AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST CITIZENS CORPORATION
and
BB&T CORPORATION
TABLE OF CONTENTS
-----------------
Page
ARTICLE IDEFINITIONS.........................................................1
ARTICLE IITHE MERGER.........................................................6
2.1 Merger...........................................................6
2.2 Filing; Plan of Merger...........................................7
2.3 Effective Time...................................................7
2.4 Closing..........................................................7
2.5 Effect of Merger.................................................7
2.6 Further Assurances...............................................8
2.7 Merger Consideration.............................................8
2.8 Conversion of Shares; Payment of Merger Consideration............9
2.9 Conversion of Stock Options.....................................10
2.10 No Right to Dissent.............................................11
2.11 Merger of Subsidiaries..........................................11
2.12 Anti-Dilution...................................................11
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF First Citizens.................12
3.1 Capital Structure...............................................12
3.2 Organization, Standing and Authority............................12
3.3 Ownership of Subsidiaries.......................................12
3.4 Organization, Standing and Authority of the Subsidiaries........13
3.5 Authorized and Effective Agreement..............................13
3.6 Securities Filings; Financial Statements; Statements True.......14
3.7 Minute Books....................................................15
3.8 Adverse Change..................................................15
3.9 Absence of Undisclosed Liabilities..............................15
3.10 Properties......................................................15
3.11 Environmental Matters...........................................16
3.12 Loans; Allowance for Loan Losses................................16
3.13 Tax Matters.....................................................17
3.14 Employees; Compensation; Benefit Plans..........................18
3.15 Certain Contracts...............................................21
3.16 Legal Proceedings; Regulatory Approvals.........................22
3.17 Compliance with Laws; Filings...................................22
3.18 Brokers and Finders.............................................23
3.19 Repurchase Agreements; Derivatives..............................23
3.20 Deposit Accounts................................................24
3.21 Related Party Transactions......................................24
3.22 Certain Information.............................................24
3.23 Tax and Regulatory Matters......................................24
3.24 State Takeover Laws.............................................24
3.25 Labor Relations.................................................25
3.26 Fairness Opinion................................................25
ARTICLE IVREPRESENTATIONS AND WARRANTIESOF BB&T.............................25
4.1 Capital Structure of BB&T.......................................25
4.2 Organization, Standing and Authority of BB&T....................25
4.3 Authorized and Effective Agreement..............................26
4.4 Organization, Standing and Authority of BB&T Subsidiaries.......26
4.5 Securities Documents; Statements True...........................27
4.6 Financial Statements............................................27
4.7 Certain Information.............................................27
4.8 Tax and Regulatory Matters......................................27
4.9 Share Ownership.................................................27
ARTICLE VCOVENANTS..........................................................28
5.1 First Citizens Shareholder Meeting..............................28
5.2 Registration Statement; Proxy Statement/Prospectus..............28
5.3 Plan of Merger; Reservation of Shares...........................29
5.4 Additional Acts.................................................29
5.5 Best Efforts....................................................30
5.6 Certain Accounting Matters......................................30
5.7 Access to Information...........................................30
5.8 Press Releases..................................................31
5.9 Forbearances of First Citizens..................................31
5.10 Employment Agreements...........................................33
5.11 Affiliates......................................................34
5.12 Section 401(k) Plan; Other Employee Benefits....................34
5.13 Directors and Officers Protection...............................35
5.14 Forbearances of BB&T............................................35
5.15 Reports.........................................................36
5.16 Exchange Listing................................................36
5.17 Advisory Board for Georgia Market Area..........................36
5.18 Board of Directors of BB&T......................................37
5.19 No Sale of Jefferson Property...................................37
ARTICLE VICONDITIONS PRECEDENT..............................................37
6.1 Conditions Precedent - BB&T and First Citizens..................37
6.2 Conditions Precedent - First Citizens...........................38
6.3 Conditions Precedent - BB&T.....................................39
ARTICLE VIITERMINATION, DEFAULT, WAIVER AND AMENDMENT.......................40
7.1 Termination.....................................................40
7.2 Effect of Termination...........................................43
7.3 Survival of Representations, Warranties and Covenants...........43
7.4 Waiver..........................................................43
7.5 Amendment or Supplement.........................................44
ARTICLE VIIIMISCELLANEOUS...................................................44
8.1 Expenses........................................................44
8.2 Entire Agreement................................................44
8.3 No Assignment...................................................44
8.4 Notices.........................................................44
8.6 Captions........................................................46
8.7 Counterparts....................................................46
8.8 Governing Law...................................................46
ANNEXES
Annex A Articles of Merger
Annex B Employment Agreement with Tom Moat
Annex C Employment Agreement with Charles M.
Barnes
Annex D Employment Agreement with Donald C.
Phillips
Annex E Employment Agreement with Douge Heartha
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
January 26, 1999, is among FIRST CITIZENS CORPORATION (including, with respect
to all periods prior to its inception on August 22, 1996, its predecessor,
Newnan Savings Bank, FSB, "First Citizens"), a Georgia corporation having its
principal office at Newnan, Georgia, and BB&T CORPORATION ("BB&T"), a North
Carolina corporation having its principal office at Winston-Salem, North
Carolina;
R E C I T A L S:
The parties desire that First Citizens shall be merged with and into BB&T
(said transaction being hereinafter referred to as the "Merger") pursuant to a
plan of merger (the "Plan of Merger") substantially in the form attached as
Annex A hereto, and the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby. As a condition and inducement to BB&T's
willingness to enter into the Agreement, First Citizens is concurrently granting
to BB&T an option to acquire, under certain circumstances, 560,483 shares of the
common stock, par value $1.00 per share, of First Citizens.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any Person, who directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with such Person and, without limiting the generality of
the foregoing, includes any executive officer or director of such Person and any
Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be
filed with the office of the Secretary of State of North Carolina, as provided
in Section 55-11-05 of the NCBCA, and with the office of the Secretary of State
of Georgia, as provided in Section 14-2-1105 of the GBCC.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended.
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"BB&T Common Stock" shall mean the shares of voting common stock, par
value $5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Option Agreement" shall mean the Stock Option Agreement dated as of
even date herewith, as amended from time to time, under which BB&T has an option
to purchase shares of First Citizens Common Stock, which shall be executed
immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the First Citizens Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Environmental Claim" means any notice from any governmental authority or
third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from a
violation of the Environmental Laws or the presence or release into the
environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq., and other laws and regulations relating to emissions,
discharges, releases, or threatened releases of any Hazardous Substances, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of any Hazardous Substances.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Morgan Keegan & Company, Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1997, 1996, and 1995, 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,
1997, 1996, and 1995, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1997, and (b) with respect to First Citizens, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of First Citizens as of March 31, 1998, March 31, 1997 and March 31, 1996,
and the related consolidated statements of income and retained earnings, and
cash flows (including related notes and schedules, if any) for each of the three
years ended March 31, 1998, March 31, 1997 and March 31, 1996 as filed by First
Citizens in Securities Documents and (ii) the consolidated statements of
financial condition of First Citizens (including related notes and schedules, if
any) and the related consolidated statements of income and retained earnings,
and cash flows (including related notes and schedules, if any) included in
Securities Documents filed by First Citizens with respect to periods ended
subsequent to March 31, 1998.
"First Citizens Common Stock" shall mean the shares of voting common
stock, par value $1.00 per share, of First Citizens. The First Citizens Common
Stock has no Rights attached, except as provided in Section 3.1.
"First Citizens Disclosure Memorandum" shall mean the written information
in one or more documents, each of which is entitled "First Citizens Disclosure
Memorandum" and dated on or before the date of this Agreement and delivered not
later than ten days following the date of execution of this Agreement by First
Citizens to BB&T, and describing in reasonable detail the matters contained
therein. Each disclosure made therein shall be in existence on the date of this
Agreement and shall specifically reference each Section of this Agreement under
which such disclosure is made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced.
"First Citizens Subsidiaries" shall mean First Citizens Bank, First
Citizens Bank of Fayette County, First Citizens Bank of Clayton County, Citizens
Mortgage Group, Inc., Newnan Financial Services, Inc., Jefferson Ventures, Inc.,
and any and all other Subsidiaries of First Citizens as of the date hereof and
any corporation, bank, savings association, or other organization acquired as a
Subsidiary of First Citizens after the date hereof and held as a Subsidiary by
First Citizens at the Effective Time.
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"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the relevant
date.
"GBCC" shall mean the Georgia Business Corporation Code, as amended.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or regulation,
including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v)
poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste
which are otherwise dangerous, hazardous, harmful to human health or the
environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or First Citizens shall mean an event,
change, or occurrence which, individually or together with any other event,
change or occurrence, (i) has a material adverse effect on the financial
condition, results of operations, business or business prospects of BB&T and the
BB&T Subsidiaries taken as a whole, or First Citizens and the First Citizens
Subsidiaries taken as a whole, or (ii) materially impairs the ability of BB&T or
First Citizens to perform its obligations under this Agreement or to consummate
the Merger and the other transactions contemplated by this Agreement; provided
that "Material Adverse Effect" shall not be deemed to include the impact of (a)
actions and omissions of BB&T or First Citizens taken with the prior written
consent of the other in contemplation of the transactions contemplated hereby
and (b) the direct effects of compliance with this Agreement on the operating
performance of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement or relating to any
litigation arising as a result of the Merger.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders of
First Citizens to solicit their votes in connection with a proposal to approve
this Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed with the Commission
under the Securities Act, with respect to the BB&T Common Stock to be issued in
connection with the transactions contemplated by this Agreement.
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"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests (other than rights
pursuant to the Rights Agreement described under the definition of "BB&T Common
Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939 as amended; and the rules and
regulations of the Commission promulgated thereunder.
"Stock Option" shall mean, collectively, any option granted under the
Stock Option Plans, outstanding and unexercised on the date hereof to acquire
shares of First Citizens Common Stock, aggregating 291,147 shares.
"Stock Option Plans" shall mean First Citizens' Stock Option and Incentive
Plan and First Citizens' Directors' Nonincentive Stock Option Plan.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either owns or controls 50% or
more of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (in determining whether
one entity owns or controls 50% or more of the outstanding equity securities of
another, equity securities owned or controlled in a fiduciary capacity shall be
deemed owned and controlled by the beneficial owner).
"TILA" shall mean the Truth in Lending Act, as amended.
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1.2 Terms Defined Elsewhere
The capitalized terms set forth below are defined in the following
sections:
Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
BB&T Ratio Section 7.1(h)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(b)
Constituent Corporations Section 2.1
Converted Value Section 7.1(h)
Determination Date Section 7.1(h)
Effective Time Section 2.3
Employer Entity Section 5.12(c)
Exchange Ratio Section 2.7(a)
First Citizens Introduction
Index Group Section 7.1(h)
Index Price Section 7.1(h)
Merger Recitals
Merger Consideration Section 2.7
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Starting Date Section 7.1(h)
Surviving Corporation Section 2.1(a)
ARTICLE II
THE MERGER
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2.1 Merger
BB&T and First Citizens are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA. At the Effective
Time:
(a) First Citizens shall be merged with and into BB&T in accordance with
the applicable provisions of the NCBCA and the GBCC, with BB&T being the
surviving corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of First Citizens shall cease and the Merger
shall in all respects have the effect provided in Section 2.5.
7
(c) The Articles of Incorporation of BB&T at the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall become the Bylaws of
the Surviving Corporation.
2.2 Filing; Plan of Merger
The Merger shall not become effective unless this Agreement and the Plan
of Merger are duly approved by shareholders holding at least a majority of the
shares of First Citizens Common Stock. Upon fulfillment or waiver of the
conditions specified in Article VI and provided that this Agreement has not been
terminated pursuant to Article VII, the Constituent Corporations will cause the
Articles of Merger to be executed and filed with the Secretary of State of North
Carolina and the Secretary of State of Georgia, as provided in Section 55-11-05
of the NCBCA and Section 14-2-1105 of the GBCC, respectively. The Plan of Merger
is incorporated herein by reference, and adoption of this Agreement by the
Boards of Directors of the Constituent Corporations and approval by the
shareholders of First Citizens shall constitute adoption and approval of the
Plan of Merger.
2.3 Effective Time
The Merger shall be effective at the day and hour specified in the
Articles of Merger as filed as provided in Section 2.2 (herein sometimes
referred to as the "Effective Time").
2.4 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Womble Carlyle Sandridge & Rice,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions to
Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing), or
such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
From and after the Effective Time, the separate existence of First
Citizens shall cease, and the Surviving Corporation shall thereupon and
thereafter, to the extent consistent with its Articles of Incorporation, possess
all of the rights, privileges, immunities and franchises, of a public as well as
a private nature, of each of the Constituent Corporations; and all property,
real, personal and mixed, and all debts due on whatever account, and all other
choses in action, and each and every other interest of or belonging to or due to
each of the Constituent Corporations shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
8
2.6 Further Assurances
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in law
or any other actions are necessary, desirable or proper to vest, perfect or
confirm of record or otherwise, in the Surviving Corporation, the title to any
property or rights of the Constituent Corporations acquired or to be acquired by
reason of, or as a result of, the Merger, the Constituent Corporations agree
that such Constituent Corporations and their proper officers and directors shall
and will execute and deliver all such proper deeds, assignments and assurances
in law and do all things necessary, desirable or proper to vest, perfect or
confirm title to such property or rights in the Surviving Corporation and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized and
directed in the name of the Constituent Corporations or otherwise to take any
and all such actions.
2.7 Merger Consideration
As used herein, the term "Merger Consideration" shall mean the
number of shares of BB&T Common Stock (to the nearest one-ten thousandth of a
share) to be exchanged for each share of First Citizens Common Stock issued and
outstanding as of the Effective Time and cash (without interest) to be payable
in exchange for any fractional share of BB&T Common Stock which would otherwise
be distributable to a First Citizens shareholder as provided in Section 2.8(d),
determined as follows:
(a) The number of shares of BB&T Common Stock to be issued for each issued
and outstanding share of First Citizens Common Stock shall be in the ratio (the
"Exchange Ratio") of 1.0789 shares of BB&T Common Stock for each share of First
Citizens Common Stock.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the Closing Value. The "Closing Value" shall mean the average closing
price per share of BB&T Common Stock on the NYSE Composite Transaction List (as
reported by The Wall Street Journal - Eastern Edition) for the five trading days
(determined by excluding days on which the NYSE is closed) ending on the tenth
calendar day immediately preceding the Effective Time (the tenth day to be
determined by counting the first calendar day preceding the Effective Time as
the first day).
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of First Citizens or the holders of record of First Citizens Common
Stock, each share of First Citizens Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and shall
represent the right to receive, upon surrender of the certificate representing
such share of First Citizens Common Stock (as provided in subsection (d) below),
the Merger Consideration.
9
(b) Each share of the common stock of BB&T issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of First Citizens Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration. No interest will be paid or accrued
on the Merger Consideration upon the surrender of the certificate or
certificates representing shares of First Citizens Common Stock. With respect to
any certificate for First Citizens Common Stock that has been lost or destroyed,
BB&T shall pay the Merger Consideration attributable to such certificate upon
receipt of a surety bond or other adequate indemnity as required in accordance
with BB&T's standard policy, and evidence reasonably satisfactory to BB&T of
ownership of the shares represented thereby. After the Effective Time, no
transfer of the shares of First Citizens Common Stock outstanding immediately
prior to the Effective Time shall be made on the stock transfer books of the
Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each First Citizens shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of First
Citizens Common Stock. Upon surrender of such certificates or other evidence of
ownership meeting the requirements of Section 2.8(c), together with such letter
of transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, BB&T shall
promptly cause the transfer to the persons entitled thereto of the Merger
Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by First Citizens in respect of shares of First Citizens Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time, subject to compliance by First Citizens with section 5.9(b).
To the extent permitted by law, former shareholders of record of First Citizens
shall be entitled to vote after the Effective Time at any meeting of BB&T
shareholders the number of whole shares of BB&T Common Stock into which their
respective shares of First Citizens Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Citizens Common Stock for certificates representing BB&T Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by BB&T on the BB&T Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares of BB&T Common Stock issuable pursuant to
this Agreement, but no dividend or other distribution payable to the holders of
record of BB&T Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any certificate representing First Citizens
Common Stock until such holder surrenders such certificate for exchange as
provided in this Section 2.8. Upon surrender of such certificate, both the BB&T
Common Stock certificate and any undelivered dividends and cash payments payable
hereunder (without interest) shall be delivered and paid with respect to the
shares of First Citizens Common Stock represented by such certificate.
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2.9 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding (and which
by its terms does not lapse on or before the Effective Time), whether or not
then exercisable, shall be converted into and become rights with respect to BB&T
Common Stock, and BB&T shall assume each Stock Option in accordance with the
terms of the Stock Option Plans, except that from and after the Effective Time
(i) BB&T and its Compensation Committee shall be substituted for First Citizens
and its Board of Directors administering the Stock Option Plans, (ii) each Stock
Option assumed by BB&T may be exercised solely for shares of BB&T Common Stock,
(iii) the number of shares of BB&T Common Stock subject to each such Stock
Option shall be the number of whole shares of BB&T (omitting any fractional
share) determined by multiplying the number of shares of First Citizens Common
Stock subject to such Stock Option immediately prior to the Effective Time by
the Exchange Ratio, and (iv) the per share exercise price under each such Stock
Option shall be adjusted by dividing the per share exercise price under each
such Stock Option by the Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the foregoing, BB&T may at its election substitute as of the
Effective Time options under the BB&T Corporation 1995 Omnibus Stock Incentive
Plan or any other duly adopted comparable plan (in either case, the "BB&T Option
Plan") for all or a part of the Stock Options, subject to the following
conditions: (A) the requirements of (iii) and (iv) above shall be met; (B) such
substitution shall not constitute a modification, extension or renewal of any of
the Stock Options which are incentive stock options; and (C) the substituted
options shall continue in effect on the same terms and conditions as provided in
the Stock Options and the Stock Option Plans granting each Stock Option. Each
grant of a converted or substitute option to any individual who subsequent to
the Merger will be a director or officer of BB&T as construed under Rule 16b-3
shall, as a condition to such conversion or substitution, be approved in
accordance with the provisions of Rule 16b-3. Each Stock Option which is an
incentive stock option shall be adjusted as required by Section 424 of the Code,
and the Regulations promulgated thereunder, so as to continue as an incentive
stock option under Section 424(a) of the Code, and so as not to constitute a
modification, extension, or renewal of the option within the meaning of Section
424(h) of the Code. BB&T and First Citizens agree to take all necessary steps to
effectuate the foregoing provisions of this Section 2.9. As soon as practicable
following the Effective Time, BB&T shall deliver to the participants in the
Stock Option Plans an appropriate notice setting forth such participant's rights
pursuant thereto. BB&T has reserved and shall continue to reserve adequate
shares of BB&T Common Stock for delivery upon exercise of any converted or
substitute options. As soon as practicable after the Effective Time, if it has
not already done so, and to the extent First Citizens shall have a registration
statement in effect or an obligation to file a registration statement, BB&T
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of
BB&T Common Stock subject to converted or substitute options and shall use its
reasonable efforts to maintain the effectiveness of such registration statement
(and maintain the current status of the prospectus or prospectuses contained
therein) for so long as such converted or substitute options remain outstanding.
With respect to those individuals, if any, who subsequent to the Merger may be
subject to the reporting requirements under Section 16(a) of the Exchange Act,
BB&T shall administer the Stock Option Plans assumed pursuant to this Section
2.9 (or the BB&T Option Plan, if applicable) in a manner that complies with Rule
16b-3 promulgated under the Exchange Act to the extent necessary to preserve for
such individuals the benefits of Rule 16b-3 to the extent such benefits were
available to them prior to the Effective Time. First Citizens hereby represents
that the Stock Option Plans in their current forms comply with Rule 16b-3 to the
extent, if any, required as of the date hereof.
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(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
2.10 No Right to Dissent.
Nothing in the Articles of Incorporation or Bylaws, and no resolution of
First Citizens or any First Citizens Subsidiary, provides or would provide to
any person, including without limitation the First Citizens shareholders, upon
execution of this Agreement, the Plan of Merger or the BB&T Option Agreement and
consummation of the transactions contemplated hereby and thereby, rights of
dissent and appraisal of any kind.
2.11 Merger of Subsidiaries
In the event that BB&T shall request, First Citizens shall take such
actions, and shall cause the First Citizens Subsidiaries to take such actions,
as may be required in order to effect, at the Effective Time, the merger of one
or more of the First Citizens Subsidiaries with and into, in each case, one of
the BB&T Subsidiaries or any other Subsidiary of BB&T.
2.12 Anti-Dilution
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend or other similar recapitalization, and the record date thereof (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF First Citizens
Except as Disclosed, First Citizens represents and warrants to BB&T as
follows (the representations and warranties herein of First Citizens are made
subject to the applicable standard set forth in Section 6.3(a), and no such
representation or warranty shall be deemed to be inaccurate unless the
inaccuracy would permit BB&T to refuse to consummate the Merger under such
applicable standard):
3.1 Capital Structure
The authorized capital stock of First Citizens consists of 8,000,000
shares of First Citizens Common Stock, par value $1.00 per share, and 8,000,000
shares of First Citizens Preferred stock, without par value. As of the date
hereof, 2,816,500 shares of First Citizens Common Stock are issued and
outstanding. No other classes of capital stock of First Citizens, common or
preferred, are authorized, issued or outstanding. All outstanding shares of
First Citizens Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable. No shares of capital stock have been reserved for
any purpose, except for (i) shares of First Citizens Common Stock reserved in
connection with the Stock Option Plans, and (ii) 560,483 shares of First
Citizens Common Stock reserved in connection with the BB&T Option Agreement.
First Citizens has granted options to acquire 291,147 shares of First Citizens
Common Stock under the Stock Option Plans, which options remain outstanding as
of the date hereof. Except as set forth in this Section 3.1, there are no Rights
authorized, issued or outstanding with respect to, nor are there any agreements,
understandings or commitments relating to the right of any First Citizens
shareholder to own, to vote or to dispose of, the capital stock of First
Citizens. Holders of First Citizens Common Stock do not have preemptive rights.
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3.2 Organization, Standing and Authority
First Citizens is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, with full corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. First Citizens is not required to be
qualified to do business in any other state of the United States or foreign
jurisdiction.
3.3 Ownership of Subsidiaries
Section 3.3 of the First Citizens Disclosure Memorandum lists all of the
First Citizens Subsidiaries and, with respect to each, its jurisdiction of
organization, jurisdictions in which it is qualified or otherwise licensed to
conduct business, the number of shares or ownership interests owned by First
Citizens (directly or indirectly), the percentage ownership interest so owned by
First Citizens and its business activities. The outstanding shares of capital
stock or other equity interests of the First Citizens Subsidiaries are validly
issued and outstanding, fully paid and nonassessable, and all such shares are
directly or indirectly owned by First Citizens free and clear of all liens,
claims and encumbrances or preemptive rights of any person. No Rights are
authorized, issued or outstanding with respect to the capital stock or other
equity interests of the First Citizens Subsidiaries, and there are no
agreements, understandings or commitments relating to the right of First
Citizens to own, to vote or to dispose of said interests. None of the shares of
capital stock or other equity interests of the First Citizens Subsidiaries have
been issued in violation of the preemptive rights of any person. Section 3.3 of
the First Citizens Disclosure Memorandum also lists all shares of capital stock
or other securities or ownership interests of any corporation, partnership,
joint venture, or other organization (other than the First Citizens
Subsidiaries) owned directly or indirectly by First Citizens.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Citizens Subsidiary which is a depository institution is a
federally chartered savings association or a Georgia chartered bank with its
deposits insured by the FDIC. Each of the First Citizens Subsidiaries is validly
existing and in good standing under the laws of its jurisdiction of
organization. Each of the First Citizens Subsidiaries has full power and
authority to carry on its business as now conducted, and is duly qualified to do
business in each jurisdiction Disclosed with respect to it. No First Citizens
Subsidiary is required to be qualified to do business in any other state of the
United States or foreign jurisdiction, or is engaged in any type of activities
that have not been Disclosed.
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3.5 Authorized and Effective Agreement
(a) First Citizens has all requisite corporate power and authority to
enter into and (subject to receipt of all necessary governmental approvals and
the receipt of approval of the First Citizens shareholders of this Agreement and
the Plan of Merger) to perform all of its obligations under this Agreement, the
Articles of Merger and the BB&T Option Agreement. The execution and delivery of
this Agreement, the Articles of Merger and the BB&T Option Agreement, and
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action, except, in the case of
this Agreement and the Plan of Merger, the approval of the First Citizens
shareholders pursuant to and to the extent required by applicable law. This
Agreement, the Plan of Merger and the BB&T Option Agreement constitute legal,
valid and binding obligations of First Citizens, and each is enforceable against
First Citizens in accordance with its terms, in each such case subject to (i)
bankruptcy, fraudulent transfer, insolvency, moratorium, reorganization,
conservatorship, receivership, or other similar laws from time to time in effect
relating to or affecting the enforcement of the rights of creditors of
FDIC-insured institutions or the enforcement of creditors' rights generally; and
(ii) general principles of equity (whether applied in a court of law or in
equity).
(b) Neither the execution and delivery of this Agreement, the Articles of
Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by First Citizens with any of the
provisions hereof or thereof, shall (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or Bylaws of First Citizens or
any First Citizens Subsidiary, (ii) constitute or result in a breach of any
term, condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property or
asset of First Citizens or any First Citizens Subsidiary pursuant to, any note,
bond, mortgage, indenture, license, permit, contract, agreement or other
instrument or obligation, or (iii) subject to receipt of all required
governmental approvals, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to First Citizens or any First Citizens
Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
First Citizens of the Merger and the other transactions contemplated in this
Agreement.
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3.6 Securities Filings; Financial Statements; Statements True
(a) First Citizens has timely filed all Securities Documents required by
the Securities Laws to be filed since March 31, 1995. First Citizens has
Disclosed or made available to BB&T a true and complete copy of each Securities
Document filed by First Citizens with the Commission after March 31, 1994 and
prior to the date hereof, which are all of the Securities Documents that First
Citizens was required to file during such period. As of their respective dates
of filing, such Securities Documents complied with the Securities Laws as then
in effect, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of First Citizens fairly present or will
fairly present, as the case may be, the consolidated financial position of First
Citizens and the First Citizens Subsidiaries as of the dates indicated and the
consolidated statements of income and retained earnings, changes in
shareholders' equity and statements of cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end audit adjustments that are not material in amount or
effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by First Citizens or any First Citizens Subsidiary to
BB&T contains or will contain any untrue statement of a material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
3.7 Minute Books
The minute books of First Citizens and each of the First Citizens
Subsidiaries contain or will contain at Closing accurate records of all meetings
and other corporate actions of their respective shareholders and Boards of
Directors (including committees of the Board of Directors), and the signatures
contained therein are the true signatures of the persons whose signatures they
purport to be.
3.8 Adverse Change
Since March 31, 1998, First Citizens and the First Citizens Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent, except
as disclosed in the most recent First Citizens Financial Statements, or entered
into any transactions with Affiliates, in each case other than in the ordinary
course of business consistent with past practices, nor has there been any
adverse change or any event involving a prospective adverse change in the
business, financial condition, results of operations or business prospects of
First Citizens or any of the First Citizens Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Citizens and
the First Citizens Subsidiaries are disclosed in the most recent Financial
Statements of First Citizens or were incurred in the ordinary course of its
business since the date of First Citizens' most recent Financial Statements.
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3.10 Properties
(a) First Citizens and the First Citizens Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults
or equitable interests, to all of the properties and assets, real and personal,
tangible and intangible, reflected on the consolidated balance sheet included in
the Financial Statements of First Citizens as of March 31, 1998 or acquired
after such date, except for (i) liens for current taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent, or
(iv) dispositions and encumbrances for adequate consideration in the ordinary
course of business.
(b) All leases and licenses pursuant to which First Citizens or any First
Citizens Subsidiary, as lessee or licensee, leases or licenses rights to real or
personal property are valid and enforceable in accordance with their respective
terms.
3.11 Environmental Matters
(a) First Citizens and the First Citizens Subsidiaries are and at all
times have been in compliance with all Environmental Laws. Neither First
Citizens nor any First Citizens Subsidiary has received any communication
alleging that First Citizens or the First Citizens Subsidiary is not in such
compliance, and there are no present circumstances that would prevent or
interfere with the continuation of such compliance.
(b) There are no pending Environmental Claims, neither First Citizens nor
any First Citizens Subsidiary has received notice of any pending Environmental
Claims, and there are no conditions or facts existing which might reasonably be
expected to result in legal, administrative, arbitral or other proceedings
asserting Environmental Claims or other claims, causes of action or governmental
investigations of any nature seeking to impose, or that could result in the
imposition of, any liability arising under any Environmental Laws upon (i) First
Citizens or any First Citizens Subsidiary, (ii) any person or entity whose
liability for any Environmental Claim First Citizens or any First Citizens
Subsidiary has or may have retained or assumed, either contractually or by
operation of law, (iii) any real or personal property owned or leased by First
Citizens or any First Citizens Subsidiary, or any real or personal property
which First Citizens or any First Citizens Subsidiary has or is judged to have
managed or supervised or participated in the management of, or (iv) any real or
personal property in which First Citizens or any First Citizens Subsidiary holds
a security interest securing a loan recorded on the books of First Citizens or
any First Citizens Subsidiary. Neither First Citizens nor any First Citizens
Subsidiary is subject to any agreement, order, judgment, decree or memorandum by
or with any court, governmental authority, regulatory agency or third party
imposing any liability under any Environmental Laws.
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(c) First Citizens and the First Citizens Subsidiaries are in compliance
with all recommendations contained in any environmental audits, analyses and
surveys received by First Citizens relating to all real and personal property
owned or leased by First Citizens or any First Citizens Subsidiary and all real
and personal property of which First Citizens or any First Citizens Subsidiary
has or is judged to have managed or supervised or participated in the management
of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim, or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Laws, against First Citizens or any First Citizens Subsidiary or against any
person or entity whose liability for any Environmental Claim First Citizens or
any First Citizens Subsidiary has or may have retained or assumed, either
contractually or by operation of law.
3.12 Loans; Allowance for Loan Losses
(a) All of the loans on the books of First Citizens and the First Citizens
Subsidiaries are valid and properly documented, and were made in the ordinary
course of business. Neither the terms of such loans, nor any of the loan
documentation, nor the manner in which such loans have been administered and
serviced, nor First Citizens' procedures and practices of approving or rejecting
loan applications, violates any federal, state or local law, rule, regulation or
ordinance applicable thereto, including, without limitation, the TILA,
Regulations O and Z of the Federal Reserve Board, the CRA, the Equal Credit
Opportunity Act, as amended, and state laws, rules and regulations relating to
consumer protection, installment sales and usury.
(b) The allowances for loan losses reflected on the consolidated balance
sheets included in the Financial Statements of First Citizens are adequate as of
their respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
(a) First Citizens and the First Citizens Subsidiaries and each of their
predecessors have timely filed (or requests for extensions have been timely
filed and any such extensions either are pending or have been granted and have
not expired) all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns, and
withholding and employment tax returns) and have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither First Citizens nor any First Citizens Subsidiary has
or will have any liability for any such taxes in excess of the amounts so paid
or reserves or accruals so established. First Citizens and the First Citizens
Subsidiaries have paid, or where payment is not required to have been made have
set up an adequate reserve or accrual for payment of, all taxes required to be
paid or accrued for the preceding or current fiscal year for which a return is
not yet due.
17
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by First Citizens and the First Citizens Subsidiaries are complete and
accurate. Neither First Citizens nor any First Citizens Subsidiary is delinquent
in the payment of any tax, assessment or governmental charge. No deficiencies
for any tax, assessment or governmental charge have been proposed, asserted or
assessed (tentatively or otherwise) against First Citizens or any First Citizens
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to First Citizens or any First Citizens
Subsidiary to extend the period of limitations for the assessment or collection
of any tax. No audit examination or deficiency or refund litigation with respect
to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither First Citizens nor any of the First Citizens Subsidiaries is a
party to any tax allocation or sharing agreement or has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was First Citizens or a First Citizens
subsidiary) or has any liability for taxes of any person (other than First
Citizens and the First Citizens Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor or by contract or otherwise.
(e) Each of First Citizens and the First Citizens Subsidiaries is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and tax withholding requirements under federal,
state, and local tax laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Code.
(f) Neither First Citizens nor any of the First Citizens Subsidiaries has
made any payments, is obligated to make any payments, or is a party to any
contract that could obligate it to make any payments that would be disallowed as
a deduction under Section 280G or 162(m) of the Code.
3.14 Employees; Compensation; Benefit Plans
(a) Compensation. First Citizens has Disclosed a complete and correct list
of the name, age, position, rate of compensation and any incentive compensation
arrangements, bonuses or commissions or fringe or other benefits, whether
payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of First Citizens and of each First Citizens
Subsidiary and each other person (in each case other than as an employee) to
whom First Citizens or any First Citizens Subsidiary pays or provides, or has an
obligation, agreement (written or unwritten), policy or practice of paying or
providing, retirement, health, welfare or other benefits of any kind or
description whatsoever.
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(b) Employee Benefit Plans.
(i) First Citizens has Disclosed an accurate and complete list of
all Plans, as defined below, contributed to, maintained or sponsored by
First Citizens or any First Citizens Subsidiary, to which First Citizens
or any First Citizens Subsidiary is obligated to contribute or has any
liability or potential liability, whether direct or indirect, including
all Plans contributed to, maintained or sponsored by each member of the
controlled group of corporations, within the meaning of Sections 414(b),
414(c), 414(m) and 414(o) of the Code, of which First Citizens or any
First Citizens Subsidiary is a member. For purposes of this Agreement, the
term "Plan" shall mean a plan, arrangement, agreement or program described
in the foregoing provisions of this Section 3.14(b)(i) and which is: (A) a
profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance, welfare or
incentive plan, agreement or arrangement, whether or not funded and
whether or not terminated, (B) an employment agreement, (C) a personnel
policy or fringe benefit plan, policy, program or arrangement providing
for benefits or perquisites to current or former employees, officers,
directors or agents, whether or not funded, and whether or not terminated,
including, without limitation, benefits relating to automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, severance,
medical, dental, hospitalization, life insurance and other types of
insurance, or (D) any other employee benefit plan as defined in Section
3(3) of ERISA, whether or not funded and whether or not terminated.
(ii) Neither First Citizens nor any First Citizens Subsidiary
contributes to, has an obligation to contribute to or otherwise has any
liability or potential liability with respect to (A) any multiemployer
plan as defined in Section 3(37) of ERISA, (B) any plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the Code
(and regulations promulgated thereunder), or (C) any plan which provides
health, life insurance, accident or other "welfare-type" benefits to
current or future retirees or former employees or directors, their spouses
or dependents, other than in accordance with Section 4980B of the Code or
applicable state continuation coverage law.
(iii) None of the Plans obligates First Citizens or any First
Citizens Subsidiary to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated
by this Agreement or solely as a result of a "change in control," as such
term is used in Section 280G of the Code (and regulations promulgated
thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and
funds, has been maintained, funded and administered in compliance in all
respects with its own terms and in compliance in all respects with all
applicable laws and regulations, including but not limited to ERISA and
the Code. No actions, suits, claims, complaints, charges, proceedings,
hearings, examinations, investigations, audits or demands with respect to
the Plans (other than routine claims for benefits) are pending or
threatened, and there are no facts which could give rise to or be expected
to give rise to any actions, suits, claims, complaints, charges,
proceedings, hearings, examinations, investigations, audits or demands. No
Plan that is subject to the funding requirements of Section 412 of the
Code or Section 302 of ERISA has incurred any "accumulated funding
deficiency" as such term is defined in such Sections of ERISA and the
Code, whether or not waived, and each Plan has always fully met the
funding standards required under Title I of ERISA and Section 412 of the
Code. No liability to the Pension Benefit Guaranty Corporation ("PBGC")
(except for routine payment of premiums) has been or is expected to be
incurred with respect to any Plan that is subject to Title IV of ERISA, no
reportable event (as such term is defined in Section 4043 of ERISA) has
occurred with respect to any such Plan, and the PBGC has not commenced or
threatened the termination of any Plan. None of the assets of First
Citizens or any First Citizens Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code,
neither First Citizens nor any First Citizens Subsidiary has been required
to post any security pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code, and there are no facts which could be expected to
give rise to such lien or such posting of security. No event has occurred
and no condition exists that would subject First Citizens or any First
Citizens Subsidiary to any tax under Sections 4971, 4972, 4976, 4977 or
4979 of the Code or to a fine or penalty under Section 502(c) of ERISA.
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(v) Each Plan that is intended to be qualified under Section 401(a)
of the Code, and each trust (if any) forming a part thereof, has received
a favorable determination letter from the IRS as to the qualification
under the Code of such Plan and the tax exempt status of such related
trust, and nothing has occurred since the date of such determination
letter that could adversely affect the qualification of such Plan or the
tax exempt status of such related trust.
(vi) No underfunded "defined benefit plan" (as such term is defined
in Section 3(35) of ERISA) has been, during the five years preceding the
Closing Date, transferred out of the controlled group of corporations
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code) of
which First Citizens or any First Citizens Subsidiary is a member or was a
member during such five-year period.
(vii) As of the Closing Date, the fair market value of the assets of
each Plan that is a tax qualified defined benefit plan equals or exceeds
the present value of all vested and non-vested liabilities thereunder
determined in accordance with reasonable actuarial methods, factors and
assumptions applicable to a defined benefit plan on an ongoing basis. With
respect to each Plan that is subject to the funding requirements of
Section 412 of the Code and Section 302 of ERISA, all required
contributions for all periods ending prior to or as of the Closing Date
(including periods from the first day of the then-current plan year to the
Closing Date and including all quarterly contributions required in
accordance with Section 412(m) of the Code) shall have been made. With
respect to each other Plan, all required payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to
or as of the Closing Date shall have been made.
(viii) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under
Section 408 of ERISA or Section 4975 of the Code, whether by statutory,
class or individual exemption) has occurred with respect to any Plan which
would result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409
or 502(i) of ERISA. Neither First Citizens nor, to the best knowledge of
First Citizens, any First Citizens Subsidiary, any trustee, administrator
or other fiduciary of any Plan, or any agent of any of the foregoing has
engaged in any transaction or acted or failed to act in a manner that
could subject First Citizens or any First Citizens Subsidiary to any
liability for breach of fiduciary duty under ERISA or any other applicable
law.
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(ix) With respect to each Plan, all reports and information required
to be filed with any government agency or distributed to Plan participants
and their beneficiaries have been duly and timely filed or distributed.
(x) First Citizens and each First Citizens Subsidiary has been and
is presently in compliance with all of the requirements of Section 4980B
of the Code.
(xi) Neither First Citizens nor any First Citizens Subsidiary has a
liability as of March 31, 1998 under any Plan that, to the extent
disclosure is required under GAAP, is not reflected on the consolidated
balance sheet included in the Financial Statements of First Citizens as of
March 31, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) First
Citizens' or any First Citizens Subsidiary's obligation to make
contributions or any other payments to fund benefits accrued under the
Plans as of the date of this Agreement or (B) the benefits accrued or
payable with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting,
accelerated allocation of previously unallocated Plan assets or by the
conversion of all stock options in accordance with Section 2.9 hereof).
(xiii) With respect to each Plan, First Citizens has Disclosed
or made available to BB&T, true, complete and correct copies of (A) all
documents pursuant to which the Plans are maintained, funded and
administered, including summary plan descriptions, (B) the three most
recent annual reports (Form 5500 series) filed with the IRS (with
attachments), (C) the three most recent actuarial reports, if any, (D) the
three most recent financial statements, (E) all governmental filings for
the last three years, including, without limitation, excise tax returns
and reportable events filings, and (F) all governmental rulings,
determinations, and opinions (and pending requests for governmental
rulings, determinations, and opinions) during the past three years.
(xiv) Each of the Plans as applied to First Citizens and any First
Citizens Subsidiary may be amended or terminated at any time by action of
First Citizens' Board of Directors, or such First Citizens' Subsidiary's
Board of Directors, as the case may be, or a committee of such Board of
Directors or duly authorized officer, in each case subject to the terms of
the Plan and compliance with applicable laws and regulations (and limited,
in the case of multiemployer plans, to termination of the participation of
First Citizens or a First Citizens Subsidiary thereunder).
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3.15 Certain Contracts
(a) Neither First Citizens nor any First Citizens Subsidiary is a party
to, is bound or affected by, or receives benefits under (i) any agreement,
arrangement or commitment, written or oral, the default of which would have a
Material Adverse Effect, whether or not made in the ordinary course of business
(other than loans or loan commitments made or certificates or deposits received
in the ordinary course of the banking business), or any agreement restricting
its business activities, including, without limitation, agreements or memoranda
of understanding with regulatory authorities, (ii) any agreement, indenture or
other instrument, written or oral, relating to the borrowing of money by First
Citizens or any First Citizens Subsidiary or the guarantee by First Citizens or
any First Citizens Subsidiary of any such obligation, which cannot be terminated
within less than 30 days after the Closing Date by First Citizens or any First
Citizens Subsidiary (without payment of any penalty or cost, except with respect
to Federal Home Loan Bank or Federal Reserve Bank advances), (iii) any
agreement, arrangement or commitment, written or oral, relating to the
employment of a consultant, independent contractor or agent, or the employment,
election or retention in office of any present or former director or officer,
which cannot be terminated within less than 30 days after the Closing Date by
First Citizens or any First Citizens Subsidiary (without payment of any penalty
or cost), or that provides benefits which are contingent, or the application of
which is altered, upon the occurrence of a transaction involving First Citizens
of the nature contemplated by this Agreement or the BB&T Option Agreement, or
(iv) any agreement or plan, written or oral, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the BB&T Option Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the BB&T Option Agreement. Each
matter Disclosed pursuant to this Section 3.15(a) is in full force and effect as
of the date hereof.
(b) Neither First Citizens nor any First Citizens Subsidiary is in default
under any agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default.
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3.16 Legal Proceedings; Regulatory Approvals
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of First Citizens,
threatened against First Citizens or any First Citizens Subsidiary or against
any asset, interest, plan or right of First Citizens or any First Citizens
Subsidiary, or, to the best knowledge of First Citizens, against any officer,
director or employee of any of them in their capacity as such. There are no
actions, suits or proceedings instituted, pending or, to the best knowledge of
First Citizens, threatened against any present or former director or officer of
First Citizens or any First Citizens Subsidiary that would reasonably be
expected to give rise to a claim against First Citizens or any First Citizens
Subsidiary for indemnification. There are no actual or, to the best knowledge of
First Citizens, threatened actions, suits or proceedings which present a claim
to restrain or prohibit the transactions contemplated herein or in the BB&T
Option Agreement. To the best knowledge of First Citizens, no fact or condition
relating to First Citizens or any First Citizens Subsidiary exists (including,
without limitation, noncompliance with the CRA) that would prevent First
Citizens or BB&T from obtaining all of the federal and state regulatory
approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of First Citizens and each First Citizens Subsidiary is in compliance
with all statutes and regulations (including, but not limited to, the CRA, the
TILA and regulations promulgated thereunder, and other consumer banking laws),
and has obtained and maintained all permits, licenses and registrations
applicable to the conduct of its business, and neither First Citizens nor any
First Citizens Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation, (ii) threatening to revoke any permit, license, registration, or
other government authorization, or (iii) restricting or in any way limiting its
operations. Neither First Citizens nor any First Citizens Subsidiary is subject
to any regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and none of them has received any
communication requesting that it enter into any of the foregoing. Since March
31, 1995, First Citizens and each of the First Citizens Subsidiaries have filed
all reports, registrations, notices and statements, and any amendments thereto,
that it was required to file with federal and state regulatory authorities,
including, without limitation, the OTS, Commission, FDIC, Federal Reserve Board
and applicable state Regulators. Each such report, registration, notice and
statement, and each amendment thereto, complied with applicable legal
requirements.
3.18 Brokers and Finders
Neither First Citizens nor any First Citizens Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, in the Plan of Merger or
in the BB&T Option Agreement, except for an obligation payable at the Closing to
the Financial Advisor, the nature and extent of which has been Disclosed, for
investment banking services, and except for fees to accountants and lawyers.
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3.19 Repurchase Agreements; Derivatives
(a) With respect to all agreements currently outstanding pursuant to which
First Citizens or any First Citizens Subsidiary has purchased securities subject
to an agreement to resell, First Citizens or the First Citizens Subsidiary has a
valid, perfected first lien or security interest in the securities or other
collateral securing such agreement, and the value of such collateral equals or
exceeds the amount of the debt secured thereby. With respect to all agreements
currently outstanding pursuant to which First Citizens or any First Citizens
Subsidiary has sold securities subject to an agreement to repurchase, neither
First Citizens nor the First Citizens Subsidiary has pledged collateral in
excess of the amount of the debt secured thereby. Neither First Citizens nor any
First Citizens Subsidiary has pledged collateral in excess of the amount
required under any interest rate swap or other similar agreement currently
outstanding.
(b) Neither First Citizens nor any First Citizens Subsidiary is a party to
or has agreed to enter into an exchange-traded or over-the-counter swap,
forward, future, option, cap, floor, or collar financial contract, or any other
interest rate or foreign currency protection contract not included on its
balance sheets in the Financial Statements, which is a financial derivative
contract (including various combinations thereof), except for options and
forwards entered into in the ordinary course of its mortgage lending business
consistent with past practice and current policy.
3.20 Deposit Accounts
The deposit accounts of the First Citizens Subsidiaries that are
depository institutions are insured by the FDIC to the maximum extent permitted
by federal law, and the First Citizens Subsidiaries have paid all premiums and
assessments and filed all reports required to have been paid or filed under all
rules and regulations applicable to the FDIC.
3.21 Related Party Transactions
First Citizens has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which First
Citizens or any First Citizens Subsidiary is a party with any director,
executive officer or 5% shareholder of First Citizens or any person,
corporation, or enterprise controlling, controlled by or under common control
with any of the foregoing. All such transactions, investments and loans are on
terms no less favorable to First Citizens than could be obtained from unrelated
parties.
3.22 Certain Information
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of First Citizens to vote on the Plan of Merger, the
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by First Citizens, (i)
shall comply with the applicable provisions of the Securities Laws, and (ii)
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
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3.23 Tax and Regulatory Matters
Neither First Citizens nor any First Citizens Subsidiary has taken or
agreed to take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling- of-interests or not to
constitute a reorganization under Section 368 of the Code or (ii) impede or
delay receipt of any consents of regulatory authorities referred to in Section
5.4(b) or result in failure of the condition in Section 6.3(b).
3.24 State Takeover Laws
First Citizens and each First Citizens Subsidiary have taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable moratorium, fair price, business combination, control share or other
anti-takeover laws.
3.25 Labor Relations
Neither First Citizens nor any First Citizens Subsidiary is the subject of
any claim or allegation that it has committed an unfair labor practice (within
the meaning of the National Labor Relations Act or comparable state law) or
seeking to compel it to bargain with any labor organization as to wages or
conditions of employment, nor is First Citizens or any First Citizens Subsidiary
party to any collective bargaining agreement. There is no strike or other labor
dispute involving First Citizens or any First Citizens Subsidiary, pending or
threatened, or to the best knowledge of First Citizens, is there any activity
involving any employees of First Citizens or any First Citizens Subsidiary
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
3.26 Fairness Opinion
First Citizens has received from the Financial Advisor an opinion that, as
of the date hereof, the Merger Consideration is fair to the shareholders of
First Citizens from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to First Citizens as follows (the
representations and warranties herein of BB&T are made subject to the applicable
standard set forth in Section 6.2(a), and no such representation or warranty
shall be deemed to be inaccurate unless the inaccuracy would permit First
Citizens to refuse to consummate the Merger under such applicable standard):
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4.1 Capital Structure of BB&T
The authorized capital stock of BB&T consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which 2,000,000 shares have been
designated as Series B Junior Participating Preferred Stock and the remainder
are undesignated, and none of which shares are issued and outstanding, and (ii)
500,000,000 shares of BB&T Common Stock of which 290,210,766 shares were issued
and outstanding on December 31, 1998. All outstanding shares of BB&T Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The shares of BB&T Common Stock reserved as provided in Section
5.3 are free of any Rights and have not been reserved for any other purpose, and
such shares are available for issuance as provided pursuant to the Plan of
Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
BB&T is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its assets, and is duly qualified to do business in the states of
the United States where its ownership or leasing of property or the conduct of
its business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
(a) BB&T has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals) perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of BB&T. This Agreement and the Plan of Merger attached hereto constitute
legal, valid and binding obligations of BB&T, and each is enforceable against
BB&T in accordance with its terms, in each case subject to (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship, receivership or other
similar laws in effect from time to time relating to or affecting the
enforcement of the rights of creditors; and (ii) general principles of equity.
(b) Neither the execution and delivery of this Agreement or the Articles
of Merger, nor consummation of the transactions contemplated hereby, nor
compliance by BB&T with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of BB&T or any BB&T Subsidiary, (ii) constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of BB&T or any BB&T Subsidiary pursuant
to, any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to BB&T or any BB&T Subsidiary.
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(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
BB&T of the Merger and the other transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
Each of the BB&T Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. BB&T owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of the BB&T
Subsidiaries. Each of the BB&T Subsidiaries (i) has full power and authority to
carry on its business as now conducted and (ii) is duly qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification.
4.5 Securities Documents; Statements True
BB&T has timely filed all Securities Documents required by the Securities
Laws to be filed since December 31, 1995. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No statement, certificate, instrument or other writing furnished
or to be furnished hereunder by BB&T or any other BB&T Subsidiary to First
Citizens contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
4.6 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 (subject, in the case of unaudited interim statements, to the
absence of any notes and to normal year-end audit adjustments that are not
material in amount or effect) in conformity with GAAP consistently applied.
4.7 Certain Information
When the Proxy Statement/Prospectus is mailed, and at all times subsequent
to such mailing up to and including the time of the meeting of shareholders of
First Citizens to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
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4.8 Tax and Regulatory Matters
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger not
to be accounted for as a pooling-of-interests or not to constitute a
reorganization under Section 368 of the Code, or (ii) materially impede or delay
receipt of any consents of regulatory authorities referred to in Section 5.4(b)
or result in failure of the condition in Section 6.3(b).
4.9 Share Ownership
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of First Citizens Common Stock.
4.10 Legal Proceedings; Regulatory Approvals
There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings instituted, which present a claim to restrain or prohibit
the transactions contemplated herein. To the best knowledge of BB&T, no fact or
condition relating to BB&T or any BB&T Subsidiary exists (including, without
limitation, noncompliance with the CRA) that would prevent BB&T or First
Citizens from obtaining all of the federal and state regulatory approvals
contemplated herein.
ARTICLE V
COVENANTS
5.1 First Citizens Shareholder Meeting
First Citizens shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and by
approving execution of this Agreement, the Board of Directors of First Citizens
agrees that it shall, at the time the Proxy Statement/Prospectus is mailed to
the shareholders of First Citizens, recommend that First Citizens' shareholders
vote for such approval; provided, that the Board of Directors of First Citizens
may withdraw or refuse to make such recommendation only if the Board of
Directors shall determine in good faith that such recommendation should not be
made in light of its fiduciary duty to First Citizens' shareholders after
consideration of (i) written advice of legal counsel that, in the opinion of
such counsel, such recommendation or the failure to withdraw or modify such
recommendation would more likely than not constitute a breach of the fiduciary
duty of the Board of Directors to the shareholders of First Citizens, and (ii)
either (A) the written withdrawal by the Financial Advisor of its opinion
referred to in Section 3.26 or (B) the delivery to the Board of Directors of
written advice from the Financial Advisor that the Merger Consideration is
either not fair or inadequate to the First Citizens shareholders from a
financial point of view.
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5.2 Registration Statement; Proxy Statement/Prospectus
As promptly as practicable after the date hereof, BB&T shall prepare and
file the Registration Statement with the Commission. First Citizens will furnish
to BB&T the information required to be included in the Registration Statement
with respect to its business and affairs before it is filed with the Commission
and again before any amendments are filed, and shall have the right to review
and consult with BB&T on the form of, and any characterizations of such
information included in, the Registration Statement prior to the filing with the
Commission. Such Registration Statement, at the time it becomes effective and on
the Effective Time, shall in all material respects conform to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission. The Registration Statement shall include the form of Proxy
Statement/Prospectus. BB&T and First Citizens shall use their reasonable best
efforts to cause the Proxy Statement/Prospectus to be approved by the Commission
for mailing to the First Citizens shareholders, and such Proxy
Statement/Prospectus shall, on the date of mailing, conform in all material
respects to the requirements of the Securities Laws and the applicable rules and
regulations of the Commission thereunder. First Citizens shall cause the Proxy
Statement/Prospectus to be mailed to shareholders in accordance with all
applicable notice requirements under the Securities Laws and the GBCC.
5.3 Plan of Merger; Reservation of Shares
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T undertakes and agrees (i) to adopt
the Plan of Merger and (ii) to pay or cause to be paid when due the Merger
Consideration. BB&T has reserved for issuance such number of shares of BB&T
Common Stock as shall be necessary to pay the Merger Consideration and agrees
not to take any action that would cause the aggregate number of authorized
shares of BB&T Common Stock available for issuance hereunder not to be
sufficient to effect the Merger. If at any time the aggregate number of shares
of BB&T Common Stock reserved for issuance hereunder is not sufficient to effect
the Merger, BB&T shall take all appropriate action as may be required to
increase the number of shares of BB&T Common Stock reserved for such purpose.
5.4 Additional Acts
(a) First Citizens agrees to take such actions requested by BB&T as may be
reasonably necessary to modify the structure of, or to substitute parties to (so
long as such substitute is BB&T, a BB&T Subsidiary or any other Subsidiary of
BB&T) the transactions contemplated hereby, provided that such modifications do
not change the Merger Consideration or abrogate the covenants and other
agreements contained in this Agreement, including, without limitation, the
covenant not to take any action that would substantially delay or impair the
prospects of completing the Merger pursuant to this Agreement and the Plan of
Merger.
(b) As promptly as practicable after the date hereof, BB&T and First
Citizens shall submit notice or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board and any other
federal, state or local government agency, department or body to which notice is
required or advisable, including without limitation the OTS, or from which
approval is required for consummation of the Merger and the other transactions
contemplated hereby. First Citizens and BB&T each represents and warrants to the
other that all information included (or submitted for inclusion) concerning it,
its respective Subsidiaries, and any of its respective directors, officers and
shareholders, shall be true, correct and complete in all material respects as of
the date presented.
29
(c) BB&T agrees that its Board of Directors or authorized Board committee
shall approve prior to the Effective Time each grant of a converted option (as
described in Section 2.9(a)) to any individual who, subsequent to consummation
of the Merger, will be a director or officer of BB&T under Rule 16b-3 of the
Exchange Act.
5.5 Best Efforts
Each of BB&T and First Citizens shall use, and shall cause each of their
respective Subsidiaries to use, its best efforts in good faith to (i) furnish
such information as may be required in connection with and otherwise cooperate
in the preparation and filing of the documents referred to in Sections 5.2 and
5.4 or elsewhere herein, and (ii) take or cause to be taken all action necessary
or desirable on its part to fulfill the conditions in Article VI, including,
without limitation, executing and delivering, or causing to be executed and
delivered, such representations, certificates and other instruments or documents
as may be reasonably requested by BB&T's legal counsel for such counsel to issue
the opinion contemplated by Section 6.1(e), and to consummate the transactions
herein contemplated at the earliest possible date. Neither BB&T nor First
Citizens shall take, or cause, or to the best of its ability permit to be taken,
any action that would substantially delay or impair the prospects of completing
the Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
First Citizens shall cooperate with BB&T concerning accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with record keeping, loan
classification, valuation adjustments, levels of loan loss reserves and other
accounting practices; provided, that any action taken pursuant to this Section
5.6 shall not be deemed to constitute or result in the breach of any
representation or warranty of First Citizens contained in this Agreement.
5.7 Access to Information
First Citizens and BB&T will each keep the other advised of all material
developments relevant to its business and the businesses of its Subsidiaries,
and to consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
First Citizens shall afford to representatives of BB&T access, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments and records of First Citizens and the
First Citizens Subsidiaries and, during such period, shall make available all
information concerning their businesses as may be reasonably requested. No
investigation pursuant to this Section 5.7 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations
hereunder of, either party hereto. Each party hereto shall, and shall cause each
of its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information previously
furnished in connection with the transactions contemplated by this Agreement.
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5.8 Press Releases
BB&T and First Citizens shall agree with each other as to the form and
substance of any press release related to this Agreement and the Plan of Merger
or the transactions contemplated hereby and thereby, and consult with each other
as to the form and substance of other public disclosures related thereto;
provided, that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the opinion
of its counsel is required by law.
5.9 Forbearances of First Citizens
Except with the prior written consent of BB&T, between the date hereof and
the Effective Time, First Citizens shall not, and shall cause each of the First
Citizens Subsidiaries not to:
(a) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted,
or establish or acquire any new Subsidiary or engage in any new type of
activity or expand any existing activities;
(b) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock, other than regularly
scheduled quarterly dividends of $0.10 per share of First Citizens Common
Stock payable on record dates and in amounts consistent with past
practices; provided that any dividend declared or payable on the shares of
First Citizens Common Stock for the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
BB&T and First Citizens, be declared with a record date prior to the
Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of BB&T Common Stock is before
the Effective Time;
(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plans or the BB&T Option
Agreement;
(d) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or encumbrance
on any share of stock held by it in any First Citizens Subsidiary, or
permit any such lien, charge or encumbrance to exist; or waive or release
any material right or cancel or compromise any debt or claim, in each case
other than in the ordinary course of business;
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(g) merge with any other entity or permit any other entity to merge
into it, or consolidate with any other entity; acquire control over any
other entity; or liquidate, sell or otherwise dispose of any assets or
acquire any assets other than in the ordinary course of its business
consistent with past practices;
(h) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(i) increase the rate of compensation of any of its directors,
officers or employees (excluding increases in compensation resulting from
the exercise of compensatory stock options outstanding as of the date of
this Agreement), or pay or agree to pay any bonus to, or provide any new
employee benefit or incentive to, any of its directors, officers or
employees, except for increases or payments made in the ordinary course of
business consistent with past practice pursuant to plans or arrangements
in effect on the date hereof;
(j) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
other employees; provided, however, that this subparagraph shall not
prevent renewal of any of the foregoing consistent with past practice;
(k) solicit or encourage inquiries or proposals with respect to,
furnish any information relating to, or participate in any negotiations or
discussions concerning, any acquisition or purchase of all or a
substantial portion of the assets of, or a substantial equity interest in,
First Citizens or any First Citizens Subsidiary or any business
combination with First Citizens or any First Citizens Subsidiary other
than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of First Citizens or any First Citizens
Subsidiary to do any of the above; or fail to notify BB&T immediately if
any such inquiries or proposals are received, any such information is
requested or required, or any such negotiations or discussions are sought
to be initiated; provided, that this subsection (k) shall not apply to
furnishing information, negotiations or discussions following an
unsolicited offer if, as a result of such offer, First Citizens is advised
in writing by legal counsel that in its opinion the failure to so furnish
information or negotiate would likely constitute a breach of the fiduciary
duty of First Citizens' Board of Directors to the First Citizens
shareholders;
(l) enter into (i) any material agreement, arrangement or commitment
not made in the ordinary course of business, (ii) any agreement, indenture
or other instrument not made in the ordinary course of business relating
to the borrowing of money by First Citizens or a First Citizens Subsidiary
or guarantee by First Citizens or a First Citizens Subsidiary of any
obligation, (iii) any agreement, arrangement or commitment relating to the
employment or severance of a consultant or the employment, severance,
election or retention in office of any present or former director, officer
or employee (this clause shall not apply to the election of directors by
shareholders or the reappointment of officers in the normal course), or
(iv) any contract, agreement or understanding with a labor union;
32
(m) change its lending, investment or asset liability management
policies in any material respect, except as may be required by applicable
law, regulation, or directives, and except that after approval of the
Agreement and the Plan of Merger by its shareholders and after receipt of
the requisite regulatory approvals for the transactions contemplated by
this Agreement and the Plan of Merger, First Citizens shall cooperate in
good faith with BB&T to adopt policies, practices and procedures
consistent with those utilized by BB&T, effective on or before the Closing
Date;
(n) change its methods of accounting in effect at March 31, 1998,
except as required by changes in GAAP concurred in by BB&T, which
concurrence shall not be unreasonably withheld, or change any of its
methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its federal income tax returns
for the year ended March 31, 1998, except as required by changes in law or
regulation;
(o) incur any commitments for capital expenditures or obligation to
make capital expenditures in excess of $25,000, for any one expenditure,
or $100,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers,
advances from the Federal Home Loan Bank or Federal Reserve Bank and
reverse repurchase arrangements in the ordinary course of business;
(q) take any action which would or could reasonably be expected to
(i) cause the Merger not to be accounted for as a pooling-of-interests or
not to constitute a reorganization under Section 368 of the Code as
determined by BB&T, (ii) result in any inaccuracy of a representation or
warranty herein which would allow for a termination of this Agreement, or
(iii) cause any of the conditions precedent to the transactions
contemplated by this Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary course
of business; or
(s) agree to do any of the foregoing.
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5.10 Employment Agreements
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements with Tom Moat substantially in the form of Annex B hereto, with
Charles M. Barnes substantially in the form of Annex C hereto, with Donald C.
Phillips substantially in the form of Annex D hereto and with Douge Heartha
substantially in the form of Exhibit E hereto.
5.11 Affiliates
First Citizens shall use its best efforts to cause all persons who are
Affiliates of First Citizens to deliver to BB&T promptly following this
Agreement a written agreement providing that such person will not dispose of
BB&T Common Stock received in the Merger except in compliance with the
Securities Act and the rules and regulations promulgated thereunder and except
as consistent with qualifying the transactions contemplated hereby for pooling
of interests accounting treatment, and in any event shall use its best efforts
to cause such affiliates to deliver to BB&T such written agreement prior to the
Closing Date.
5.12 Section 401(k) Plan; Other Employee Benefits
(a) BB&T shall cause the 401(k) plan of First Citizens to be merged with
the 401(k) plan maintained by BB&T and the BB&T Subsidiaries, and the account
balances of former employees of First Citizens or the First Citizens
Subsidiaries who are participants in the First Citizens plan shall be
transferred to the accounts of such employees under the BB&T 401(k) plan.
Following such merger and transfer, such accounts shall be governed and
controlled by the terms of the BB&T 401(k) plan as in effect from time to time,
except as required to comply with the provisions of Section 411(d)(6) of the
Code and Regulations thereunder (and subject to BB&T's right to terminate such
plan). For purposes of administering the 401(k) plan, service with First
Citizens and the First Citizens Subsidiaries shall be deemed to be service with
BB&T or the BB&T Subsidiaries for participation and vesting purposes, but not
for purposes of benefit accrual.
(b) Each employee of First Citizens at the Effective Time who becomes an
employee immediately following the Effective Time of BB&T, a BB&T Subsidiary or
any other Subsidiary of BB&T ("Employer Entity") shall be eligible to
participate in the group hospitalization, medical, dental, life, disability and
other welfare benefit plans and programs available to employees of the Employer
Entity, subject to the terms of such plans and programs; provided, that service
with First Citizens shall be deemed to be service with the Employer Entity for
the purpose of determining eligibility to participate and vesting (if
applicable) in such welfare plans and programs, but not for the purpose of
computing benefits, if any, determined in whole or in part with reference to
service. In addition, if the first plan year of participation by First Citizens
employees and their dependents in the group health plan of any Employer Entity
is a partial plan year, the Employer Entity shall cause its group health plan to
credit toward deductible and other out-of-pocket limitations any expenses
incurred by such persons under First Citizens' group health plan during that
portion of the Employer Entity's plan year during which such persons were
covered under First Citizens' group health plan.
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(c) Each employee of First Citizens or a First Citizens Subsidiary who
becomes an employee of an Employer Entity and is terminated by such or another
Employer Entity subsequent to the Effective Time, excluding any employee who has
an existing employment or special termination agreement which is Disclosed,
shall be entitled to severance pay in accordance with the general severance
policy maintained by BB&T, if and to the extent that such employee is entitled
to severance pay under such policy. Such employee's service with First Citizens
or a First Citizens Subsidiary shall be treated as service with BB&T for
purposes of determining the amount of severance pay, if any, under BB&T's
severance policy.
(d) BB&T agrees to honor all employment agreements, severance agreements
and deferred compensation agreements that First Citizens and the First Citizens
Subsidiaries have with their current and former employees and directors and
which have been Disclosed to BB&T pursuant to this Agreement, except to the
extent any such agreements shall be superseded or terminated at the Closing or
following the Closing Date. Except for the agreements described in the preceding
sentence, the Stock Option Plans, First Citizens' employee stock purchase plan
and other employee benefit plans of First Citizens shall be terminated as of the
Effective Time.
(e) BB&T shall provide, to the extent required by Section 4980B of the
Code and Section 601 et seq. of ERISA, health continuation coverage satisfying
for any First Citizens employee and eligible dependents thereof who incur a
"qualifying event," as defined therein, on or prior to the Closing Date.
5.13 Directors and Officers Protection
BB&T or a BB&T Subsidiary shall provide and keep in force for a period of
three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of First Citizens for
acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in First Citizens'
policy on the date hereof; provided, that in no event shall the annual premium
on such policy exceed 150% of the annual premium payments on First Citizens'
policy in effect as of the date hereof (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, BB&T shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance obtainable
for a premium equal to the Maximum Amount. Notwithstanding the foregoing, BB&T
further agrees to indemnify all individuals who are or have been officers,
directors or employees of First Citizens or any First Citizens Subsidiary prior
to the Effective Time from any acts or omissions in such capacities prior to the
Effective Time, to the extent that such indemnification is provided pursuant to
the Articles of Incorporation or Bylaws of First Citizens on the date hereof and
is permitted under the NCBCA.
5.14 Forbearances of BB&T
Except with the prior written consent of First Citizens, which consent
shall not be arbitrarily or unreasonably withheld, between the date hereof and
the Effective Time, neither BB&T nor any BB&T Subsidiary shall take any action
which would or might be expected to (i) cause the business combination
contemplated hereby not to be accounted for as a pooling-of-interests or not to
constitute a reorganization under Section 368 of the Code; (ii) result in any
inaccuracy of a representation or warranty herein which would allow for
termination of this Agreement; (iii) cause any of the conditions precedent to
the transactions contemplated by this Agreement to fail to be satisfied; (iv)
exercise the BB&T Option Agreement other than in accordance with its terms, or
dispose of the shares of First Citizens Common Stock issuable upon exercise of
the option rights conferred thereby other than as permitted by the terms
thereof; or (v) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to the
conduct of its business.
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5.15 Reports
Each of First Citizens and BB&T shall file (and shall cause the First
Citizens Subsidiaries and the BB&T Subsidiaries, respectively, to file), between
the date of this Agreement and the Effective Time, all reports required to be
filed by it with the Commission and any other regulatory authorities having
jurisdiction over such party, and shall deliver to BB&T or First Citizens, as
the case may be, copies of all such reports promptly after the same are filed.
If financial statements are contained in any such reports filed with the
Commission, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to the absence of notes and
to normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the Commission will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to a regulatory authority other than
the Commission shall be prepared in accordance with requirements applicable to
such reports.
5.16 Exchange Listing
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of First Citizens Common Stock pursuant
to the Merger, and BB&T shall give all notices and make all filings with the
NYSE required in connection with the transactions contemplated herein.
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5.17 Advisory Board for Georgia Market Area
As of the Effective Time, BB&T shall offer to each of the members of the
Board of Directors of First Citizens a seat on the Advisory Board for the
Atlanta, Georgia area. For two years following the Effective Time, the Advisory
Board members appointed pursuant to this Section 5.17 and who continue to serve
shall receive, as compensation for service on the Advisory Board, Advisory Board
member's fees (annual retainer and attendance fees) equal in amount each year
(prorated for any partial year) to the annual retainer and schedule of
attendance fees for directors of First Citizens in effect on January 1, 1999.
Following such two-year period, Advisory Board Members, if they continue to
serve in such capacity, shall receive fees in accordance with BB&T's standard
schedule of fees for service thereon as in effect from time to time. For two
years after the Effective Time, no such Advisory Board member shall be
prohibited from serving thereon because he or she shall have attained the
maximum age for service thereon (currently age 70). First Citizens shall use its
best efforts to cause each member of its Board of Directors to enter into an
agreement with BB&T on or before the Closing Date providing that such member
will not engage in activities competitive with BB&T for two years following the
Effective Time.
5.18 Board of Directors of BB&T
As of the Effective Time, Branch Banking and Trust Company, a North
Carolina banking corporation, shall elect J. Littleton Glover, Jr. to its Board
of Directors, to serve until its next annual meeting (subject to the right of
removal for cause) and thereafter so long as he is elected and qualifies.
5.19 No Sale of Jefferson Property
Except as set forth in the Agreement for the Sale and Purchase of Real
Estate dated July 16, 1996 by and between Peachtree City Holdings, L.L.C. and
Jefferson Ventures, Inc., as amended on December __, 1996 and February 25, 1997,
First Citizens shall not, and shall cause each of the First Citizens
Subsidiaries not to, sell or agree to sell all or any part of the real property
owned by Jefferson Ventures, Inc. after the date hereof without the prior
written consent of BB&T.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and First Citizens
The respective obligations of BB&T and First Citizens to effect the
transactions contemplated by this Agreement shall be subject to satisfaction or
waiver of the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the Plan of Merger, and consummation of
the transactions contemplated hereby and thereby, shall have been duly and
validly taken, including, without limitation, the approval of the shareholders
of First Citizens of the Agreement and the Plan of Merger;
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(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required in
connection with the transactions contemplated by this Agreement and the Plan of
Merger, all notice periods and waiting periods with respect to such approvals
shall have passed and all such approvals shall be in effect;
(d) None of BB&T, any of the BB&T Subsidiaries, First Citizens or any of
the First Citizens Subsidiaries shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement;
(e) First Citizens and BB&T shall have received an opinion of BB&T's legal
counsel, in form and substance satisfactory to First Citizens and BB&T,
substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of First
Citizens will not recognize any gain or loss to the extent that such
shareholders exchange shares of First Citizens Common Stock for shares of BB&T
Common Stock; and
(f) BB&T shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective Time,
addressed to BB&T, in form and substance reasonably satisfactory to BB&T, from
Arthur Andersen, LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
6.2 Conditions Precedent - First Citizens
The obligations of First Citizens to effect the transactions contemplated
by this Agreement shall be subject to the satisfaction of the following
additional conditions at or prior to the Effective Time, unless waived by First
Citizens pursuant to Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and as
of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
First Citizens. The representations and warranties of BB&T set forth in Sections
4.1, 4.2 (except as relates to qualification), 4.3(a), 4.3(b)(i) and 4.4 (except
as relates to qualification) shall be true and correct (except for inaccuracies
which are de minimis in amount). There shall not exist inaccuracies in the
representations and warranties of BB&T set forth in this Agreement (including
the representations and warranties set forth in Sections 4.1, 4.2, 4.3(a),
4.3(b)(i) and 4.4) such that the aggregate effect of such inaccuracies has, or
is reasonably likely to have, a Material Adverse Effect on BB&T.
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(b) BB&T shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement.
(c) BB&T shall have delivered to First Citizens a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.1(d), 6.2(a) and 6.2(b) hereof, to the extent applicable to
BB&T, have been satisfied and that there are no actions, suits, claims,
governmental investigations or procedures instituted, pending or, to the best of
such officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on BB&T or that present a claim to restrain or prohibit
the transactions contemplated herein or in the Plan of Merger.
(d) First Citizens shall have received opinions of counsel to BB&T in the
form reasonably acceptable to First Citizens' legal counsel.
(e) All approvals of the transactions contemplated herein from the Federal
Reserve Board and any other state or federal government agency, department or
body, the approval of which is required for the consummation of the Merger,
shall have been received and all waiting periods with respect to such approvals
shall have expired.
(f) The shares of BB&T Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
6.3 Conditions Precedent - BB&T
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of First Citizens shall be
evaluated as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time (or on the date designated in the
case of any representation and warranty which specifically relates to an earlier
date), except as otherwise contemplated by this Agreement or consented to in
writing by BB&T. The representations and warranties of First Citizens set forth
in Sections 3.1, 3.2 (except the last sentence thereof), 3.3, 3.4 (except the
last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be true and
correct (except for inaccuracies which are de minimis in amount). There shall
not exist inaccuracies in the representations and warranties of First Citizens
set forth in this Agreement (including the representations and warranties set
forth in the Sections designated in the preceding sentence) such that the effect
of such inaccuracies individually or in the aggregate has, or is reasonably
likely to have, a Material Adverse Effect on First Citizens and the First
Citizens Subsidiaries taken as a whole.
(b) No regulatory approval shall have imposed any condition or requirement
which, in the reasonable opinion of the Board of Directors of BB&T, would so
materially adversely affect the business or economic benefits to BB&T of the
transactions contemplated by this Agreement as to render consummation of such
transactions inadvisable or unduly burdensome.
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(c) First Citizens shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) First Citizens shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c) hereof, to
the extent applicable to First Citizens, have been satisfied and that there are
no actions, suits, claims, governmental investigations or procedures instituted,
pending or, to the best of such officer's knowledge, threatened that reasonably
may be expected to have a Material Adverse Effect on First Citizens or that
present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger.
(e) BB&T shall have received opinions of counsel to First Citizens in the
form reasonably acceptable to BB&T's legal counsel.
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 hereof to the extent necessary, in the reasonable
judgment of BB&T, to ensure that the Merger will be accounted for as a pooling
of interests under GAAP and to promote compliance with Rule 145 promulgated by
the Commission.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
inaccuracy would provide the nonbreaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 6.2(a)
hereof in the case of First Citizens and Section 6.3(a) hereof in the case of
BB&T; and, in the case of (i) or (ii), if such breach or inaccuracy has not been
cured by the earlier of thirty days following written notice of such breach to
the party committing such breach or the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
breach of any of its representations, warranties, covenants or undertakings
herein.
40
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 hereof are denied,
and the time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders of
First Citizens do not approve the Agreement and the Plan of Merger.
(f) At any time following August 31, 1999 by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to 11:59 p.m. on March 15, 1999 by BB&T in writing,
if BB&T determines in its sole good faith judgment, through review of
information Disclosed by First Citizens, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Citizens and of the First Citizens Subsidiaries, taken as a whole, are
materially adversely different from BB&T's reasonable expectations with respect
thereto on the date of execution of this Agreement; provided that BB&T shall
inform First Citizens upon such termination as to the reasons for BB&T's
determination. The fact that First Citizens has Disclosed information shall not
prevent BB&T from terminating this Agreement pursuant to this Section 7.1(g) on
account of such information.
(h) By First Citizens at any time during the five-day period commencing
after the Determination Date if both of the following conditions are satisfied:
(1) the Closing Value shall be less than $32.67; and
(2) (i) the quotient obtained by dividing the Closing Value by
$38.4375 (such number being referred to herein as the "BB&T Ratio") shall
be less than (ii) 90% of the quotient obtained by dividing the Index Price
on the Determination Date by the Index Price on the Starting Date;
subject, however, to the following three sentences. If First Citizens determines
not to consummate the Merger pursuant to this Section 7.1(h), it shall give
prompt written notice of its election to terminate to BB&T, which notice may be
withdrawn at any time prior to the lapse of the ten-day period commencing on the
Determination Date. During the five-day period commencing with its receipt of
such notice, BB&T shall have the option, with respect to a failure to satisfy
the condition in clause (1), to elect to increase the Exchange Ratio to a number
such that the value (based on the Closing Value) of the amount of BB&T Common
Stock to be received in the Merger for each share of First Citizens Common Stock
shall equal the value (based on the Closing Value) that would have been received
if the Closing Value were $32.67. The election contemplated by the preceding
sentence shall be made by giving notice to First Citizens of such election and
the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 7.1(h), and this Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified), and any references in this Agreement to "Exchange Ratio" shall
thereafter be deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 7.1(h). If the Closing Date shall occur during the five-day period such
option is in effect, the Closing Date shall be extended until the fifth Business
Day following the close of such five-day period.
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For purposes of this Section 7.1(h), the following terms shall have the
meanings indicated:
"Closing Value" shall have the meaning provided in Section 2.7(b).
"Determination Date" shall mean the tenth calendar day preceding the date
designated by BB&T as the Closing Date.
"Index Group" shall mean the 12 bank holding companies listed below, the
common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. In the event that
any such company or companies are removed from the Index Group, the weights
(which have been determined based upon the number of shares of outstanding
common stock) shall be redistributed proportionately for purposes of determining
the Index Price. The 12 bank holding companies and the weights attributed to
them are as follows:
Bank Holding Companies % Weighting
---------------------- -----------
Wachovia Corporation 9.64
Fifth Third Bancorp 12.69
Comerica Incorporation 7.40
Summit Bancorp 8.23
Mercantile Bancorporation, Inc. 7.48
First Security Corporation 8.95
Huntington Bancshares Inc. 10.06
SouthTrust Corporation 7.86
Regions Financial Corporation 10.52
Marshall & Ilsley Corp. 5.05
AmSouth Bancorporation 5.67
Union Planters Corp. 6.45
Total 100.00%
======
"Index Price" on a given date shall mean the weighted average (weighted in
accordance with the "% Weighting" listed above) of the closing sales prices of
the companies composing the Index Group (determined as provided with respect to
the Closing Value).
"Starting Date" shall mean the date of this Agreement.
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If any company belonging to the Index Group or BB&T declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the Starting Date and the
Determination Date, the prices for the common stock of such company or BB&T
shall be appropriately adjusted for the purposes of applying this Section
7.1(h).
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated pursuant
to Section 7.1 hereof, both this Agreement and the Plan of Merger shall become
void and have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 7.1(b) hereof shall not relieve the breaching party from liability
for a breach of the covenant, agreement, representation or warranty giving rise
to such termination. The BB&T Option Agreement shall be governed by its own
terms.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13, 5.17 and 5.18), provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or First Citizens (or any director, officer or controlling
person thereof) of any defense at law or in equity which otherwise would be
available against the claims of any person, including, without limitation, any
shareholder or former shareholder of either BB&T or First Citizens, the
aforesaid representations, warranties and covenants being material inducements
to consummation by BB&T and First Citizens of the transactions contemplated
herein.
7.4 Waiver
Except with respect to any required regulatory approval, each party
hereto, by written instrument signed by an executive officer of such party, may
at any time (whether before or after approval of the Agreement and the Plan of
Merger by the First Citizens shareholders) extend the time for the performance
of any of the obligations or other acts of the other party hereto and may waive
(i) any inaccuracies of the other party in the representations or warranties
contained in this Agreement, the Plan of Merger or any document delivered
pursuant hereto or thereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other party, or satisfaction of any of the
conditions precedent to its obligations, contained herein or in the Plan of
Merger, or (iii) the performance by the other party of any of its obligations
set out herein or therein; provided that no such extension or waiver, or
amendment or supplement pursuant to this Section 7.4, executed after approval by
the First Citizens shareholders of this Agreement and the Plan of Merger, shall
reduce either the Exchange Ratio or the payment terms for fractional interests.
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7.5 Amendment or Supplement
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of BB&T and First Citizens, subject to the
proviso to Section 7.4.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Agreement, including,
without limitation, fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and printing
costs incurred in connection with the Registration Statement and the Proxy
Statement/Prospectus shall be borne 50% by BB&T and 50% by First Citizens.
8.2 Entire Agreement
This Agreement, including the documents and other writings referenced
herein or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto, written
or oral, entered into on or before the date hereof. The terms and conditions of
this Agreement and the BB&T Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement or the BB&T Option Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors, any rights, remedies, obligations or
liabilities, except for the rights of directors and officers of First Citizens
to enforce rights in Sections 5.13, 5.17 and 5.18.
8.3 No Assignment
Except for a substitution of parties pursuant to Section 5.4(a), none of
the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
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If to First Citizens:
Tom Moat
J. Littleton Glover, Jr.
First Citizens Corporation
19 Jefferson Street
Newnan, Georgia 30263
Telephone: 770-253-5017
Fax: 770-683-6010
With a required copy to:
Walter G. Moeling, IV
Powell, Goldstein, Frazer and Murphy LLP
191 Peachtree Street, N.E., Sixteenth Floor
Atlanta, Georgia 30303
Telephone: 404-572-6600
Fax: 404-572-6999
If to BB&T:
Scott E. Reed
150 South Stratford Road
4th Floor
Winston-Salem, North Carolina 27104
Telephone: 336-733-3088
Fax: 336-733-2296
With a required copy to:
William A. Davis, II
Womble Carlyle Sandridge & Rice, PLLC
200 West Second Street
Winston-Salem, North Carolina 27102
Telephone: 336-721-3624
Fax: 336-733-8364
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Specific Performance
First Citizens acknowledges that the First Citizens Common Stock and the
First Citizens business and assets are unique, and that if First Citizens fails
to consummate the transactions contemplated by this Agreement such failure will
cause irreparable harm to BB&T for which there will be no adequate remedy at
law, BB&T shall be entitled, in addition to its other remedies at law, to
specific performance of this Agreement if First Citizens shall, without cause,
refuse to consummate the transactions contemplated by this Agreement.
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8.6 Captions
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
BB&T CORPORATION
By:
---------------------------------------
Name:
---------------------------------
Title:
---------------------------------
FIRST CITIZENS CORPORATION
By:
---------------------------------------
Name:
---------------------------------
Title:
---------------------------------
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