Exhibit 99.1
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AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
REPUBLIC BANCSHARES, INC.
and
BB&T CORPORATION
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..........................................................1
1.1 Definitions........................................................1
1.2 Terms Defined Elsewhere............................................6
ARTICLE II THE MERGER..........................................................7
2.1 Merger.............................................................7
2.2 Filing; Plan of Merger.............................................8
2.3 Effective Time.....................................................8
2.4 Closing............................................................8
2.5 Effect of Merger...................................................8
2.6 Further Assurances.................................................9
2.7 Merger Consideration...............................................9
2.8 Conversion of Shares; Payment of Merger Consideration.............10
2.9 Conversion of Stock Options and Stock Appreciation Rights.........12
2.10 Merger of Subsidiaries............................................14
2.11 Anti-Dilution.....................................................14
ARTICLE III REPRESENTATIONS AND WARRANTIES OF REPUBLIC........................14
3.1 Capital Structure.................................................15
3.2 Organization, Standing and Authority..............................15
3.3 Ownership of Subsidiaries.........................................15
3.4 Organization, Standing and Authority of the Subsidiaries..........16
3.5 Authorized and Effective Agreement................................16
3.6 Securities Filings; Financial Statements; Statements True;
NASDAQ Compliance.................................................17
3.7 Minute Books......................................................18
3.8 Adverse Change....................................................18
3.9 Absence of Undisclosed Liabilities................................18
3.10 Properties........................................................18
3.11 Environmental Matters.............................................19
3.12 Loans; Allowance for Loan Losses..................................20
3.13 Tax Matters.......................................................20
3.14 Employees; Compensation; Benefit Plans............................21
3.15 Certain Contracts.................................................25
3.16 Legal Proceedings; Regulatory Approvals...........................26
3.17 Compliance with Laws; Filings.....................................26
3.18 Brokers and Finders...............................................27
3.19 Repurchase Agreements; Derivatives................................27
3.20 Deposit Accounts..................................................27
3.21 Related Party Transactions........................................28
3.22 Certain Information...............................................28
3.23 Tax and Regulatory Matters........................................28
3.24 State Takeover Laws...............................................28
3.25 Labor Relations...................................................28
3.26 Fairness Opinion..................................................29
3.27 No Right to Dissent...............................................29
3.28 Shares and Rights.................................................29
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BB&T.............................29
4.1 Capital Structure of BB&T.........................................29
4.2 Organization, Standing and Authority of BB&T......................30
4.3 Authorized and Effective Agreement................................30
4.4 Organization, Standing and Authority of BB&T Subsidiaries.........31
4.5 Securities Documents; Financial Statements........................31
4.6 Certain Information...............................................31
4.7 Tax and Regulatory Matters........................................31
4.8 Share Ownership...................................................32
4.9 Legal Proceedings; Regulatory Approvals...........................32
4.10 Adverse Change....................................................32
4.11 Compliance with Laws; Filings.....................................32
4.12 Financial Capability..............................................33
ARTICLE V COVENANTS...........................................................33
5.1 Shareholder Meetings..............................................33
5.2 Registration Statement; Proxy Statement/Prospectus................34
5.3 Plan of Merger; Reservation of Shares.............................34
5.4 Additional Acts...................................................34
5.5 Best Efforts......................................................35
5.6 Certain Accounting Matters........................................36
5.7 Access to Information.............................................36
5.8 Press Releases....................................................37
5.9 Forbearances of Republic..........................................37
5.10 Employment Agreements.............................................39
5.11 Affiliates........................................................40
5.12 Section 401(k) Plan; Other Employee Benefits......................40
5.13 Directors' and Officers' Protection...............................43
5.14 Forbearances of BB&T..............................................44
5.15 Reports...........................................................44
5.16 Exchange Listing..................................................44
5.17 Advisory Board....................................................44
5.18 Board of Directors of Branch Banking and Trust Company............45
5.19 Tax Treatment.....................................................45
ARTICLE VI CONDITIONS PRECEDENT...............................................46
6.1 Conditions Precedent - BB&T and Republic..........................46
6.2 Conditions Precedent - Republic...................................47
6.3 Conditions Precedent - BB&T.......................................47
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ARTICLE VII TERMINATION, DEFAULT, WAIVER AND AMENDMENT........................48
7.1 Termination.......................................................48
7.2 Effect of Termination.............................................50
7.3 Survival of Representations, Warranties and Covenants.............50
7.4 Waiver............................................................50
7.5 Amendment or Supplement...........................................51
7.6 Termination Fee...................................................51
8.1 Expenses..........................................................52
8.2 Entire Agreement..................................................52
8.3 No Assignment.....................................................53
8.4 Notices...........................................................53
8.5 Captions..........................................................54
8.6 Counterparts......................................................54
8.7 Governing Law.....................................................54
ANNEXES
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Annex A Articles of Merger
Annex B Form of President of Florida Operations
and Regional President Employment
Agreement
Annex C Form of Regional President
Employment Agreement
Annex D Form of Employment Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), dated as of
December 1, 2003 is among REPUBLIC BANCSHARES, INC. ("Republic"), a corporation
chartered under the laws of the State of Florida having its principal office at
St. Petersburg, Florida, and BB&T CORPORATION ("BB&T"), a North Carolina
corporation having its principal office at Winston-Salem, North Carolina;
R E C I T A L S:
- - - - - - - -
The parties desire to effect a strategic business combination by merging
Republic into BB&T (said transaction being hereinafter referred to as the
"Merger") pursuant to a plan of merger (the "Plan of Merger") substantially in
the form attached as Annex A hereto, and the parties desire to provide for
certain undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby. For United States federal
income tax purposes, the parties intend that the Merger will qualify as a
reorganization under the provisions of Section 368(a) of the Code (as defined
below).
The Boards of Directors of BB&T and Republic have each determined that the
Merger will further their respective business strategies and goals and is in the
best interest of their respective shareholders, and each has consequently
approved the Merger, this Agreement and the Plan of Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions
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When used herein, the capitalized terms set forth below shall have the
following meanings:
"Affiliate" means, with respect to any person, any other person, who
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such person and, without limiting
the generality of the foregoing, includes any executive officer or director of
such person and any Affiliate of such executive officer or director.
"Articles of Merger" shall mean the Articles of Merger required to be filed
with the office of the Secretary of State of North Carolina, as provided in
Section 55-11-05 of the NCBCA, and with the office of the Florida Department of
State, as provided in Section 607.1105 of the FBCA.
"Bank Holding Company Act" shall mean the Federal Bank Holding Company Act
of 1956, as amended, and rules and regulations promulgated thereunder.
"Bank Secrecy Act" shall mean the Federal Bank Secrecy Act of 1970, as
amended, and rules and regulations promulgated thereunder.
"BB&T Common Stock" shall mean the shares of voting common stock, par value
$5.00 per share, of BB&T, with rights attached issued pursuant to Rights
Agreement dated December 17, 1996 between BB&T and Branch Banking and Trust
Company, as Rights Agent, relating to BB&T's Series B Junior Participating
Preferred Stock, $5.00 par value per share.
"BB&T Subsidiaries" shall mean Branch Banking and Trust Company, Branch
Banking and Trust Company of South Carolina and Branch Banking and Trust Company
of Virginia.
"Benefit Plan Determination Date" shall mean, with respect to each employee
pension or welfare benefit plan or program maintained by Republic at the
Effective Time, the date determined by BB&T with respect to such plan or program
which shall be not later than January 1 following the close of the calendar year
in which the last of the Republic Subsidiaries which is a bank or other savings
institution is merged into BB&T or one of the BB&T Subsidiaries.
"Business Day" shall mean all days other than Saturdays, Sundays and
Federal Reserve holidays.
"CERCLA" shall mean the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended, and
rules and regulations promulgated thereunder.
"Disclosed" shall mean disclosed in the Republic Disclosure Memorandum,
referencing the Section number herein pursuant to which such disclosure is being
made.
"Environmental Claim" means any notice from any governmental authority or
third party alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup or remediation costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based
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upon, or resulting from a violation of the Environmental Laws or the
presence or release into the environment of any Hazardous Substances.
"Environmental Laws" means all applicable federal, state and local laws and
regulations, as amended, relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface, or subsurface strata) and which are administered, interpreted, or
enforced by the United States Environmental Protection Agency and state and
local agencies with jurisdiction over and including common law in respect of,
pollution or protection of the environment, including without limitation CERCLA,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.,
and other laws and regulations relating to emissions, discharges, releases, or
threatened releases of any Hazardous Substances, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and rules and regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"FBCA" shall mean the Florida Business Corporation Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.
"Financial Advisor" shall mean Xxxxx, Xxxxxxxx & Xxxxx, Inc.
"Financial Statements" shall mean (a) with respect to BB&T, (i) the
consolidated balance sheet (including related notes and schedules, if any) of
BB&T as of December 31, 2002, 2001, and 2000, and the related consolidated
statements of income, shareholders' equity and cash flows (including related
notes and schedules, if any) for each of the three years ended December 31,
2002, 2001, and 2000, as filed by BB&T in Securities Documents and (ii) the
consolidated balance sheets of BB&T (including related notes and schedules, if
any) and the related consolidated statements of income, shareholders' equity and
cash flows (including related notes and schedules, if any) included in
Securities Documents filed by BB&T with respect to periods ended subsequent to
December 31, 2002, and (b) with respect to Republic, (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of Republic as of December 31, 2002, 2001 and 2000, and the related
consolidated statements of income and retained earnings, and cash flows
(including related notes and schedules, if any) for each of the three years
ended December 31, 2002, 2001 and 2000 as filed by Republic in Securities
Documents and (ii) the consolidated statements of financial condition of
Republic (including related notes and schedules, if any) and the related
consolidated statements of
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income and retained earnings, and cash flows (including related notes and
schedules, if any) included in Securities Documents filed by Republic with
respect to periods ended subsequent to December 31, 2002.
"GAAP" shall mean generally accepted accounting principles applicable to
financial institutions and their holding companies, as in effect at the relevant
date.
"Hazardous Substances" means any substance or material (i) identified in
CERCLA; (ii) determined to be toxic, a pollutant or a contaminant under any
applicable federal, state or local statutes, law, ordinance, rule or regulation,
including but not limited to petroleum products; (iii) asbestos; (iv) radon; (v)
poly-chlorinated biphiphenyls and (vi) such other materials, substances or waste
which are otherwise dangerous, hazardous, harmful to human health or the
environment.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" on BB&T or Republic shall mean an event,
circumstance, change, effect, occurrence or state of facts which, individually
or together with any other event, change, effect, occurrence or state of facts,
(i) has a material adverse effect on the financial condition, results of
operations, business or stockholder's equity of BB&T and the BB&T Subsidiaries
taken as a whole, or Republic and the Republic Subsidiaries taken as a whole, or
(ii) materially impairs the ability of BB&T or Republic to perform its
obligations under this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement; provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) any event, change,
effect, occurrence or state of facts to the extent relating to or arising from
the United States or local economy or financial or securities markets in
general, (b) any event, change, effect, occurrence or state of facts to the
extent relating to or arising from announcement of this Agreement or the actions
and omissions of BB&T or Republic taken with the prior written consent of the
other in contemplation of the transactions contemplated hereby and the effects
of compliance with this Agreement on the parties, including expenses incurred by
the parties in consummating the transactions contemplated by this Agreement or
relating to any litigation arising as a result of the Merger.
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotations.
"NCBCA" shall mean the North Carolina Business Corporation Act, as amended.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or group of entities, or governmental body.
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"Proxy Statement/Prospectus" shall mean the proxy statement and prospectus,
together with any supplements thereto, to be sent to shareholders of Republic to
solicit their votes in connection with a proposal to approve this Agreement and
the Plan of Merger.
"Registration Statement" shall mean the registration statement of BB&T as
declared effective by the Commission under the Securities Act, including any
post-effective amendments or supplements thereto as filed with the Commission
under the Securities Act, with respect to the BB&T Common Stock to be issued in
connection with the transactions contemplated by this Agreement.
"Republic Common Stock" shall mean the shares of voting common stock, par
value $2.00 per share, of Republic.
"Republic Disclosure Memorandum" shall mean the written information in one
or more documents, each of which is entitled "Republic Disclosure Memorandum"
and dated on or before the date of this Agreement and delivered not later than
the date of execution of this Agreement by Republic to BB&T. Information
disclosed with respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced.
"Republic Subsidiaries" shall mean the subsidiaries of Republic set forth
in the Republic Disclosure Memorandum, and any and all other Subsidiaries of
Republic as of the date hereof.
"Rights" shall mean warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests (other than rights
pursuant to the Rights Agreements described under the definition of "BB&T Common
Stock"), and stock appreciation rights, performance units and similar
stock-based rights whether or not they obligate the issuer thereof to issue
stock or other securities or to pay cash.
"SAR" shall mean any right to receive a cash payment in respect of the
value of shares of Republic Common Stock granted under the Stock Option Plans
and outstanding and unexercised.
"Xxxxxxxx-Xxxxx Act" shall mean the Xxxxxxxx-Xxxxx Act of 2002, as it may
be amended, and the rules and regulations promulgated thereunder.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, proxy statements,
registration statements and all similar documents filed, or required to be
filed, pursuant to the Securities Laws, including but not limited to periodic
and other reports filed pursuant to Section 13 of the Exchange Act.
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"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Xxxxxxxx-Xxxxx Act; the Investment Company Act of 1940, as amended; the
Investment Advisers Act of 1940, as amended; the Trust Indenture Act of 1939 as
amended; and in each case the rules and regulations of the Commission
promulgated thereunder.
"Stock Option" shall mean any option to acquire shares of Republic Common
Stock granted under the Stock Option Plans and outstanding and unexercised.
"Stock Option Plans" shall mean Republic's 1995 Stock Option Plan, as
amended, and the 1997 Stock Appreciation Rights Plan.
"Subsidiaries" shall mean all those corporations, associations, or other
business entities of which the entity in question either owns or controls 50% or
more of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent (in determining whether
one entity owns or controls 50% or more of the outstanding equity securities of
another, equity securities owned or controlled in a fiduciary capacity shall be
deemed owned and controlled only by the beneficial owner).
"Superior Offer" shall mean a proposal or offer to acquire or purchase all
or a substantial portion of the assets of or a substantial equity interest in,
or to effect any recapitalization, liquidation or dissolution involving or a
business combination or other similar transaction with, Republic or any Republic
Subsidiary (including, without limitation, a tender offer or exchange offer to
purchase Republic Common Stock) other than as contemplated by this Agreement:
(i) that did not arise from or involve a breach or violation by Republic of
Section 5.9(k) or any other provision of this Agreement; (ii) that the Republic
Board of Directors determines in its good faith judgment, based, among other
things, on advice of the Financial Advisor, to be more favorable to the Republic
shareholders than the Merger; and (iii) the financing for the implementation of
which, to the extent required, is then committed or in the good faith reasonable
judgment of the Republic Board of Directors, based, among other things, on
advice of the Financial Advisor, is capable of being obtained by the party
making the proposal or offer.
"TILA" shall mean the Truth in Lending Act, as amended, and rules and
regulations promulgated thereunder.
"USA PATRIOT Act" shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, as amended, and rules and regulations promulgated thereunder.
1.2 Terms Defined Elsewhere
-----------------------
The capitalized terms set forth below are defined in the following sections:
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Agreement Introduction
BB&T Introduction
BB&T Option Plan Section 2.9(a)
Branch Bank Section 5.10
Closing Section 2.4
Closing Date Section 2.4
Closing Value Section 2.7(c)
Constituent Corporations Section 2.1
Continuing Insider Section 2.9(a)
Effective Time Section 2.3
Employer Entity Section 5.12(a)
Exchange Ratio Section 2.7(a)
Merger Recitals
Merger Consideration Section 2.7(a)
PBGC Section 3.14(b)(iv)
Plan Section 3.14(b)(i)
Plan of Merger Recitals
Republic Introduction
Republic Acquisition Proposal Section 7.1(g)
Republic Preferred Stock Section 3.1(a)
Requisite Regulatory Approval Section 6.1(c)
Surviving Corporation Section 2.1(a)
Termination Fee Section 7.6
Transferred Employee Section 5.12(a)
ARTICLE II
THE MERGER
2.1 Merger
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BB&T and Republic are constituent corporations (the "Constituent
Corporations") to the Merger as contemplated by the NCBCA and the FBCA. At the
Effective Time:
(a) Republic shall be merged into BB&T in accordance with the applicable
provisions of the NCBCA and the FBCA, with BB&T being the surviving corporate
entity (hereinafter sometimes referred to as the "Surviving Corporation").
(b) The separate existence of Republic shall cease and the Merger shall in
all respects have the effects provided in Section 2.5.
(c) The Articles of Incorporation of BB&T at the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation.
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(d) The Bylaws of BB&T at the Effective Time shall be the Bylaws of the
Surviving Corporation.
2.2 Filing; Plan of Merger
----------------------
The Merger shall not become effective unless this Agreement and the Plan of
Merger are duly approved by shareholders holding at least a majority of the
shares of Republic Common Stock. Upon fulfillment or waiver of the conditions
specified in Article VI and provided that this Agreement has not been terminated
pursuant to Article VII, the Constituent Corporations will cause the Articles of
Merger to be executed and filed with the Secretary of State of North Carolina
and the Florida Department of State, as provided in Section 55-11-05 of the
NCBCA and Section 607.1105 of the FBCA, respectively. The Plan of Merger is
incorporated herein by reference, and adoption of this Agreement by the Boards
of Directors of the Constituent Corporations and approval by the shareholders of
Republic shall constitute adoption and approval of the Plan of Merger.
2.3 Effective Time
--------------
The Merger shall be effective at the day and hour specified in the Articles
of Merger as filed as provided in Section 2.2 (herein sometimes referred to as
the "Effective Time").
2.4 Closing
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The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx,
PLLC, Winston-Salem, North Carolina, at 10:00 a.m. on a date selected by BB&T,
which date shall be no later than: (i) the fifth Business Day of the calendar
month immediately following the calendar month in which the shareholders approve
this Agreement and the Plan of Merger; (ii) if the conditions to Closing set
forth in Article VI (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing) are not satisfied on
the date set forth in 2.4(i), the date of Closing shall be no less than five (5)
Business Days after the conditions to Closing set forth in Article VI are
satisfied (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing); or (iii) such later
date as the parties may otherwise agree (the "Closing Date").
2.5 Effect of Merger
----------------
From and after the Effective Time, the separate existence of Republic shall
cease, and the Surviving Corporation shall thereupon and thereafter, to the
extent consistent with its Articles of Incorporation, possess all of the rights,
privileges, immunities and franchises, of a public as well as a private nature,
of each of the Constituent Corporations; and all property, real, personal and
mixed, and all debts due on whatever account, and all other choses in action,
and each and every other interest of or belonging to or due to each
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of the Constituent Corporations shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without further act or deed; and the
title to any real estate or any interest therein vested in either of the
Constituent Corporations shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible for all
the liabilities, obligations and penalties of each of the Constituent
Corporations; and any claim, existing action or proceeding, civil or criminal,
pending by or against either of the Constituent Corporations may be prosecuted
as if the Merger had not taken place, or the Surviving Corporation may be
substituted in its place; and any judgment rendered against either of the
Constituent Corporations may be enforced against the Surviving Corporation.
Neither the rights of creditors nor any liens upon the property of either of the
Constituent Corporations shall be impaired by reason of the Merger.
2.6 Further Assurances
------------------
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or assurances in law
or any other actions are necessary, desirable or proper to vest, perfect or
confirm of record or otherwise, in the Surviving Corporation, the title to any
property or rights of the Constituent Corporations acquired or to be acquired by
reason of, or as a result of, the Merger, the Constituent Corporations agree
that such Constituent Corporations and their proper officers and directors shall
and will execute and deliver all such proper deeds, assignments and assurances
in law and do all things necessary, desirable or proper to vest, perfect or
confirm title to such property or rights in the Surviving Corporation and
otherwise to carry out the purpose of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized and
directed in the name of the Constituent Corporations or otherwise to take any
and all such actions.
2.7 Merger Consideration
--------------------
(a) As used herein, the term "Merger Consideration" per share of Republic
Common Stock shall mean the consideration described in (i) or (ii) below, as
elected as provided in Section 2.8 by each Republic shareholder, and subject to
adjustment as provided in paragraph (b) of this Section 2.7:
(i) .81 (the "Exchange Ratio") shares of BB&T Common Stock (to the
nearest ten thousandth of a share) to be exchanged for each share of
Republic Common Stock subject to this election and owned by the shareholder
as of the Effective Time (the "Stock Election"); or
(ii) $31.79 in cash for each share of Republic Common Stock subject to
this election and owned by the shareholder as of the Effective Time (the
"Cash Election").
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Each Republic shareholder shall be permitted to make any combination of the
Stock Election and the Cash Election in whole share increments with respect to
the shareholder's shares of Republic Common Stock.
(b) Notwithstanding paragraph (a) preceding, in no event shall the amount
of cash payable pursuant to the aggregate of the Cash Elections and pursuant to
Section 2.7(c) (the "Aggregate Cash Amount") exceed the lesser of (i) 55% of the
value of the aggregate Merger Consideration (including cash payable pursuant to
Section 2.7(c)), determined by valuing shares of BB&T Common Stock at the
Closing Value, or (ii) the product of $12.72 multiplied by the number of shares
of Republic Common Stock outstanding at the close of business on the Closing
Date (the lesser of such amounts being referred to herein as the "Maximum Cash
Amount"). In the event that the Aggregate Cash Amount shall exceed the Maximum
Cash Amount, the Merger Consideration distributable to each Republic shareholder
shall be adjusted by taking the following steps: (1) determine the amount by
which the Aggregate Cash Amount exceeds the Maximum Cash Amount; (2) allocate
the excess amount in (1) among all Republic shareholders making the Cash
Election in the proportion that the amount of cash payable to each Republic
shareholder pursuant to the election under Section 2.8 (without giving effect to
any reduction pursuant to this Section 2.7(b)) bears to the Aggregate Cash
Amount (the amount allocated to each shareholder is referred to herein as the
"Shareholder Cash Excess"); (3) determine the number of whole shares of BB&T
Common Stock having a value (valued at $39.25 per share) equal to the
Shareholder Cash Excess (if the Shareholder Cash Excess is not evenly divisible
by $39.25, the number of shares determined by dividing the Shareholder Cash
Excess by $39.25 shall be rounded up to the next whole share), and (4) add the
number of shares of BB&T Common Stock in (3) to the shares, if any, of BB&T
Common Stock that the Republic shareholder will receive pursuant to the Stock
Election of such Republic shareholder and reduce the amount of cash subject to
the Cash Election of the shareholder by the value (at $39.25 per share) of such
number of shares of BB&T Common Stock in (3).
(c) Cash (without interest) will be payable in exchange for any fractional
share of BB&T Common Stock which would otherwise be distributable to a Republic
shareholder, as determined following application of (a) and (b) of this Section
2.7. The amount of cash payable with respect to any fractional share of BB&T
Common Stock shall be determined by multiplying the fractional part of such
share by the Closing Value. The "Closing Value" shall mean the average of the
high and low price per share of BB&T Common Stock on the NYSE as reported on
XXXXxxx.xxx on the date of the Effective Time (as of 4:00 p.m. eastern time).
2.8 Conversion of Shares; Payment of Merger Consideration
-----------------------------------------------------
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of Republic or the holders of record of Republic Common Stock, each
share of Republic Common Stock issued and outstanding immediately prior to the
Effective Time shall be converted into and shall represent the right to receive,
upon surrender of the
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certificate representing such share of Republic Common Stock (as provided
in subsection (d) below), the Merger Consideration.
(b) Each share of BB&T Common Stock issued and outstanding immediately
prior to the Effective Time shall continue to be issued and outstanding.
(c) Until surrendered, each outstanding certificate which prior to the
Effective Time represented one or more shares of Republic Common Stock shall be
deemed upon the Effective Time for all purposes to represent only the right to
receive the Merger Consideration and any declared and unpaid dividends with
respect to Republic Common Stock. No interest will be paid or accrued on the
Merger Consideration upon the surrender of the certificate or certificates
representing shares of Republic Common Stock. With respect to any certificate
for Republic Common Stock that has been lost or destroyed, BB&T shall pay the
Merger Consideration attributable to such certificate upon receipt of a surety
bond or other adequate indemnity as required in accordance with BB&T's standard
policy, and evidence reasonably satisfactory to BB&T of ownership of the shares
represented thereby. After the Effective Time, Republic's transfer books shall
be closed and no transfer of the shares of Republic Common Stock outstanding
immediately prior to the Effective Time shall be made on the stock transfer
books of the Surviving Corporation.
(d) Promptly after the Effective Time, BB&T shall cause to be delivered or
mailed to each Republic shareholder a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any shares of Republic
Common Stock. Upon proper surrender of such certificates or other evidence of
ownership meeting the requirements of Section 2.8(c), together with such letter
of transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested, BB&T shall
promptly cause the transfer to the persons entitled thereto of the Merger
Consideration in the form elected or deemed elected.
(e) The Surviving Corporation shall pay any dividends or other
distributions with a record date prior to the Effective Time that have been
declared or made by Republic in respect of shares of Republic Common Stock in
accordance with the terms of this Agreement and that remain unpaid at the
Effective Time, subject to compliance by Republic with Section 5.9(b). Whenever
a dividend or other distribution is declared by BB&T on the BB&T Common Stock,
the record date for which is at or after the Effective Time, the declaration
shall include dividends or other distributions on all shares of BB&T Common
Stock issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of BB&T Common Stock as of any time subsequent
to the Effective Time shall be delivered to the holder of any certificate
representing Republic Common Stock until such holder surrenders such certificate
for exchange as provided in this Section 2.8. Upon surrender of such
certificate, both the Merger Consideration (without interest) and any
undelivered dividends payable hereunder
11
(without interest) shall be delivered and paid with respect to the shares of
Republic Common Stock represented by such certificate.
(f) Subject to the election and allocation procedures set forth in Sections
2.7 and 2.8, each record holder of Republic Common Stock as of the Election
Deadline will be entitled to elect the form of Merger Consideration in Section
2.7(a)(i) and (ii). All such elections shall be made on a form provided by BB&T
for that purpose ("Form of Election"). BB&T and Republic will mail the Form of
Election on or shortly after the date the Proxy Statement/Prospectus is mailed
to the shareholders of Republic.
(g) Any election for the purposes of Sections 2.7 and 2.8 will be effective
only if BB&T has received a properly completed and signed Form of Election by
the Election Deadline. The "Election Deadline" means 5:00 p.m., Winston-Salem,
North Carolina Time, on the date of Republic's shareholders' meeting to vote on
this Agreement and the Plan of Merger. A Form of Election may be revoked or
changed by the person submitting such Form of Election or any other person to
whom the subject shares are subsequently transferred by written notice by such
person to BB&T at or prior to the Election Deadline. All Forms of Election will
be deemed to be revoked if this Agreement has been terminated in accordance with
its terms.
(h) Any holder of Republic Common Stock as of the Effective Time who does
not submit a properly completed and signed Form of Election that is received by
BB&T at or prior to the Election Deadline, will be deemed to have made the Stock
Election in Section 2.7(a)(i) for all purposes herein. BB&T will have the
discretion to disregard immaterial defects in Forms of Election. If BB&T or its
designee reasonably determines that any purported Stock Election or Cash
Election was not properly made, such purported election will be deemed to be of
no force and effect and the holder making such election will be deemed to have
made the Stock Election in Section 2.7(a)(i) for all purposes herein.
2.9 Conversion of Stock Options and Stock Appreciation Rights
---------------------------------------------------------
(a) At the Effective Time, each Stock Option and SAR then outstanding (and
which by its terms does not lapse on or before the Effective Time), whether or
not then exercisable, shall be converted into and become rights with respect to
BB&T Common Stock, and BB&T shall assume each Stock Option and SAR in accordance
with the terms of the Stock Option Plans, except that from and after the
Effective Time (i) BB&T and its Compensation Committee shall be substituted for
Republic and the Committee of Republic's Board of Directors with respect to
administering the Stock Option Plans, (ii) each Stock Option and SAR assumed by
BB&T may be exercised solely for shares of BB&T Common Stock, or in the case of
an SAR, a cash payment in respect of the value of shares of BB&T Common Stock,
(iii) the number of shares of BB&T Common Stock subject to each such Stock
Option and with respect to each SAR shall be the number of whole shares of BB&T
Common Stock (omitting any fractional share) determined by multiplying the
number of shares of Republic Common Stock subject to such Stock
12
Option or SAR immediately prior to the Effective Time by the Exchange Ratio, and
(iv) the per share exercise price under each such Stock Option and SAR shall be
adjusted by dividing the per share exercise price under each such Stock Option
and SAR by the Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the foregoing, BB&T may at its election substitute as of the
Effective Time options or stock appreciation rights under the BB&T Corporation
1995 Omnibus Stock Incentive Plan or any other duly adopted comparable plan (in
either case, the "BB&T Option Plan") for all or a part of the Stock Options or
SARs, subject to the following conditions: (A) the requirements of (iii) and
(iv) above shall be met; (B) such substitution shall not constitute a
modification, extension or renewal of any of the Stock Options or SARs and shall
be tax neutral to the option holder; and (C) the substituted options or stock
appreciation rights shall continue in effect on the same terms and conditions as
provided in the Stock Option or SAR agreements and the Stock Option Plans
governing each Stock Option and SAR. BB&T shall cause each grant of a converted
or substitute option or stock appreciation right to any individual who
subsequent to the Merger will be a director or officer of BB&T as construed
under Commission Rule 16b-3 (a "Continuing Insider") to be duly approved in
accordance with the provisions of Rule 16b-3 such that the receipt thereof shall
be exempt from Section 16(b) of the Exchange Act (BB&T and Republic agreeing
that, in order to most effectively compensate and retain Continuing Insiders in
connection with the Merger, both prior to and after the Effective Time, it is
desirable that Continuing Insiders not be subject to a risk of liability under
Section 16(b) of the Exchange Act to the fullest extent permitted by applicable
law as a result of any deemed purchase or sale for purposes of Section 16(b)
arising in connection with the exchange and/or conversion of shares of Republic
Common Stock and Stock Options and SARs in the Merger). Each Stock Option which
is an incentive stock option shall be adjusted as required by Section 424 of the
Code, and the Regulations promulgated thereunder, so as to continue as an
incentive stock option under Section 424(a) of the Code, and so as not to
constitute a modification, extension, or renewal of the option within the
meaning of Section 424(h) of the Code. BB&T and Republic agree to take all
necessary steps to effectuate the foregoing provisions of this Section 2.9. BB&T
has reserved and shall continue to reserve adequate shares of BB&T Common Stock
for delivery upon exercise of any converted or substitute options. Within
fifteen days after the Effective Time, if it has not already done so, BB&T shall
file a registration statement on Form S-3 or Form S-8, as the case may be (or
any successor or other appropriate forms), with respect to the shares of BB&T
Common Stock subject to converted or substitute options and shall maintain the
effectiveness of such registration statement (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such converted
or substitute options remain outstanding. With respect to those individuals, if
any, who subsequent to the Merger may be subject to the reporting requirements
under Section 16(a) of the Exchange Act, BB&T shall administer the Stock Option
Plans assumed pursuant to this Section 2.9 (or the BB&T Option Plan, if
applicable) in a manner that complies with Rule 16b-3 promulgated under the
Exchange Act to the extent necessary to preserve for such individuals the
benefits of Rule 16b-3 to the extent such benefits were available to them prior
to the Effective Time. Republic hereby represents that the Stock
13
Option Plans in their current forms have been administered in compliance with
Rule 16b-3 to the extent, if any, required as of the date hereof.
(b) As soon as practicable following the Effective Time, BB&T shall deliver
to the participants receiving converted options or stock appreciation rights
under the BB&T Option Plan an appropriate notice setting forth such
participant's rights pursuant thereto.
(c) Eligibility to receive new stock option grants following the Effective
Time with respect to BB&T Common Stock shall be determined by BB&T in accordance
with its plans and procedures as in effect from time to time, and subject to any
contractual obligations.
2.10 Merger of Subsidiaries
----------------------
In the event that BB&T shall request, Republic shall take such actions, and
shall cause the Republic Subsidiaries to take such actions, as may be required
in order to effect, immediately after the Effective Time, the merger of one or
more of the Republic Subsidiaries with and into, in each case, one of the BB&T
Subsidiaries; provided, however, that such actions, merger or mergers shall not
(i) impose any significant additional costs on Republic or the Republic
Subsidiaries or (ii) impede or materially delay consummation of the Merger.
2.11 Anti-Dilution
-------------
In the event BB&T changes the number of shares of BB&T Common Stock issued
and outstanding at or prior to the Effective Time as a result of any
reclassification, recapitalization, stock split, stock dividend or other similar
event, and the record date thereof (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar recapitalization
for which a record date is not established) shall be at or prior to the
Effective Time, the Exchange Ratio shall be proportionately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF REPUBLIC
Except as Disclosed, Republic represents and warrants to BB&T as follows
(the representations and warranties herein of Republic are made subject to the
applicable standard set forth in Section 6.3(a), and no such representation or
warranty shall be deemed to be inaccurate or incomplete unless it is inaccurate
or incomplete to the extent that BB&T would be entitled to refuse to consummate
the Merger pursuant to Section 7.1(b)(ii) on account of such inaccuracy):
14
3.1 Capital Structure
-----------------
The authorized capital stock of Republic consists of 20,000,000 shares of
Republic Common Stock and 100,000 shares of Series A Preferred Stock, $20.00 par
value, of Republic ("Republic Preferred Stock"). As of September 30, 2003,
Republic had 13,267,294 shares of Republic Common Stock issued and outstanding
and no shares of Republic Preferred Stock issued and outstanding. Except for the
foregoing and as permitted by Section 5.9(c), no other classes of capital stock
of Republic, common or preferred, are authorized, issued or outstanding. All
outstanding shares of Republic capital stock have been duly authorized and are
validly issued, fully paid and nonassessable. No shares of capital stock have
been reserved for any purpose, except for shares of Republic Common Stock
reserved in connection with the Stock Option Plans. As of September 30, 2003,
Republic had outstanding options to acquire 736,590 shares of Republic Common
Stock under the Stock Option Plans or other outstanding agreements and awards.
Except as set forth in this Section 3.1, there are no Rights authorized, issued
or outstanding with respect to, nor are there any agreements, understandings or
commitments with Republic or its Subsidiaries relating to the right of any
Republic shareholder to own, to vote or to dispose of, the capital stock of
Republic. Holders of Republic Common Stock do not have preemptive rights. As of
September 30, 2003, Republic had outstanding SARs under the Stock Option Plans
or other outstanding agreements and awards with respect to 11,340 shares of
Republic Common Stock which SARs were exercisable solely for a cash payment.
3.2 Organization, Standing and Authority
------------------------------------
Republic is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets. Republic is not required to be qualified to
do business in any other state of the United States or foreign jurisdiction.
Republic is registered as a bank holding company under the Bank Holding Company
Act.
3.3 Ownership of Subsidiaries
-------------------------
Section 3.3 of the Republic Disclosure Memorandum lists all of the Republic
Subsidiaries and, with respect to each, its jurisdiction of organization,
jurisdictions in which it is qualified or otherwise licensed to conduct
business, the number of shares or ownership interests owned by Republic
(directly or indirectly), the percentage ownership interest so owned by Republic
and its business activities. The outstanding shares of capital stock or other
equity interests of the Republic Subsidiaries are validly issued and
outstanding, fully paid and nonassessable, and all such shares are directly or
indirectly owned by Republic free and clear of all liens, claims and
encumbrances or preemptive rights of any person. No Rights are authorized,
issued or outstanding with respect to the capital stock or other equity
interests of the Republic Subsidiaries, and there are no agreements,
understandings or commitments relating to the right of Republic to own, to
15
vote or to dispose of said interests. None of the shares of capital stock or
other equity interests of the Republic Subsidiaries have been issued in
violation of the preemptive rights of any person. Section 3.3 of the Republic
Disclosure Memorandum also sets forth a list, as of the date hereof, of all
investments (including, without limitation, all shares of capital stock or other
securities or ownership interests) of Republic or its Subsidiaries in any
corporation, partnership, joint venture, or other organization (other than the
Republic Subsidiaries and stock or other securities held in a fiduciary capacity
owned directly or indirectly by Republic).
3.4 Organization, Standing and Authority of the Subsidiaries
--------------------------------------------------------
Each Republic Subsidiary which is a depository institution is a state
chartered bank with its deposits insured by the FDIC. Each of the Republic
Subsidiaries is validly existing and in good standing under the laws of its
jurisdiction of organization. Each of the Republic Subsidiaries has full power
and authority to carry on its business as now conducted, and is duly qualified
to do business and in good standing in each jurisdiction in which the nature of
its business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary.
3.5 Authorized and Effective Agreement
----------------------------------
(a) Republic has all requisite corporate power and authority to enter into
and (subject to receipt of all necessary governmental approvals and the receipt
of approval of the Republic shareholders of this Agreement and the Plan of
Merger) to perform all of its obligations under this Agreement and the Plan of
Merger. The execution and delivery of this Agreement and the Articles of Merger,
and consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action, except, in the
case of this Agreement and the Plan of Merger, the approval of the Republic
shareholders pursuant to and to the extent required by applicable law. This
Agreement and the Plan of Merger constitute legal, valid and binding obligations
of Republic, and each is enforceable against Republic in accordance with its
terms, in each such case subject to (i) bankruptcy, fraudulent transfer,
insolvency, moratorium, reorganization, conservatorship, receivership, or other
similar laws from time to time in effect relating to or affecting the
enforcement of the rights of creditors of FDIC-insured institutions or the
enforcement of creditors' rights generally; and (ii) general principles of
equity (whether applied in a court of law or in equity).
(b) Neither the execution and delivery of this Agreement or the Articles of
Merger, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by Republic with any of the provisions hereof or thereof, shall (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of Republic or any Republic Subsidiary, (ii) constitute
or result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of Republic or any Republic
16
Subsidiary pursuant to, any note, bond, mortgage, indenture, license, permit,
contract, agreement or other instrument or obligation, or (iii) subject to
receipt of all required governmental approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Republic or any
Republic Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
Republic of the Merger and the other transactions contemplated in this
Agreement.
3.6 Securities Filings; Financial Statements; Statements True;
NASDAQ Compliance
---------------------------------------------------------
(a) Republic has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 2000. Republic has Disclosed or
made available to BB&T a true and complete copy of each Securities Document
filed by Republic with the Commission after December 31, 2000 and prior to the
date hereof, which are all of the Securities Documents that Republic was
required to file during such period. As of their respective dates of filing,
such Securities Documents complied with the Securities Laws as then in effect
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) The Financial Statements of Republic were prepared in conformity with
GAAP applied on a consistent basis (subject, in the case of unaudited interim
statements, to the absence of notes and to normal year-end audit adjustments
that are not material in amount or effect) and fairly present or will fairly
present, as the case may be, the consolidated financial position and results of
operations of Republic and the Republic Subsidiaries as of the dates indicated.
(c) No statement, certificate, instrument or other writing furnished or to
be furnished hereunder by Republic or any Republic Subsidiary to BB&T, taken as
a whole, contains or will contain any untrue statement of a material fact or
will omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
3.7 Minute Books
------------
The minute books of Republic and each of the Republic Subsidiaries contain
or will contain at Closing accurate records of all meetings and other corporate
actions of their respective shareholders and Boards of Directors (including
committees of the Board of Directors), and the signatures contained therein are
the true signatures of the persons whose signatures they purport to be.
17
3.8 Adverse Change
--------------
Since December 31, 2002, (a) Republic and the Republic Subsidiaries have
not (i) incurred any liability, whether accrued, absolute or contingent, except
as disclosed in the most recent Republic Financial Statements, or (ii) except as
disclosed in Securities Documents filed prior to the date hereof, entered into
any transactions with Affiliates, in each of (i) or (ii) other than in the
ordinary course of business consistent with past practices or in connection with
this Agreement or the transactions contemplated hereby, and (b) there has not
been any event or circumstance which has had or is reasonably likely to have a
Material Adverse Effect on Republic.
3.9 Absence of Undisclosed Liabilities
----------------------------------
All liabilities (including without limitation contingent liabilities and
any off-balance-sheet loans, financings, liabilities, obligations or
indebtedness) of Republic and the Republic Subsidiaries are disclosed in the
most recent Financial Statements of Republic or are normally recurring business
obligations incurred in the ordinary course of its business since the date of
Republic's most recent Financial Statements or in connection with this Agreement
or the transactions contemplated hereby. Without limiting the generality of the
foregoing, neither Republic nor any Republic Subsidiary has any off-balance
sheet obligation or liability of any nature, matured or unmatured, fixed or
contingent, to any other person, or a financial interest in any other person,
the purpose or effect of which is to improperly defer, postpone, reduce or
otherwise avoid inclusion on the balance sheet or income statement of any
obligation or liability for which Republic or any Republic Subsidiary is or may
become liable.
3.10 Properties
----------
(a) Republic and the Republic Subsidiaries have good and marketable title,
free and clear of all liens, encumbrances, charges, defaults or equitable
interests, to all of the properties and assets, real and personal, tangible and
intangible, reflected on the consolidated balance sheet included in the
Financial Statements of Republic as of December 31, 2002 or acquired after such
date, except for (i) liens for current taxes not yet due and payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course of
banking business, (iii) such imperfections of title, easements and encumbrances,
if any, as are not material in character, amount or extent, (iv) dispositions
and encumbrances for adequate consideration in the ordinary course of business,
or (v) matters otherwise reflected on such consolidated balance sheet or any
other Financial Statements of Republic included in Securities Documents of
Republic filed prior to the date hereof.
(b) All leases and licenses pursuant to which Republic or any Republic
Subsidiary, as lessee or licensee, leases or licenses rights to real or personal
property are valid and enforceable against Republic or such Subsidiary and, as
of the date hereof and
18
to the knowledge of Republic, against the other parties thereto, in accordance
with their respective terms.
3.11 Environmental Matters
---------------------
(a) Republic and the Republic Subsidiaries are and at all times have been
in compliance with all Environmental Laws. Neither Republic nor any Republic
Subsidiary has received any communication alleging that Republic or the Republic
Subsidiary is not in such compliance, and there are no present circumstances
that would prevent or interfere with the continuation of such compliance.
(b) There are no pending Environmental Claims, neither Republic nor any
Republic Subsidiary has received notice of any pending Environmental Claims, and
there are no conditions or facts existing which might reasonably be expected to
result in legal, administrative, arbitral or other proceedings asserting
Environmental Claims or other claims, causes of action or governmental
investigations of any nature seeking to impose, or that could result in the
imposition of, any liability arising under any Environmental Laws upon (i)
Republic or any Republic Subsidiary, (ii) any person or entity whose liability
for any Environmental Claim Republic or any Republic Subsidiary has or may have
retained or assumed, either contractually or by operation of law, (iii) any real
or personal property owned or leased by Republic or any Republic Subsidiary, or
any real or personal property which Republic or any Republic Subsidiary has or
is judged to have managed or supervised or participated in the management of, or
(iv) any real or personal property in which Republic or any Republic Subsidiary
holds a security interest securing a loan recorded on the books of Republic or
any Republic Subsidiary. Neither Republic nor any Republic Subsidiary is subject
to any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any liability
under any Environmental Laws.
(c) Republic and the Republic Subsidiaries are in compliance with all
recommendations contained in any environmental audits, analyses and surveys
received by Republic relating to all real and personal property owned or leased
by Republic or any Republic Subsidiary and all real and personal property of
which Republic or any Republic Subsidiary has or is judged to have managed or
supervised or participated in the management of.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim, or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Laws, against Republic or any Republic Subsidiary or against any person or
entity whose liability for any Environmental Claim Republic or any Republic
Subsidiary has or may have retained or assumed, either contractually or by
operation of law.
19
3.12 Loans; Allowance for Loan Losses
--------------------------------
(a) All of the loans, leases, installment sales contracts and other credit
transactions on the books of Republic and the Republic Subsidiaries are valid
and properly documented and were made in the ordinary course of business, and
the security therefor, if any, is valid and properly perfected. Neither the
terms of such loans, leases, installment sales contracts and other credit
transactions, nor any of the documentation evidencing such transactions, nor the
manner in which such loans, leases, installment sales contracts and other credit
transactions have been administered and serviced, nor Republic's procedures and
practices of approving or rejecting applications for such transactions, violates
any federal, state or local law, rule, regulation or ordinance applicable
thereto, including without limitation the TILA, Regulations O and Z of the
Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, as amended,
and state laws, rules and regulations relating to consumer protection,
installment sales and usury.
(b) The allowances for losses respecting loans, leases, installment sales
contracts and other credit transactions reflected on the consolidated balance
sheets included in the Financial Statements of Republic are adequate as of their
respective dates under the requirements of GAAP and applicable regulatory
requirements and guidelines.
3.13 Tax Matters
-----------
(a) Republic and the Republic Subsidiaries and each of their predecessors
have timely filed (or requests for extensions have been timely filed and any
such extensions either are pending or have been granted and have not expired)
all federal, state and local (and, if applicable, foreign) tax returns required
by applicable law to be filed by them (including, without limitation, estimated
tax returns, income tax returns, information returns, and withholding and
employment tax returns) and have paid, or have set up a reserve or accrual that
is adequate under GAAP for the payment of, all taxes shown as due in respect of
the periods covered by such returns. Republic and the Republic Subsidiaries have
paid, or set up a reserve or accrual that is adequate under GAAP for payment of,
all taxes required to be paid or accrued for the preceding or current fiscal
year for which a return is not yet due.
(b) All federal, state and local (and, if applicable, foreign) tax returns
filed by Republic and the Republic Subsidiaries are complete and accurate. No
deficiencies for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against Republic or any Republic
Subsidiary which have not been settled or paid. There are currently no
agreements in effect with respect to Republic or any Republic Subsidiary to
extend the period of limitations for the assessment or collection of any tax. No
audit examination or deficiency or refund litigation with respect to such
returns is pending.
20
(c) Deferred taxes of Republic and its Subsidiaries have been provided for
in accordance with GAAP consistently applied.
(d) Neither Republic nor any of the Republic Subsidiaries is a party to any
tax allocation or sharing agreement (other than such an agreement exclusively
between or among Republic and the Republic Subsidiaries) or has been a member of
an affiliated group filing a consolidated federal income tax return (other than
a group the common parent of which was Republic or a Republic subsidiary) or has
any liability for taxes of any person (other than Republic and the Republic
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law) as a transferee or successor or by
contract or otherwise.
(e) Each of Republic and the Republic Subsidiaries is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and tax withholding requirements under federal, state, and local tax
laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Code.
(f) Neither Republic nor any of the Republic Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract that
could obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Code.
3.14 Employees; Compensation; Benefit Plans
--------------------------------------
(a) Compensation. Republic has previously made available information
relating to the name, age, position, rate of compensation and any incentive
compensation arrangements, bonuses or commissions or fringe or other benefits,
whether payable in cash or in kind, of each executive officer of Republic.
(b) Employee Benefit Plans.
(i) Republic has Disclosed an accurate and complete list of all Plans,
as defined below, contributed to, maintained or sponsored by Republic or
any Republic Subsidiary, or to which Republic or any Republic Subsidiary is
obligated to contribute for the benefit of current or former employees of
Republic or any Republic Subsidiary. For purposes of this Agreement, the
term "Plan" shall mean a plan, arrangement, agreement or program described
in the foregoing provisions of this Section 3.14(b)(i) that is: (A) a
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive
plan, agreement or arrangement, whether or not funded and whether or not
terminated (only if such plan has assets or liabilities), (B) an employment
agreement, (C) a personnel policy or fringe benefit plan, policy, program
or arrangement providing for benefits or perquisites to current or
21
former employees, officers, directors or agents, whether or not funded, and
whether or not terminated (only if such plan has assets or liabilities),
including, without limitation, benefits relating to automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, severance,
medical, dental, hospitalization, life insurance and other types of
insurance, or (D) any other employee benefit plan as defined in Section
3(3) of ERISA, whether or not funded and whether or not terminated.
(ii) Neither Republic nor any Republic Subsidiary contributes to, has
an obligation to contribute to or otherwise has any liability or potential
liability with respect to (A) any multiemployer plan as defined in Section
3(37) of ERISA, (B) any plan of the type described in Sections 4063 and
4064 of ERISA or in Section 413 of the Code (and regulations promulgated
thereunder), or (C) any plan which provides health, life insurance,
accident or other "welfare-type" benefits to current or future retirees or
former employees or directors, their spouses or dependents, other than in
accordance with Section 4980B of the Code or applicable state continuation
coverage law.
(iii) None of the Plans obligates Republic or any Republic Subsidiary
to pay separation, severance, termination or similar-type benefits solely
as a result of any transaction contemplated by this Agreement or solely as
a result of a "change in control," as such term is used in Section 280G of
the Code (and regulations promulgated thereunder).
(iv) Each Plan, and all related trusts, insurance contracts and funds,
has been maintained, funded and administered in compliance in all respects
with its own terms and in compliance in all respects with all applicable
laws and regulations, including but not limited to ERISA and the Code. No
actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands with respect to the Plans
(other than routine claims for benefits) are pending or threatened, and
there are no facts which could give rise to or be expected to give rise to
any actions, suits, claims, complaints, charges, proceedings, hearings,
examinations, investigations, audits or demands. No Plan that is subject to
the funding requirements of Section 412 of the Code or Section 302 of ERISA
has incurred any "accumulated funding deficiency" as such term is defined
in such Sections of ERISA and the Code, whether or not waived, and each
Plan has always satisfied the funding standards required under Title I of
ERISA and Section 412 of the Code. No liability to the Pension Benefit
Guaranty Corporation ("PBGC") (except for routine payment of premiums) has
been or is reasonably expected to be incurred with respect to any Plan that
is subject to Title IV of ERISA, no reportable event (as such term is
defined in Section 4043 of ERISA) for which the PBGC has not waived notice
has occurred with respect to any such Plan, and the PBGC has not commenced
or threatened the termination of any Plan. None of the assets of Republic
or any Republic Subsidiary is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code,
22
neither Republic nor any Republic Subsidiary has been required to post any
security pursuant to Section 307 of ERISA or Section 401(a)(29) of the
Code, and there are no facts which could reasonably be expected to give
rise to such lien or such posting of security. No event has occurred and no
condition exists that would subject Republic or any Republic Subsidiary to
any tax under Sections 4971, 4972, 4976, 4977 or 4979 of the Code or to a
fine or penalty under Section 502(c) of ERISA.
(v) Each Plan that is intended to be qualified under Section 401(a) of
the Code, and each trust (if any) forming a part thereof, has received a
favorable determination letter from the IRS as to the qualification under
the Code of such Plan and the tax exempt status of such related trust, and
nothing has occurred since the date of such determination letter that could
adversely affect the qualification of such Plan or the tax exempt status of
such related trust.
(vi) No underfunded "defined benefit plan" (as such term is defined in
Section 3(35) of ERISA) has been, during the five years preceding the
Closing Date, transferred out of the controlled group of corporations
(within the meaning of Sections 414(b), (c), (m) and (o) of the Code) of
which Republic or any Republic Subsidiary is a member or was a member
during such five-year period. There does not now exist, nor do any
circumstances exist, that would result in, any liability with respect to
any employee benefit plan that is maintained, sponsored or contributed to
by any entity that is a member of the Republic controlled group of
corporations (as defined above) (i) under Title IV of ERISA, (ii) under
section 302 of ERISA, (iii) under sections 412 and 4971 of the Code, or
(iv) as a result of a failure to comply with the continuation coverage
requirements of section 601 et seq. of ERISA and section 4980B of the Code,
or (v) under any other statute, rule or regulation that would reasonably be
expected to be a liability of Republic or a Republic Subsidiary solely as a
result of an entity being a member of the Republic controlled group of
corporations (as defined above), that would be a liability of Republic or
any Republic Subsidiary, other than such liabilities that arise solely out
of, or relate solely to, the Plans Disclosed in Section 3.14(b) of the
Republic Disclosure Memorandum.
(vii) As of December 31, 2002, the fair market value of the assets of
each Plan that is a tax qualified defined benefit plan equaled or exceeded,
and as of the Closing Date will equal or exceed, the present value of all
vested and nonvested liabilities thereunder determined in accordance with
the actuarial methods, factors and assumptions contained in such Plan's
most recent actuarial valuation, which such actuarial methods, factors and
assumptions are reasonable as of the date of such actuarial valuation. With
respect to each Plan that is subject to the funding requirements of Section
412 of the Code and Section 302 of ERISA, all required contributions for
all periods ending prior to or as of the Closing Date (including periods
from the first day of the then-current plan year to the Closing Date and
including all quarterly contributions required in accordance
23
with Section 412(m) of the Code) shall have been made. With respect to each
other Plan, all required payments, premiums, contributions, reimbursements
or accruals for all periods ending prior to or as of the Closing Date shall
have been made. No tax qualified Plan has any unfunded liabilities.
(viii) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of
ERISA or Section 4975 of the Code, whether by statutory, class or
individual exemption) has occurred with respect to any Plan which would
result in the imposition, directly or indirectly, of any excise tax,
penalty or other liability under Section 4975 of the Code or Section 409 or
502(i) of ERISA. Neither Republic nor, to the best knowledge of Republic,
any Republic Subsidiary, any trustee, administrator or other fiduciary of
any Plan, or any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner that could subject
Republic or any Republic Subsidiary to any liability for breach of
fiduciary duty under ERISA.
(ix) With respect to each Plan, all reports and information required
to be filed with any government agency or distributed to Plan participants
and their beneficiaries have been duly and timely filed or distributed.
(x) Republic and each Republic Subsidiary has been and is presently in
compliance with all of the requirements of Section 4980B of the Code.
(xi) Neither Republic nor any Republic Subsidiary has a liability as
of December 31, 2002 under any Plan that, to the extent disclosure is
required under GAAP, is not reflected on the consolidated balance sheet
included in the Financial Statements of Republic as of December 31, 2002,
or any Financial Statements of Republic as of a later date that are
contained in Securities Documents of Republic filed prior to the date
hereof or otherwise Disclosed.
(xii) Neither the consideration nor implementation of the transactions
contemplated under this Agreement will increase (A) Republic's or any
Republic Subsidiary's obligation to make contributions or any other
payments to fund benefits accrued under the Plans as of the date of this
Agreement or (B) the benefits accrued or payable with respect to any
participant under the Plans (except to the extent benefits may be deemed
increased by accelerated vesting, accelerated allocation of previously
unallocated Plan assets or by the conversion of stock options or SARs in
accordance with Section 2.9).
(xiii) With respect to each Plan, Republic has Disclosed or made
available to BB&T, true, complete and correct copies of (A) all documents
pursuant to which the Plans are maintained, funded and administered,
including summary plan descriptions, (B) the three most recent annual
reports (Form 5500 series) filed with the IRS (with attachments), (C) the
three most recent actuarial reports, if any, (D) the three most recent
financial statements, if any, (E) all
24
governmental filings for the last three years, including, without
limitation, excise tax returns and reportable events filings, and (F) all
governmental rulings, determinations, and opinions (and pending requests
for governmental rulings, determinations, and opinions) during the past
three years.
(xiv) Each of the Plans as applied to Republic and any Republic
Subsidiary may be amended or terminated at any time by action of Republic's
Board of Directors, or such Republic's Subsidiary's Board of Directors, as
the case may be, or a committee of such Board of Directors or duly
authorized officer, in each case subject to the terms of the Plan and
compliance with applicable laws and regulations (and limited, in the case
of multiemployer plans, to termination of the participation of Republic or
a Republic Subsidiary thereunder).
3.15 Certain Contracts
-----------------
(a) Neither Republic nor any Republic Subsidiary is a party to, is bound or
affected by, or receives benefits under (i) except for this Agreement, any
agreement, arrangement or commitment, written or oral, the default of which has
had or would be reasonably likely to have a Material Adverse Effect, whether or
not made in the ordinary course of business (other than loans or loan
commitments made or certificates or deposits received in the ordinary course of
the banking business), outstanding on the date hereof, or any agreement
restricting in any material respect its business activities, including, without
limitation, agreements or memoranda of understanding with regulatory
authorities, (ii) any agreement, indenture or other instrument, written or oral,
outstanding on the date hereof, relating to the borrowing of money by Republic
or any Republic Subsidiary or the guarantee by Republic or any Republic
Subsidiary of any such obligation, which cannot be terminated within less than
30 days after the Closing Date by Republic or any Republic Subsidiary (without
payment of any penalty or cost, except with respect to Federal Home Loan Bank or
Federal Reserve Bank advances), (iii) any agreement, arrangement or commitment,
written or oral, relating to the employment of a consultant, independent
contractor or agent, or the employment, election or retention in office of any
present or former director or officer, which cannot be terminated within less
than 30 days after the Closing Date by Republic or any Republic Subsidiary
(without payment of any penalty or cost), or that provides benefits which are
contingent, or the application of which is altered, upon the occurrence of a
transaction involving Republic of the nature contemplated by this Agreement, or
(iv) any agreement or plan, written or oral, including any stock option plans,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement. Each agreement, arrangement, commitment, indenture and plan Disclosed
pursuant to this Section 3.15(a) is as of the date hereof valid and binding on
Republic or its applicable Subsidiary and, to the knowledge of Republic, against
the other parties thereto.
25
(b) Neither Republic nor any Republic Subsidiary is in default under any
agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that, with the
lapse of time or giving of notice or both, would constitute such a default.
3.16 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the best knowledge of Republic,
threatened against Republic or any Republic Subsidiary or against any asset,
interest, Plan or right of Republic or any Republic Subsidiary, or, to the best
knowledge of Republic, against any officer, director or employee of any of them
in their capacity as such. There are no actions, suits or proceedings
instituted, pending or, to the best knowledge of Republic, threatened against
any present or former director or officer of Republic or any Republic Subsidiary
that would reasonably be expected to give rise to a claim against Republic or
any Republic Subsidiary for indemnification. There are no actual or, to the best
knowledge of Republic, threatened actions, suits or proceedings which present a
claim to restrain or prohibit the transactions contemplated herein. To the best
knowledge of Republic, no fact or condition relating to Republic or any Republic
Subsidiary exists (including, without limitation, noncompliance with the CRA or
the USA PATRIOT ACT) that would prevent Republic or BB&T from obtaining all of
the federal and state regulatory approvals required to consummate the Merger.
3.17 Compliance with Laws; Filings
-----------------------------
Each of Republic and each Republic Subsidiary is in compliance with all
statutes and regulations (including, but not limited to, the Securities Laws,
the CRA, the TILA and rules and regulations promulgated thereunder, and other
consumer banking laws), and has obtained and maintained all permits, licenses
and registrations necessary to the conduct of its business as presently
conducted, and since December 31, 2000 neither Republic nor any Republic
Subsidiary has received notification that has not lapsed, been withdrawn or
abandoned by any agency or department of federal, state or local government (i)
asserting a violation or possible violation of any such statute or regulation,
(ii) threatening to revoke any permit, license, registration, or other
government authorization, or (iii) restricting or in any way limiting its
operations (other than general regulatory restrictions applicable to similarly
situated banks and bank holding companies generally). Neither Republic nor any
Republic Subsidiary is subject to any regulatory or supervisory cease and desist
order, agreement, directive, memorandum of understanding or commitment, and
since December 31, 2000 none of them has received any communication requesting
that it enter into any of the foregoing. Since December 31, 2000, Republic and
each of the Republic Subsidiaries has filed all reports, registrations, notices
and statements, and any amendments thereto, that it was required to file with
federal and state regulatory authorities, including, without limitation, the
Commission, FDIC, Federal Reserve Board and applicable state regulators. Each
such report,
26
registration, notice and statement, and each amendment thereto, complied with
applicable legal requirements. Republic is in compliance in all material
respects with all applicable listing and corporate governance rules and
regulations of the NASDAQ.
3.18 Brokers and Finders
-------------------
Neither Republic nor any Republic Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein or in the Plan of Merger, except for an
obligation to the Financial Advisor for investment banking services, the nature
and extent of which have been Disclosed, and except for fees to accountants and
lawyers.
3.19 Repurchase Agreements; Derivatives
----------------------------------
(a) With respect to all agreements currently outstanding pursuant to which
Republic or any Republic Subsidiary has purchased securities subject to an
agreement to resell, Republic or the Republic Subsidiary has a valid, perfected
first lien or security interest in the securities or other collateral securing
such agreement, and the value of such collateral equals or exceeds the amount of
the debt secured thereby. With respect to all agreements currently outstanding
pursuant to which Republic or any Republic Subsidiary has sold securities
subject to an agreement to repurchase, neither Republic nor the Republic
Subsidiary has pledged collateral having a value at the time of entering into
such pledge that exceeds the amount of the debt secured thereby. Neither
Republic nor any Republic Subsidiary has pledged collateral having a value at
the time of entering into such pledge that exceeds the amount required under any
interest rate swap or other similar agreement currently outstanding.
(b) Neither Republic nor any Republic Subsidiary is a party to or has
agreed to enter into an exchange-traded or over-the-counter swap, forward,
future, option, cap, floor, or collar financial contract, or any other interest
rate or foreign currency protection contract not included on its balance sheets
in the Financial Statements, which is a financial derivative contract (including
various combinations thereof), except for options and forwards entered into in
the ordinary course of its mortgage lending business consistent with past
practice and current policy.
3.20 Deposit Accounts
----------------
The deposit accounts of the Republic Subsidiaries that are depository
institutions are insured by the FDIC to the maximum extent permitted by federal
law, and the Republic Subsidiaries have paid all premiums and assessments
required to have been paid, and filed all reports required to have been filed,
under all rules and regulations applicable to the FDIC.
27
3.21 Related Party Transactions
--------------------------
Republic has Disclosed all existing transactions, investments and loans,
including loan guarantees existing as of the date hereof, to which Republic or
any Republic Subsidiary is a party with any director, executive officer or 5%
shareholder of Republic or any person, corporation, or enterprise controlling,
controlled by or under common control with any of the foregoing. All such
transactions, investments and loans are on terms no less favorable to Republic
than could be obtained from unrelated parties.
3.22 Certain Information
-------------------
When the Proxy Statement/Prospectus is mailed, and at the time of the
meeting of shareholders of Republic to vote on the Plan of Merger, the Proxy
Statement/Prospectus and all amendments or supplements thereto, with respect to
all information set forth therein provided by Republic, (i) shall comply with
the applicable provisions of the Securities Laws, and (ii) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
3.23 Tax and Regulatory Matters
--------------------------
Neither Republic nor any Republic Subsidiary has taken or agreed to take
any action or knows of any circumstance which would or could reasonably be
expected to (i) cause the Merger not to constitute a reorganization under
Section 368 of the Code or (ii) materially impede or delay receipt of any
consents of regulatory authorities referred to in Section 5.4(b) or result in
failure of the condition in Section 6.3(b).
3.24 State Takeover Laws
-------------------
Republic and each Republic Subsidiary have taken all necessary action to
exempt the transactions contemplated by this Agreement from any applicable
moratorium, fair price, business combination, control share or other
anti-takeover laws, and no such law shall be activated or applied as a result of
such transactions. Neither the Articles of Incorporation nor the Bylaws of
Republic, nor any other document of Republic or to which Republic is a party,
contains a provision that requires more than a majority of the shares of
Republic Common Stock entitled to vote, or the vote or approval of any other
class of capital stock or voting security, to approve the Merger or any other
transactions contemplated in this Agreement.
3.25 Labor Relations
---------------
Neither Republic nor any Republic Subsidiary is the subject of any claim or
allegation that it has committed an unfair labor practice (within the meaning of
the National Labor Relations Act or comparable state law) or seeking to compel
it to bargain with any labor organization as to wages or conditions of
employment, nor is Republic or
28
any Republic Subsidiary party to any collective bargaining agreement. There is
no strike or other labor dispute involving Republic or any Republic Subsidiary,
pending or threatened, or to the best knowledge of Republic, is there any
activity involving any employees of Republic or any Republic Subsidiary seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
3.26 Fairness Opinion
----------------
Republic has received from its Financial Advisor an opinion to the effect
that, as of the date of such opinion, the Merger Consideration is fair to the
shareholders of Republic from a financial point of view.
3.27 No Right to Dissent
-------------------
Nothing in the Articles of Incorporation or the Bylaws of Republic or any
Republic Subsidiary provides or would provide to any person, including without
limitation the holders of Republic Common Stock, upon execution of this
Agreement or the Plan of Merger and consummation of the transactions
contemplated hereby and thereby, rights of dissent and appraisal of any kind.
3.28 Shares and Rights
-----------------
Between December 31, 2002 and the date hereof, Republic has not: (1)
issued, granted or authorized any Rights or effected any recapitalization,
reclassification, stock dividend, stock split or like change in capitalization;
or (2) issued any shares of its capital stock (including treasury shares),
except pursuant to the Stock Option Plans with respect to Stock Options
outstanding on December 31, 2002.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BB&T
BB&T represents and warrants to Republic as follows (the representations
and warranties herein of BB&T are made subject to the applicable standard set
forth in Section 6.2(a), and no such representation or warranty shall be deemed
to be inaccurate unless it is inaccurate to the extent that Republic would be
entitled to refuse to consummate the Merger pursuant to Section 7.1(b)(ii) on
account of such inaccuracy):
4.1 Capital Structure of BB&T
-------------------------
The authorized capital stock of BB&T consists of (i) 5,000,000 shares of
preferred stock, par value $5.00 per share, of which 2,000,000 shares have been
designated as Series B Junior Participating Preferred Stock and the remainder
are undesignated, and none of which shares are issued and outstanding, and (ii)
1,000,000,000 shares of BB&T Common Stock of which 548,886,598 shares were
issued and outstanding as of
29
September 30, 2003. All outstanding shares of BB&T Common Stock, and all shares
thereof to be issued as Merger Consideration, have been duly authorized and are
or shall be (when issued) validly issued, fully paid and nonassessable. The
shares of BB&T Common Stock reserved as provided in Section 5.3 are free of any
Rights and have not been reserved for any other purpose, and such shares are
available for issuance as provided pursuant to the Plan of Merger. Holders of
BB&T Common Stock do not have preemptive rights.
4.2 Organization, Standing and Authority of BB&T
--------------------------------------------
BB&T is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, and is duly qualified to do business in the states of the
United States where its ownership or leasing of property or the conduct of its
business requires such qualification. BB&T is registered as a financial holding
company under the Bank Holding Company Act.
4.3 Authorized and Effective Agreement
----------------------------------
(a) BB&T has all requisite corporate power and authority to enter into and
(subject to receipt of all necessary government approvals) perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
and the Articles of Merger and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of BB&T. This Agreement and the
Plan of Merger attached hereto constitute legal, valid and binding obligations
of BB&T, and each is enforceable against BB&T in accordance with its terms, in
each case subject to (i) bankruptcy, insolvency, moratorium, reorganization,
conservatorship, receivership or other similar laws in effect from time to time
relating to or affecting the enforcement of the rights of creditors; and (ii)
general principles of equity.
(b) Neither the execution and delivery of this Agreement or the Articles of
Merger, nor consummation of the transactions contemplated hereby or thereby, nor
compliance by BB&T with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or bylaws of BB&T or any BB&T Subsidiary, (ii) constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of BB&T or any BB&T Subsidiary pursuant
to, any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation, or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to BB&T or any BB&T Subsidiary.
(c) Other than consents or approvals required from, or notices to,
regulatory authorities as provided in Section 5.4(b), no notice to, filing with,
or consent of, any
30
public body or authority is necessary for the consummation by BB&T of the Merger
and the other transactions contemplated in this Agreement.
4.4 Organization, Standing and Authority of BB&T Subsidiaries
---------------------------------------------------------
Each of the BB&T Subsidiaries is duly organized, validly existing and in
good standing under applicable laws. BB&T owns, directly or indirectly, all of
the issued and outstanding shares of capital stock of each of the BB&T
Subsidiaries. Each of the BB&T Subsidiaries (i) has full power and authority to
carry on its business as now conducted and (ii) is duly qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification.
4.5 Securities Documents; Financial Statements
------------------------------------------
(a) BB&T has timely filed all Securities Documents required by the
Securities Laws to be filed since December 31, 2000. As of their respective
dates of filing, such Securities Documents complied with the Securities Laws as
then in effect, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The Financial Statements of BB&T fairly present or will fairly present,
as the case may be, the consolidated financial position of BB&T and its
Subsidiaries as of the dates indicated and the consolidated statements of income
and retained earnings, changes in shareholders' equity and statements of cash
flows for the periods then ended (subject in the case of unaudited interim
statements, to the absence of notes and to normal year-end audit adjustments
that are not material in amount or effect) in conformity with GAAP applied on a
consistent basis.
4.6 Certain Information
-------------------
When the Proxy Statement/Prospectus is mailed, and at all times subsequent
to such mailing up to and including the time of the meeting of shareholders of
Republic to vote on the Merger, the Proxy Statement/Prospectus and all
amendments or supplements thereto, with respect to all information set forth
therein relating to BB&T, (i) shall comply with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances in which
they were made, not misleading.
4.7 Tax and Regulatory Matters
--------------------------
Neither BB&T nor any BB&T Subsidiary has taken or agreed to take any
action, or knows of any circumstance, which would or could reasonably be
expected to (i) cause
31
he Merger not to constitute a reorganization under Section 368 of the Code, or
(ii) materially impede or delay receipt of any consents of regulatory
authorities referred to in Section 5.4(b) or result in failure of the condition
in Section 6.3(b).
4.8 Share Ownership
---------------
As of the date of this Agreement, BB&T does not own (except in a fiduciary
capacity) any shares of Republic Common Stock.
4.9 Legal Proceedings; Regulatory Approvals
---------------------------------------
There are no actual or, to the best knowledge of BB&T, threatened actions,
suits or proceedings instituted, which present a claim to restrain or prohibit
the transactions contemplated herein. To the best knowledge of BB&T, no fact or
condition relating to BB&T or any BB&T Subsidiary exists (including, without
limitation, noncompliance with the CRA or the USA PATRIOT ACT) that would
prevent BB&T or Republic from obtaining all of the federal and state regulatory
approvals contemplated herein.
4.10 Adverse Change
--------------
Since December 31, 2002, (a) BB&T and the BB&T Subsidiaries have not
incurred any liability, whether accrued, absolute or contingent, except as
disclosed in the most recent BB&T Financial Statements or not required to be
disclosed under GAAP or disclosed in Securities Documents, other than in the
ordinary course of business consistent with past practices or in connection with
this Agreement or the transactions contemplated hereby; and (b) there has not
been any event or circumstance which has had or is reasonably likely to have a
Material Adverse Effect on BB&T.
4.11 Compliance with Laws; Filings
-----------------------------
Each of BB&T and each BB&T Subsidiary is in compliance with all statutes
and regulations (including, but not limited to, the CRA, the TILA and
regulations promulgated thereunder, and other consumer banking laws), and has
obtained and maintained all permits, licenses and registrations necessary to the
conduct of its business as presently conducted, and since December 31, 2000
neither BB&T nor any BB&T Subsidiary has received notification that has not
lapsed, been withdrawn or abandoned by any agency or department of federal,
state or local government (i) asserting a violation or possible violation of any
such statute or regulation, (ii) threatening to revoke any permit, license,
registration, or other government authorization, or (iii) restricting or in any
way limiting its operations (other than general regulatory restrictions
applicable to similarly situated banks and bank holding companies). Neither BB&T
nor any BB&T Subsidiary is subject to any regulatory or supervisory cease and
desist order, agreement, directive, memorandum of understanding or commitment,
and since December 31, 2000 none of them has received any communication
requesting that it enter into any of the foregoing. Since December 31, 2002,
BB&T and each of the BB&T Subsidiaries has filed all
32
reports, registrations, notices and statements, and any amendments thereto, that
it was required to file with federal and state regulatory authorities,
including, without limitation, the Commission, FDIC, Federal Reserve Board and
applicable state regulators. Each such report, registration, notice and
statement, and each amendment thereto, complied with applicable legal
requirements.
4.12 Financial Capability
--------------------
BB&T has available funds sufficient to pay the aggregate cash portion of
the Merger Consideration and all fees and expenses related hereto payable by it
and to otherwise consummate the transactions and fulfill its other obligations
contemplated hereby.
ARTICLE V
COVENANTS
5.1 Shareholder Meetings
--------------------
Republic shall submit this Agreement and the Plan of Merger to its
shareholders for approval at a meeting to be held as soon as reasonably
practicable following the effectiveness of the Registration Statement. By
approving this Agreement and authorizing its execution, the Board of Directors
of Republic agrees that it shall, at the time the Proxy Statement/Prospectus is
mailed to the shareholders of Republic, recommend that Republic's shareholders
vote for such approval; provided that, if a Superior Offer shall be made and the
Board of Directors of Republic, after consultation with (and based on the advice
of) counsel, determines in good faith that, continuing to recommend this
Agreement and the Plan of Merger would more likely than not result in violation
of its fiduciary duties under applicable law then the Board of Directors of
Republic may submit this Agreement and the Plan of Merger to Republic's
shareholders without recommendation (although the resolutions adopting this
Agreement and the Plan of Merger as of the date hereof may not be rescinded or
amended), in which event the Board of Directors of Republic shall communicate
the basis for its lack of a recommendation to the Republic shareholders to the
extent required by law; provided that the Board of Directors of Republic may not
take any actions under this sentence until after giving BB&T at least five
Business Days to respond to such Superior Offer (and after giving BB&T notice of
the identity of the offeror and the latest material terms and conditions of the
Superior Offer) and if BB&T shall propose any amendment or modification of this
Agreement, until after determining that the Superior Offer continues to
constitute a Superior Offer. At the time of execution of this Agreement, each
member of the Board of Directors of Republic has executed an agreement with BB&T
obligating the director to vote all shares over which such director has voting
control in favor the Plan of Merger and to not transfer prior to the Effective
Time any such shares over which such director has voting control.
33
5.2 Registration Statement; Proxy Statement/Prospectus
--------------------------------------------------
As promptly as practicable after the date hereof, BB&T shall prepare and
file the Registration Statement with the Commission. Republic will furnish to
BB&T the information required to be included in the Registration Statement with
respect to its business and affairs before it is filed with the Commission and
again before any amendments are filed, and Republic shall have the right to
review and consult with BB&T on the form of, and any characterizations of such
information included in, the Registration Statement prior to the filing with the
Commission. Such Registration Statement, at the time it becomes effective and on
the Effective Time, shall in all material respects conform to the requirements
of the Securities Act and the applicable rules and regulations of the
Commission. The Registration Statement shall include the form of Proxy
Statement/Prospectus. BB&T and Republic shall use all reasonable efforts to
cause the Proxy Statement/Prospectus to be approved by the Commission for
mailing to the Republic shareholders, and such Proxy Statement/Prospectus shall,
on the date of mailing, conform in all material respects to the requirements of
the Securities Laws and the applicable rules and regulations of the Commission
thereunder. Republic shall cause the Proxy Statement/Prospectus to be mailed to
its respective shareholders in accordance with all applicable notice
requirements under the Securities Laws, the FBCA, and the rules and regulations
of NASDAQ.
5.3 Plan of Merger; Reservation of Shares
-------------------------------------
At the Effective Time, the Merger shall be effected in accordance with the
Plan of Merger. In connection therewith, BB&T acknowledges that it (i) has
adopted the Plan of Merger and (ii) will pay or cause to be paid when due the
Merger Consideration. BB&T has reserved for issuance such number of shares of
BB&T Common Stock as shall be necessary to pay the Merger Consideration and
agrees not to take any action that would cause the aggregate number of
authorized shares of BB&T Common Stock available for issuance hereunder not to
be sufficient to effect the Merger. If at any time the aggregate number of
shares of BB&T Common Stock reserved for issuance hereunder is not sufficient to
effect the Merger, BB&T shall take all appropriate action as may be required to
increase the number of shares of BB&T Common Stock reserved for such purpose.
5.4 Additional Acts
---------------
(a) Republic agrees to take such actions requested by BB&T as may be
reasonably necessary to modify the structure of, or to substitute parties to (so
long as such substitute is BB&T or a wholly owned BB&T Subsidiary) the
transactions contemplated hereby, provided that such modifications do not change
the Merger Consideration (including the tax treatment thereof) or abrogate the
covenants and other agreements contained in this Agreement, including, without
limitation, the covenant not to take any action that would substantially delay
completion of, or substantially impair the prospects of completing the Merger
pursuant to this Agreement and the Plan of Merger.
34
(b) As promptly as practicable after the date hereof, BB&T and Republic
shall submit all notices and/or applications for prior approval of the
transactions contemplated herein to the Federal Reserve Board and any other
federal, state or local government agency, department or body to which notice is
required or from which approval is required for consummation of the Merger and
the other transactions contemplated hereby. In addition, BB&T and Republic shall
each promptly furnish all information as may be required by any federal, state
or local government agency, department or body properly asserting jurisdiction
in order that the requisite approvals for the transactions contemplated hereby
may be obtained or to request any applicable waiting periods to expire as
promptly as practicable. Republic and BB&T shall, as soon as practicable, take
all other action required to obtain as promptly as practicable all necessary
permits, consents, approvals, authorizations and agreements of, and to give all
notices and reports and make all other filings with, the Federal Reserve Board
and any other federal, state or local government agency, department or body to
which notice is required or from which approval is required for consummation of
the Merger and the other transactions contemplated hereby, and BB&T and Republic
shall cooperate with each other with respect thereto. BB&T and Republic shall
promptly provide to each other copies of all applications, documents,
correspondence or oral (to the extent material) or written comments that each of
them or any of their Subsidiaries files with, sends to or receives from the
Federal Reserve Board and any other federal, state or local government agency,
department or body to which notice is required or from which approval is
required for consummation of the Merger and the other transactions contemplated
hereby, or the staff or supervisory agents of any of them, relating to this
Agreement and the transactions contemplated hereby, including any applications
filed for the purpose of obtaining any necessary regulatory consents, approvals
or waivers. Republic and BB&T each represents and warrants to the other that all
information included (or submitted for inclusion) concerning it, its respective
Subsidiaries, and any of its respective directors, officers and shareholders,
shall be true, correct and complete in all material respects as of the date
presented.
5.5 Best Efforts
------------
Each of BB&T and Republic shall use, and shall cause each of their
respective Subsidiaries to use, its best efforts in good faith to (i) furnish
such information as may be required in connection with and otherwise cooperate
in the preparation and filing of the documents referred to in Sections 5.2 and
5.4 or elsewhere herein, and (ii) take or cause to be taken all action necessary
or desirable on its part to fulfill the conditions in Article VI, including,
without limitation, executing and delivering, or causing to be executed and
delivered, such representations, certificates and other instruments or documents
as may be reasonably requested by BB&T's or Republic's legal counsel for such
counsel to issue the opinion contemplated by Section 6.1(e), and to consummate
the transactions herein contemplated at the earliest possible date. Neither BB&T
nor Republic shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially delay or impair the prospects of
completing the Merger pursuant to this Agreement and the Plan of Merger.
35
5.6 Certain Accounting Matters
--------------------------
Republic shall cooperate reasonably with BB&T concerning accounting and
financial matters necessary or appropriate to facilitate the Merger (taking into
account BB&T's policies, practices and procedures), including, without
limitation, issues arising in connection with conforming record keeping, loan
classification, valuation adjustments and other accounting practices, and
conforming Republic's lending, investment or asset/liability management
policies; provided, that any action taken pursuant to this Section 5.6 shall not
be deemed to constitute or result in the breach of any representation, warranty,
covenant or agreement of Republic contained in this Agreement.
5.7 Access to Information
---------------------
Republic and BB&T will each use reasonable best efforts to keep the other
advised of all material developments relevant to its business and the businesses
of its Subsidiaries, and to consummation of the Merger, and each shall provide
to the other, upon request, reasonable details of any such development. Upon
reasonable notice, Republic shall afford to representatives of BB&T reasonable
access, during normal business hours during the period prior to the Effective
Time, to all of the properties, books, contracts, commitments and records of
Republic and the Republic Subsidiaries and, during such period, shall make
available all information concerning their businesses as may be reasonably
requested. No investigation pursuant to this Section 5.7 shall affect or be
deemed to modify any representation or warranty made by, or the conditions to
the obligations hereunder of, either party hereto. Each party hereto shall, and
shall cause each of its directors, officers, attorneys and advisors to, maintain
the confidentiality of all information obtained hereunder which is not otherwise
publicly disclosed by the other party, said undertakings with respect to
confidentiality to survive any termination of this Agreement pursuant to Section
7.1. Notwithstanding anything herein to the contrary, and except as reasonably
necessary to comply with applicable securities laws, any party to this Agreement
(and any employee, representative or other agent of any party to this Agreement)
may disclose to any and all persons, without limitation of any kind, the U.S.
federal income tax treatment and tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions and other
tax analyses) that are or have been provided to it relating to such tax
treatment or tax structure, provided, however, that this sentence shall not
permit any disclosure that otherwise is prohibited by this Agreement until the
earlier of (a) the date of public announcement of discussions relating to the
Merger, (b) the date of public announcement of the Merger and (c) the date of
execution of this Agreement. In the event of the termination of this Agreement,
each party shall return to the other party upon request all confidential
information previously furnished in connection with the transactions
contemplated by this Agreement.
36
5.8 Press Releases
--------------
BB&T and Republic shall agree with each other as to the form and substance
of any press release related to this Agreement and the Plan of Merger or the
transactions contemplated hereby and thereby, and consult with each other as to
the form and substance of other public disclosures related thereto; provided,
that nothing contained herein shall prohibit either party, following
notification to and, if practicable, consultation with, the other party, from
making any disclosure which in the opinion of its counsel is required by law.
5.9 Forbearances of Republic
------------------------
Except with the prior written consent of BB&T or as Disclosed in Section
5.9 of the Republic Disclosure Memorandum, between the date hereof and the
Effective Time, Republic shall not, and shall cause each of the Republic
Subsidiaries not to:
(a) carry on its business other than in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, or establish or
acquire any new Subsidiary or engage in any new type of activity or expand any
existing activities;
(b) declare, set aside, make or pay any dividend or other distribution in
respect of its capital stock other than a dividend on shares of Republic Common
Stock payable after the fiscal year ending December 31, 2003 in an amount up to
$.30 per share;
(c) issue any shares of its capital stock (including treasury shares),
except pursuant to the Stock Option Plans with respect to the Stock Options
outstanding on the date hereof (or that become outstanding after the date hereof
other than in violation of this Agreement);
(d) issue, grant or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in capitalization;
(e) amend its Articles of Incorporation or Bylaws;
(f) impose or permit imposition, of any lien, charge or encumbrance on any
share of stock held by it in any Republic Subsidiary, or permit any such lien,
charge or encumbrance to exist; or waive or release any material right or cancel
or compromise any debt or claim, in each case other than in the ordinary course
of business;
(g) merge with any other entity or permit any other entity to merge into
it, or consolidate with any other entity; acquire control over any other entity;
or liquidate, sell or otherwise dispose of any material assets or acquire any
material assets other than in the ordinary course of its business consistent
with past practices;
37
(h) fail to comply in any material respect with any laws, regulations,
ordinances or governmental actions applicable to it and to the conduct of its
business;
(i) increase the rate of compensation of any of its directors, officers or
employees (excluding increases in compensation resulting from the exercise of
(i) Stock Options, or (ii) the distribution of shares or amounts in connection
with other equity based awards, in the case of (i) or (ii) that are outstanding
on the date hereof or that become outstanding after the date hereof other than
in violation of this Agreement), or pay or agree to pay any bonus to, or provide
any new employee benefit or incentive to, any of its directors, officers or
employees, except for annual bonuses in respect of 2003 in the ordinary course
of business consistent with past practice, increases or payments made in the
ordinary course of business consistent with past practice for annual or
merit-based increases in base salary to employees, including executive officers,
or pursuant to plans or arrangements in effect on the date hereof;
(j) enter into or substantially modify (except as may be required by
applicable law or regulation) any pension, retirement, stock option, stock
purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees; provided, however, that this subparagraph shall not prevent renewal
of any of the foregoing consistent with past practice;
(k) solicit or encourage inquiries or proposals with respect to, furnish
any information relating to, or participate in any negotiations or discussions
concerning, any acquisition or purchase of all or a substantial portion of the
assets of or a substantial equity interest in, or any recapitalization,
liquidation or dissolution involving or a business combination or other similar
transaction with, Republic or any Republic Subsidiary other than as contemplated
by this Agreement; or authorize any officer, director, agent or affiliate of
Republic or any Republic Subsidiary to do any of the above; or fail to notify
BB&T within forty-eight hours of any such inquiries or proposals are received,
any such information is requested or required, or any such negotiations or
discussions are sought to be initiated; provided, that this Section 5.9(k) shall
not apply to furnishing information to or participating in negotiations or
discussions with any Person that has made, or that the Republic Board of
Directors determines in good faith is reasonably likely to make, a Superior
Offer, if the Republic Board of Directors determines in good faith, after
consultation with outside legal counsel, that it should take such actions in
light of its fiduciary duty to Republic's shareholders;
(l) enter into (i) any material agreement, arrangement or commitment not
made in the ordinary course of business, (ii) any material agreement, indenture
or other instrument not made in the ordinary course of business relating to the
borrowing of money by Republic or a Republic Subsidiary or guarantee by Republic
or a Republic Subsidiary of any obligation, (iii) any agreement, arrangement or
commitment relating to the employment or severance of a consultant or the
employment, severance, election or
38
retention in office of any present or former director, officer or employee (this
clause shall not apply to the election of directors by shareholders or the
reappointment of officers in the normal course) except with respect to the
termination of an employee other than an executive officer in the ordinary
course of business consistent with past practice, or (iv) any contract,
agreement or understanding with a labor union, or (v) any agreement, arrangement
or commitment which, if outstanding on the date hereof, would violate Section
3.15;
(m) change its lending, investment or asset liability management policies
in any material respect, except as may be required by applicable law,
regulation, or directives, and except that after approval of the Agreement and
the Plan of Merger by its shareholders and after receipt of the requisite
regulatory approvals for the transactions contemplated by this Agreement and the
Plan of Merger, Republic shall cooperate in good faith with BB&T as provided in
Section 5.6;
(n) change its methods of accounting in effect at December 31, 2002 except
as required by changes in GAAP or regulatory accounting principles as reasonably
concurred in by BB&T, which concurrence shall not be unreasonably withheld, or
change in any material respect its methods of reporting income and deductions
for federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 2002, except as
required by changes in law or regulation;
(o) incur any commitments for capital expenditures or obligation to make
capital expenditures in excess of $50,000, for any one expenditure, or $250,000,
in the aggregate;
(p) incur any indebtedness other than deposits from customers, advances
from the Federal Home Loan Bank or Federal Reserve Bank and reverse repurchase
arrangements in the ordinary course of business;
(q) take any action which would or could reasonably be expected to (i)
result in any inaccuracy of a representation or warranty herein which would
allow for a termination of this Agreement pursuant to 7.1(b)(ii), or (ii) cause
any of the conditions precedent to the transactions contemplated by this
Agreement to fail to be satisfied;
(r) dispose of any material assets other than in the ordinary course of
business; or
(s) agree to do any of the foregoing.
5.10 Employment Agreements
---------------------
Concurrently with the execution hereof, Branch Banking and Trust Company, a
North Carolina banking corporation and a wholly owned Subsidiary of BB&T
("Branch Bank") and Xxxxxxx X. Xxxxx have entered into an Employment Agreement
in the form
39
set forth in Annex B hereto, which Agreement shall be effective only upon the
Closing. Branch Bank shall offer to enter into an Employment Agreement with J.
Xxxxxxx Xxxxxxxx substantially in the form set forth in Annex C hereto, which
Agreement shall be effective only upon the Closing. As of the Effective Time,
Branch Bank (or another BB&T Affiliate) shall offer to enter into an Employment
Agreement with the eleven persons designated on Schedule 5.10 substantially in
the form of Annex D hereto.
5.11 Affiliates
----------
Republic shall use its best efforts to cause all persons who are Affiliates
of Republic to deliver to BB&T promptly following execution of this Agreement a
written agreement in the form attached as Exhibit 5.11 providing that such
person will not dispose of BB&T Common Stock received in the Merger, except in
compliance with the Securities Act and the rules and regulations promulgated
thereunder, and in any event shall use its best efforts to cause such affiliates
to deliver to BB&T such written agreement prior to the Closing Date.
5.12 Section 401(k) Plan; Other Employee Benefits
--------------------------------------------
(a) Effective on the Benefit Plan Determination Date with respect to the
401(k) plan of Republic (the "Republic 401(k) Plan"), BB&T shall cause such plan
to be merged with the 401(k) plan maintained by BB&T and the BB&T Subsidiaries
or to be frozen, in each case as determined by BB&T and subject to the receipt
of all applicable regulatory or governmental approvals. Each employee of
Republic or any Republic Subsidiary at the Effective Time (i) who is a
participant in the Republic 401(k) Plan, (ii) who becomes an employee
immediately following the Effective Time of BB&T or of any subsidiary of BB&T
(collectively with BB&T an "Employer Entity"), and (iii) who continues in the
employment of an Employer Entity until the Benefit Plan Determination Date for
the Republic 401(k) Plan, shall be eligible to participate in BB&T's 401(k) plan
as of the Benefit Plan Determination Date. Until the Benefit Plan Determination
Date, BB&T shall continue in effect for the benefit of participating employees
(including those Transferred Employees who become eligible to participate in the
Republic 401(k) Plan after the Effective Time but prior to the Benefit Plan
Determination Date) the Republic 401(k) Plan and any related supplemental or
excess benefit defined contribution plans, without amendment except as may be
required by applicable law. Any employee of Republic or any Republic Subsidiary,
who is not a participant in the Republic 401(k) Plan as of the Benefit Plan
Determination Date, shall be eligible to be a participant in the BB&T 401(k)
plan upon complying with the eligibility requirements after taking into account
the service crediting provisions set forth below. All rights to participate in
BB&T's 401(k) plan are subject to BB&T's right to amend or terminate the plan.
For purposes of administering BB&T's 401(k) plan and any related supplemental or
excess benefit plan of BB&T, service with Republic and the Republic Subsidiaries
(or any predecessor entities to the extent such service was recognized by
Republic) shall be deemed to be service with BB&T or any other Employer Entity
for purposes of participation, vesting and benefit accruals. Each employee of
Republic or a Republic
40
Subsidiary at the Effective Time who becomes an employee immediately following
the Effective Time of an Employer Entity is referred to herein as a "Transferred
Employee."
(b) Each Transferred Employee shall be eligible to participate in group
hospitalization, medical, dental, life, disability and other welfare benefit
plans and programs available to similarly situated employees of the Employer
Entity, subject to the terms of such plans and programs, as of the Benefit Plan
Determination Date for each such plan or program, conditional upon the
Transferred Employee's being employed by an Employer Entity as of such Benefit
Plan Determination Date and subject to complying with the eligibility
requirements of the respective plans and programs after taking into account the
service crediting and other provisions set forth below. Following the Effective
Time, BB&T shall or shall cause the applicable Employer Entity to continue each
welfare benefit plan or program of Republic or the Republic Subsidiaries in
effect for the benefit of the Transferred Employees without amendment except as
may be required by applicable law, so long as the Transferred Employees remain
eligible to participate and until they shall become eligible to become
participants in the corresponding plan or program maintained by the Employer
Entity (and, with respect to any such plan or program, subject to complying with
the eligibility requirements after taking into account the service crediting and
other provisions set forth below and subject to the right of the Employer Entity
to terminate such plan or program). Retirees of Republic or a Republic
Subsidiary and Transferred Employees, who are either participants in or eligible
to participate in the Republic retiree medical benefits plan, shall
automatically become participants in or eligible to participate in (as
applicable to each such individual) the BB&T retiree medical benefits plan as of
the retiree medical Benefit Plan Determination Date, and BB&T shall continue the
Republic retiree medical benefits plan in effect without amendment except as may
be required by applicable law until such Benefit Plan Determination Date. For
purposes of administering the welfare plans and programs subject to this Section
5.12(b), service with Republic or any Republic Subsidiary (or any predecessor
entities to the extent such service was recognized by Republic) shall be deemed
to be service with BB&T or another Employer Entity for the purpose of
determining eligibility to participate, vesting (if applicable), benefit
accruals (solely for purposes of vacation and seniority entitlements),
commencement of benefits and benefit subsidies (including without limitation for
retiree medical benefit subsidies) in such welfare plans and programs. From and
after the Effective Time (or the Benefit Plan Determination Date, as
applicable), BB&T shall or shall cause another Employer Entity to (i) cause any
pre-existing conditions or limitations and eligibility waiting periods under any
group health plans of an Employer Entity to be waived with respect to the
Transferred Employees and the retirees of Republic and the Republic Subsidiaries
who are participants in or eligible to participate in the Republic retiree
medical benefits plan and (ii) give each Transferred Employee and the retirees
of Republic and the Republic Subsidiaries who are participants in or eligible to
participate in the Republic retiree medical benefits plan (when retired) credit
for the plan year in which the Effective Time (or the Benefit Plan Determination
Date, as applicable) occurs towards applicable deductibles and annual
out-of-pocket limits for expenses incurred prior to the Effective Time (or the
Benefit Plan Determination Date, as applicable). The provisions of this
41
Section 5.12(b) shall apply equally to the eligible dependents of a Transferred
Employee and of a retiree of Republic and the Republic Subsidiaries.
(c) Except to the extent of commitments herein or other contractual
commitments, if any, specifically made or assumed hereunder or otherwise by
BB&T, neither BB&T nor any Employer Entity shall have any obligation arising
from the Merger to continue any Transferred Employees in its employ or in any
specific job or to provide to any Transferred Employee any specified level of
compensation or any incentive payments, benefits or perquisites. Each
Transferred Employee who is terminated by an Employer Entity subsequent to the
Effective Time, excluding any employee who has a then existing contract
providing for severance in lieu of severance plan benefits, shall be entitled to
severance pay in accordance with the general severance policy of BB&T as then in
effect, if and to the extent that such Transferred Employee is entitled to
severance pay and benefits under the applicable policy. Each Transferred
Employee's severance pay and benefits, if any, under the severance policy, shall
be determined based on aggregate service of a Transferred Employee with Republic
and the Republic Subsidiaries (or any predecessor entities to the extent such
service was recognized by Republic) prior to the Effective Time and with BB&T or
another Employer Entity on and after the Effective Time, with all service with
Republic and the Republic Subsidiaries (or any predecessor entities to the
extent such service was recognized by Republic) being deemed to be service with
BB&T or another Employer Entity.
(d) With respect to the defined benefit pension plan of Republic (the
"Republic Pension Plan"), BB&T shall cause such plan to be merged with the
defined benefit pension plan maintained by BB&T and the BB&T Subsidiaries (the
"BB&T Pension Plan"), subject to and conditional upon the receipt of all
applicable regulatory or governmental approvals. Each Transferred Employee, who
is a participant in the Republic Pension Plan at the Effective Time and who
continues in the employment of an Employer Entity until the Benefit Plan
Determination Date with respect to the Republic Pension Plan, shall be eligible
to participate in the BB&T Pension Plan as of the Benefit Plan Determination
Date. Until the Benefit Plan Determination Date, BB&T shall continue in effect
for the benefit of participating employees (including those Transferred
Employees who become eligible to participate in the Republic Pension Plan after
the Effective Time but prior to the Benefit Plan Determination Date) the
Republic Pension Plan and any related supplemental or excess defined benefit
plans, without amendment except as required by applicable law. Any employee of
Republic or a Republic Subsidiary who is not a participant in the Republic
Pension Plan as of the Benefit Plan Determination Date shall be eligible to
participate in the BB&T Pension Plan upon complying with the eligibility
requirements after taking into account the service crediting provisions set
forth below. All rights to participate in the BB&T Pension Plan are subject to
BB&T's right to amend or terminate the plan. As of the close of business on the
date immediately preceding the Benefit Plan Determination Date, BB&T shall
determine the accrued benefit under the Republic Pension Plan with respect to
participants continuing in the service of an Employer Entity. Such accrued
benefit shall be determined by taking into account service and compensation
following the Effective Time and preceding the
42
Benefit Plan Determination Date, and the accrued benefit as so determined shall
be the accrued benefit under the BB&T Pension Plan for service prior to the
Benefit Plan Determination Date (and shall be added to the benefit accrued under
the BB&T Pension Plan for service and compensation beginning with the Benefit
Plan Determination Date). For purposes of administering the BB&T Pension Plan,
service with Republic and the Republic Subsidiaries (and any predecessor
entities to the extent such service was recognized by Republic) shall be deemed
to be service with BB&T for participation and vesting purposes, but not for
purposes of benefit accrual.
(e) BB&T agrees to honor all employment agreements, severance agreements,
supplemental retirement and deferred compensation agreements and plans that
Republic and the Republic Subsidiaries have with or in place with respect to
their current and former employees and directors and which have been Disclosed
to BB&T pursuant to this Agreement, except to the extent any such agreements
shall be superseded or terminated at the Closing or following the Closing Date,
to the extent permitted by and in accordance with their terms. Except for the
agreements described in the preceding sentence and except as otherwise provided
in this Section 5.12, following the Effective Time, (i) the Transferred
Employees shall be eligible to participate in such other employee benefit and
compensation plans as are provided to similarly situated employees of BB&T and
its Subsidiaries and subject to complying with applicable eligibility
requirements, (ii) for purposes of administering such other plans, service with
Republic or any Republic Subsidiary (or any predecessor entities to the extent
such service was recognized by Republic) shall be deemed to be service with BB&T
or another Employer Entity for the purpose of determining eligibility to
participate and vesting (if applicable), and (iii) the employee benefit plans of
Republic may, in the sole discretion of BB&T, be frozen or merged into
comparable plans of BB&T, or terminated in the case of non-qualified retirement
plans, effective as of such time as BB&T shall determine in its sole discretion,
to the extent permitted by and in accordance with their terms.
5.13 Directors' and Officers' Protection
-----------------------------------
BB&T or a BB&T Subsidiary shall provide and keep in force for a period of
three years after the Effective Time directors' and officers' liability
insurance providing coverage to directors and officers of Republic for acts or
omissions or alleged acts or omissions occurring prior to the Effective Time.
Such insurance shall provide at least the same coverage and amounts as contained
in Republic's policy on the date hereof; provided, that in no event shall the
annual premium on such policy exceed 175% of the annual premium payments on
Republic's policy in effect as of the date hereof (the "Maximum Amount"). If the
amount of the premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, BB&T shall use its reasonable best efforts to
maintain the most advantageous policies of directors' and officers' liability
insurance obtainable for a premium equal to the Maximum Amount. Notwithstanding
the foregoing, BB&T further agrees to indemnify from and after the Effective
Time all individuals who are or have been officers, directors or employees of
Republic or any Republic Subsidiary prior to the Effective Time with respect to
any acts or omissions or
43
alleged acts or omissions in such capacities prior to the Effective Time, to the
fullest extent permitted by law.
5.14 Forbearances of BB&T
--------------------
Except with the prior written consent of Republic, between the date hereof
and the Effective Time, neither BB&T nor any BB&T Subsidiary shall take any
action which would or might reasonably be expected to (i) result in any
inaccuracy of a representation or warranty herein that would allow for
termination of this Agreement; (ii) cause any of the conditions precedent to the
transactions contemplated by this Agreement to fail to be satisfied; (iii) fail
to comply in any material respect with any laws, regulations, ordinances or
governmental actions applicable to it and to the conduct of its business; (iv)
amend its Articles of Incorporation or bylaws in a manner that would adversely
affect the economic benefits of the Merger to the holders of Republic Common
Stock; (v) enter into any agreement to acquire all or substantially all of the
capital stock or assets of any other person or business unless such transaction
would not substantially delay completion of, or substantially impair the
prospects of completing, the Merger pursuant to this Agreement and the Plan of
Merger; (vi) agree to do any of the foregoing.
5.15 Reports
-------
Each of Republic and BB&T shall file (and shall cause the Republic
Subsidiaries and the BB&T Subsidiaries, respectively, to file), between the date
of this Agreement and the Effective Time, all reports required to be filed by it
with the Commission and any other regulatory authorities having jurisdiction
over such party, and shall deliver to BB&T or Republic, as the case may be,
copies of all such reports promptly after the same are filed.
5.16 Exchange Listing
----------------
BB&T shall use its reasonable best efforts to list, prior to the Effective
Time, on the NYSE, subject to official notice of issuance, the shares of BB&T
Common Stock to be issued to the holders of Republic Common Stock pursuant to
the Merger, and BB&T shall give all notices and make all filings with the NYSE
required in connection with the transactions contemplated herein.
5.17 Advisory Board
--------------
As of the Effective Time, BB&T shall offer to each of the members of the
Board of Directors of Republic (other than Xxxxxxx X. Xxxxx) a seat on a BB&T
Advisory Board (which Advisory Board may be existing or newly established)
serving a BB&T Florida region determined by BB&T. For two years following the
Effective Time, the Advisory Board members appointed pursuant to this Section
5.17 who are not employees of BB&T or a BB&T Affiliate or under contract with
BB&T or any BB&T Affiliate, and who continue to serve shall receive, as
compensation for service on the Advisory Board,
44
Advisory Board member's fees (annual retainer and attendance fees) equal in
amount each year (prorated for any partial year) to the annual retainer and
schedule of attendance fees for directors of Republic in effect on the date of
this Agreement. Following such two-year period, Advisory Board Members who are
entitled to receive Advisory Board Member fees, if they continue to serve in
such capacity, shall receive fees in accordance with BB&T's standard schedule of
fees for service thereon as in effect from time to time. For two years after the
Effective Time, no such Advisory Board member shall be prohibited from serving
thereon because he or she shall have attained the maximum age for service
thereon (currently age 70). Membership of any person on any Advisory Board shall
be conditional upon execution of an agreement providing that such person will
not engage in activities competitive with BB&T for two years following the
Effective Time or, if longer, the period that he or she is a member of the
Advisory Board.
5.18 Board of Directors of Branch Banking and Trust Company
------------------------------------------------------
As of the Effective Time, Branch Bank shall elect Xxxxxxx X. Xxxxx and
another individual to be selected on or before the Effective Time by mutual
agreement of the Chairman of the Republic Board of Directors and the Chief
Executive Officer of BB&T, to Branch Bank's Board of Directors, to serve until
its next annual meeting (subject to the right of removal for cause) and
thereafter so long as he or she is elected and qualifies. For three years after
the Effective Time, Xxxxxxx X. Xxxxx shall not be prohibited from serving on
such Board because he shall have attained the maximum age for service thereon
(currently age 70). Any member of such Board of Directors who is not an employee
of BB&T or a BB&T Affiliate or under contract with BB&T or a BB&T Affiliate
shall be entitled to receive fees for service on the Board in accordance with
BB&T's policies as in effect from time to time. Membership of any person on any
such Board shall be conditional upon execution of an agreement providing that
such person will not engage in activities competitive with BB&T for two years
following the Effective Time or, if longer, the period that he or she is a
member of such Board.
5.19 Tax Treatment
-------------
From the date hereof through the Effective Time, BB&T shall, and shall
cause its Affiliates to, and Republic shall, and shall cause its Subsidiaries
to, each use their reasonable best efforts to take such action as may be
necessary to cause the Merger to qualify as, and to refrain from taking any
action which could reasonably be expected to prevent the Merger from qualifying
as, as the case may be, a reorganization under the provisions of Section 368(a)
of the Code.
45
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - BB&T and Republic
----------------------------------------
The respective obligations of BB&T and Republic to effect the transactions
contemplated by this Agreement shall be subject to satisfaction or waiver of the
following conditions at or prior to the Effective Time:
(a) All corporate action necessary to authorize the execution, delivery and
performance of this Agreement and the Plan of Merger, and consummation of the
transactions contemplated hereby and thereby, shall have been duly and validly
taken, including, without limitation, the approval of the shareholders of
Republic of the Agreement and the Plan of Merger;
(b) The Registration Statement (including any post-effective amendments
thereto) shall be effective under the Securities Act, no proceedings shall be
pending or to the knowledge of BB&T threatened by the Commission to suspend the
effectiveness of such Registration Statement and the BB&T Common Stock to be
issued as contemplated in the Plan of Merger shall have either been registered
or be subject to exemption from registration under applicable state securities
laws;
(c) The parties shall have made all regulatory filings, and received all
regulatory approvals required in connection with the transactions contemplated
by this Agreement and the Plan of Merger, all notice periods and waiting periods
with respect to such filings and approvals shall have passed and all such
approvals shall be in effect (a "Requisite Regulatory Approval");
(d) None of BB&T, any of the BB&T Subsidiaries, Republic or any of the
Republic Subsidiaries shall be subject to any order, decree or injunction of a
court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated by this Agreement;
(e) Each of Republic and BB&T shall have received an opinion of its
respective legal counsel, in form and substance satisfactory to Republic and
BB&T, on the basis of facts, representations and assumptions set forth in such
opinions substantially to the effect that the Merger will constitute one or more
reorganizations under Section 368 of the Code and that the shareholders of
Republic will not recognize any gain or loss, except (i) to the extent of any
cash received by such shareholders in exchange for shares of Republic Common
Stock and (ii) with respect to cash received in lieu of fractional shares of
BB&T Common Stock. In rendering the opinions described in the preceding
sentence, such counsel may require and rely upon representations contained in
certificates of the officers of Republic and BB&T; and
46
(f) The shares of BB&T Common Stock issuable pursuant to the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
6.2 Conditions Precedent - Republic
-------------------------------
The obligations of Republic to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by Republic pursuant
to Section 7.4:
(a) All representations and warranties of BB&T shall be evaluated as of the
date of this Agreement and as of the Effective Time as though made on and as of
the Effective Time (or on the date designated in the case of any representation
and warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Agreement or consented to in writing by Republic. The
representations and warranties of BB&T set forth in Sections 4.1, 4.2 (except as
relates to qualification), 4.3(a), 4.3(b)(i) and 4.4 (except as relates to
qualification) shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of BB&T set forth
in this Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on BB&T.
(b) BB&T shall have performed in all material respects all obligations and
complied in all material respects with all covenants required by this Agreement.
(c) BB&T shall have delivered to Republic a certificate, dated the Closing
Date and signed by its Chairman or President or an Executive Vice President, to
the effect that the conditions set forth in Sections 6.1(a), 6.1(b), 6.1(c),
6.1(d), 6.2(a) and 6.2(b), to the extent applicable to BB&T, have been satisfied
and that there are no actions, suits, claims, governmental investigations or
procedures instituted, pending or, to the best of such officer's knowledge,
threatened against BB&T or any BB&T Subsidiary or against any asset, interest,
employee benefit plan, program or trust or right of BB&T or any BB&T Subsidiary,
or, to the best knowledge of BB&T, against any officer, director or employee of
any of them in their capacity as such, that is reasonably likely to have a
Material Adverse Effect on BB&T.
6.3 Conditions Precedent - BB&T
---------------------------
The obligations of BB&T to effect the transactions contemplated by this
Agreement shall be subject to satisfaction of the following additional
conditions at or prior to the Effective Time, unless waived by BB&T pursuant to
Section 7.4:
(a) All representations and warranties of Republic shall be evaluated as of
the date of this Agreement and as of the Effective Time as though made on and as
of the Effective Time (or on the date designated in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Agreement or consented to in writing by
BB&T. The representations and warranties of
47
Republic set forth in Sections 3.1, 3.2 (except as it relates to qualification),
3.3, 3.4 (except the last sentence thereof), 3.5(a), 3.5(b)(i), 3.23 and 3.24
shall be true and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Republic set forth in this
Agreement such that the effect of such inaccuracies individually or in the
aggregate has, or is reasonably likely to have, a Material Adverse Effect on
Republic (evaluated without regard to the Merger).
(b) No regulatory approval required to complete the Merger shall have
imposed any condition or requirement which would have a Material Adverse Effect
on the ability of BB&T to conduct the business operations of Republic or of BB&T
following the Effective Time in substantially the same manner as conducted prior
to the Effective Time.
(c) Republic shall have performed in all material respects all obligations
and complied in all material respects with
all covenants required by this Agreement.
(d) Republic shall have delivered to BB&T a certificate, dated the Closing
Date and signed by its Chairman or President, to the effect that the conditions
set forth in Sections 6.1(a), 6.1(c), 6.1(d), 6.3(a) and 6.3(c), to the extent
applicable to Republic, have been satisfied and that there are no actions,
suits, claims, governmental investigations or proceedings instituted, pending
or, to the best of such officer's knowledge, threatened against Republic or any
Republic Subsidiary or against any asset, interest, Plan or right of Republic or
any Republic Subsidiary, or, to the best knowledge of Republic, against any
officer, director or employee of any of them in their capacity as such, that is
reasonably likely to have a Material Adverse Effect on Republic (evaluated
without regard to the Merger).
(e) BB&T shall have received the written agreements from Affiliates as
specified in Section 5.11 to the extent necessary, in the reasonable judgment of
BB&T, to promote compliance with Rule 145 promulgated by the Commission.
(f) The Noncompetition Agreement executed by Xxxxxxx X. Xxxxx and delivered
to BB&T contemporaneously with this Agreement shall be in full force and effect.
ARTICLE VII
TERMINATION, DEFAULT, WAIVER AND AMENDMENT
7.1 Termination
-----------
This Agreement may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent in
writing of the parties hereto.
48
(b) At any time prior to the Effective Time, by either party (i) in the
event of a material breach by the other party of any covenant or agreement
contained in this Agreement, or (ii) in the event of an inaccuracy of any
representation or warranty of the other party contained in this Agreement, which
breach or inaccuracy would provide the nonbreaching party the ability to refuse
to consummate the Merger under the applicable standard set forth in Section
6.2(a) or (b) in the case of Republic and Section 6.3(a) or (c) in the case of
BB&T; and, in the case of (i) or (ii), if such breach or inaccuracy has not been
cured by the earlier of thirty days following written notice of such breach to
the party committing such breach or the date set forth in paragraph (f) below
whichever is earlier.
(c) At any time prior to the Effective Time, by either party hereto in
writing, if any of the conditions precedent to the obligations of such party to
consummate the transactions contemplated hereby cannot be satisfied or fulfilled
prior to the Closing Date, and the party giving the notice is not in material
breach of any of its representations, warranties, covenants or undertakings
herein.
(d) At any time, by either party hereto in writing, if any Requisite
Regulatory Approval has been denied, and the time period for appeals and
requests for reconsideration has run.
(e) At any time, by either party hereto in writing, if the shareholders of
Republic do not approve the Agreement and the Plan of Merger at the meeting of
such shareholders to be held pursuant to Section 5.1.
(f) At any time following July 31, 2004, by either party hereto in writing,
if the Effective Time has not occurred by the close of business on such date,
and the party giving the notice is not in material breach of any of its
representations, warranties, covenants or undertakings herein.
(g) At any time prior to the Effective Time, by BB&T in writing, if the
Board of Directors of Republic shall have withdrawn its recommendation or
refused to recommend to the shareholders of Republic that they vote to approve
the Plan of Merger in compliance with Section 5.1, or shall have recommended to
the shareholders of Republic approval of an agreement, plan or transaction
arising out of or implementing any Republic Acquisition Proposal. As used
herein, "Republic Acquisition Proposal" means any proposal or offer to acquire
or purchase all or a substantial portion of the assets of or a substantial
equity interest in, or to effect any recapitalization, liquidation or
dissolution involving or a business combination or other similar transaction
with, Republic or any Republic Subsidiary (including, without limitation, a bona
fide tender offer or exchange offer to purchase Republic Common Stock) other
than with BB&T or a BB&T Subsidiary.
49
7.2 Effect of Termination
---------------------
In the event this Agreement and the Plan of Merger is terminated pursuant
to Section 7.1, both this Agreement and the Plan of Merger shall become void and
have no effect, except that (i) the provisions hereof relating to
confidentiality, the Termination Fee and expenses set forth in Sections 5.7, 7.6
and 8.1, respectively, shall survive any such termination and (ii) a termination
pursuant to Section 7.1(b) shall not relieve the breaching party from liability
for a breach of the covenant, agreement, representation or warranty giving rise
to such termination.
7.3 Survival of Representations, Warranties and Covenants
-----------------------------------------------------
All representations, warranties and covenants in this Agreement or the Plan
of Merger or in any instrument delivered pursuant hereto or thereto shall expire
on, and be terminated and extinguished at, the Effective Time, other than
covenants that by their terms are to be performed after the Effective Time
(including Sections 5.13, 5.17 and 5.18); provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive BB&T or Republic (or any director, officer or controlling person
thereof) of any defense at law or in equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either BB&T or Republic, the aforesaid representations,
warranties and covenants being material inducements to consummation by BB&T and
Republic of the transactions contemplated herein.
7.4 Waiver
------
Except with respect to any required regulatory approval, each party hereto,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of the Agreement and the Plan of Merger
by the Republic shareholders) extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement, the Plan of Merger or any document delivered pursuant hereto
or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of the other party, or satisfaction of any of the conditions
precedent to its obligations, contained herein or in the Plan of Merger, or
(iii) the performance by the other party of any of its obligations set out
herein or therein; provided that no such extension or waiver, or amendment or
supplement pursuant to this Section 7.4, executed after approval by the Republic
shareholders of this Agreement and the Plan of Merger, shall reduce either the
Merger Consideration, the payment terms for fractional interests or the intended
tax treatment of the Merger. No waiver or modification of this Agreement or of
any covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith. No evidence of
any waiver or modification shall be offered or received in evidence at any
proceeding, arbitration, or litigation between the parties hereto arising out
50
of or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.
7.5 Amendment or Supplement
-----------------------
This Agreement or the Plan of Merger may be amended or supplemented at any
time in writing by mutual agreement of BB&T and Republic, subject to the proviso
to Section 7.4.
7.6 Termination Fee
---------------
(a) In the event that this Agreement is terminated (and in the case of a
termination by BB&T such termination is effected by a writing identifying which
of the provisions of Section 7.1 is being invoked):
(i) by either BB&T or Republic pursuant to Section 7.1(e) and (A) at
the time of the meeting of the Republic shareholders referred to in
Section 5.1 (or at any adjournment thereof) a Republic Acquisition
Proposal shall have been publicly disclosed and not withdrawn or (B)
prior to such shareholders' meeting, Republic's Board of Directors
shall have withdrawn its recommendation or refused to recommend to the
shareholders of Republic that they vote to approve the Plan of Merger;
(ii) by BB&T pursuant to Section 7.1(g);
(iii) by BB&T pursuant to Section 7.1(b) as a result of a breach by
Republic of Section 5.1 or Section 5.9(k)); or
(iv) by BB&T pursuant to Section 7.1(b) as a result of any knowing,
willful or intentional breach of this Agreement on the part of
Republic (other than a breach by Republic of Section 5.1 or Section
5.9(k)), and: (1) at the time of such termination Republic shall not
be entitled to terminate the Agreement pursuant to Section 7.1(b); and
(2) (A) a Republic Acquisition Proposal shall have been publicly
disclosed at or before the time of such breach; or (B) an overture
from a bona fide person or entity shall have been communicated to the
Republic Board of Directors at or before the time of such breach to
engage in an agreement, plan or transaction to acquire or purchase all
or a substantial portion of the assets of or a substantial equity
interest in, or to effect any recapitalization, liquidation or
dissolution involving, or a business combination or other similar
transaction with, Republic or any Republic Subsidiary (including,
without limitation, a bona fide tender offer or exchange
51
offer to purchase Republic common stock) other than with BB&T or a
BB&T Subsidiary;
and, within fifteen (15) months of such termination, Republic consummates, or
enters into a definitive agreement with respect to consummation of, a Republic
Acquisition Proposal (an "Alternative Transaction Event"), then Republic shall
within two Business Days after the occurrence of such Alternative Transaction
Event, pay to BB&T a termination fee equal to $17,000,000 (the "Termination
Fee") by wire transfer of immediately available funds. The Termination Fee shall
be in addition to any other rights that BB&T may have under this Agreement, and
shall be payable without regard to any expenses to be paid pursuant to Section
8.1.
(b) Republic acknowledges that the agreements contained in Section 7.6(a)
are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, BB&T would not enter into this Agreement;
accordingly, if Republic fails promptly to pay any amount due pursuant to
Section 7.6(a) and, in order to obtain such payment, BB&T commences a suit which
results in a judgment against Republic for all or a substantial portion of the
payment set forth in Section 7.6(a), Republic shall pay to BB&T its costs and
expenses (including reasonable attorneys' fees) in connection with such suit,
together with interest on the Termination Fee from the date that payment was
required to be made until the date payment is made at the prime rate of Branch
Banking and Trust Company in effect on the date payment was required to be made
plus two percentage points.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses
--------
Each party hereto shall bear and pay all costs and expenses incurred by it
in connection with the transactions contemplated by this Agreement, including,
without limitation, fees and expenses of its own financial consultants,
accountants and counsel; provided, however, that the filing fees and printing
costs incurred in connection with the Registration Statement and the Proxy
Statement/Prospectus shall be borne 50% by BB&T and 50% by Republic.
8.2 Entire Agreement
----------------
This Agreement, including the documents and other writings referenced
herein or delivered pursuant hereto and the Confidentiality Agreement (the
"BB&T/Republic Confidentiality Agreement") between BB&T and Xxxxx Xxxxxxxx &
Xxxxx on behalf of Republic dated October 20, 2003, contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and thereunder and supersedes all arrangements or understandings with
respect thereto, written or oral, entered into on or before the date hereof;
provided that the terms of the BB&T/Republic Confidentiality
52
Agreement shall not be construed to prevent or otherwise restrict the disclosure
of information by BB&T and/or Republic in the Proxy Statement/Prospectus, the
Registration Statement, other filings with the Commission and other governmental
authorities and agencies or other disclosures (including, without limitation,
press releases) to the extent required under applicable laws or regulations. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and thereto and their respective successors.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and thereto, and their respective
successors, any rights, remedies, obligations or liabilities, except for the
rights of directors and officers of Republic to enforce rights in Sections 5.13,
5.17 and 5.18, which shall inure to the benefit of and be enforceable by the
persons referred to therein and their respective heirs and representatives.
8.3 No Assignment
-------------
Except for a substitution of parties pursuant to Section 5.4(a), none of
the parties hereto may assign any of its rights or obligations under this
Agreement to any other person, except upon the prior written consent of each
other party.
8.4 Notices
-------
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight express courier or by facsimile transmission,
addressed or directed as follows:
If to Republic:
Xxxxxxx X. Xxxxxxx
Republic Bancshares, Inc.
000 Xxxxxx Xxxxxx X.X.
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a required copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
53
If to BB&T:
Xxxxx X. Xxxx
000 Xxxxx Xxxxxxxxx Xxxx
0xx Xxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
With a required copy to:
Xxxxxxx X. Xxxxx, XX
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Fax: 000-000-0000
Any party may by notice change the address to which notice or other
communications to it are to be delivered.
8.5 Captions
--------
The captions contained in this Agreement are for reference only and are not
part of this Agreement.
8.6 Counterparts
------------
This Agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of North Carolina, without regard to the principles of
conflicts of laws, except to the extent federal law may be applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
54
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed in counterparts by their duly
authorized officers, all as of the day and year first above written.
BB&T CORPORATION
By: /s/ Xxxx X. Xxxxxxx, XX
Name: Xxxx X. Xxxxxxx, XX
Title: Chairman and Chief Executive Officer
REPUBLIC BANCSHARES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
55
