merger, the Proxy Statement and all amendments or
supplements thereto, with respect to all information set
forth therein furnished by BB&T relating to BB&T,
including pro forma information insofar as it relates to
BB&T and entities other than LSB and the LSB
Subsidiaries, (i) shall comply in all material respects
with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
contained therein, in light of the circumstances in
which they were made, not misleading.
3.15 Employee Benefit Plans
a. BB&T has Previously Disclosed a list of and
provided LSB with access to true and complete copies of
all stock option, employee stock purchase and stock
bonus plans, qualified pension or profit-sharing plans,
deferred compensation, bonus or group insurance
contracts and any other incentive, welfare or employee
benefit plans or agreements maintained for the benefit
of employees or former employees of BB&T or any BB&T
Subsidiary together with (i) the most recent actuarial
and financial reports prepared with respect to any
qualified plans, (ii) the most recent annual reports
filed with any government agency, and (iii) all rulings
and determination letters and any open requests for
rulings or letters that pertain to any qualified plan.
b. Neither BB&T nor any other BB&T Subsidiary
(or any pension plan maintained by any of them) has
incurred any material liability to the Pension Benefit
Guaranty Corporation or the Internal Revenue Service
with respect to any pension plan qualified under Section
401 of the Code except liabilities to the Pension
Benefit Guaranty Corporation pursuant to Section 4007 of
ERISA, all of which have been fully paid. No reportable
event under Section 4043(b) of ERISA has occurred with
respect to any such pension plan.
c. Neither BB&T nor any BB&T Subsidiary
participates in, or has incurred any liability under
Section 4201 of ERISA for a complete or partial
withdrawal from, a multiemployer plan (as such term is
defined in ERISA).
d. Except as Previously Disclosed, a favorable
determination letter has been issued by the Internal
Revenue Service with respect to each "employee pension
plan" (as defined in Section 3(2) of ERISA) of BB&T or
any BB&T Subsidiary to the effect that such plan is
qualified under Section 401 of the Code and tax exempt
under Section 501 of the Code. No such letter has been
revoked or, to BB&T's knowledge, threatened to be
revoked and BB&T does not know of any ground on which
such revocation may be based. Neither BB&T nor any BB&T
Subsidiary has a material liability under any such plan
that is not reflected on the consolidated balance sheet
included in the Financial Statements of BB&T as of
December 31, 1992.
e. 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) has occurred with respect to any employee
benefit plan maintained by BB&T or any BB&T Subsidiary
(i) which would result in the imposition, directly or
indirectly, of a material excise tax under Section 4975
of the Code, or (ii) the correction of which would have
a material adverse effect on the business, operations or
financial condition of BB&T and the BB&T Subsidiaries
taken as a whole.
ARTICLE IV
COVENANTS
4.1 Shareholders' Meeting
LSB shall submit this Reorganization Agreement
and the Plan of Merger to its shareholders for approval
at a special meeting to be held as soon as practicable,
and the Board of Directors of LSB shall recommend that
the shareholders vote for such approval.
4.2 Proxy Statement; Registration Statement
BB&T and LSB shall cooperate in the timely
preparation and filing of the Registration Statement
with the Commission and BB&T shall use its best efforts
to cause such Registration Statement to be declared
effective under the Securities Act, which Registration
Statement, at the time it becomes effective, and on the
Effective Date, shall in all material respects conform
to the requirements of the Securities Act and the
general rules and regulations of the Commission under
the Securities Act. The Registration Statement shall
include the form of Proxy Statement for the meeting of
LSB's shareholders to be held for the purpose of having
such shareholders vote upon approval of this
Reorganization Agreement and the Plan of Merger. LSB
shall cause the Proxy Statement to be mailed to its
shareholders. LSB 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. BB&T shall take all actions required to
register or obtain exemptions from such registration for
the BB&T Common Stock to be issued in connection with
the transactions contemplated by this Agreement and the
Plan of Merger under applicable state "Blue Sky"
securities laws, as appropriate.
4.3 Bank Merger Agreement; Applications
a. LSB shall cause Lexington and Community to
execute and deliver the Bank Merger Agreement as soon as
practicable following BB&T's request therefor and BB&T
shall cause Branch Bank-SC to execute and deliver the
Bank Merger Agreement at substantially the same time.
b. LSB further agrees to approve, execute and
deliver, and to cause appropriate LSB Subsidiaries to
approve, execute and deliver, any amendment to this
Agreement, the Plan of Merger and the Bank Merger
Agreement and any additional plans and agreements
requested by BB&T to modify the structure of, or to
substitute parties to, the transactions contemplated
hereby, provided that such modifications do not
adversely affect the economic benefits of such
transactions or otherwise abrogate the covenants and
other agreements contained in this Agreement.
c. As promptly as practicable after the date
hereof, BB&T and LSB shall submit applications for prior
approval of the transactions contemplated herein to the
Federal Reserve Board, the FDIC and the State Board,
and/or any other federal, state or local government
agency, department or body the approval of which is
required for consummation of the Merger, the Bank
Mergers and the other transactions contemplated hereby
and thereby. BB&T shall permit LSB to review in advance
all such applications and will consult with LSB on all
characterizations of the information relating to LSB or
the LSB Subsidiaries; provided, however, that any such
advance review by LSB shall be reasonably prompt. BB&T
promptly shall furnish LSB with copies after filing of
applications with these or any other regulatory agencies
filed by BB&T or any BB&T Subsidiary. LSB and BB&T each
represent and warrant to the other that all information
concerning it and its directors, officers and
shareholders and concerning its subsidiaries included
(or submitted for inclusion) in any such application
shall be true, correct and complete in all material
respects as of the date presented.
4.4 Best Efforts
BB&T and LSB shall each use its best efforts in
good faith, and each of them shall cause its
subsidiaries to use their 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 4.2 and 4.3 above or elsewhere herein, and
(ii) take or cause to be taken all action necessary or
desirable on its part so as to permit consummation of
the Merger and the Bank Mergers, at the earliest
possible date, including, without limitation, (a)
obtaining the consent or approval of each individual,
partnership, corporation, association or other business
or professional entity whose consent or approval is
required for consummation of the transactions
contemplated hereby, provided that neither LSB nor any
LSB Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith
without the prior written consent of BB&T, and (b)
requesting the delivery of appropriate opinions,
consents and letters from its counsel and independent
auditors. Neither BB&T nor LSB 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, or the Bank Mergers,
provided that nothing herein contained shall preclude
BB&T from exercising its rights under the Option
Agreement.
4.5 Certain Accounting Matters
a. LSB and BB&T shall consult and cooperate
with each other concerning such accounting and financial
matters as may be necessary or appropriate to facilitate
the Merger and the Bank Mergers (taking into account
BB&T's policies, practices and procedures), including
without limitation issues arising in connection with
record keeping, loan classification, valuation
adjustments, levels of loan loss reserves and other
accounting practices.
b. LSB shall between the date hereof and the
Closing Date maintain (i) the ratio of total loan loss
reserves to non-performing assets at not less than 1.00;
and (ii) its total loan loss reserves at not less than
1.25% of total loans.
c. LSB agrees, subject to its Board of
Directors' fiduciary duties and the limitations of
federal and state law, to increase its dividend to an
amount consistent with the amount requested by BB&T and
the limitation contained in Section 4.8(b).
4.6 Investigation and Confidentiality
LSB will keep BB&T advised of all material
developments relevant to its business and to
consummation of the Merger and the Bank Mergers, and
BB&T will advise LSB of any material adverse change in
its financial condition or operations and all material
developments that are likely adversely to affect
consummation of the Merger or the Bank Mergers. BB&T
and LSB each may make or cause to be made such
investigation of the financial and legal condition of
the other as such party reasonably deems necessary or
advisable in connection with the transactions
contemplated herein, provided, however, that such
investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with
normal operations. BB&T and LSB agree to furnish the
other and the other's advisors with such financial data
and other information with respect to its business and
properties as such other party shall from time to time
reasonably request. No investigation pursuant to this
Section 4.6 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 in such
investigation which is not otherwise publicly disclosed
by the other party, said undertaking with respect to
confidentiality to survive any termination of this
Agreement pursuant to Section 6.1 hereof. In the event
of the termination of this Agreement, each party shall
return to the furnishing party or, at the request of the
furnishing party, destroy and certify the destruction of
all confidential information previously furnished in
connection with the transactions contemplated by this
Agreement.
4.7 Press Releases
BB&T and LSB shall agree with each other as to
the form and substance of any press release related to
this Reorganization 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,
however, that nothing contained herein shall prohibit
either party, following notification to the other party,
from making any disclosure which its counsel deems
necessary.
4.8 Forbearances of LSB
Except with the prior written consent of BB&T,
which consent shall not be withheld on an arbitrary
basis or on a basis inconsistent with BB&T's interests
as an acquiror of LSB, between the date hereof and the
Effective Date, LSB shall not, and shall cause each LSB
Subsidiary 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 cause or permit any subsidiary to
engage in any new activity or expand any existing
activities;
(b) declare, set aside, make or pay any
dividend or other distribution in respect of its
capital stock that would cause the business
combination contemplated hereby not to be
accounted for as a pooling of interests, as
determined by BB&T;
(c) issue any shares of its capital stock
other than pursuant to the Option Agreement or
the merger of Lexington with The Dorn Banking
Company or the LSB Dividend Reinvestment Plan;
(d) issue, grant or authorize any Rights
other than pursuant to the Option Agreement or
effect any recapitalization, reclassification,
stock dividend, stock split or like change in
capitalization;
(e) amend its articles of incorporation or
by-laws; impose, or suffer the imposition, on any
share of stock held by LSB in any LSB Subsidiary
of any material lien, charge or encumbrance or
permit any such lien to exist; or waive or
release any material right or cancel or
compromise any material debt or claim other than
in the ordinary course of business;
(f) other than completion of the merger
with The Dorn Banking Company, merge with any
other corporation or bank or permit any other
corporation, savings institution or bank to merge
into it or consolidate with any other
corporation, savings institution or bank; acquire
control over any other firm, bank, corporation,
savings institution or organization; or
liquidate, sell or otherwise dispose of any
assets or acquire any assets, other than in the
ordinary course of its business;
(g) fail to comply in any material respect
with any laws, regulations, ordinances or
governmental actions applicable to it and to the
conduct of its business except where LSB or any
LSB Subsidiary is in good faith contesting the
validity of any of the foregoing; or where the
failure to so comply will not have a Material
Adverse Effect;
(h) increase the rate of compensation of
any of its directors, officers or employees, or
pay or agree to pay any bonus to, or provide any
other employee benefit or incentive to, any of
its directors, officers or employees, except in a
manner and amount consistent with past practice;
(i) enter into or substantially modify
(except as may be required by applicable law) 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
renewals of any of the foregoing consistent with
past practice;
(j) solicit or encourage inquiries or
proposals with respect to, furnish any
information relating to, or participate in any
negotiations or discussions concerning, any
acquisition or purchase of all or a substantial
portion of the assets of, or a substantial equity
interest in, LSB or any LSB Subsidiary or any
business combination with LSB or any LSB
Subsidiary other than as contemplated by this
Agreement; or authorize any officer, director,
agent or affiliate of it to do any of the above;
or fail to notify BB&T immediately if any such
inquiries or proposals are received by, any such
information is required from, or any such
negotiations or discussions are sought to be
initiated with, LSB or any LSB Subsidiary;
(k) enter into (i) any material agreement,
arrangement or commitment not made in the
ordinary course of business, including, without
limitation, agreements or memoranda of
understanding with regulatory authorities,
(ii) any agreement, indenture or other instrument
not made in the ordinary course of business
relating to the borrowing of money by LSB or any
LSB Subsidiary or guarantee by LSB or any LSB
Subsidiary of any such obligation, (iii) any
agreement, arrangement or commitment not
cancellable by LSB without penalty or cost within
30 days after the Effective Date 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
normal election of directors by shareholders and
the election of officers by directors not
pursuant to a specific agreement, arrangement or
commitment not Previously Disclosed); or (iv) any
contract, agreement or understanding with a labor
union;
(l) 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 LSB shall, and shall cause the LSB
Subsidiaries to, cooperate in good faith with
BB&T to adopt policies, practices and procedures
consistent with those utilized by BB&T, effective
on or before the Closing Date;
(m) change its methods of accounting in
effect at December 31, 1992, except as required
by changes in generally accepted accounting
principles concurred in by its independent
certified public accountants, or change any of
its methods of reporting income and deductions
for federal income tax purposes from those
employed in the preparation of its federal income
tax returns for the year ended December 31, 1992,
except as required by changes in law or
regulation; or
(n) agree to do any of the foregoing.
4.9 Plan of Merger; Reservation of Shares
a. On the Effective Date, the Merger shall be
effected in accordance with the Plan of Merger attached
hereto as Annex A. In this connection, BB&T undertakes
and agrees (i) to adopt and to cause BB&T-SC to adopt
the Plan of Merger; (ii) to vote the shares of BB&T-SC
Common Stock for approval of the Plan of Merger; and
(iii) to pay or cause to be paid when due the number of
shares of BB&T Common Stock to be distributed pursuant
to Article V of the Plan of Merger and any cash required
to be paid for fractional shares pursuant to Article V,
Paragraph 9 of the Plan of Merger.
b. BB&T shall reserve for issuance such number
of shares of BB&T Common Stock as shall be necessary to
pay the consideration to be distributed to LSB's
stockholders as contemplated in Article V, Paragraph 1
of the Plan of Merger. If at any time the aggregate
number of shares of BB&T Common Stock remaining unissued
(or in treasury) shall not be sufficient to effect the
Merger, BB&T shall take all appropriate action to
increase the amount of the authorized BB&T Common Stock.
4.10 Certain Agreements
BB&T shall enter into employment agreements with
those LSB Employees as have been Previously Disclosed on
the terms Previously Disclosed.
4.11 Closing; Articles of Merger
The transactions contemplated by this Agreement,
the Plan of Merger and the Bank Merger Agreement shall
be consummated at one or more closings to be held at the
executive offices of BB&T, or such other place as shall
be agreed to by BB&T and LSB, on the first business day
following satisfaction of the conditions to consummation
of the Merger and the Bank Mergers set forth in
Article V hereof, such later date within 30 days
thereafter as may be specified by BB&T, or such later
date as the parties may otherwise agree. The Merger
shall become effective upon the Effective Date, which
shall be the time and date specified in the Articles of
Merger evidencing the Merger, as filed with the
Secretary of State of South Carolina. The Bank Mergers
may be consummated as of the Effective Date or such
later date as BB&T shall specify.
4.12 Affiliates
LSB and BB&T shall cooperate and use their best
efforts to identify those persons who may be deemed to
be "affiliates" of LSB within the meaning of Rule 145
promulgated by the Commission under the Securities Act.
LSB shall use its best efforts to cause each person so
identified to deliver to BB&T at least 30 days prior to
the Effective Date 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.
4.13 Indemnification and Insurance.
a. Prior to the Effective Date, each director
of LSB, Lexington and Community and each officer of LSB,
Lexington and Community who is currently entitled to
indemnification pursuant to South Carolina Law shall be
indemnified in connection with any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, arising out
of or in connection with this Agreement, the Option
Agreement or any of the transactions contemplated hereby
or thereby, by BB&T to the fullest extent permitted by
law in effect at the time the act was committed against
(a) reasonable expenses, including attorney's fees,
actually and necessarily incurred by him or her in
connection therewith, and (b) reasonable payments made
by him in satisfaction of any judgment, money decree,
fine, penalty or settlement for which he may have become
liable in any such action, suit or proceeding; provided,
however, that BB&T will not indemnify any person against
liability or litigation expense such person may incur on
account of activities which were at the time taken known
or believed by such person to be clearly in conflict
with the best interest of LSB or BB&T or, with respect
to any criminal action or proceeding, activities which
the indemnitee had reasonable cause to believe were
unlawful. To the fullest extent permitted by law, for
all sums for which there is a right of indemnification,
BB&T shall pay said sums from time to time in advance of
the final disposition of the action, suit or
proceedings; provided, however, that the payment of
expenses incurred by a director or officer in his
capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such
person while a director or officer) in advance of the
final disposition of a proceeding shall be made only
upon delivery to BB&T of an undertaking, by or on behalf
of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that the
director or officer is not entitled to be indemnified
under this Section or otherwise. BB&T agrees to take
all actions as may be necessary and appropriate to
authorize BB&T to pay the indemnification required by
this Section, including without limitation, to the
extent needed, making a good faith evaluation of the
manner in which the claimant for indemnity acted and of
the reasonable amount of indemnity due him and given
notice to, and obtaining approval by, the shareholders
of BB&T to the extent required by law.
b. Following the Effective Date, each director
of LSB, Lexington and Community and each officer of LSB,
Lexington and Community who is currently entitled to
indemnification pursuant to South Carolina law shall be
indemnified, in accordance with BB&T-SC's by-law
provisions, to the maximum extent permitted under South
Carolina and federal law, if applicable.
c. BB&T agrees to purchase and to keep in force
directors' and officers' liability insurance to provide
coverage for actions or omissions by directors and
officers of LSB, Lexington and Community for claims made
for the period commencing with and after the Effective
Date; provided, however, that such insurance will be
provided only if, and to the extent that, any similarly
situated officer or director of BB&T is insured from
time to time.
4.14 Employees and Employee Benefit Plans
a. (i) Upon the Effective Date, each person
who is an employee of LSB or the LSB Subsidiaries as of
such Effective Date (individually an "Employee") shall
automatically become an employee of the Surviving
Corporation (as defined in the Plan of Merger) or Branch
Bank-SC, as the case may be, upon substantially the same
terms and conditions of employment, including
compensation and benefits, and comparable
responsibilities that each Employee had on the day
before the Effective Date.
(ii) Each such Employee shall remain an
Employee for a period of at least two years following
the Effective Date, subject to satisfactory performance
of duties.
(iii) Notwithstanding Section 4.14(ii),
whether before or after the two year period described in
such section, no Employee shall be terminated or have
his or her salary reduced involuntarily as a result of
the Merger. This Section 4.14(a)(iii) is not intended
to confer, and should not be construed to confer, any
right upon or contract in favor of any Employee of the
Surviving Corporation.
(iv) Notwithstanding Sections
4.14(a)(i)-(iii), nothing contained herein shall
restrict the ability of the Surviving Corporation or
Branch Bank-SC to dismiss any Employee, if such
dismissal is for "Just Cause." For purposes of this
provision, termination for "Just Cause" shall include
personal dishonesty or willful violation of any federal,
state or local law, rule or regulation (other than
traffic violations or similar offenses) or a final cease
and desist order, conviction of a felony or of a
misdemeanor involving moral turpitude, unethical
business practices in connection with the Surviving
Corporation's business, misappropriation of the
Surviving Corporation's assets, incompetence, or
intentional failure to perform stated duties. In
addition to the foregoing, if any Employee is terminated
within the two-year period for any reason and at any
time, such termination shall be effected only if such
termination shall have been approved in writing by any
two of Raymond S. Caughman, Robert N. Hubbs and David S.
Hipp, or, if less than two of them are at the time
employed by Branch Bank-SC, any two members of the Board
of Directors of Branch Bank-SC who were, on the
Effective Date, directors of LSB.
b. Each Employee shall be eligible to receive
group hospitalization, medical, life, disability and
other benefits comparable to those provided to the
present employees of BB&T without the imposition of any
waiting period or limitation on pre-existing conditions;
provided, however, such benefits shall not in the
aggregate to all Employees as a group be less in amount
or value than those presently provided by LSB and the
LSB Subsidiaries; and provided, further, that any
Employee who is, on the Effective Date, entitled to 5
weeks of paid vacation per year shall continue to be
entitled to 5 weeks paid vacation per year for the
duration of the Employee's employment with BB&T and the
BB&T Subsidiaries.
c. Following the Bank Mergers, LSB shall cause
Lexington's pension plan and 401(k) plan to be merged
with the 401(k) plans maintained by BB&T and the BB&T
Subsidiaries or be terminated. The parties shall reach
agreement as to the appropriate method of accomplishing
this result (either termination or merger) as soon as
practicable. If the LSB Plan is terminated, the rights
and interests of the employees of LSB and the LSB
Subsidiaries in such plans shall become fully vested,
with each participating Employee having the right or
option either to receive the benefits to which they are
entitled as a result of the termination of the Plan or
to have such benefits "rolled" into the 401(k) Plan
maintained by BB&T and the BB&T Subsidiaries for the
benefit of their employees, and on the same basis and
applying the same eligibility standards as would apply
to employees of BB&T and the BB&T subsidiaries.
Following the Bank Mergers, the Employees of LSB and the
LSB Subsidiaries shall be entitled to participate, to
the same extent and on the same terms as the employees
of BB&T, in any retirement, pension or similar plans in
effect for the benefit of the employees of BB&T (other
than any employee stock ownership plan established for
the benefit of certain of BB&T's employees) which when
considered as a whole for all Employees considered as a
group shall be no less favorable in the aggregate than
the benefits currently provided to the Employees of LSB,
Lexington and Community.
d. For purposes of participating in all plans
and benefits of BB&T, such Employees shall receive
credit for their period of service to LSB and the LSB
Subsidiaries for participation and vesting purposes only.
e. Nothing in this Agreement shall detract from
any rights of any Employee under any Previously
Disclosed written employment agreement, except as may
otherwise be agreed to by any Employee.
f. To the extent that this Section 4.14
contemplates or requires the taking of action or
forbearance by any subsidiary of BB&T, BB&T shall cause
such subsidiary to take such action or to so forbear.
4.15 Forbearances of BB&T
Except with the prior written consent of LSB,
which consent shall not be arbitrarily or unreasonably
withheld, between the date hereof and the Effective
Date, neither BB&T nor any BB&T Subsidiary shall:
a. exercise the Option Agreement other than in
accordance with its terms, or dispose of the shares of
LSB Common Stock issuable upon exercise of the option
rights conferred thereby other than as permitted or
contemplated by the terms thereof;
b. enter into a merger or other business
combination transaction with any other corporation or
person in which BB&T would not be the surviving or
continuing entity after the consummation thereof;
c. sell or lease all or substantially all of
the assets and business of BB&T; or
d. declare an extraordinary or special dividend
or distribution on its common stock in an amount equal
to more than 10% of BB&T's stockholders' equity as
reflected on the Financial Statements of BB&T as of the
three months ended prior to such payment.
4.16 Membership on the Board of Directors
a. Upon consummation of the Merger, BB&T shall
cause each of the members of the Board of Directors of
LSB to become members of the Board of Directors of
Branch Bank-SC and shall use its best efforts to cause
such members to remain members of such board until they
reach age 70, subject to the fiduciary duties of the
members of the Board of Directors of Branch Bank-SC.
Further, BB&T shall cause (i) each such member's
compensation to be the greater of (a) $8,400 per year
(plus $100 for each special meeting not held on the day
of a regular board meeting), plus reasonable travel
expenses, or (b) the compensation paid to the members of
the Branch Bank-SC Board of Directors as of the
Effective Date; and (ii) all benefits as have been
Previously Disclosed which are presently provided to or
made available to such members to be continued.
b. Upon consummation of the Merger, BB&T shall
cause two members of the board of directors of LSB
designated by the board of directors of LSB (the "LSB
Designees") to become members of the Board of Directors
of BB&T. Thereafter, for a period of at least five
years, subject to the fiduciary duties of the members of
the Board of Directors of BB&T, BB&T agrees to recommend
to the Nominating Committee of the BB&T Board of
Directors the nomination of the LSB Designees for
reelection and inclusion as part of the slate of
directors recommended by the Nominating Committee for
the Board of Directors of BB&T. In the event that
either or both of the LSB Designees is unable or
unwilling to serve as a director during such five-year
period, BB&T shall substitute, to the extent practicable
and consistent with the limitations described in this
subparagraph, a person or persons who as of the date
hereof are members of the Board of Directors of LSB.
BB&T further agrees that after such five year period,
subject to the fiduciary duties of the members of the
BB&T Board of Directors, BB&T will continue to use its
best efforts to recommend to the Nominating Committee of
the BB&T Board of Directors the nomination to the BB&T
Board of Directors of at least one person who resides in
the current LSB market area.
4.17 Community Benefits
a. BB&T will maintain an operations center in
Lexington for at least two years after the Effective
Date. BB&T will also consider locating facilities and
expanding employment opportunities in LSB's current
market area when doing so would not impose an economic
burden on BB&T or be inconsistent with BB&T's business
plans.
b. BB&T will make, or cause to be made,
charitable and civic contributions, consistent with its
philosophy in making charitable or civic contributions,
in the communities served by the LSB Subsidiaries in
amounts of not less than $1 million between the date
hereof and December 31, 1996. Larger contributions may
be made in the form of five-year pledges. BB&T will
consult with the persons who are directors of LSB on the
Effective Date to determine which organizations will
receive such contributions.
4.18 Dissenters' Rights
LSB shall give BB&T prompt notice of any
purported exercise of dissenters' rights and BB&T shall
have the right to participate in all negotiations and
proceedings with respect to any such demands. LSB shall
not, without the prior written consent of BB&T,
voluntarily make any payment with respect to, or settle
or offer or agree to settle, any such demand for payment.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions Precedent -- BB&T and LSB
The respective obligations of BB&T and LSB 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 Date:
(a) All corporate action necessary to
authorize the execution, delivery and performance
of this Reorganization Agreement, the Plan of
Merger, the Option Agreement and the Bank Merger
Agreement 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
LSB;
(b) The Registration Statement (including
any post-effective amendments thereto) shall be
effective under the Securities Act, and BB&T and
LSB shall have received all state securities or
"Blue Sky" permits or other authorizations, or
confirmations as to the availability of an
exemption from registration requirements as may
be necessary and no proceedings shall be pending
or to the knowledge of BB&T threatened by the
Commission or any state "Blue Sky" securities
administration 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) Neither BB&T, any BB&T Subsidiary, LSB
nor any LSB Subsidiary 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 Reorganization Agreement; and
(d) LSB and BB&T shall have received an
opinion of BB&T's counsel or tax advisor in form
and substance satisfactory to LSB and BB&T
substantially to the effect that the Merger and
the Bank Mergers will constitute one or more
reorganizations under Section 368 of the Code and
that the shareholders of LSB will not recognize
any gain or loss to the extent that such
shareholders exchange shares of LSB Common Stock
for shares of BB&T Common Stock.
5.2 Conditions Precedent -- LSB
The obligations of LSB to effect the transactions
contemplated by this Agreement shall be subject to
satisfaction of the following additional conditions at
or prior to the Effective Date unless waived by LSB
pursuant to Section 6.4 hereof:
(a) The representations and warranties of
BB&T set forth in Article III hereof shall be
true and correct in all material respects as of
the date of this Agreement and as of the
Effective Date as though made on and as of the
Effective Date (or on the date when made in the
case of any representation and warranty which
specifically relates to an earlier date), except
as otherwise contemplated by this Reorganization
Agreement or consented to in writing by LSB
(which consent may not be unreasonably withheld);
(b) BB&T shall have in all material
respects performed all material obligations and
complied with all material covenants required by
this Agreement;
(c) BB&T shall have delivered to LSB a
certificate, dated the Effective Date and signed
by its Chairman or President, to the effect that
the conditions set forth in Sections 5.1(a),
5.1(b), 5.1(e), 5.2(a), 5.2(c) and 5.2(f), 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 his
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 or in the Bank Merger
Agreement;
(d) LSB shall have received such opinions
of the General Counsel to BB&T as to matters of
North Carolina, and other counsel as to matters
of federal law, as it shall reasonably request;
(e) All approvals of the transactions
contemplated herein from the Federal Reserve
Board, the FDIC, the State Board and any other
state or federal government agency, department or
body, the approval of which is required for the
consummation of the Merger (but not the Bank
Mergers), shall have been received and all
waiting periods with respect to such approvals
shall have expired; and
(f) LSB shall not have reasonably
determined in good faith that there has been a
material adverse change in the condition,
operations or prospects of BB&T since
December 31, 1992.
5.3 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 Date, unless
waived by BB&T pursuant to Section 6.4 hereof:
(a) The representations and warranties of
LSB set forth in Article II hereof shall be true
and correct in all material respects as of the
date of this Agreement and as of the Effective
Date as though made on and as of the Effective
Date (or on the date when made 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 (which consent may not be
unreasonably withheld);
(b) The parties hereto shall have received
all regulatory approvals required in connection
with the transactions contemplated by this
Reorganization Agreement, all notice periods and
waiting periods required after the granting of
any such approvals shall have passed, and all
such approvals shall be in effect; provided,
however, that no such 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 of the transactions
contemplated by this Agreement as to render
consummation of such transactions inadvisable or
unduly burdensome;
(c) LSB shall have in all material respects
performed all material obligations and complied
with all material covenants required by this
Agreement;
(d) LSB shall have delivered to BB&T a
certificate, dated the Effective Date and signed
by its Chairman or President, to the effect that
the conditions set forth in Sections 5.1(a),
5.1(b), 5.3(a), 5.3(b) and 5.3(c), to the extent
applicable to LSB, have been satisfied and that
there are no actions, suits, claims, governmental
investigations or procedures instituted, pending
or, to the best of his knowledge, threatened that
reasonably may be expected to have a Material
Adverse Effect on LSB 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 such opinions
of counsel as it shall reasonably request;
(f) BB&T shall not have reasonably
determined in good faith that there has been a
material adverse change in the condition,
operations or prospects of LSB, Lexington or
Community since December 31, 1992;
(g) BB&T shall have received the written
agreements from affiliates as specified in
Section 4.12 hereof;
(h) BB&T shall have determined that the
transactions contemplated herein qualify for
accounting treatment as a pooling of interests;
and
(i) Dissenters' rights pursuant to Section
33-13-210 of the SCBCA with respect to the Merger
shall not have been exercised by the holders of
more than 10% of the outstanding LSB common stock.
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
6.1 Termination
This Agreement may be terminated:
(a) at any time on or prior to the
Effective Date, by the mutual consent in writing
of the parties hereto;
(b) at any time on or prior to the
Effective Date, by BB&T in writing if LSB has, or
by LSB in writing if BB&T has, in any material
respect, breached (i) any covenant or undertaking
contained herein, in the Plan of Merger, in the
Option Agreement or the Bank Merger Agreement, or
(ii) any representation or warranty contained
herein, which breach has been materially adverse,
and, in the case of (i) or (ii), if such breach
has not been cured by the earlier of 30 days
after the date on which written notice of such
breach is given to the party committing such
breach or the Effective Date;
(c) on the Effective Date, by either party
hereto in writing, if any of the conditions
precedent to the obligations of such party to
consummate the transactions contemplated hereby
have not been satisfied or fulfilled;
(d) at any time, by either party hereto in
writing, if any of the applications for prior
approval referred to in Section 4.3 hereof are
denied, and the time period for appeals and
requests for reconsideration has run;
(e) at any time, by either party hereto in
writing, if the shareholders of LSB do not
approve the transactions contemplated herein;
(f) by either party hereto in writing, if
the Effective Date has not occurred by the close
of business on January 31, 1995;
(g) at any time, by either party hereto in
writing if the BB&T Average Closing Price is less
than $26.00 or higher than $36.00;
(h) at any time prior to April 30, 1994, by
BB&T in writing, if BB&T determines in its sole
good faith judgment that the financial condition,
business or prospects of LSB are materially
adversely different from what was reasonably
expected by BB&T after the performance of its due
diligence prior to the execution of this
Agreement; provided that BB&T shall inform LSB
upon such termination as to the reasons for
BB&T's determination; and, provided further, that
this Section 6.1(h) shall not limit in any way
the due diligence investigation of LSB which BB&T
may perform or otherwise affect any other rights
which BB&T has after the date hereof and after
April 30, 1994, under the terms of this
Agreement; and
(i) at any time prior to April 30, 1994, by
LSB in writing, if LSB determines in its sole
good faith judgment that the financial condition,
business or prospects of BB&T (as such condition,
business or prospects may affect the market price
of BB&T Common Stock) are materially different
from what was reasonably expected by LSB after
the performance of its due diligence prior to the
execution of this Agreement; provided that LSB
shall inform BB&T upon such determination as to
the reasons for LSB's determination; and
provided, further, that this Section 6.1(i) shall
not limit in any way the due diligence
investigation of BB&T which LSB may perform or
otherwise affect any other rights which LSB has
after the date hereof and after April 30, 1994,
under the terms of this Agreement; and
(j) at any time, by either party hereto in
writing, if such party determines in good faith
that any condition precedent to such party's
obligations to consummate the Merger and/or the
Bank Mergers is or would be impossible to
satisfy, provided that the terminating party has
given the other party notice with respect thereto
at least ten days prior to such termination and
has given the other party a reasonable
opportunity to discuss the matter with a view to
achieving a mutually acceptable resolution.
6.2 Effect of Termination
In the event this Agreement or the Plan of Merger
is terminated pursuant to Section 6.1 hereof, both this
Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof
relating to confidentiality and expenses set forth in
Sections 4.6 and 7.1, respectively, shall survive any
such termination and (ii) a termination pursuant to
Section 6.1(b) hereof shall not relieve the breaching
party from liability for an uncured breach of the
covenant or agreement giving rise to such termination.
6.3 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 Date other than covenants that by their terms
are to be performed after the Effective Date, provided
that no such representations, warranties or covenants
shall be deemed to be terminated or extinguished so as
to deprive BB&T or LSB (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 LSB,
the aforesaid representations, warranties and covenants
being material inducements to consummation by BB&T and
LSB of the transactions contemplated herein.
6.4 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 shareholders of LSB) extend
the time for the performance of any of the obligations
or other acts of the other party hereto and may waive
(i) any inaccuracies of the other party in the
representations or warranties contained in this
Agreement, the Plan of Merger or any document delivered
pursuant hereto or thereto, (ii) compliance with any of
the covenants, undertakings or agreements of the other
party, or satisfaction of any of the conditions
precedent to its obligations, contained herein or in the
Plan of Merger, or (iii) the performance by the other
party of any of its obligations set out herein or
therein; provided that no such waiver or amendment or
supplement pursuant to Section 6.5 hereof executed after
approval of this Agreement and the Plan of Merger by the
shareholders of LSB shall reduce either the number of
shares of BB&T Common Stock into which each share of LSB
Common Stock shall be converted in the Merger or the
payment terms for fractional interests.
6.5 Amendment or Supplement
This Agreement and the Plan of Merger may be
amended or supplemented at any time by mutual agreement
of BB&T and LSB subject to the proviso to Section 6.4
hereof. Any such amendment or supplement must be in
writing and approved by their respective boards of
directors.
ARTICLE VII
MISCELLANEOUS
7.1 Expenses
Each party hereto shall bear and pay all costs
and expenses incurred by it in connection with the
transactions contemplated by this Reorganization
Agreement, including fees and expenses of its own
financial consultants, accountants and counsel, except
that BB&T and LSB shall each bear and pay 50 percent for
the cost of printing the Proxy Statement.
Notwithstanding the foregoing, BB&T shall reimburse LSB
for all reasonable out-of-pocket expenses incurred by
LSB in connection with the transactions contemplated by
this Agreement if this Agreement is terminated;
provided, however, that BB&T's obligation to reimburse
LSB for such expenses shall not apply if LSB materially
breaches any provision of this Agreement, the Plan of
Merger, the Bank Merger Agreement or the Option
Agreement.
7.2 Entire Agreement
This Agreement, the Plan of Merger, the Option
Agreement and the Bank Merger Agreement contain the
entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and
supersedes all prior arrangements or understandings with
respect thereto, written or oral, other than documents
referred to herein or therein. The terms and conditions
of this Agreement, the Plan of Merger, the Option
Agreement and the Bank Merger Agreement shall inure to
the benefit of and be binding upon the parties hereto
and thereto and their respective successors. Nothing in
this Agreement, the Plan of Merger, the Option Agreement
and the Bank Merger 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 other than as set forth in Sections 4.10,
4.13, 4.14 and 4.16 hereof.
7.3 No Assignment
Neither of the parties hereto may assign any of
its rights or obligations under this Reorganization
Agreement to any other person.
7.4 Notices
All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by overnight
express or by registered or certified mail, postage
prepaid, addressed as follows:
If to LSB:
L.S.B. Bancshares, Inc. of South Carolina
309 Columbia Avenue
P.O. Box 8
Lexington, South Carolina 29071
Attention: Raymond S. Caughman
With a required copy to:
Sinkler & Boyd, P.A.
Suite 1200, The Palmetto Center
1426 Main Street
Columbia, South Carolina 29201
Attention: George S. King, Jr.
If to BB&T:
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
Attention: John A. Allison IV
With a required copy to:
Arnold & Porter
1200 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: L. Stevenson Parker
7.5 Captions
The captions contained in this Reorganization
Agreement are for reference purposes only and are not
part of this Agreement.
7.6 Counterparts
This Reorganization 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.
7.7 Governing Law
This Reorganization Agreement shall be governed
by and construed in accordance with the laws of the
State of South Carolina applicable to agreements made
and entirely to be performed within such jurisdiction
except to the extent federal law may be applicable.
IN WITNESS WHEREOF, the parties hereto, intending
to be legally bound hereby, have caused this
Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their
officers thereunto duly authorized, all as of the day
and year first above written.
Attest BB&T FINANCIAL CORPORATION
By
(SEAL)
Attest L.S.B. BANCSHARES, INC.
OF SOUTH CAROLINA
By
(SEAL)
ANNEX A
PLAN OF MERGER OF
L.S.B. BANCSHARES, INC. OF SOUTH
CAROLINA WITH AND INTO BB&T FINANCIAL
CORPORATION OF SOUTH CAROLINA
PLAN OF MERGER ("Plan of Merger") dated as of
December 7, 1993, by and between L.S.B. BANCSHARES, INC.
OF SOUTH CAROLINA ("LSB"), a South Carolina corporation
having its principal office at 309 Columbia Avenue, P.O.
Box 8, Lexington, South Carolina 29071 and BB&T
FINANCIAL CORPORATION OF SOUTH CAROLINA ("BB&T-SC"), a
South Carolina corporation having its principal office
at 416 East North Street, Greenville, South Carolina,
and joined in by BB&T FINANCIAL CORPORATION ("BB&T"), a
North Carolina corporation having its principal office
at 223 West Nash Street, Wilson, North Carolina 27893.
W I T N E S S E T H
WHEREAS, LSB is a bank holding company
incorporated under the laws of South Carolina, the
authorized capital stock of which consists of 5,000,000
shares of common stock, par value $2.50 per share ("LSB
Common Stock") of which, at the date hereof, 2,688,028
shares are issued and outstanding; and
WHEREAS, BB&T-SC is a bank holding company
incorporated under the laws of South Carolina, the
authorized capital stock of which consists of 20,000,000
shares of common stock, par value $2.50 per share,
1,427,188 of which are issued and outstanding at the
date hereof; and
WHEREAS, BB&T is a bank holding company
incorporated under the laws of North Carolina, the
authorized capital stock of which consists of 50,000,000
shares of common stock, par value $2.50 per share ("BB&T
Common Stock"), __________ of which are issued and
outstanding at the date hereof, and 4,000,000 shares of
preferred stock, par value $2.50 per share, none of
which are issued or outstanding; and
WHEREAS, the respective Boards of Directors of
LSB, BB&T-SC and BB&T deem the merger of LSB with and
into BB&T-SC, under and pursuant to the terms and
conditions herein set forth or referred to, desirable
and in the best interests of the respective corporations
and their respective shareholders, and the respective
Boards of Directors of LSB, BB&T-SC and BB&T have
adopted resolutions approving this Plan of Merger and,
in the case of BB&T and LSB, an Agreement and Plan of
Reorganization dated as of December 7, 1993
("Reorganization Agreement"); and
WHEREAS, the Board of Directors of LSB has
directed that this Plan of Merger and the Reorganization
Agreement be submitted to its shareholders for approval;
NOW, THEREFORE, in consideration of the premises
and of the mutual agreements herein contained, the
parties hereto do hereby agree that the Plan of Merger
shall be as follows:
ARTICLE I
MERGER AND NAME OF SURVIVING CORPORATION
Subject to the terms and conditions of this Plan
of Merger, on the Effective Date (as hereinafter
defined), LSB shall be merged with and into BB&T-SC
pursuant to the provisions of, and with the effect
provided in, Chapter 11 of the South Carolina Business
Corporation Act ("SCBCA") (said transaction being
hereinafter referred to as the "Merger"). On the
Effective Date, the separate existence of LSB shall
cease and BB&T-SC, as the surviving corporation, shall
continue unaffected and unimpaired by the Merger
(BB&T-SC as existing on and after the Effective Date
being hereinafter sometimes referred to as the
"Surviving Corporation"). The name of the Surviving
Corporation shall remain "BB&T Financial Corporation of
South Carolina."
ARTICLE II
ARTICLES OF INCORPORATION AND BY-LAWS
The Articles of Incorporation and the By-laws of
BB&T-SC in effect immediately prior to the Effective
Date shall be the Articles of Incorporation and the
By-laws of the Surviving Corporation, in each case until
amended in accordance with applicable law.
ARTICLE III
BOARD OF DIRECTORS
On the Effective Date, the Board of Directors of
the Surviving Corporation shall consist of those persons
serving as directors of BB&T-SC immediately prior to the
Effective Date.
ARTICLE IV
CAPITAL
Each share of capital stock of BB&T-SC issued and
outstanding immediately prior to the Effective Date
shall, on the Effective Date, continue to be issued and
outstanding, and shall be an identical outstanding share
of the Surviving Corporation.
ARTICLE V
CONVERSION AND EXCHANGE OF LSB COMMON STOCK;
FRACTIONAL SHARE INTERESTS
On the Effective Date, except as provided in
paragraphs 5, 8, 9 and 11 of this Article, each share of
LSB Common Stock outstanding immediately prior to the
Effective Date shall by virtue of the Merger be
converted into and exchanged for the following number of
shares of BB&T Common Stock (the "Exchange Ratio"):
(a) in the event that the BB&T Average
Closing Price is equal to or less than $30.50 per
share, that number (rounded to the nearest
ten-thousandth) equal to the Adjustment Factor
divided by $30.50;
(b) in the event that the BB&T Average
Closing Price is greater than $30.50 and equal to
or less than $36.00, that number (rounded to the
nearest ten-thousandth) equal to the Adjustment
Factor divided by the BB&T Average Closing Price;
and
(c) in the event that the BB&T Average
Closing Price is greater than $36.00, that number
(rounded to the nearest ten-thousandth) equal to
the Adjustment Factor divided by 36.00.
In the event that BB&T shall have a record date
between December 7, 1993 and the Effective Date for a
special distribution to stockholders, a stock split,
stock dividend or similar change in capitalization, an
equitable and appropriate adjustment shall be made to
Paragraph 1(a) and 1(c) hereof to reflect the effect of
such distribution or change.
The "BB&T Average Closing Price," as used
herein, shall refer to the average of the reported
closing price of BB&T Common Stock on the
Nasdaq/National Market System on the ten trading days
("Computation Days") ending on the tenth business day
prior to the Effective Date.
The "Adjustment Factor," as used herein,
shall refer to that number equal to 2.25 times the LSB
Book Value Per Share.
The "LSB Book Value Per Share," as used
herein, shall mean LSB's book value per share as of the
last day of the calendar month immediately preceding the
Effective Date, as determined by Donald G. Jones &
Company, P.A., less any gain attributable to such book
value between September 30, 1993 and the Closing Date as
a result of any extraordinary gain (including, but not
limited to, a sale of securities or other assets not in
the ordinary course of business) recognized by LSB or
The Dorn Banking Company.
On the Effective Date, all shares of LSB
Common Stock owned beneficially by LSB or any subsidiary
of LSB other than in a fiduciary capacity or in
connection with a debt previously contracted and all
shares of LSB Common Stock owned by BB&T or owned
beneficially by any subsidiary of BB&T other than in a
fiduciary capacity or in connection with a debt
previously contracted shall be cancelled and no cash,
stock or other property shall be delivered in exchange
therefor.
On and after the Effective Date, each holder
of a certificate or certificates theretofore
representing outstanding shares of LSB Common Stock (any
such certificate being hereinafter referred to as a
"Certificate") may surrender the same to BB&T or its
agent for cancellation and each such holder shall be
entitled upon such surrender to receive in exchange
therefor certificate(s) representing the number of whole
shares of BB&T Common Stock to which such holder is
entitled as provided herein and a check in an amount
equal to the amount of cash, without interest, to which
such holder is entitled for any fraction of share under
paragraph 9 of this Article. Until so surrendered, each
Certificate shall be deemed for all purposes to evidence
ownership of the number of shares of BB&T Common Stock
into which the shares represented by such Certificates
have been changed or converted as aforesaid. No
dividend or other distribution payable with respect to
the shares of BB&T Common Stock shall be paid to an
entitled former shareholder of LSB until such
shareholder surrenders his Certificate or Certificates
representing LSB Common Stock for exchange as provided
in this paragraph 6. Certificates surrendered for
exchange by any person constituting an "affiliate" of
LSB for purposes of Rule 145(c) under the Securities Act
of 1933, as amended, shall not be exchanged for
certificates representing whole shares of BB&T Common
Stock until BB&T has received from such person the
written agreement contemplated by Section 4.12 of the
Reorganization Agreement.
Upon the Effective Date, the stock transfer
books of LSB shall be closed and no transfer of LSB
Common Stock by such holder shall thereafter be made or
recognized.
In the event that prior to the Effective
Date the outstanding shares of LSB Common Stock shall
have been increased (other than upon consummation of the
merger with The Dorn Banking Company or sales through
the LSB Dividend Reinvestment Plan), decreased, or
changed into or exchanged for a different number or kind
of shares or securities by reorganization,
recapitalization, reclassification, stock dividend,
stock split, or other like change in capitalization, all
without BB&T receiving consideration therefor, then an
appropriate and proportionate adjustment shall be made
in the number and kind of shares of BB&T Common Stock to
be thereafter delivered pursuant to this Plan of Merger
and the Reorganization Agreement.
Notwithstanding any other provision hereof,
each holder of shares of LSB Common Stock who would
otherwise have been entitled to receive a fraction of a
share of BB&T Common Stock shall receive, in lieu
thereof, cash in an amount equal to such fractional part
of a share of BB&T Common Stock multiplied by the BB&T
Average Closing Price. No such holder shall be entitled
to dividends, voting rights or any other shareholder
right in respect of any fractional share. All
fractional share interests of each holder shall be
aggregated, and no such holder shall receive a cash
payment equal to, or greater than, the BB&T Average
Closing Price.
Promptly after the Effective Date, shares of
LSB Common Stock held by holders who did not vote in
favor of the Merger and who otherwise perfect
dissenters' rights under Section 33-13-210 and 33-13-230
of the SCBCA shall not be converted into or become
shares of BB&T Common Stock, but such shares of LSB
Common Stock shall represent only the right to receive
the "fair value" of such shares as provided in Section
33-13-250 of the SCBCA. If any such holder shall have
failed to perfect or shall have effectively withdrawn or
lost such dissenters' rights, such shares of LSB Common
Stock shall thereupon be deemed to have been converted
and become the applicable number of shares of BB&T
Common Stock as of the Effective Date without any
interest thereon.
Any other provision in this Plan of Merger
or the Reorganization Agreement notwithstanding, no
party hereto or agent thereof shall be liable to a
holder of LSB Common Stock for any amount paid or
property delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat,
or similar law.
ARTICLE VI
EFFECTIVE DATE OF THE MERGER
Articles of Merger evidencing the transactions
contemplated herein shall be delivered for filing to the
Secretary of State of South Carolina. The Merger shall
be effective at the time and on the date specified in
such Articles of Merger (such date and time being herein
referred to as the "Effective Date").
ARTICLE VII
FURTHER ASSURANCES
If at any time the Surviving Corporation shall
consider or be advised that any further assignments,
conveyances or assurances are necessary or desirable to
vest, perfect or confirm in the Surviving Corporation
title to any property or rights of LSB, or otherwise
carry out the provisions hereof, the proper officers and
directors of LSB, as of the Effective Date, and
thereafter the officers of the Surviving Corporation,
acting on behalf of LSB, shall execute and deliver any
and all property or assignments, conveyances and
assurances, and do all things necessary or desirable to
vest, perfect or confirm title to such property or
rights in the Surviving Corporation and otherwise carry
out the provisions hereof.
ARTICLE VIII
CONDITIONS PRECEDENT
The obligations of BB&T, BB&T-SC and LSB to
effect the Merger as herein provided shall be subject to
satisfaction, unless duly waived, of the conditions set
forth in the Reorganization Agreement.
ARTICLE IX
ABANDONMENT AND TERMINATION
Anything contained in this Plan of Merger to the
contrary notwithstanding, and notwithstanding adoption
hereof by the shareholders of LSB, this Plan of Merger
may be terminated and the Merger abandoned as provided
in the Reorganization Agreement.
ARTICLE X
MISCELLANEOUS
1. This Plan of Merger may be amended or
supplemented at any time by mutual agreement of BB&T,
BB&T-SC and LSB. Any such amendment or supplement must
be in writing and approved by their respective Boards of
Directors and shall be subject to the proviso in
Section 6.5 of the Reorganization Agreement.
2. Any notice or other communication required or
permitted under this Plan of Merger shall be given, and
shall be effective, in accordance with the provisions of
the Reorganization Agreement.
3. The headings of the several Articles herein
are inserted for convenience of reference only and are
not intended to be a part of or to affect the meaning or
interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of
South Carolina applicable to agreements made and
entirely to be performed in such jurisdiction, except to
the extent federal law may be applicable.