Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRSTSPARTAN FINANCIAL CORP.
and
BB&T CORPORATION
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER.........................................................1
ARTICLE II THE MERGER........................................................7
2.1 Merger.............................................................7
2.2 Filing; Plan of Merger.............................................7
2.3 Effective Time.....................................................7
2.4 Closing............................................................8
2.5 Effect of Merger...................................................8
2.6 Further Assurances.................................................8
2.7 Merger Consideration...............................................9
2.8 Conversion of Shares; Payment of Merger Consideration..............9
2.9 Conversion of Stock Options.......................................10
2.10 Merger of Subsidiaries............................................12
2.11 Anti-Dilution.....................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXX.........................12
3.1 Capital Structure.................................................12
3.2 Organization, Standing and Authority..............................13
3.3 Ownership of Subsidiaries.........................................13
3.4 Organization, Standing and Authority of the Subsidiaries..........13
3.5 Authorized and Effective Agreement................................14
3.6 Securities Filings; Financial Statements; Statements True.........15
3.7 Minute Books......................................................15
3.8 Adverse Change....................................................15
3.9 Absence of Undisclosed Liabilities................................16
3.10 Properties........................................................16
3.11 Environmental Matters.............................................16
3.12 Loans; Allowance for Loan Losses..................................17
3.13 Tax Matters.......................................................17
3.14 Employees; Compensation; Benefit Plans............................19
3.15 Certain Contracts.................................................22
3.16 Legal Proceedings; Regulatory Approvals...........................23
3.17 Compliance with Laws; Filings.....................................24
3.18 Brokers and Finders...............................................24
3.19 Repurchase Agreements; Derivatives................................24
3.20 Deposit Accounts..................................................25
3.21 Related Party Transactions........................................25
3.22 Certain Information...............................................25
3.23 Tax and Regulatory Matters........................................25
3.24 State Takeover Laws...............................................26
3.25 Labor Relations...................................................26
3.26 Fairness Opinion..................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T...........................27
4.1 Capital Structure of BB&T.........................................27
4.2 Organization, Standing and Authority of BB&T......................27
4.3 Authorized and Effective Agreement................................27
4.4 Organization, Standing and Authority of BB&T Subsidiaries.........28
4.5 Securities Documents; Financial Statements; Statements True.......28
4.6 Certain Information...............................................29
4.7 Tax and Regulatory Matters........................................29
4.8 Share Ownership...................................................29
4.9 Legal Proceedings; Regulatory Approvals...........................29
Page
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4.10 Adverse Change.....................................................30
ARTICLE V COVENANTS.........................................................30
5.1 Xxxxx Shareholder Meeting.........................................30
5.2 Registration Statement; Proxy Statement/Prospectus................30
5.3 Plan of Merger; Reservation of Shares.............................31
5.4 Additional Acts...................................................31
5.5 Best Efforts......................................................32
5.6 Certain Accounting Matters........................................32
5.7 Access to Information.............................................32
5.8 Press Releases....................................................33
5.9 Forbearances of Xxxxx.............................................33
5.10 Employment Agreements.............................................36
5.11 Affiliates........................................................36
5.12 Section 401(k) Plan; Other Employee Benefits......................36
5.13 Directors and Officers Protection.................................38
5.14 Forbearances of BB&T..............................................38
5.15 Reports...........................................................39
5.16 Exchange Listing..................................................39
5.17 Advisory Boards...................................................39
5.18 Board of Directors of Branch Banking and Trust
Company of South Carolina........................................40
ARTICLE VI CONDITIONS PRECEDENT.............................................40
6.1 Conditions Precedent - BB&T and Xxxxx.............................40
6.2 Conditions Precedent - Xxxxx......................................41
6.3 Conditions Precedent - BB&T.......................................42
ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT......................43
7.1 Termination.......................................................43
7.2 Effect of Termination.............................................44
7.3 Survival of Representations, Warranties and Covenants.............44
7.4 Waiver............................................................44
7.5 Amendment or Supplement...........................................45
ARTICLE VIII MISCELLANEOUS..................................................45
8.1 Expenses..........................................................45
8.2 Entire Agreement..................................................45
8.3 No Assignment.....................................................46
8.4 Notices...........................................................46
8.6 Captions..........................................................47
8.7 Counterparts......................................................47
8.8 Governing Law.....................................................47
ANNEXES
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Annex A-1 Articles of Merger, with attached Agreement and Plan of Merger
Annex A-2 Certificate of Merger
Annex B Employment Agreement with
Xxxxx X. Xxxxxxx
Annex C Employment Agreements with R. Xxxxx Xxxxxxx, Xxxx X. Xxxxxxxx
and J. Xxxxxxx Xxxxxxxx
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
September 5, 2000 is between FIRSTSPARTAN FINANCIAL CORP. ("FirstSpartan"), a
Delaware corporation having its principal office at Spartanburg, South Carolina,
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 FirstSpartan shall be merged with and into BB&T
(said transaction being hereinafter referred to as the "Merger") pursuant to an
agreement and plan of merger (the "Plan of Merger") substantially in the form
attached as Annex A-1 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, FirstSpartan is
concurrently granting to BB&T an option to acquire, under certain circumstances,
740,300 shares of the common stock, par value $0.01 per share, of FirstSpartan.
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 IDEFINITIONS
1.1 Definitions
-----------
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person, who,
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with such Person and, without limiting
the generality of the foregoing, includes any executive officer or director of
such Person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be
filed with the office of the Secretary of State of North Carolina as provided in
Section 55-11-05 of the NCBCA.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company
Act of 1956, as amended.
"BB&T Common Stock" shall mean the shares of voting common stock, par
value $5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Option Agreement" shall mean the Stock Option Agreement dated as
of even date herewith, as amended from time to time, under which BB&T has an
option to purchase shares of FirstSpartan Common Stock, which shall be executed
immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Benefit Plan Determination Date" shall mean, with respect to each
employee pension or welfare benefit plan or program maintained by FirstSpartan
at the Effective Time, the date determined by BB&T with respect to such plan or
program which shall be not later than January 1 following the close of the
calendar year in which the last of the FirstSpartan Subsidiaries which is a bank
or other savings institution is merged into BB&T or one of the BB&T
Subsidiaries.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"Certificate of Merger" shall mean the Certificate of Merger to be
filed with the office of the Secretary of State of Delaware as provided in
Section 252(c) of the DGCL.
"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.
"DGCL" shall mean the Delaware General Corporation Law.
"Disclosed" shall mean disclosed in the FirstSpartan Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Environmental Claim" means any notice from any governmental authority
or third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural
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resources damages, property damages, personal injuries or penalties) arising out
of, based upon, or resulting from a violation of the Environmental Laws or the
presence or release into the environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including without limitation CERCLA,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.,
and other laws and regulations relating to emissions, discharges, releases, or
threatened releases of any Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"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 Trident Securities, a division of
McDonald Investments Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
BB&T as of December 31, 1999, 1998, and 1997, and the related consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes and schedules, if any) for each of the three years ended December
31, 1999, 1998, and 1997, 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, changes in 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, 1999, and (b) with respect to FirstSpartan, (i) the consolidated
balance sheets (including related notes and schedules, if any) of FirstSpartan
as of June 30, 1999, 1998 and 1997, and the related consolidated statements of
income, stockholders' equity, and cash flows (including related notes and
schedules, if any) for each of the three years ended June 30, 1999, 1998 and
1997 as filed by FirstSpartan in Securities Documents and (ii) the consolidated
balance sheets of FirstSpartan (including related notes and schedules, if any)
and the related consolidated statements of income,
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stockholders' equity, and cash flows (including related notes and schedules, if
any) included in Securities Documents filed by FirstSpartan with respect to
periods ended subsequent to June 30, 1999.
"FirstSpartan Common Stock" shall mean the shares of voting common
stock, par value $0.01 per share, of FirstSpartan.
"FirstSpartan Preferred Stock" shall mean the shares of nonvoting
preferred stock, $0.01 par value of FirstSpartan.
"FirstSpartan Disclosure Memorandum" shall mean the written information
in one or more documents, each of which: (a) is entitled "FirstSpartan
Disclosure Memorandum"; (ii) is dated on or before the date of this Agreement;
(iii) was delivered not later than the date of execution of this Agreement by
FirstSpartan to BB&T; and (iv) describes 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. The inclusion of a given item in the
FirstSpartan Disclosure Memorandum shall not be deemed a conclusion or admission
that such item (or any other item) is material or has a Material Adverse Effect.
"FirstSpartan Subsidiaries" shall mean First Federal Bank, FirstService
Corporation and any and all other Subsidiaries of FirstSpartan as of the date
hereof and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of FirstSpartan after the date hereof and held as a
Subsidiary by FirstSpartan at the Effective Time.
"GAAP" shall mean generally accepted accounting principles applicable
to financial institutions and their holding companies, as in effect at the
relevant date.
"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 FirstSpartan shall mean (i) a
material adverse effect on the financial condition, results of operations or
business of BB&T and the BB&T Subsidiaries taken as a whole, or FirstSpartan and
the FirstSpartan Subsidiaries taken as a whole, or (ii) the material impairment
of the ability of BB&T or FirstSpartan to perform its obligations under this
Agreement or to consummate the
4
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 FirstSpartan taken with the prior written
consent of the other in contemplation of the transactions contemplated hereby
and (b) the direct effects of compliance with this Agreement on the operating
performance of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement or relating to any
litigation arising as a result of the Merger; provided that with respect to
FirstSpartan, only if and to the extent any such expenses payable to third
parties are Disclosed by FirstSpartan or incurred by FirstSpartan following the
date hereof as permitted by this Agreement.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or group of entities, or governmental body.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders of
FirstSpartan to solicit their votes in connection with a proposal to approve
this Agreement and the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T
as declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed with the Commission
under the Securities Act, with respect to the BB&T Common Stock to be issued in
connection with the transactions contemplated by this Agreement.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests (other than
rights pursuant to the Rights Agreement described under the definition of "BB&T
Common Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
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"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939 as amended; and, in each case, the
rules and regulations of the Commission promulgated thereunder.
"Stock Option" shall mean any option to acquire shares of FirstSpartan
Common Stock granted under the Stock Option Plan that is outstanding and
unexercised on the date hereof.
"Stock Option Plan" shall mean FirstSpartan's 1997 Stock Option Plan.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent (in determining
whether one entity owns or controls 50% or more of the outstanding equity
securities of another, equity securities owned or controlled in a fiduciary
capacity shall be deemed owned and controlled by the beneficial owner).
"TILA" shall mean the Truth in Lending Act, as amended.
1.2 Terms Defined Elsewhere
-----------------------
The capitalized terms set forth below are defined in the
following sections:
Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(c)
Constituent Corporations Section 2.1
Effective Time Section 2.3
Employer Entity Section 5.12(a)
ESOP Section 3.14(b)(xviii)
Exchange Ratio Section 2.7(a)
FirstSpartan Introduction
Merger Recitals
Merger Consideration Section 2.7(a)
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Surviving Corporation Section 2.1(a)
Transferred Employee Section 5.12(a)
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ARTICLE II
THE MERGER
2.1 Merger
------
BB&T and FirstSpartan are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the DGCL. At the
Effective Time:
(a) FirstSpartan shall be merged into BB&T in accordance with the
applicable provisions of the NCBCA and the DGCL, with BB&T being the surviving
corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of FirstSpartan shall cease and the Merger
shall in all respects have the effects provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall
be the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall be the Bylaws of the
Surviving Corporation.
2.2 Filing; Plan of Merger
----------------------
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 FirstSpartan Common Stock entitled to vote. 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, as provided in Section 55-11-05 of the
NCBCA, and the Certificate of Merger to be executed and filed with the Secretary
of State of Delaware, as provided in Section 252(c) of the DGCL. The Plan of
Merger is incorporated herein by reference, and adoption of this Agreement by
the respective Boards of Directors of the Constituent Corporations and approval
by the shareholders of FirstSpartan 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 and Certificate of Merger filed as provided in Section 2.2
(herein sometimes referred to as the "Effective Time").
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2.4 Closing
-------
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx,
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
FirstSpartan shall cease, and the Surviving Corporation shall thereupon and
thereafter, to the extent consistent with its Articles of Incorporation, possess
all of the rights, privileges, immunities and franchises, of a public as well as
a private nature, of each of the Constituent Corporations; and all property,
real, personal and mixed, and all debts due on whatever account, and all other
choses in action, and each and every other interest of or belonging to or due to
each of the Constituent Corporations shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
------------------
If, at any time after the Effective Time, the Surviving Corporation
shall consider or be advised that any further deeds, assignments or assurances
in law or any other actions are necessary, desirable or proper to vest, perfect
or confirm of record or otherwise, in the Surviving Corporation, the title to
any property or rights of the Constituent Corporations acquired or to be
acquired by reason of, or as a result of, the Merger, the Constituent
Corporations agree that such Constituent Corporations and their proper officers
and directors shall and will execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary, desirable or
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose of this Agreement,
and that the proper officers and directors of the Surviving Corporation are
fully authorized and directed in the name of the Constituent Corporations or
otherwise to take any and all such actions.
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2.7 Merger Consideration
--------------------
(a) As used herein, the term "Merger Consideration" shall mean the
number of shares of BB&T Common Stock to be exchanged for each share of
FirstSpartan 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 that would otherwise be distributable to a FirstSpartan
shareholder as provided in Section 2.7(b). The number of shares of BB&T Common
Stock to be issued for each issued and outstanding share of FirstSpartan Common
Stock (the "Exchange Ratio") shall be 1.0.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the Closing Value. The "Closing Value" shall mean the 4:00 p.m. eastern
time closing price per share of BB&T Common Stock on the NYSE on the Closing
Date as reported on XXXXxxx.xxx.
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 FirstSpartan or the holders of record of FirstSpartan
Common Stock, each share of FirstSpartan 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 FirstSpartan Common Stock (as provided in subsection (d) below),
the Merger Consideration.
(b) Each share of BB&T Common Stock issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of FirstSpartan 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 FirstSpartan Common Stock. With respect to any
certificate for FirstSpartan 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,
FirstSpartan's transfer books shall be closed and no transfer of the shares of
FirstSpartan 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 FirstSpartan shareholder a form of letter of transmittal and
instructions for
9
use in effecting the surrender of the certificates which, immediately prior to
the Effective Time, represented any shares of FirstSpartan Common Stock. Upon
proper surrender of such certificates or other evidence of ownership meeting the
requirements of Section 2.8(c), together with such letter of transmittal duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably requested, BB&T shall promptly cause the
transfer to the persons entitled thereto of the Merger Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time that have been
declared or made by FirstSpartan in respect of shares of FirstSpartan Common
Stock in accordance with the terms of this Agreement and that remain unpaid at
the Effective Time, subject to compliance by FirstSpartan with Section 5.9(b).
To the extent permitted by law, former shareholders of record of FirstSpartan
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 FirstSpartan Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing FirstSpartan
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 FirstSpartan
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 FirstSpartan Common Stock represented by such certificate.
2.9 Conversion of Stock Options
---------------------------
(a) At the Effective Time, each Stock Option then outstanding (and
which by its terms does not lapse on or before the Effective Time), whether or
not then exercisable, shall be converted into and become rights with respect to
BB&T Common Stock, and BB&T shall assume each Stock Option in accordance with
the terms of the Stock Option Plan, except that from and after the Effective
Time (i) BB&T and its Compensation Committee shall be substituted for
FirstSpartan and its Compensation Committee with respect to administering the
Stock Option Plan, (ii) each Stock Option assumed by BB&T may be exercised
solely for shares of BB&T Common Stock, (iii) the number of shares of BB&T
Common Stock subject to each such Stock Option shall be the number of whole
shares of BB&T (omitting any fractional share) determined by multiplying the
number of shares of FirstSpartan 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
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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; and (C) the substituted options shall continue in
effect on the same terms and conditions as provided in the Stock Option
Agreements and the Stock Option Plan governing 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 Commission Rule 16b-3
shall, as a condition to such conversion or substitution, be approved in
accordance with the provisions of Rule 16b-3. Each Stock Option which is an
incentive stock option shall be adjusted as required by Section 424 of the Code,
and the Regulations promulgated thereunder, so as to continue as an incentive
stock option under Section 424(a) of the Code, and so as not to constitute a
modification, extension, or renewal of the option within the meaning of Section
424(h) of the Code. BB&T and FirstSpartan agree to take all necessary steps to
effectuate the foregoing provisions of this Section 2.9. BB&T has reserved and
shall continue to reserve adequate shares of BB&T Common Stock for delivery upon
exercise of any converted or substitute options. As soon as practicable after
the Effective Time, if it has not already done so, and to the extent
FirstSpartan 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
Plan assumed pursuant to this Section 2.9 (or the BB&T Option Plan, if
applicable) in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent necessary to preserve for such individuals the
benefits of Rule 16b-3 to the extent such benefits were available to them prior
to the Effective Time. FirstSpartan hereby represents that the Stock Option Plan
in its current form complies with Rule 16b-3 to the extent, if any, required as
of the date hereof.
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
(c) Eligibility to receive stock option grants following the Effective
Time with respect to BB&T Common Stock shall be determined by BB&T in accordance
with its plans and procedures as in effect from time to time, and subject to any
contractual obligations.
11
2.10 Merger of Subsidiaries
----------------------
In the event that BB&T shall request, FirstSpartan shall take such
actions, and shall cause the FirstSpartan 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 FirstSpartan Subsidiaries with and into, in each case, one of the
BB&T Subsidiaries.
2.11 Anti-Dilution
-------------
In the event BB&T changes the number of shares of BB&T Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend or other similar recapitalization, and the record date thereof
(in the case of a stock dividend) or the effective date thereof (in the case of
a stock split or similar recapitalization for which a record date is not
established) shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRSTSPARTAN
Except as Disclosed, FirstSpartan represents and warrants to BB&T as
follows (the representations and warranties herein of FirstSpartan are made
subject to the applicable standard set forth in Section 6.3(a), and no such
representation or warranty shall be deemed to be inaccurate unless it is
inaccurate to the extent that BB&T would be entitled to refuse to consummate the
Merger pursuant to Section 7.1(b)(ii) on account of such inaccuracy):
3.1 Capital Structure
-----------------
The authorized capital stock of FirstSpartan consists of 12,000,000
shares of FirstSpartan Common Stock and 250,000 shares of FirstSpartan Preferred
Stock. As of the date of this Agreement, FirstSpartan has 3,720,270 shares of
FirstSpartan Common Stock issued and outstanding and no shares of FirstSpartan
Preferred Stock issued and outstanding. No other classes of capital stock of
FirstSpartan, common or preferred, are authorized, issued or outstanding. All
outstanding shares of FirstSpartan capital stock have been duly authorized and
are validly issued, fully paid and nonassessable. No shares of capital stock
have been reserved for any purpose, except for (i) shares of FirstSpartan Common
Stock reserved for issuance in connection with the Stock Option Plan, (ii)
740,300 shares of FirstSpartan Common Stock reserved for issuance in connection
with the BB&T Option Agreement and (iii) 250,000 shares of FirstSpartan Common
Stock reserved for issuance in connection with the FirstSpartan Dividend
Reinvestment Plan. FirstSpartan has granted options to acquire 421,082 shares of
FirstSpartan Common Stock under the Stock Option Plan, which options remain
outstanding as of the date hereof. Except as set forth in this Section 3.1,
there are no Rights authorized, issued or
12
outstanding with respect to, nor are there any agreements, understandings or
commitments relating to the right of any FirstSpartan shareholder to own, to
vote or to dispose of, the capital stock of FirstSpartan. Holders of
FirstSpartan Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
------------------------------------
FirstSpartan is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. FirstSpartan is qualified to do business in
the State of South Carolina and is not required to be qualified to do business
in any other state of the United States or foreign jurisdiction. FirstSpartan is
registered as a savings and loan holding company under the Home Owners' Loan
Act.
3.3 Ownership of Subsidiaries
-------------------------
Section 3.3 of the FirstSpartan Disclosure Memorandum lists all of the
FirstSpartan 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
FirstSpartan (directly or indirectly), the percentage ownership interest so
owned by FirstSpartan and its business activities. The outstanding shares of
capital stock or other equity interests of the FirstSpartan Subsidiaries are
validly issued and outstanding, fully paid and nonassessable, and all such
shares are directly or indirectly owned by FirstSpartan 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 FirstSpartan Subsidiaries, and there are no agreements,
understandings or commitments relating to the right of FirstSpartan to own, to
vote or to dispose of said interests. None of the shares of capital stock or
other equity interests of the FirstSpartan Subsidiaries have been issued in
violation of the preemptive rights of any person. Section 3.3 of the
FirstSpartan 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 FirstSpartan Subsidiaries and
stock or other securities held in a fiduciary capacity) owned directly or
indirectly by FirstSpartan.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each FirstSpartan Subsidiary that is a depository institution is a
federally chartered savings association with its deposits insured by the FDIC.
Each of the FirstSpartan Subsidiaries is validly existing and in good standing
under the laws of its jurisdiction of organization. Each of the FirstSpartan
Subsidiaries has full power and authority to carry on its business as now
conducted, and is duly qualified to do business and in good standing in each
jurisdiction Disclosed with respect to it. No FirstSpartan Subsidiary is
required to be qualified to do business in any other state of the United States
13
or foreign jurisdiction, or is engaged in any type of activities that have not
been Disclosed.
3.5 Authorized and Effective Agreement
----------------------------------
(a) FirstSpartan 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 FirstSpartan shareholders of this Agreement and
the Plan of Merger) perform all of its obligations under this Agreement, the
Plan of Merger and the BB&T Option Agreement. The execution and delivery of this
Agreement, the Plan of Merger and the BB&T Option Agreement, and consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action, except, in the case of this
Agreement and the Plan of Merger, the approval of the FirstSpartan 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 FirstSpartan, and each is enforceable against FirstSpartan 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 Plan of
Merger, or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by FirstSpartan with any of the
provisions hereof or thereof, shall (i) conflict with or result in a breach of
any provision of the Certificate of Incorporation or Bylaws of FirstSpartan or
the comparable governing documents of any FirstSpartan 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 FirstSpartan or any
FirstSpartan 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 FirstSpartan
or any FirstSpartan 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
FirstSpartan of the Merger and the other transactions contemplated in this
Agreement.
14
3.6 Securities Filings; Financial Statements; Statements True
---------------------------------------------------------
(a) FirstSpartan has timely filed all Securities Documents required by
the Securities Laws to be filed since June 30, 1997. FirstSpartan has Disclosed
or made available to BB&T a true and complete copy of each Securities Document
filed by FirstSpartan with the Commission after June 30, 1997 and prior to the
date hereof, which are all of the Securities Documents that FirstSpartan 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 FirstSpartan fairly present or will
fairly present, as the case may be, the consolidated financial position of
FirstSpartan and the FirstSpartan 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 FirstSpartan or any FirstSpartan 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 FirstSpartan and each of the FirstSpartan
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, 2000, FirstSpartan and the FirstSpartan Subsidiaries
have not incurred any liability, whether accrued, absolute or contingent, except
as disclosed in the most recent FirstSpartan Financial Statements, or entered
into any transactions with Affiliates, in each case other than in the ordinary
course of business consistent with past practices, nor has there been any
adverse change or any event that has resulted in, or is reasonably likely to
result in, an adverse change in the business, financial condition or results of
operations of FirstSpartan or any of the FirstSpartan Subsidiaries.
15
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of FirstSpartan and
the FirstSpartan Subsidiaries are disclosed in the most recent Financial
Statements of FirstSpartan or are normally recurring business obligations
incurred in the ordinary course of its business since the date of FirstSpartan's
most recent Financial Statements.
3.10 Properties
----------
(a) FirstSpartan and the FirstSpartan 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 FirstSpartan as of June 30, 1999 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 FirstSpartan or any
FirstSpartan 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) FirstSpartan and the FirstSpartan Subsidiaries are and at all times
have been in compliance with all Environmental Laws. Neither FirstSpartan nor
any FirstSpartan Subsidiary has received any communication alleging that
FirstSpartan or the FirstSpartan 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 FirstSpartan nor
any FirstSpartan 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)
FirstSpartan or any FirstSpartan Subsidiary, (ii) any person or entity whose
liability for any Environmental Claim FirstSpartan or any FirstSpartan
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
FirstSpartan or any FirstSpartan Subsidiary, or any real or personal property
which FirstSpartan or any FirstSpartan 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 FirstSpartan or any FirstSpartan Subsidiary holds a
security interest securing a loan recorded on the books
16
of FirstSpartan or any FirstSpartan Subsidiary. Neither FirstSpartan nor any
FirstSpartan Subsidiary is subject to any agreement, order, judgment, decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any liability under any Environmental Laws.
(c) FirstSpartan and the FirstSpartan Subsidiaries are in compliance
with all recommendations contained in any environmental audits, analyses and
surveys received by FirstSpartan relating to all real and personal property
owned or leased by FirstSpartan or any FirstSpartan Subsidiary and all real and
personal property of which FirstSpartan or any FirstSpartan 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 FirstSpartan or any FirstSpartan Subsidiary or against any person
or entity whose liability for any Environmental Claim FirstSpartan or any
FirstSpartan 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 FirstSpartan and the FirstSpartan
Subsidiaries are valid and properly documented and were made in the ordinary
course of business, and the security therefor, if any, is valid and properly
perfected. Neither the terms of such loans, nor any of the loan documentation,
nor the manner in which such loans have been administered and serviced, nor
FirstSpartan's procedures and practices of approving or rejecting loan
applications, violates any federal, state or local law, rule, regulation or
ordinance applicable thereto, including, without limitation, the TILA,
Regulations O and Z of the Federal Reserve Board, the CRA, the Equal Credit
Opportunity Act, as amended, and state laws, rules and regulations relating to
consumer protection, installment sales and usury.
(b) The allowances for loan losses reflected on the consolidated
balance sheets included in the Financial Statements of FirstSpartan are, in the
reasonable, good faith judgment of FirstSpartan's management, adequate as of
their respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
-----------
(a) FirstSpartan and the FirstSpartan 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,
17
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 FirstSpartan nor any
FirstSpartan Subsidiary has or will have any liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
FirstSpartan and the FirstSpartan Subsidiaries have paid, or where payment is
not required to have been made have set up an adequate reserve or accrual for
payment of, all taxes required to be paid or accrued for the preceding or
current fiscal year for which a return is not yet due.
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by FirstSpartan and the FirstSpartan Subsidiaries are complete and
accurate. Neither FirstSpartan nor any FirstSpartan 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 FirstSpartan or any FirstSpartan
Subsidiary which have not been settled and paid. There are currently no
agreements in effect with respect to FirstSpartan or any FirstSpartan 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 with respect to FirstSpartan and the FirstSpartan
Subsidiaries have been provided for in accordance with GAAP consistently
applied.
(d) Neither FirstSpartan nor any of the FirstSpartan Subsidiaries is a
party to any tax allocation or sharing agreement (other than among FirstSpartan
and the FirstSpartan Subsidiaries) 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 FirstSpartan or a FirstSpartan subsidiary) or has any
liability for taxes of any person (other than FirstSpartan and the FirstSpartan
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 FirstSpartan and the FirstSpartan 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 FirstSpartan nor any of the FirstSpartan Subsidiaries has
made any payments, is obligated to make any payments, or is a party to any
contract that could
18
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. FirstSpartan 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 FirstSpartan and of each FirstSpartan
Subsidiary and each other person (in each case other than as an employee) to
whom FirstSpartan or any FirstSpartan Subsidiary pays or provides, or has an
obligation, agreement (written or unwritten), policy or practice of paying or
providing, retirement, health, welfare or other benefits of any kind or
description whatsoever.
(b) Employee Benefit Plans.
----------------------
(i) FirstSpartan has Disclosed an accurate and complete list
of all Plans, as defined below, contributed to, maintained or sponsored
by FirstSpartan or any FirstSpartan Subsidiary, to which FirstSpartan
or any FirstSpartan 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 FirstSpartan or
any FirstSpartan Subsidiary is a member. For purposes of this
Agreement, the term "Plan" shall mean a plan, arrangement, agreement or
program described in the foregoing provisions of this Section
3.14(b)(i) that is: (A) a profit-sharing, deferred compensation,
employee stock ownership, 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 FirstSpartan nor any FirstSpartan 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"
19
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 FirstSpartan or any
FirstSpartan Subsidiary to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a "change in
control," as such term is used in Section 280G of the Code (and
regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts
and funds, has been maintained, funded and administered in compliance
in all respects with its own terms and in compliance in all respects
with all applicable laws and regulations, including but not limited to
ERISA and the Code. No actions, suits, claims, complaints, charges,
proceedings, hearings, examinations, investigations, audits or demands
with respect to the Plans (other than routine claims for benefits) are
pending or threatened, and there are no facts which could give rise to
or be expected to give rise to any actions, suits, claims, complaints,
charges, proceedings, hearings, examinations, investigations, audits or
demands. No Plan that is subject to the funding requirements of Section
412 of the Code or Section 302 of ERISA has incurred any "accumulated
funding deficiency" as such term is defined in such Sections of ERISA
and the Code, whether or not waived, and each Plan has always fully met
the funding standards required under Title I of ERISA and Section 412
of the Code. No liability to the Pension Benefit Guaranty Corporation
("PBGC") (except for routine payment of premiums) has been or is
expected to be incurred with respect to any Plan that is subject to
Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) for which the PBGC has not waived notice has
occurred with respect to any such Plan, and the PBGC has not commenced
or threatened the termination of any Plan. None of the assets of
FirstSpartan or any FirstSpartan Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code,
neither FirstSpartan nor any FirstSpartan 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 FirstSpartan or any
FirstSpartan Subsidiary to any tax under Sections 4971, 4972, 4976,
4977 or 4979 of the Code or to a fine or penalty under Section 502(c)
of ERISA.
(v) Each Plan that is intended to be qualified under Section
401(a) of the Code or, in the case of an employee stock ownership plan,
qualifies as such under Section 4975(c)(7) 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
20
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 FirstSpartan or any FirstSpartan Subsidiary is a
member or was a member during such five-year period.
(vii) As of June 30, 1999, the fair market value of the assets
of each Plan that is a tax qualified defined benefit plan equaled or
exceeded, and as of the Closing Date will equal or exceed, the present
value of all vested and nonvested liabilities thereunder determined in
accordance with reasonable actuarial methods, factors and assumptions
applicable to a defined benefit plan on an ongoing basis. With respect
to each Plan that is subject to the funding requirements of Section 412
of the Code and Section 302 of ERISA, all required contributions for
all periods ending prior to or as of the Closing Date (including
periods from the first day of the then-current plan year to the Closing
Date and including all quarterly contributions required in accordance
with Section 412(m) of the Code) shall have been made. With respect to
each other Plan, all required payments, premiums, contributions,
reimbursements or accruals for all periods ending prior to or as of the
Closing Date shall have been made. No tax qualified Plan has any
unfunded liabilities.
(viii) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under
Section 408 of ERISA or Section 4975 of the Code, whether by statutory,
class or individual exemption) has occurred with respect to any Plan
which would result in the imposition, directly or indirectly, of any
excise tax, penalty or other liability under Section 4975 of the Code
or Section 409 or 502(i) of ERISA. Neither FirstSpartan nor, to the
best knowledge of FirstSpartan, any FirstSpartan Subsidiary, any
trustee, administrator or other fiduciary of any Plan (including,
without limitation, The First Federal Bank Employee Stock Ownership
Plan (the "ESOP")), 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 FirstSpartan or any FirstSpartan Subsidiary to any liability
for breach of fiduciary duty under ERISA or any other applicable law.
(ix) With respect to each Plan, all reports and information
required to be filed with any government agency or distributed to Plan
participants and their beneficiaries have been duly and timely filed or
distributed.
(x) FirstSpartan and each FirstSpartan Subsidiary has been and
is presently in compliance with all of the requirements of Section
4980B of the Code.
21
(xi) Neither FirstSpartan nor any FirstSpartan Subsidiary has
a liability as of June 30, 1999 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 FirstSpartan as
of June 30, 1999 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A)
FirstSpartan's or any FirstSpartan Subsidiary's obligation to make
contributions or any other payments to fund benefits accrued under the
Plans as of the date of this Agreement or (B) the benefits accrued or
payable with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting,
accelerated allocation of previously unallocated Plan assets or by the
conversion of all stock options in accordance with Section 2.9).
(xiii) With respect to each Plan, FirstSpartan 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 FirstSpartan and any
FirstSpartan Subsidiary may be amended or terminated at any time by
action of FirstSpartan's Board of Directors, or such FirstSpartan's
Subsidiary's Board of Directors, as the case may be, or a committee of
such Board of Directors or duly authorized officer, in each case
subject to the terms of the Plan and compliance with applicable laws
and regulations (and limited, in the case of multiemployer plans, to
termination of the participation of FirstSpartan or a FirstSpartan
Subsidiary thereunder).
(xv) The ESOP was adopted in July 1997. FirstSpartan will take
all steps necessary to cause any loan (as described in Treasury
Regulation ss.54.4975-7(b)(1)(ii)) made to the ESOP to be satisfied in
full as soon as practicable following the Closing Date.
3.15 Certain Contracts
-----------------
(a) Neither FirstSpartan nor any FirstSpartan 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
22
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 FirstSpartan or any FirstSpartan
Subsidiary or the guarantee by FirstSpartan or any FirstSpartan Subsidiary of
any such obligation, which cannot be terminated within less than 30 days after
the Closing Date by FirstSpartan or any FirstSpartan 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 FirstSpartan or any FirstSpartan 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 FirstSpartan 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 plans, 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 FirstSpartan nor any FirstSpartan Subsidiary is in default
under any agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of FirstSpartan,
threatened against FirstSpartan or any FirstSpartan Subsidiary or against any
asset, interest, Plan or right of FirstSpartan or any FirstSpartan Subsidiary,
or, to the best knowledge of FirstSpartan, 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 FirstSpartan,
threatened against any present or former director or officer of FirstSpartan or
any FirstSpartan Subsidiary that would reasonably be expected to give rise to a
claim against FirstSpartan or any FirstSpartan Subsidiary for indemnification.
There are no actual or, to the best knowledge of FirstSpartan, threatened
actions, suits or proceedings that present a claim to restrain or prohibit the
transactions contemplated herein or in the BB&T Option Agreement. To the best
knowledge of FirstSpartan, no fact or condition relating to FirstSpartan or any
FirstSpartan Subsidiary exists (including, without
23
limitation, noncompliance with the CRA) that would prevent FirstSpartan or BB&T
from obtaining all of the federal and state regulatory approvals contemplated
herein.
3.17 Compliance with Laws; Filings
-----------------------------
Each of FirstSpartan and each FirstSpartan 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 FirstSpartan nor any
FirstSpartan Subsidiary has received written or, to the best knowledge of
FirstSpartan, oral 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 FirstSpartan nor any FirstSpartan 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 June 30,
1997, FirstSpartan and each of the FirstSpartan Subsidiaries has filed all
reports, registrations, notices and statements, and any amendments thereto, that
it was required to file with federal and state regulatory authorities,
including, without limitation, the Commission, FDIC, OTS, 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 FirstSpartan nor any FirstSpartan Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein, in the Plan of Merger or
in the BB&T Option Agreement, except for an obligation to the Financial Advisor
for investment banking services, the nature and extent of which has been
Disclosed, and except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
----------------------------------
(a) With respect to all agreements currently outstanding pursuant to
which FirstSpartan or any FirstSpartan Subsidiary has purchased securities
subject to an agreement to resell, FirstSpartan or the FirstSpartan 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 FirstSpartan or any
FirstSpartan Subsidiary has sold securities subject to an agreement to
repurchase, neither FirstSpartan nor the FirstSpartan Subsidiary
24
has pledged collateral in excess of the amount required to secure the debt.
Neither FirstSpartan nor any FirstSpartan Subsidiary has pledged collateral in
excess of the amount required under any interest rate swap or other similar
agreement currently outstanding.
(b) Neither FirstSpartan nor any FirstSpartan 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 FirstSpartan Subsidiaries that are
depository institutions are insured by the FDIC to the maximum extent permitted
by federal law, and the FirstSpartan 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
--------------------------
FirstSpartan has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
FirstSpartan or any FirstSpartan Subsidiary is a party with any director,
executive officer or 5% shareholder of FirstSpartan 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 FirstSpartan 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 FirstSpartan to vote on this Agreement and the Plan
of Merger, the Proxy Statement/Prospectus and all amendments or supplements
thereto, with respect to all information set forth therein provided by
FirstSpartan, (i) shall comply with the applicable provisions of the Securities
Laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
3.23 Tax and Regulatory Matters
--------------------------
Neither FirstSpartan nor any FirstSpartan Subsidiary has taken or
agreed to take any action that would or could reasonably be expected to (i)
cause the Merger not to constitute a reorganization under Section 368 of the
Code or (ii) materially impede or
25
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
-------------------
FirstSpartan and each FirstSpartan Subsidiary have taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable moratorium, fair price, business combination, control share or other
anti-takeover laws, and no such law shall be activated or applied as a result of
such transactions. Neither the Certificate of Incorporation nor the Bylaws of
FirstSpartan, nor any other document of FirstSpartan or to which FirstSpartan is
a party, contains a provision that requires more than a majority of the shares
of FirstSpartan Common Stock entitled to vote, or the vote or approval of any
other class of capital stock or voting security, to approve the Merger or any of
the other transactions contemplated in this Agreement.
3.25 Labor Relations
---------------
Neither FirstSpartan nor any FirstSpartan 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 FirstSpartan or any FirstSpartan Subsidiary
party to any collective bargaining agreement. There is no strike or other labor
dispute involving FirstSpartan or any FirstSpartan Subsidiary, pending or
threatened, or to the best knowledge of FirstSpartan, is there any activity
involving any employees of FirstSpartan or any FirstSpartan Subsidiary seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
3.26 Fairness Opinion
----------------
FirstSpartan has received from the Financial Advisor an opinion that,
as of the date hereof, the Merger Consideration is fair to the shareholders of
FirstSpartan from a financial point of view.
3.27 No Right to Dissent
-------------------
Nothing in the Certificate of Incorporation or the Bylaws of
FirstSpartan or the similar governing documents of any FirstSpartan Subsidiary
provides or would provide to any person, including without limitation the
holders of FirstSpartan Common Stock, upon execution of this Agreement or the
Plan of Merger and consummation of the transactions contemplated hereby and
thereby, rights of dissent and appraisal of any kind.
26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to FirstSpartan as follows (the
representations and warranties herein of BB&T are made subject to the applicable
standard set forth in Section 6.2(a), and no such representation or warranty
shall be deemed to be inaccurate unless it is inaccurate to the extent that
FirstSpartan would be entitled to refuse to consummate the Merger pursuant to
Section 7.1(b)(ii) on account of such inaccuracy):
4.1 Capital Structure of BB&T
-------------------------
The authorized capital stock of BB&T consists of (i) 5,000,000 shares
of preferred stock, par value $5.00 per share, of which 2,000,000 shares have
been designated as Series B Junior Participating Preferred Stock and the
remainder are undesignated, and none of which shares are issued and outstanding,
and (ii) 500,000,000 shares of BB&T Common Stock of which 399,893,490 shares
were issued and outstanding as of July 31, 2000. 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 properties and assets, and is duly qualified to do business in
the states of the United States where its ownership or leasing of property or
the conduct of its business requires such qualification. BB&T is registered as a
financial holding company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
(a) BB&T has all requisite corporate power and authority to enter into
and (subject to receipt of all necessary government approvals) perform all of
its obligations under this Agreement and the Plan of Merger. The execution and
delivery of this Agreement and the Plan of Merger and consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
BB&T. This 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
27
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
(whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Plan of
Merger or the Articles of Merger (or the Certificate of Merger), nor
consummation of the transactions contemplated hereby or thereby, nor compliance
by BB&T with any of the provisions hereof or thereof shall (i) conflict with or
result in a breach of any provision of the Articles of Incorporation or bylaws
of BB&T or any BB&T Subsidiary, (ii) constitute or result in a breach of any
term, condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property or
asset of BB&T or any BB&T Subsidiary pursuant to, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation, or (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to BB&T or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
BB&T of the Merger and the other transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
---------------------------------------------------------
Each of the BB&T Subsidiaries is duly organized, validly existing and
in good standing under applicable laws. BB&T owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of each of the BB&T
Subsidiaries. Each of the BB&T Subsidiaries (i) has full power and authority to
carry on its business as now conducted and (ii) is duly qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification.
4.5 Securities Documents; Financial Statements; Statements True
-----------------------------------------------------------
(a) BB&T has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 1996. 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 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 statements of
income, changes in shareholders' equity and cash flows for the periods then
ended (subject, in the case of
28
unaudited interim statements, to the absence of notes and to normal year-end
audit adjustments that are not material in amount or effect) in conformity with
GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or
to be furnished hereunder by BB&T or any BB&T Subsidiary to FirstSpartan
contains or will contain any untrue statement of material fact or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.6 Certain Information
-------------------
When the Proxy Statement/Prospectus is mailed, and at all times
subsequent to such mailing up to and including the time of the meeting of
shareholders of FirstSpartan to vote on the Merger, the Proxy
Statement/Prospectus and all amendments or supplements thereto, with respect to
all information set forth therein relating to BB&T, (i) shall comply with the
applicable provisions of the Securities Laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
4.7 Tax and Regulatory Matters
--------------------------
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger not
to constitute a reorganization under Section 368 of the Code, or (ii) materially
impede or delay receipt of any consents of regulatory authorities referred to in
Section 5.4(b) or result in failure of the condition in Section 6.3(b).
4.8 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a
fiduciary capacity) any shares of FirstSpartan Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actual or, to the best knowledge of BB&T, threatened
actions, suits or proceedings that 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 FirstSpartan
from obtaining all of the federal and state regulatory approvals contemplated
herein.
29
4.10 Adverse Change
--------------
Since June 30, 2000, there has not been any adverse change or any
event that has resulted in, or is reasonably likely to result in, an adverse
change in the business, financial condition or results of operations of BB&T or
any of the BB&T Subsidiaries.
ARTICLE V
COVENANTS
5.1 FirstSpartan Shareholder Meeting
--------------------------------
FirstSpartan shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as reasonably
practicable following the effectiveness of the Registration Statement. By
approving this Agreement and authorizing its execution, the Board of Directors
of FirstSpartan agrees that it shall, at the time the Proxy Statement/Prospectus
is mailed to the shareholders of FirstSpartan, recommend that FirstSpartan's
shareholders vote for such approval; provided, that the Board of Directors of
FirstSpartan may withdraw, modify, condition 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
FirstSpartan's shareholders after consideration of (i) written advice of legal
counsel that such recommendation or the failure to withdraw or modify such
recommendation could reasonably be expected to constitute a breach of the
fiduciary duty of the Board of Directors to the shareholders of FirstSpartan,
and (ii) a written determination from the Financial Advisor that the Merger
Consideration is not fair or is inadequate to the FirstSpartan shareholders from
a financial point of view, accompanied by a detailed analysis of the reasons for
such determination.
5.2 Registration Statement; Proxy Statement/Prospectus
--------------------------------------------------
As promptly as practicable after the date hereof, BB&T shall prepare
and file the Registration Statement with the Commission. FirstSpartan will
furnish to BB&T the information required to be included in the Registration
Statement with respect to its business and affairs before it is filed with the
Commission and again before any amendments are filed, and shall have the right
to review and consult with BB&T on the form of, and any characterizations of
such information included in, the Registration Statement prior to the filing
with the Commission. BB&T shall prepare such Registration Statement such that,
at the time it becomes effective and on the Effective Time, it conforms in all
material respects to the requirements of the Securities Act and the applicable
rules and regulations of the Commission (provided that no covenant is made by
BB&T as to information provided by FirstSpartan for inclusion in the
Registration Statement). The Registration Statement shall include the form of
Proxy Statement/Prospectus. BB&T and FirstSpartan shall use all reasonable
efforts to cause
30
the Proxy Statement/Prospectus to be approved by the Commission for mailing to
the FirstSpartan 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. BB&T shall notify FirstSpartan, as promptly as reasonably
practicable following BB&T's receipt of notice thereof, if a stop order is
issued with respect to the Registration Statement or the Proxy
Statement/Prospectus. FirstSpartan shall cause the Proxy Statement/Prospectus to
be mailed to its shareholders in accordance with all applicable notice
requirements under the Securities Laws, the DGCL and the rules and regulations
of the Nasdaq Stock Market.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with
the Plan of Merger. In connection therewith, BB&T acknowledges that it (i) has
adopted the Plan of Merger and (ii) will pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient to
effect the Merger, BB&T shall take all appropriate action as may be required to
increase the number of shares of BB&T Common Stock reserved for such purpose.
5.4 Additional Acts
---------------
(a) FirstSpartan agrees to take such actions requested by BB&T as may
be reasonably necessary to modify the structure of, or to substitute parties to
(so long as such substitute is BB&T or a BB&T Subsidiary) the transactions
contemplated hereby, provided that such modifications do not change the Merger
Consideration or abrogate the covenants and other agreements contained in this
Agreement, including, without limitation, the covenant not to take any action
that would substantially delay or impair the prospects of completing the Merger
pursuant to this Agreement and the Plan of Merger.
(b) As promptly as practicable after the date hereof, BB&T and
FirstSpartan shall submit notice or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board, the OTS and any
other federal, state or local government agency, department or body to which
notice is required or from which approval is required for consummation of the
Merger and the other transactions contemplated hereby. FirstSpartan 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. FirstSpartan and
BB&T shall provide promptly to each other copies of all correspondence with
regulatory bodies to which notices or applications are submitted.
31
5.5 Best Efforts
------------
Each of BB&T and FirstSpartan 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 FirstSpartan
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
--------------------------
FirstSpartan shall cooperate with BB&T concerning (i) accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with record keeping, loan
classification, valuation adjustments, levels of loan loss reserves and other
accounting practices, and (ii) FirstSpartan's lending, investment or
asset/liability management policies; provided, that any action taken pursuant to
this Section 5.6 shall not be deemed to constitute or result in the breach of
any representation, warranty or covenant of FirstSpartan contained in this
Agreement. FirstSpartan shall not be required to modify or change any such
policies or practices, however, until the earlier of (A) such time as BB&T
acknowledges that all conditions to its obligation to consummate the Merger have
been waived or satisfied (other than the delivery of certificates, opinions and
other instruments and documents to be delivered at Closing or otherwise to be
dated at the Effective Time, the delivery of which shall continue to be a
condition to BB&T's obligation to consummate the Merger) or (B) immediately
prior to the Effective Time.
5.7 Access to Information
---------------------
FirstSpartan 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,
FirstSpartan 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 FirstSpartan and the
FirstSpartan Subsidiaries and, during such period, shall make available all
information concerning their businesses as may be reasonably
32
requested. No investigation pursuant to this Section 5.7 shall affect or be
deemed to modify any representation or warranty made by, or the conditions to
the obligations hereunder of, either party hereto. Each party hereto shall, and
shall cause each of its directors, officers, attorneys and advisors to, maintain
the confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information previously
furnished in connection with the transactions contemplated by this Agreement.
5.8 Press Releases
--------------
BB&T and FirstSpartan 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 FirstSpartan
----------------------------
Except with the prior written consent of BB&T (which consent shall not
be arbitrarily withheld or delayed), between the date hereof and the Effective
Time, FirstSpartan shall not, and shall cause each of the FirstSpartan
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 $0.25 per share of FirstSpartan Common
Stock payable on record dates and in amounts consistent with past
practices; provided that any dividend declared or payable on the shares
of FirstSpartan Common Stock in the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
BB&T and FirstSpartan, be declared with a record date prior to the
Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of BB&T Common Stock is
before the Effective Time;
(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plan with respect to the
options outstanding on the date hereof or pursuant to the BB&T Option
Agreement;
33
(d) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(e) amend its Certificate 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 FirstSpartan
Subsidiary, or permit any such lien, charge or encumbrance to exist; or
waive or release any material right or cancel or compromise any debt or
claim, in each case other than in the ordinary course of business;
(g) merge with any other entity or permit any other entity to
merge into it, or consolidate with any other entity; acquire control
over any other entity; or liquidate, sell or otherwise dispose of any
assets or acquire any assets other than in the ordinary course of its
business consistent with past practices;
(h) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(i) increase the rate of compensation of any of its directors,
officers or employees (excluding increases in compensation resulting
from the exercise of compensatory stock options outstanding as of the
date of this Agreement), or pay or agree to pay any bonus to, or
provide any new employee benefit or incentive to, any of its directors,
officers or employees, except for increases or payments made in the
ordinary course of business consistent with past practice pursuant to
plans or arrangements in effect on the date hereof;
(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, FirstSpartan or any FirstSpartan Subsidiary or any
business combination with FirstSpartan or any FirstSpartan Subsidiary
other than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of FirstSpartan or any FirstSpartan
Subsidiary to do any of the above; or fail to notify BB&T immediately
if any such inquiries or proposals are
34
received, any such information is requested or required, or any such
negotiations or discussions are sought to be initiated; provided, that
this Section 5.9(k) shall not apply to furnishing information,
negotiations or discussions with the offeror following an unsolicited
offer if, as a result of such offer, FirstSpartan is advised in writing
by legal counsel that the failure to so furnish information or
negotiate could reasonably be expected to constitute a breach of the
fiduciary duty of FirstSpartan's Board of Directors to the FirstSpartan
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 FirstSpartan
or a FirstSpartan Subsidiary or guarantee by FirstSpartan or a
FirstSpartan Subsidiary of any obligation, (iii) any agreement,
arrangement or commitment relating to the employment or severance of a
consultant or the employment, severance, election or retention in
office of any present or former director, officer or employee (this
clause shall not apply to the election of directors by shareholders or
the reappointment of officers in the normal course), or (iv) any
contract, agreement or understanding with a labor union;
(m) change its lending, investment or asset/liability
management policies in any material respect, except (i) as may be
required by applicable law, regulation, or directives, and (ii) 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, and subject to Section 5.6, FirstSpartan 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 June 30,
1999 in any material respect, 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 June
30, 1999, 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 and reverse repurchase
arrangements in the ordinary course of business;
35
(q) take any action which would or could reasonably be
expected to (i) cause the Merger not to constitute a reorganization
under Section 368 of the Code as determined by BB&T, (ii) result in any
inaccuracy of a representation or warranty herein that would allow for
a termination of this Agreement, or (iii) cause any of the conditions
precedent to the transactions contemplated by this Agreement to fail to
be satisfied;
(r) dispose of any material assets other than in the ordinary
course of business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
BB&T (or its specified BB&T Subsidiary) has entered into employment
agreements with Xxxxx X. Xxxxxxx in the form of Annex B hereto and with R. Xxxxx
Xxxxxxx, Xxxx X. Xxxxxxxx and J. Xxxxxxx Xxxxxxxx in the form of Annex C hereto,
all of which shall become effective as of the Effective Time.
5.11 Affiliates
----------
FirstSpartan shall use its best efforts to cause all persons who are
Affiliates of FirstSpartan to deliver to BB&T promptly following execution of
this Agreement, and in any event prior to the Closing Date, a written agreement
providing that such person will not dispose of BB&T Common Stock received in the
Merger except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
5.12 Section 401(k) Plan; Other Employee Benefits
--------------------------------------------
(a) Effective on the Benefit Plan Determination Date with respect to
the 401(k) plan of FirstSpartan, BB&T shall cause such plan to be merged with
the 401(k) plan maintained by BB&T and the BB&T Subsidiaries, or to be frozen or
terminated, in each case as determined by BB&T and subject to the receipt of all
applicable regulatory or governmental approvals. Each employee of FirstSpartan
at the Effective Time who (i) is a participant in the 401(k) plan of
FirstSpartan, (ii) becomes an employee immediately following the Effective Time
of BB&T or of any subsidiary of BB&T ("Employer Entity"), and (iii) continues in
the employment of an Employer Entity until the Benefit Plan Determination Date
for the 401(k) plan, shall be eligible to participate in BB&T's 401(k) plan as
of such Benefit Plan Determination Date. Any other former employee of
FirstSpartan who is employed by an Employer Entity on or after such Benefit Plan
Determination Date shall be eligible to be a participant in the BB&T 401(k) plan
upon complying with eligibility requirements. All rights to participate in
BB&T's 401(k) plan are subject to BB&T's right to amend or terminate the plan.
Until such Benefit Plan Determination Date, BB&T shall continue in effect for
the benefit of participating employees the 401(k) plan of FirstSpartan. For
purposes of administering BB&T's
36
401(k) plan, service with FirstSpartan and the FirstSpartan Subsidiaries shall
be deemed to be service with BB&T for participation and vesting purposes, but
not for purposes of benefit accrual. Each employee of FirstSpartan or a
FirstSpartan Subsidiary at the Effective Time who becomes an employee
immediately following the Effective Time of an Employer Entity is referred to
herein as a "Transferred Employee."
(b) Each Transferred Employee shall be eligible to participate in group
hospitalization, medical, dental, life, disability and other welfare benefit
plans and programs available to employees of the Employer Entity, subject to the
terms of such plans and programs, as of the Benefit Plan Determination Date for
each such plan or program, conditional upon the Transferred Employee's being
employed by an Employer Entity as of such Benefit Plan Determination Date and
subject to complying with eligibility requirements of the respective plans and
programs. With respect to health care coverages, participation in BB&T's plans
may be subject to availability of HMO options. In any case in which HMO coverage
is not available, substitute coverage will be provided that may not be fully
comparable to the HMO coverage. With respect to any welfare benefit plan or
program of FirstSpartan that the Employer Entity determines, in its sole
discretion, provides benefits of the same type or class as a corresponding plan
or program maintained by the Employer Entity, the Employer Entity shall continue
such FirstSpartan plan or program in effect for the benefit of the Transferred
Employees so long as they remain eligible to participate and until they shall
become eligible to become participants in the corresponding plan or program
maintained by the Employer Entity (and, with respect to any such plan or
program, subject to complying with eligibility requirements and subject to the
right of the Employer Entity to terminate such plan or program). For purposes of
administering the welfare plans and programs subject to this Section 5.12(b),
(A) service with FirstSpartan shall be deemed to be service with the Employer
Entity for the purpose of determining eligibility to participate and vesting (if
applicable) in such welfare plans and programs, but not for the purpose of
computing benefits, if any, determined in whole or in part with reference to
service (except as otherwise provided in Section 5.12(c)), and (B) each
Transferred Employee shall receive credit for any deductibles and out-of pocket
expenses paid prior to the applicable Benefit Plan Determination Date (to the
same extent such credit was given under the analogous plan prior to such Benefit
Plan Determination Date) in satisfying any applicable deductibles or
out-of-pocket expenses.
(c) Except to the extent of commitments herein or other contractual
commitments, if any, specifically made or assumed hereunder by BB&T, neither
BB&T nor any Employer Entity shall have any obligation arising from the Merger
to continue any Transferred Employees in its employ or in any specific job or to
provide to any Transferred Employee any specified level of compensation or any
incentive payments, benefits or perquisites. Each Transferred Employee who is
terminated by an Employer Entity subsequent to the Effective Time, excluding any
employee who has a then existing contract providing for severance or who is a
participant in the FirstSpartan Severance Compensation Plan, 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
37
to severance pay under such policy. Such employee's service with FirstSpartan or
a FirstSpartan 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 FirstSpartan and the
FirstSpartan Subsidiaries have with their current and former employees and
directors and which have been Disclosed to BB&T pursuant to this Agreement,
except to the extent any such agreements shall be superseded or terminated at
the Closing or following the Closing Date. Except for the agreements described
in the preceding sentence and except as otherwise provided in this Section 5.12,
the employee benefit plans of FirstSpartan shall, in the sole discretion of
BB&T, be frozen, terminated or merged into comparable plans of BB&T, effective
as BB&T shall determine in its sole discretion.
(e) Notwithstanding and without limiting the generality of Section
5.12(d), as soon as practicable following the date hereof but, in any event,
prior to the Effective Time, FirstSpartan shall take any and all action
necessary to terminate the ESOP as of the Effective Time, to repay any
outstanding indebtedness thereof and to allocate shares of FirstSpartan Common
Stock held thereby to the participants therein in accordance with the terms
thereof. No purchases of shares of FirstSpartan Common Stock shall be made
thereunder after the date hereof.
5.13 Directors and Officers Protection
---------------------------------
BB&T or a BB&T Subsidiary shall provide and keep in force for a period
of three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of FirstSpartan for acts
or omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in FirstSpartan's policy on
the date hereof; provided, that in no event shall the annual premium on such
policy exceed 150% of the annual premium payments on FirstSpartan's policy in
effect as of the date hereof (the "Maximum Amount"). If the amount of the
premiums necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, BB&T shall use its reasonable efforts to maintain the most
advantageous policies of directors' and officers' liability insurance obtainable
for a premium equal to the Maximum Amount. Notwithstanding the foregoing, BB&T
further agrees to indemnify all individuals who are or have been officers,
directors or employees of FirstSpartan or any FirstSpartan 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 Certificate of Incorporation or Bylaws of FirstSpartan on the date hereof
and is permitted under the DGCL and the NCBCA. BB&T shall also advance
indemnifiable expenses as incurred to the extent permitted by the Certificate of
Incorporation or Bylaws of FirstSpartan on the date hereof and permitted under
the DGCL and the NCBCA.
5.14 Forbearances of BB&T
--------------------
38
Except with the prior written consent of FirstSpartan, 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 constitute a reorganization under Section
368 of the Code; (ii) result in any inaccuracy of a representation or warranty
herein that would allow for termination of this Agreement; (iii) cause any of
the conditions precedent to the transactions contemplated by this Agreement to
fail to be satisfied; or (iv) fail to comply in any material respect with any
laws, regulations, ordinances or governmental actions applicable to it and to
the conduct of its business.
5.15 Reports
-------
Each of FirstSpartan and BB&T shall file (and shall cause the
FirstSpartan 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 FirstSpartan,
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 FirstSpartan Common Stock
pursuant to the Merger, and BB&T shall give all notices and make all filings
with the NYSE required in connection with the transactions contemplated herein.
5.17 Advisory Boards
---------------
As of the Effective Time, BB&T shall offer to (i) the members of the
Board of Directors and directors emeritus of FirstSpartan a seat on the BB&T
Advisory Board for the Spartanburg, South Carolina area and (ii) the
FirstSpartan advisory directors in Greer, South Carolina a seat on the BB&T
Advisory Board for the Greer,
39
South Carolina 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 FirstSpartan in effect on August 1, 2000.
Following such two-year period, Advisory Board Members, if they continue to
serve in such capacity, shall receive fees in accordance with BB&T's standard
schedule of fees for service thereon as in effect from time to time. For two
years after the Effective Time, no such Advisory Board member shall be
prohibited from serving thereon because he or she shall have attained the
maximum age for service thereon (currently age 70). Membership of any person on
any Advisory Board shall be conditional upon execution of an agreement providing
that such person will not engage in activities competitive with BB&T for two
years following the Effective Time or, if longer, the period that he or she is a
member of the Advisory Board.
5.18 Board of Directors of Branch Banking and Trust Company of South Carolina
------------------------------------------------------------------------
As of the Effective Time, Branch Banking and Trust Company of South
Carolina, a South Carolina banking corporation, shall elect Xxxxx X. Xxxxxxx 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. Any member of such Board of Directors who is not an employee of BB&T
or any of its Affiliates shall be entitled to receive fees for service on the
Board in accordance with BB&T's policies as in effect from time to time.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and FirstSpartan
--------------------------------------------
The respective obligations of BB&T and FirstSpartan 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 FirstSpartan of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of
40
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, FirstSpartan or any of
the FirstSpartan Subsidiaries shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement; and
(e) FirstSpartan and BB&T shall have received an opinion of BB&T's
legal counsel, in form and substance satisfactory to FirstSpartan 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
FirstSpartan will not recognize any gain or loss to the extent that such
shareholders exchange shares of FirstSpartan Common Stock for shares of BB&T
Common Stock.
6.2 Conditions Precedent - FirstSpartan
-----------------------------------
The obligations of FirstSpartan 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
FirstSpartan 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
FirstSpartan. 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), 4.4 (except as
relates to qualification) and 4.7 shall be true and correct (except for
inaccuracies which are de minimis). There shall not exist inaccuracies in the
representations and warranties of BB&T set forth in this Agreement (including
the representations and warranties set forth in the Sections designated in the
preceding sentence) such that the aggregate effect of such inaccuracies has, or
is reasonably likely to have, a Material Adverse Effect on BB&T.
(b) BB&T shall have performed in all material respects all obligations
and complied in all material respects with all covenants required by this
Agreement.
(c) BB&T shall have delivered to FirstSpartan a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect
41
that the conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c), 6.1(d), 6.2(a)
and 6.2(b), to the extent applicable to BB&T, have been satisfied and that there
are no actions, suits, claims, governmental investigations or procedures
instituted, pending or, to the best of such officer's knowledge, threatened that
reasonably may be expected to have a Material Adverse Effect on BB&T or that
present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger.
(d) FirstSpartan shall have received opinions of counsel to BB&T in the
form reasonably acceptable to FirstSpartan's legal counsel.
(e) The shares of BB&T Common Stock issuable pursuant to the Merger
shall have been approved for listing on the NYSE, subject to official notice of
issuance.
6.3 Conditions Precedent - BB&T
---------------------------
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of FirstSpartan 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 FirstSpartan set forth in
Sections 3.1, 3.2 (except as relates to qualification), 3.3, 3.4 (except the
last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be true and
correct (except for inaccuracies which are de minimis). There shall not exist
inaccuracies in the representations and warranties of FirstSpartan 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 FirstSpartan (evaluated without regard to the
Merger).
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of BB&T,
would so materially adversely affect the business or economic benefits to BB&T
of the transactions contemplated by this Agreement as to render consummation of
such transactions inadvisable or unduly burdensome.
(c) FirstSpartan shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) FirstSpartan shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the
extent applicable to FirstSpartan, have
42
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 FirstSpartan (evaluated without regard to the Merger)
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 FirstSpartan in the
form reasonably acceptable to BB&T's legal counsel.
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 hereto in
writing (i) in the event of a material breach by the other party of any covenant
or agreement contained in this Agreement, or (ii) in the event of an inaccuracy
of any representation or warranty of the other party contained in this
Agreement, which inaccuracy would provide the nonbreaching party the ability to
refuse to consummate the Merger under the applicable standard set forth in
Section 6.2(a) in the case of FirstSpartan and Section 6.3(a) in the case of
BB&T; and, in the case of (i) or (ii), if such breach or inaccuracy has not been
cured by the earlier of thirty days following written notice of such breach to
the party committing such breach or the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
material breach of any of its representations, warranties, covenants or
undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 are denied, and the
time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders
of FirstSpartan do not approve the Agreement and the Plan of Merger at a meeting
called and held for the purpose of voting thereon.
43
(f) At any time following April 30, 2001 by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in material breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to the Effective Time, by BB&T in writing, if the
Board of Directors of FirstSpartan shall have withdrawn, modified, conditioned
or refused to make its recommendation to the shareholders of FirstSpartan that
they vote to approve this Agreement and the Plan of Merger.
7.2 Effect of Termination
---------------------
In the event this Agreement and the Plan of Merger is terminated
pursuant to Section 7.1, both this Agreement and the Plan of Merger shall become
void and have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for a breach of the
covenant, agreement, representation or warranty giving rise to such termination.
The BB&T Option Agreement shall be governed by its own terms, and no provision
contained herein shall limit the ability of BB&T to exercise its rights under
the BB&T Option Agreement.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13 and 5.17); provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or FirstSpartan (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 FirstSpartan, the aforesaid
representations, warranties and covenants being material inducements to
consummation by BB&T and FirstSpartan 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 FirstSpartan 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,
44
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 FirstSpartan shareholders of this Agreement and the Plan of Merger, shall
reduce either the Exchange Ratio or the payment terms for fractional interests.
7.5 Amendment or Supplement
-----------------------
This Agreement or the Plan of Merger may be amended or supplemented at
any time in writing by mutual agreement of BB&T and FirstSpartan, 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
FirstSpartan.
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 FirstSpartan to
enforce rights in Sections 5.13 and 5.17.
45
8.3 No Assignment
-------------
Except for a substitution of parties pursuant to Section 5.4(a), none
of the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
If to FirstSpartan:
Xxxxx X. Xxxxxxx
First Federal Bank
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With a required copy to:
Xxxx X. Xxxxxxx
Xxxxxxx, Xxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to BB&T:
Xxxxx X. Xxxx
000 Xxxxx Xxxxxxxxx Xxxx
0xx Xxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With a required copy to:
Xxxxxxx X. Xxxxx, XX
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
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Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Specific Performance
--------------------
FirstSpartan acknowledges that the FirstSpartan Common Stock and the
FirstSpartan business and assets are unique, and that if FirstSpartan 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 FirstSpartan shall, without cause,
refuse to consummate the transactions contemplated by this Agreement.
8.6 Captions
--------
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.7 Counterparts
------------
This Agreement and the Plan of Merger may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.8 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[remainder of page intentionally left blank]
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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: /s/ Xxxx X. Xxxxxxx XX
--------------------------------------
Name: Xxxx X. Xxxxxxx XX
------------------------------------
Title: Chairman & Chief Executive Officer
-----------------------------------
FIRSTSPARTAN FINANCIAL CORP.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------------
Title: President & Chief Executive Officer
------------------------------------
