1
EXHIBIT 99.6
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST LIBERTY FINANCIAL CORP.
AND
BB&T CORPORATION
2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS .................................................... 1
ARTICLE II
THE MERGER ..................................................... 7
2.1 Merger .................................................. 7
2.2 Filing; Plan of Merger .................................. 8
2.3 Effective Time .......................................... 8
2.4 Closing ................................................. 8
2.5 Effect of Merger ........................................ 9
2.6 Further Assurances ...................................... 9
2.7 Merger Consideration .................................... 10
2.8 Conversion of Shares; Payment of Merger Consideration ... 10
2.9 Conversion of Stock Options ............................. 11
2.10 Merger of Subsidiaries .................................. 13
2.11 Anti-Dilution ........................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FIRST LIBERTY ................ 13
3.1 Capital Structure ....................................... 14
3.2 Organization, Standing and Authority .................... 14
3.3 Ownership of Subsidiaries ............................... 15
3.4 Organization, Standing and Authority of the Subsidiaries 15
3.5 Authorized and Effective Agreement ...................... 15
3.6 Securities Filings; Financial Statements; Statements True 16
3.7 Minute Books ............................................ 17
3.8 Adverse Change .......................................... 17
3.9 Absence of Undisclosed Liabilities ...................... 17
3.10 Properties .............................................. 17
3.11 Environmental Matters ................................... 18
3.12 Loans; Allowance for Loan Losses ........................ 19
3.13 Tax Matters ............................................. 19
3.14 Employees; Compensation; Benefit Plans .................. 20
3.15 Certain Contracts ....................................... 25
3.16 Legal Proceedings; Regulatory Approvals ................. 26
3.17 Compliance with Laws; Filings ........................... 26
3.18 Brokers and Finders ..................................... 27
3.19 Repurchase Agreements; Derivatives ...................... 27
3.20 Deposit Accounts ........................................ 27
3
3.21 Related Party Transactions .............................. 28
3.22 Certain Information ..................................... 28
3.23 Tax and Regulatory Matters .............................. 28
3.24 State Takeover Laws; Shareholder Rights Plan ............ 28
3.25 Labor Relations ......................................... 29
3.26 No Right to Dissent ..................................... 29
3.27 Fairness Opinion ........................................ 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T ......................... 29
4.1 Capital Structure of BB&T ............................... 30
4.3 Authorized and Effective Agreement ...................... 30
4.4 Organization, Standing and Authority of BB&T Subsidiaries 31
4.5 Securities Documents; Statements True ................... 31
4.6 Certain Information ..................................... 31
4.7 Tax and Regulatory Matters .............................. 32
ARTICLE V
COVENANTS ...................................................... 32
5.1 First Liberty Shareholder Meeting ....................... 32
5.2 Registration Statement; Proxy Statement/Prospectus ...... 32
5.3 Plan of Merger; Reservation of Shares ................... 33
5.4 Additional Acts ......................................... 33
5.5 Best Efforts ............................................ 34
5.6 Certain Accounting Matters .............................. 34
5.7 Access to Information ................................... 35
5.8 Press Releases .......................................... 35
5.9 Forbearances of First Liberty ........................... 35
5.10 Employment Agreements ................................... 39
5.11 Affiliates .............................................. 39
5.12 Section 401(k) Plan; ESSOP; Other Employee Benefits ..... 39
5.13 Directors and Officers Protection ....................... 41
5.14 Forbearances of BB&T .................................... 42
5.15 Reports ................................................. 42
5.16 Exchange Listing ........................................ 42
5.17 Advisory Board for Georgia Area ......................... 43
5.18 Board of Directors of Branch Banking and Trust Company .. 43
4
ARTICLE VI
CONDITIONS PRECEDENT ........................................... 43
6.1 Conditions Precedent - BB&T and First Liberty ........... 43
6.2 Conditions Precedent - First Liberty .................... 44
6.3 Conditions Precedent - BB&T ............................. 45
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT ..................... 46
7.1 Termination ............................................. 46
7.2 Effect of Termination ................................... 47
7.3 Survival of Representations, Warranties and Covenants ... 48
7.4 Waiver .................................................. 48
7.5 Amendment or Supplement ................................. 49
ARTICLE VIII
MISCELLANEOUS .................................................. 49
8.1 Expenses ................................................ 49
8.2 Entire Agreement ........................................ 49
8.3 No Assignment ........................................... 49
8.4 Notices ................................................. 49
8.6 Captions ................................................ 51
8.7 Counterparts ............................................ 51
8.8 Governing Law ........................................... 51
ANNEXES
Annex A Articles of Merger
Annexes B-1 through B-10 Employment Agreements with Officers
5
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
April 27, 1999, is by and between FIRST LIBERTY FINANCIAL CORP. ("First
Liberty"), a Georgia corporation having its principal office at Macon, Georgia,
and BB&T CORPORATION ("BB&T"), a North Carolina corporation having its principal
office at Winston-Salem, North Carolina;
R E C I T A L S:
The parties desire that First Liberty shall be merged with and into
BB&T (said transaction being hereinafter referred to as the "Merger") pursuant
to a plan of merger (the "Plan of Merger") substantially in the form attached as
Annex A hereto, and the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby. As a condition and inducement to BB&T's
willingness to enter into the Agreement, First Liberty is concurrently granting
to BB&T an option to acquire, under certain circumstances, 2,838,708 shares of
the common stock, par value $1.00 per share, of First Liberty.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any Person, who directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with such Person and, without limiting the generality
of the foregoing, includes any executive officer or director of such Person and
any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be
filed with the office of the Secretary of State of North Carolina, as provided
in Section 55-11-05 of the NCBCA, and with the office of the Secretary of State
of Georgia, as provided in Section 14-2-1105 of the GBCC.
1
6
"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 First Liberty Common Stock, which shall be executed
immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended (42 U.S.C. 9601 et seq.).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Disclosed" shall mean disclosed in the First Liberty Disclosure
Memorandum, referencing the Section number herein pursuant to which such
disclosure is being made.
"Environmental Claim" means any notice from any governmental authority
or third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based upon, or resulting from a
violation of the Environmental Laws or the presence or release into the
environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and
2
7
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 Sandler X'Xxxxx & Partners, L.P.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 1998, 1997, and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
1998, 1997, and 1996, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 1998, and (b) with respect to First Liberty, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of First Liberty as of September 30, 1998, September 30, 1997 and September
30, 1996, and the related consolidated statements of income and retained
earnings, and cash flows (including related notes and schedules, if any) for
each of the three years ended September 30, 1998, September 30, 1997 and
September 30, 1996 as filed by First Liberty in Securities Documents and (ii)
the consolidated statements of financial condition of First Liberty (including
related notes and schedules, if any) and the related consolidated statements of
income and retained earnings, and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by First Liberty with
respect to periods ended subsequent to September 30, 1998.
"First Liberty Common Stock" shall mean the shares of voting common
stock, par value $1.00 per share, of First Liberty, with rights attached
pursuant to Shareholder Rights Plan dated August 2, 1989.
3
8
"First Liberty Disclosure Memorandum" shall mean the written
information in one or more documents, each of which is entitled "First Liberty
Disclosure Memorandum" and dated on or before the date of this Agreement and
delivered not later than seven days after the date of execution of this
Agreement by First Liberty to BB&T, and describing in reasonable detail the
matters contained therein. Each disclosure made therein shall be in existence on
the date of this Agreement and shall specifically reference each Section of this
Agreement under which such disclosure is made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced.
"First Liberty ESSOP" shall mean the First Liberty Financial Corp.
Employee Savings and Stock Ownership Plan.
"First Liberty Subsidiaries" shall mean First Liberty Bank, Liberty
Mortgage Corporation, NewSouth Financial Services, Inc., OFC Capital Corporation
and any and all other Subsidiaries of First Liberty as of the date hereof and
any corporation, bank, savings association, or other organization acquired as a
Subsidiary of First Liberty after the date hereof and held as a Subsidiary by
First Liberty 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.
"GBCC" shall mean the Georgia Business Corporation Code, as amended.
"Hazardous Substances" means any substance or material (i) identified
in CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or regulation,
including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v)
poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste
which are otherwise dangerous, hazardous, harmful to human health or the
environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or First Liberty shall mean an event,
fact, change, or occurrence which, individually or together with any other
event, fact, change or occurrence, (i) has a material adverse effect on the
financial condition, results of operations, business or business prospects of
BB&T and the BB&T Subsidiaries taken as a whole, or First Liberty and the First
Liberty Subsidiaries taken as a whole, or (ii) materially impairs the ability of
BB&T or First Liberty to perform its obligations under this Agreement or to
consummate the Merger and the other transactions contemplated by this Agreement;
provided that "Material Adverse Effect" shall not be deemed to include the
impact of (a) actions and omissions of BB&T or First Liberty 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
4
9
operating performance of the parties, including expenses incurred by the parties
in consummating the transactions contemplated by this Agreement or relating to
any litigation arising as a result of the Merger.
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"Performance Excellence Plan" shall mean the First Liberty Financial
Corp. Performance Excellence Plan.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders of
First Liberty 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.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939 as amended; and the rules and
regulations of the Commission promulgated thereunder.
5
10
"Stock Option" shall mean, collectively, any option granted under the
Stock Option Plans, outstanding and unexercised on the date hereof to acquire
shares of First Liberty Common Stock, aggregating 771,314 shares.
"Stock Option Plans" shall mean the First Liberty Financial Corp. 1992
Stock Incentive Plan and the First Liberty Financial Corp. 1995 Director 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)
Exchange Ratio Section 2.7(a)
Merger Recitals
Merger Consideration Section 2.7(a)
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
First Liberty Introduction
Surviving Corporation Section 2.1(a)
6
11
ARTICLE II
THE MERGER
2.1 Merger
BB&T and First Liberty are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the GBCC. At the
Effective Time:
7
12
(a) First Liberty shall be merged with and into BB&T in accordance with
the applicable provisions of the NCBCA and the GBCC, with BB&T being the
surviving corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of First Liberty shall cease and the Merger
shall in all respects have the effect provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall
become the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall become the Bylaws of
the Surviving Corporation.
2.2 Filing; Plan of Merger
The Merger shall not become effective unless this Agreement and the
Plan of Merger are duly approved by shareholders holding at least a majority of
the shares of First Liberty Common Stock. Upon fulfillment or waiver of the
conditions specified in Article VI and provided that this Agreement has not been
terminated pursuant to Article VII, the Constituent Corporations will cause the
Articles of Merger to be executed and filed with the Secretary of State of North
Carolina and the Secretary of State of Georgia, as provided in Section 55-11-05
of the NCBCA and Section 14-2-1105 of the GBCC, respectively. The Plan of Merger
is incorporated herein by reference, and adoption of this Agreement by the
Boards of Directors of the Constituent Corporations and approval by the
shareholders of First Liberty shall constitute adoption and approval of the Plan
of Merger.
2.3 Effective Time
The Merger shall be effective at the day and hour specified in the
Articles of Merger as filed as provided in Section 2.2 (herein sometimes
referred to as the "Effective Time").
2.4 Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on a date after September 30,
1999 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").
8
13
2.5 Effect of Merger
From and after the Effective Time, the separate existence of First
Liberty 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.
9
14
2.7 Merger Consideration
(a) As used herein, the term "Merger Consideration" shall mean the
number of shares of BB&T Common Stock (to the nearest ten thousandth of a share)
to be exchanged for each share of First Liberty Common Stock issued and
outstanding as of the Effective Time and cash (without interest) to be payable
in exchange for any fractional share of BB&T Common Stock which would otherwise
be distributable to a First Liberty 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 First Liberty Common Stock (the "Exchange Ratio") shall
equal the quotient of $33.25 divided by the Closing Value (as defined in Section
2.7(b)), except that, in the event the Closing Value is less than $38.22, the
Exchange Ratio shall be 0.87 and, in the event the Closing Value is more than
$39.12, the Exchange Ratio shall be 0.85.
(b) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the Closing Value. The "Closing Value" shall mean the average closing
price per share of BB&T Common Stock on the NYSE Composite Transaction List (as
reported by The Wall Street Journal - Eastern Edition) for the ten trading days
(determined by excluding days on which the NYSE is closed) ending on the tenth
calendar day preceding the Effective Time (the tenth day to be determined by
counting the first calendar day preceding the Effective Time as the first day).
2.8 Conversion of Shares; Payment of Merger Consideration
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of First Liberty or the holders of record of First Liberty
Common Stock, each share of First Liberty Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and shall
represent the right to receive, upon surrender of the certificate representing
such share of First Liberty Common Stock (as provided in subsection (d) below),
the Merger Consideration.
(b) Each share of the common stock of BB&T issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of First Liberty Common Stock
shall be deemed upon the Effective Time for all purposes to represent only the
right to receive the Merger Consideration. No interest will be paid or accrued
on the Merger Consideration upon the surrender of the certificate or
certificates representing shares of First Liberty Common Stock. With respect to
any certificate for First Liberty Common Stock that has been lost or destroyed,
BB&T shall pay the Merger Consideration attributable to such certificate upon
receipt of a surety bond or other adequate indemnity as required in accordance
with BB&T's standard policy, and evidence reasonably satisfactory to BB&T of
ownership of the shares represented thereby. After the Effective Time, no
transfer of the shares of First Liberty Common Stock outstanding immediately
prior to the Effective Time shall be made on the stock transfer books of the
Surviving Corporation.
10
15
(d) Promptly after the Effective Time, BB&T shall cause to be delivered
or mailed to each First Liberty shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of First Liberty
Common Stock. Upon surrender of such certificates or other evidence of ownership
meeting the requirements of Section 2.8(c), together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, BB&T shall
promptly cause the transfer to the persons entitled thereto of the Merger
Consideration.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time which have been
declared or made by First Liberty in respect of shares of First Liberty Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time, subject to compliance by First Liberty with Section 5.9(b).
To the extent permitted by law, former shareholders of record of First Liberty
shall be entitled to vote after the Effective Time at any meeting of BB&T
shareholders the number of whole shares of BB&T Common Stock into which their
respective shares of First Liberty Common Stock are converted, regardless of
whether such holders have exchanged their certificates representing First
Liberty Common Stock for certificates representing BB&T Common Stock in
accordance with the provisions of this Agreement. Whenever a dividend or other
distribution is declared by BB&T on the BB&T Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares of BB&T Common Stock issuable pursuant to
this Agreement, but no dividend or other distribution payable to the holders of
record of BB&T Common Stock as of any time subsequent to the Effective Time
shall be delivered to the holder of any certificate representing First Liberty
Common Stock until such holder surrenders such certificate for exchange as
provided in this Section 2.8. Upon surrender of such certificate, both the BB&T
Common Stock certificate and any undelivered dividends and cash payments payable
hereunder (without interest) shall be delivered and paid with respect to the
shares of First Liberty Common Stock represented by such certificate.
2.9 Conversion of Stock Options
(a) At the Effective Time, each Stock Option then outstanding (and
which by its terms does not lapse on or before the Effective Time), whether or
not then exercisable, shall be converted into and become rights with respect to
BB&T Common Stock, and BB&T shall assume each Stock Option in accordance with
the terms of the Stock Option Plans, except that from and after the Effective
Time (i) BB&T and its Compensation Committee shall be substituted for First
Liberty and its Compensation and Benefits Committee administering the Stock
Option Plans, (ii) each Stock Option assumed by BB&T may be exercised solely for
shares
11
16
of BB&T Common Stock, (iii) the number of shares of BB&T Common Stock subject to
each such Stock Option shall be the number of whole shares of BB&T (omitting any
fractional share) determined by multiplying the number of shares of First
Liberty Common Stock subject to such Stock Option immediately prior to the
Effective Time by the Exchange Ratio, and (iv) the per share exercise price
under each such Stock Option shall be adjusted by dividing the per share
exercise price under each such Stock Option by the Exchange Ratio and rounding
up to the nearest cent. Notwithstanding the foregoing, BB&T may at its election
substitute as of the Effective Time options under the BB&T Corporation 1995
Omnibus Stock Incentive Plan or any other duly adopted comparable plan (in
either case, the "BB&T Option Plan") for all or a part of the Stock Options,
subject to the following conditions: (A) the requirements of (iii) and (iv)
above shall be met; (B) such substitution shall not constitute a modification,
extension or renewal of any of the Stock Options which are incentive stock
options; and (C) the substituted options shall continue in effect on the same
terms and conditions as provided in the Stock Options and the Stock Option Plans
granting each Stock Option. Each grant of a converted or substitute option to
any individual who subsequent to the Merger will be a director or officer of
BB&T as construed under Rule 16b-3 shall, as a condition to such conversion or
substitution, be approved in accordance with the provisions of Rule 16b-3. Each
Stock Option which is an incentive stock option shall be adjusted as required by
Section 424 of the Code, and the Regulations promulgated thereunder, so as to
continue as an incentive stock option under Section 424(a) of the Code, and so
as not to constitute a modification, extension, or renewal of the option within
the meaning of Section 424(h) of the Code. BB&T and First Liberty agree to take
all necessary steps to effectuate the foregoing provisions of this Section 2.9.
As soon as practicable following the Effective Time, BB&T shall deliver to the
participants in the Stock Option Plans an appropriate notice setting forth such
participant's rights pursuant thereto. BB&T has reserved and shall continue to
reserve adequate shares of BB&T Common Stock for delivery upon exercise of any
converted or substitute options. As soon as practicable after the Effective
Time, if it has not already done so, and to the extent First Liberty shall have
a registration statement in effect or an obligation to file a registration
statement, BB&T shall file a registration statement on Form S-3 or Form S-8, as
the case may be (or any successor or other appropriate forms), with respect to
the shares of BB&T Common Stock subject to converted or substitute options and
shall use its reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such converted or substitute
options remain outstanding. With respect to those individuals, if any, who
subsequent to the Merger may be subject to the reporting requirements under
Section 16(a) of the Exchange Act, BB&T shall administer the Stock Option Plans
assumed pursuant to this Section 2.9 (or the BB&T Option Plan, if applicable) in
a manner that complies with Rule 16b-3 promulgated under the Exchange Act to the
extent necessary to preserve for such individuals the benefits of Rule 16b-3 to
the extent such benefits were available to them prior to the Effective Time.
First Liberty hereby represents that the Stock Option Plans in their current
forms comply with Rule 16b-3 to the extent, if any, required as of the date
hereof.
12
17
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
2.10 Merger of Subsidiaries
In the event that BB&T shall request, First Liberty shall take such
actions, and shall cause the First Liberty Subsidiaries to take such actions, as
may be required in order to effect, at the Effective Time, the merger of one or
more of the First Liberty 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 FIRST LIBERTY
Except as Disclosed, First Liberty represents and warrants to BB&T as
follows (the representations and warranties herein of First Liberty are made
subject to the applicable standard set forth in Section 6.3(a), and no such
representation or warranty shall be deemed to be inaccurate unless the
inaccuracy would permit BB&T to refuse to consummate the Merger under such
applicable standard):
13
18
3.1 Capital Structure
The authorized capital stock of First Liberty consists of 100,000,000
shares of First Liberty Common Stock, par value $1.00 per share, and 5,000,000
shares of First Liberty preferred stock, no par value. As of the date hereof,
14,264,867 shares of First Liberty Common Stock are issued and outstanding and
no shares of First Liberty preferred stock are outstanding. No other classes of
capital stock of First Liberty, common or preferred, are authorized, issued or
outstanding. All outstanding shares of First Liberty Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable. No shares of
capital stock have been reserved for any purpose, except for (i) shares of First
Liberty Common Stock reserved in connection with the Stock Option Plans and the
Performance Excellence Plan, and (ii) 2,838,708 shares of First Liberty Common
Stock reserved in connection with the BB&T Option Agreement. First Liberty has
granted options to acquire 771,314 shares of First Liberty Common Stock under
the Stock Option Plans, which options remain outstanding as of the date hereof,
and may issue additional options based on First Liberty's financial performance
for its fiscal year ending September 30, 1999 to purchase up to 116,850 shares
of First Liberty Common Stock under the Performance Excellence Plan and up to
116,000 shares of First Liberty Common Stock under the Stock Option Plans.
Except as set forth in this Section 3.1, there are no Rights authorized, issued
or outstanding with respect to, nor are there any agreements, understandings or
commitments relating to the right of any First Liberty shareholder to own, to
vote or to dispose of, the capital stock of First Liberty. Holders of First
Liberty Common Stock do not have preemptive rights.
3.2 Organization, Standing and Authority
First Liberty is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia, with full corporate power
and authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. First Liberty is not required to be qualified
to do business in any other state of the United States or foreign jurisdiction.
14
19
3.3 Ownership of Subsidiaries
Section 3.3 of the First Liberty Disclosure Memorandum lists all of the
First Liberty Subsidiaries and, with respect to each, its jurisdiction of
organization, jurisdictions in which it is qualified or otherwise licensed to
conduct business, the number of shares or ownership interests owned by First
Liberty (directly or indirectly), the percentage ownership interest so owned by
First Liberty and its business activities. The outstanding shares of capital
stock or other equity interests of the First Liberty Subsidiaries are validly
issued and outstanding, fully paid and nonassessable, and all such shares are
directly or indirectly owned by First Liberty free and clear of all liens,
claims and encumbrances or preemptive rights of any person. No Rights are
authorized, issued or outstanding with respect to the capital stock or other
equity interests of the First Liberty Subsidiaries, and there are no agreements,
understandings or commitments relating to the right of First Liberty to own, to
vote or to dispose of said interests. None of the shares of capital stock or
other equity interests of the First Liberty Subsidiaries have been issued in
violation of the preemptive rights of any person. Section 3.3 of the First
Liberty Disclosure Memorandum also lists all shares of capital stock or other
securities or ownership interests of any corporation, partnership, joint
venture, or other organization (other than the First Liberty Subsidiaries) owned
directly or indirectly by First Liberty.
3.4 Organization, Standing and Authority of the Subsidiaries
Each First Liberty Subsidiary which is a depository institution is a
federally chartered savings association with its deposits insured by the FDIC.
Each of the First Liberty Subsidiaries is validly existing and in good standing
under the laws of its jurisdiction of organization. Each of the First Liberty
Subsidiaries has full power and authority to carry on its business as now
conducted, and is duly qualified to do business in each jurisdiction Disclosed
with respect to it. No First Liberty Subsidiary is required to be qualified to
do business in any other state of the United States or foreign jurisdiction, or
is engaged in any type of activities that have not been Disclosed.
3.5 Authorized and Effective Agreement
(a) First Liberty has all requisite corporate power and authority to
enter into and (subject to receipt of all necessary governmental approvals and
the receipt of approval of the First Liberty shareholders of this Agreement and
the Plan of Merger) to perform all of its obligations under this Agreement, the
Articles of Merger and the BB&T Option Agreement. The execution and delivery of
this Agreement, the Articles of Merger and the BB&T Option Agreement, and
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action, except, in the case of
this Agreement and the Plan of Merger, the approval of the First Liberty
shareholders pursuant to and to the extent required by applicable law. This
Agreement, the Plan of Merger and the BB&T
15
20
Option Agreement constitute legal, valid and binding obligations of First
Liberty, and each is enforceable against First Liberty in accordance with its
terms, in each such case subject to (i) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship, receivership, or other
similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity (whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Articles
of Merger or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by First Liberty with any of the
provisions hereof or thereof, shall (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or bylaws of First Liberty or any
First Liberty Subsidiary, (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon any property or asset of
First Liberty or any First Liberty Subsidiary pursuant to, any note, bond,
mortgage, indenture, license, permit, contract, agreement or other instrument or
obligation, or (iii) subject to receipt of all required governmental approvals,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to First Liberty or any First Liberty Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
First Liberty of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Filings; Financial Statements; Statements True
(a) First Liberty has timely filed all Securities Documents required by
the Securities Laws to be filed since September 30, 1995. First Liberty has
Disclosed or made available to BB&T a true and complete copy of each Securities
Document filed by First Liberty with the Commission after September 30, 1995 and
prior to the date hereof, which are all of the Securities Documents that First
Liberty was required to file during such period. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of First Liberty fairly present or will
fairly present, as the case may be, the consolidated financial position of First
Liberty and the First Liberty 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
16
21
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end adjustments that are not material in amount or effect) in
conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or
to be furnished hereunder by First Liberty or any First Liberty Subsidiary to
BB&T contains or will contain any untrue statement of a material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
3.7 Minute Books
The minute books of First Liberty and each of the First Liberty
Subsidiaries contain or will contain at Closing accurate records of all meetings
and other corporate actions of their respective shareholders and Boards of
Directors (including committees of the Board of Directors), and the signatures
contained therein are the true signatures of the persons whose signatures they
purport to be.
3.8 Adverse Change
Since September 30, 1998, First Liberty and the First Liberty
Subsidiaries have not incurred any liability, whether accrued, absolute or
contingent, except as disclosed in the most recent First Liberty 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 fact or event involving a prospective
adverse change in the business, financial condition, results of operations or
business prospects of First Liberty or any of the First Liberty Subsidiaries.
3.9 Absence of Undisclosed Liabilities
All liabilities (including contingent liabilities) of First Liberty and
the First Liberty Subsidiaries are disclosed in the most recent Financial
Statements of First Liberty or are normally recurring business obligations
incurred in the ordinary course of its business since the date of First
Liberty's most recent Financial Statements.
3.10 Properties
(a) First Liberty and the First Liberty Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults
or equitable interests, to all of the properties and assets, real and personal,
tangible and intangible, reflected on the consolidated balance sheet included in
the Financial Statements of First Liberty as of September 30, 1998 or acquired
after such date, except for (i) liens for current taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such
17
22
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent, or (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business.
(b) All leases and licenses pursuant to which First Liberty or any
First Liberty Subsidiary, as lessee or licensee, leases or licenses rights to
real or personal property are valid and enforceable in accordance with their
respective terms.
3.11 Environmental Matters
(a) First Liberty and the First Liberty Subsidiaries are and at all
times have been in compliance with all Environmental Laws. Neither First Liberty
nor any First Liberty Subsidiary has received any communication alleging that
First Liberty or the First Liberty Subsidiary is not in such compliance, and
there are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) There are no pending Environmental Claims, neither First Liberty
nor any First Liberty Subsidiary has received notice of any pending
Environmental Claims, and there are no conditions or facts existing which might
reasonably be expected to result in legal, administrative, arbitral or other
proceedings asserting Environmental Claims or other claims, causes of action or
governmental investigations of any nature seeking to impose, or that could
result in the imposition of, any liability arising under any Environmental Laws
upon (i) First Liberty or any First Liberty Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim First Liberty or any First
Liberty Subsidiary has or may have retained or assumed, either contractually or
by operation of law, (iii) any real or personal property owned or leased by
First Liberty or any First Liberty Subsidiary, or any real or personal property
which First Liberty or any First Liberty Subsidiary has or is judged to have
managed or supervised or participated in the management of, or (iv) any real or
personal property in which First Liberty or any First Liberty Subsidiary holds a
security interest securing a loan recorded on the books of First Liberty or any
First Liberty Subsidiary. Neither First Liberty nor any First Liberty 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) First Liberty and the First Liberty Subsidiaries are in compliance
with all recommendations contained in any environmental audits, analyses and
surveys received by First Liberty relating to all real and personal property
owned or leased by First Liberty or any First Liberty Subsidiary and all real
and personal property of which First Liberty or any First Liberty 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
18
23
under any Environmental Laws, against First Liberty or any First Liberty
Subsidiary or against any person or entity whose liability for any Environmental
Claim First Liberty or any First Liberty Subsidiary has or may have retained or
assumed, either contractually or by operation of law.
3.12 Loans; Allowance for Loan Losses
(a) All of the loans on the books of First Liberty and the First
Liberty 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 First Liberty'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 First Liberty are
adequate as of their respective dates under the requirements of GAAP and
applicable regulatory requirements and guidelines.
3.13 Tax Matters
(a) First Liberty and the First Liberty Subsidiaries and each of their
predecessors have timely filed (or requests for extensions have been timely
filed and any such extensions either are pending or have been granted and have
not expired) all federal, state and local (and, if applicable, foreign) tax
returns required by applicable law to be filed by them (including, without
limitation, estimated tax returns, income tax returns, information returns, and
withholding and employment tax returns) and have paid, or where payment is not
required to have been made, have set up an adequate reserve or accrual for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns and, as of the Effective Time, will have paid, or where payment is
not required to have been made, will have set up an adequate reserve or accrual
for the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither First Liberty nor any First Liberty Subsidiary has
or will have any liability for any such taxes in excess of the amounts so paid
or reserves or accruals so established. First Liberty and the First Liberty
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.
19
24
(b) All federal, state and local (and, if applicable, foreign) tax
returns filed by First Liberty and the First Liberty Subsidiaries are complete
and accurate. Neither First Liberty nor any First Liberty Subsidiary is
delinquent in the payment of any tax, assessment or governmental charge. No
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against First Liberty or any
First Liberty Subsidiary which have not been settled and paid. There are
currently no agreements in effect with respect to First Liberty or any First
Liberty Subsidiary to extend the period of limitations for the assessment or
collection of any tax. No audit examination or deficiency or refund litigation
with respect to such returns is pending.
(c) Deferred taxes have been provided for in accordance with GAAP
consistently applied.
(d) Neither First Liberty nor any of the First Liberty Subsidiaries is
a party to any tax allocation or sharing agreement or has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was First Liberty or a First Liberty
subsidiary) or has any liability for taxes of any person (other than First
Liberty and the First Liberty Subsidiaries) under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) as a
transferee or successor or by contract or otherwise.
(e) Each of First Liberty and the First Liberty Subsidiaries is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and tax withholding requirements under federal,
state, and local tax laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Code.
(f) Neither First Liberty nor any of the First Liberty Subsidiaries has
made any payments, is obligated to make any payments, or is a party to any
contract that could obligate it to make any payments that would be disallowed as
a deduction under Section 280G or 162(m) of the Code.
3.14 Employees; Compensation; Benefit Plans
(a) Compensation. First Liberty has Disclosed a complete and correct
list of the name, age, position, rate of compensation and any incentive
compensation arrangements, bonuses or commissions or fringe or other benefits,
whether payable in cash or in kind, of each director, shareholder, independent
contractor, consultant and agent of First Liberty and of each First Liberty
Subsidiary and each other person (in each case other than as an employee) to
whom First Liberty or any First Liberty 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.
20
25
(b) Employee Benefit Plans.
(i) First Liberty has Disclosed an accurate and complete
list of all Plans, as defined below, contributed to, maintained or
sponsored by First Liberty or any First Liberty Subsidiary, to which
First Liberty or any First Liberty Subsidiary is obligated to
contribute or has any liability or potential liability, whether direct
or indirect, including all Plans contributed to, maintained or
sponsored by each member of the controlled group of corporations,
within the meaning of Sections 414(b), 414(c), 414(m) and 414(o) of the
Code, of which First Liberty or any First Liberty Subsidiary is a
member. For purposes of this Agreement, the term "Plan" shall mean a
plan, arrangement, agreement or program described in the foregoing
provisions of this Section 3.14(b)(i) and which is: (A) a
profit-sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, severance, welfare
or incentive plan, agreement or arrangement, whether or not funded and
whether or not terminated, (B) an employment agreement, (C) a personnel
policy or fringe benefit plan, policy, program or arrangement providing
for benefits or perquisites to current or former employees, officers,
directors or agents, whether or not funded, and whether or not
terminated, including, without limitation, benefits relating to
automobiles, clubs, vacation, child care, parenting, sabbatical, sick
leave, severance, medical, dental, hospitalization, life insurance and
other types of insurance, or (D) any other employee benefit plan as
defined in Section 3(3) of ERISA, whether or not funded and whether or
not terminated.
(ii) Neither First Liberty nor any First Liberty Subsidiary
contributes to, has an obligation to contribute to or otherwise has any
liability or potential liability with respect to (A) any multiemployer
plan as defined in Section 3(37) of ERISA, (B) any plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413 of the
Code (and regulations promulgated thereunder), or (C) any plan which
provides health, life insurance, accident or other "welfare-type"
benefits to current or future retirees or former employees or
directors, their spouses or dependents, other than in accordance with
Section 4980B of the Code or applicable state continuation coverage
law.
(iii) None of the Plans obligates First Liberty or any First
Liberty 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,
21
26
proceedings, hearings, examinations, investigations, audits or demands.
No Plan that is subject to the funding requirements of Section 412 of
the Code or Section 302 of ERISA has incurred any "accumulated funding
deficiency" as such term is defined in such Sections of ERISA and the
Code, whether or not waived, and each Plan has always fully met the
funding standards required under Title I of ERISA and Section 412 of
the Code. No liability to the Pension Benefit Guaranty Corporation
("PBGC") (except for routine payment of premiums) has been or is
expected to be incurred with respect to any Plan that is subject to
Title IV of ERISA, no reportable event (as such term is defined in
Section 4043 of ERISA) has occurred with respect to any such Plan, and
the PBGC has not commenced or threatened the termination of any Plan.
None of the assets of First Liberty or any First Liberty Subsidiary is
the subject of any lien arising under Section 302(f) of ERISA or
Section 412(n) of the Code, neither First Liberty nor any First Liberty
Subsidiary has been required to post any security pursuant to Section
307 of ERISA or Section 401(a)(29) of the Code, and there are no facts
which could be expected to give rise to such lien or such posting of
security. No event has occurred and no condition exists that would
subject First Liberty or any First Liberty Subsidiary to any tax under
Sections 4971, 4972, 4976, 4977 or 4979 of the Code or to a fine or
penalty under Section 502(c) of ERISA.
(v) Each Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a part
thereof, has received a favorable determination letter from the IRS as
to the qualification under the Code of such Plan and the tax exempt
status of such related trust, and nothing has occurred since the date
of such determination letter that could adversely affect the
qualification of such Plan or the tax exempt status of such related
trust.
(vi) No underfunded "defined benefit plan" (as such term is
defined in Section 3(35) of ERISA) has been, during the five years
preceding the Closing Date, transferred out of the controlled group of
corporations (within the meaning of Sections 414(b), (c), (m) and (o)
of the Code) of which First Liberty or any First Liberty Subsidiary is
a member or was a member during such five-year period.
(vii) As of September 30, 1998, 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
22
27
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. The First Liberty
ESSOP has not incurred any debt to acquire shares of First Liberty
Common Stock, and there is no suspense account maintained under the
First Liberty ESSOP.
(viii) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under
Section 408 of ERISA or Section 4975 of the Code, whether by statutory,
class or individual exemption) has occurred with respect to any Plan
which would result in the imposition, directly or indirectly, of any
excise tax, penalty or other liability under Section 4975 of the Code
or Section 409 or 502(i) of ERISA. Neither First Liberty nor, to the
best knowledge of First Liberty, any First Liberty Subsidiary, any
trustee, administrator or other fiduciary of any Plan, or any agent of
any of the foregoing has engaged in any transaction or acted or failed
to act in a manner that could subject First Liberty or any First
Liberty 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) First Liberty and each First Liberty Subsidiary has
been and is presently in compliance with all of the requirements of
Section 4980B of the Code.
(xi) Neither First Liberty nor any First Liberty Subsidiary
has a liability as of September 30, 1998 under any Plan that, to the
extent disclosure is required under GAAP, is not reflected on the
consolidated balance sheet included in the Financial Statements of
First Liberty as of September 30, 1998 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) First
Liberty's or any First Liberty Subsidiary's obligation to make
contributions or any other payments to fund benefits accrued under the
Plans as of the date of this Agreement or (B) the benefits accrued or
payable with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting,
accelerated allocation of previously unallocated Plan assets or by the
conversion of all stock options in accordance with Section 2.9 hereof.
23
28
(xiii) With respect to each Plan, First Liberty 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.
24
29
(xiv) Each of the Plans as applied to First Liberty and any
First Liberty Subsidiary may be amended or terminated at any time by
action of First Liberty's Board of Directors, or such First Liberty'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 First Liberty or a First Liberty
Subsidiary thereunder).
3.15 Certain Contracts
(a) Neither First Liberty nor any First Liberty Subsidiary is a party
to, is bound or affected by, or receives benefits under (i) any agreement,
arrangement or commitment, written or oral, the default of which would have a
Material Adverse Effect, whether or not made in the ordinary course of business
(other than loans or loan commitments made or certificates or deposits received
in the ordinary course of the banking business), or any agreement restricting
its business activities, including, without limitation, agreements or memoranda
of understanding with regulatory authorities, (ii) any agreement, indenture or
other instrument, written or oral, relating to the borrowing of money by First
Liberty or any First Liberty Subsidiary or the guarantee by First Liberty or any
First Liberty Subsidiary of any such obligation, which cannot be terminated
within less than 30 days after the Closing Date by First Liberty or any First
Liberty Subsidiary (without payment of any penalty or cost, except with respect
to Federal Home Loan Bank or Federal Reserve Bank advances), (iii) any
agreement, arrangement or commitment, written or oral, relating to the
employment of a consultant, independent contractor or agent, or the employment,
election or retention in office of any present or former director or officer,
which cannot be terminated within less than 30 days after the Closing Date by
First Liberty or any First Liberty Subsidiary (without payment of any penalty or
cost), or that provides benefits which are contingent, or the application of
which is altered, upon the occurrence of a transaction involving First Liberty
of the nature contemplated by this Agreement or the BB&T Option Agreement, or
(iv) any agreement or plan, written or oral, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the BB&T Option Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the BB&T Option Agreement. Each
matter Disclosed pursuant to this Section 3.15(a) is in full force and effect as
of the date hereof.
(b) Neither First Liberty nor any First Liberty 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.
25
30
3.16 Legal Proceedings; Regulatory Approvals
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of First Liberty,
threatened against First Liberty or any First Liberty Subsidiary or against any
asset, interest, plan or right of First Liberty or any First Liberty Subsidiary,
or, to the best knowledge of First Liberty, against any officer, director or
employee of any of them in their capacity as such. There are no actions, suits
or proceedings instituted, pending or, to the best knowledge of First Liberty,
threatened against any present or former director or officer of First Liberty or
any First Liberty Subsidiary that would reasonably be expected to give rise to a
claim against First Liberty or any First Liberty Subsidiary for indemnification.
There are no actual or, to the best knowledge of First Liberty, threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or in the BB&T Option Agreement. To the best
knowledge of First Liberty, no fact or condition relating to First Liberty or
any First Liberty Subsidiary exists (including, without limitation,
noncompliance with the CRA) that would prevent First Liberty or BB&T from
obtaining all of the federal and state regulatory approvals contemplated herein.
3.17 Compliance with Laws; Filings
Each of First Liberty and each First Liberty Subsidiary is in
compliance with all statutes and regulations (including, but not limited to, the
CRA, the TILA and regulations promulgated thereunder, and other consumer banking
laws), and has obtained and maintained all permits, licenses and registrations
applicable to the conduct of its business, and neither First Liberty nor any
First Liberty Subsidiary has received notification that has not lapsed, been
withdrawn or abandoned by any agency or department of federal, state or local
government (i) asserting a violation or possible violation of any such statute
or regulation, (ii) threatening to revoke any permit, license, registration, or
other government authorization, or (iii) restricting or in any way limiting its
operations. Neither First Liberty nor any First Liberty Subsidiary is subject to
any regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment, and none of them has received any
communication requesting that it enter into any of the foregoing. Since
September 30, 1996, First Liberty and each of the First Liberty 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 OTS, Commission, FDIC, Federal
Reserve Board and applicable state regulators. Each such report, registration,
notice and statement, and each amendment thereto, complied with applicable legal
requirements.
26
31
3.18 Brokers and Finders
Neither First Liberty nor any First Liberty 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, the nature and extent of which has been Disclosed, for
investment banking services, and except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
(a) With respect to all agreements currently outstanding pursuant to
which First Liberty or any First Liberty Subsidiary has purchased securities
subject to an agreement to resell, First Liberty or the First Liberty 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, except to the extent
required by the Federal Home Bank of Atlanta. With respect to all agreements
currently outstanding pursuant to which First Liberty or any First Liberty
Subsidiary has sold securities subject to an agreement to repurchase, neither
First Liberty nor the First Liberty Subsidiary has pledged collateral in excess
of the amount of the debt secured thereby. Neither First Liberty nor any First
Liberty Subsidiary has pledged collateral in excess of the amount required under
any interest rate swap or other similar agreement currently outstanding.
(b) Neither First Liberty nor any First Liberty 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,
liquidity management and interest rate risk management, in each case consistent
with past practice and current policy.
3.20 Deposit Accounts
The deposit accounts of the First Liberty Subsidiaries that are
depository institutions are insured by the FDIC to the maximum extent permitted
by federal law, and the First Liberty 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.
27
32
3.21 Related Party Transactions
First Liberty has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which First
Liberty or any First Liberty Subsidiary is a party with any director, executive
officer or 5% shareholder of First Liberty or any person, corporation, or
enterprise controlling, controlled by or under common control with any of the
foregoing. All such transactions, investments and loans are on terms no less
favorable to First Liberty than could be obtained from unrelated parties.
3.22 Certain Information
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of First Liberty to vote on the Plan of Merger, the
Proxy Statement/Prospectus and all amendments or supplements thereto, with
respect to all information set forth therein provided by First Liberty, (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 First Liberty nor any First Liberty Subsidiary has taken or
agreed to take any action which would or could reasonably be expected to (i)
cause the Merger not to be accounted for as a pooling-of-interests or not to
constitute a reorganization under Section 368 of the Code or (ii) impede or
delay receipt of any consents of regulatory authorities referred to in Section
5.4(b) or result in failure of the condition in Section 6.3(b).
3.24 State Takeover Laws; Shareholder Rights Plan
First Liberty and each First Liberty 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 laws shall be activated or applied as a
result of such transactions. Such transactions shall not trigger or create any
rights in First Liberty shareholders to receive distribution of any shares of
capital stock of First Liberty or any other rights pursuant to the First Liberty
Shareholder Rights Plan dated August 2, 1989, as amended or extended, or
otherwise affect the capital structure or capitalization of First Liberty.
28
33
3.25 Labor Relations
Neither First Liberty nor any First Liberty Subsidiary is the subject
of any claim or allegation that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act or comparable state law)
or seeking to compel it to bargain with any labor organization as to wages or
conditions of employment, nor is First Liberty or any First Liberty Subsidiary
party to any collective bargaining agreement. There is no strike or other labor
dispute involving First Liberty or any First Liberty Subsidiary, pending or
threatened, or to the best knowledge of First Liberty, is there any activity
involving any employees of First Liberty or any First Liberty Subsidiary seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
3.26 No Right to Dissent
Nothing in the Articles of Incorporation or the Bylaws of First Liberty
or any First Liberty Subsidiary provides or would provide to any person,
including without limitation the First Liberty shareholders, upon execution of
this Agreement, the Plan of Merger or the BB&T Option Agreement and consummation
of the transactions contemplated hereby and thereby, rights of dissent and
appraisal of any kind.
3.27 Fairness Opinion
First Liberty has received from the Financial Advisor an opinion that,
as of the date hereof, the Merger Consideration is fair to the shareholders of
First Liberty from a financial point of view.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BB&T
BB&T represents and warrants to First Liberty as follows (the
representations and warranties herein of BB&T are made subject to the applicable
standard set forth in Section 6.2(a), and no such representation or warranty
shall be deemed to be inaccurate unless the inaccuracy would permit First
Liberty to refuse to consummate the Merger under such applicable standard):
29
34
4.1 Capital Structure of BB&T
The authorized capital stock of BB&T consists of (i) 5,000,000 shares
of preferred stock, par value $5.00 per share, of which 2,000,000 shares have
been designated as Series B Junior Participating Preferred Stock and the
remainder are undesignated, and none of which shares are issued and outstanding,
and (ii) 500,000,000 shares of BB&T Common Stock of which 290,210,766 shares
were issued and outstanding on December 31, 1998. All outstanding shares of BB&T
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The shares of BB&T Common Stock reserved as provided in Section
5.3 are free of any Rights and have not been reserved for any other purpose, and
such shares are available for issuance as provided pursuant to the Plan of
Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
BB&T is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its assets, and is duly qualified to do business in the states of
the United States where its ownership or leasing of property or the conduct of
its business requires such qualification. BB&T is registered as a bank holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
(a) BB&T has all requisite corporate power and authority to enter into
and (subject to receipt of all necessary government approvals) perform all of
its obligations under this Agreement. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of BB&T. This Agreement and the Plan of Merger attached hereto
constitute legal, valid and binding obligations of BB&T, and each is enforceable
against BB&T in accordance with its terms, in each case subject to (i)
bankruptcy, insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws in effect from time to time relating to or
affecting the enforcement of the rights of creditors; and (ii) general
principles of equity.
(b) Neither the execution and delivery of this Agreement or the
Articles of Merger, nor consummation of the transactions contemplated hereby,
nor compliance by BB&T with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or bylaws of BB&T or any BB&T Subsidiary, (ii) constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of BB&T or any BB&T Subsidiary
30
35
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; Statements True
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. No statement, certificate, instrument or other writing
furnished or to be furnished hereunder by BB&T or any other BB&T Subsidiary to
First Liberty 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 First Liberty 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.
31
36
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 be accounted for as a pooling-of-interests or not to constitute a
reorganization under Section 368 of the Code, or (ii) materially impede or delay
receipt of any consents of regulatory authorities referred to in Section 5.4(b)
or result in failure of the condition in Section 6.3(b).
ARTICLE V
COVENANTS
5.1 First Liberty Shareholder Meeting
First Liberty shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as practicable, and by
approving execution of this Agreement, the Board of Directors of First Liberty
agrees that it shall, at the time the Proxy Statement/Prospectus is mailed to
the shareholders of First Liberty, recommend that First Liberty's shareholders
vote for such approval; provided, that the Board of Directors of First Liberty
may withdraw or refuse to make such recommendation only if the Board of
Directors shall determine in good faith that such recommendation should not be
made in light of its fiduciary duty to First Liberty shareholders after
consideration of (i) written advice of legal counsel that, in the opinion of
such counsel, such recommendation or the failure to withdraw or modify such
recommendation would more likely than not constitute a breach of the fiduciary
duty of the Board of Directors to the shareholders of First Liberty, and (ii)
either (A) the written withdrawal by the Financial Advisor of its opinion
referred to in Section 3.27 or (B) the delivery to the Board of Directors of
written advice from the Financial Advisor that the Merger Consideration is
either not fair or inadequate to the First Liberty shareholders from a financial
point of view.
5.2 Registration Statement; Proxy Statement/Prospectus
As promptly as practicable after the date hereof, BB&T shall prepare
and file the Registration Statement with the Commission. First Liberty will
furnish to BB&T the information required to be included in the Registration
Statement with respect to its business and affairs before it is filed with the
Commission and again before any amendments are filed, and shall have the right
to review and consult with BB&T on the form of, and any characterizations of
such information included in, the Registration Statement prior to the filing
with the Commission. Such Registration Statement, at the time it becomes
effective and on the Effective Time, shall in all material respects conform to
the requirements of the Securities Act and the applicable rules and regulations
of the Commission. The Registration Statement shall include the form of Proxy
Statement/Prospectus. BB&T and First Liberty shall use their reasonable best
efforts to cause the Proxy Statement/Prospectus to be approved by the Commission
for mailing to the First Liberty shareholders, and such Proxy
Statement/Prospectus shall, on the date of mailing,
32
37
conform in all material respects to the requirements of the Securities Laws and
the applicable rules and regulations of the Commission thereunder. First Liberty
shall cause the Proxy Statement/Prospectus to be mailed to shareholders in
accordance with all applicable notice requirements under the Securities Laws and
the GBCC.
5.3 Plan of Merger; Reservation of Shares
At the Effective Time, the Merger shall be effected in accordance with
the Plan of Merger. In connection therewith, BB&T undertakes and agrees (i) to
adopt the Plan of Merger, if not adopted as of the date hereof, and (ii) to pay
or cause to be paid when due the Merger Consideration. BB&T has reserved for
issuance such number of shares of BB&T Common Stock as shall be necessary to pay
the Merger Consideration and agrees not to take any action that would cause the
aggregate number of authorized shares of BB&T Common Stock available for
issuance hereunder not to be sufficient to effect the Merger. If at any time the
aggregate number of shares of BB&T Common Stock reserved for issuance hereunder
is not sufficient to effect the Merger, BB&T shall take all appropriate action
as may be required to increase the number of shares of BB&T Common Stock
reserved for such purpose.
5.4 Additional Acts
(a) First Liberty 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 First
Liberty 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. First Liberty 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.
(c) BB&T agrees that its Board of Directors or authorized Board
committee shall approve prior to the Effective Time each grant of a converted
option (as described in Section 2.9(a)) to any individual who, subsequent to
consummation of the Merger, will be a director or officer of BB&T under Rule
16b-3 of the Exchange Act.
33
38
5.5 Best Efforts
Each of BB&T and First Liberty shall use, and shall cause each of their
respective Subsidiaries to use, its best efforts in good faith to (i) furnish
such information as may be required in connection with and otherwise cooperate
in the preparation and filing of the documents referred to in Sections 5.2 and
5.4 or elsewhere herein, and (ii) take or cause to be taken all action necessary
or desirable on its part to fulfill the conditions in Article VI, including,
without limitation, executing and delivering, or causing to be executed and
delivered, such representations, certificates and other instruments or documents
as may be reasonably requested by BB&T's legal counsel for such counsel to issue
the opinion contemplated by Section 6.1(e), and to consummate the transactions
herein contemplated at the earliest possible date. Neither BB&T nor First
Liberty shall take, or cause, or to the best of its ability permit to be taken,
any action that would substantially delay or impair the prospects of completing
the Merger pursuant to this Agreement and the Plan of Merger.
5.6 Certain Accounting Matters
First Liberty shall cooperate with BB&T concerning accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with record keeping, loan
classification, valuation adjustments, levels of loan loss reserves and other
accounting practices; provided, that any action taken pursuant to this Section
5.6 shall be in accordance with GAAP and all regulations applicable to First
Liberty and shall not be deemed to constitute or result in the breach of any
representation or warranty of First Liberty contained in this Agreement.
34
39
5.7 Access to Information
First Liberty and BB&T will each keep the other advised of all material
developments relevant to its business and the businesses of its Subsidiaries,
and to consummation of the Merger, and each shall provide to the other, upon
request, reasonable details of any such development. Upon reasonable notice,
First Liberty shall afford to representatives of BB&T access, during normal
business hours during the period prior to the Effective Time, to all of the
properties, books, contracts, commitments and records of First Liberty and the
First Liberty Subsidiaries and, during such period, shall make available all
information concerning their businesses as may be reasonably requested. No
investigation pursuant to this Section 5.7 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations
hereunder of, either party hereto. Each party hereto shall, and shall cause each
of its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. In the event of the termination of this Agreement, each party shall return
to the other party upon request all confidential information previously
furnished in connection with the transactions contemplated by this Agreement.
5.8 Press Releases
BB&T and First Liberty shall mutually agree as to the form and
substance of any press release related to this Agreement and the Plan of Merger
or the transactions contemplated hereby and thereby, and consult with each other
as to the form and substance of other public disclosures related thereto;
provided, that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the opinion
of its counsel is required by law.
5.9 Forbearances of First Liberty
Except with the prior written consent of BB&T, between the date hereof
and the Effective Time, First Liberty shall not, and shall cause each of the
First Liberty 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 $.095 per share of First Liberty
Common Stock payable on record dates and in amounts consistent with
past practices; provided that any dividend declared or payable on the
shares of First Liberty Common Stock for the quarterly period during
which the Effective Time occurs
35
40
shall, unless otherwise agreed upon in writing by BB&T and First
Liberty, 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 (it being the express intention of the parties that
shareholders of First Liberty receive not more than one dividend in the
calendar quarter in which the Effective Time occurs);
(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plans, the First Liberty
ESSOP or the BB&T Option Agreement;
(d) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization, except that, on or before the earlier to
occur of November 30, 1999 and the Effective Time, First Liberty may,
consistent with past practice and subject to Section 5.9(i), grant
stock options for First Liberty's fiscal year ending September 30, 1999
based on First Liberty's financial performance for such fiscal year (1)
to purchase up to 116,850 shares of First Liberty Common Stock in the
aggregate to approximately 40 First Liberty employees under the
Performance Excellence Plan and (2) to purchase up to 116,000 shares of
First Liberty Common Stock in the aggregate to approximately 11
executive officers and nine directors of First Liberty under the Stock
Option Plans; provided, that any First Liberty employee to whom any
such options are issued who would otherwise be eligible to receive
stock options from BB&T in the first quarter of 2000 shall not be so
eligible;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or
encumbrance on any share of stock held by it in any First Liberty
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
36
41
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 Section 5.9(j) shall not prevent (1) renewal of any of the
foregoing consistent with past practice or (2) amendment of the First
Liberty Shareholder Rights Plan dated August 2, 1989 only to extend the
term of such Rights Plan, if and to the extent determined by BB&T in
its sole reasonable discretion that such amendment will not cause the
Merger not to be accounted for as a pooling-of-interests;
(k) solicit or encourage inquiries or proposals with respect
to, furnish any information relating to, or participate in any
negotiations or discussions concerning, any acquisition or purchase of
all or a substantial portion of the assets of, or a substantial equity
interest in, First Liberty or any First Liberty Subsidiary or any
business combination with First Liberty or any First Liberty Subsidiary
other than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of First Liberty or any First Liberty
Subsidiary to do any of the above; or fail to notify BB&T immediately
if any such inquiries or proposals are received, any such information
is requested or required, or any such negotiations or discussions are
sought to be initiated; provided, that this subsection (k) shall not
apply to furnishing information, negotiations or discussions following
an unsolicited offer if, as a result of such offer, First Liberty is
advised in writing by legal counsel that in its opinion the failure to
so furnish information or negotiate would likely constitute a breach of
the fiduciary duty of First Liberty's Board of Directors to the First
Liberty shareholders;
(l) enter into (i) any material agreement, arrangement or
commitment not made in the ordinary course of business, (ii) any
material agreement, indenture or other instrument not made in the
ordinary course of business relating to the borrowing of money by First
Liberty or a First Liberty Subsidiary or guarantee by First Liberty or
a First Liberty 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;
37
42
(m) change its lending, investment or asset liability
management policies in any material respect, except as may be required
by applicable law, regulation, or directives, and except that after
approval of the Agreement and the Plan of Merger by its shareholders
and after receipt of the requisite regulatory approvals for the
transactions contemplated by this Agreement and the Plan of Merger,
First Liberty shall cooperate in good faith with BB&T to adopt
policies, practices and procedures consistent with those utilized by
BB&T and in accordance with GAAP and all applicable regulations,
effective on or before the Closing Date;
(n) change its methods of accounting in effect at September
30, 1998, except as required by changes in GAAP concurred in by BB&T,
which concurrence shall not be unreasonably withheld, or change any of
its methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal income
tax returns for the year ended September 30, 1998, except as required
by changes in law or regulation;
(o) incur any commitments for capital expenditures or
obligation to make capital expenditures in excess of $100,000, for any
one expenditure, or $1,000,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers,
advances from the Federal Home Loan Bank or Federal Reserve Bank, draws
on its existing line of credit with SunTrust Bank and reverse
repurchase arrangements, in each case in the ordinary course of
business;
(q) take any action which would or could reasonably be
expected to (i) cause the Merger not to be accounted for as a
pooling-of-interests or not to constitute a reorganization under
Section 368 of the Code as determined by BB&T, (ii) result in any
inaccuracy of a representation or warranty herein which would allow for
a termination of this Agreement, or (iii) cause any of the conditions
precedent to the transactions contemplated by this Agreement to fail to
be satisfied;
(r) except in connection with the sale of two of its branches
as Disclosed, dispose of any material assets other than in the ordinary
course of business; or
(s) agree to do any of the foregoing.
38
43
5.10 Employment Agreements
BB&T (or its specified BB&T Subsidiary) agrees to enter into employment
agreements as of the Effective Time with certain executives of First Liberty
substantially in the forms attached respectively as Annexes B-1 through B-10.
5.11 Affiliates
First Liberty shall use its best efforts to cause all persons who are
Affiliates of First Liberty to deliver to BB&T promptly following this Agreement
a written agreement providing that such person will not dispose of BB&T Common
Stock received in the Merger except in compliance with the Securities Act and
the rules and regulations promulgated thereunder and except as consistent with
qualifying the transactions contemplated hereby for pooling of interests
accounting treatment, and in any event shall use its best efforts to cause such
affiliates to deliver to BB&T such written agreement prior to the Closing Date.
5.12 Section 401(k) Plan; ESSOP; Other Employee Benefits
(a) Each employee of First Liberty at the Effective Time who becomes an
employee immediately following the Effective Time of BB&T or a BB&T Subsidiary
("Employer Entity") shall be eligible to participate in BB&T's 401(k) plan
(subject to BB&T's right to terminate such plan). For purposes of administering
BB&T's 401(k) plan, service with First Liberty and the First Liberty
Subsidiaries shall be deemed to be service with BB&T or the BB&T Subsidiaries
for participation and vesting purposes, but not for purposes of benefit accrual.
(b) (i) Each participant in the First Liberty ESSOP not fully
vested will become fully vested in his or her First Liberty ESSOP
account as of the Effective Time. As soon as practicable after the
execution of this Agreement, First Liberty and BB&T will cooperate to
cause the First Liberty ESSOP to be amended and other action taken, in
a manner reasonably acceptable to First Liberty and BB&T, to provide
that the First Liberty ESSOP will terminate upon the Effective Time.
Between the date hereof and the Effective Time, First Liberty or a
First Liberty Subsidiary shall make contributions to the First Liberty
ESSOP in accordance with the provisions of the First Liberty ESSOP and
consistent with past practice. First Liberty and BB&T agree that,
subject to the conditions described herein, as soon as practicable
after the Effective Time, participants in the First Liberty ESSOP shall
be entitled at their election to have the assets in their First Liberty
ESSOP accounts either distributed to them in a lump sum or rolled over
to another tax-qualified plan (including the BB&T 401(k) plan to the
extent permitted by such plan) or individual retirement account.
(ii) The actions relating to termination of the First Liberty
ESSOP will be adopted conditional upon the consummation of the Merger
and upon receiving a favorable determination letter from the IRS with
regard to the continued qualification of the First Liberty ESSOP. First
Liberty and BB&T will cooperate in submitting
39
44
appropriate requests for any such determination letter to the IRS and
will use their best efforts to seek the issuance of such letter as soon
as practicable following the date hereof. First Liberty and BB&T will
adopt such additional amendments to the First Liberty ESSOP as may be
required by the IRS as a condition to granting such determination
letter, provided that such amendments do not (i) substantially change
the terms outlined herein, (ii) have a Material Adverse Effect on First
Liberty or (iii) result in an additional material liability to BB&T.
(iii) As of and following the Effective Time, BB&T shall cause
the First Liberty ESSOP to be maintained for the exclusive benefit of
employees and other persons who were participants or beneficiaries
therein prior to the Effective Time, and shall proceed with termination
of the First Liberty ESSOP through distribution of its assets in
accordance with its terms (subject to the amendments described herein
and as otherwise may be required to comply with applicable law or to
obtain a favorable determination from the IRS as to the continuing
qualified status of the First Liberty ESSOP); provided, however, that
no such termination distributions from the First Liberty ESSOP shall
occur after the Effective Time until a favorable determination letter
has been received from the IRS.
(c) Each employee of First Liberty at the Effective Time who
becomes an employee immediately following the Effective Time of an Employer
Entity shall be eligible to participate in the group hospitalization, medical,
dental, life, disability and other welfare benefit plans and programs available
to employees of the Employer Entity, subject to the terms of such plans and
programs; provided, that service with First Liberty 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. Coverage under the group health plans of First
Liberty and the First Liberty Subsidiaries will be deemed "creditable coverage"
within the meaning of ERISA Section 701(c) for purposes of any preexisting
condition limitation which may apply under any group health plan maintained by
an Employer Entity; provided, however, that no coverage prior to a "significant
break in coverage" as defined in ERISA Section 701(c)(2) shall be counted as
"creditable coverage."
(d) Each employee of First Liberty or a First Liberty Subsidiary
who becomes an employee of an Employer Entity and is terminated by such or
another Employer Entity subsequent to the Effective Time, excluding any employee
who has an existing employment or special termination agreement which is
Disclosed, shall be entitled to severance pay in accordance with the general
severance policy maintained by BB&T, if and to the extent that such employee is
entitled to severance pay under such policy. Such employee's service with First
Liberty or a First Liberty 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.
40
45
(e) BB&T agrees to honor all employment agreements, severance
agreements and deferred compensation agreements, including without limitation
outstanding obligations under First Liberty's Nonqualified Deferred Compensation
Plan, that First Liberty and the First Liberty Subsidiaries have with their
current and former employees and directors and which have been Disclosed to BB&T
pursuant to this Agreement, except to the extent any such agreements shall be
superseded or terminated at the Closing or following the Closing Date. Except
for the agreements described in the preceding sentence, the Stock Option Plans,
Performance Excellence Plan and other employee benefit plans of First Liberty
shall be terminated as of the Effective Time.
5.13 Directors and Officers Protection
BB&T or a BB&T Subsidiary shall provide and keep in force for a period
of three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of First Liberty for acts
or omissions occurring prior to the Effective Time. Such insurance shall provide
at least the same coverage and amounts as contained in First Liberty'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 First Liberty'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 First Liberty or any First Liberty Subsidiary prior to
the Effective Time from any acts or omissions in such capacities prior to the
Effective Time, to the extent that such indemnification is provided pursuant to
the Articles of Incorporation of First Liberty on the date hereof and is
permitted under the GBCC. If BB&T or the BB&T Subsidiary maintaining the
insurance provided for in this Section 5.13 or any successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of the consolidation or merger, or shall transfer all or
substantially all of its assets to any entity, proper provision shall be made so
that the successor or assign of BB&T or the BB&T Subsidiary shall assume the
obligations in this Section 5.13. This Section 5.13 is intended for the benefit
of and shall be enforceable by each indemnified officer and director and their
respective heirs and representatives.
41
46
5.14 Forbearances of BB&T
Except with the prior written consent of First Liberty, neither BB&T
nor any BB&T Subsidiary shall take any action which would or might be expected
to (i) cause the business combination contemplated hereby not to be accounted
for as a pooling-of-interests or not to constitute a reorganization under
Section 368 of the Code; (ii) result in any inaccuracy of a representation or
warranty herein which would allow for termination of this Agreement; (iii) cause
any of the conditions precedent to the transactions contemplated by this
Agreement to fail to be satisfied; (iv) exercise the BB&T Option Agreement other
than in accordance with its terms, or dispose of the shares of First Liberty
Common Stock issuable upon exercise of the option rights conferred thereby other
than as permitted by the terms thereof; or (v) fail to comply in any material
respect with any laws, regulations, ordinances or governmental actions
applicable to it and to the conduct of its business.
5.15 Reports
Each of First Liberty and BB&T shall file (and shall cause the First
Liberty Subsidiaries and the BB&T Subsidiaries, respectively, to file), between
the date of this Agreement and the Effective Time, all reports required to be
filed by it with the Commission and any other regulatory authorities having
jurisdiction over such party, and shall deliver to BB&T or First Liberty, 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 year-end adjustments that are not material). As of their respective
dates, such reports filed with the Commission will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to a regulatory authority other than the Commission shall
be prepared in accordance with requirements applicable to such reports.
5.16 Exchange Listing
BB&T shall use its reasonable best efforts to list, prior to the
Effective Time, on the NYSE, subject to official notice of issuance, the shares
of BB&T Common Stock to be issued to the holders of First Liberty 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.
42
47
5.17 Advisory Board for Georgia Area
As of the Effective Time, Xxxxxx X. Xxxxxxx shall be named chairman of
the BB&T Advisory Board for the State of Georgia (the "State Advisory Board"),
the initial members of which are to be chosen by Xxxxxx X. Xxxxxxx and BB&T. The
State Advisory Board shall meet not more than six times per year, and members
shall receive a fee of $1,000 per meeting attended. In addition, the Advisory
Boards of First Liberty in existence on the date hereof shall continue in effect
as Area Advisory Boards of BB&T for their respective market areas ("Area
Advisory Boards"). For two years following the Effective Time, the Area Advisory
Board members appointed pursuant to this Section 5.17 and who continue to serve
shall receive, as compensation for service on an Area Advisory Board, fees
(annual retainer and attendance fees) equal in amount each year (prorated for
any partial year) to the annual retainer and schedule of attendance fees for
directors of First Liberty in effect on January 1, 1999. Following such two-year
period, Area 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 Area 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).
5.18 Board of Directors of Branch Banking and Trust Company
As of the Effective Time, Branch Banking and Trust Company, a North
Carolina banking corporation, shall elect Xxxxxx 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.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and First Liberty
The respective obligations of BB&T and First Liberty 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 by the shareholders
of First Liberty of the Agreement and the Plan of Merger;
43
48
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have received all regulatory approvals required
in connection with the transactions contemplated by this Agreement and the Plan
of Merger, all notice periods and waiting periods with respect to such approvals
shall have passed and all such approvals shall be in effect;
(d) None of BB&T, any of the BB&T Subsidiaries, First Liberty or any of
the First Liberty 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) First Liberty and BB&T shall have received an opinion of BB&T's
legal counsel, in form and substance satisfactory to First Liberty and BB&T,
substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of First
Liberty will not recognize any gain or loss to the extent that such shareholders
exchange shares of First Liberty Common Stock for shares of BB&T Common Stock.
6.2 Conditions Precedent - First Liberty
The obligations of First Liberty to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction of the
following additional conditions at or prior to the Effective Time, unless waived
by First Liberty pursuant to Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and as
of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
First Liberty. The representations and warranties of BB&T set forth in Sections
4.1, 4.2 (except as relates to qualification), 4.3(a), 4.3(b)(i) and 4.4 (except
as relates to qualification) shall be true and correct (except for inaccuracies
which are de minimis in amount). There shall not exist inaccuracies in the
representations and warranties of BB&T set forth in this Agreement (including
the representations and warranties set forth in Sections 4.1, 4.2, 4.3(a),
4.3(b)(i) and 4.4) such that the aggregate effect of such inaccuracies has, or
is reasonably likely to have, a Material Adverse Effect on BB&T;
(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;
44
49
(c) BB&T shall have delivered to First Liberty a certificate, dated the
Closing Date and signed by its Chairman or President or an Executive Vice
President, to the effect that the conditions set forth in Sections 6.1(a),
6.1(b), 6.1(c), 6.1(d), 6.2(a) and 6.2(b) hereof, to the extent applicable to
BB&T, have been satisfied and that there are no actions, suits, claims,
governmental investigations or procedures instituted, pending or, to the best of
such officer's knowledge, threatened that reasonably may be expected to have a
Material Adverse Effect on BB&T or that present a claim to restrain or prohibit
the transactions contemplated herein or in the Plan of Merger;
(d) First Liberty shall have received opinions of counsel to BB&T in
the form reasonably acceptable to First Liberty's legal counsel; and
(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 First Liberty shall be
evaluated as of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Time (or on the date designated in the
case of any representation and warranty which specifically relates to an earlier
date), except as otherwise contemplated by this Agreement or consented to in
writing by BB&T. The representations and warranties of First Liberty set forth
in Sections 3.1, 3.2 (except the last sentence thereof), 3.3, 3.4 (except the
last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be true and
correct (except for inaccuracies which are de minimis in amount). There shall
not exist inaccuracies in the representations and warranties of First Liberty
set forth in this Agreement (including the representations and warranties set
forth in the Sections designated in the preceding sentence) such that the effect
of such inaccuracies individually or in the aggregate has, or is reasonably
likely to have, a Material Adverse Effect on First Liberty and the First Liberty
Subsidiaries taken as a whole;
(b) No regulatory approval shall have imposed any condition or
requirement which, in the reasonable opinion of the Board of Directors of BB&T,
would so materially adversely affect the business or economic benefits to BB&T
of the transactions contemplated by this Agreement as to render consummation of
such transactions inadvisable or unduly burdensome;
(c) First Liberty shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement;
45
50
(d) First Liberty shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c) hereof, to
the extent applicable to First Liberty, have been satisfied and that there are
no actions, suits, claims, governmental investigations or procedures instituted,
pending or, to the best of such officer's knowledge, threatened that reasonably
may be expected to have a Material Adverse Effect on First Liberty or that
present a claim to restrain or prohibit the transactions contemplated herein or
in the Plan of Merger;
(e) BB&T shall have received opinions of counsel to First Liberty in
the form reasonably acceptable to BB&T's legal counsel;
(f) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 hereof to the extent necessary, in the reasonable
judgment of BB&T, to ensure that the Merger will be accounted for as a pooling
of interests under GAAP and to promote compliance with Rule 145 promulgated by
the Commission;
(g) BB&T shall have received letters, dated as of the date of filing of
the Registration Statement with the Commission and as of the Effective Time,
addressed to BB&T, in form and substance reasonably satisfactory to BB&T, from
Xxxxxx Xxxxxxxx, LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment; and
(h) BB&T shall have received Employment Agreements substantially in the
form of Annex X-0, X-0 and B-3 executed by Xxxxxx X. Xxxxxxx, Xxx X. Xxxxxxx and
Xxxxx X. Xxxxxxx, respectively.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
inaccuracy would provide the nonbreaching party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section 6.2(a)
hereof in the case of First Liberty and Section 6.3(a) hereof in the case of
BB&T; and, in the case of (i) or (ii), if such breach or inaccuracy has not been
cured by the earlier of thirty days following written notice of such breach to
the party committing such breach or the Effective Time.
46
51
(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 hereof are denied,
and the time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders
of First Liberty do not approve the Agreement and the Plan of Merger.
(f) At any time following December 31,1999 by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in material breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to 11:59 p.m. on June 15, 1999 by BB&T in
writing, if BB&T determines in its sole good faith judgment, through review of
information Disclosed by First Liberty, or otherwise, that the financial
condition, results of operations, business or business prospects of First
Liberty and of the First Liberty Subsidiaries, taken as a whole, are materially
adversely different from BB&T's reasonable expectations with respect thereto on
the date of execution of this Agreement (which reasonable expectations were
formed without regard to any Disclosed information); provided that BB&T shall
inform First Liberty upon such termination as to the reasons for BB&T's
determination. The fact that First Liberty has Disclosed information shall not
prevent BB&T from terminating this Agreement pursuant to this Section 7.1(g) on
account of such information.
7.2 Effect of Termination
In the event this Agreement and the Plan of Merger is terminated
pursuant to Section 7.1 hereof, both this Agreement and the Plan of Merger shall
become void and have no effect, except that (i) the provisions hereof relating
to confidentiality and expenses set forth in Sections 5.7 and 8.1 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 7.1(b) hereof shall not relieve the breaching party from liability
for a breach of the covenant, agreement, representation or warranty giving rise
to such termination. The BB&T Option Agreement shall be governed by its own
terms.
47
52
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13, 5.17 and 5.18), provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or First Liberty (or any director, officer or controlling person
thereof) of any defense at law or in equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either BB&T or First Liberty, the aforesaid
representations, warranties and covenants being material inducements to
consummation by BB&T and First Liberty of the transactions contemplated herein.
7.4 Waiver
Except with respect to any required regulatory approval, each party
hereto, by written instrument signed by an executive officer of such party, may
at any time (whether before or after approval of the Agreement and the Plan of
Merger by the First Liberty shareholders) extend the time for the performance of
any of the obligations or other acts of the other party hereto and may waive (i)
any inaccuracies of the other party in the representations or warranties
contained in this Agreement, the Plan of Merger or any document delivered
pursuant hereto or thereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other party, or satisfaction of any of the
conditions precedent to its obligations, contained herein or in the Plan of
Merger, or (iii) the performance by the other party of any of its obligations
set out herein or therein; provided that no such extension or waiver, or
amendment or supplement pursuant to this Section 7.4, executed after approval by
the First Liberty shareholders of this Agreement and the Plan of Merger, shall
reduce either the Exchange Ratio or the payment terms for fractional interests.
48
53
7.5 Amendment or Supplement
This Agreement or the Plan of Merger may be amended or supplemented at
any time in writing by mutual agreement of BB&T and First Liberty, subject to
the proviso to Section 7.4.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated by this Agreement,
including, without limitation, fees and expenses of its own financial
consultants, accountants and counsel; provided, however, that the filing fees
and printing costs incurred in connection with the Registration Statement and
the Proxy Statement/Prospectus shall be borne 50% by BB&T and 50% by First
Liberty.
8.2 Entire Agreement
This Agreement, including the documents and other writings referenced
herein or delivered pursuant hereto, contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and thereunder
and supersedes all arrangements or understandings with respect thereto, written
or oral, entered into on or before the date hereof. The terms and conditions of
this Agreement and the BB&T Option Agreement shall inure to the benefit of and
be binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement or the BB&T Option Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors, any rights, remedies, obligations or
liabilities, except for the rights of directors and officers of First Liberty to
enforce rights in Sections 5.13, 5.17 and 5.18.
8.3 No Assignment
Except for a substitution of parties pursuant to Section 5.4(a), none
of the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
49
54
If to First Liberty:
Xxxxxx X. Xxxxxxx
First Liberty Financial Corp.
000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With a required copy to:
Xxxxxxx X. Hills, Jr.
First Liberty Financial Corp.
0000 Xxxxxxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to BB&T:
Xxxxx X. Xxxx
BB&T Corporation
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
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
50
55
8.5 Specific Performance
First Liberty acknowledges that the First Liberty Common Stock and the
First Liberty business and assets are unique, and that if First Liberty fails to
consummate the transactions contemplated by this Agreement such failure will
cause irreparable harm to BB&T for which there will be no adequate remedy at
law, BB&T shall be entitled, in addition to its other remedies at law, to
specific performance of this Agreement if First Liberty shall, without cause,
refuse to consummate the transactions contemplated by this Agreement.
8.6 Captions
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
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]
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: President and Chief Executive Officer
FIRST LIBERTY FINANCIAL CORP.
By: /s/Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
51
56
Xxxxxx X. Xxxxxxx, Xxx X. Xxxxxxx and Xxxxx X. Xxxxxxx hereby agree to
execute and deliver to BB&T at Closing the Employment Agreements substantially
in the form of Annex X-0, X-0 and B-3, respectively.
/s/Xxxxxx X. Xxxxxxx
--------------------
Xxxxxx X. Xxxxxxx
/s/Xxx X. Xxxxxxx
--------------------
Xxx X. Xxxxxxx
/s/Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
52
57
BB&T to acquire First Liberty Financial Corp. of Macon, Ga.
WINSTON-SALEM, N.C., April 28 /PRNewswire/ -- BB&T Corporation (NYSE: BBT -
news) said today it will buy First Liberty Financial Corp. (Nasdaq: FLFC - news)
of Macon, Ga., in a $500 million stock swap that will give BB&T its second
Georgia bank.
First Liberty Financial, with $1.7 billion in assets, operates 39 banking
offices and 13 consumer finance offices in Macon and Savannah, Ga., and
neighboring areas. Its principal subsidiaries include First Liberty Mortgage
Corp. and OFC Capital Corp., an equipment leasing subsidiary.
The transaction, approved by the directors of both companies, will be accounted
for as a pooling of interests. Based on BB&T's closing price of $39 on Monday,
First Liberty shareholders will receive 0.8525 BB&T share for each First Liberty
share, worth $33.25.
The final exchange ratio will be determined based on a pricing period prior to
closing. First Liberty shareholders will receive $33.25 worth of BB&T common
stock if BB&T's average price during the pricing period is between $38.22 and
$39.12. If BB&T's price is less than $38.22, shareholders will receive a fixed
exchange ratio of 0.87. If BB&T's price is more than $39.12, they will receive a
fixed exchange ratio of 0.85.
"First Liberty is a quality institution that will allow us to expand our
presence into economically strong markets in Georgia," said BB&T Chairman and
Chief Executive Officer Xxxx Xxxxxxx. "We're excited about adding a community
bank with a philosophy and corporate culture that is very compatible with ours."
BB&T announced its initial move into Georgia in late January with its pending
acquisition of First Citizens Corp. of Newnan, Ga., giving it entry into
metropolitan Atlanta. First Liberty will boost BB&T's assets in Georgia to more
than $2 billion.
First Liberty President and Chief Executive Officer Xxxxxx Xxxxxxx will be named
president of BB&T's Georgia Operations.
BB&T's newest region will be headquartered in Macon and First Liberty Executive
Vice President Xxxxx Xxxxxxx will be named its president. BB&T currently has 17
58
autonomous regions, which operate like community banks. More than 95 percent of
lending decisions are made locally.
First Liberty also operates a regional community banking network. The similar
operating systems should make First Liberty's transition an easy one for bank
customers and employees.
"Just like First Liberty, BB&T is a financial institution attuned to the
customer," Xxxxxxx said. "BB&T's community banking structure will allow us to
serve existing customers and new ones the way we always have. Only now we'll
also be able to provide all the products and services of a financial institution
with nearly $38 billion in assets."
First Liberty customers will be introduced to a broad product line that includes
insurance, mutual funds, annuities, trust, retail brokerage, investment banking,
treasury services and international banking.
First Liberty operates banking offices in Macon and Savannah, and the following
locations: Adel, Xxxxxx, Xxxxx, Douglas, Forsyth, Fort Valley, Milledgeville,
Nashville, Xxxxxxx, Swainsboro, Sylvania, Tifton, Valdosta, Vidalia, Warner
Robins and Waycross.
Named the top "small business-friendly" bank in the nation by the U.S. Small
Business Administration, BB&T expects to expand consumer, small business and
commercial lending opportunities in those communities.
"Maybe the best thing about our new partnership is that both companies believe
in treating customers with the highest level of personal service possible,"
Xxxxxxx said. "We look forward to joining an expanding franchise rooted in a
community banking philosophy."
The acquisition will extend BB&T's presence from northern Maryland to south
Georgia.
The merger, which is subject to the approval of the First Liberty shareholders
and banking regulators, is expected to be completed in the fourth quarter of
1999.
59
Winston-Salem, N.C.-based BB&T Corporation, with $37.8 billion in assets,
operates 581 banking offices in the Carolinas, Virginia, Maryland and
Washington, D.C.
Business Week magazine recently named BB&T Corporation the second highest
performing S&P 500 bank holding company in the nation.
