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AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
VIRGINIA CAPITAL BANCSHARES, INC.
AND
BB&T CORPORATION
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS........................................................ 1
ARTICLE II THE MERGER........................................................ 7
2.1 Merger................................................................ 7
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2.2 Filing; Plan of Merger................................................ 7
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2.3 Effective Time........................................................ 8
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2.4 Closing............................................................... 8
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2.5 Effect of Merger...................................................... 8
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2.6 Further Assurances.................................................... 8
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2.7 Merger Consideration.................................................. 9
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2.8 Conversion of Shares; Payment of Merger Consideration................. 10
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2.9 Conversion of Stock Options........................................... 11
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2.10 Merger of Subsidiaries................................................ 12
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2.11 Anti-Dilution......................................................... 13
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF VIRGINIA CAPITAL............... 13
3.1 Capital Structure..................................................... 13
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3.2 Organization, Standing and Authority.................................. 13
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3.3 Ownership of Subsidiaries............................................. 14
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3.4 Organization, Standing and Authority of the Subsidiaries.............. 14
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3.5 Authorized and Effective Agreement.................................... 14
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3.6 Securities Filings; Financial Statements; Statements True............. 15
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3.7 Minute Books.......................................................... 16
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3.8 Adverse Change........................................................ 16
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3.9 Absence of Undisclosed Liabilities.................................... 16
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3.10 Properties............................................................ 17
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3.11 Environmental Matters................................................. 17
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3.12 Loans; Allowance for Loan Losses...................................... 18
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3.13 Tax Matters........................................................... 18
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3.14 Employees; Compensation; Benefit Plans................................ 19
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3.15 Certain Contracts..................................................... 23
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3.16 Legal Proceedings; Regulatory Approvals............................... 24
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3.17 Compliance with Laws; Filings......................................... 25
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3.18 Brokers and Finders................................................... 25
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3.19 Repurchase Agreements; Derivatives.................................... 25
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3.20 Deposit Accounts...................................................... 26
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3.21 Related Party Transactions............................................ 26
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3.22 Certain Information................................................... 26
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3.23 Tax and Regulatory Matters............................................ 27
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3.24 State Takeover Laws; Corporate Documents.............................. 27
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3.25 Labor Relations....................................................... 27
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3.26 Fairness Opinion...................................................... 27
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T............................ 28
4.1 Capital Structure of BB&T............................................. 28
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4.2 Organization, Standing and Authority of BB&T.......................... 28
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4.3 Authorized and Effective Agreement.................................... 29
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4.4 Organization, Standing and Authority of BB&T Subsidiaries............. 29
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4.5 Securities Documents; Financial Statements; Statements True........... 29
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4.6 Certain Information................................................... 30
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4.7 Tax and Regulatory Matters............................................ 30
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4.8 Share Ownership....................................................... 30
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4.9 Legal Proceedings; Regulatory Approvals............................... 30
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4.10 Adverse Change........................................................ 31
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ARTICLE V COVENANTS.......................................................... 31
5.1 Virginia Capital Shareholder Meeting.................................. 31
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5.2 Registration Statement; Proxy Statement/Prospectus.................... 31
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5.3 Plan of Merger; Reservation of Shares................................. 32
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5.4 Additional Acts....................................................... 32
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5.5 Best Efforts.......................................................... 33
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5.6 Certain Accounting Matters............................................ 33
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5.7 Access to Information................................................. 33
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5.8 Press Releases........................................................ 34
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5.9 Forbearances of Virginia Capital...................................... 34
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5.10 Employment Agreements................................................. 37
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5.11 Affiliates............................................................ 37
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5.12 Section 401(k) Plan; Other Employee Benefits.......................... 37
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5.13 Directors and Officers Protection..................................... 39
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5.14 Forbearances of BB&T.................................................. 40
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5.15 Reports............................................................... 40
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5.16 Exchange Listing...................................................... 40
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5.17 Advisory Board........................................................ 41
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5.18 Special Payments and Distributions.................................... 41
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ARTICLE VI CONDITIONS PRECEDENT.............................................. 42
6.1 Conditions Precedent - BB&T and Virginia Capital...................... 42
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6.2 Conditions Precedent - Virginia Capital............................... 42
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6.3 Conditions Precedent - BB&T........................................... 43
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ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT....................... 44
7.1 Termination........................................................... 44
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7.2 Effect of Termination................................................. 45
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7.3 Survival of Representations, Warranties and Covenants................. 45
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7.4 Waiver................................................................ 46
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7.5 Amendment or Supplement............................................... 46
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ARTICLE VIII MISCELLANEOUS................................................... 47
8.1 Expenses.............................................................. 47
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8.2 Entire Agreement...................................................... 47
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8.3 No Assignment......................................................... 47
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8.4 Notices............................................................... 47
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8.5 Specific Performance.................................................. 49
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8.6 Captions.............................................................. 49
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8.7 Counterparts.......................................................... 49
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8.8 Governing Law......................................................... 49
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ANNEXES
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Annex A Articles of Merger, with attached
Agreement and Plan of Merger
Annex B Employment Agreement with
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Annex C Employment Agreement with
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
January 23, 2000 is between VIRGINIA CAPITAL BANCSHARES, INC. ("Virginia
Capital"), a Virginia corporation having its principal office at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, 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 Virginia Capital shall be merged with and into
BB&T (said transaction being hereinafter referred to as the "Merger") pursuant
to an agreement and plan of merger (the "Plan of Merger") substantially in the
form attached as Annex A 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, Virginia Capital
is concurrently granting to BB&T an option to acquire, under certain
circumstances, 1,848,560 shares of the common stock, par value $0.01 per share,
of Virginia Capital.
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
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When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person, who,
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with such Person and, without limiting
the generality of the foregoing, includes any executive officer or director of
such Person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be
filed with the office of the Secretary of State of North Carolina as provided in
Section 55-11-05 of the NCBCA and with the Virginia State Corporation Commission
as provided in Section 13.1-720 of the VSCA.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended.
▇
"▇▇&▇ ▇▇▇▇▇▇ ▇▇▇▇▇" 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 Virginia Capital Common Stock, which shall be executed
immediately following execution of this Agreement.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Benefit Plan Determination Date" shall mean, with respect to each
employee pension or welfare benefit plan or program maintained by Virginia
Capital at the Effective Time, the date determined by BB&T with respect to such
plan or program which shall be not later than January 1 following the close of
the calendar year in which the last of the Virginia Capital Subsidiaries which
is a bank or other savings institution is merged into BB&T or one of the BB&T
Subsidiaries.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 ET SEQ.
"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 Virginia Capital 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.
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"Environmental Laws" means all applicable federal, state and local laws
and regulations, as amended, relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including without limitation CERCLA,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 ET SEQ.,
and other laws and regulations relating to emissions, discharges, releases, or
threatened releases of any Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Trident Securities, a division of McDonald
Investments, Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
BB&T as of December 31, 1999, 1998, and 1997, and the related consolidated
statements of income, changes in shareholders' equity and cash flows (including
related notes and schedules, if any) for each of the three years ended December
31, 1999, 1998, and 1997, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, changes in shareholders'
equity and cash flows (including related notes and schedules, if any) included
in Securities Documents filed by BB&T with respect to periods ended subsequent
to December 31, 1999, and (b) with respect to Virginia Capital, (i) the
consolidated balance sheets (including related notes and schedules, if any) of
Virginia Capital as of December 31, 1999, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for each of the three
years ended December 31, 1999, 1998 and 1997 as filed by Virginia Capital in
Securities Documents and (ii) the consolidated balance sheets of Virginia
Capital (including related notes and schedules, if any) and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) included in Securities
Documents filed by Virginia Capital with respect to periods ended subsequent to
December 31, 1999.
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"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the relevant
date.
"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.
"Home Owners' Loan Act" means the Home Owners' Loan Act of 1989, as
amended.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or Virginia Capital shall mean (i) a
material adverse effect on the financial condition, results of operations or
business of BB&T and the BB&T Subsidiaries taken as a whole, or Virginia Capital
and the Virginia Capital Subsidiaries taken as a whole, or (ii) the material
impairment of the ability of BB&T or Virginia Capital 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
Virginia Capital taken with the prior written consent of the other in
contemplation of the transactions contemplated hereby and (b) the direct effects
of compliance with this Agreement on the operating performance of the parties,
including expenses incurred by the parties in consummating the transactions
contemplated by this Agreement or relating to any litigation arising as a result
of the Merger (provided that, with respect to Virginia Capital, only if and to
the extent any such expenses payable to third parties are Disclosed by Virginia
Capital or incurred by Virginia Capital following the date hereof as permitted
by this Agreement).
"NCBCA" shall mean the North Carolina Business Corporation Act, as
amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"OTS" shall mean the Office of Thrift Supervision
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or group of entities, or governmental body.
"Proxy Statement/Prospectus" shall mean the proxy statement and
prospectus, together with any supplements thereto, to be sent to shareholders of
Virginia Capital to solicit their votes in connection with a proposal to approve
this Agreement and the Plan of Merger.
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"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, in each case, the
rules and regulations of the Commission promulgated thereunder.
"Stock Option" shall mean any option to acquire shares of Virginia Capital
Common Stock granted under the Stock Option Plan that is outstanding and
unexercised on the date hereof.
"Stock Option Plan" shall mean the Virginia Capital Bancshares, Inc. 1999
Stock-Based Incentive Plan, as amended and restated.
"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.
"Virginia Capital Common Stock" shall mean the shares of voting common
stock, par value $0.01 per share, of Virginia Capital.
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"Virginia Capital Preferred Stock" shall mean the shares of preferred
stock of Virginia Capital.
"Virginia Capital Disclosure Memorandum" shall mean the written
information in one or more documents, each of which: (a) is entitled "Virginia
Capital Disclosure Memorandum"; (ii) is dated on or before the date of this
Agreement; (iii) was delivered to BB&T not later than the date of execution of
this Agreement by Virginia Capital; and (iv) describes in reasonable detail the
matters contained therein. Each disclosure made therein shall be in existence on
the date of this Agreement and shall specifically reference each Section of this
Agreement under which such disclosure is made. Information disclosed with
respect to one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced. The inclusion of a given item in the
Virginia Capital Disclosure Memorandum shall not be deemed a conclusion or
admission that such item (or any other item) is material or has a Material
Adverse Effect.
"Virginia Capital Subsidiaries" shall mean Fredericksburg State Bank and
any and all other Subsidiaries of Virginia Capital as of the date hereof and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Virginia Capital after the date hereof and held as a Subsidiary by
Virginia Capital at the Effective Time.
"VSCA" shall mean the Virginia Stock Corporation Act, as amended.
1.2 Terms Defined Elsewhere
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The capitalized terms set forth below are defined in the following
sections:
Agreement Introduction
Adjusted Exchange Ratio Section 2.7(b)
Average Closing Price Section 2.7(b)
BB&T Introduction
BB&T Option Plan Section 2.9(a)
Cash Amount Section 2.7(b)(B)
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(c)
Constituent Corporations Section 2.1
Effective Time Section 2.3
Employer Entity Section 5.12(a)
ESOP Section 3.14(b)(xviii)
Exchange Ratio Section 2.7(b)
Interim Exchange Ratio Section 2.7(b)
Merger Recitals
Merger Consideration Section 2.7(a)
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PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Starting Price Section 2.7(b)
Surviving Corporation Section 2.1(a)
Transferred Employee Section 5.12(a)
Virginia Capital Introduction
ARTICLE II
THE MERGER
2.1 Merger
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BB&T and Virginia Capital are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the VSCA. At the
Effective Time:
(a) Virginia Capital shall be merged into BB&T in accordance with the
applicable provisions of the NCBCA and the VSCA, with BB&T being the surviving
corporate entity (hereinafter sometimes referred to as the "Surviving
Corporation").
(b) The separate existence of Virginia Capital shall cease and the Merger
shall in all respects have the effects provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation.
(d) The Bylaws of BB&T at the Effective Time shall be the Bylaws of the
Surviving Corporation.
2.2 Filing; Plan of Merger
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The Merger shall not become effective unless this Agreement and the Plan
of Merger are duly approved by shareholders holding more than two-thirds of the
shares of Virginia Capital Common Stock entitled to vote. Upon fulfillment or
waiver of the conditions specified in Article VI and provided that this
Agreement has not been terminated pursuant to Article VII, the Constituent
Corporations will cause the Articles of Merger to be executed and filed with the
Secretary of State of North Carolina, as provided in Section 55-11-05 of the
NCBCA, and with the Virginia State Corporation Commission, as provided in
Section 13.1-720 of the VSCA. The Plan of Merger is incorporated herein by
reference, and adoption of this Agreement by the respective Boards of Directors
of the Constituent Corporations and approval by the shareholders of Virginia
Capital shall constitute adoption and approval of the Plan of Merger.
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2.3 Effective Time
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The Merger shall be effective at the day and hour specified in the
Articles of Merger filed as provided in Section 2.2 (herein sometimes referred
to as the "Effective Time").
2.4 Closing
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The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on the date designated by
BB&T which is within thirty days following the satisfaction of the conditions to
Closing set forth in Article VI (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing), or
such later date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
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From and after the Effective Time, the separate existence of Virginia
Capital 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
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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
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Merger, the Constituent Corporations agree that such Constituent Corporations
and their proper officers and directors shall and will execute and deliver all
such proper deeds, assignments and assurances in law and do all things
necessary, desirable or proper to vest, perfect or confirm title to such
property or rights in the Surviving Corporation and otherwise to carry out the
purpose of this Agreement, and that the proper officers and directors of the
Surviving Corporation are fully authorized and directed in the name of the
Constituent Corporations or otherwise to take any and all such actions.
2.7 Merger Consideration
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As used herein, the term "Merger Consideration" shall mean the
consideration to be provided by BB&T to the holders of shares of Virginia
Capital Common Stock at the Effective Time, to be comprised of (i) the number of
shares of BB&T Common Stock to be exchanged for each share of Virginia Capital
Common Stock issued and outstanding as of the Effective Time, (ii) cash (without
interest) to be payable as provided in Section 2.7(b), if any, and (iii) cash
(without interest) to be payable in exchange for any fractional share of BB&T
Common Stock that would otherwise be distributable to a Virginia Capital
shareholder as provided in Section 2.7(c). The amount of the Merger
Consideration shall be determined as follows:
(a) Except 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 Virginia
Capital Common Stock (the "Exchange Ratio") shall be determined in accordance
with this Section 2.7(a). If the BB&T Average Price (as defined below) is:
(1) equal to or greater than $37.31, the Exchange Ratio shall be
.4958;
(2) less than $37.32 but greater than $30.53, the Exchange Ratio
shall be the result obtained by dividing $18.50 by the BB&T Average Price;
or
(3) $30.53 or less, the Exchange Ratio shall be .6060.
The "BB&T Average Price" shall mean the average 4:00 p.m. eastern time closing
price per share of BB&T Common Stock on the NYSE for the ten trading days
(determined by excluding days on which the NYSE is closed) ending on the day
preceding the date of the Virginia Capital Shareholder Meeting described in
Section 5.1.
(b) Notwithstanding the provisions of Section 2.7(a), in the event that
the value of the Merger Consideration, based on the Exchange Ratio determined
under Section 2.7(a) and BB&T Average Price, is less than $16.53, Virginia
Capital may terminate this Agreement as provided in Section 7.1(h) unless, not
later than the fifth Business Day following the close of the period for
determining the BB&T Average Price as provided in Section 2.7(a), BB&T shall
have provided written notice to Virginia Capital that it agrees, in its sole and
absolute discretion, to provide additional Merger Consideration in the form of
cash, BB&T Common Stock (valued at the BB&T Average
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Price) or a combination thereof in an amount so that the value of the Merger
Consideration shall equal $16.53.
(c) The amount of cash payable with respect to any fractional share of
BB&T Common Stock shall be determined by multiplying the fractional part of such
share by the Closing Value. The "Closing Value" shall mean the 4:00 p.m. eastern
time closing price per share of BB&T Common Stock on the NYSE on the Closing
Date as reported on ▇▇▇▇▇▇▇.▇▇▇.
2.8 Conversion of Shares; Payment of Merger Consideration
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(a) At the Effective Time, by virtue of the Merger and without any action
on the part of Virginia Capital or the holders of record of Virginia Capital
Common Stock, each share of Virginia Capital 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 Virginia Capital Common Stock (as provided in subsection (d)
below), the Merger Consideration.
(b) Each share of BB&T Common Stock issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of Virginia Capital 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 Virginia Capital Common Stock. With respect
to any certificate for Virginia Capital 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, Virginia Capital's transfer books shall be closed and no
transfer of the shares of Virginia Capital Common Stock outstanding immediately
prior to the Effective Time shall be made on the stock transfer books of the
Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each Virginia Capital 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 Virginia
Capital Common Stock. Upon proper surrender of such certificates or other
evidence of ownership meeting the requirements of Section 2.8(c), together with
such letter of transmittal duly executed and completed in accordance with the
instructions thereto, and such other documents as may be reasonably requested,
BB&T shall promptly cause the transfer to the persons entitled thereto of the
Merger Consideration.
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(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time that have been
declared or made by Virginia Capital in respect of shares of Virginia Capital
Common Stock in accordance with the terms of this Agreement and that remain
unpaid at the Effective Time, subject to compliance by Virginia Capital with
Section 5.9(b). To the extent permitted by law, former shareholders of record of
Virginia Capital 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 Virginia Capital Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing Virginia Capital 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 Virginia Capital 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 Virginia Capital Common Stock
represented by such certificate.
2.9 Conversion of Stock Options
---------------------------
(a) At the Effective Time, each Stock Option then outstanding (and which
by its terms does not lapse on or before the Effective Time), whether or not
then exercisable, shall be converted into and become rights with respect to BB&T
Common Stock, and BB&T shall assume each Stock Option in accordance with the
terms of the Stock Option Plan, except that from and after the Effective Time
(i) BB&T and its Compensation Committee shall be substituted for Virginia
Capital and its Compensation Committee with respect to administering the Stock
Option Plan, (ii) each Stock Option assumed by BB&T may be exercised solely for
shares of BB&T Common Stock, (iii) the number of shares of BB&T Common Stock
subject to each such Stock Option shall be the number of whole shares of BB&T
(omitting any fractional share) determined by multiplying the number of shares
of Virginia Capital 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; and (C) the
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substituted options shall continue in effect on the same terms and conditions as
provided in the Stock Option Agreements and the Stock Option Plan governing each
Stock Option. Each grant of a converted or substitute option to any individual
who subsequent to the Merger will be a director or officer of BB&T as construed
under Commission Rule 16b-3 shall, as a condition to such conversion or
substitution, be approved in accordance with the provisions of Rule 16b-3. Each
Stock Option which is an incentive stock option shall be adjusted as required by
Section 424 of the Code, and the Regulations promulgated thereunder, so as to
continue as an incentive stock option under Section 424(a) of the Code, and so
as not to constitute a modification, extension, or renewal of the option within
the meaning of Section 424(h) of the Code. BB&T and Virginia Capital agree to
take all necessary steps to effectuate the foregoing provisions of this Section
2.9. BB&T has reserved and shall continue to reserve adequate shares of BB&T
Common Stock for delivery upon exercise of any converted or substitute options.
As soon as practicable after the Effective Time, if it has not already done so,
and to the extent Virginia Capital shall have a registration statement in effect
or an obligation to file a registration statement, BB&T shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of BB&T Common
Stock subject to converted or substitute options and shall use its reasonable
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such converted or substitute options remain outstanding. With
respect to those individuals, if any, who subsequent to the Merger may be
subject to the reporting requirements under Section 16(a) of the Exchange Act,
BB&T shall administer the Stock Option Plan assumed pursuant to this Section 2.9
(or the BB&T Option Plan, if applicable) in a manner that complies with Rule
16b-3 promulgated under the Exchange Act to the extent necessary to preserve for
such individuals the benefits of Rule 16b-3 to the extent such benefits were
available to them prior to the Effective Time. Virginia Capital hereby
represents that the Stock Option Plan in its current form complies with Rule
16b-3 to the extent, if any, required as of the date hereof.
(b) As soon as practicable following the Effective Time, BB&T shall
deliver to the participants receiving converted options under the BB&T Option
Plan an appropriate notice setting forth such participant's rights pursuant
thereto.
(c) Eligibility to receive stock option grants following the Effective
Time with respect to BB&T Common Stock shall be determined by BB&T in accordance
with its plans and procedures as in effect from time to time, and subject to any
contractual obligations.
2.10 Merger of Subsidiaries
----------------------
In the event that BB&T shall request, Virginia Capital shall take such
actions, and shall cause the Virginia Capital 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 Virginia Capital Subsidiaries with and into, in each case, one of
the BB&T Subsidiaries.
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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 VIRGINIA CAPITAL
Except as Disclosed, Virginia Capital represents and warrants to BB&T as follows
(the representations and warranties herein of Virginia Capital are made subject
to the applicable standard set forth in Section 6.3(a), and no such
representation or warranty shall be deemed to be inaccurate unless it is
inaccurate to the extent that BB&T would be entitled to refuse to consummate the
Merger pursuant to Section 7.1(b)(ii) on account of such inaccuracy):
3.1 Capital Structure
-----------------
The authorized capital stock of Virginia Capital consists of 75,000,000
shares of Virginia Capital Common Stock and 5,000,000 shares of Virginia Capital
Preferred Stock. As of the date of this Agreement, Virginia Capital has
9,289,280 shares of Virginia Capital Common Stock issued and outstanding and no
shares of Virginia Capital Preferred Stock issued and outstanding. No other
classes of capital stock of Virginia Capital, common or preferred, are
authorized, issued or outstanding. All outstanding shares of Virginia Capital
capital stock have been duly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock have been reserved for any purpose,
except for (i) shares of Virginia Capital Common Stock reserved for issuance in
connection with the Stock Option Plan and (ii) 1,848,560 shares of Virginia
Capital Common Stock reserved for issuance in connection with the BB&T Option
Agreement. Virginia Capital has granted options to acquire 1,140,386 shares of
Virginia Capital Common Stock under the Stock Option Plan, which options remain
outstanding as of the date hereof. Except as set forth in this Section 3.1,
there are no Rights authorized, issued or outstanding with respect to, nor are
there any agreements, understandings or commitments relating to the right of any
Virginia Capital shareholder to own, to vote or to dispose of, the capital stock
of Virginia Capital. Holders of Virginia Capital Common Stock do not have
preemptive rights.
3.2 Organization, Standing and Authority
------------------------------------
Virginia Capital is a corporation duly organized, validly existing and in
good
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standing under the laws of the Commonwealth of Virginia, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its properties and assets. Virginia Capital is not required to be
qualified to do business in any other state of the United States or foreign
jurisdiction. Virginia Capital is registered as a bank holding company under the
Bank Holding Company Act.
3.3 Ownership of Subsidiaries
-------------------------
Section 3.3 of the Virginia Capital Disclosure Memorandum lists all of the
Virginia Capital 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 Virginia
Capital (directly or indirectly), the percentage ownership interest so owned by
Virginia Capital and its business activities. The outstanding shares of capital
stock or other equity interests of the Virginia Capital Subsidiaries are validly
issued and outstanding, fully paid and nonassessable, and all such shares are
directly or indirectly owned by Virginia Capital 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 Virginia Capital Subsidiaries, and there are no
agreements, understandings or commitments relating to the right of Virginia
Capital to own, to vote or to dispose of said interests. None of the shares of
capital stock or other equity interests of the Virginia Capital Subsidiaries
have been issued in violation of the preemptive rights of any person. Section
3.3 of the Virginia Capital 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 Virginia
Capital Subsidiaries and stock or other securities held in a fiduciary capacity)
owned directly or indirectly by Virginia Capital.
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each Virginia Capital Subsidiary that is a depository institution is a
Virginia chartered bank with its deposits insured by the FDIC. Each of the
Virginia Capital Subsidiaries is validly existing and in good standing under the
laws of its jurisdiction of organization. Each of the Virginia Capital
Subsidiaries has full power and authority to carry on its business as now
conducted, and is duly qualified to do business and in good standing in each
jurisdiction Disclosed with respect to it. No Virginia Capital 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) Virginia Capital 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 Virginia Capital shareholders of this Agreement
and the Plan of Merger) perform all of its obligations under this Agreement, the
Plan of Merger and the BB&T Option Agreement. The execution and delivery of this
Agreement, the Plan of Merger and the BB&T
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Option Agreement. The execution and delivery of this Agreement, the Plan of
Merger and the BB&T Option Agreement, and consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action, except, in the case of this Agreement and the Plan
of Merger, the approval of the Virginia Capital shareholders pursuant to and to
the extent required by applicable law. This Agreement, the Plan of Merger and
the BB&T Option Agreement constitute legal, valid and binding obligations of
Virginia Capital, and each is enforceable against Virginia Capital in accordance
with its terms, in each such case subject to (i) bankruptcy, fraudulent
transfer, insolvency, moratorium, reorganization, conservatorship, receivership,
or other similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity (whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Plan of
Merger, or the BB&T Option Agreement, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Virginia Capital 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 Virginia Capital
or the comparable governing documents of any Virginia Capital 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 Virginia Capital or
any Virginia Capital 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 Virginia Capital or any Virginia Capital 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
Virginia Capital of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Filings; Financial Statements; Statements True
---------------------------------------------------------
(a) Virginia Capital has timely filed all Securities Documents required by
the Securities Laws to be filed since December 31, 1998. Virginia Capital has
Disclosed or made available to BB&T a true and complete copy of each Securities
Document filed by Virginia Capital with the Commission after December 31, 1998
and prior to the date hereof, which are all of the Securities Documents that
Virginia Capital 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.
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(b) The Financial Statements of Virginia Capital fairly present or will
fairly present, as the case may be, the consolidated financial position of
Virginia Capital and the Virginia Capital Subsidiaries as of the dates indicated
and the consolidated statements of income and retained earnings, changes in
shareholders' equity and statements of cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to the absence of notes
and to normal year-end audit adjustments that are not material in amount or
effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by Virginia Capital or any Virginia Capital 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 Virginia Capital and each of the Virginia Capital
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 December 31, 1999, Virginia Capital and the Virginia Capital
Subsidiaries have not incurred any liability, whether accrued, absolute or
contingent, except as disclosed in the Virginia Capital Financial Statements, or
entered into any transactions with Affiliates, in each case other than in the
ordinary course of business consistent with past practices, nor has there been
any adverse change or any event that has resulted in, or is reasonably likely to
result in, an adverse change in the business, financial condition or results of
operations of Virginia Capital or any of the Virginia Capital Subsidiaries.
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including contingent liabilities) of Virginia Capital and
the Virginia Capital Subsidiaries are disclosed in the most recent Financial
Statements of Virginia Capital or are normally recurring business obligations
incurred in the ordinary course of its business since the date of Virginia
Capital's most recent Financial Statements.
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3.10 Properties
----------
(a) Virginia Capital and the Virginia Capital 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 Virginia Capital as of December 31, 1999 or acquired
after such date, except for (i) liens for current taxes not yet due and payable,
(ii) pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such imperfections of title, easements and
encumbrances, if any, as are not material in character, amount or extent, or
(iv) dispositions and encumbrances for adequate consideration in the ordinary
course of business.
(b) All leases and licenses pursuant to which Virginia Capital or any
Virginia Capital 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) Virginia Capital and the Virginia Capital Subsidiaries are and at all
times have been in compliance with all Environmental Laws. Neither Virginia
Capital nor any Virginia Capital Subsidiary has received any communication
alleging that Virginia Capital or the Virginia Capital 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 Virginia Capital
nor any Virginia Capital 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) Virginia Capital or any Virginia Capital Subsidiary, (ii) any person or
entity whose liability for any Environmental Claim Virginia Capital or any
Virginia Capital 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 Virginia Capital or any Virginia Capital Subsidiary, or any real or
personal property which Virginia Capital or any Virginia Capital 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 Virginia Capital or any Virginia
Capital Subsidiary holds a security interest securing a loan recorded on the
books of Virginia Capital or any Virginia Capital Subsidiary. Neither Virginia
Capital nor any Virginia Capital Subsidiary is subject to any agreement, order,
judgment, decree or memorandum by or with any court, governmental authority,
regulatory agency or third party imposing any liability under any Environmental
Laws.
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(c) Virginia Capital and the Virginia Capital Subsidiaries are in
compliance with all recommendations contained in any environmental audits,
analyses and surveys received by Virginia Capital relating to all real and
personal property owned or leased by Virginia Capital or any Virginia Capital
Subsidiary and all real and personal property of which Virginia Capital or any
Virginia Capital Subsidiary has or is judged to have managed or supervised or
participated in the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim, or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Laws, against Virginia Capital or any Virginia Capital Subsidiary or against any
person or entity whose liability for any Environmental Claim Virginia Capital or
any Virginia Capital 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 Virginia Capital and the Virginia
Capital 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 Virginia Capital'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 Virginia Capital are, in the
reasonable, good faith judgment of Virginia Capital's management, adequate as of
their respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
-----------
(a) Virginia Capital and the Virginia Capital 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
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the payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. Neither Virginia Capital nor any Virginia Capital Subsidiary
has or will have any liability for any such taxes in excess of the amounts so
paid or reserves or accruals so established. Virginia Capital and the Virginia
Capital Subsidiaries have paid, or where payment is not required to have been
made have set up an adequate reserve or accrual for payment of, all taxes
required to be paid or accrued for the preceding or current fiscal year for
which a return is not yet due.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by Virginia Capital and the Virginia Capital Subsidiaries are complete and
accurate. Neither Virginia Capital nor any Virginia Capital 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 Virginia Capital or any
Virginia Capital Subsidiary which have not been settled and paid. There are
currently no agreements in effect with respect to Virginia Capital or any
Virginia Capital Subsidiary to extend the period of limitations for the
assessment or collection of any tax. No audit examination or deficiency or
refund litigation with respect to such returns is pending.
(c) Deferred taxes with respect to Virginia Capital and the Virginia
Capital Subsidiaries have been provided for in accordance with GAAP consistently
applied.
(d) Neither Virginia Capital nor any of the Virginia Capital Subsidiaries
is a party to any tax allocation or sharing agreement (other than among Virginia
Capital and the Virginia Capital Subsidiaries) or has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was Virginia Capital or a Virginia Capital
subsidiary) or has any liability for taxes of any person (other than Virginia
Capital and the Virginia Capital 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 Virginia Capital and the Virginia Capital 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 Virginia Capital nor any of the Virginia Capital 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.
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3.14 Employees; Compensation; Benefit Plans
--------------------------------------
(a) Compensation. Virginia Capital 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 Virginia Capital and of each Virginia
Capital Subsidiary and each other person (in each case other than as an
employee) to whom Virginia Capital or any Virginia Capital Subsidiary pays or
provides, or has an obligation, agreement (written or unwritten), policy or
practice of paying or providing, retirement, health, welfare or other benefits
of any kind or description whatsoever.
(b) Employee Benefit Plans.
----------------------
(i) Virginia Capital has Disclosed an accurate and complete list of
all Plans, as defined below, contributed to, maintained or sponsored by
Virginia Capital or any Virginia Capital Subsidiary, to which Virginia
Capital or any Virginia Capital 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 Virginia Capital
or any Virginia Capital Subsidiary is a member. For purposes of this
Agreement, the term "Plan" shall mean a plan, arrangement, agreement or
program described in the foregoing provisions of this Section 3.14(b)(i)
that is: (A) a profit-sharing, deferred compensation, employee stock
ownership, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, agreement or
arrangement, whether or not funded and whether or not terminated, (B) an
employment agreement, (C) a personnel policy or fringe benefit plan,
policy, program or arrangement providing for benefits or perquisites to
current or former employees, officers, directors or agents, whether or not
funded, and whether or not terminated, including, without limitation,
benefits relating to automobiles, clubs, vacation, child care, parenting,
sabbatical, sick leave, severance, medical, dental, hospitalization, life
insurance and other types of insurance, or (D) any other employee benefit
plan as defined in Section 3(3) of ERISA, whether or not funded and
whether or not terminated.
(ii) Neither Virginia Capital nor any Virginia Capital 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.
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(iii) None of the Plans obligates Virginia Capital or any Virginia
Capital Subsidiary to pay separation, severance, termination or
similar-type benefits solely as a result of any transaction contemplated
by this Agreement or solely as a result of a "change in control," as such
term is used in Section 280G of the Code (and regulations promulgated
thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and
funds, has been maintained, funded and administered in compliance in all
respects with its own terms and in compliance in all respects with all
applicable laws and regulations, including but not limited to ERISA and
the Code. No actions, suits, claims, complaints, charges, proceedings,
hearings, examinations, investigations, audits or demands with respect to
the Plans (other than routine claims for benefits) are pending or
threatened, and there are no facts which could give rise to or be expected
to give rise to any actions, suits, claims, complaints, charges,
proceedings, hearings, examinations, investigations, audits or demands. No
Plan that is subject to the funding requirements of Section 412 of the
Code or Section 302 of ERISA has incurred any "accumulated funding
deficiency" as such term is defined in such Sections of ERISA and the
Code, whether or not waived, and each Plan has always fully met the
funding standards required under Title I of ERISA and Section 412 of the
Code. No liability to the Pension Benefit Guaranty Corporation ("PBGC")
(except for routine payment of premiums) has been or is expected to be
incurred with respect to any Plan that is subject to Title IV of ERISA,
including without limitation Fredericksburg State Bank's qualified
noncontributory defined benefit plan. No reportable event (as such term is
defined in Section 4043 of ERISA) for which the PBGC has not waived notice
has occurred with respect to any such Plan, and the PBGC has not commenced
or threatened the termination of any Plan. None of the assets of Virginia
Capital or any Virginia Capital Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code,
neither Virginia Capital nor any Virginia Capital 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 Virginia Capital or any
Virginia Capital Subsidiary to any tax under Sections 4971, 4972, 4976,
4977 or 4979 of the Code or to a fine or penalty under Section 502(c) of
ERISA.
(v) Each Plan that is intended to be qualified under Section 401(a)
of the Code or, in the case of an employee stock ownership plan, qualifies
as such under Section 4975(c)(7) of the Code, and each trust (if any)
forming a part thereof, has received a favorable determination letter from
the IRS as to the qualification under the Code of such Plan and the tax
exempt status of such related trust, and nothing has occurred since the
date of such determination letter that could adversely affect the
qualification of such Plan or the tax exempt status of such related trust.
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(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 Virginia Capital or any Virginia Capital Subsidiary is a member
or was a member during such five-year period.
(vii) As of December 31, 1999, the fair market value of the assets
of each Plan that is a tax qualified defined benefit plan equaled or
exceeded, and as of the Closing Date will equal or exceed, the present
value of all vested and nonvested liabilities thereunder determined in
accordance with reasonable actuarial methods, factors and assumptions
applicable to a defined benefit plan on an ongoing basis. With respect to
each Plan that is subject to the funding requirements of Section 412 of
the Code and Section 302 of ERISA, all required contributions for all
periods ending prior to or as of the Closing Date (including periods from
the first day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance with Section
412(m) of the Code) shall have been made. With respect to each other Plan,
all required payments, premiums, contributions, reimbursements or accruals
for all periods ending prior to or as of the Closing Date shall have been
made. No tax qualified Plan has any unfunded liabilities.
(viii) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code, whether by statutory, class or
individual exemption) has occurred with respect to any Plan which would
result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409
or 502(i) of ERISA. Neither Virginia Capital nor, to the best knowledge of
Virginia Capital, any Virginia Capital Subsidiary, any trustee,
administrator or other fiduciary of any Plan (including, without
limitation, The Fredericksburg Savings Bank Employee Stock Ownership Plan
(the "ESOP")), or any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner that could subject
Virginia Capital or any Virginia Capital 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) Virginia Capital and each Virginia Capital Subsidiary has been
and is presently in compliance with all of the requirements of Section
4980B of the Code.
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(xi) Neither Virginia Capital nor any Virginia Capital Subsidiary
has a liability as of December 31, 1999 under any Plan that, to the extent
disclosure is required under GAAP, is not reflected on the consolidated
balance sheet included in the Financial Statements of Virginia Capital as
of December 31, 1999 or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the
transactions contemplated under this Agreement will increase (A) Virginia
Capital's or any Virginia Capital Subsidiary's obligation to make
contributions or any other payments to fund benefits accrued under the
Plans as of the date of this Agreement or (B) the benefits accrued or
payable with respect to any participant under the Plans (except to the
extent benefits may be deemed increased by accelerated vesting,
accelerated allocation of previously unallocated Plan assets or by the
conversion of all stock options in accordance with Section 2.9).
(xiii)With respect to each Plan, Virginia Capital has Disclosed or
made available to BB&T, true, complete and correct copies of (A) all
documents pursuant to which the Plans are maintained, funded and
administered, including summary plan descriptions, (B) the three most
recent annual reports (Form 5500 series) filed with the IRS (with
attachments), (C) the three most recent actuarial reports, if any, (D) the
three most recent financial statements, (E) all governmental filings for
the last three years, including, without limitation, excise tax returns
and reportable events filings, and (F) all governmental rulings,
determinations, and opinions (and pending requests for governmental
rulings, determinations, and opinions) during the past three years.
(xiv) Each of the Plans as applied to Virginia Capital and any
Virginia Capital Subsidiary may be amended or terminated at any time by
action of Virginia Capital's Board of Directors, or such Virginia
Capital'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 Virginia Capital or a Virginia Capital
Subsidiary thereunder).
(xv) The ESOP was adopted in December 1998. Virginia Capital will
take all steps necessary to cause any loan (as described in Treasury
Regulation ss.54.4975-7(b)(1)(ii)) made to the ESOP to be satisfied in
full as soon as practicable following the Closing Date.
3.15 Certain Contracts
-----------------
(a) Neither Virginia Capital nor any Virginia Capital 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,
23
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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 Virginia Capital or any
Virginia Capital Subsidiary or the guarantee by Virginia Capital or any Virginia
Capital Subsidiary of any such obligation, which cannot be terminated within
less than 30 days after the Closing Date by Virginia Capital or any Virginia
Capital 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
Virginia Capital or any Virginia Capital 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
Virginia Capital of the nature contemplated by this Agreement or the BB&T Option
Agreement, or (iv) any agreement or plan, written or oral, including any stock
option plans, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the BB&T Option Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement or the BB&T Option Agreement.
Each matter Disclosed pursuant to this Section 3.15(a) is in full force and
effect as of the date hereof.
(b) Neither Virginia Capital nor any Virginia Capital Subsidiary is in
default under any agreement, commitment, arrangement, lease, insurance policy,
or other instrument, whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of Virginia Capital,
threatened against Virginia Capital or any Virginia Capital Subsidiary or
against any asset, interest, Plan or right of Virginia Capital or any Virginia
Capital Subsidiary, or, to the best knowledge of Virginia Capital, 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 Virginia Capital, threatened against any present or former director
or officer of Virginia Capital or any Virginia Capital Subsidiary that would
reasonably be expected to give rise to a claim against Virginia Capital or any
Virginia Capital Subsidiary for indemnification. There are no actual or, to the
best knowledge of Virginia Capital, threatened actions, suits or proceedings
that present a claim to restrain or prohibit
24
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the transactions contemplated herein or in the BB&T Option Agreement. To the
best knowledge of Virginia Capital, no fact or condition relating to Virginia
Capital or any Virginia Capital Subsidiary exists (including, without
limitation, noncompliance with the CRA) that would prevent Virginia Capital or
BB&T from obtaining all of the federal and state regulatory approvals
contemplated herein.
3.17 Compliance with Laws; Filings
-----------------------------
Each of Virginia Capital and each Virginia Capital 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 Virginia Capital nor any
Virginia Capital Subsidiary has received written or, to the best knowledge of
Virginia Capital, oral notification that has not lapsed, been withdrawn or
abandoned by any agency or department of federal, state or local government (i)
asserting a violation or possible violation of any such statute or regulation,
(ii) threatening to revoke any permit, license, registration, or other
government authorization or (iii) restricting or in any way limiting its
operations. Neither Virginia Capital nor any Virginia Capital 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 December 31, 1998, Virginia Capital and each of the Virginia Capital
Subsidiaries has filed all reports, registrations, notices and statements, and
any amendments thereto, that it was required to file with federal and state
regulatory authorities, including, without limitation, the Commission, FDIC,
OTS, Federal Reserve Board and applicable state regulators. Each such report,
registration, notice and statement, and each amendment thereto, complied with
applicable legal requirements.
3.18 Brokers and Finders
-------------------
Neither Virginia Capital nor any Virginia Capital Subsidiary, nor any of
their respective officers, directors or employees, has employed any broker,
finder or financial advisor or incurred any liability for any fees or
commissions in connection with the transactions contemplated herein, in the Plan
of Merger or in the BB&T Option Agreement, except for an obligation to the
Financial Advisor for investment banking services, the nature and extent of
which has been Disclosed, and except for fees to accountants and lawyers.
3.19 Repurchase Agreements; Derivatives
----------------------------------
(a) With respect to all agreements currently outstanding pursuant to which
Virginia Capital or any Virginia Capital Subsidiary has purchased securities
subject to an agreement to resell, Virginia Capital or the Virginia Capital
Subsidiary has a valid, perfected first lien or security interest in the
securities or other collateral securing such
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agreement, and the value of such collateral equals or exceeds the amount of the
debt secured thereby. With respect to all agreements currently outstanding
pursuant to which Virginia Capital or any Virginia Capital Subsidiary has sold
securities subject to an agreement to repurchase, neither Virginia Capital nor
the Virginia Capital Subsidiary has pledged collateral in excess of the amount
required to secure the debt. Neither Virginia Capital nor any Virginia Capital
Subsidiary has pledged collateral in excess of the amount required under any
interest rate swap or other similar agreement currently outstanding.
(b) Neither Virginia Capital nor any Virginia Capital Subsidiary is a
party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial contract, or any
other interest rate or foreign currency protection contract not included on its
balance sheets in the Financial Statements, which is a financial derivative
contract (including various combinations thereof), except for options and
forwards entered into in the ordinary course of its mortgage lending business
consistent with past practice and current policy.
3.20 Deposit Accounts
----------------
The deposit accounts of the Virginia Capital Subsidiaries that are
depository institutions are insured by the FDIC to the maximum extent permitted
by federal law, and the Virginia Capital Subsidiaries have paid all premiums and
assessments and filed all reports required to have been paid or filed under all
rules and regulations applicable to the FDIC.
3.21 Related Party Transactions
--------------------------
Virginia Capital has Disclosed all existing transactions, investments and
loans, including loan guarantees existing as of the date hereof, to which
Virginia Capital or any Virginia Capital Subsidiary is a party with any
director, executive officer or 5% shareholder of Virginia Capital 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 Virginia Capital 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 Virginia Capital to vote on this Agreement and the
Plan of Merger, the Proxy Statement/Prospectus and all amendments or supplements
thereto, with respect to all information set forth therein provided by Virginia
Capital, (i) shall comply with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
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3.23 Tax and Regulatory Matters
--------------------------
Neither Virginia Capital nor any Virginia Capital Subsidiary has taken or
agreed to take any action that would or could reasonably be expected to (i)
cause the Merger not to constitute a reorganization under Section 368 of the
Code or (ii) materially impede or 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; Corporate Documents
----------------------------------------
Virginia Capital and each Virginia Capital 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 (including, without limitation, those set forth in
Section 13.1-725 et seq. and Section 13.1-728.1 et seq. of the VSCA), and no
such law shall be activated or applied as a result of such transactions. Neither
the Articles of Incorporation nor the Bylaws of Virginia Capital, nor any other
document of Virginia Capital or to which Virginia Capital is a party, contains a
provision that requires more than two-thirds of the shares of Virginia Capital
Common Stock entitled to vote, or the vote or approval of any other class of
capital stock or voting security, to approve the Merger or any of the other
transactions contemplated in this Agreement.
3.25 Labor Relations
---------------
Neither Virginia Capital nor any Virginia Capital 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 Virginia Capital or any Virginia
Capital Subsidiary party to any collective bargaining agreement. There is no
strike or other labor dispute involving Virginia Capital or any Virginia Capital
Subsidiary, pending or threatened, or to the best knowledge of Virginia Capital,
is there any activity involving any employees of Virginia Capital or any
Virginia Capital Subsidiary seeking to certify a collective bargaining unit or
engaging in any other organization activity.
3.26 Fairness Opinion
----------------
Virginia Capital has received from the Financial Advisor an opinion that,
as of the date hereof, the Merger Consideration is fair to the shareholders of
Virginia Capital from a financial point of view.
3.27 No Right to Dissent
-------------------
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Nothing in the Articles of Incorporation or the Bylaws of Virginia Capital
or the similar governing documents of any Virginia Capital Subsidiary provides
or would provide to any person, including without limitation the holders of
Virginia Capital Common Stock, upon execution of this Agreement or the Plan of
Merger and consummation of the transactions contemplated hereby and thereby,
rights of dissent and appraisal of any kind.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to Virginia Capital as follows (the
representations and warranties herein of BB&T are made subject to the applicable
standard set forth in Section 6.2(a), and no such representation or warranty
shall be deemed to be inaccurate unless it is inaccurate to the extent that
Virginia Capital would be entitled to refuse to consummate the Merger pursuant
to Section 7.1(b)(ii) on account of such inaccuracy):
4.1 Capital Structure of BB&T
-------------------------
The authorized capital stock of BB&T consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which 2,000,000 shares have been
designated as Series B Junior Participating Preferred Stock and the remainder
are undesignated, and none of which shares are issued and outstanding, and (ii)
500,000,000 shares of BB&T Common Stock of which 395,951,280 shares were issued
and outstanding as of November 30, 2000. All outstanding shares of BB&T Common
Stock have been duly authorized and are validly issued, fully paid and
nonassessable. The shares of BB&T Common Stock reserved as provided in Section
5.3 are free of any Rights and have not been reserved for any other purpose, and
such shares are available for issuance as provided pursuant to the Plan of
Merger. Holders of BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
--------------------------------------------
BB&T is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina, with full corporate
power and authority to carry on its business as now conducted and to own, lease
and operate its properties and assets, and is duly qualified to do business in
the states of the United States where its ownership or leasing of property or
the conduct of its business requires such qualification. BB&T is registered as a
financial holding company under the Bank Holding Company Act.
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4.3 Authorized and Effective Agreement
----------------------------------
(a) BB&T has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals) perform all of its
obligations under this Agreement and the Plan of Merger. The execution and
delivery of this Agreement and the Plan of Merger and consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
BB&T. This Agreement and the Plan of Merger attached hereto constitute legal,
valid and binding obligations of BB&T, and each is enforceable against BB&T in
accordance with its terms, in each case subject to (i) bankruptcy, insolvency,
moratorium, reorganization, conservatorship, receivership or other similar laws
in effect from time to time relating to or affecting the enforcement of the
rights of creditors; and (ii) general principles of equity (whether applied in a
court of law or in equity).
(b) Neither the execution and delivery of this Agreement, the Plan of
Merger or the Articles of Merger, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by BB&T with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or bylaws of BB&T or any BB&T
Subsidiary, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of BB&T
or any BB&T Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to BB&T
or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
BB&T of the Merger and the other transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
---------------------------------------------------------
Each of the BB&T Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. BB&T owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of the BB&T
Subsidiaries. Each of the BB&T Subsidiaries (i) has full power and authority to
carry on its business as now conducted and (ii) is duly qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification.
4.5 Securities Documents; Financial Statements; Statements True
-----------------------------------------------------------
(a) BB&T has timely filed all Securities Documents required by the
Securities
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Laws to be filed since December 31, 1997. As of their respective dates of
filing, such Securities Documents complied with the Securities Laws as then in
effect, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The Financial Statements of BB&T fairly present or will fairly
present, as the case may be, the consolidated financial position of BB&T and the
BB&T Subsidiaries as of the dates indicated and the consolidated statements of
income, changes in shareholders' equity and cash flows for the periods then
ended (subject, in the case of unaudited interim statements, to the absence of
notes and to normal year-end audit adjustments that are not material in amount
or effect) in conformity with GAAP applied on a consistent basis.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by BB&T or any BB&T Subsidiary to Virginia Capital
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
Virginia Capital to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
4.7 Tax and Regulatory Matters
--------------------------
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action which would or could reasonably be expected to (i) cause the Merger not
to constitute a reorganization under Section 368 of the Code, or (ii)<-1-
95>materially impede or delay receipt of any consents of regulatory authorities
referred to in Section 5.4(b) or result in failure of the condition in Section
6.3(b).
4.8 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of Virginia Capital Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
---------------------------------------
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There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings that present a claim to restrain or prohibit the
transactions contemplated herein. To the best knowledge of BB&T, no fact or
condition relating to BB&T or any BB&T Subsidiary exists (including, without
limitation, noncompliance with the CRA) that would prevent BB&T or Virginia
Capital from obtaining all of the federal and state regulatory approvals
contemplated herein.
4.10 Adverse Change
--------------
Since September 30, 2001 there has been no adverse change or any event
that has resulted in, or is reasonably likely to result in, an adverse change in
the business, financial condition or results of operations of BB&T or any of its
Subsidiaries.
ARTICLE V
COVENANTS
5.1 Virginia Capital Shareholder Meeting
------------------------------------
Virginia Capital shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as reasonably
practicable following the effectiveness of the Registration Statement. By
approving this Agreement and authorizing its execution, the Board of Directors
of Virginia Capital agrees that it shall, at the time the Proxy
Statement/Prospectus is mailed to the shareholders of Virginia Capital,
recommend that Virginia Capital's shareholders vote for such approval; provided,
that the Board of Directors of Virginia Capital may withdraw, modify, condition
or refuse to make such recommendation only if the Board of Directors shall
determine in good faith that such recommendation should not be made in light of
its fiduciary duty to Virginia Capital's shareholders after consideration of (i)
written advice of legal counsel that such recommendation or the failure to
withdraw or modify such recommendation could reasonably be expected to
constitute a breach of the fiduciary duty of the Board of Directors to the
shareholders of Virginia Capital, and (ii) a written determination from the
Financial Advisor that the Merger Consideration is not fair or is inadequate to
the Virginia Capital shareholders from a financial point of view, accompanied by
a detailed analysis of the reasons for such determination.
5.2 Registration Statement; Proxy Statement/Prospectus
--------------------------------------------------
As promptly as practicable after the date hereof, BB&T shall prepare and
file the Registration Statement with the Commission. Virginia Capital 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
31
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Statement prior to the filing with the Commission. BB&T shall prepare such
Registration Statement such that, at the time it becomes effective and on the
Effective Time, it conforms in all material respects to the requirements of the
Securities Act and the applicable rules and regulations of the Commission
(provided that no covenant is made by BB&T as to information provided by
Virginia Capital for inclusion in the Registration Statement). The Registration
Statement shall include the form of Proxy Statement/Prospectus. BB&T and
Virginia Capital shall use all reasonable efforts to cause the Proxy
Statement/Prospectus to be approved by the Commission for mailing to the
Virginia Capital shareholders, and such Proxy Statement/Prospectus shall, on the
date of mailing, conform in all material respects to the requirements of the
Securities Laws and the applicable rules and regulations of the Commission
thereunder. BB&T shall notify Virginia Capital, as promptly as reasonably
practicable following BB&T's receipt of notice thereof, if a stop order is
issued with respect to the Registration Statement or the Proxy
Statement/Prospectus. Virginia Capital shall cause the Proxy
Statement/Prospectus to be mailed to its shareholders in accordance with all
applicable notice requirements under the Securities Laws, the VSCA and the rules
and regulations of the Nasdaq Stock Market.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T acknowledges that it (i) has
adopted the Plan of Merger and (ii) will pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient to
effect the Merger, BB&T shall take all appropriate action as may be required to
increase the number of shares of BB&T Common Stock reserved for such purpose.
5.4 Additional Acts
---------------
(a) Virginia Capital 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 Virginia
Capital shall submit notice or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board, and any other
federal, state or local government agency, department or body to which notice is
required or from which
32
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approval is required for consummation of the Merger and the other transactions
contemplated hereby. Virginia Capital 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. Virginia Capital and BB&T shall provide promptly to
each other copies of all correspondence with regulatory bodies to which notices
or applications are submitted.
5.5 Best Efforts
------------
Each of BB&T and Virginia Capital 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 Virginia
Capital 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
--------------------------
Virginia Capital shall cooperate with BB&T concerning (i) accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with record keeping, loan
classification, valuation adjustments, levels of loan loss reserves and other
accounting practices, and (ii) Virginia Capital's lending, investment or
asset/liability management policies; provided, that any action taken pursuant to
this Section 5.6 shall not be deemed to constitute or result in the breach of
any representation, warranty or covenant of Virginia Capital contained in this
Agreement. Virginia Capital shall not be required to modify or change any such
policies or practices, however, until the earlier of (A) such time as BB&T
acknowledges that all conditions to its obligation to consummate the Merger have
been waived or satisfied (other than the delivery of certificates, opinions and
other instruments and documents to be delivered at Closing or otherwise to be
dated at the Effective Time, the delivery of which shall continue to be a
condition to BB&T's obligation to consummate the Merger) or (B) immediately
prior to the Effective Time.
5.7 Access to Information
---------------------
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Virginia Capital 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,
Virginia Capital 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 Virginia Capital and
the Virginia Capital 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 Virginia Capital shall agree with each other as to the form and
substance of any press release related to this Agreement and the Plan of Merger
or the transactions contemplated hereby and thereby, and consult with each other
as to the form and substance of other public disclosures related thereto;
provided, that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which in the opinion
of its counsel is required by law.
5.9 Forbearances of Virginia Capital
--------------------------------
Except with the prior written consent of BB&T (which consent shall not be
arbitrarily withheld or delayed), between the date hereof and the Effective
Time, Virginia Capital shall not, and shall cause each of the Virginia Capital
Subsidiaries not to:
(a) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted,
or establish or acquire any new Subsidiary or engage in any new type of
activity or expand any existing activities;
(b) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock, other than regularly
scheduled quarterly dividends of $0.11 per share of Virginia Capital
Common Stock payable on record dates and in amounts consistent with past
practices; provided that any dividend declared or payable on the shares of
Virginia Capital Common Stock in the quarterly period during which the
Effective Time occurs shall, unless otherwise agreed upon in writing by
BB&T and Virginia Capital, be declared with a record date prior to the
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Effective Time only if the normal record date for payment of the
corresponding quarterly dividend to holders of BB&T Common Stock is before
the Effective Time;
(c) issue any shares of its capital stock (including treasury
shares), except pursuant to the Stock Option Plan with respect to the
options outstanding on the date hereof or pursuant to the BB&T Option
Agreement;
(d) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or encumbrance
on any share of stock held by it in any Virginia Capital Subsidiary, or
permit any such lien, charge or encumbrance to exist; or waive or release
any material right or cancel or compromise any debt or claim, in each case
other than in the ordinary course of business;
(g) merge with any other entity or permit any other entity to merge
into it, or consolidate with any other entity; acquire control over any
other entity; or liquidate, sell or otherwise dispose of any assets or
acquire any assets other than in the ordinary course of its business
consistent with past practices;
(h) fail to comply in any material respect with any laws,
regulations, ordinances or governmental actions applicable to it and to
the conduct of its business;
(i) increase the rate of compensation of any of its directors,
officers or employees (excluding increases in compensation resulting from
the exercise of compensatory stock options outstanding as of the date of
this Agreement), or pay or agree to pay any bonus to, or provide any new
employee benefit or incentive to, any of its directors, officers or
employees, except for increases or payments made in the ordinary course of
business consistent with past practice pursuant to plans or arrangements
in effect on the date hereof;
(j) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
other employees; provided, however, that this subparagraph shall not
prevent renewal of any of the foregoing consistent with past practice;
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(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,
Virginia Capital or any Virginia Capital Subsidiary or any business
combination with Virginia Capital or any Virginia Capital Subsidiary other
than as contemplated by this Agreement; or authorize any officer,
director, agent or affiliate of Virginia Capital or any Virginia Capital
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 Section 5.9(k) shall not apply to
furnishing information, negotiations or discussions with the offeror
following an unsolicited offer if, as a result of such offer, Virginia
Capital is advised in writing by legal counsel that the failure to so
furnish information or negotiate could reasonably be expected to
constitute a breach of the fiduciary duty of Virginia Capital's Board of
Directors to the Virginia Capital shareholders;
(l) enter into (i) any material agreement, arrangement or commitment
not made in the ordinary course of business, (ii) any agreement, indenture
or other instrument not made in the ordinary course of business relating
to the borrowing of money by Virginia Capital or a Virginia Capital
Subsidiary or guarantee by Virginia Capital or a Virginia Capital
Subsidiary of any obligation, (iii) any agreement, arrangement or
commitment relating to the employment or severance of a consultant or the
employment, severance, election or retention in office of any present or
former director, officer or employee (this clause shall not apply to the
election of directors by shareholders or the reappointment of officers in
the normal course), or (iv) any contract, agreement or understanding with
a labor union;
(m) change its lending, investment or asset/liability management
policies in any material respect, except (i) as may be required by
applicable law, regulation, or directives, and (ii) that after approval of
the Agreement and the Plan of Merger by its shareholders and after receipt
of the requisite regulatory approvals for the transactions contemplated by
this Agreement and the Plan of Merger, and subject to Section 5.6,
Virginia Capital shall cooperate in good faith with BB&T to adopt
policies, practices and procedures consistent with those utilized by BB&T,
effective on or before the Closing Date;
(n) change its methods of accounting in effect at December 31, 1999
in any material respect, except as required by changes in GAAP concurred
in by BB&T, which concurrence shall not be unreasonably withheld, or
change any of its methods of reporting income and deductions for federal
income tax purposes from those employed in the preparation of its federal
income tax returns for the year ended December 31, 1999, except as
required by changes in law or regulation;
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(o) incur any commitments for capital expenditures or obligation to
make capital expenditures in excess of $25,000, for any one expenditure,
or $100,000, in the aggregate;
(p) incur any indebtedness other than deposits from customers,
advances from the Federal Home Loan Bank and reverse repurchase
arrangements in the ordinary course of business;
(q) take any action which would or could reasonably be expected to
(i) cause the Merger not to constitute a reorganization under Section 368
of the Code as determined by BB&T, (ii) result in any inaccuracy of a
representation or warranty herein that would allow for a termination of
this Agreement, or (iii) cause any of the conditions precedent to the
transactions contemplated by this Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary course
of business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
BB&T (or its specified BB&T Subsidiary) has entered into an employment
agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. in the form of Annex B hereto and with
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the form of Annex C hereto, both of which shall become
effective as of the Effective Time.
5.11 Affiliates
----------
Virginia Capital shall use its best efforts to cause all persons who are
Affiliates of Virginia Capital to deliver to BB&T promptly following execution
of this Agreement, and in any event prior to the Closing Date, a written
agreement providing that such person will not dispose of BB&T Common Stock
received in the Merger except in compliance with the Securities Act and the
rules and regulations promulgated thereunder.
5.12 Section 401(k) Plan; Other Employee Benefits
--------------------------------------------
(a) Effective on the Benefit Plan Determination Date with respect to the
401(k) plan of Virginia Capital, BB&T shall cause such plan to be merged with
the 401(k) plan maintained by BB&T and the BB&T Subsidiaries, or to be frozen or
terminated, in each case as determined by BB&T and subject to the receipt of all
applicable regulatory or governmental approvals. Each employee of Virginia
Capital at the Effective Time who (i) is a participant in the 401(k) plan of
Virginia Capital, (ii) becomes an employee immediately following the Effective
Time of BB&T or of any
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subsidiary of BB&T ("Employer Entity"), and (iii) continues in the employment of
an Employer Entity until the Benefit Plan Determination Date for the 401(k)
plan, shall be eligible to participate in BB&T's 401(k) plan as of such Benefit
Plan Determination Date. Any other former employee of Virginia Capital who is
employed by an Employer Entity on or after such Benefit Plan Determination Date
shall be eligible to be a participant in the BB&T 401(k) plan upon complying
with eligibility requirements. All rights to participate in BB&T's 401(k) plan
are subject to BB&T's right to amend or terminate the plan. Until such Benefit
Plan Determination Date, BB&T shall continue in effect for the benefit of
participating employees the 401(k) plan of Virginia Capital. For purposes of
administering BB&T's 401(k) plan, service with Virginia Capital and the Virginia
Capital Subsidiaries shall be deemed to be service with BB&T for participation
and vesting purposes, but not for purposes of benefit accrual. Each employee of
Virginia Capital or a Virginia Capital Subsidiary at the Effective Time who
becomes an employee immediately following the Effective Time of an Employer
Entity is referred to herein as a "Transferred Employee."
(b) Each Transferred Employee shall be eligible to participate in group
hospitalization, medical, dental, life, disability and other welfare benefit
plans and programs available to employees of the Employer Entity, subject to the
terms of such plans and programs, as of the Benefit Plan Determination Date for
each such plan or program, conditional upon the Transferred Employee's being
employed by an Employer Entity as of such Benefit Plan Determination Date and
subject to complying with eligibility requirements of the respective plans and
programs. With respect to health care coverages, participation in BB&T's plans
may be subject to availability of HMO options. In any case in which HMO coverage
is not available, substitute coverage will be provided that may not be fully
comparable to the HMO coverage. With respect to any welfare benefit plan or
program of Virginia Capital that the Employer Entity determines, in its sole
discretion, provides benefits of the same type or class as a corresponding plan
or program maintained by the Employer Entity, the Employer Entity shall continue
such Virginia Capital plan or program in effect for the benefit of the
Transferred Employees so long as they remain eligible to participate and until
they shall become eligible to become participants in the corresponding plan or
program maintained by the Employer Entity (and, with respect to any such plan or
program, subject to complying with eligibility requirements and subject to the
right of the Employer Entity to terminate such plan or program). For purposes of
administering the welfare plans and programs subject to this Section 5.12(b),
(A) service with Virginia Capital shall be deemed to be service with the
Employer Entity for the purpose of determining eligibility to participate and
vesting (if applicable) in such welfare plans and programs, but not for the
purpose of computing benefits, if any, determined in whole or in part with
reference to service (except as otherwise provided in Section 5.12(c)), and (B)
each Transferred Employee shall receive credit for any deductibles and out-of
pocket expenses paid prior to the applicable Benefit Plan Determination Date (to
the same extent such credit was given under the analogous plan prior to such
Benefit Plan Determination Date) in satisfying any applicable deductibles or
out-of-pocket expenses.
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(c) Except to the extent of commitments herein or other contractual
commitments, if any, specifically made or assumed hereunder by BB&T, neither
BB&T nor any Employer Entity shall have any obligation arising from the Merger
to continue any Transferred Employees in its employ or in any specific job or to
provide to any Transferred Employee any specified level of compensation or any
incentive payments, benefits or perquisites. Each Transferred Employee who is
terminated by an Employer Entity subsequent to the Effective Time 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 Virginia Capital
or a Virginia Capital Subsidiary shall be treated as service with BB&T for
purposes of determining the amount of severance pay, if any, under BB&T's
severance policy.
(d) BB&T agrees to honor all employment agreements, severance agreements
and deferred compensation agreements that Virginia Capital and the Virginia
Capital Subsidiaries have with their current and former employees and directors
and which have been Disclosed to BB&T pursuant to this Agreement, except to the
extent any such agreements shall be superseded or terminated at the Closing or
following the Closing Date. Except for the agreements described in the preceding
sentence and except as otherwise provided in this Section 5.12, the employee
benefit plans of Virginia Capital shall, in the sole discretion of BB&T, be
frozen, terminated or merged into comparable plans of BB&T, effective as BB&T
shall determine in its sole discretion.
(e) Notwithstanding and without limiting the generality of Section
5.12(d), as soon as practicable following the date hereof but, in any event,
prior to the Effective Time, Virginia Capital shall take any and all action
necessary to terminate the ESOP as of the Effective Time, to repay any
outstanding indebtedness thereof and to allocate shares of Virginia Capital
Common Stock held thereby to the participants therein in accordance with the
terms thereof. No purchases of shares of Virginia Capital Common Stock shall be
made thereunder after the date hereof.
5.13 Directors and Officers Protection
---------------------------------
BB&T or a BB&T Subsidiary shall provide and keep in force for a period of
three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of Virginia Capital for
acts or omissions occurring prior to the Effective Time. Such insurance shall
provide at least the same coverage and amounts as contained in Virginia
Capital'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 Virginia
Capital'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
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officers, directors or employees of Virginia Capital or any Virginia Capital
Subsidiary prior to the Effective Time from any acts or omissions in such
capacities prior to the Effective Time, to the extent that such indemnification
is provided pursuant to the Articles of Incorporation or Bylaws of Virginia
Capital on the date hereof and is permitted under the VSCA and the NCBCA. BB&T
shall also advance indemnifiable expenses as incurred to the extent permitted by
the Articles of Incorporation or Bylaws of Virginia Capital on the date hereof
and permitted under the VSCA and the NCBCA.
5.14 Forbearances of BB&T
--------------------
Except with the prior written consent of Virginia Capital, between the
date hereof and the Effective Time neither BB&T nor any BB&T Subsidiary shall
take any action which would or might be expected to (i) cause the business
combination contemplated hereby not to constitute a reorganization under Section
368 of the Code; (ii) result in any inaccuracy of a representation or warranty
herein that would allow for termination of this Agreement; (iii) cause any of
the conditions precedent to the transactions contemplated by this Agreement to
fail to be satisfied; or (iv) fail to comply in any material respect with any
laws, regulations, ordinances or governmental actions applicable to it and to
the conduct of its business.
5.15 Reports
-------
Each of Virginia Capital and BB&T shall file (and shall cause the Virginia
Capital 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 Virginia Capital, as
the case may be, copies of all such reports promptly after the same are filed.
If financial statements are contained in any such reports filed with the
Commission, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to the absence of notes and
to normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the Commission will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to a regulatory authority other than
the Commission shall be prepared in accordance with requirements applicable to
such reports.
5.16 Exchange Listing
----------------
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to
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be issued to the holders of Virginia Capital Common Stock pursuant to the
Merger, and BB&T shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.17 Advisory Board
--------------
As of the Effective Time, BB&T shall offer to (i) the members of the Board
of Directors of Virginia Capital a seat on the BB&T Advisory Board for the
Fredericksburg, Virginia area. For two years following the Effective Time, the
Advisory Board members appointed pursuant to this Section 5.17 and who continue
to serve shall receive, as compensation for service on the Advisory Board,
Advisory Board member's fees (annual retainer and attendance fees) equal in
amount each year (prorated for any partial year) to the annual retainer and
schedule of attendance fees for directors of Virginia Capital in effect on
December 1, 2000. Following such two-year period, Advisory Board Members, if
they continue to serve in such capacity, shall receive fees in accordance with
BB&T's standard schedule of fees for service thereon as in effect from time to
time. For two years after the Effective Time, no such Advisory Board member
shall be prohibited from serving thereon because he or she shall have attained
the maximum age for service thereon (currently age 70). Membership of any person
on any Advisory Board shall be conditional upon execution of an agreement
providing that such person will not engage in activities competitive with BB&T
for two years following the Effective Time or, if longer, the period that he or
she is a member of the Advisory Board.
5.18 Special Payments and Distributions
----------------------------------
Virginia Capital shall not (a) make any distributions or payments to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or accelerate vesting with respect to
any benefits distributable or payable to either if BB&T, acting in good faith,
determines that such distributions, payments or acceleration could constitute
excess parachute payments within the meaning of Section 280G of the Code, and
(b) in addition to the restrictions in (a), make any cash severance payment to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. in excess of $100,000 or to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in excess of
$300,000. At least ten days prior to the Closing Date, Virginia Capital shall
submit to BB&T schedules showing amounts to be paid or distributed to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and the value of any accelerated benefits
distributable or payable to each, and BB&T shall determine if (a) or (b) is
potentially violated and, if it makes such determination, Virginia Capital shall
reduce the amounts as appropriate to the satisfaction of BB&T.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and Virginia Capital
------------------------------------------------
The respective obligations of BB&T and Virginia Capital to effect the
transactions contemplated by this Agreement shall be subject to satisfaction or
waiver of the following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery
and performance of this Agreement and the Plan of Merger, and consummation of
the transactions contemplated hereby and thereby, shall have been duly and
validly taken, including, without limitation, the approval of the shareholders
of Virginia Capital of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or, to the best 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, Virginia Capital or any of
the Virginia Capital 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) Virginia Capital and BB&T shall have received an opinion of BB&T's
legal counsel, in form and substance satisfactory to Virginia Capital 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
Virginia Capital will not recognize any gain or loss to the extent that such
shareholders exchange shares of Virginia Capital Common Stock for shares of BB&T
Common Stock.
6.2 Conditions Precedent - Virginia Capital
---------------------------------------
The obligations of Virginia Capital 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 Virginia Capital pursuant to Section 7.4:
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(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
Virginia Capital. The representations and warranties of BB&T set forth in
Sections 4.1, 4.2 (except as relates to qualification), 4.3(a), 4.3(b)(i), 4.4
(except as relates to qualification) and 4.7 shall be true and correct (except
for inaccuracies which are de minimis). There shall not exist inaccuracies in
the representations and warranties of BB&T set forth in this Agreement
(including the representations and warranties set forth in the Sections
designated in the preceding sentence) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect on
BB&T.
(b) BB&T shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement.
(c) BB&T shall have delivered to Virginia Capital 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), 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) Virginia Capital shall have received opinions of counsel to BB&T in
the form reasonably acceptable to Virginia Capital's legal counsel.
(e) The shares of BB&T Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
6.3 Conditions Precedent - BB&T
---------------------------
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of Virginia Capital 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 Virginia Capital set
forth in Sections 3.1, 3.2 (except as relates to qualification), 3.3, 3.4
(except the last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24 shall be
true and correct (except for inaccuracies which are de minimis). There shall not
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exist inaccuracies in the representations and warranties of Virginia Capital 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 Virginia Capital (evaluated without regard
to consummation of the Merger).
(b) No regulatory approval shall have imposed any condition or requirement
which, in the reasonable opinion of the Board of Directors of BB&T, would so
materially adversely affect the business or economic benefits to BB&T of the
transactions contemplated by this Agreement as to render consummation of such
transactions inadvisable or unduly burdensome.
(c) Virginia Capital shall have performed in all material respects all
obligations and complied in all material respects with all covenants required by
this Agreement.
(d) Virginia Capital shall have delivered to BB&T a certificate, dated the
Closing Date and signed by its Chairman or President, to the effect that the
conditions set forth in Sections 6.1(a), 6.1(c), 6.3(a) and 6.3(c), to the
extent applicable to Virginia Capital, 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 Virginia Capital (evaluated
without regard to the Merger) or that present a claim to restrain or prohibit
the transactions contemplated herein or in the Plan of Merger.
(e) BB&T shall have received opinions of counsel to Virginia Capital in
the form reasonably acceptable to BB&T's legal counsel.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
(b) At any time prior to the Effective Time, by either party hereto in
writing (i) in the event of a material breach by the other party of any covenant
or agreement contained in this Agreement, or (ii) in the event of the inaccuracy
of any representation or warranty of the other party contained in this
Agreement, which inaccuracy would provide the nonbreaching party the ability to
refuse to consummate the Merger under the applicable standard set forth in
Section 6.2(a) in the case of Virginia Capital and Section
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6.3(a) in the case of BB&T; and, in the case of (i) or (ii), if such breach or
inaccuracy has not been cured by the earlier of thirty days following written
notice of such breach to the party committing such breach or the Effective Time.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of the other
party to consummate the transactions contemplated hereby cannot be satisfied or
fulfilled prior to the Closing Date, and the party giving the notice is not in
material breach of any of its representations, warranties, covenants or
undertakings herein.
(d) At any time, by either party hereto in writing, if any of the
applications for prior approval referred to in Section 5.4 are denied, and the
time period for appeals and requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders of
Virginia Capital do not approve the Agreement and the Plan of Merger at a
meeting called and held for the purpose of voting thereon.
(f) At any time following October 31, 2001, by either party hereto in
writing, if the Effective Time has not occurred by the close of business on such
date, and the party giving the notice is not in material breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to the Effective Time, by BB&T in writing, if the
Board of Directors of Virginia Capital shall have withdrawn, modified,
conditioned or refused to make its recommendation to the shareholders of
Virginia Capital that they vote to approve this Agreement and the Plan of
Merger.
(h) At any time prior to the Effective Time, by Virginia Capital in
writing, under the circumstances described in Section 2.7(b).
7.2 Effect of Termination
---------------------
In the event this Agreement and the Plan of Merger is terminated pursuant
to Section 7.1, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality and expenses set forth in Sections 5.7 and 8.1, respectively,
shall survive any such termination and (ii) a termination pursuant to Section
7.1(b) shall not relieve the breaching party from liability for a breach of the
covenant, agreement, representation or warranty giving rise to such termination.
The BB&T Option Agreement shall be governed by its own terms, and no provision
contained herein shall limit the ability of BB&T to exercise its rights under
the BB&T Option Agreement.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
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All representations, warranties and covenants in this Agreement or the
Plan of Merger or in any instrument delivered pursuant hereto or thereto shall
expire on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13 and 5.17); provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or Virginia Capital (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 Virginia Capital, the
aforesaid representations, warranties and covenants being material inducements
to consummation by BB&T and Virginia Capital 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 Virginia Capital 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 Virginia Capital shareholders of this Agreement and the Plan of Merger,
shall reduce either the Exchange Ratio or the payment terms for fractional
interests.
7.5 Amendment or Supplement
-----------------------
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of BB&T and Virginia Capital, subject to the
provision to Section 7.4.
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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 Virginia Capital.
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 Virginia Capital
to enforce rights in Sections 5.13 and 5.17.
8.3 No Assignment
-------------
Except for a substitution of parties pursuant to Section 5.4(a), none of
the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
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If to Virginia Capital:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
Virginia Capital Bancshares, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to BB&T:
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
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8.5 Specific Performance
--------------------
Virginia Capital acknowledges that the Virginia Capital Common Stock and
the Virginia Capital business and assets are unique, and that if Virginia
Capital 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 Virginia Capital shall, without
cause, refuse to consummate the transactions contemplated by this Agreement.
8.6 Captions
--------
The captions contained in this Agreement are for reference only and are
not part of this Agreement.
8.7 Counterparts
------------
This Agreement and the Plan of Merger may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.8 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have caused this Agreement to be executed in counterparts by their
duly authorized officers, all as of the day and year first above written.
BB&T CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
-------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
VIRGINIA CAPITAL BANCSHARES,
INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------
Title: President
-----------------------
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