Exhibit 2.5
PREFERRED STOCK PURCHASE AGREEMENT
----------------------------------
This Preferred Stock Purchase Agreement is made and entered into as of
this 21st day of April, 1994, by and between BB&T Financial Corporation, a North
Carolina corporation (the "Purchaser") and Commerce Bank, a bank chartered under
the laws of the State of Virginia (the "Bank").
WHEREAS, the Purchaser desires to purchase and the Bank desires to issue
and sell to the Purchaser up to one hundred twenty thousand (120,000) shares of
Non-Cumulative Preferred Stock, Series A, of the Bank, par value $5.00 per
share, having the terms and conditions set forth in Exhibit A hereto (the
"Preferred Stock"), on the terms and subject to the conditions hereinafter set
forth;
WHEREAS, the Board of Directors of the Purchaser has approved this
Agreement and has determined that the arrangements provided for herein are in
the best interests of the Purchaser and its stockholders; and
WHEREAS, the Board of Directors of the Bank has approved this Agreement
and has determined that the arrangements provided for herein are in the best
interests of the Bank and its stockholders;
NOW, THEREFORE, in consideration of the foregoing recitals and the
representations, warranties and covenants herein set forth, and subject to the
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
---------
Definitions
-----------
For purposes of this Agreement, the following expressions shall have the
meanings respectively set forth below:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"Affiliate" of, or any person "affiliated" with, the person or entity
specified, shall mean any corporation, partnership, joint venture, association,
organization or other person or entity that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, the person or entity specified.
"Agreement" shall mean this Preferred Stock Purchase Agreement, made and
entered into on the date first above written by and between the Purchaser and
the Bank.
"Bank Holding Company Act" shall mean the Bank Holding Company Act of
1956, as amended.
"Commitment" shall have the meaning set forth in Section 2.01(b) hereof.
"Common Stock" shall have the meaning set forth in Section 4.01(b)
hereof, or shall mean other securities into which the Preferred Stock shall
become convertible pursuant to the terms of the Preferred Stock.
"Conversion Shares" shall mean the shares of Common Stock issuable upon
conversion of the Preferred Stock.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System, or any successor thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Initial Closing" shall mean the closing of the transaction described in
Section 2.01(a) of this Agreement.
"Initial Closing Date" shall mean the first business day following
satisfaction of the conditions precedent set forth in Articles VII and VIII
hereof, or such other date as may be mutually agreed to by the parties hereto.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation National Market System.
"Preferred Stock" shall have the meaning set forth in the first Whereas
clause hereof.
"Purchase Price" shall mean $100.00 per share of Preferred Stock.
"Purchased Shares" shall mean the shares of Preferred Stock which the
Bank shall sell to the Purchaser pursuant to this Agreement.
"SEC" shall mean the United States Securities and Exchange Commission, or
any successor thereto.
"Shares" shall mean the Purchased Shares and the Conversion Shares,
collectively.
"Subsequent Closing" shall mean a closing of a transaction described in
Section 2.01(b) of this Agreement.
"Subsequent Closing Date" shall mean the date mutually agreed to by the
parties hereto upon which the Subsequent Closing shall occur.
- 2 -
ARTICLE II
----------
Purchase and Sale of Shares
---------------------------
2.01 Purchase of Shares from the Bank.
--------------------------------
(a) Initial Closing. At the Initial Closing, on the terms and
---------------
subject to the conditions set forth herein, the Bank shall issue, sell and
deliver to the Purchaser, and the Purchaser shall purchase for the Purchase
Price and accept from the Bank, 30,000 shares of Preferred Stock. At the Initial
Closing, the Bank shall deliver to the Purchaser a certificate or certificates
registered in the name of the Purchaser and evidencing the number of Purchased
Shares purchased by the Purchaser and shall take all actions necessary to
reflect such issuance and purchase on the Bank's books and records.
(b) Commitment to Purchase and Sell Additional Shares. The
-------------------------------------------------
Purchaser hereby commits to purchase and the Bank hereby commits to issue and
sell to the Purchaser up to an additional 90,000 shares of Preferred Stock (the
"Commitment") at one or more Subsequent Closings, unless the Commitment is
otherwise terminated as provided herein. The Bank's rights under the Commitment
may be exercised by sending written notice to the Purchaser specifying the
number of shares to be purchased, which number may not be less than 10,000
shares on any one occasion. Purchaser shall purchase such shares within 60 days
of receipt of such notice, provided, however, that if within such 60 day period
any required regulatory approval or clearance to purchase such shares has not
been received or any required waiting period following such approval or
clearance has not expired, the Purchaser shall purchase such shares within five
business days following receipt of such approval or clearance or expiration of
such waiting period. The Commitment shall expire at the close of business on the
last day of the calendar quarter in which the Commitment shall commence, but
shall be renewed automatically on such date for an additional calendar quarter
and on a quarterly basis thereafter until December 31, 2000 (so that the last
renewal date shall be September 30, 1999) so long as at all times up to and
including the renewal date, the amount of the Bank's total tangible equity plus
loan loss reserves is not less than seven times the amount of its Non-performing
Assets. For purposes of this Section 2.01(b), the term "Non-performing Assets"
shall mean non-accrual and restructured loans and foreclosed property. The Bank
shall report the amount of its tangible equity plus loan loss reserves and its
Non-performing Assets to the Purchaser as of the end of each month within 10
days after the end of each month. Notwithstanding the foregoing, the Commitment
may be terminated at any time by the Purchaser by written notice to the Bank,
given before or after receipt of notice from the Bank of the exercise of its
rights under the Commitment, (i) upon the
- 3 -
resignation or termination of the employment of G. Robert Aston, Jr. as chief
executive officer of the Bank, (ii) if the amount of the Bank's tangible equity
plus loan loss reserves is less than seven times the amount of its Non-
performing Assets, (iii) upon a material adverse change in the business or
prospects of the Bank, solely as determined by the Purchaser, (iv) upon
occurrence of any event giving rise to a right by the Purchaser to convert the
Preferred Stock pursuant to the terms thereof, (v) if issuance of the number of
shares of Common Stock issuable upon conversion of the number of shares of
Preferred Stock that would be outstanding after giving effect to the issuance of
the number of shares of Preferred Stock specified in the notice by the Bank of
the exercise of its rights under the Commitment would require shareholder
approval under the Bank's charter or bylaws or under applicable law or the rules
for quotation of the Common Stock on NASDAQ or any national securities exchange
on which the Common Stock may be listed, and such shareholder approval has not
been obtained, or (vi) if the Bank is in breach of its covenant to maintain
authorized and unissued shares of Common Stock as set forth in Section 5.07
hereof.
(c) Subsequent Closing. At any Subsequent Closing, on the terms
------------------
and subject to the conditions set forth herein, the Bank shall issue, sell and
deliver to the Purchaser, and the Purchaser shall purchase for the Purchase
Price and accept from the Bank, the number of shares of Preferred Stock
specified in the notice given by the Bank to the Purchaser under Section 2.01(b)
hereof.
At any Subsequent Closing, the Bank shall deliver to the Purchaser
a certificate or certificates registered in the name of the Purchaser and
evidencing the number of Purchased Shares purchased by the Purchaser and shall
take all actions necessary to reflect such issuance and purchase on the Bank's
books and records.
2.02 Purchase Price of Shares.
------------------------
The aggregate Purchase Price to be paid at each of the Initial Closing in
accordance with Section 2.01(a) and the Subsequent Closing in accordance with
Section 2.01(c) shall be payable by the Purchaser by wire transfer to an account
designated in a writing delivered to the Purchaser by the Bank at least two
business days prior to the Initial Closing Date or the Subsequent Closing Date,
as the case may be, or by certified check in immediately available funds drawn
to the order of the Bank if no such writing is timely delivered.
2.03 Closings.
--------
The Initial Closing and any Subsequent Closing shall take place at the
principal executive office of the Purchaser, at
- 4 -
10:00 a.m., on the Initial Closing Date and any Subsequent Closing Date, as the
case may be, or at any other place and time as the parties may agree.
ARTICLE III
-----------
Representations and Warranties
------------------------------
of Purchaser
------------
3.01 The Purchaser represents and warrants to the Bank as follows:
(a) Organization, Authority and Binding Agreement. The Purchaser
---------------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of North Carolina, and has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been effectively authorized on the part of the
Purchaser by all necessary action, corporate or otherwise. This Agreement has
been duly executed and delivered by an authorized officer of the Purchaser and,
assuming due execution and delivery by the Bank, constitutes a legal, valid and
binding obligation of the Purchaser enforceable against it in accordance with
its terms, except as enforcement thereof may be limited by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
at law or in equity) and the effect of applicable bankruptcy, insolvency,
moratorium and other similar laws of general application relating to or
affecting creditors rights generally, including, without limitation, the effect
of statutory or other laws regarding fraudulent conveyances and preferential
transfers.
(b) Agreement Not in Breach of Other Instruments. The execution
--------------------------------------------
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not violate or
result in a breach of any of the terms or provisions of, or constitute a default
under, or conflict with, any material agreement, mortgage, indenture, deed of
trust, lease, loan agreement or other agreement or instrument to which the
Purchaser is a party or by which it is bound, the articles of incorporation or
bylaws or similar documents of the Purchaser, or any judgment, decree, order,
writ, award or injunction of any court, governmental body or arbitrator, or any
law, rule or regulation applicable to the Purchaser.
(c) Consents and Approvals. No consents, approvals or
----------------------
authorizations from any governmental entities or any other person, under any
law, rule, regulation, contract or agreement, are required for the execution,
delivery and performance of this Agreement by the Purchaser or the
- 5 -
consummation by the Purchaser of the transactions contemplated hereby, except as
have been or will have been obtained by the Initial Closing Date.
(d) Investment Representation. The Purchaser is or will be acquiring
-------------------------
the Purchased Shares and the Conversion Shares, as the case may be, from the
Bank for its own account for investment only and not with a view to making a
distribution thereof within the meaning of the 1933 Act. Neither the Purchased
Shares nor the Conversion Shares will be sold or transferred by the Purchaser in
violation of the securities laws of the United States or any state thereof or
other jurisdiction, nor in violation of Article VI of this Agreement. The
Purchaser is aware that as of the date hereof neither the Purchased Shares nor
the Conversion Shares have been registered under the 1933 Act or any state or
other jurisdiction's securities laws, and that the Purchased Shares and the
Conversion Shares must be held indefinitely unless subsequently registered or an
exemption from such registration is available. The Purchaser is aware that it
will not be readily able to liquidate its investment in the Purchased Shares and
the Conversion Shares. The Purchaser is a bona fide resident of the
jurisdiction set forth for its address in Section 10.01 and has no present
intention of changing its jurisdiction of residence. The Purchaser understands
and agrees that the certificate or certificates representing the Purchased
Shares and the Conversion Shares will bear a legend substantially to the effect
set forth in Section 6.03(b) and that a stop transfer order may be placed with
respect thereto. The proposed investment in the Purchased Shares and the
Conversion Shares is a permissible and legal investment for the Purchaser under
any legal investment laws applicable to the Purchaser.
(e) Access; Sophistication; etc.
---------------------------
1. The Purchaser is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated by the SEC under the 1933 Act
and was not formed for the specific purpose of acquiring the Purchased Shares or
the Conversion Shares. The Purchaser has conducted its own independent review of
the Bank and its financial condition and has relied only on such review and the
representations, warranties, terms and conditions of this Agreement.
2. The Purchaser acknowledges that all documents, books and
records requested by it and pertaining to the Bank have been made available to
it for inspection by it and its agents and representatives; that it and its
agents and representatives have had a reasonable opportunity to ask questions
of, and receive answers from, the Bank or officers of the Bank concerning the
terms and conditions of the offering of the Purchased Shares and the business
and prospects of the Bank.
- 6 -
The Purchaser and its respective agents and representatives have such knowledge
and experience in financial and business matters as to enable them to utilize
the information made available to them in connection with the purchases
contemplated hereby, to evaluate the merits and risks of an investment in the
Bank and to make an informed decision with respect thereto and such an
evaluation and informed decision has been made.
(f) No Brokerage Fees. No broker or finder has acted for the
-----------------
Purchaser in connection with this Agreement or the transactions contemplated
hereby and no broker or finder is entitled to any brokerage or finder's fees or
other commission in respect of such transactions based in any way on agreements,
arrangements or understandings made by or on behalf of the Purchaser.
(g) No Misleading Statements, etc. No representation or warranty made
------------------------------
by the Purchaser in any certificate, agreement, schedule or other document
furnished or to be furnished to the Bank or to any federal or state governmental
agency in connection with this Agreement and the transactions contemplated
hereby as of their respective dates contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
required to be stated therein or necessary to make such representation or
warranty or statement not misleading.
ARTICLE IV
----------
Representations and Warranties
------------------------------
of the Bank
-----------
4.01 The Bank represents and warrants to the Purchaser that:
(a) Organization, Good Standing and Authority. The Bank is a bank
-----------------------------------------
duly organized, validly existing and in good standing under the laws of Virginia
and has full corporate power and authority to carry on its business as now
conducted and to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement, the
issuance, transfer, conveyance and sale of the Purchased Shares to the
Purchaser, the issuance, transfer, conveyance and sale of the Conversion Shares
upon conversion of the Preferred Stock, and the consummation of the transactions
contemplated hereby have been effectively authorized on the part of the Bank by
the Board of Directors of the Bank. This Agreement has been duly executed and
delivered by an authorized officer of the Bank and, assuming due execution and
delivery by the Purchaser, constitutes a legal, valid and binding obligation of
the Bank enforceable against it in accordance with its terms, except as
enforcement thereof may be limited by general
- 7 -
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity) and the effect of applicable bankruptcy,
receivership, conservatorship, insolvency, moratorium and other similar laws of
general application relating to or affecting creditors' rights generally,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers.
(b) Capital Stock. The authorized capital stock of the Bank on the
-------------
date hereof consists of (i) 5,000,000 shares of common stock, par value $2.50
per share (the "Common Stock"), of which 2,702,538 shares are issued and
outstanding, and (ii) 1,000,000 shares of preferred stock, par value $5.00 per
share of which no shares are issued and outstanding. All issued and outstanding
shares of Common Stock have been validly authorized and issued and are validly
outstanding, fully paid and nonassessable, and no such outstanding shares were
issued in violation of any preemptive rights, nor do any such shares have a
claim to preemptive rights. No shares of Common Stock are held in the treasury
of the Bank. The Bank has reserved for issuance, as of the date hereof, shares
of Common Stock sufficient at all times for issuance pursuant to the conversion
of the Purchased Shares and no other shares of capital stock have been reserved
for any purpose, except for (i) 262,895 shares of Common Stock in connection
with the Bank's 10% Convertible Subordinated Capital Notes due August 31, 2002
("Convertible Notes"), (ii) 209,637 shares of Common Stock in connection with
the Bank's 1985 Stock Option Plan, (iii) 157,500 shares of Common Stock in
connection with the Bank's 1993 Incentive Stock Plan and (iv) 234,547 shares of
Common Stock in connection with the Bank's Dividend Reinvestment and Stock
Purchase Plan. There are no other outstanding warrants, options, rights, calls
or commitments of any kind relating to, or any presently effective agreements or
understandings with respect to, the capital stock of the Bank, whether issued or
unissued, or securities convertible into capital stock of the Bank, other than
as contemplated by this Agreement. The Bank is not a party to or bound by, any
contract, indenture, agreement or instrument, or any note, debenture, bond or
other security, under the terms of which or pursuant to which, the Bank's right
to declare or pay dividends on the Common Stock or the Preferred Stock or to
redeem the Preferred Stock in accordance with the terms thereof is restricted.
(c) Agreement Not in Breach of Other Instruments. The execution,
--------------------------------------------
delivery and performance of this Agreement, the issuance, transfer, conveyance
and sale of the Purchased Shares to the Purchaser, the issuance, transfer,
conveyance and sale of the Conversion Shares upon conversion of the Preferred
Stock, and the consummation of the transactions contemplated hereby, will not
violate, or result in a breach of, any of the terms or provisions of, or
constitute a default under, or conflict with,
- 8 -
any material agreement, mortgage, indenture, deed of trust, lease, loan
agreement or other agreement or instrument to which the Bank is a party or by
which it is bound, the charter or bylaws or similar documents of the Bank or any
judgment, decree, order, writ, award or injunction of any court, governmental
body or arbitrator, or any law, rule or regulation applicable to the Bank.
(d) Consents and Approvals. The Bank has obtained, or will have
----------------------
obtained by the Initial Closing Date, all consents, approvals or authorizations
from all governmental entities or otherwise, prescribed by any law, rule,
regulation, contract or agreement which may be required for the execution,
delivery and performance of this Agreement by the Bank, the issuance, transfer,
conveyance and sale of the Purchased Shares to the Purchaser, the issuance,
transfer, conveyance and sale of the Conversion Shares upon conversion of the
Preferred Stock, and the consummation by the Bank of the transactions
contemplated hereby. No consent or approval of the Bank's stockholders is
required by law or the Bank's charter or bylaws or similar documents of the Bank
or by the rules for quotation of the Common Stock on NASDAQ for the execution,
delivery and performance by the Bank of this Agreement, including without
limitation the issue and sale of the Purchased Shares and the Conversion Shares,
and the performance of the terms of the Preferred Stock, except that approval of
the Bank's stockholders would be required under the rules for quotation of the
Common Stock on NASDAQ for the issuance of any Conversion Shares (i) if such
issuance would result in a change in control of the Bank, or (ii) in an amount
equal to 20% or more of the Bank's outstanding Common Stock for less than the
greater of book or market value of the Common Stock.
(e) Authorization of Stock. The Purchased Shares have been duly and
----------------------
validly authorized and, when the Purchased Shares are issued and paid for by the
Purchaser as contemplated by this Agreement, the Purchased Shares will be
validly issued and outstanding, fully paid and nonassessable and will not have
been issued in violation of any preemptive rights. Upon consummation of the
purchase contemplated hereby, the Purchaser will acquire from the Bank good and
marketable title to the Purchased Shares, free and clear of all covenants,
conditions, restrictions, voting trust arrangements, liens, charges,
encumbrances, options and adverse claims or rights whatsoever, except those
imposed by the Purchaser; provided, however, that subsequent transfers by the
-------- -------
Purchaser may be subject to compliance with applicable laws and the terms of
this Agreement. The Common Stock to be issued upon conversion of the Preferred
Stock has been duly and validly authorized and, when issued upon conversion of
the Preferred Stock, will be validly issued and outstanding, fully paid and
nonassessable and will not have been issued in violation of any preemptive
rights. Upon the conversion of the Preferred Stock, the Purchaser will acquire
- 9 -
from the Bank good and marketable title to such Common Stock, free and clear of
all covenants, conditions, restrictions, voting trust arrangements, liens,
charges, encumbrances, options and adverse claims or rights whatsoever, except
those imposed by the Purchaser; provided, however, that subsequent transfers by
-------- -------
the Purchaser may be subject to compliance with applicable laws and the terms of
this Agreement.
(f) Corporate Documents. True and correct copies of the charter and
-------------------
bylaws of the Bank, certified by an appropriate officer of the Bank, have been
delivered to the Purchaser and such charter and bylaws have not been amended
since the respective dates of certification thereof, nor have the Board of
Directors or the stockholders of the Bank taken any action for the purpose of
effecting the amendment or modification of such charter or bylaws. The deposit
accounts of the Bank are insured by the FDIC to the maximum extent permitted by
federal law. The Bank has made all filings required to be made by applicable
law with the FDIC and any other federal or state governmental authority, all of
which complied when filed in all material respects with applicable banking laws
and regulations. The Bank has previously delivered to the Purchaser true and
complete copies of all reports, schedules, registration statements and
definitive proxy statements filed by the Bank with the FDIC since December 31,
1987, and all other material reports filed by the Bank with any federal or state
governmental authority since December 31, 1987.
(g) Compliance with Law and Agreements. The Bank is not in default
----------------------------------
under or in violation of any provision of its charter or bylaws or any note,
bond, indenture, mortgage, deed of trust, loan agreement or any other agreement
to which it is a party or by which it is bound or to which any of its properties
or assets is subject, other than such defaults or violations as would not, in
the aggregate, have a material adverse effect on the business, operations,
prospects or financial condition of the Bank, and the Bank is not in violation
of any statute, rule, regulation, order, writ, decree or injunction of any court
or governmental agency or body having jurisdiction over it or any of its
properties which if enforced would have a material adverse effect on the
business, operations, prospects or financial condition of the Bank. Bank has
not received notification from any agency or department of federal, state or
local government (i) asserting a violation of any such statute, regulation, or
order, (ii) threatening to revoke any license, franchise, permit or government
authorization or (iii) restricting or in any way limiting its operations. The
Bank is not subject to any regulatory or supervisory cease and desist order,
agreement, directive, memorandum of understanding or commitment, and has not
received any communication requesting that it enter into any of the foregoing.
- 10 -
(h) Legal Proceedings. There are no legal, administrative,
-----------------
arbitration or other proceedings, claims or actions or governmental
investigations or reviews of any nature with respect to the Bank or to which any
of its assets are subject and, to the best of the Bank's knowledge, there is no
reasonable basis for, and there has not been threatened, any such proceeding,
claim, action or governmental investigation or review with respect to the Bank
(i) which, if adversely determined, would be reasonably likely to, either
individually or in the aggregate, have a material adverse effect, or (ii) which
could have a material adverse effect on the ability of the Bank to consummate
the transactions contemplated hereunder or to issue the Purchased Shares or the
Conversion Shares upon conversion of the Preferred Stock. The Bank is not
subject to any order, judgment or decree which is reasonably likely to have a
material adverse effect.
(i) Financial Statements. The Bank has delivered to the Purchaser
--------------------
audited financial statements for the fiscal years ended December 31, 1991,
December 31, 1992 and December 31, 1993 ("Financial Statements"). Each of the
balance sheets included in the Financial Statements (including any related notes
and schedules) fairly presents the financial position of the Bank as of its date
and each of the statements of income, cash flows and of changes in shareholders'
equity included in the Financial Statements (including any related notes and
schedules) fairly presents the results of operations, cash flows and changes in
shareholders' equity, as the case may be, of the Bank for the period set forth
therein, in each case in accordance with generally accepted accounting
principles consistently applied during the period involved, except as may be
noted therein. Except as set forth in the Financial Statements, the Bank has no
indebtedness, obligation or liability (contingent or otherwise) that, either
alone or when combined with all similar obligations or liabilities, would be
material to the Bank, and there does not exist a set of circumstances that, to
the knowledge of the Bank, could reasonably be expected to result in any such
material indebtedness, obligation or liability. The Bank has not suffered any
material adverse change in its business, financial condition or results of
operations since December 31, 1993.
(j) No Broker. Except for Alex. Brown & Sons Incorporated ("Alex
---------
Brown"), no broker or finder has acted for the Bank in connection with this
Agreement or the transactions contemplated hereby, and no broker or finder is
entitled to any brokerage or finder's fees or other commission in respect of
such transactions based in any way on agreements, arrangements or understandings
made by or on behalf of the Bank. The Bank has fully disclosed to the Purchaser
all financial agreements, arrangements and understandings with Alex Brown.
- 11 -
(k) No Misleading Statements, etc. No representation or warranty
-----------------------------
made by the Bank in or pursuant to this Agreement and no statement by the Bank
in any certificate, agreement, schedule or other document furnished or to be
furnished to the Purchaser or to any federal or state governmental agency in
connection with this Agreement and the transactions contemplated hereby contains
or will contain as of their respective dates any untrue statement of material
fact or omits or will omit to state any material fact required to be stated
therein or necessary to make such representation or warranty or statement not
misleading. No reports or documents, copies of which are referred to herein as
being furnished to the Purchaser pursuant hereto, as of their respective dates
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements contained therein not misleading.
ARTICLE V
---------
Covenants and Undertakings of the Bank
--------------------------------------
5.01 Resolutions of the Bank. The Bank shall promptly furnish to the
-----------------------
Purchaser copies of resolutions dated on or before the date hereof, certified by
its secretary or assistant secretary as having been duly adopted by its Board of
Directors authorizing and approving the execution and delivery of this Agreement
by the Bank and authorizing the officers of the Bank to do all things necessary
to carry out and complete the terms and provisions hereof and thereof. Such
resolutions shall include authorization of the issuance of the Purchased Shares
(having the terms set forth in Exhibit A hereto) and authorization of the
reservation of shares for and issuance of the Common Stock to be issued upon
conversion of the Purchased Shares.
5.02 Assistance. The Bank shall use its best efforts to apply for and
----------
obtain and to assist the Purchaser in applying for and obtaining such approvals
of governmental authorities as may, at any time, be required, in the opinion of
the Purchaser, to be obtained by the Bank or the Purchaser to authorize the
transactions contemplated by this Agreement, including without limitation the
issuance and delivery of the Purchased Shares and the Conversion Shares. The
Bank shall furnish to the Purchaser all information (complying with the
representation and warranty set forth in Section 4.01(k) hereof) concerning the
Bank required for use in any application or statement to be made by the
Purchaser to any governmental body in connection with the transactions
contemplated by this Agreement. In the event of any pending or threatened legal
action or proceeding seeking to challenge the legality or validity of the
transactions contemplated by this Agreement, the Bank shall not provide any
- 12 -
assistance with respect to, and shall vigorously defend, any such legal actions
or proceeding (provided, however, that the foregoing shall not preclude the Bank
-------- -------
from entering into a settlement of or otherwise resolving such legal action or
proceeding if the Bank deems it advisable to do so).
5.03 Financial Statements. The Bank shall maintain its books and
--------------------
records in accordance with generally accepted accounting principles as well as
any regulatory reporting requirements required by the FDIC. The Bank shall
further maintain its books and records in the usual, regular and ordinary
manner. Promptly following the filing thereof, the Bank shall deliver to the
Purchaser copies of all reports filed with the FDIC. Promptly following the
issuance thereof, the Bank shall deliver to the Purchaser copies of all press
releases issued by the Bank.
5.04 Notification of Proceedings. The Bank shall notify the Purchaser
---------------------------
promptly of any proceedings, claims, actions or governmental investigations or
reviews which relate to the transactions contemplated by this Agreement.
5.05 Registration Rights. In the event offers or sales of Common Stock
-------------------
shall become subject to registration or filing requirements under the 1933 Act,
as amended, or similar regulations of any banking or other governmental agency,
the Bank shall enter into a registration rights agreement with the Purchaser,
containing standard terms and conditions, whereby the Bank shall agree to
provide "piggy-back" registration rights upon request by the Purchaser.
5.06 Stock Exchange Listing. The Bank shall use its best efforts to
----------------------
maintain the quotation of the Common Stock on the NASDAQ National Market System.
Effective upon issuance of the Conversion Shares, the Bank shall cause the
Conversion Shares to be approved for quotation on the NASDAQ National Market
System and any national securities exchange on which shares of Common Stock may
at such time be listed.
5.07 Reservation of Shares of Common Stock; Shareholder Approval. The
-----------------------------------------------------------
Bank shall at all times maintain authorized and unissued shares of Common Stock
in an amount equal to two times the maximum number of shares of Common Stock
into which the Preferred Stock would be convertible assuming the Commitment were
exercised in full. If, at the time of a Change in Control Event (as defined in
Exhibit A hereto), shareholder approval of the issuance of Common Stock upon
conversion of the Preferred Stock would be required under applicable law or the
rules for quotation of Common Stock on NASDAQ or of any national securities
exchange on which the Common Stock is listed, the Bank shall seek to obtain the
requisite shareholder approval as promptly as practicable after the occurrence
of such Change in Control Event.
- 13 -
5.08 Issuance of Additional Preferred Stock. Without the prior written
--------------------------------------
consent of the Purchaser, the Bank shall not issue any shares of Preferred Stock
or other preferred stock of the Bank ranking on a parity with the Preferred
Stock except as contemplated by this Agreement or in widely dispersed public
offering or in a private offering in which no person would acquire more than 5%
of the preferred stock sold in such offering.
ARTICLE VI
----------
Covenants and Undertakings of the Purchaser
-------------------------------------------
6.01 Confidentiality. The Purchaser shall keep confidential all
---------------
information and documents furnished to it by or on behalf of the Bank and not
use the same to its competitive advantage (other than as contemplated by this
Agreement or evaluation of any other transaction with the Bank), and shall cause
its Affiliates, agents, representatives, investors and employees to keep
confidential all such information and documents furnished to them by such
Purchaser and not use the same to their advantage (other than as contemplated by
this Agreement), except (i) to the extent such information or documents are or
thereafter become lawfully obtainable from other sources or are in the public
domain through no fault on its or their part, (ii) to the extent such
information or documents are required to be disclosed by the Purchaser pursuant
to an order of a court of competent jurisdiction, provided, however, that the
-------- -------
Bank is provided prompt notice to the extent permitted by law so that it may
seek a protective order or other appropriate remedy, or (iii) as is consented to
in writing by the Bank.
6.02 Transfer of Shares. The Purchaser agrees that it shall not
------------------
transfer, sell or otherwise hypothecate the Purchased Shares, except with the
prior written consent of the Bank. Subsequent to the conversion of the
Purchased Shares into Common Stock, the Purchaser agrees that it shall not
transfer, sell or otherwise hypothecate the Conversion Shares, except in the
open market or in a public or private offering, and shall not sell the
Conversion Shares to a single purchaser without the written consent of the Bank.
6.03 Disposition of Shares.
---------------------
(a) The Purchaser understands and agrees that neither the Purchased
Shares nor the Conversion Shares have been registered under either the 1933 Act
or any applicable state securities laws (the "State Acts") and may not lawfully
be sold or otherwise disposed of for value except upon registration of such
transfer in accordance with the securities registration requirements of the 1933
Act and any applicable State Acts, or pursuant to an exemption from such
registration requirements.
- 14 -
(b) Any certificates evidencing the Purchased Shares and the
Conversion Shares acquired hereby shall be imprinted with a conspicuous legend
in substantially the following form:
The securities represented by this certificate have not been
registered under either the Securities Act of 1933 (the
"Act") or applicable state securities laws (the "State Acts")
and shall not be sold or otherwise disposed of for value by
the holder hereof except upon registration of such sale or
disposition in accordance with the securities registration
requirements of the Act or of any applicable State Acts, or
pursuant to an exemption from such registration requirements.
The securities represented by this certificate were acquired
pursuant to a Preferred Stock Purchase Agreement dated
____________, 1994 between BB&T Financial Corporation and
Bank, which agreement contains provisions restricting the
transferability of such securities. A copy of such agreement
is available at the principal offices of Bank and should be
reviewed carefully before any person seeks to acquire such
securities.
6.04 Notification of Proceedings. The Purchaser shall notify the Bank
---------------------------
promptly of any proceedings, claims, actions or governmental investigations or
reviews which relate to the transactions contemplated by this Agreement.
ARTICLE VII
-----------
Conditions Precedent to Obligations
of the Purchaser
-----------------------------------
7.01 The obligations of the Purchaser under this Agreement to be
performed at the Initial Closing and any Subsequent Closing shall, at the option
of the Purchaser, be subject to the satisfaction, on or prior to such Initial
Closing or Subsequent Closing, as the case may be, of the following conditions:
(a) No Misrepresentation or Breach of Covenants and Warranties.
----------------------------------------------------------
There shall have been no material breach by the Bank in the performance of any
of its covenants and agreements
- 15 -
contained or referred to herein; each of the representations and warranties of
the Bank, shall be true and correct in all material respects as of the Initial
Closing Date and the Subsequent Closing Date, as the case may be, as though made
as of each such date and there shall have been delivered to the Purchaser a
certificate or certificates to the foregoing effect dated as of each such date
and signed by the chief executive officer of the Bank.
(b) Opinion of Counsel for the Bank. The Purchaser shall have
-------------------------------
received from counsel for the Bank an opinion, dated the date of the Initial
Closing or the Subsequent Closing, as the case may be, in form and substance
satisfactory to the Purchaser and its counsel, addressing the matters set forth
in Exhibit B hereto.
(c) No Restraint. No order by a court of competent jurisdiction shall
------------
have been issued which would restrain or prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
(d) Bank Holding Company Act. Purchaser shall have obtained written
------------------------
confirmation (i) from the Federal Reserve that the transactions contemplated
hereunder do not require approval under the Bank Holding Company Act or the
Federal Reserve's regulations, thereunder and that upon consummation of the
transactions contemplated hereunder the Purchaser would not be deemed to control
the Bank for purposes of the Bank Holding Company Act or the Federal Reserve's
regulations thereunder and (ii) from the Virginia State Corporation Commission
that the transactions contemplated hereunder do not require approval under
Chapter 15 of the Code of Virginia.
(e) Regulatory Consents. The Bank shall have received any consents,
-------------------
authorizations, orders and approvals of, and made any filings and registrations
with, any United States or state governmental commission, board or other
regulatory body, required for or in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.
(f) Additional Documents. The Bank shall have delivered such
--------------------
additional documents evidencing satisfaction of the conditions specified in this
Article VII as may be reasonably requested by the Purchaser or its counsel.
(g) Cross Liability. Purchaser shall have obtained either (i) written
---------------
confirmation from the FDIC that the purchase of Preferred Stock pursuant to this
Agreement will not cause the Purchaser or any of its Affiliates to be under
"common control" with the Bank for purposes of Section 1815(e) of the Federal
Deposit Insurance Act or any regulations promulgated thereunder,
- 16 -
or (ii) if such common control exists, a written waiver from the FDIC of any
liability resulting therefrom.
ARTICLE VIII
------------
Conditions Precedent to Obligations
of the Bank
-----------------------------------
8.01 The obligations of the Bank under this Agreement to be performed at
the Initial Closing and any Subsequent Closing, shall, at the option of the
Bank, be subject to the satisfaction, on or prior to such Initial Closing or
Subsequent Closing, as the case may be, of the following conditions:
(a) No Misrepresentation or Breach of Covenants and Warranties. There
----------------------------------------------------------
shall have been no material breach by the Purchaser in the performance of any of
its covenants and agreements contained or referred to herein; each of the
representations and warranties of the Purchaser contained or referred to in this
Agreement shall be true and correct in all material respects as of the Initial
Closing Date and the Subsequent Closing Date, as the case may be, as though made
as of such date and there shall have been delivered to the Bank a certificate or
certificates to such effect, dated as of each such date and signed by the
President or Senior Executive Vice President of the Purchaser.
(b) Opinion of Counsel for the Purchaser. The Bank shall have
------------------------------------
received from counsel for the Purchaser (who may be an employee of the
Purchaser) an opinion, dated the date of the Initial Closing or the Subsequent
Closing, as the case may be, in form and substance satisfactory to the Bank and
its counsel, addressing the matters set forth in Exhibit C hereto.
(c) No Restraint. No order by a court of competent jurisdiction shall
------------
have been issued which would restrain or prohibit or otherwise challenge the
legality or validity of the transactions contemplated hereby.
(d) Regulatory Consents. The Purchaser shall have received any
-------------------
consents, authorizations, orders and approvals of, and made any filings and
registrations with, any United States or state governmental commission, board or
other regulatory body, required for or in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
(e) Additional Documents. The Purchaser shall have delivered such
--------------------
additional documents evidencing satisfaction of the conditions specified in this
Article VIII as may be reasonably requested by the Bank or its counsel.
- 17 -
ARTICLE IX
----------
Termination
-----------
9.01 Mutual Agreement. This Agreement shall terminate on December 31,
----------------
2000, and may be earlier terminated:
(a) at any time by mutual written agreement of the parties;
(b) upon non-renewal or termination of the Commitment as provided
in Section 2.01(b) or Section 5.07 hereof;
(c) at any time by the Purchaser in writing, if the Bank has, or by
the Bank in writing, if the Purchaser has, in any material respect, breached (i)
any covenant or undertaking contained herein or (ii) any representation or
warranty contained herein, and in case of (ii), if such breach has not been
cured 30 days after the date on which written notice of such breach is given to
the party committing such breach;
(d) on the Initial Closing Date or any Subsequent Closing Date, by
any 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; or
(e) by any party hereto in writing, if the Initial Closing Date has
not occurred by the close of business on June 30, 1994.
9.02 Effect of Termination. Upon termination of this Agreement pursuant
---------------------
to this Article IX, each party shall bear its own costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby and
neither party shall have any liability to the other arising out of this
Agreement, provided that nothing set forth in this Section 9.02 shall relieve
any party who has breached its obligations under this Agreement from any
liability arising by virtue of such breach and provided further that the
provisions of Section 6.01 and, so long as the Preferred Stock is outstanding,
Sections 5.05 through 5.08, shall continue in effect notwithstanding any such
termination.
ARTICLE X
---------
Miscellaneous
-------------
10.01 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be
- 18 -
delivered personally, by first-class, certified or registered mail or by Federal
Express or any other reputable overnight courier service, addressed as follows:
If to the Purchaser:
- -------------------
BB&T Financial Corporation
223 West Nash Street
Wilson, North Carolina 27893
Attention: Scott E. Reed
If to the Bank:
- --------------
Commerce Bank
5101 Cleveland Street
Virginia Beach, VA 23462
Attention: G. Robert Aston, Jr.
Either party may change the persons required to receive notices, requests,
demands or other communications hereunder or its or his or her address by
sending a notice of such change to the other party in accordance with the
provisions of this Section 10.01. All notices, requests, demands and other
communications hereunder shall be deemed delivered when received by all persons
entitled to their receipt.
10.02 Assignability and Parties in Interest. This Agreement shall not be
-------------------------------------
assignable by either of the parties hereto without the written consent of the
other party. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns. No
third party shall be entitled to a benefit hereunder nor be entitled to sue in
law or in equity to enforce any part of this Agreement.
10.03 Governing Law. This Agreement shall be governed by, and construed
-------------
and enforced in accordance with, the internal laws, and not the laws pertaining
to choice or conflicts of laws, of the State of Virginia. Each of the parties
hereto irrevocably consents that any legal action or proceeding against it or
any of its property with respect to this Agreement may be brought in any court
of the State of Virginia or any Federal court of the United States of America in
each case located in Virginia, or both, and by the execution and delivery of
this Agreement each party hereto hereby accepts with regard to any such action
or proceeding for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Service of all
complaints and other papers in connection with any such action or proceeding may
be made in
- 19 -
accordance with Section 10.01 hereof and each party agrees that service in such
manner shall be adequate for all such purposes.
10.04 Counterparts. This Agreement may be executed simultaneously in one
------------
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
10.05 Best Efforts. Subject to the terms and conditions herein provided,
------------
each of the parties hereto agrees to use its best efforts and to cooperate with
the other party as promptly as practicable to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations, or otherwise, including without
limitation, filing appropriate applications to obtain all necessary approvals,
consents, waivers and other regulatory approvals, to consummate, as soon as
practicable, the transactions contemplated by this Agreement, and to continue
the prosecution of such applications in good faith.
10.06 Publicity. Except as may be required by law as advised by a
---------
written opinion of counsel, neither party shall issue any press release or make
any other public announcement or comment relating to this Agreement or the
transactions contemplated hereby without the prior consent of the other party,
which consent shall not be unreasonably withheld.
10.07 Complete Agreement. This Agreement and the Exhibits hereto
------------------
delivered pursuant hereto contain the entire agreement between the parties
hereto with respect to the transactions contemplated herein and, except as
provided herein, supersede all previous oral and written and all contemporaneous
oral negotiations, commitments, writings and understandings.
10.08 Amendments and Waivers.
----------------------
(a) This Agreement and all Exhibits hereto may be amended only by a
writing signed by the Bank and the Purchaser.
(b) No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right hereunder or operate to constrain the rights of any other parties
hereunder. No waiver of any one right shall operate as a waiver of any
subsequent right.
10.09 Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.10 Severability. Any provision of this Agreement which is invalid,
------------
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of
- 20 -
such invalidity, illegality or unenforceability, without affecting in any way
the remaining provisions hereof in such jurisdiction or rendering that or any
other provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be signed as of the date first above written.
BB&T FINANCIAL CORPORATION
ATTEST:
/s/ Harllee W. Lyon By:/s/ Scott E. Reed
- -------------------------- ---------------------------
Harllee W. Lyon Scott E. Reed
Assistant Secretary Senior Executive Vice
President and Treasurer
COMMERCE BANK
ATTEST:
/s/ Brenda P. Harper By:/s/ G. Robert Aston, Jr.
- -------------------------- ---------------------------
Brenda P. Harper G. Robert Aston, Jr.
Assistant Corporate President and Chief
Secretary Executive Officer
- 21 -
EXHIBIT A
NONCUMULATIVE
PREFERRED STOCK, SERIES A
I. Designation and Number, Issuance.
--------------------------------
This series is designated the Non-Cumulative Preferred Stock, Series A,
par value $5.00 per share (hereinafter called the "Series A Preferred Stock" or
this "Series") of Commerce Bank (the "Bank"). The number of shares constituting
this Series shall be up to one hundred twenty thousand (120,000). Such number
may be increased or decreased at any time or from time to time in accordance
with law up to the maximum number of shares of Preferred Stock authorized to be
issued under the charter of the Bank, as amended, less all shares at the time
authorized of any other series of preferred stock; provided that no decrease
shall reduce the number of shares of this Series to a number less than that of
the shares then outstanding. Shares of this Series will be dated as of the date
of issue.
II. Preference.
----------
The preferences of each share of Series A Preferred Stock with respect to
dividend payments or distributions upon the voluntary or involuntary
liquidation, dissolution or winding up of the Bank (herein referred to as
"liquidation"), as the case may be, will be in every respect on a parity with
the preferences of every other share of Series A Preferred Stock as to dividend
payments or upon liquidation. The rights of the Series A Preferred Stock will
not be junior to the rights of any other class or series of capital stock of the
Bank as to dividend payments or upon liquidation.
III. Voting Rights.
-------------
Except as otherwise required by law, the holders of shares of Series A
Preferred Stock shall have no voting rights.
IV. Dividends.
---------
4.01. Rights To Receive Dividends. The holders of shares of this Series
---------------------------
shall be entitled to receive, when, as and if declared by the Board of Directors
of the Bank, out of funds legally available therefor, noncumulative dividends in
cash at the rate per annum payable as set forth in this Section IV.
4.02. Noncumulative Dividends and Dividend Rate.
-----------------------------------------
(a) Dividends on the shares of this Series shall be paid in cash and
shall be noncumulative; therefore, if a dividend on the shares of this Series
with respect to any Dividend Period (as defined below) is not declared by the
Board of Directors of the Bank, the Bank shall have no obligation at any time to
pay a dividend on the shares of this Series in respect of such Dividend Period.
(b) The annual dividend rate on each share of this Series shall be the
Liquidation Value (as defined in Section 5.01 hereof) multiplied by a percentage
as follows: (i) from the date of issuance through December 31, 1996, 6.75%; and
(ii) beginning on January 1, 1997 (or, if later, the date of issuance), 275
basis points over the most recently reported interest rate for the three-year
Constant Maturity Treasury Note (as quoted on Telerate page 7052, or a
comparable source if such source is not available) on the last business day
prior to the Dividend Payment Date, but not more than 11.0% (the "Maximum
Dividend Rate") or less than 5.0%. Dividends shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each a
"Dividend Payment Date"). Each period beginning on the later of the date of
issuance or the day next following a Dividend Payment Date and ending on the
next succeeding Dividend Payment Date shall be a "Dividend Period."
(c) No full dividends shall be declared or paid or set apart for payment
on any other preferred stock of the Bank in respect of any dividend period
unless, (i) except with respect to any series of preferred stock that at that
time pays dividends on a periodic basis different from that of the Series A
Preferred Stock, full dividends on all outstanding shares of this Series for the
then-current Dividend Period shall have been paid in full or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment, and (ii) with respect to any series of preferred
stock that at that time pays dividends on a periodic basis different from that
of the Series A Preferred Stock, full dividends on all outstanding shares of
this Series for the immediately preceding Dividend Period have been declared and
paid. Holders of the shares of this Series shall not be entitled to any
dividends, whether payable in cash or stock, in excess of the noncumulative
dividends declared by the Board of Directors as set forth in this Section IV.
(d) Except as provided in Section 4.02(c), if full dividends on all
outstanding shares of this Series at the rate per share set out in this Section
4.02 shall not have been declared and paid or set aside for payment for the
immediately preceding Dividend Period, the Bank shall not, until full dividends
have been declared and paid or set aside for payment
- 2 -
on all outstanding shares of this Series for a subsequent Dividend Period, (i)
declare or pay or set aside for payment any dividends (other than a dividend in
Common Stock or in any other securities ranking junior to this Series as to
dividends and upon liquidation of the Bank) or make any other distribution or
payments on the Common Stock or any other securities of the Bank ranking junior
to shares of this Series with respect to the payment of dividends or upon
liquidation or (ii) make any payment on account of the purchase, redemption or
other retirement of, or pay or make available any monies for a sinking fund for
the redemption of, any shares of Common Stock or such other securities ranking
junior to this Series except by conversion into or exchange for securities of
the Bank ranking junior to this Series as to dividends and upon liquidation.
V. Liquidation Rights.
------------------
5.01. Payment Upon Liquidation. In the event of any liquidation,
------------------------
dissolution or winding up of the Bank, whether voluntary or involuntary, the
holders of outstanding shares of this Series shall be entitled to receive out of
the assets of the Bank, or the proceeds thereof, before any payment or
distribution shall be made on the Common Stock or any other class of capital
stock, upon liquidation, a liquidation distribution in the amount of $100.00
(the "Liquidation Value") per share of this Series plus an amount per share
equal to all accrued and unpaid dividends thereon for the then-current Dividend
Period pro rated based on the number of days elapsed during such Dividend Period
prior to the date of final distribution to such holders (collectively, the
"Liquidation Amount"). After payment of the full amount of such Liquidation
Amount, the holders of this Series shall not be entitled to any further
participation in any distribution of assets of the Bank.
5.02. Insufficient Assets. If, upon any liquidation, dissolution or
-------------------
winding up of the Bank, whether voluntary or involuntary, the assets of the
Bank, or proceeds thereof, distributable among the holders of the shares of this
Series shall be insufficient to pay in full the Liquidation Amount set forth in
Section 5.01 then such assets, or the proceeds thereof, shall be distributed
among the holders of this Series ratably in accordance with the respective
amounts which would be payable on such shares of this Series if all amounts
payable thereon were paid in full.
5.03. Payments on Securities Ranking Junior. In the event of any such
-------------------------------------
liquidation, dissolution or winding up of the Bank, whether voluntary or
involuntary, unless and until payment in full is made to the holders of all
outstanding shares of this Series of the Liquidation Amount pursuant to Section
5.01, no dividend or other distribution or payment shall be made to the holders
of the Common Stock or any other
- 3 -
class of securities ranking upon liquidation junior to the shares of this
Series, and no purchase, redemption or other acquisition for any consideration
by the Bank shall be made in respect of the shares of the Common Stock or such
other class of securities.
5.04. Definition of Liquidation. Neither the consolidation nor merger
-------------------------
of the Bank into or with another bank, bank holding company or corporation, nor
the sale, lease or exchange (for cash, shares of equity stock, securities or
other consideration) of all or substantially all of the property and assets of
the Bank, shall be deemed to be a liquidation, dissolution or winding up of the
Bank within the meaning of this Article V.
VI. Redemption.
----------
6.01. Authorization for Redemption and Redemption Price.
-------------------------------------------------
(a) The Bank may, at its option, redeem the shares of this Series, in
whole but not in part, at any time on or after December 31, 1996 at the
applicable Redemption Price.
(b) The Bank may, at its option, redeem the shares of this Series, in
whole and not in part, at any time on or after a Change in Control Transaction
as defined in Article VIII hereof has been consummated. In addition to the
Redemption Price, upon (i) a redemption of the Series A Preferred Stock on or
after a Change in Control Transaction has been consummated, or (ii) consummation
of a Change in Control Transaction within 12 months following the redemption of
the Series A Preferred Stock pursuant to Section 6.01(a), the holder(s) of the
Series A Preferred Stock at the time of such redemption shall be entitled to be
paid the Special Redemption Premium. Notwithstanding the foregoing, the
holder(s) of the Series A Preferred Stock shall not be entitled to be paid the
Special Redemption Premium pursuant to this Section 6.01(b) during the period
any of the following events or conditions shall remain in effect: (1) a Capital
Shortfall (as defined in Section 7.01(a)); (2) the Bank has become subject to a
formal or informal action, agreement or directive with the Federal Deposit
Insurance Corporation ("FDIC") that includes a requirement for the Bank to raise
additional capital; or (3) the FDIC has determined that payment of the Special
Redemption Premium would limit its ability to take any necessary action to
resolve the Bank as a problem or failing institution.
6.02. Redemption Notice. In the event the Bank shall redeem shares of
-----------------
this Series pursuant to Section 6.01(a) or (b), written notice of such
redemption (a "Notice of Redemption") shall be given by first class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the date
set for redemption ("Redemption Date"), to each
- 4 -
holder of record of the shares to be redeemed, at such holder's address as the
same appears on the stock register of the Bank. Each Notice of Redemption shall
state: (1) the Redemption Date; (2) the Redemption Price, the amount of accrued
and unpaid dividends per share on the shares to be redeemed, and, if applicable,
the Special Redemption Premium; (3) the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Price; and (4)
that dividends on the shares to be redeemed will cease to accrue on such
Redemption Date. No defect in the Notice of Redemption or in the mailing
thereof or publication of its contents shall affect the validity of the
redemption proceedings.
6.03. Redemption Procedures. On or after a Redemption Date, each holder
---------------------
of shares of this Series that were called for redemption shall surrender the
certificate or certificates, if such shares are held at the time of redemption
by such holder, evidencing such shares to the Bank at any place designated for
such surrender in the Notice of Redemption and shall then be entitled to receive
payment of the Redemption Price for each share, all accrued and unpaid dividends
thereon and, if applicable, the Special Redemption Premium.
6.04. Deposit of Redemption Funds. On the Redemption Date specified in
---------------------------
the Notice of Redemption given pursuant to Section 6.02, the Bank shall, and at
any time after the Notice of Redemption shall have been mailed and before such
Redemption Date, the Bank may deposit for the pro rata benefit of the holders of
the shares of this Series so set for redemption the funds necessary for such
redemption with a bank or trust company having a capital and surplus of at least
$500 million. Any money so deposited by the Bank and unclaimed at the end of
two years from the date designated for such redemption shall revert to the
general fund of the Bank. After such reversion, such bank or trust company
shall, upon demand, pay over to the Bank such unclaimed amounts and thereupon
such bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Bank for payment
of the Redemption Price, accrued and unpaid dividends and the Special Redemption
Premium, if applicable. Any interest accrued on funds so deposited pursuant to
this Section 6.04 shall be paid from time to time to the Bank for its own
account.
6.05. Effect of Redemption.
--------------------
(a) If a Notice of Redemption shall have been given, then upon the date
of the deposit referred to in the preceding subsection, all rights of holders of
the shares so set for redemption shall cease, except the right of holders of
such shares to receive the Redemption Price, accrued and unpaid dividends and
the Special Redemption Premium, if applicable,
- 5 -
against delivery of such shares, if such shares are held at the time of
redemption by such holder, but without interest, and such shares shall cease to
be outstanding.
(b) Any shares of this Series which shall at any time have been redeemed
shall, after such redemption, have the status of authorized but unissued shares
of preferred stock of the Bank, without designation as to series until such
shares are once more designated as part of a particular series by the Board of
Directors.
6.06. Special Redemption Premium Payment Procedures. In the event a
---------------------------------------------
Change in Control Transaction is consummated within 12 months following the
redemption of the Series A Preferred Stock pursuant to Section 6.01(a), the Bank
shall, within ten business days following such consummation, pay the Special
Redemption Premium by check mailed to the holder(s) of record of the Series A
Preferred Stock on the Redemption Date, at such holder's address as it appeared
on the stock register of the Bank on such date or such other address as the
holder shall have provided to the Bank.
VII. Conversion.
----------
7.01. Authorization for Conversion.
----------------------------
(a) The holder(s) of the Series A Preferred Stock shall have the right,
at its (their) option, to convert all such shares into shares of Common Stock
within 60 days after the date (the "Report Date") on which the Bank publicly
reports, in a report filed with the FDIC or press release, a leverage ratio, as
defined in FDIC regulations, of less than the greater of (i) 4.75% or (ii) if
the minimum leverage ratio required for the Bank to be deemed adequately
capitalized under FDIC regulations is greater than 4.0%, the minimum leverage
ratio plus 0.75% (a "Capital Shortfall"; a conversion pursuant to this Section
7.01, a "Capital Shortfall Conversion").
(b) The holder(s) of the Series A Preferred Stock shall have the right,
at its (their) option, to convert all such shares into shares of Common Stock if
the Bank elects not to redeem, or is prohibited by applicable law or by the
FDIC, the SCC or other applicable federal or state regulatory authority from
redeeming, the Series A Preferred Stock on or after a Change in Control
Transaction has been consummated (a "Change in Control Conversion").
7.02. Conversion Terms and Conditions. The conversion of the Series A
-------------------------------
Preferred Stock shall be on and subject to the following terms and conditions:
(a) Each share of Series A Preferred Stock shall be convertible at the
principal executive office of the Bank or
- 6 -
at the office of any transfer agent for the Bank's Common Stock, into a number
of fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of Common Stock equal to the Liquidation Value
divided by the Conversion Price.
(b) In order to convert shares of Series A Preferred Stock into Common
Stock the holder thereof shall (i) surrender at any office hereinabove mentioned
the certificate or certificates therefor, duly endorsed as assigned to the Bank
or in blank, and (ii) give written notice to the Bank at such office that he
elects to convert such shares in Common Stock. Such surrender shall be made
within 60 days of the Report Date in the case of a Capital Shortfall Conversion
and within 30 days of the consummation of a Change in Control Transaction in the
case of a Change in Control Conversion (provided that if regulatory approval for
acquisition of the shares of Common Stock upon conversion has been sought by the
holder(s), such period shall be extended to the date 30 days after such approval
is obtained).
(c) No payment or adjustment shall be made upon any conversion on
account of any dividends declared and not yet paid on the shares of Series A
Preferred Stock surrendered for conversion or on account of any dividends on the
Common Stock issued upon conversion; provided, however, that holders of the
-------- -------
Series A Preferred Stock shall be entitled to receive any dividend payable to
holders of record of shares of Common Stock on a date prior to the date of
conversion of their shares of Series A Preferred Stock if such shares are
converted prior to the payment date for such dividend.
(d) Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of the surrender
of such shares for conversion in accordance with the foregoing provisions, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such Common Stock at such time.
(e) As promptly as practicable on or after the conversion date, the Bank
shall issue and shall deliver at such office a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion and cash
in lieu of any fraction of a share, as hereinafter provided, to the person or
persons entitled to receive the same.
(f) The Bank shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of shares of the Series A Preferred Stock,
two times the full number of shares of Common Stock then
- 7 -
deliverable upon the conversion of all shares of the Series A Preferred Stock
then outstanding.
(g) No fractional shares of Common Stock shall be issued upon
conversion, but, instead of any fraction of a share which would otherwise be
issuable, the Bank shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the Conversion Price (as hereinafter
defined) at the close of business on the day of conversion.
(h) In case of any consolidation of the Bank with, or merger of the Bank
or share exchange into, any other person, any merger of another person into the
Bank (other than a merger or share exchange which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), any sale or transfer of all or substantially all of the assets of
the Bank, or any acquisition of 100% of the outstanding Common Stock held by
persons other than constituent persons (as hereinafter defined) or affiliates
thereof or the Bank (a "Merger Transaction"), lawful provision shall be made as
a part of the terms of such Merger Transaction whereby each share of the Series
A Preferred Stock shall convert automatically into a share of preferred stock of
such other person having terms (including redemption, liquidation and conversion
rights) substantially identical to those of this Series and the holder of each
share of such preferred stock shall have the right thereafter to convert such
share into the kind and amount of securities, cash and other property receivable
upon such Merger Transaction by a holder of the number of shares of Common Stock
of the Bank into which a share of the Series A Preferred Stock might have been
converted at the Conversion Price in effect immediately prior to such Merger
Transaction, assuming such holder of Common Stock of the Bank is not a person
with which the Bank consolidated or into which the Bank merged or which merged
into the Bank or exchanged its shares or to which such sale or transfer was
made, as the case may be (a "constituent person"), or an affiliate of a
constituent person; provided, however, that if the kind or amount of securities,
-------- -------
cash and other property receivable upon such Merger Transaction is not the same
for each share of Common Stock held immediately prior to such Merger Transaction
by persons other than a constituent person or an affiliate thereof, then for the
purposes of this Paragraph (h) the kind and amount of securities, cash and other
property receivable upon such Merger Transaction with respect to any share of
Common Stock into which a share of the Series A Preferred Stock may be converted
shall be deemed to be the kind and amount available (upon election or otherwise)
to holders of shares of Common Stock immediately prior to such Merger
Transaction other than a constituent person or an affiliate thereof, with such
election rights and such other rights and on such other terms and conditions as
are applicable to the holders of Common Stock, treating the holders of Series A
- 8 -
Preferred Stock as if they were holders of the number of shares of Common Stock
into which such shares of Series A Preferred Stock are then convertible. The
above provisions of this Paragraph (h) shall similarly apply to successive
Merger Transactions.
(i) The Bank will pay any and all taxes that may be payable in respect of
the issue or delivery of shares of Common Stock on conversion of shares of the
Series A Preferred Stock pursuant hereto. The Bank shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which the shares of the Series A Preferred Stock so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Bank the amount of any such tax, or has
established to the satisfaction of the Bank that such tax has been paid.
VIII. Definitions of Terms.
--------------------
(a) Any securities of the Bank will be deemed to rank:
(1) senior to the shares of this Series, either as to dividends
or upon liquidation, if the holders of such securities will be
entitled to the receipt of dividends payments or of amounts
distributable upon dissolution, liquidation or winding up of the
Bank, as the case may be, in preference or priority to the holders
of shares of this Series;
(2) on a parity with shares of this Series, either as to
dividends or upon liquidation, whether or not the dividends,
dividend dates or redemption or liquidation prices per share or
optional or mandatory redemption provisions, if any, be different
from those of this Series, if the holders of such securities will be
entitled to the receipt of dividends or of amounts distributable
upon dissolution, liquidation or winding up of the Bank, as the case
may be, in proportion to their respective dividend rates or
liquidation prices, without preference or priority, one over the
other, as between the holders of such securities and the holders of
shares of this Series; and
(3) junior to shares of this Series, either as to dividends or
upon
- 9 -
liquidation, if such class shall be common stock or if the holders of
this Series will be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Bank, as the case may be, in preference or priority to the holders of
such securities.
(b) The term "Change in Control Event" means any of the following events
or transactions:
(1) any person (other than BB&T Financial Corporation ("BB&T"), or
any affiliate of BB&T) shall have commenced a bona fide tender or
exchange offer to purchase shares of Common Stock such that upon
consummation of such offer such person would own or control, if such
person is a depository institution or deposition institution holding
company, 25% or more, and in the case of any other person, 50% or
more, of the outstanding shares of Common Stock;
(2) the Bank shall have entered into an agreement with any person
(other than BB&T or any BB&T affiliate), or any person (other than
BB&T or any BB&T affiliate) shall have filed an application or notice
with the FDIC or any other federal or state regulatory agency for
clearance or approval, to (x) merge or consolidate, or enter into any
similar transaction, with the Bank, (y) purchase, lease or otherwise
acquire all or substantially all of the assets of the Bank or (z)
purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing, if such person is a depository institution or
depository institution holding company, 25% or more, and in the case
of any other person, 50% or more, of the voting power of the Bank;
(3) any person (other than BB&T or any BB&T affiliate) shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of, if such person is a depository institution or
depository institution holding company, 25% or more, and in the case
of any other person, 50% or more, of the outstanding
- 10 -
shares of Common Stock (the term "beneficial ownership" for purposes
hereof having the meaning assigned thereto in Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder); or
(4) any person (other than BB&T or any BB&T affiliate) shall have
made a bona fide proposal to the Bank by public announcement or
written communication that is or becomes the subject of public
disclosure to (x) acquire the Bank by merger, consolidation, purchase
of all or substantially all of its assets or any other similar
transaction, (y) purchase or otherwise acquire securities
representing, if such person is a depository institution or
depository institution holding company, 25% or more, and in the case
of any other person, 50% or more, of the voting power of the Bank, or
(z) make an offer described in clause (1) above;
provided, however, that a Change in Control Event shall not include a
reorganization that involves only the acquisition of control of the Bank by a
newly formed company that is formed by the Bank for such purpose.
(c) The term "Change in Control Transaction" shall mean any of the
following transactions shall have been consummated:
(1) a Merger Transaction as defined in Section 7.02(h) hereof; or
(2) any person (other than BB&T or any BB&T affiliate) shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of, if such person is a depository institution or
depository institution holding company, 25% or more, and in the case
of any other person, 50% or more, of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes hereof having the
meaning assigned thereto in Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the regulations promulgated thereunder);
provided, however, that a Change in Control Transaction shall not include a
reorganization that involves only the
- 11 -
acquisition of control of the Bank by a newly formed company that is formed by
the Bank for such purpose.
(d) The term "Common Stock" means the common stock, par value $2.50,
of the Bank.
(e) The term "Conversion Price" means the closing market price per
share of the Common Stock as quoted on NASDAQ on the Initial Closing Date as
defined in the Preferred Stock Purchase Agreement dated April 21, 1994 between
the Bank and BB&T, provided that Conversion Price in effect at any time shall be
subject to adjustment as follows:
(1) In case the Bank shall (i) pay a dividend or make a
distribution on the Common Stock in shares of its capital stock, (ii)
subdivide or reclassify its outstanding Common Stock into a greater
number of securities, or (iii) combine or reclassify its outstanding
Common Stock into a smaller number of securities, the Conversion
Price in effect immediately prior thereto shall be adjusted so that
the holder of any Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of
capital stock of the Bank which such holder would have owned or have
been entitled to receive after the happening of any of the events
described above had such Preferred Stock been converted immediately
prior to the happening of such event. An adjustment made pursuant to
this subsection (1) shall become effective immediately after the
record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification.
(2) In case the Bank shall fix a record date for the issuance of
rights or warrants to all holders of its Common Stock entitling them
(within a 45 calendar-day period expiring after such record date) to
subscribe for or purchase shares of Common Stock or securities
convertible into shares of Common Stock at a price per share (or a
conversion price per share) less than the current market price per
share of Common Stock (as defined in subsection (4) below) at such
record date, the Conversion Price in effect immediately prior thereto
shall be
- 12 -
adjusted so that it shall equal the price determined by multiplying
the Conversion Price in effect immediately prior to such record date
by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of
shares which the aggregate offering price of the total number of
shares so offered (or the aggregate initial conversion price of the
convertible securities so offered) would purchase at such current
market price, and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock offered for subscription
or purchase (or into which the convertible securities so offered are
initially convertible). Such adjustment shall be made successively
whenever such a record date is fixed, and shall become effective
immediately after such record date. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such current market price, and in
determining the aggregate offering price of such shares, there shall
be taken into account any consideration received by the Bank for such
rights or warrants, the value of such consideration, if other than
cash, to be determined by the Board of Directors of the Bank.
(3) In case the Bank shall fix a record date for making a
distribution to all holders of its Common Stock of its obligations,
securities or property (excluding cash dividends or distributions
paid from retained earnings or consolidated net income of the Bank or
referred to in subsection (1) above) or rights or warrants to
subscribe or purchase (excluding those referred to in subsection (2)
above), then in each such case the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be the current market price per
share (as defined in subsection (4) below) of the Common Stock
- 13 -
on such record date less the then fair market value (as determined by
the Board of Directors of the Bank whose determination shall be
conclusive) of the portion of the obligations, securities or property
so distributed or of such rights or warrants applicable to one share
of Common Stock, and the denominator shall be the current market
price per share (as defined in subsection (4) below) of the Common
Stock. Such adjustment shall be made successively whenever such a
record date is fixed and shall become effective immediately after
such record date.
(4) For the purpose of any computation under subsection (2) and (3)
above, the current market price per share of Common Stock at any date
shall be deemed to be the average of the daily closing prices for the
30 consecutive business days commencing 45 business days before the
day in question. The closing price for any day shall be (i) if the
Common Stock is listed or admitted for trading on any national
securities exchange, the last sale price (regular way), or the
average of the closing bid and ask prices if no sale occurred, of
Common Stock on the principal securities exchange on which the Common
Stock is listed, (ii) if not listed as described in (i), the mean
between the closing high bid and low asked quotations of Common Stock
on NASDAQ, or any similar system or automated dissemination of
quotations of securities prices then in common use, if so quoted, or
(iii) if not quoted as described in clause (ii), the mean between the
high bid and low asked quotations for Common Stock as reported by the
National Quotation Bureau Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock
on at least five of the 10 preceding days. If none of the conditions
set forth above is met, the closing price of Common Stock on any day
or the average of such closing prices for any period shall be current
fair market value of Common Stock as determined by the Board of
Directors based upon an independent appraisal.
- 14 -
(5) No adjustment in the Conversion Price will be required unless
such adjustment would require a change of at least 1% in the
Conversion Price then in effect; provided, however, that any
adjustment that would otherwise be required to be made shall be
carried forward and taken into account in determining whether any
subsequent adjustment is required. Except as set forth above, the
Conversion Price will not be adjusted for the issuance of Common
Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, or carrying the right or option to
purchase or otherwise acquire the foregoing, in exchange for cash,
other property or services.
(6) Whenever the Conversion Price is adjusted, as herein provided,
the Bank shall promptly file with any conversion agent an officers'
certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such
adjustment. Promptly after delivery of such certificate, the Bank
shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which
such adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holder of each share of
Preferred Stock at such holder's last address appearing on the
security register of the Bank.
(f) The term "Redemption Price" means:
Prior to
December 31, 1997 - 104% of Liquidation Value
December 31, 1997-
December 30, 1998 - 103% of Liquidation Value
December 31, 1998-
December 30, 1999 - 102% of Liquidation Value
December 31, 1999-
December 30, 2000 - 101% of Liquidation Value
On or after
December 31, 2000 - 100% of Liquidation Value.
- 15 -
(g) The term "Special Redemption Premium" means an amount equal to 10% of
the Liquidation Value of the shares of Series A Preferred Stock redeemed.
- 16 -