North Carolina | 6060 | 56-0939887 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (IRS Employer Identification No.) |
Paul D. Freshour, Esq. | Ralph F. MacDonald, III | Elizabeth O. Derrick, Esq. | ||
Arnold & Porter llp | Alston & Bird LLP | Womble Carlyle Sandridge & | ||
1600 Tysons Blvd. | One Atlantic Center | Rice, PLLC | ||
Suite 900 | 1201 West Peachtree St. | 1201 West Peachtree St., Suite 3500 | ||
McLean, Virginia 22102 | Atlanta, Georgia 30309 | Atlanta, Georgia 30309 | ||
Phone: (703) 720-7008 | Phone: (404) 881-7582 | Phone: (404) 888-7433 | ||
Fax: (703) 720-7399 | Fax: (404) 253-8272 | Fax: (404) 870-4824 |
Proposed maximum | Proposed maximum | |||||||||||
Title of each Class | Amount to be | offering price | aggregate offering | Amount of | ||||||||
of Securities to be Registered | Registered | per unit | price(2) | registration fee | ||||||||
Common Stock, par value $5.00 per share | 14,963,129 | (1) | $587,238,206 | $62,835 | ||||||||
(1) | Not applicable. |
(2) | Computed in accordance with Rule 457(f) based on the average high ($26.07) and low ($25.74) sales price of the common stock of Main Street Banks, Inc. on February 21, 2006 as reported on NASDAQ National Market. Solely for the purposes of calculating the registration fee, the proposed maximum aggregate offering price is equal to the aggregate value of the estimated maximum number of shares of Main Street common stock that may be exchanged in connection with the merger. |
Sincerely, | |
Samuel B. Hay III | |
President and Chief Executive Officer |
BB&T Corporation Investor Relations 150 South Stratford Road, Suite 300 Winston-Salem, North Carolina 27104 (336) 733-3058 | Main Street Banks, Inc. Investor Relations 3500 Lenox Road Atlanta, Georgia 30326 (770) 786-3441 |
• | To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of December 14, 2005, between Main Street Banks, Inc. and BB&T Corporation, providing for the merger of Main Street with and into BB&T. In the merger, each share of Main Street common stock will be converted into the right to receive .6602 shares of BB&T common stock. A copy of the merger agreement is attached as Appendix A to the accompanying proxy statement/ prospectus. | |
• | To approve the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the above proposal. | |
• | To transact any other business that may properly come before the meeting or any adjournment or postponement of the meeting. |
By Order of the Board of Directors | |
Samuel B. Hay III | |
Chief Executive Officer and President |
Page | |||||
1 | |||||
1 | |||||
2 | |||||
2 | |||||
2 | |||||
2 | |||||
3 | |||||
3 | |||||
3 | |||||
3 | |||||
4 | |||||
4 | |||||
4 | |||||
6 | |||||
7 | |||||
7 | |||||
7 | |||||
8 | |||||
8 | |||||
8 | |||||
9 | |||||
9 | |||||
9 | |||||
9 | |||||
10 | |||||
10 | |||||
11 | |||||
12 | |||||
14 | |||||
15 | |||||
15 | |||||
15 | |||||
16 | |||||
16 | |||||
17 |
i
Page | |||||
17 | |||||
17 | |||||
17 | |||||
18 | |||||
18 | |||||
19 | |||||
19 | |||||
19 | |||||
24 | |||||
32 | |||||
32 | |||||
33 | |||||
34 | |||||
35 | |||||
36 | |||||
36 | |||||
37 | |||||
38 | |||||
41 | |||||
43 | |||||
44 | |||||
44 | |||||
46 | |||||
47 | |||||
47 | |||||
48 | |||||
48 | |||||
48 | |||||
50 | |||||
51 | |||||
51 | |||||
52 | |||||
52 | |||||
52 | |||||
53 | |||||
53 |
ii
Page | ||||||
54 | ||||||
54 | ||||||
54 | ||||||
54 | ||||||
54 | ||||||
55 | ||||||
56 | ||||||
57 | ||||||
58 | ||||||
58 | ||||||
58 | ||||||
59 | ||||||
59 | ||||||
60 | ||||||
61 | ||||||
61 | ||||||
62 | ||||||
62 | ||||||
63 | ||||||
63 | ||||||
63 | ||||||
63 | ||||||
64 | ||||||
64 | ||||||
A-1 | ||||||
B-1 |
iii
December 14, 2005 | [ ], 2006 | |||||||
BB&T | $ | 43.17 | ||||||
Main Street | $ | 28.73 | ||||||
Equivalent Price Per Share of Main Street Common Stock | $ | 28.50 |
Closing Price Per Share | Equivalent Price Per Share of | |||||
of BB&T Common Stock | Main Street Common Stock | |||||
$ | 50.00 | $ | 33.01 | |||
49.00 | 32.35 | |||||
48.00 | 31.69 | |||||
47.00 | 31.03 | |||||
46.00 | 30.37 | |||||
45.00 | 29.71 | |||||
44.00 | 29.05 | |||||
43.00 | 28.39 | |||||
42.00 | 27.73 | |||||
41.00 | 27.07 | |||||
40.00 | 26.41 | |||||
39.00 | 25.75 | |||||
38.00 | 25.09 | |||||
37.00 | 24.43 | |||||
36.00 | 23.77 | |||||
35.00 | 23.11 |
1
2
3
4
5
6
• | approval of the merger agreement by the holders of a majority of Main Street’s outstanding common stock; | |
• | the continuing accuracy of the parties’ representations in the merger agreement; | |
• | compliance, in all material respects, by each party with its obligations and covenants under the merger agreement; | |
• | the continuing effectiveness of the registration statement filed with the Securities and Exchange Commission covering the shares of BB&T common stock to be issued in the merger; | |
• | the approval for listing on the NYSE of the shares of BB&T common stock issuable pursuant to the merger agreement; and | |
• | the absence of any order, decree or injunction of a court or agency of competent jurisdiction which enjoins or prohibits completion of the transactions contemplated by the merger agreement. |
• | the merger is not completed by July 1, 2006; | |
• | the shareholders of Main Street do not approve the merger; | |
• | any condition that must be satisfied to complete the merger cannot be satisfied or fulfilled; | |
• | the other company violates, in a material way, any of its representations, warranties or obligations under the merger agreement and the violation is not cured in a timely fashion; or | |
• | any of the required regulatory approvals are denied, and the time period for appeals and requests for reconsideration have expired. |
• | withdraws its recommendation or refuses to recommend, without any adverse conditions or qualifications, to the shareholders of Main Street that they approve the merger agreement; or | |
• | recommends the approval of a competing acquisition proposal for Main Street. |
7
• | BB&T terminates because Main Street is in material breach of the merger agreement and such breach is not cured or cannot be cured; | |
• | BB&T terminates because prior to the Main Street shareholders’ meeting, the Main Street Board of Directors withdrew or disclosed its intention to withdraw or materially and adversely modify its recommendation, or refused to recommend, without any adverse conditions or qualifications, to the Main Street shareholders that they vote to approve the merger, or recommended to Main Street shareholders that they approve an acquisition of Main Street by a third party; or | |
• | Either Main Street or BB&T terminates because the Main Street shareholders did not vote to approve the merger agreement. |
• | Prior to such termination an acquisition proposal by a third party with respect to Main Street has been commenced, publicly proposed or publicly disclosed. |
• | Within 12 months of termination of the merger agreement, Main Street completes or enters into a definitive agreement with another party with respect to the acquisition of Main Street. |
• | after receiving an acquisition proposal from a third party, the Main Street Board does not take action to convene the Main Street shareholders’ meeting and/or recommend that Main Street shareholders adopt the merger agreement; |
• | within 12 months of termination of the merger agreement, Main Street completes or enters into a definitive agreement with another party with respect to the acquisition of Main Street, except that BB&T would not be entitled to a termination fee under this scenario if the merger agreement is terminated by mutual consent of BB&T and Main Street or because any governmental approval required to complete the merger is denied by final, nonappealable action of a governmental authority. |
8
9
BB&T | Main Street | |||||||||||||||||||||||||
High | Low | Cash Dividend | High | Low | Cash Dividend | |||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||
March 31, 2006 (through , 2006) | $ | 0.38 | $ | 0.165 | ||||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||
March 31, 2005 | $ | 42.24 | $ | 37.68 | $ | 0.35 | $ | 35.34 | $ | 26.35 | $ | 0.1525 | ||||||||||||||
June 30, 2005 | 40.95 | 37.04 | 0.35 | 26.46 | 22.58 | 0.1525 | ||||||||||||||||||||
September 30, 2005 | 43.00 | 38.56 | 0.38 | 28.48 | 25.27 | 0.1525 | ||||||||||||||||||||
December 31, 2005 | 43.92 | 37.39 | 0.38 | 29.01 | 25.00 | 0.1525 | ||||||||||||||||||||
For year 2005 | $ | 43.92 | $ | 37.04 | $ | 1.46 | $ | 35.34 | $ | 22.58 | $ | 0.61 | ||||||||||||||
Quarter Ended | ||||||||||||||||||||||||||
March 31, 2004 | $ | 38.80 | $ | 34.48 | $ | 0.32 | $ | 27.50 | $ | 24.90 | $ | 0.135 | ||||||||||||||
June 30, 2004 | 37.91 | 33.02 | 0.32 | 28.82 | 25.62 | 0.135 | ||||||||||||||||||||
September 30, 2004 | 40.46 | 36.38 | 0.35 | 30.60 | 26.46 | 0.135 | ||||||||||||||||||||
December 31, 2004 | 43.25 | 38.67 | 0.35 | 34.93 | 28.55 | 0.135 | ||||||||||||||||||||
For year 2004 | $ | 43.25 | $ | 33.02 | $ | 1.34 | $ | 34.93 | $ | 24.90 | $ | 0.54 |
BB&T historical | $ | 43.17 | ||
Main Street historical | $ | 28.73 | ||
Main Street pro forma equivalent(1) | $ | 28.50 |
(1) | Reflects the pro-forma equivalent closing price of the BB&T common stock that would be received by Main Street shareholders in the merger based on an exchange ratio of .6602 shares of BB&T common stock for each share of Main Street common stock. |
10
As of and For the Nine | |||||||||||||||||||||||||||||
Months Ended September 30 | As of and For the Year Ended December 31 | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
Net interest income | $ | 2,625,140 | $ | 2,502,182 | $ | 3,348,223 | $ | 3,082,005 | $ | 2,747,460 | $ | 2,433,679 | $ | 2,314,497 | |||||||||||||||
Net income | 1,224,195 | 1,141,491 | 1,558,375 | 1,064,903 | 1,303,009 | 973,638 | 698,488 | ||||||||||||||||||||||
Basic earnings per share | 2.23 | 2.07 | 2.82 | 2.09 | 2.75 | 2.15 | 1.55 | ||||||||||||||||||||||
Diluted earnings per share | 2.22 | 2.05 | 2.80 | 2.07 | 2.72 | 2.12 | 1.53 | ||||||||||||||||||||||
Cash dividends per share | 1.08 | 0.99 | 1.34 | 1.22 | 1.10 | 0.98 | 0.86 | ||||||||||||||||||||||
Book value per share | 20.43 | 19.54 | 19.76 | 18.33 | 15.70 | 13.50 | 11.96 | ||||||||||||||||||||||
Total assets | 107,080,153 | 97,880,397 | 100,508,641 | 90,466,613 | 80,216,816 | 70,869,945 | 66,552,823 | ||||||||||||||||||||||
Long-term debt | $ | 12,376,759 | $ | 11,145,504 | $ | 11,419,624 | $ | 10,807,700 | $ | 13,587,841 | $ | 11,721,076 | $ | 8,646,018 |
As of and For the Nine | |||||||||||||||||||||||||||||
Months Ended | |||||||||||||||||||||||||||||
September 30 | As of and For the Year Ended December 31 | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
Net interest income | $ | 67,330 | $ | 60,979 | $ | 82,409 | $ | 71,370 | $ | 54,298 | $ | 49,530 | $ | 48,236 | |||||||||||||||
Net income | 22,527 | 23,252 | 30,950 | 26,699 | 20,471 | 14,347 | 13,925 | ||||||||||||||||||||||
Basic earnings per share | 1.05 | 1.20 | 1.59 | 1.49 | 1.30 | 0.92 | 0.90 | ||||||||||||||||||||||
Diluted earnings per share | 1.03 | 1.16 | 1.54 | 1.44 | 1.26 | 0.89 | 0.88 | ||||||||||||||||||||||
Cash dividends per share | 0.4575 | 0.4050 | 0.54 | 0.48 | 0.42 | 0.36 | 0.24 | ||||||||||||||||||||||
Book value per share | 13.60 | 11.77 | 13.10 | 10.50 | 8.11 | 6.70 | 6.04 | ||||||||||||||||||||||
Total assets | 2,473,567 | 2,258,393 | 2,326,442 | 1,971,765 | 1,381,990 | 1,110,168 | 1,070,575 | ||||||||||||||||||||||
Long-term debt | $ | 249,716 | $ | 277,751 | $ | 252,617 | $ | 191,605 | $ | 55,155 | $ | 75,121 | $ | 52,128 |
11
At or For the Nine | ||||||||||
Months Ended | At or for the year ended | |||||||||
September 30, 2005 | December 31, 2004 | |||||||||
Earnings per common share: | ||||||||||
Basic: | ||||||||||
BB&T historical | $ | 2.23 | $ | 2.82 | ||||||
Main Street historical | 1.05 | 1.59 | ||||||||
Pro Forma combined | 2.23 | 2.83 | ||||||||
Main Street pro forma equivalent of one Main Street common share | 1.47 | 1.87 | ||||||||
Diluted: | ||||||||||
BB&T historical | 2.22 | 2.80 | ||||||||
Main Street historical | 1.03 | 1.54 | ||||||||
Pro Forma combined | 2.21 | 2.81 | ||||||||
Main Street pro forma equivalent of one Main Street common share | 1.46 | 1.85 | ||||||||
Cash dividends paid per common share (note 1): | ||||||||||
BB&T historical | 1.08 | 1.34 | ||||||||
Main Street historical | .4575 | .5400 | ||||||||
Pro Forma combined | 1.08 | 1.34 | ||||||||
Main Street pro forma equivalent of one Main Street common share | .7130 | .8847 | ||||||||
Shareholders’ equity per common share: | ||||||||||
BB&T historical | 20.43 | 19.76 | ||||||||
Main Street historical | 13.60 | 13.10 | ||||||||
Pro Forma combined | 21.02 | 20.34 | ||||||||
Main Street pro forma equivalent of one Main Street common share | 13.88 | 13.43 |
Pending Acquisition |
12
Fourth Quarter Earnings |
13
• | expected cost savings from the merger or other previously announced mergers may not be fully realized or realized within the expected time frame; | |
• | deposit attrition, customer loss or revenue loss following proposed mergers may be greater than expected; | |
• | competitive pressure among depository and other financial institutions, especially those targeted at Main Street’s customers, may increase significantly; | |
• | costs or difficulties related to the integration of the businesses of BB&T and its merger partners, including Main Street, may be greater than expected; | |
• | changes in the interest rate environment may reduce margins; | |
• | general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit; | |
• | legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which BB&T and Main Street are engaged; | |
• | adverse changes may occur in the securities markets; and | |
• | competitors of BB&T and Main Street may have greater financial resources and develop products that enable such competitors to compete more successfully than BB&T and Main Street. |
14
• | approval and adoption of the Agreement and Plan of Merger, dated December 14, 2005 between BB&T and Main Street pursuant to which Main Street would merge with and into BB&T. In this proxy statement/ prospectus, we refer to the Agreement and Plan of Merger as the “merger agreement.” A copy of the merger agreement is attached hereto as Appendix A; | |
• | approval of the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event that there are not sufficient votes at the time of the special meeting to approve the above proposal; and | |
• | such other matters as may properly come before the special meeting. |
15
16
• | prior to the special meeting, delivering a written notice of revocation bearing a later date or time than the proxy to 3500 Lenox Road, Atlanta, Georgia 30326, Attention: Corporate Secretary; | |
• | prior to the special meeting, submitting another proxy by mail or by hand delivery that is later dated and that is properly signed, dated and completed; or |
17
• | oral revocation at the special meeting in person to any of the persons named on the enclosed proxy card. Attendance at the special meeting will not by itself constitute revocation of a proxy; you must specifically revoke as described above. |
18
19
20
Main Street’s Reasons for the Merger |
• | the merits of other strategic options available to Main Street, including continuing as an independent entity while making certain changes to its current strategic plans; | |
• | Burke Capital’s detailed analysis of similar transactions which demonstrated that the principal financial and business terms of the merger were comparable; | |
• | the opinion delivered to Main Street by Burke Capital, to the effect that, as of December 14, 2005, and based upon and subject to the considerations set forth in the opinion, the merger consideration specified in the merger agreement was fair from a financial point of view to the holders of shares of Main Street common stock; | |
• | that Main Street shareholders would receive, as BB&T shareholders, an earnings per share upgrade of approximately 38%, based on Main Street’s and BB&T’s respective stated earnings for the previous 12 months, and a dividend upgrade of approximately 65%, based on Main Street’s and BB&T’s respective dividend rates as of December 14, 2005; | |
• | the low probability of receiving more favorable merger offers from other financial institutions in the near future due to the thorough market-testing process that the Main Street Board of Directors had completed; | |
• | BB&T’s positive record in providing severance, training and job opportunities for employees displaced in previous acquisitions; | |
• | the compatibility of cultures, management, and similar business philosophies of Main Street and BB&T; | |
• | the employee benefits that current employees of Main Street would receive as employees of BB&T and BB&T’s willingness to give such employees credit for past service to Main Street and to include Main Street employees in the BB&T pension plan; |
21
• | BB&T’s willingness to match up to $1 million of funds from Main Street to provide $2 million for an employee assistance program for Main Street employees adversely affected by the merger (Main Street’s share of the fund will come from Messrs. Hay, Milligan, and Fowler’s agreement to amend their existing employment agreements with Main Street to reduce the amounts due upon the termination of such employment agreements); | |
• | the potential benefits to customers due to BB&T’s sizeable share of the Atlanta market, extensive branch network, high level of expertise, broad line of products and services, and higher lending limits; | |
• | the benefits to the communities in which Main Street operates due to the expected effects on Main Street’s employees and customers; | |
• | the information regarding BB&T’s financial condition, operations, culture, and business philosophy learned in meetings between Mr. Hay and Burke Capital and the executive management of BB&T; | |
• | Main Street’s due diligence review of BB&T and its knowledge of BB&T, including BB&T’s track record of completing and integrating bank acquisitions; | |
• | the regulatory and other approvals required in connection with the merger and the likelihood that, once the definitive merger agreement had been entered into, the merger would be completed; | |
• | the expected treatment of the merger as a “reorganization” for United States federal income tax purposes which would generally allow Main Street shareholders receiving BB&T common stock in the merger to avoid recognizing gain or loss upon the conversion of shares of Main Street common stock into such shares of BB&T common stock; | |
• | the challenges of combining the businesses, assets and workforces of the two companies and BB&T’s past experience in this regard; and | |
• | the proposed employment arrangements with Messrs. Hay, Milligan, and Fowler, and the fact that some of Main Street’s directors and executive officers have other interests in the merger that are in addition to their interests as Main Street shareholders.See“Certain Interests of Main Street’s Directors and Officers in the Merger” beginning on page . |
BB&T’s Reasons for the Merger |
22
• | Criterion: The transaction must be accretive to cash earnings per share by the second full year following the merger. BB&T’s analysis indicated that the merger would be accretive to cash earnings per share the second full year following the merger. | |
• | Criterion: The transaction must be accretive to earnings per share, as determined in accordance with generally accepted accounting principles, by the third full year following the merger. BB&T’s analysis indicated that the merger would be accretive in the second full year following the merger. | |
• | Criterion: The projected performance of Main Street must conform to BB&T’s internal rate of return criteria. BB&T’s current minimum internal rate of return for this type of investment is 15% or better. BB&T’s analysis indicated the projected internal rate of return of Main Street will be better than 15%. | |
• | Criterion: The transaction must be accretive to cash basis return on equity by the third full year following the merger. BB&T’s analysis indicated that the merger would be immediately accretive to cash basis return on equity. | |
• | Criterion: The transaction must be accretive to cash basis return on assets by the third full year following the merger. BB&T’s analysis indicated that the merger would be accretive to cash basis return on assets in the second full year following the merger. | |
• | Criterion: The transaction must be accretive to tangible book value by the fifth full year following the merger. BB&T’s analysis indicated that the merger would be accretive to tangible book value in the fifth full year following the merger. | |
• | Criterion: The combined leverage ratio following the merger must not be below 7%. BB&T’s analysis indicated that the combined leverage ratio will remain over 7%. | |
• | Criterion: The transaction must create accelerated dividend growth potential for current BB&T shareholders by the fifth full year following the merger. BB&T’s analysis indicated that the merger will create accelerated dividend growth in first full year following the merger. |
• | The acquisition is consistent with BB&T’s strategy of pursuing in-market (Carolinas/ Virginia/ West Virginia/ D.C./ Maryland/ Georgia/ Kentucky/ Tennessee/ Florida) and contiguous state acquisitions of high quality banks and thrifts. | |
• | The acquisition is consistent with past acquisitions that have been successfully executed. | |
• | The transaction will provide BB&T with the following: |
• | the opportunity to sell a broad array of banking and insurance products to Main Street’s client base; | |
• | an expanded presence in Georgia, with its market share rank increasing to fifth from sixth in the state; | |
• | an increase in market share rank to fifth from sixth in the Atlanta metropolitan area; and |
23
• | an increase in market share rank to seventh from 12th in the Athens metropolitan area. |
Assumptions Made by BB&T |
• | BB&T’s earnings per share (“EPS”) for 2006 would be in line with the estimate published by First Call Corporation of $3.30; | |
• | BB&T’s earnings per share for subsequent years are based upon an assumption that income statement and balance sheet growth would be at an annual rate of 10.0%; | |
• | Main Street’s 2006 projected financial statements were based on Main Street’s EPS on a stand-alone basis for 2006 being $1.68, as estimated by First Call Corporation; | |
• | Annual pre-tax cost savings of approximately 35% of Main Street’s 2006 estimated noninterest expense base (realized in the first 12 months of operations following conversion of Main Street’s systems to BB&T’s systems); | |
• | Income statement and balance sheet growth rates, except for noninterest income and noninterest expense, attributable to Main Street would be 5% in year one and 10% in year two, 15% in years three through five, and 10% in all years thereafter. Main Street’s noninterest income was projected to grow to achieve a fee income ratio of 30% in year five and at 10% in each year thereafter; | |
• | Main Street’s 2006 core net interest margin (non-fully taxable equivalent) was estimated at 4.24% for 2006 and for the remainder of the model years; and | |
• | One-time after-taxes merger-related charges of $39.9 million. |
24
• | The merger agreement and certain of the schedules thereto; | |
• | Certain publicly available financial statements and other historical financial information of Main Street that it deemed relevant; | |
• | Projected earnings estimates for Main Street prepared by and reviewed with senior management of Main Street and the views of senior management regarding Main Street’s business, financial condition, results of operations and future prospects; | |
• | Internal financial and operating information with respect to the business, operations and prospects of Main Street furnished to Burke Capital by Main Street that is not publicly available; | |
• | Certain publicly available financial statements and other historical financial information of BB&T that it deemed relevant; | |
• | The reported prices and trading activity of BB&T’s common stock, as well as dividends paid on BB&T common stock, and compared those prices and activity and dividends with other publicly-traded companies that Burke Capital deemed relevant; | |
• | The pro forma financial impact of the merger on BB&T’s ability to complete a transaction from a regulatory standpoint, based on assumptions determined by senior management of Main Street and Burke Capital; | |
• | The financial terms of other recent business combinations in the commercial banking industry, to the extent publicly available and deemed relevant by Burke Capital; | |
• | The current market environment generally and the banking environment in particular; | |
• | Such other information, financial studies, analyses and investigations and financial, economic and market criteria as it considered relevant. |
25
26
Summary of Proposed Merger |
Deal Value Considerations: | ||||
Offer Price/Common Share | $ | 28.50 | ||
Aggregate Value for Common Shares | $ | 612,328,363 | ||
Aggregate Value for Outstanding Options | $ | 10,405,866 | ||
Total Transaction Value | $ | 622,734,229 | ||
Deal Multiples: | ||||
Transaction Value/LTM Net Income | 20.60x | |||
Transaction Value/2006 Projected Net Income | 17.17x | |||
Transaction Value/Book Value | 2.13x | |||
Transaction Value/Tangible Book Value | 3.28x | |||
Core Deposit Premium | 31.34% |
Analysis of Main Street |
Comparable Trading Valuation Analysis |
Peer Group A |
27
Peer Group B |
Peer Group A | Peer Group B | |||||||||||||||||||
Main Street | Peer Group | Peer Group | ||||||||||||||||||
Banks, Inc. | Medians | Quartile | Medians | Quartile | ||||||||||||||||
Trading Characteristics | ||||||||||||||||||||
Price/Book | 2.13 | x | 2.00 | x | 2 | 2.15 | x | 2 | ||||||||||||
Price/Tangible Book | 3.28 | x | 2.57 | x | 1 | 2.67 | x | 1 | ||||||||||||
Price/LTM Core EPS | 20.20 | x | 17.10 | x | 2 | 17.20 | x | 1 | ||||||||||||
Price/2005E EPS | 20.30 | x | 16.40 | x | 1 | 16.85 | x | 1 | ||||||||||||
Price/2006E EPS | 17.30 | x | 14.80 | x | 1 | 14.75 | x | 1 | ||||||||||||
Market Capitalization | $617 | $325 | 1 | $344 | 1 | |||||||||||||||
Current Dividend Yield | 2.10 | % | 2.04 | % | 2 | 1.87 | % | 2 | ||||||||||||
3 mo Avg Trading Vol | 33,553 | 14,793 | 2 | 14,569 | 1 | |||||||||||||||
Weekly Vol/ Shares Outstanding | 0.78 | % | 0.62 | % | 2 | 0.66 | % | 1 |
Stock Price Performance | ||||||||||||
One | Three | Six | ||||||||||
Month | Month | Month | ||||||||||
S&P 500 | 2.73% | 2.94% | 5.55% | |||||||||
S&P Banking Index | 1.39% | 5.50% | 1.57% | |||||||||
Main Street | 6.33% | 5.05% | 19.13% |
Market Premium Analysis |
28
MSBK | ||||||||||||
BB&T | Stock | |||||||||||
Offer | Price | Premium | ||||||||||
1-Day | $ | 28.50 | $ | 28.89 | -1.35% | |||||||
1-Week (average week) | $ | 28.50 | $ | 28.22 | 0.99% | |||||||
1-Month (average week) | $ | 28.50 | $ | 27.54 | 3.49% | |||||||
2-Month (average week) | $ | 28.50 | $ | 26.57 | 7.26% |
Financial Upgrades Analysis |
Earnings/Share | ||||||||||||||||||||
Upgrades | ||||||||||||||||||||
Latest | Tangible | Annual | ||||||||||||||||||
Twelve | 2005 | Book Value/ | Book Value/ | Dividend/ | ||||||||||||||||
Months | Estimated | Share | Share | Share | ||||||||||||||||
BB&T Per Share Financials | $ | 2.96 | $ | 3.06 | $ | 20.43 | $ | 11.78 | $ | 1.52 | ||||||||||
Merger Exchange Ratio | 0.6602 | 0.6602 | 0.6602 | 0.6602 | 0.6602 | |||||||||||||||
Main Street Pro Forma | $ | 1.95 | $ | 2.02 | $ | 13.49 | $ | 7.78 | $ | 1.00 | ||||||||||
Main Street Standalone | $ | 1.42 | $ | 1.43 | $ | 13.60 | $ | 8.84 | $ | 0.61 | ||||||||||
Financial Upgrade/ Downgrade | 37.6 | % | 41.3 | % | -0.8 | % | -12.0 | % | 64.5 | % |
Analysis of Selected Merger Transactions |
• | Merger and acquisition transactions announced after January 1, 2000, excluding sellers designated as Subchapter S corporations. | |
• | Sellers with assets between $1 billion and $10 billion. | |
• | Sellers with returns on average assets (“ROAA”) greater than 100 basis points in the latest quarter prior to announcement. | |
• | Sellers located within the U.S. |
29
Median Valution in | ||||||||||||
Comparable Transactions | ||||||||||||
BB&T | ||||||||||||
Merger | 59 U.S. | 13 Southeast | ||||||||||
Consideration | Transactions | Transactions | ||||||||||
Multiple Comparison | ||||||||||||
Price/LTM Earnings | 20.62 | x | 18.46 | x | 20.36 | x | ||||||
Price/Aggregate Stated Equity | 2.14 | x | 2.55 | x | 2.68 | x | ||||||
Price/Tangible Book | 3.28 | x | 2.76 | x | 2.83 | x | ||||||
Core Deposit Premium | 31.52 | % | 23.36 | % | 21.16 | % | ||||||
Price/Assets | 25.19 | % | 22.14 | % | 23.54 | % | ||||||
Implied Valuation/ Share | ||||||||||||
Price/LTM Earnings | $ | 28.50 | $ | 25.59 | $ | 28.15 | ||||||
Price/Aggregate Stated Equity | 28.50 | 33.85 | 35.53 | |||||||||
Price/Tangible Book | 28.50 | 24.03 | 24.68 | |||||||||
Core Deposit Premium | 28.50 | 23.50 | 22.15 | |||||||||
Price/Assets | 28.50 | 25.13 | 26.68 | |||||||||
Average Valuation | $ | 28.50 | $ | 26.42 | $ | 27.44 |
Discounted Cash Flow Analysis |
30
Contribution Analysis |
Contribution | ||||||||
BB&T | Main Street | |||||||
Pro Forma Ownership | 97.45% | 2.55% | ||||||
Earnings (000’s): | ||||||||
LTM Earnings — Stated | 98.21% | 1.79% | ||||||
2005E Earnings | 98.21% | 1.79% | ||||||
2006E Earnings | 97.95% | 2.05% | ||||||
Balance Sheet (9/30/2005) (000’s): | ||||||||
Loans | 97.60% | 2.40% | ||||||
Assets | 97.74% | 2.26% | ||||||
Deposits | 97.64% | 2.36% | ||||||
Equity | 97.46% | 2.54% | ||||||
Tangible Equity | 97.14% | 2.86% |
Analysis of BB&T |
Comparable Trading Valuation Analysis |
Peer Group | BB&T | |||||||||||
Medians | Corporation | Quartile | ||||||||||
Trading Characteristics | ||||||||||||
Price/Book | 2.09 | x | 2.08 | x | 3 | |||||||
Price/Tangible Book | 2.90 | x | 3.60 | x | 2 | |||||||
Price/LTM Core EPS | 13.80 | x | 14.10 | x | 2 | |||||||
Price/2005E EPS | 13.40 | x | 13.90 | x | 2 | |||||||
Price/2006E EPS | 12.60 | x | 12.80 | x | 2 | |||||||
Market Capitalization | $15,441 | $22,977 | 1 | |||||||||
Current Dividend Yield | 3.19 | % | 3.58 | % | 2 | |||||||
3 mo Avg Trading Vol | 1,371,959 | 1,676,568 | 2 | |||||||||
Weekly Vol/ Shares Outstanding | 1.69 | % | 1.55 | % | 3 |
31
Stock Price Performance | ||||||||||||
One | Three | Six | ||||||||||
Month | Month | Month | ||||||||||
S&P 500 | 2.73 | % | 2.94 | % | 5.55 | % | ||||||
S&P Banking Index | 1.39 | % | 5.50 | % | 1.57 | % | ||||||
BB&T | -0.39 | % | 6.50 | % | 9.06 | % |
Other Analyses and Factors |
Information Regarding Burke Capital |
32
• | approval of the shareholders of Main Street of the merger agreement; | |
• | BB&T’s registration statement on Form S-4 relating to the merger must be effective under the Securities Act of 1933, and no stop order suspending the effectiveness of the registration statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the Securities and Exchange Commission; |
33
• | all regulatory approvals required to consummate the merger shall have been obtained and shall remain in full force and effect and all statutory waiting periods required by such regulatory approvals shall have expired and no such approvals shall contain (i) any conditions, restrictions or requirements that the BB&T Board of Directors reasonably determines would either, before or after the completion of the merger, have a material adverse effect on BB&T or (ii) any conditions, restrictions or requirements that are not customary and usual for approvals of such type and that the BB&T Board of Directors reasonably determines would either, before or after the completion of the merger, have a material adverse effect on BB&T; | |
• | no governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and prohibits consummation of the merger; and | |
• | the shares of BB&T common stock issuable pursuant to the merger must have been approved for listing on the NYSE, subject to official notice of issuance. |
• | the representations and warranties of BB&T in the merger agreement shall be true and correct as of the date of the merger agreement and as of the closing of the merger, except for such inaccuracies in the representations and warranties that, individually or in the aggregate, have not had or are not reasonably likely to have a material adverse effect on BB&T; | |
• | BB&T must have performed in all material respects all obligations and complied in all material respects with all covenants required by the merger agreement; and | |
• | Main Street must have received closing certificates with respect to accuracy of representations and warranties and compliance with covenants from BB&T. |
• | the representations and warranties of Main Street in the merger agreement shall be true and correct as of the date of the merger agreement and as of the closing of the merger, except for such inaccuracies in the representations and warranties that, individually or in the aggregate, have not had or are not reasonably likely to have a material adverse effect on Main Street (other than Main Street’s capitalization which may only havede minimus variations); | |
• | Main Street must have performed in all material respects all of its obligations and complied in all material respects with all of its covenants required by the merger agreement; | |
• | BB&T must have received agreements from specified affiliates of Main Street concerning their shares of Main Street common stock and the shares of BB&T common stock to be received by them; | |
• | BB&T must have received closing certificates from Main Street with respect to accuracy of representations and warranties and compliance with covenants; and | |
• | BB&T must have received an opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to Main Street, regarding matters specified in the merger agreement. |
34
• | to use reasonable best efforts in good faith to satisfy the conditions necessary to complete the transactions contemplated by the merger agreement as soon as is reasonably practicable; and | |
• | not to take any action that would adversely affect the desired income tax consequences of the merger. |
• | conduct their businesses other than in the ordinary and usual course; | |
• | fail to use reasonable efforts to preserve intact their business organizations and assets and maintain their rights, franchises and existing relations with customers, suppliers, employees and business associates; | |
• | voluntarily take any action likely to have an adverse effect upon Main Street’s ability to perform any of its material obligations under the merger agreement; | |
• | enter into any new material line of business; | |
• | materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies, except as required by applicable law, regulation or policies imposed by any governmental authority; | |
• | issue any shares of capital stock, other than in connection with the exercise of outstanding options or, consistent with past practice, in connection with awards of restricted stock and stock options to directors, officers, and employees under the Main Street stock option plans; | |
• | incur additional indebtedness other than in the ordinary course of business; | |
• | sell or otherwise dispose of any material assets, acquire any materials assets or make certain capital expenditures; | |
• | increase the compensation or fringe benefits of its directors, officers or employees except in a manner consistent with past practice; or | |
• | declare or pay any dividends or other distributions on capital stock other than quarterly cash dividends in an amount not to exceed the per share amount declared and paid in accordance with past practices, provided that Main Street may pay a quarterly dividend in the first quarter 2006 up to $0.16775 per share of Main Street common stock, which is an increase from the immediately preceding dividend paid in 2005. Main Street and BB&T will coordinate their dividends pending the merger so that Main Street shareholders will receive, during the quarter in which the merger becomes effective, a dividend from either BB&T or Main Street, but not both. |
35
• | declare, set aside, make or pay any extraordinary or special dividends on shares of BB&T common stock or make any other extraordinary or special distributions in respect of any of its capital stock; or | |
• | amend the BB&T Articles of Incorporation, BB&T Bylaws or the Articles of Incorporation or Bylaws of any BB&T subsidiaries in a manner that would adversely affect the economic or other benefits of the merger to the holders of Main Street common stock or to the employees of Main Street and Main Street’s subsidiaries. |
• | any inaccuracies of the other party in the representations or warranties contained in the merger agreement or any document delivered pursuant to the merger agreement; | |
• | 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 in the merger agreement; or | |
• | the performance by the other party of any of its obligations set out in the merger agreement. |
• | at any time before the merger becomes effective, by the mutual consent in writing of BB&T and Main Street; | |
• | at any time before the merger becomes effective, by BB&T or Main Street in the event of either: (i) a breach by the other party of any representation or warranty contained in the merger agreement, which breach cannot be or has not been cured within 30 days after the giving of written notice to the |
36
breaching party of such breach; or (ii) a material breach by the other party of any of the covenants or agreements contained in the merger agreement, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach,provided that(A) such breach would entitle the non-breaching party not to consummate the merger, and (B) the terminating party is not itself in material breach of any provision of the merger agreement; | ||
• | at any time before the merger becomes effective, by BB&T or Main Street, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event that the merger is not consummated by July 1, 2006, except to the extent that the failure of the merger to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate the merger agreement; | |
• | by Main Street or BB&T in the event (i) the approval of any governmental authority required for consummation of the merger and the other transactions contemplated by the merger agreement shall have been denied by final nonappealable action of such governmental authority; (ii) the Main Street shareholders fail to adopt the merger agreement at the Main Street shareholders’ meeting and approve the merger; or (iii) any of the closing conditions have not been met as required by the merger agreement; or | |
• | by BB&T, if (i) the Main Street Board of Directors submits the merger agreement to its shareholders without a recommendation for approval or with any adverse conditions on, or qualifications of, such recommendation for approval; (ii) the Main Street Board of Directors otherwise withdraws or materially and adversely modifies (or discloses its intention to withdraw or materially and adversely modify) its recommendation; or (iii) the Main Street Board of Directors recommends to its shareholders an acquisition proposal other than the merger. |
• | BB&T terminates because Main Street is in material breach of the merger agreement and such breach is not cured or cannot be cured; | |
• | BB&T terminates because prior to the Main Street shareholders’ meeting, the Main Street Board of Directors withdrew or disclosed its intention to withdraw or materially and adversely modify its recommendation, or refused to recommend, without any adverse conditions or qualifications, to the Main Street shareholders that they vote to approve the merger, or recommended to Main Street shareholders that they approve an acquisition of Main Street by a third party; or | |
• | Either Main Street or BB&T terminates because the Main Street shareholders did not vote to approve the merger agreement. |
37
• | Prior to such termination an acquisition proposal by a third party with respect to Main Street has been commenced, publicly proposed or publicly disclosed. |
• | Within 12 months of termination of the merger agreement, Main Street completes or enters into a definitive agreement with another party with respect to the acquisition of Main Street. |
• | after receiving an acquisition proposal from a third party, the Main Street Board does not take action to convene the Main Street shareholders’ meeting and/or recommend that Main Street shareholders adopt the merger agreement; |
• | within 12 months of termination of the merger agreement, Main Street completes or enters into a definitive agreement with another party with respect to the acquisition of Main Street, except that under this scenario BB&T would not be entitled to a termination fee if the merger agreement is terminated by mutual consent of BB&T and Main Street or because any regulatory approval required to complete the merger is denied by final, nonappealable action of a governmental authority. |
Existing Employment Agreements with Main Street |
38
Claims Agreements with Main Street |
New Employment and Consulting Agreements with Branch Bank |
39
Equity-Based Awards |
40
Board of Directors of Branch Bank |
Advisory Boards |
Indemnification of Directors and Officers; Insurance |
• | dealers in securities or foreign currencies, financial institutions, insurance companies or tax exempt organizations; |
41
• | persons who are not “United States persons” (as defined in Section 7701(a)(30) of the Internal Revenue Code); | |
• | persons who are subject to alternative minimum tax, or who elect to apply amark-to-market method of accounting; | |
• | holders of options granted by Main Street, or persons who acquired Main Street stock pursuant to employee stock options or otherwise as compensation; | |
• | persons who do not hold their shares as capital assets; or | |
• | persons who hold their shares as part of a “hedge,” “constructive sale,” “straddle,” “conversion transaction” or other integrated transaction. |
Material Tax Consequences of the Merger |
• | the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code; | |
• | each of BB&T and Main Street will be a party to that reorganization within the meaning of Section 368(b) of the Internal Revenue Code; | |
• | no gain or loss will be recognized by BB&T or Main Street as a result of the merger, except for amounts resulting from any required change in accounting methods or any income or deferred gain recognized under the relevant consolidated return regulations; | |
• | the shareholders of Main Street who receive BB&T common stock in exchange for their Main Street common stock will recognize no gain or loss for federal income tax purposes; | |
• | the aggregate tax basis of the BB&T common stock received by a Main Street shareholder (including any fractional share interest deemed received and redeemed as described below) will be the same as the aggregate tax basis of the Main Street common stock surrendered in exchange; and | |
• | the holding period for BB&T common stock received (including any fractional share interest deemed received and redeemed as described below) in exchange for shares of Main Street common stock will include the period during which the shareholder held the shares of Main Street common stock surrendered in exchange therefor. |
42
Backup Withholding |
The Merger |
43
Employee Benefit Plans |
44
Stock Options |
45
46
47
• | Branch Banking and Trust Company, Winston-Salem, North Carolina | |
• | Branch Banking and Trust Company of South Carolina, Greenville, South Carolina | |
• | Branch Banking and Trust Company of Virginia, Richmond, Virginia | |
• | BB&T Bankcard Corporation, Columbus, Georgia | |
• | Scott & Stringfellow, Inc., Richmond, Virginia | |
• | Regional Acceptance Corporation, Greenville, North Carolina | |
• | Sheffield Financial LLC, Clemmons, North Carolina | |
• | MidAmerica Gift Certificate Company, Louisville, Kentucky | |
• | BB&T Asset Management, Inc., Raleigh, North Carolina |
Branch Bank |
States | Offices | ||||
North Carolina | 332 | ||||
Maryland | 127 | ||||
Georgia | 119 | ||||
Kentucky | 94 | ||||
Florida | 89 | ||||
West Virginia | 80 | ||||
Tennessee | 47 | ||||
District of Columbia | 9 | ||||
Alabama | 2 | ||||
Indiana | 1 | ||||
Total | 900 | ||||
48
• | BB&T Leasing Corporation, based in Charlotte, North Carolina, which provides lease financing to commercial businesses; | |
• | BB&T Investment Services, Inc., a registered broker-dealer located in Charlotte, North Carolina, which offers clients non-deposit investment alternatives, including discount brokerage services, equities, fixed-rate and variable-rate annuities, mutual funds and government and municipal bonds; | |
• | BB&T Insurance Services, Inc., headquartered in Raleigh, North Carolina, which offers property and casualty, life, health, employee benefits, commercial general liability, surety, title and other insurance products through its agency network; | |
• | Stanley, Hunt, DuPree & Rhine, Inc., with dual headquarters in Greensboro, North Carolina and Greenville, South Carolina, which offers flexible benefit plans, and investment advisory, actuarial and benefit consulting services; | |
• | Prime Rate Premium Finance Corporation, Inc., located in Florence, South Carolina, which provides insurance premium financing primarily to clients in BB&T’s geographic markets; | |
• | Laureate Capital, LLC, located in Charlotte, North Carolina, which specializes in arranging and servicing commercial mortgage loans; | |
• | Lendmark Financial Services, Inc., located in Conyers, Georgia, which offers alternative consumer and mortgage loans to clients unable to meet BB&T’s normal credit and mortgage loan underwriting guidelines; | |
• | CRC Insurance Services, Inc., based in Birmingham, Alabama, which is a wholesale insurance broker authorized to do business nationwide; and | |
• | McGriff, Seibels & Williams, Inc., based in Birmingham, Alabama, which is authorized to do business nationwide and specializes in providing insurance products on an agency basis to large commercial and energy clients, including many Fortune 500 companies. |
Branch Bank-SC, Branch Bank-VA and BB&T Bankcard Corporation |
Major Nonbank Subsidiaries |
• | Scott & Stringfellow, Inc., which is a registered investment banking and full-service brokerage firm that provides services in retail brokerage, equity and debt underwriting, investment advice, corporate finance and equity research; and facilitates the origination, trading and distribution of fixed-income securities and equity products in both the public and private capital markets. It also has a public finance department that provides investment banking, financial advisory services and debt underwriting services to a variety of regional taxable and tax-exempt issuers; Scott & Stringfellow’s investment banking and corporate and public finance areas do business as BB&T Capital Markets; | |
• | Regional Acceptance Corporation, which specializes in indirect financing for consumer purchases of primarily mid-model and late-model used automobiles; |
49
• | Sheffield Financial LLC, which specializes in loans to individuals and small commercial lawn care businesses across the country for the purchase of outdoor power equipment and power sport equipment; and | |
• | MidAmerica Gift Certificate Company, which specializes in the issuance and sale of retail gift certificates and giftcards through a nationwide network of authorized mall agents. | |
• | BB&T Asset Management, Inc., which is an independent Registered Investment Advisor and the advisor to the BB&T Funds, provides tailored investment management solutions to meet the specific needs and objectives of individual and institutional clients through a full range of investment strategies, including domestic and international equity and fixed income investing. |
Services |
• | small business lending | |
• | commercial middle market lending | |
• | real estate lending | |
• | retail lending | |
• | home equity lending | |
• | sales finance | |
• | home mortgage lending | |
• | commercial mortgage lending | |
• | leasing | |
• | asset management | |
• | retail and wholesale agency insurance | |
• | institutional trust services | |
• | wealth management/ private banking | |
• | investment brokerage services | |
• | capital markets services | |
• | factoring | |
• | asset-based lending | |
• | international banking services | |
• | treasury services | |
• | electronic payment services | |
• | credit and debit card services | |
• | consumer finance | |
• | payroll processing |
50
• | to pursue acquisitions of banks and thrifts in the Carolinas, Virginia, Maryland, Washington, D.C., Georgia, West Virginia, Tennessee, Kentucky, and Florida with assets of $500 million to $15 billion, with an informal target of growing approximately 5% of BB&T’s assets through acquisition; | |
• | to acquire companies in niche markets that provide products or services that can be offered through the existing distribution system to BB&T’s current customer base; and | |
• | to consider strategic nonbank acquisitions in markets that are economically feasible and provide positive long-term benefits. |
51
52
September 30, | December 31, | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||||||
Loan Type | ||||||||||||||||||||||||
Commercial and industrial | $ | 128,193 | $ | 129,791 | $ | 118,243 | $ | 104,062 | $ | 68,320 | $ | 97,572 | ||||||||||||
Real estate — construction | 459,581 | 379,468 | 304,046 | 238,415 | 173,464 | 150,107 | ||||||||||||||||||
Real estate — residential mortgage | 286,918 | 284,648 | 269,358 | 198,400 | 152,226 | 162,706 | ||||||||||||||||||
Commercial real estate | 881,887 | 826,434 | 711,209 | 404,630 | 366,003 | 263,500 | ||||||||||||||||||
Consumer and other | 39,125 | 35,903 | 41,650 | 38,387 | 53,075 | 63,857 | ||||||||||||||||||
Unearned income and deferred loan fees | (3,436 | ) | (2,628 | ) | (1,180 | ) | (1,407 | ) | (1,642 | ) | (1,779 | ) | ||||||||||||
Loans, net of unearned income | $ | 1,792,268 | $ | 1,653,616 | $ | 1,443,326 | $ | 982,487 | $ | 811,446 | $ | 735,963 | ||||||||||||
Mortgage loans held-for-sale | $ | 7,119 | $ | 6,932 | $ | 5,671 | $ | 8,176 | $ | 9,194 | $ | 2,248 | ||||||||||||
Percent of loans category to total loans | ||||||||||||||||||||||||
Commercial and industrial | 7.15 | % | 7.85 | % | 8.19 | % | 10.59 | % | 8.42 | % | 13.26 | % | ||||||||||||
Real estate — construction | 25.64 | % | 22.95 | % | 21.07 | % | 24.27 | % | 21.38 | % | 20.40 | % | ||||||||||||
Real estate — residential mortgage | 16.01 | % | 17.21 | % | 18.66 | % | 20.19 | % | 18.76 | % | 22.11 | % | ||||||||||||
Commercial real estate | 49.21 | % | 49.98 | % | 49.28 | % | 41.18 | % | 45.10 | % | 35.80 | % | ||||||||||||
Consumer and other | 2.18 | % | 2.17 | % | 2.88 | % | 3.91 | % | 6.54 | % | 8.67 | % | ||||||||||||
Unearned income and deferred loan fees | -0.19 | % | -0.16 | % | -0.08 | % | -0.14 | % | -0.20 | % | -0.24 | % | ||||||||||||
Loans, net of unearned income | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % |
53
54
Control Share Acquisition Act |
Provisions Regarding the BB&T Board of Directors |
Meeting of Shareholders; Shareholders’ Nominations and Proposals |
55
BB&T | Main Street | |||
Authorized Capital Stock | • 1,000,000,000 shares common stock • 5,000,000 shares preferred stock | • 50,000,000 shares of common stock | ||
Special Meetings of Shareholders | • May be called by the Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Secretary, or the Board of Directors | • May be called by the President, the Board of Directors, or shareholders owning an aggregate of not less than two-thirds of the outstanding capital stock | ||
Board of Directors | • Minimum size is three • Maximum size is 30 • Current size is 15 • Divided into three classes • May be removed with or without cause at a shareholders’ meeting where the number of votes cast to remove a director exceeds the number of votes cast not to remove a director | • Minimum size is five • Maximum size is 25 • Current size is nine • Divided into three classes • May be removed with cause by the affirmative vote of a majority of the shares then entitled to vote at an election of directors • May be removed without cause by the affirmative vote of two-thirds of the shares then entitled to vote at an election of directors or by the affirmative vote of a majority of all the Directors | ||
Dividends and Other Distributions | • Subject to statutory and regulatory restrictions | • Subject to substantially similar statutory and regulatory restrictions | ||
Shareholder Nominations and Shareholder Proposals | • Bylaws establish advance notice procedures for shareholder proposals and for the nomination of candidates for election as directors • Proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934 | • No established advance notice procedures • Proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934 | ||
Discharge of Duties; Exculpation and Indemnification | • Directors must discharge duties according to NCBCA • Directors have no personal liability for monetary damages for certain breaches of duty as a director • BB&T will indemnify directors and officers against liabilities arising out of his or her status as a director or officer to the fullest extent permitted under applicable law subject to certain exceptions | • Directors must discharge duties according to GBCC • Similarly, directors have no personal liability for monetary damages for certain breaches of duty as a director • Main Street will indemnify directors and officers against liabilities arising out of their status as a director or officer for acts believed in good faith to be in or not opposed to the best interests of Main Street subject to certain exceptions |
56
BB&T | Main Street | |||
Mergers, Share Exchanges and Sales of Assets | • Must be approved by a majority of shareholders except approval of a merger by shareholders of the surviving corporation is not required under certain circumstances | • Substantially the same except, in addition, holders of at least two- thirds of the issued and outstanding shares entitled to vote or more than two-thirds of the Main Street directors then in office must approve the transaction | ||
Anti-Takeover Statutes | • North Carolina Control Share Acquisition Act applies to BB&T • BB&T has opted out of the North Carolina Shareholder Protection Act | • Anti-takeover provisions of the GBCC including control share and fair price provisions require a corporation to adopt bylaws expressly providing for their application. Main Street has not adopted such bylaws. | ||
Amendments to Articles of Incorporation and Bylaws | • Articles may be amended upon approval by a majority of the votes cast within each voting group entitled to vote • Directors and shareholders may each amend Bylaws, provided that, subject to certain exceptions, Directors may not amend a Bylaw adopted by shareholders | • Amendment of Articles is substantially the same except that certain Articles may only be amended by supermajority votes of either the directors or shareholders • Directors or shareholders may amend Bylaws by the affirmative vote at a meeting of the Directors or shareholders | ||
Consideration of Business Combinations | • Articles and Bylaws do not set forth specific considerations | • Articles set forth specific considerations including effects on employees, customers, shareholder, and other Main Street constituents | ||
Shareholders’ Rights of Dissent and Appraisal | • No rights available in the merger | • No rights available in the merger |
BB&T |
Main Street |
57
BB&T |
Main Street |
BB&T |
Main Street |
BB&T |
Main Street |
58
BB&T |
Main Street |
BB&T |
59
Main Street |
BB&T |
Main Street |
60
BB&T |
Main Street |
BB&T |
Main Street |
61
BB&T |
Main Street |
BB&T |
Main Street |
62
BB&T |
Main Street |
63
64
(File No. 1-10853)
Annual Report on Form 10-K | For the fiscal year ended December 31, 2004 | |
Quarterly Reports on Form 10-Q | For the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 | |
Current Reports on Form 8-K | Filed January 6, 2005 (under Item 5.02), January 31, 2005 (under Item 5.02), February 28, 2005 (under Item 5.02), February 28, 2005 (under Items 1.01 and 9.01), July 1, 2005 (under Items 8.01 and 9.01), August 17, 2005 (under Items 8.01 and 9.01), August 24, 2005 (under Items 1.01 and 9.01), October 25, 2005 (under Item 8.01), October 31, 2005 (under Item 1.01), November 22, 2005 (under Item 8.01), December 15, 2005 (under Items 8.01 and 9.01), January 5, 2006 (under Item 5.02), and January 12, 2006 (under Items 8.01 and 9.01) | |
Registration Statement on Form 8-A (describing BB&T’s common stock): | Filed September 4, 1991 |
(File No. 0-25128)
Annual Report on Form 10-K | For the fiscal year ended December 31, 2004 | |
Quarterly Reports on Form 10-Q | For the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 | |
Current Reports on Form 8-K | Filed January 19, 2005 (two), February 15, 2005, March 7, 2005, March 28, 2005, April 6, 2005, April 15, 2005, April 20, 2005, April 21, 2005, April 26, 2005, May 6, 2005, May 20, 2005, June 8, 2005, July 12, 2005, July 14, 2005, July 20, 2005, September 1, 2005, October 7, 2005, October 14, 2005, November 2, 2005, December 16, 2005, December 30, 2005, January 6, 2006, January 6, 2006, January 9, 2006, January 12, 2006, and January 17, 2006 |
65
BB&T Corporation | Main Street Banks, Inc. | |
Investor Relations | Investor Relations | |
150 South Stratford Road, Suite 300 | 3500 Lenox Road | |
Winston-Salem, North Carolina 27104 | Atlanta, Georgia 30326 | |
(336) 733-3058 | (770) 786-3441 |
66
Page | ||||||||
ARTICLE I | Certain Definitions | A-1 | ||||||
1.01 | Certain Definitions | A-1 | ||||||
ARTICLE II | The Merger | A-6 | ||||||
2.01 | The Parent Merger | A-6 | ||||||
2.02 | The Subsidiary Merger | A-6 | ||||||
2.03 | Effectiveness of the Parent Merger | A-6 | ||||||
2.04 | Effective Date and Effective Time | A-6 | ||||||
ARTICLE III | Consideration; Exchange Procedures | A-6 | ||||||
3.01 | Merger Consideration | A-6 | ||||||
3.02 | Rights as Shareholders; Stock Transfers | A-7 | ||||||
3.03 | Fractional Shares | A-7 | ||||||
3.04 | Exchange Procedures | A-7 | ||||||
3.05 | Anti-Dilution Provisions | A-7 | ||||||
3.06 | Options | A-8 | ||||||
ARTICLE IV | Actions Pending Acquisition | A-9 | ||||||
4.01 | Forbearances of Main Street | A-9 | ||||||
4.02 | Forbearances of BB&T | A-11 | ||||||
ARTICLE V | Representations and Warranties | A-11 | ||||||
5.01 | Disclosure Schedules | A-11 | ||||||
5.02 | Standard | A-11 | ||||||
5.03 | Representations and Warranties of Main Street | A-12 | ||||||
5.04 | Representations and Warranties of BB&T | A-23 | ||||||
ARTICLE VI | Covenants | A-24 | ||||||
6.01 | Reasonable Best Efforts | A-24 | ||||||
6.02 | Shareholder Approval | A-25 | ||||||
6.03 | Registration Statement | A-25 | ||||||
6.04 | Press Releases | A-25 | ||||||
6.05 | Access; Information | A-26 | ||||||
6.06 | Acquisition Proposals | A-26 | ||||||
6.07 | Affiliate Agreements | A-26 | ||||||
6.08 | Takeover Laws | A-27 | ||||||
6.09 | Reports | A-27 | ||||||
6.10 | Exchange Listing | A-27 | ||||||
6.11 | Regulatory Applications | A-27 | ||||||
6.12 | Indemnification | A-27 | ||||||
6.13 | Employment and Consulting/ Noncompete Agreements; 401(k) Plan; Other Employee Benefits | A-28 | ||||||
6.14 | Notification of Certain Matters | A-30 | ||||||
6.15 | Dividend Coordination | A-30 | ||||||
6.16 | Board Representation; Advisory Board | A-30 | ||||||
6.17 | Tax Treatment | A-30 | ||||||
6.18 | No Breaches of Representations and Warranties | A-31 | ||||||
6.19 | Consents | A-31 | ||||||
6.20 | Insurance Coverage | A-31 |
Appendix A-i
Page | ||||||||
6.21 | Correction of Information | A-31 | ||||||
6.22 | Confidentiality | A-31 | ||||||
ARTICLE VII | Conditions to Consummation of the Merger | A-31 | ||||||
7.01 | Conditions to Each Party’s Obligation to Effect the Merger | A-31 | ||||||
7.02 | Conditions to Obligation of Main Street | A-32 | ||||||
7.03 | Conditions to Obligation of BB&T | A-32 | ||||||
ARTICLE VIII | Termination | A-33 | ||||||
8.01 | Termination | A-33 | ||||||
8.02 | Effect of Termination and Abandonment; Enforcement of Agreement | A-33 | ||||||
8.03 | Termination Fee | A-34 | ||||||
ARTICLE IX | Miscellaneous | A-34 | ||||||
9.01 | Survival | A-34 | ||||||
9.02 | Waiver; Amendment | A-34 | ||||||
9.03 | Counterparts | A-34 | ||||||
9.04 | Governing Law | A-34 | ||||||
9.05 | Expenses | A-34 | ||||||
9.06 | Notices | A-35 | ||||||
9.07 | Entire Understanding; No Third Party Beneficiaries | A-35 | ||||||
9.08 | Interpretation; Effect | A-35 | ||||||
9.09 | Waiver of Jury Trial | A-36 | ||||||
9.10 | Severability | A-36 | ||||||
9.11 | Assignment | A-36 | ||||||
Exhibit A | Form of Main Street Affiliate Agreement |
Appendix A-ii
“Acquisition Proposal” means any tender or exchange offer, proposal for a merger, consolidation or other business combination involving Main Street or any of its Subsidiaries, or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the assets or deposits of, Main Street or any of its Subsidiaries, other than the transactions contemplated by this Agreement. | |
“Agreement” means this Agreement, as amended or modified from time to time in accordance with Section 9.02. |
Appendix A-1
“Agreement to Merge” has the meaning set forth in Section 2.02. | |
“Bank” means Main Street Bank, a wholly-owned subsidiary of Main Street. | |
“BB&T 401(k) Plan” has the meaning set forth in Section 6.13(b). | |
“BB&T Articles” means the Articles of Incorporation of BB&T, as amended. | |
“BB&T Bank” means Branch Banking and Trust Company, a banking corporation organized under the laws of North Carolina and a wholly-owned subsidiary of BB&T. | |
“BB&T Board” means the Board of Directors of BB&T. | |
“BB&T Bonus Plan” has the meaning set forth in Section 6.13(e). | |
“BB&T Bylaws” means the Bylaws of BB&T, as amended. | |
“BB&T Common Stock” means the common stock, $5.00 par value, of BB&T. | |
“BB&T Option Plan” has the meaning set forth in Section 3.06. | |
“BB&T Preferred Stock” means the preferred stock, par value $5.00 per share, of BB&T. | |
“BB&T SEC Documents” has the meaning set forth in Section 5.04(f)(i). | |
“Benefit Plan Determination Date” means the date or dates as determined by BB&T, which date or dates shall be no later than the 60th day after Closing. | |
“BHC Act” means the Bank Holding Company Act of 1956, as amended. | |
“Closing” has the meaning set forth in Section 2.04. | |
“Code” has the meaning set forth in Recital D. | |
“Company-Owned Stock” shall mean shares of Main Street Stock held by Main Street or any of its Subsidiaries or by BB&T or any of its Subsidiaries, in each case other than in a fiduciary capacity or as a result of debts previously contracted in good faith. | |
“Compensation and Benefit Plans” has the meaning set forth in Section 5.03(m)(i). | |
“Consultants” has the meaning set forth in Section 5.03(m)(i). | |
“Consulting/ Noncompete Agreements” has the meaning set forth in Section 6.13(a). | |
“Directors” has the meaning set forth in Section 5.03(m)(i). | |
“Disclosure Schedule” has the meaning set forth in Section 5.01. | |
“Effective Date” means the date on which the Effective Time occurs, as provided for in Section 2.04. | |
“Effective Time” means the time on the Effective Date as provided for in Section 2.04. | |
“Employees” has the meaning set forth in Section 5.03(m)(i). All references herein to “employees of Main Street” or “Main Street employees” shall be deemed to mean employees of Main Street, Bank or any of their respective Subsidiaries or affiliates. | |
“Employer Entity” has the meaning set forth in Section 6.13(b). | |
“Employment Agreement” has the meaning set forth in Section 6.13(a). | |
“Employment/ Consulting Agreement” has the meaning set forth in Section 6.13(a). | |
“Environmental Laws” means all applicable local, state and federal environmental, health and safety laws and regulations, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the |
Appendix A-2
Federal Clean Air Act, and the Occupational Safety and Health Act, each as amended, the regulations promulgated thereunder, and their respective state counterparts. | |
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended. | |
“ERISA Affiliate” has the meaning set forth in Section 5.03(m)(iii). | |
“ERISA Affiliate Plan” has the meaning set forth in Section 5.03(m)(iii). | |
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. | |
“Exchange Agent” has the meaning set forth in Section 3.04. | |
“FDIA” has the meaning set forth in Section 5.03(cc). | |
“FDIC” means the Federal Deposit Insurance Corporation. | |
“FRB” means the Federal Reserve Board. | |
“GAAP” means accounting principles generally accepted in the United States. | |
“GBCC” means the Georgia Business Corporation Code, as amended. | |
“Governmental Authority” means any court, administrative agency or commission or other federal, state or local governmental authority or instrumentality. | |
“Hazardous Material” means, collectively, (i) any “hazardous substance” as defined by CERCLA, (ii) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, as amended through the date hereof, and (iii) other than common office supplies, any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable Federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as now in effect. | |
“Indemnified Party” has the meaning set forth in Section 6.12(a). | |
“Information” has the meaning set forth in Section 6.22. | |
“IRS” has the meaning set forth in Section 5.03(m)(ii). | |
The term“knowledge” means, with respect to a party hereto, actual knowledge after reasonable investigation by any officer of that party with the title of not less than a vice president or that party’s in-house counsel, if any. | |
“Lien” means any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance of any kind. | |
“Main Street” has the meaning set forth in the preamble to this Agreement. | |
“Main Street Affiliate” has the meaning set forth in Section 6.07. | |
“Main Street Articles” means the Articles of Incorporation of Main Street. | |
“Main Street Board” means the Board of Directors of Main Street. | |
“Main Street Bonus Arrangements” has the meaning set forth in Section 6.13(e). | |
“Main Street Bylaws” means the Bylaws of Main Street. | |
“Main Street Common Stock” means the common stock, with no par value, of Main Street. | |
“Main Street Financial Statements” has the meaning set forth in Section 5.03(g). | |
“Main Street Meeting” has the meaning set forth in Section 6.02. |
Appendix A-3
“Main Street Off Balance Sheet Transaction” has the meaning set forth in Section 5.03(u). | |
“Main Street SEC Documents” has the meaning set forth in Section 5.03(hh). | |
“Main Street Stock” means Main Street Common Stock. | |
“Main Street Stock Option” has the meaning set forth in Section 3.06. | |
“Main Street Stock Plans” means the option plans and agreements of Main Street and its Subsidiaries pursuant to which rights to purchase Main Street Common Stock are outstanding immediately prior to the Effective Time pursuant to the 1999 Directors Stock Option Plan, the 2000 Directors Stock Option Plan and the Omnibus Stock Ownership and Long-term Incentive Plan. | |
“Material Adverse Effect” means, with respect to Main Street or BB&T, any effect that (i) is material and adverse to the financial position, results of operations or business of Main Street and its Subsidiaries taken as a whole, or BB&T and its Subsidiaries taken as a whole, respectively, or (ii) would materially impair the ability of either Main Street or BB&T to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement;provided, however, that Material Adverse Effect shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability or interpretations thereof by courts or Governmental or Regulatory Authorities or changes in GAAP or applicable regulatory accounting principles, (b) any modifications or changes to valuation policies and practices in connection with the Merger or restructuring charges taken in connection with the Merger, in each case in accordance with GAAP, (c) changes resulting from expenses (such as legal, accounting and investment bankers’ fees) incurred in connection with this Agreement or the transactions contemplated herein, (d) actions or omissions of a party which have been waived in accordance with Section 9.02 hereof, (e) any modifications or changes made by Main Street to its general business practices or policies so as to be consistent with the practices or policies of BB&T; or (f) announcement of the transactions contemplated by this Agreement and completion of the transactions contemplated by this Agreement. | |
“Material Contracts” has the meaning set forth in Section 5.03(k). | |
“Merger” collectively refers to the Parent Merger and the Subsidiary Merger, as set forth in Section 2.01 and Section 2.02, respectively. | |
“Merger Consideration” has the meaning set forth in Section 3.01. | |
“NASD” means The National Association of Securities Dealers. | |
“NASDAQ” means the NASDAQ Stock Market, Inc. | |
“NCBCA” shall mean the North Carolina Business Corporation Act, as amended. | |
“New Certificates” has the meaning set forth in Section 3.04. | |
“NYSE” shall mean the New York Stock Exchange, Inc. | |
“Old Certificates” has the meaning set forth in Section 3.04. | |
“Parent Merger” has the meaning set forth in Recital A. | |
“Pension Plan” has the meaning set forth in Section 5.03(m)(ii). | |
“Person” has the meaning set forth in Section 5.03(k)(D). | |
“Previously Disclosed” by a party shall mean information set forth in its Disclosure Schedule. Disclosure of any information, agreement, or other item in a party’s Disclosure Schedule referenced by a particular Section in this Agreement shall, should the existence of such information, agreement, or other item or its contents be relevant to any other Section, be deemed to be disclosed with respect to that Section only if such Section of the Disclosure Schedule contains such information or a specific cross- |
Appendix A-4
reference to such other relevant Section (including any specific items or information within such Section) of the Disclosure Schedule. | |
“Proxy/ Prospectus” has the meaning set forth in Section 6.03(a). | |
“Proxy Statement” has the meaning set forth in Section 6.03(a). | |
“Registration Statement” has the meaning set forth in Section 6.03(a). | |
“Regulatory Authority” shall mean any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions and their subsidiaries (including their holding companies) or issuers of securities (including, without limitation, the North Carolina State Banking Commission, the Georgia Department of Banking and Finance, the FRB, the FDIC and the SEC). | |
“Rights” means, with respect to any Person, securities or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, or any options, calls or commitments relating to, or any stock appreciation right or other instrument the value of which is determined in whole or in part by reference to the market price or value of, shares of capital stock of such Person. | |
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002 and the rules and regulations thereunder. | |
“SBA” means the Small Business Administration. | |
“SEC” means the Securities and Exchange Commission. | |
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder. | |
“Stock Exchange Ratio” has the meaning set forth in Section 3.01. | |
“Subsidiary”, “Subsidiaries” and“Significant Subsidiary” have the meanings ascribed to them in Rule 1-02 of Regulation S-X of the SEC. | |
“Subsidiary Merger” has the meaning set forth in Section 2.02. | |
“Surviving Corporation” has the meaning set forth in Section 2.01. | |
“Takeover Laws” has the meaning set forth in Section 5.03(o). | |
“Takeover Provisions” has the meaning set forth in Section 5.03(o). | |
“Tax” and“Taxes” means all federal, state, local or foreign taxes, charges, fees, levies or other assessments, however denominated, including, without limitation, all net income, gross income, gains, gross receipts, sales, use,ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, unemployment or other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the Effective Date. | |
“Tax Returns” means any return, amended return or other report (including elections, declarations, disclosures, schedules, estimates and information returns) required to be filed with respect to any Tax. | |
“Transferred Employee” has the meaning set forth in Section 6.13(b). |
Appendix A-5
Appendix A-6
Appendix A-7
Appendix A-8
(a) Ordinary Course. Conduct the business of Main Street and its Subsidiaries other than in the ordinary and usual course or fail to use reasonable efforts to preserve intact their business organizations and assets and maintain their rights, franchises and existing relations with customers, suppliers, employees and business associates, or voluntarily take any action which, at the time taken, has or is reasonably likely to have an adverse affect upon Main Street’s ability to perform any of its material obligations under this Agreement, or enter into any new material line of business or materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating policies, except as required by applicable law, regulation or policies imposed by any Governmental or Regulatory Authority. | |
(b) Capital Stock. Other than pursuant to Rights to be issued as Previously Disclosed and as to Rights outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of Main Street Stock or any Rights, (ii) enter into any agreement with respect to the foregoing, or (iii) permit any additional shares of Main Street Stock to become subject to new grants of employee or director stock options, other Rights or similar stock-based employee rights, except as Previously Disclosed. | |
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment any dividend, other than (A) quarterly cash dividends on Main Street Stock in an amount not to exceed the per share amount declared and paid in accordance with past practices, with record and payment dates as indicated in Section 6.15 hereof, and (B) dividends from any Main Street Subsidiaries to Main Street, or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock. | |
(d) Compensation; Employment Agreements; Etc. Enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of Main Street or its Subsidiaries (other than the Employment Agreement and the Consulting and Noncompete Agreements described in Section 6.13 or as Previously Disclosed), or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), except (i) for normal individual increases in compensation to employees in the ordinary course of business consistent with past practice, (ii) for other changes that are required by applicable law, and (iii) to satisfy Previously Disclosed contractual obligations existing as of the date hereof. | |
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as may be required by applicable law, (ii) to satisfy Previously Disclosed contractual obligations existing as of the date hereof or (iii) the regular annual renewal of insurance contracts) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, officer or employee of Main Street or its |
Appendix A-9
Subsidiaries, or take any action to accelerate the vesting or exercisability of stock options, restricted stock or other compensation or benefits payable thereunder. | |
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary course of business or as Previously Disclosed. | |
(g) Acquisitions. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith, in each case in the ordinary and usual course of business consistent with past practice) all or any portion of, the assets, business, deposits or properties of any other entity. | |
(h) Governing Documents. Amend the Main Street Articles, Main Street Bylaws (or similar governing documents) or the Articles of Incorporation or Bylaws (or similar governing documents) of any of Main Street’s Subsidiaries. | |
(i) Accounting Methods. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or regulatory accounting principles. | |
(j) Contracts. Except in the ordinary course of business consistent with past practice or in connection with this Agreement or the transactions contemplated by this Agreement, enter into or terminate any Material Contract (as defined in Section 5.03(k)) or amend or modify in any material respect any of its existing Material Contracts. | |
(k) Claims. Except in the ordinary course of business consistent with past practice or in connection with this Agreement or the transactions contemplated by this Agreement, settle any claim, action or proceeding which, individually or in the aggregate for all such settlements, is material to Main Street and its Subsidiaries. | |
(l) Adverse Actions. Take any action while knowing that such action would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or knowingly take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VII not being satisfied, or (iii) a material violation of any provision of this Agreement except, in each case, as may be required by applicable law or regulation or Governmental or Regulatory Authority. | |
(m) Risk Management. Except pursuant to applicable law or regulation or Governmental or Regulatory Authority or as Previously Disclosed, (i) implement or adopt any material change in its interest rate risk management and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk; or (iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk and other risk. | |
(n) Indebtedness. Incur any indebtedness for borrowed money other than in the ordinary course of business consistent with past practice. | |
(o) Capital Expenditures. Make any capital expenditure or commitments with respect thereto in an amount in excess of $50,000 for any item or project, or $250,000 in the aggregate for any related items or projects, except as Previously Disclosed or as have been previously committed to prior to the date hereof. | |
(p) New Offices, Office Closures, Etc. Close or relocate any offices at which business is conducted or open any new offices or ATMs, except as Previously Disclosed. | |
(q) Taxes. (1) Fail to prepare and file or cause to be prepared and filed in a manner consistent with past practice all Tax Returns (whether separate or consolidated, combined, group or unitary Tax Returns that include Main Street or any of its Subsidiaries) that are required to be filed (with extensions) |
Appendix A-10
on or before the Effective Date;provided, however, that BB&T shall have a reasonable opportunity, beginning at least fifteen (15) days prior to the due date thereof, to review and comment on the form and substance of any Tax Returns relating to the U.S. Federal income tax, or Georgia State franchise tax, or (2) make, change or revoke any material election in respect of Taxes, enter into any material closing agreement, settle any material claim or assessment in respect of Taxes or offer or agree to do any of the foregoing or surrender its rights to do any of the foregoing or to claim any refund in respect of Taxes. | |
(r) Commitments. Agree or commit to do any of the foregoing items in this Section 4.01, except as Previously Disclosed. |
(a) Extraordinary Dividend. Declare, set aside, make or pay any extraordinary or special dividends on shares of BB&T Common Stock or make any other extraordinary or special distributions in respect of any of its capital stock. | |
(b) Governing Documents. Amend the BB&T Articles, BB&T Bylaws or the Articles of Incorporation or Bylaws of any BB&T Subsidiaries in a manner that would adversely affect the economic or other benefits of the Merger to the holders of Main Street Common Stock or to the employees of Main Street and the Main Street Subsidiaries. | |
(c) Adverse Actions. Agree, commit or take any action while knowing that such action would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; or knowingly take any action that is intended or is reasonably likely to result in (i) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (ii) any of the conditions to the Merger set forth in Article VII not being satisfied, or (iii) a material violation of any provision of this Agreement except, in each case, as may be required by applicable law or regulation or Governmental or Regulatory Authority. | |
(d) Commitments. Agree or commit to do any of the foregoing in this Section 4.02. |
Appendix A-11
(a) Organization, Standing and Authority. Main Street is a corporation duly organized, validly existing and in good standing under the laws of the State of Georgia and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Main Street is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. Bank is a Georgia state bank chartered under the Financial Institutions Code of Georgia, is a non-member bank of the Federal Reserve and is duly organized, validly existing and in good standing under the laws of the State of Georgia. Bank is duly qualified to do business and is in good standing in the State of Georgia and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. | |
(b) Capital Structure of Main Street. The authorized capital stock of Main Street consists of 50,000,000 shares of Main Street Common Stock, with no par value, of which 21,484,577 shares were outstanding as of November 30, 2005. The outstanding shares of Main Street Common Stock have been duly authorized, are validly issued and outstanding, fully paid and nonassessable, and are not subject to any preemptive rights (and were not issued in violation of any preemptive rights). As of November 30, 2005, except as set forth in its Disclosure Schedule, Main Street did not have any Rights issued or outstanding with respect to Main Street Common Stock, and Main Street did not have any commitment to authorize, issue or sell any Main Street Common Stock or Rights, except pursuant to this Agreement. | |
(c) Subsidiaries. |
(i) (A) Main Street has Previously Disclosed a list of all of its Subsidiaries, together with the jurisdiction of organization of each such Subsidiary, (B) except as Previously Disclosed, Main Street owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries, (C) no equity securities of any of Main Street’s Subsidiaries are or may become required to be issued (other than to it or its wholly-owned Subsidiaries) by reason of any Right or otherwise, (D) there are no contracts, commitments, understandings or arrangements by which any of such Subsidiaries is or may be bound to sell or otherwise transfer any equity securities of any such Subsidiaries (other than to it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments, understandings, or arrangements relating to its rights to vote or to dispose of such securities and (F) all the equity securities of each Subsidiary held by Main Street or its Subsidiaries are fully paid and nonassessable and are owned by Main Street or its Subsidiaries free and clear of any Liens. | |
(ii) Main Street does not own beneficially, directly or indirectly, any equity securities or similar interests of any Person, or any interest in a partnership or joint venture of any kind, other than its Subsidiaries. | |
(iii) Each of Main Street’s Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization, and is duly qualified to do business and is in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified. | |
(iv) Each Subsidiary of Main Street that is a bank (as defined in the BHC Act) is an “insured bank” as defined in the Federal Deposit Insurance Act and applicable regulations thereunder. |
(d) Corporate Power; Authorized and Effective Agreement. Each of Main Street and its Subsidiaries has full corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets. Main Street has the corporate power and authority to execute, deliver and perform its obligations under this Agreement, including the execution and filing of the articles of merger with the Georgia Secretary of State, subject to receipt of the necessary shareholder and Regulatory Authority approvals. Bank has the corporate power and authority to consummate the Subsidiary Merger and the Agreement to Merge as contemplated by this Agreement, subject to receipt of the necessary Regulatory Authority approvals. |
Appendix A-12
(e) Corporate Authority. Subject to receipt of the requisite adoption of this Agreement by the holders of a majority of the outstanding shares of Main Street Common Stock entitled to vote thereon (which is the only shareholder vote required thereon), this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of Main Street and the Main Street Board prior to the date hereof. This Agreement is a valid and legally binding obligation of Main Street, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles). | |
(f) Regulatory Filings; No Defaults. |
(i) Except as Previously Disclosed, no consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Main Street or any of its Subsidiaries in connection with the execution, delivery or performance by Main Street of this Agreement or to consummate the Merger except for (A) filings of applications, notices and the Agreement to Merge, as applicable, with federal and state banking authorities, (B) filings with state securities authorities, if any, (C) the filings of the articles of merger with the North Carolina Secretary of State pursuant to the NCBCA and the articles of merger with the Georgia Secretary of State pursuant to the GBCC and (D) any notices to or filings with the SBA. As of the date hereof, Main Street is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b). | |
(ii) Subject to receipt of the regulatory and shareholder approvals referred to above and the expiration of certain regulatory waiting periods, and required filings under federal and state securities laws, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, Rule or regulation or any judgment, decree, order, governmental permit or license, or Material Contract as defined in Section 5.01(k), indenture or instrument of Main Street or of any of its Subsidiaries or to which Main Street or any of its Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Main Street Articles or the Main Street Bylaws, or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument. |
(g) Financial Statements; Internal Controls. |
(i) Main Street has previously delivered to BB&T true and complete copies of (A) its balance sheets as of December 31, 2002, 2003 and 2004 and the related statements of operations, stockholders’ equity and cash flows for the fiscal years then ended, including the footnotes thereto, if any, additional or supplemental information supplied therewith and the report prepared in connection therewith by the independent certified public accountants auditing such financial statements; and (B) its interim unaudited quarterly financial statements for the quarters beginning after December 31, 2004 and ending on September 30, 2005 (as to each, the“Last Report Date”). The documents described in clauses (A) and (B) above (collectively, the“Main Street Financial Statements”): |
(1) are true, complete and correct; | |
(2) are in accordance with the books and records of Main Street; | |
(3) fairly and accurately presents the financial condition of Main Street as of the dates thereof, and the results of operations for the periods then ended, as applicable (except in each case as may be noted therein and subject, in the case of unaudited interim financial statements, to the absence of notes and to normal year-end adjustments that are not material in amount or in effect); |
Appendix A-13
(4) were prepared on a consistent basis throughout the periods involved; and | |
(5) have been prepared in accordance with GAAP (except in each case as may be noted therein and subject, in the case of unaudited interim financial statements, to the absence of notes and to normal year-end audit adjustments that are not material in amount or effect). |
(ii) Neither Main Street nor any of its Subsidiaries has any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on the consolidated balance sheet of Main Street included in its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005 (including any notes thereto) and for liabilities incurred in the ordinary course of business consistent with past practice since December 31, 2002 or in connection with this Agreement and the transactions contemplated hereby. | |
(iii) The records, systems, controls, data and information of Main Street and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Main Street or its Subsidiaries or Main Street’s accountants (including all means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have a Material Adverse Effect on the system of internal accounting controls described below in this Section 5.03(g)(iii). Main Street (A) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15 promulgated under the Exchange Act) to ensure that material information relating to Main Street, including its consolidated Subsidiaries, is made known to the management of Main Street by others within those entities, and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to Main Street’s outside auditors and the audit committee of Main Street’s Board of Directors (y) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15 promulgated under the Exchange Act) that are reasonably likely to adversely affect Main Street’s ability to record, process, summarize and report financial information and (z) any fraud, whether or not material, that involves management or other employees who have a significant role in Main Street’s internal control over financial reporting. These disclosures were made in writing by management to Main Street’s auditors and audit committee and a copy has previously been made available to BB&T. As of the date hereof and except as Previously Disclosed, there is no reason to believe that Main Street’s outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Sections 302, 404 and 906 of the Sarbanes-Oxley Act, without qualification (except to the extent expressly permitted by such rules and regulations), when next due. | |
(iv) Since December 31, 2004 (A) through the date hereof, neither Main Street nor any of its Subsidiaries nor, to Main Street’s knowledge, any director, officer, employee, auditor, accountant or representative of Main Street or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Main Street or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Main Street or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing Main Street or any of its Subsidiaries, whether or not employed by Main Street or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by Main Street or any of it Subsidiaries or any of their respective officers, directors, employees or agents to the Board of Directors of Main Street or any committee thereof or to any director or officer of Main Street. |
(h) Litigation. Except as Previously Disclosed, there is no suit, action, investigation, audit or proceeding (whether judicial, arbitral, administrative or other) pending or, to Main Street’s knowledge, |
Appendix A-14
threatened against or affecting Main Street or any of its Subsidiaries, nor is there any judgment, decree, injunction, Rule or order of any Governmental Authority or arbitration outstanding against Main Street or any of its Subsidiaries. | |
(i) Regulatory Matters. |
(i) Neither Main Street nor any of its Subsidiaries or properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, or extraordinary supervisory letter from, any Regulatory Authority charged with the supervision or regulation of financial institutions and their subsidiaries (including their holding companies) or issuers of securities. | |
(ii) Neither Main Street nor any of its Subsidiaries has been advised by any Regulatory Authority that such Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission nor to its knowledge has any Regulatory Authority commenced an investigation in connection therewith. |
(j) Compliance with Laws. Except as Previously Disclosed, each of Main Street and its Subsidiaries: |
(i) is in compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act (which includes a CRA Rating of “satisfactory” or better), the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices; | |
(ii) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Main Street’s knowledge, no suspension or cancellation of any of them is threatened; | |
(iii) has not received, since December 31, 2002, any notification or communication from any Governmental Authority (A) asserting that Main Street or any of its Subsidiaries is not in compliance with any of the statutes, regulations, or ordinances which such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit, or governmental authorization (nor, to Main Street’s knowledge, do any grounds for any of the foregoing exist); and | |
(iv) is in compliance with all applicable listing standards and corporate governance and other rules and regulations of the NASDAQ. |
(k) Material Contracts; Defaults. (i) Except as set forth in Main Street’s Disclosure Schedule, neither Main Street nor any of its Subsidiaries is a party to or is bound by any contract of the following types as of the date of this Agreement, nor is any such contract presently being negotiated or discussed: |
(A) Any contract involving commitments to others to make capital expenditures or purchases or sales in excess of $20,000 in any one case or $100,000 in the aggregate in any period of 12 consecutive months; | |
(B) Any contract relating to any direct or indirect indebtedness of Main Street or its Subsidiaries for borrowed money (including loan agreements, lease purchase arrangements, guarantees, agreements to purchase goods or services or to supply funds or other undertakings on which others rely in extending credit), or any conditional sales contracts, chattel mortgages, equipment lease agreements and other security arrangements with respect to personal property with an obligation in excess of $25,000 in any one case or $100,000 in the aggregate in any period of 12 consecutive months; |
Appendix A-15
(C) Any employment, severance, consulting or management services contract or any confidentiality or proprietary rights contract with any employee of Main Street or any of its Subsidiaries; | |
(D) Any contract containing covenants limiting the freedom of Main Street or any of its Subsidiaries to compete in any line of business or with any individual, bank, corporation, partnership, limited liability company, joint venture, trust, unincorporated association or organization, government body, agency or instrumentality, or any other entity (each, a“Person”) or in any area or territory; | |
(E) Any partnership, joint venture, limited liability company arrangement or other similar agreement; | |
(F) Any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, issuance, or other plan or arrangement for the benefit of Main Street’s or any of its Subsidiaries’ current or former directors, officers, and employees; | |
(G) Any license agreement, either as licensor or licensee, or any other contract of any type relating to any patent, trademark or trade name, except for license agreements relating tooff-the-shelf software or software components pursuant to a non-negotiable standard form or “shrink wrap” license or where the aggregate purchase price for the license is less than $5,000; | |
(H) Any contract with any director, officer or key employee of Main Street or any of its Subsidiaries or any arrangement under which Main Street or any of its Subsidiaries has advanced or loaned any amount to any of their directors, officers, and employees; | |
(I) Any contract, whether exclusive or otherwise, with any sales agent, representative, franchisee or distributor involving money or property and having an obligation in excess of $25,000 in any one case or $100,000 in the aggregate in a period of 12 consecutive months; | |
(J) Other than this Agreement and the ancillary agreements being executed in connection with this Agreement, any contract providing for the acquisition or disposition of any portion of Main Street or any of its Subsidiaries; | |
(K) Any contract that requires the payment of royalties; | |
(L) Any contract under which the consequences of a breach, violation or default would reasonably be expected to have a Material Adverse Effect on Main Street or any of its Subsidiaries as presently conducted; | |
(M) Any contract pursuant to which Main Street or any of its Subsidiaries has any obligation to share revenues or profits derived from Main Street or any of its Subsidiaries with any other entity; | |
(N) Any contract between (i) Main Street or any of its Subsidiaries, on the one hand, and any officer, director, employee or consultant of Main Street or any of its Subsidiaries, or any natural person related by blood or marriage to such natural person, on the other hand, and (ii) Main Street or any of its Subsidiaries, on the one hand, and any employee of Main Street or any of its Subsidiaries, on the other hand (collectively, “Affiliate Agreements”); and | |
(O) Any other legally binding contract not of the type covered by any of the other items of this Section 5.03(k) involving money or property and having an obligation in excess of $100,000 in the aggregate in any period of 12 consecutive months. |
(ii) “Material Contracts” shall mean those contracts on Main Street’s Disclosure Schedule listed under Section 5.03(k). All of the Material Contracts are in full force and effect and are legal, valid, binding and enforceable in accordance with their terms (A) as to Main Street or any of its Subsidiaries, as the case may be, and (B) to the knowledge of Main Street, as to the other parties to |
Appendix A-16
such Material Contracts. Except as disclosed in Main Street’s Disclosure Schedule, Main Street and/or its Subsidiaries, as applicable, and to the knowledge of Main Street, each other party to the Material Contracts, has performed and is performing all material obligations, conditions and covenants required to be performed by it under the Material Contracts. Neither Main Street nor any of its Subsidiaries, and to the knowledge of Main Street, no other party, is in violation, breach or default of any material obligation, condition or covenant under any of the Material Contracts, and neither Main Street nor any of its Subsidiaries, and to the knowledge of Main Street, no other party, has received any notice that any of the Material Contracts will be terminated or will not be renewed. Neither Main Street nor any of its Subsidiaries, has received from or given to any other Person any notice of default or other violation under any of the Material Contracts, nor, to the knowledge of Main Street, does any condition exist or has any event occurred which with notice or lapse of time or both would constitute a default thereunder. |
(l) No Brokers or Finder’s Fees. No action has been taken by Main Street that would give rise to any valid claim against any party hereto for a brokerage commission, finder’s fee or other like payment with respect to the transactions contemplated by this Agreement, except for a fee to be paid to Burke Capital Group, LLC. | |
(m) Employee Benefit Plans. |
(i) Section 5.03(m)(i) of Main Street’s Disclosure Schedule contains a complete and accurate list of all existing bonus, incentive, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, severance, welfare and fringe benefit plans, employment or severance agreements and all similar practices, policies and arrangements maintained or contributed to by Main Street or any of its Subsidiaries and in which any employee or former employee (the“Employees”), consultant or former consultant (the“Consultants”) or director or former director (the“Directors”) of Main Street or any of its Subsidiaries participates or to which any such Employees, Consultants or Directors are a party (the“Compensation and Benefit Plans”). Neither Main Street nor any of its Subsidiaries has any commitment to create any additional Compensation and Benefit Plan or to modify or change any existing Compensation and Benefit Plan, except as otherwise contemplated by Section 4.01(e) of this Agreement. | |
(ii) Each Compensation and Benefit Plan has been operated and administered in all material respects in accordance with its terms and in substantial compliance with applicable law, including, but not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act, or any regulations or rules promulgated thereunder, and all filings, disclosures and notices required by ERISA, the Code, the Securities Act, the Exchange Act, the Age Discrimination in Employment Act and any other applicable law have been timely made. Each Compensation and Benefit Plan which is an “employee pension benefit plan” within the meaning of Section 3(2) of ERISA (a“Pension Plan”) and which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter (including a determination that the related trust under such Compensation and Benefit Plan is exempt from tax under Section 501(a) of the Code) or opinion letter, as applicable, from the Internal Revenue Service(“IRS”), and Main Street is not aware of any circumstances likely to result in revocation of any such favorable determination letter. There is no material pending or, to the knowledge of Main Street, threatened legal action, suit or claim relating to the Compensation and Benefit Plans other than routine claims for benefits thereunder. To Main Street’s knowledge, neither Main Street nor any of its Subsidiaries has engaged in a transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably be expected to subject Main Street or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA, assuming for purposes of Section 4975 of the Code that the taxable period of any such transaction expired as of the date hereof. |
Appendix A-17
(iii) None of the Compensation and Benefit Plans is subject to Title IV of ERISA. No liability under Title IV of ERISA has been or is expected to be incurred by Main Street or any of its Subsidiaries with respect to any ongoing, frozen or terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or any single-employer plan of any entity (an“ERISA Affiliate”) which is considered one employer with Main Street under Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an“ERISA Affiliate Plan”). No ERISA Affiliate Plan is subject to Title IV of ERISA. None of Main Street, any of its Subsidiaries or any ERISA Affiliate has contributed, or has been obligated to contribute, to a multiemployer plan under Subtitle E of Title IV of ERISA at any time since September 26, 1980. To the knowledge of Main Street, there is no pending investigation or enforcement action by the Department of Labor or IRS or any other governmental agency with respect to any Compensation and Benefit Plan. | |
(iv) All contributions required to be made under the terms of any Compensation and Benefit Plan or ERISA Affiliate Plan have been timely made in cash or have been reflected on the Main Street Financial Statements (as defined in Section 5.03(g)) as of September 30, 2005. Neither any Pension Plan nor any ERISA Affiliate Plan has an “accumulated funding deficiency” (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. | |
(v) Neither Main Street nor any of its Subsidiaries has any obligations to provide retiree health and life insurance or other retiree death benefits under any Compensation and Benefit Plan, other than benefits mandated by Section 4980B of the Code. There has been no communication to Employees by Main Street or any of its Subsidiaries that would reasonably be expected to promise or guarantee such Employees retiree health or life insurance or other retiree death benefits on a permanent basis. | |
(vi) Main Street and its Subsidiaries do not maintain any Compensation and Benefit Plans covering foreign Employees. | |
(vii) With respect to each Compensation and Benefit Plan, if applicable, Main Street has provided or made available to BB&T true and complete copies of existing: (A) Compensation and Benefit Plan documents and amendments thereto; (B) trust instruments and insurance contracts; (C) two most recently filed Form 5500s; (D) most recent actuarial report and financial statement; (E) the most recent summary plan description; (F) all top hat notices filed with the Department of Labor; (G) most recent determination letter issued by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; and (I) most recent nondiscrimination tests performed under ERISA and the Code (including 401(k) and 401(m) tests). | |
(viii) Except as disclosed on Section 5.03(m)(viii) of Main Street’s Disclosure Schedule, the consummation of the transactions contemplated by this Agreement would not, directly or indirectly (including, without limitation, as a result of any termination of employment prior to or following the Effective Time) reasonably be expected to (A) entitle any Employee, Consultant or Director to any payment (including severance pay or similar compensation) or any increase in compensation, (B) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan or (C) result in any material increase in benefits payable under any Compensation and Benefit Plan. | |
(ix) Neither Main Street nor any of its Subsidiaries maintains any compensation plans, programs or arrangements the payments under which would not reasonably be expected to be deductible as a result of the limitations under Section 162(m) of the Code and the regulations issued thereunder. | |
(x) Except as disclosed on Section 5.03(m)(x) of Main Street’s Disclosure Schedule, as a result, directly or indirectly, of the transactions contemplated by this Agreement (including, without limitation, as a result of any termination of employment prior to or following the Effective Time), none of BB&T, Main Street or the Surviving Corporation, or any of their respective Subsidiaries will be obligated to make a payment that would be characterized as an “excess parachute payment” |
Appendix A-18
to an individual who is a “disqualified individual” (as such terms are defined in Section 280G of the Code) of Main Street on a consolidated basis, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future. | |
(xi) Section 5.03(m)(xi) of Main Street’s Disclosure Schedule identifies each Compensation and Benefit Plan that is or has ever been a “nonqualified deferred compensation plan” within the meaning of Code Section 409A and associated Treasury Department guidance, including IRS Notice 2005-1 and Proposed Treasury Regulations Sections 1.409A-1et seq.(collectively “409A”) (each such plan a“NQDC Plan”). Except as provided in Section 5.03(m)(xi) of Main Street’s Disclosure Schedule, each NQDC Plan has been operated, notwithstanding any terms to the contrary, in good faith compliance with 409A, to the extent required under 409A. |
(n) Labor Matters. Neither Main Street nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Main Street or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Main Street or any such Subsidiary to bargain with any labor organization as to wages or conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to Main Street’s knowledge, threatened, nor is Main Street aware of any activity involving its or any of its Subsidiaries’ employees seeking to certify a collective bargaining unit or engaging in other organizational activity. | |
(o) Takeover Laws. Main Street has taken all action required to be taken by it in order to exempt this Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are exempt from, the requirements of any “moratorium”; “control share”, “fair price”, “affiliate transaction”, “business combination” or other antitakeover laws and regulations of any state (collectively,“Takeover Laws”) applicable to it, including, without limitation, the State of Georgia. Main Street has taken all action required to be taken by it in order to make this Agreement and the transactions contemplated hereby comply with, and this Agreement and the transactions contemplated hereby do comply with, the requirements of any Articles, Sections or provisions of Main Street’s or its Subsidiaries’ Articles of Incorporation or Bylaws concerning “business combination”, “fair price”, “voting requirement”, “constituency requirement” or other related provisions (collectively, the“Takeover Provisions”). | |
(p) Environmental Matters. Except as Previously Disclosed, to Main Street’s knowledge, neither the conduct nor operation of Main Street or its Subsidiaries nor any condition of any property presently or previously owned, leased or operated by any of them (including, without limitation, in a fiduciary or agency capacity), or on which any of them holds a Lien, violates or violated Environmental Laws and to Main Street’s knowledge, no condition has existed or event has occurred with respect to any of them or any such property that, with notice or the passage of time, or both, is reasonably likely to result in liability under Environmental Laws. Neither Main Street nor any of its Subsidiaries has used or stored any Hazardous Material in, on, or at any property presently or previously owned, leased or operated by any of them in violation of any Environmental Law. To Main Street’s knowledge, neither Main Street nor any of its Subsidiaries has received any notice from any Person that Main Street or its Subsidiaries or the operation or condition of any property ever owned, leased, operated, or held as collateral or in a fiduciary capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including, but not limited to, responsibility (or potential responsibility) for the cleanup or other remediation of any pollutants, contaminants, or hazardous or toxic wastes, substances or materials at, on, beneath, or originating from any such property. Neither Main Street nor any of its Subsidiaries is the subject of any action, claim, litigation, dispute, investigation or other proceeding with respect to violations of, or liability under, any Environmental Law. Main Street and each of its Subsidiaries has timely filed all reports and notifications required to be filed with respect to all of its operations and properties presently or previously owned, leased or operated by any of them and has generated and maintained all required records and data under all applicable Environmental Laws. |
Appendix A-19
(q) Tax Matters. (i) All Tax Returns that are required to be filed by or with respect to Main Street and its Subsidiaries have been duly filed, (ii) all Taxes shown to be due on the Tax Returns referred to in clause (i) have been paid in full, (iii) except as Previously Disclosed, the Tax Returns referred to in clause (i) have been examined by the IRS or the appropriate state, local or foreign taxing authority or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (iv) all deficiencies asserted or assessments made as a result of such examinations have been paid in full, (v) no issues that have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns referred to in clause (i) are currently pending, and (vi) no waivers of statutes of limitation have been given by or requested with respect to any Taxes of Main Street or its Subsidiaries. Main Street has made or will make available to BB&T true and correct copies of the United States federal income Tax Returns filed by Main Street and its Subsidiaries for each of the three most recent fiscal years ended on or before December 31, 2004. Neither Main Street nor any of its Subsidiaries has any liability with respect to income, franchise or similar Taxes that accrued on or before the end of the period ended December 31, 2004 in excess of the amounts accrued with respect thereto that are reflected in the Main Street Financial Statements (as defined in Section 5.03(g)). As of the date hereof, neither Main Street nor any of its Subsidiaries has any reason to believe that any conditions exist that might prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. |
(ii) No Tax is required to be withheld pursuant to Section 1445 of the Code as a result of the transfer contemplated by this Agreement. |
(r) Risk Management Instruments. All material interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar risk management arrangements, whether entered into for Main Street’s own account, or for the account of one or more of Main Street’s Subsidiaries or their customers (all of which are listed on Main Street’s Disclosure Schedule), were entered into by Main Street or Main Street’s Subsidiaries (i) in accordance with prudent business practices and all applicable laws, rules, regulations and regulatory policies and (ii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of Main Street or one of its Subsidiaries, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles), and is in full force and effect. Neither Main Street nor its Subsidiaries, nor to Main Street’s knowledge any other party thereto, is in breach of any of its obligations under any such agreement or arrangement. | |
(s) Books and Records. The books and records of Main Street and its Subsidiaries have been fully, properly and accurately maintained in all material respects, have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) of the Exchange Act, and there are no material inaccuracies or discrepancies of any kind contained or reflected therein and they fairly reflect the substance of events and transactions included therein. | |
(t) Insurance. Main Street’s Disclosure Schedule sets forth all of the insurance policies, binders, or bonds maintained by Main Street or its Subsidiaries. Main Street and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Main Street reasonably has determined to be prudent in accordance with industry practices. All such insurance policies are in full force and effect; Main Street and its Subsidiaries are not in material default thereunder; and all claims thereunder have been filed in due and timely fashion. | |
(u) Main Street Off Balance Sheet Transactions. Section 5.03(u) of Main Street’s Disclosure Schedule sets forth a true and complete list of all affiliated Main Street entities, including without limitation all special purpose entities, limited purpose entities and qualified special purpose entities, in which Main Street or any of its Subsidiaries or any officer or director of Main Street or any of its Subsidiaries has an economic or management interest and with which Main Street or its Subsidiaries conducts business. Section 5.03(u) of Main Street’s Disclosure Schedule also sets forth a true and |
Appendix A-20
complete list of all transactions, arrangements, and other relationships between or among any such Main Street affiliated entity, Main Street, any of its Subsidiaries, and any officer or director of Main Street or any of its Subsidiaries that are not reflected in the consolidated financial statements of Main Street (each, a“Main Street Off Balance Sheet Transaction”), along with the following information with respect to each such Main Street Off Balance Sheet Transaction: (i) the business purpose, activities, and economic substance; (ii) the key terms and conditions; (iii) the potential risk to Main Street or any of its Subsidiaries; (iv) the amount of any guarantee, line of credit, standby letter of credit or commitment, or any other type of arrangement, that could require Main Street or any of its Subsidiaries to fund any obligations under any such transaction; and (v) any other information that could have a Material Adverse Effect on Main Street or any of its Subsidiaries. | |
(v) Disclosure. The representations and warranties contained in this Section 5.03 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 5.03 not misleading. | |
(w) Material Adverse Change. Except as Previously Disclosed, Main Street has not, on a consolidated basis, suffered a change in its business, financial condition or results of operations since December 31, 2004 that has had a Material Adverse Effect on Main Street. | |
(x) Absence of Undisclosed Liabilities. Except as Previously Disclosed, neither Main Street nor any of its Subsidiaries has any liability (contingent or otherwise) that is material to Main Street on a consolidated basis, or that, when combined with all liabilities as to similar matters would be material to Main Street on a consolidated basis, except as disclosed in the Main Street Financial Statements (as defined in Section 5.03(g)). | |
(y) Properties. Main Street and its 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, reflected on the Main Street Financial Statements (as defined in Section 5.03(g)) as being owned by Main Street as of September 30, 2005 or acquired after such date, except (i) statutory liens for amounts 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, encumbrances, liens, charges, defaults or equitable interests, if any, as do not affect the use of properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, (iv) dispositions and encumbrances in the ordinary course of business, and (v) liens on properties acquired in foreclosure or on account of debts previously contracted. All leases pursuant to which Main Street or any of its Subsidiaries, as lessee, leases real or personal property (except for leases that have expired by their terms or that Main Street or any such Subsidiary has agreed to terminate since the date hereof) are valid without default thereunder by the lessee or, to Main Street’s knowledge, the lessor. | |
(z) Loans. Each loan reflected as an asset in the Main Street Financial Statements (as defined in Section 5.03(g)) and each balance sheet date subsequent thereto (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent secured, has been secured by valid liens and security interests that have been perfected, and (iii) is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles. Except as Previously Disclosed, as of November 30, 2005, Bank is not a party to a loan, including any loan guaranty, with any director, executive officer or 5% shareholder of Main Street or any of its Subsidiaries or any Person controlling, controlled by or under common control with any of the foregoing. All loans and extensions of credit that have been made by Bank that are subject either to Section 22(b) of the Federal Reserve Act, as amended, or to Part 349 of the rules and regulations promulgated by the FDIC, comply therewith. | |
(aa) Allowance for Loan Losses. The allowance for loan losses reflected on the Main Street Financial Statements (as defined in Section 5.03(g)), as of their respective dates, is adequate in all material respects under the requirements of GAAP to provide for reasonably incurred losses on outstanding loans. |
Appendix A-21
(bb) Repurchase Agreements. With respect to all agreements pursuant to which Main Street or any of its Subsidiaries has purchased securities subject to an agreement to resell, if any, Main Street or such Subsidiary, as the case may be, has a valid, perfected first lien or security interest in or evidence of ownership in book entry form of the government securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby. | |
(cc) Deposit Insurance. The deposits of Bank are insured by the FDIC in accordance with The Federal Deposit Insurance Act(“FDIA”), and Bank has paid all assessments and filed all reports required by the FDIA. | |
(dd) Annual Disclosure Statement. Main Street is in compliance with Part 350 of the rules and regulations promulgated by the FDIC concerning disclosure requirements, including the preparation of an annual disclosure statement, and the signature and attestation requirements provided and to be provided pursuant to such Part are accurate. | |
(ee) Bank Secrecy Act, Anti-Money Laundering and OFAC and Customer Information. Main Street is not aware of, has not been advised of, and has no reason to believe that any facts or circumstances exist, which would cause it or any of its Subsidiaries to be deemed (i) to be operating in violation in any material respect of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering statute, Rule or regulation; or (ii) not to be in satisfactory compliance in any material respect with the applicable privacy and customer information requirements contained in any federal and state privacy laws and regulations, including, without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and the regulations promulgated thereunder. It is not aware of any facts or circumstances that would cause it to believe that any non-public customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it or any of its Subsidiaries to undertake any material remedial action. The Main Street Board (or, where appropriate, the board of directors of any of Main Street’s Subsidiaries) has adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with Section 326 of the Patriot Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the Patriot Act and the regulations thereunder, and it (or such other of its Subsidiaries) has complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot Act and the regulations thereunder. | |
(ff) No Right to Dissent. Nothing in the Articles of Incorporation or the Bylaws of Main Street or any of its Subsidiaries provides or would provide to any Person, including without limitation the holders of Main Street Common Stock, upon execution of this Agreement and consummation of the transactions contemplated hereby and thereby, rights of dissent and appraisal of any kind. Holders of Main Street Common Stock will not have any dissenters rights pursuant to Article 13 of the GBCC. | |
(gg) Sarbanes-Oxley Act. Main Street is in compliance in all material respects with the provisions of the Sarbanes-Oxley Act, including Section 404 thereof, and the certifications provided and to be provided pursuant to Sections 302 and 906 thereof are accurate, except as Previously Disclosed. | |
(hh) SEC Documents. Main Street’s Annual Reports on Form 10-K for the fiscal years ended December 31, 2002, 2003 and 2004, and all other reports, registration statements, definitive proxy statements or information statements filed by it or any of its Subsidiaries subsequent to December 31, 2001 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed with the SEC (collectively,“Main Street SEC Documents”) as of the date filed, or if amended or superseded by a filing prior to November 30, 2005, then on the date of such amended or superseded filing, (A) were timely filed and complied in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (B) 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 the light of the circumstances under which they were made, not misleading. |
Appendix A-22
(a) Organization, Standing and Authority. BB&T is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina. BB&T is duly qualified to do business and is in good standing in the State of North Carolina and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. BB&T is registered as a financial holding company under the Bank Holding Company Act of 1956, as amended. BB&T Bank is a state banking association duly organized, validly existing and in good standing under the laws of the State of North Carolina. BB&T Bank is duly qualified to do business and is in good standing in the State of North Carolina and any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. | |
(b) BB&T Stock |
(i) 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) 1,000,000,000 shares of BB&T Common Stock, par value $5.00 per share, of which 542,810,280 shares were outstanding as of November 30, 2005. The outstanding shares of BB&T Common Stock have been duly authorized and are validly issued and outstanding, fully paid and nonassessable, and subject to no preemptive rights (and were not issued in violation of any preemptive rights). | |
(ii) The shares of BB&T Common Stock to be issued in exchange for shares of Main Street Common Stock in the Merger, when issued in accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable and subject to no preemptive rights. |
(c) Corporate Power. Each of BB&T and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its properties and assets; and BB&T has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. | |
(d) Corporate Authority; Authorized and Effective Agreement. This Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of BB&T and the BB&T Board prior to the date hereof and no shareholder approval is required on the part of BB&T. The Agreement to Merge, when executed by BB&T Bank, shall have been approved by the Board of Directors of BB&T Bank and by the BB&T Board, as the sole shareholder of BB&T Bank. This Agreement is a valid and legally binding agreement of BB&T, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors rights or by general equity principles). | |
(e) Regulatory Approvals; No Defaults. |
(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by BB&T or any of its Subsidiaries in connection with the execution, delivery or performance by BB&T of this Agreement or to consummate the Merger except for (A) the filing of applications, notices or the Agreement to Merge, as applicable, with the federal and state banking authorities; (B) the filing and declaration of effectiveness of the Registration Statement; (C) the filings of the articles of merger with the North Carolina Secretary of State pursuant to the NCBCA and the articles of merger with the Georgia Secretary of State pursuant to the GBCC; (D) such filings as are required to be made or approvals as are required to be obtained under the securities or “Blue Sky” laws of various states in connection with the issuance of BB&T Common Stock in the Merger; (E) any notices to or filings with the SBA; and (F) receipt of the approvals set forth in Section 7.01(b). As of the date hereof, |
Appendix A-23
BB&T is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b). | |
(ii) Subject to the satisfaction of the requirements referred to in the preceding paragraph and expiration of the related waiting periods, and required filings under federal and state securities laws, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) constitute a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any law, Rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of BB&T or of any of its Subsidiaries or to which BB&T or any of its Subsidiaries or properties is subject or bound, (B) constitute a breach or violation of, or a default under, the Articles of Incorporation or Bylaws (or similar governing documents) of BB&T or any of its Subsidiaries, or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument. |
(f) Financial Reports and SEC Documents; Material Adverse Effect. |
(i) BB&T’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it or any of its Subsidiaries with the SEC subsequent to December 31, 2004 under the Securities Act, or under Section 13, 14 or 15(d) of the Exchange Act, in the form filed or to be filed (collectively,“BB&T SEC Documents”) as of the date filed, (A) complied or will comply in all material respects with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (B) did not 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 to make the statements therein, in light of the circumstances under which they were made, not misleading; and each of the balance sheets or statements of condition contained in or incorporated by reference into any such BB&T SEC Document (including the related notes and schedules thereto) fairly presents, or will fairly present, the financial position of BB&T and its Subsidiaries as of its date, and each of the statements of income or results of operations and changes in shareholders’ equity and cash flows or equivalent statements in such BB&T SEC Documents (including any related notes and schedules thereto) fairly presents, or will fairly present, the results of operations, changes in shareholders’ equity and cash flows, as the case may be, of BB&T and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP consistently applied during the periods involved, except in each case as may be noted therein, subject to normal year-end audit adjustments and the absence of footnotes in the case of unaudited statements. | |
(ii) Since December 31, 2004, no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events (described in any paragraph of Section 5.04 or otherwise), is reasonably likely to have a Material Adverse Effect with respect to BB&T, except as disclosed in the BB&T SEC Documents. |
(g) No Brokers or Finder’s Fees. BB&T has not employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finder’s fee, commission or other similar form of compensation in connection with this Agreement or the transactions contemplated hereby. |
Appendix A-24
Appendix A-25
Appendix A-26
Appendix A-27
Appendix A-28
Appendix A-29
Appendix A-30
(a) Shareholder Approval. This Agreement shall have been duly adopted by the requisite vote of Main Street’s shareholders. | |
(b) Regulatory Approvals. All regulatory approvals required to consummate the transactions contemplated hereby shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain (i) any conditions, restrictions or requirements that the BB&T Board reasonably determines would either before or after the Effective Time have a Material Adverse Effect on BB&T after giving effect to the consummation of the Merger, or (ii) any conditions, restrictions or requirements that are not customary and usual for approvals of such type and that the BB&T Board reasonably determines would either |
Appendix A-31
before or after the Effective Date have a Material Adverse Affect on BB&T after giving effect to the consummation of the Merger. | |
(c) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and prohibits consummation of the transactions contemplated by this Agreement. | |
(d) Registration Statement. The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC. | |
(e) Exchange Listing. The shares of BB&T Common Stock to be issued in the Merger shall have been approved for listing on the NYSE, subject to official notice of issuance. |
(a) Representations and Warranties. The representations and warranties of BB&T set forth in this Agreement shall be true and correct, subject to Section 5.02, as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and Main Street shall have received a certificate, dated the Effective Date, signed on behalf of BB&T by a Senior Executive Vice President or an Executive Vice President of BB&T to such effect. | |
(b) Performance of Obligations of BB&T. BB&T shall have performed in all material respects all obligations required to be performed by BB&T under this Agreement at or prior to the Effective Time, and Main Street shall have received a certificate, dated the Effective Date, signed on behalf of BB&T by a Senior Executive Vice President or an Executive Vice President of BB&T to such effect. |
(a) Representations and Warranties. The representations and warranties of Main Street set forth in this Agreement shall be true and correct, subject to Section 5.02, as of the date of this Agreement and as of the Effective Date as though made on and as of the Effective Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date) and BB&T shall have received a certificate, dated the Effective Date, signed on behalf of Main Street by the chief executive officer and the chief financial officer of Main Street to such effect. | |
(b) Performance of Obligations of Main Street. Main Street shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and BB&T shall have received a certificate, dated the Effective Date, signed on behalf of Main Street by the chief executive officer and the chief financial officer of Main Street to such effect. | |
(c) Opinion of Main Street’s Counsel. BB&T shall have received an opinion of Womble Carlyle Sandridge & Rice, PLLC, counsel to Main Street, dated the Effective Date, to the effect that, on the basis of the facts, representations and assumptions set forth in the opinion, (i) Main Street is a corporation duly organized and in existence under the laws of the State of Georgia, (ii) this Agreement has been duly executed by Main Street and is enforceable in accordance with its terms against Main Street, except as the same may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting the enforcement of creditors’ rights generally, by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing and (iii) that, |
Appendix A-32
assuming approval by Main Street’s shareholders, upon the acceptance of the filing of the articles of merger with the Georgia Secretary of State and the North Carolina Secretary of State, the Merger shall become effective. | |
(d) Affiliate Agreements. BB&T shall have received the agreements referred to in Section 6.07 from each affiliate of Main Street. |
(a) Mutual Consent. At any time prior to the Effective Time, by the mutual consent of BB&T and Main Street. | |
(b) Breach. At any time prior to the Effective Time, by BB&T or Main Street in the event of either: (i) a breach by the other party of any representation or warranty contained herein (subject to the standard set forth in Section 5.02), which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach; or (ii) a material breach by the other party of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of such breach,provided that(A) such breach (under either clause (i) or (ii)) would entitle the non-breaching party not to consummate the Merger under Article VII, and (B) the terminating party is not itself in material breach of any provision of this Agreement. | |
(c) Delay. At any time prior to the Effective Time, by BB&T or Main Street, if its Board of Directors so determines by vote of a majority of the members of its entire Board, in the event that the Merger is not consummated by July 1, 2006, except to the extent that the failure of the Merger then to be consummated arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 8.01(c). | |
(d) No Approval. By Main Street or BB&T in the event (i) the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied by final nonappealable action of such Governmental Authority; (ii) the Main Street shareholders fail to adopt this Agreement at the Main Street Meeting and approve the Merger; or (iii) any of the closing conditions have not been met as required by Article VII hereof. | |
(e) Adverse Action. By BB&T, if (i) the Main Street Board submits this Agreement (or the plan of merger contained herein) to its shareholders without a recommendation for approval or with any adverse conditions on, or qualifications of, such recommendation for approval; or (ii) the Main Street Board otherwise withdraws or materially and adversely modifies (or discloses its intention to withdraw or materially and adversely modify) its recommendation referred to in Section 6.02; or (iii) the Main Street Board recommends to its shareholders an Acquisition Proposal other than the Merger. |
Appendix A-33
(a) (i) this Agreement is terminated by BB&T pursuant to Section 8.01(b) or 8.01(e) or by BB&T or Main Street pursuant to Section 8.01(d)(ii); and (ii) prior to such termination, an Acquisition Proposal with respect to Main Street was commenced, publicly proposed or publicly disclosed; and (iii) within 12 months after such termination, Main Street shall have entered into a definitive written agreement relating to an Acquisition Proposal or any Acquisition Proposal shall have been consummated; or | |
(b) after receiving an Acquisition Proposal, the Main Street Board does not take action to convene the Main Street Meeting and/or recommend that Main Street shareholders adopt this Agreement; and within 12 months after such receipt, Main Street shall have entered into a definitive written agreement relating to an Acquisition Proposal or any Acquisition Proposal shall have been consummated;provided, however, that BB&T shall not be entitled to a termination fee pursuant to this Section 8.03(b) in the event that this Agreement shall have been terminated pursuant to Section 8.01(a) or Section 8.01(d)(i). |
Appendix A-34
3500 Lenox Road | |
Atlanta, Georgia 30326 | |
Attn: Samuel B. Hay III | |
Facsimile: 770-786-9789 | |
With a copy (which shall not constitute notice) to: | |
Womble Carlyle Sandridge & Rice, PLLC | |
1201 West Peachtree St., Ste. 3500 | |
Atlanta, Georgia 30309 | |
Attn: Elizabeth O. Derrick, Esq. | |
Facsimile: 404-870-4824 | |
and | |
Alston & Bird LLP | |
1201 West Peachtree St., STE. 3500 | |
Atlanta, Georgia 30309-3424 | |
Attn: Ralph F. MacDonald III, Esq. | |
Facsimile: 404-881-7777 | |
If to BB&T, to: | |
BB&T Corporation | |
150 S. Stratford Road | |
Winston-Salem, NC 27104 | |
Attn: Christopher L. Henson | |
Facsimile: (336) 733-0340 | |
with a copy to: | |
BB&T Legal Department | |
200 West Second Street, 3rd Floor | |
Winston-Salem, NC 27101 | |
Attn: M. Patricia Oliver, Esq. | |
Facsimile: (336) 733-2189 |
Appendix A-35
MAIN STREET BANKS, INC. |
By: | /s/ Samuel B. Hay III |
Samuel B. Hay III | |
President and CEO | |
BB&T CORPORATION |
By: | /s/ John A. Allison IV |
John A. Allison IV | |
Chairman and CEO |
Appendix A-36
(i) | The Agreement and certain of the schedules thereto; | |
(ii) | Certain publicly available financial statements and other historical financial information of Main Street that it deemed relevant; | |
(iii) | Projected earnings estimates for Main Street for the years ending December 31, 2005 through 2010 prepared by and reviewed with senior management of Main Street and the views of senior management regarding Main Street’s business, financial condition, results of operations and future prospects; | |
(iv) | Internal financial and operating information with respect to the business, operations and prospects of Main Street furnished to BCG by Main Street that is not publicly available; | |
(v) | Certain publicly available financial statements and other historical financial information of BB&T that it deemed relevant; | |
(vi) | The reported prices and trading activity of BB&T’s common stock and compared those prices and activity with other publicly-traded companies that BCG deemed relevant; | |
(vii) | The pro forma financial impact of the merger on BB&T’s ability to complete a transaction from a regulatory standpoint, based on assumptions determined by senior management of Main Street and BCG; | |
(viii) | The financial terms of other recent business combinations in the commercial banking industry, to the extent publicly available; | |
(ix) | The current market environment generally and the banking environment in particular; | |
(x) | Such other information, financial studies, analyses and investigations and financial, economic and market criteria as it considered relevant. |
Appendix B-1
Very Truly Yours, | |
Burke Capital Group, L.L.C. |
Appendix B-2
Item 21. | Exhibits and Financial Statement Schedules |
Exhibit No. | Description | |||
2 | Agreement and Plan of Merger dated as of December 14, 2005 by and between BB&T Corporation and Main Street Banks, Inc. (included as Appendix A to the proxy statement/ prospectus) | |||
4 | (a) | Amended and Restated Articles of Incorporation of BB&T, which is incorporated by reference to Exhibit 3(i) of BB&T’s Annual Report on Form 10-K, filed March 7, 2005 (Article IV of Exhibit 3(i) relates to Junior Participating Preferred Stock). | ||
4 | (b) | Bylaws of BB&T, as Amended and Restated Effective April 28, 2004, with Amendments through August 24, 2004, which is incorporated by reference to Exhibit 4.2 of Form S-3 Registration Statement No. 333-126592. |
II-1
Exhibit No. | Description | |||
4 | (c) | Subordinated Indenture (including Form of Subordinated Debt Security) between the Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996, which is incorporated herein by reference to Exhibit 4(d) of Form S-3 Registration Statement No. 333-02899. | ||
4 | (d) | Senior Indenture (including Form of Senior Debt Security) between the Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996, which is incorporated herein by reference to Exhibit 4(c) of Form S-3 Registration Statement No. 333-02899. | ||
4 | (e) | First Supplemental Indenture between the Registrant and U.S. Bank National Association, Trustee, dated as of December 23, 2003, which is incorporated herein by reference to Exhibit 4 of the Current Report on Form 8-K, filed December 23, 2003. | ||
4 | (f) | Second Supplemental Indenture between the Registrant and U.S. Bank National Association, Trustee, dated as of September 24, 2004, which is incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed September 27, 2004. | ||
5 | Form of Opinion of M. Patricia Oliver, Executive Vice President, General Counsel, Secretary and Chief Corporate Governance Officer of BB&T Corporation* | |||
8 | Form of Opinion of Arnold & Porterllp.* | |||
23 | (a) | Consent of M. Patricia Oliver, Executive Vice President, General Counsel, Secretary and Chief Corporate Governance Officer of BB&T Corporation (included in Exhibit 5).* | ||
23 | (b) | Consent of Arnold & Porterllp(included in Exhibit 8).* | ||
23 | (c) | Consent of Ernst & Young LLP. | ||
23 | (d) | Consent of PricewaterhouseCoopers LLP. | ||
23 | (e) | Consent of Burke Capital Group, L.L.C. | ||
24 | Power of Attorney. | |||
99 | Form of Main Street Banks, Inc. Proxy Card.* |
* | to be filed by amendment |
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
II-2
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. |
2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
II-3
BB&T CORPORATION |
By: | /s/ M. Patricia Oliver |
Name: M. Patricia Oliver |
Title: | Executive Vice President, General Counsel, Secretary and Chief Corporate Governance Officer |
Title: | Chairman of the Board and Chief Executive Officer (principal executive officer) |
Title: | Executive Vice President and Corporate Controller (principal accounting officer) |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
*By: | /s/ M. Patricia Oliver |
Attorney-in-Fact |
Title: | Senior Executive Vice President and Chief Financial Officer (principal financial officer) |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
Title: | Director |
II-4
Exhibit No. | Description | |||
2 | Agreement and Plan of Merger dated as of December 14, 2005 by and between BB&T Corporation and Main Street Banks, Inc. (included as Appendix A to the proxy statement/ prospectus). | |||
4 | (a) | Amended and Restated Articles of Incorporation of BB&T, which is incorporated by reference to Exhibit 3(i) of BB&T’s Annual Report on Form 10-K, filed March 7, 2005 (Article IV of Exhibit 3(i) relates to Junior Participating Preferred Stock). | ||
4 | (b) | Bylaws of BB&T, as Amended and Restated Effective April 28, 2004, with Amendments through August 24, 2004, which is incorporated by reference to Exhibit 4.2 of Form S-3 Registration Statement No. 333-126592. | ||
4 | (c) | Subordinated Indenture (including Form of Subordinated Debt Security) between the Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996, which is incorporated herein by reference to Exhibit 4(d) of Form S-3 Registration Statement No. 333-02899. | ||
4 | (d) | Senior Indenture (including Form of Senior Debt Security) between the Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996, which is incorporated herein by reference to Exhibit 4(c) of Form S-3 Registration Statement No. 333-02899. | ||
4 | (e) | First Supplemental Indenture between the Registrant and U.S. Bank National Association, Trustee, dated as of December 23, 2003, which is incorporated herein by reference to Exhibit 4 of the Current Report on Form 8-K, filed December 23, 2003. | ||
4 | (f) | Second Supplemental Indenture between the Registrant and U.S. Bank National Association, Trustee, dated as of September 24, 2004, which is incorporated herein by reference to Exhibit 99.1 of the Current Report on Form 8-K, filed September 27, 2004. | ||
5 | Form of Opinion of M. Patricia Oliver, Executive Vice President, General Counsel, Secretary and Chief Corporate Governance Officer of BB&T Corporation.* | |||
8 | Form of Opinion of Arnold & Porterllp.* | |||
23 | (a) | Consent of M. Patricia Oliver, Executive Vice President, General Counsel, Secretary and Chief Corporate Governance Officer of BB&T Corporation(included in Exhibit 5).* | ||
23 | (b) | Consent of Arnold & Porterllp(included in Exhibit 8).* | ||
23 | (c) | Consent of Ernst & Young LLP. | ||
23 | (d) | Consent of PricewaterhouseCoopers LLP. | ||
23 | (e) | Consent of Burke Capital Group, L.L.C. | ||
24 | Power of Attorney. | |||
99 | Form of Main Street Banks, Inc. Proxy Card.* |
* | to be filed by amendment |
II-5