As filed with the Securities and Exchange Commission on June 28, 2001
Registration No. 333 - _____
333-_____-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
BB&T CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 56-0939887
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
BB&T CAPITAL TRUST I
(Exact name of registrant as specified in its charter)
Delaware Applied For
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
200 West Second Street
Winston-Salem, North Carolina 27101
(336) 733-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Jerone C. Herring
Executive Vice President, Secretary and General Counsel
BB&T Corporation
Winston-Salem, North Carolina 27101
(336) 733-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Garza Baldwin, III Steven R. Finley
Womble Carlyle Sandridge & Rice, PLLC Gibson, Dunn & Crutcher LLP
3300 One First Union Center 200 Park Avenue
Charlotte, North Carolina 28202-6025 New York, New York 10166-0193
(704) 331-4907 (212) 351-4000
Approximate date of commencement of proposed sale of the securities to the
public:
From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividends or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering: _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [X]
CALCULATION OF REGISTRATION FEE
==========================================================================================================================
Title of Securities To Be Registered(1) Proposed Maximum Aggregate Offering Price (2)(3) Amount of Registration Fee
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Debt securities.........................
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Preferred stock.........................
--------------------------------------------------------------------------------------------------------------------------
Common stock, including attached
preferred share purchase rights(4)......
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Depositary shares.......................
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Warrants................................
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Units...................................
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Trust preferred securities and related
guarantees..............................
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Total........................... $1,000,000,000 $250,000
==========================================================================================================================
(1) We are registering for issuance and sale an indeterminate dollar
amount of debt securities, preferred stock, common stock, depositary
shares, warrants representing rights to purchase debt securities,
preferred stock or common stock and units consisting of any
combination of these securities issued by BB&T Corporation, trust
preferred securities issued by BB&T Capital Trust I and guarantees by
BB&T Corporation of those trust preferred securities. In addition,
shares of common stock may be issued upon conversion, redemption, or
exercise of debt securities, preferred stock, depositary shares or
warrants of BB&T Corporation or trust preferred securities of BB&T
Capital Trust I. This registration statement also registers, where
required, an indeterminate amount of securities to be sold by our
affiliates in market-making transactions. Certain information as to
each class of securities to be registered is not specified, as
permitted by General Instruction II.D. to Form S-3 under the
Securities Act of 1933. The amount being registered does not include
$150,000,000 of debt securities previously registered and as yet not
sold under our Form S-3 registration statement no. 333-02899 and being
carried forward pursuant to Rule 429. We previously paid a
registration fee of approximately $51,724 with respect to such debt
securities.
(2) The proposed maximum aggregate offering price has been estimated
solely to calculate the registration fee under Rule 457(o). In no
event will the aggregate initial offering price of all securities
issued from time to time pursuant to this registration statement
exceed $1,000,000,000 or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies. If debt
securities are issued at original issue discount, we may issue such
higher principal amount as may be sold for an initial public offering
price of up to $1,000,000,000 (less the dollar amount of any
securities previously issued under this registration statement), or
the equivalent of $1,000,000,000 in one or more foreign currencies,
foreign currency units, or composite currencies. The aggregate amount
of common stock registered under this registration statement is
further limited to that which is permissible under Rule 415(a)(4). The
securities registered under this registration statement may be sold
separately or as units with other securities registered under this
registration statement.
(3) No separate cash consideration will be received for any preferred
stock, common stock or debt securities of BB&T Corporation issuable
upon conversion or exchange of other securities of BB&T Corporation or
trust preferred securities of BB&T Capital Trust I.
(4) Each share of common stock includes a right to purchase shares of
Series B Junior Preferred Participating Preferred Stock, referred to
as the "rights." Prior to the occurrence of certain events, none of
which have occurred as of the date hereof, the rights will not be
exercisable or evidenced separately from the common stock.
The registrants hereby amend this registration statement on such date or dates
as may be necessary to delay its effective date until the registrants file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
Pursuant to Rule 429, the prospectus included in this registration statement is
a combined prospectus which also relates to BB&T Corporation's Form S-3
registration statement no. 333-02899. This registration statement also
constitutes a post-effective amendment to Form S-3 registration statement no.
333-02899, and such post-effective amendment shall hereafter become effective
concurrently with the effectiveness of this registration statement in accordance
with Section 8(c) of the Securities Act of 1933.
EXPLANATORY NOTE
This registration statement contains two forms of prospectuses to be used
in connection with offerings of the following securities:
. debt securities, preferred stock, common stock, including attached
preferred share purchase rights, depositary shares, warrants and units
of BB&T Corporation; and
. preferred securities of BB&T Capital Trust I, junior subordinated debt
securities of BB&T Corporation and guarantees by BB&T Corporation of
the preferred securities of BB&T Capital Trust I.
Each offering of securities made under this registration statement will be
made pursuant to one of these two prospectuses, with the specific terms of the
securities offered thereby set forth in an accompanying prospectus supplement.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated June 28, 2001
Prospectus
BB&T CORPORATION
Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
Units
BB&T Corporation may offer and sell:
. unsecured debt securities consisting of senior notes and debentures
and subordinated notes and debentures, and other unsecured evidences
of indebtedness in one or more series, which may be convertible into
or exchangeable for common stock or debt securities,
. shares of common stock,
. shares of preferred stock, in one or more series, which may be
convertible into or exchangeable for common stock or debt securities,
. warrants to purchase debt securities, preferred stock or common stock,
. depositary shares representing fractional interests in preferred
stock, and
. units consisting of any combination of the above securities.
The aggregate initial offering price of the securities that we offer will
not exceed $1,150,000,000. We will offer the securities in amounts, at prices
and on terms to be determined by market conditions at the time of our offering.
We will provide the specific terms of the securities in supplements to this
prospectus. You should read this prospectus and the prospectus supplements
carefully before you invest in the securities. This prospectus may not be used
to consummate sales of securities unless accompanied by a prospectus supplement.
A security is not a deposit and the securities are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
The offered securities may be offered and sold directly by us or through
one or more underwriters or agents. Supplements to this prospectus will set
forth the terms of sale of the offered securities and the identity of any
underwriter or agent. Any underwriter, dealer or agent participating in any
offering of the offered securities may be deemed an "underwriter" within the
meaning of the Securities Act of 1933. See "Plan of Distribution."
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________________ __, 2001.
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We may provide information to you about the securities we are offering in
three separate documents that progressively provide more detail:
. this prospectus, which provides general information, some of which may
not apply to your securities;
. an accompanying prospectus supplement, which describes the terms of
the securities, some of which may not apply to your securities; and
. if necessary, a pricing supplement, which describes the specific terms
of your securities.
If the terms of your securities vary between the pricing supplement, the
prospectus supplement and the accompanying prospectus, you should rely on the
information in the following order of priority:
. the pricing supplement, if any;
. the prospectus supplement; and
. the prospectus.
Unless indicated in the applicable prospectus supplement, neither we nor
the underwriters have taken any action that would permit us to publicly sell
these securities in any jurisdiction outside the United States. If you are an
investor outside the United States, you should inform yourself about and comply
with any restrictions as to the offering of the securities and the distribution
of this prospectus.
TABLE OF CONTENTS
About this Prospectus................................ 4 Description of Preferred Stock................. 18
Where You Can Find More Information.................. 4 Description of Depositary Shares............... 19
Incorporation Of Certain Documents By Reference...... 4 Description of Common Stock.................... 21
Forward-Looking Statements........................... 5 Description of Warrants........................ 23
BB&T Corporation..................................... 5 Global Securities.............................. 25
Use of Proceeds...................................... 7 Plan of Distribution........................... 27
Consolidated Ratios of Earnings to Fixed Charges..... 7 Validity of Securities......................... 29
Regulatory Considerations............................ 7 Experts........................................ 29
Description of the Debt Securities................... 8
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ABOUT THIS PROSPECTUS
This prospectus is a combined prospectus that is part of two registration
statements that we filed with the SEC utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $1,150,000,000. Of such amount, $150,000,000 is attributable to
a registration statement that registered only debt securities. Accordingly, a
minimum amount of $150,000,000 of the securities covered by this combined
prospectus will be debt securities. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of the offering and the securities. The prospectus supplement
may also add, update or change information contained in this prospectus. Any
statement that we make in this prospectus will be modified or superseded by any
inconsistent statement made by us in a prospectus supplement. You should read
both this prospectus and any prospectus supplement together with the additional
information described in the following section.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "BB&T," "we," "us," "our" or similar references
mean BB&T Corporation.
WHERE YOU CAN FIND MORE INFORMATION
The registration statement that we have filed with the SEC under the
Securities Act of 1933 to register the offer and sale of securities offered by
this prospectus includes exhibits, schedules and additional relevant information
about us. The rules and regulations of the SEC allow us to omit certain
information included in the registration statement from this prospectus.
In addition, we file reports, proxy statements and other information with
the SEC. You may read and copy any document we have filed at the SEC's public
reference rooms located at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549, and at regional offices of the SEC at the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
at 7 World Trade Center, New York, New York 10048. For further information on
the SEC's public reference rooms, please call 1-800-SEC-0330. Our filings are
also available to the public from the SEC's Internet web site at
http://www.sec.gov. Information about us also may be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006, and at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Information filed with the SEC after the date of this prospectus will
automatically update and supersede this information. The following documents
filed with the SEC are incorporated by reference:
(1) annual report on Form 10-K for the year ended December 31, 2000;
(2) quarterly report on Form 10-Q for the quarter ended March 31,
2001;
(3) current reports on Form 8-K filed with the SEC on January 12,
2001, January 24, 2001 (two), February 8, 2001, April 11, 2001
and April 27, 2001; and
(4) descriptions of BB&T's common stock and preferred stock purchase
rights set forth in registration statements on Form 8-A filed
September 4, 1991 and January 10, 1997, respectively, and in any
amendment or report filed for the purpose of updating such
descriptions.
Future filings we make with the SEC, such as annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and proxy
statements, are incorporated by reference in this prospectus until we complete
the offering of the securities.
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We will provide each person to whom a copy of this prospectus has been
delivered, without charge, a copy of any of the documents referred to above as
being incorporated by reference. You may request a copy by writing or
telephoning Investor Relations, 150 South Stratford Road, Suite 400, Winston-
Salem, North Carolina 27104 (336-733-3058).
We have not authorized anyone to give any information or make any
representation about us that is different from, or in addition to, the
representations contained in this prospectus or in any of the materials that we
have incorporated into this prospectus. If anyone does give you information of
this sort, you should not rely on it. If you are in a jurisdiction where offers
to sell, or solicitations of offers to purchase, the securities offered by this
prospectus are unlawful, or if you are a person to whom it is unlawful to direct
these types of activities, then the offer presented in this prospectus does not
extend to you. The information contained in this prospectus speaks only as of
the date of this prospectus unless the information specifically indicates that
another date applies.
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference, contains certain forward-looking statements with respect to our
financial condition, results of operations, plans, objectives, future
performance and business, including, statements preceded by, followed by or that
include the words "believes," "expects," "anticipates," "estimates" or similar
expressions.
These forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those contemplated by the forward-looking
statements due to many factors, including
. competitive pressures among depositary and other financial
institutions may increase significantly;
. changes in the interest rate environment may reduce margins;
. general economic conditions, either nationally or regionally, may be
less favorable than expected, resulting in, among other things, a
deterioration in credit quality and/or a reduced demand for credit;
. legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which we are
engaged;
. deposit attrition, customer loss or revenue loss following recent or
pending mergers may be greater than expected;
. costs or difficulties related to the integration of our businesses
with those of our merger partners may be greater than expected;
. expected cost savings associated with recent or pending mergers may
not be fully realized or realized within the expected time frame;
. competitors may have greater financial resources and develop products
that enable such competitors to compete more successfully than BB&T;
and
. adverse changes may occur in the securities markets.
BB&T CORPORATION
General
We are a financial holding company headquartered in Winston-Salem, North
Carolina. We operate, primarily through our commercial banking subsidiaries,
which do business in Alabama, Georgia, Kentucky, Maryland, North Carolina, South
Carolina, Tennessee, Virginia, Washington, D.C. and West Virginia.
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Our largest subsidiary, Branch Banking and Trust Company, referred to in
this prospectus as "Branch Bank," was chartered in 1872 and is the oldest bank
headquartered in North Carolina. At March 31, 2001, Branch Bank operated 334
banking offices in North Carolina, 100 in Georgia, 85 in West Virginia, 81 in
Maryland, 33 in Tennessee, 10 in Kentucky and eight in Washington, D.C.. Branch
Bank's principal subsidiaries include: BB&T Leasing Corp., based in Charlotte,
North Carolina, which specializes in lease financing to commercial businesses
and municipal governments; BB&T Investment Services, Inc., located in Charlotte,
North Carolina, which offers nondeposit investment alternatives, including
fixed-rate and variable rate annuities, mutual funds and discount brokerage
services; and BB&T Insurance Services, Inc., headquartered in Raleigh, North
Carolina, which is the 11/th/ largest retail insurance broker in the country.
Branch Bank has a number of additional subsidiaries, including Prime Rate
Premium Finance Corporation, Inc., located in Florence, South Carolina, which
provides insurance premium financing primarily to clients in our principal
market area; and Laureate Capital Corp., located in Charlotte, North Carolina,
which principally specializes in arranging financing of commercial and multi-
family real estate.
Our other commercial banking subsidiaries are Branch Banking and Trust
Company of South Carolina and Branch Banking and Trust Company of Virginia. At
March 31, 2001, Branch Banking and Trust Company of South Carolina operated 101
banking offices in South Carolina and Branch Banking and Trust Company of
Virginia operated 141 banking offices in Virginia.
Our nonbank subsidiaries include Scott & Stringfellow, Inc., an investment
banking and full-service brokerage firm headquartered in Richmond, Virginia. On
November 15, 2000, we consummated the acquisition of Edgar M. Norris & Co., a
full-service brokerage firm based in Greenville, South Carolina. Edgar M. Norris
was merged into Scott & Stringfellow during the first quarter of 2001. At March
31, 2001, Scott & Stringfellow operated 23 full-service brokerage offices in
Virginia, 11 in North Carolina, seven in South Carolina, one in Maryland and one
in Tennessee. Scott & Stringfellow specializes in the origination, trading and
distribution of fixed-income securities and equity products in both the public
and private capital markets. Scott & Stringfellow also provides investment
banking, financial advisory and underwriting services to a variety of regional
corporate and municipal issuers.
We have a number of other nonbank subsidiaries, including BB&T Bankcard
Corporation, which provides credit card services; Regional Acceptance
Corporation, which engages in automobile financing; and W.E. Stanley, Inc., an
actuarial and employee benefits consulting firm.
The primary services offered by our subsidiaries include:
. Small business lending . Treasury services
. Commercial middle market lending . Investment and mutual funds sales
. Retail lending . Capital markets
. Home equity lending . Factoring
. Sales finance . Asset-based lending
. Mortgage lending . International banking services
. Leasing . Cash management
. Asset management . Electronic payment services
. Trust services . Credit and debit card services
. Agency insurance
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USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities offered
by this prospectus for general corporate purposes unless otherwise indicated in
the prospectus supplement or pricing supplement relating to a specific issue of
securities. Our general corporate purposes may include acquisitions of other
companies, repurchasing shares of our common stock, extending credit to, or
funding investments in, our subsidiaries and such other purposes indicated in
the applicable prospectus supplement or pricing supplement. The precise amounts
and timing of our use of the net proceeds will depend upon our, and our
subsidiaries', funding requirements and the availability of other funds. Until
we use the net proceeds from the sale of any of our securities for general
corporate purposes, we will use the net proceeds to reduce our short-term
indebtedness or for temporary investments. We expect that we will, on a
recurrent basis, engage in additional financings as the need arises to finance
our growth, through acquisitions or otherwise, or to fund our subsidiaries.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges were as follows for
the five fiscal years in the period ended December 31, 2000 and the three months
ended March 31, 2001 and March 31, 2000:
Three Months
Ended March 31, Year Ended December 31,
--------------- -----------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
Earnings to fixed charges:
Excluding interest on deposits.......... 2.29x 2.42x 2.02x 2.56x 2.70x 2.55x 2.58x
Including interest on deposits.......... 1.48 1.52 1.38 1.55 1.54 1.49 1.50
For purposes of computing these ratios, earnings represent income from
continuing operations before extraordinary items and cumulative effects of
changes in accounting principals plus income taxes and fixed charges (excluding
capitalized interest). Fixed charges, excluding interest on deposits, represent
interest (other than on deposits, but including capitalized interest), one-third
(the proportion representative of the interest factor) of rents and all
amortization of debt issuance costs. Fixed charges, including interest on
deposits, represent all interest, one-third (the proportion representative of
the interest factor) of rents and all amortization of debt issuance costs.
REGULATORY CONSIDERATIONS
The Federal Reserve Board regulates, supervises and examines BB&T, which is
a financial holding company under the Bank Holding Company Act. For a discussion
of the material elements of the regulatory framework applicable to financial
holding companies and their subsidiaries and specific information relevant to
BB&T, please refer to our annual report on Form 10-K for the fiscal year ended
December 31, 2000, our current report on Form 8-K filed on April 27, 2001 (which
restated financial statements and other financial data set forth in our annual
report on Form 10-K), our quarterly report on Form 10-Q for the period ended
March 31, 2001, and any subsequent reports we file with the SEC, which are
incorporated by reference in this prospectus. This regulatory framework is
intended primarily for the protection of account holders. As a result of this
regulatory framework, our earnings are affected by actions of the Federal
Reserve Board, the Federal Deposit Insurance Corporation, which insures the
deposits of our banking subsidiaries within certain limits and regulates our
banking subsidiaries, and the SEC, which regulates the activities of certain
subsidiaries engaged in the securities business. In addition, our banking
subsidiaries are subject to regulation by state banking authorities.
Depositary institutions, like BB&T's bank subsidiaries, are also affected
by various federal laws, including those relating to consumer protection and
similar matters. BB&T also has other financial services subsidiaries that
7
are regulated, supervised and examined by the Federal Reserve Board and other
state and federal regulatory agencies and self-regulatory organizations.
Changes to federal laws and regulations and to the laws and regulations in
the states where we and our subsidiaries do business can affect the operating
environment of financial holding companies and their subsidiaries in substantial
and unpredictable ways. We cannot accurately predict whether legislation will
ultimately be enacted, and, if enacted, the ultimate effect that it, or
implementing regulations, would have upon our or our subsidiaries' financial
condition or results of operations.
DESCRIPTION OF THE DEBT SECURITIES
The debt securities will constitute either senior debt securities or
subordinated debt securities. The senior debt securities will be issued under a
senior indenture with State Street Bank and Trust Company, as senior trustee.
The subordinated debt securities will be issued under a subordinated indenture,
with State Street Bank and Trust Company, as subordinated trustee. We
collectively refer to the senior indenture and the subordinated indenture as the
"indentures" and the senior trustee and the subordinated trustee as the
"trustee."
In the event of the resignation or removal of the trustee prior to the
issuance of a particular series of debt securities, the trustee for such series
of debt securities will be identified in the prospectus supplement for such
series, and all references to "trustee" shall be deemed to mean the trustee so
identified. No trustee shall be responsible for the acts, obligations,
liabilities or responsibilities of any other trustee. The following summaries of
certain provisions of the indentures may not be complete and are subject to, and
are qualified in their entirety by reference to, all the provisions of the
indentures. Wherever particular sections or defined terms of the indentures are
referred to, we intend that such sections or definitions shall be incorporated
herein by reference. Capitalized terms not otherwise defined in this prospectus
or in the applicable prospectus supplement have the meanings given such terms in
the indentures.
The following sets forth certain terms and provisions of the debt
securities to which any prospectus supplement or pricing supplement may relate.
When we offer any debt securities --which we refer to as "Offered Securities" --
we will describe in that prospectus supplement or pricing supplement the
particular terms of the Offered Securities and the extent, if any, to which such
general provisions may apply to the Offered Securities.
Debt Securities Generally
The indentures do not limit the aggregate principal amount of debt
securities that may be issued under them and provide that debt securities may be
issued from time to time in one or more series. The debt securities will be our
direct, unsecured obligations and will not be obligations of a bank insured by
the FDIC or any other government agency. Neither the indentures nor the debt
securities will limit or otherwise restrict the amount of other indebtedness
that we may incur or other securities that we or any of our subsidiaries may
issue.
We refer you to the prospectus supplement or pricing supplement relating to
each particular series of Offered Securities for definitions of the following
terms of those Offered Securities:
. the title;
. any limit on the aggregate principal amount;
. whether the Offered Securities are senior debt securities or
subordinated debt securities;
. the price or prices, expressed as a percentage of the aggregate
principal amount of the Offered Securities, at which the Offered
Securities will be issued;
. the date or dates on which the Offered Securities will mature;
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. the rate or rates, which may be fixed or floating, per year at which
the Offered Securities will bear interest, if any, or the method of
determining the interest rates;
. the date from which interest, if any, on the Offered Securities will
accrue, the dates on which interest, if any, will be payable, the date
on which payment of interest, if any, will commence and the regular
record dates for such interest payment dates, if any;
. the extent to which any of the Offered Securities will be issuable in
the form of one or more temporary or permanent global securities, and
if so, the identity of the depositary for the global securities, or
the manner in which any interest payable on temporary or permanent
global securities will be paid;
. the dates, if any, on which, and the price or prices at which, we
will, pursuant to any mandatory sinking fund provisions, or may,
pursuant to any optional sinking fund or any purchase fund provisions,
redeem the Offered Securities, and the other detailed terms and
provisions of such sinking and/or purchase funds;
. the date, if any, after which, and the price or prices at which, we
may, pursuant to an optional redemption provision, redeem the Offered
Securities or the holder of the Offered Securities may require us to
redeem them, and the other detailed terms and provisions of such
optional redemption;
. the denomination or denominations in which the Offered Securities are
authorized to be issued;
. whether the Offered Securities will be issued as registered
securities, bearer securities, or both and any limitations on the
issuance of such bearer securities, including exchange for registered
securities of the same series;
. information with respect to book-entry procedures;
. each office or agency where, subject to the terms of the applicable
indenture, the Offered Securities may be presented for registration of
transfer or exchange; and
. any other terms of the Offered Securities, which will not be
inconsistent with the provisions of the applicable indenture.
We may issue debt securities as original issue discount securities to be
sold at a substantial discount below their principal amount. If we do, we will
describe special federal income tax and other considerations relating to the
original discount securities in the applicable prospectus supplement or pricing
supplement.
We may issue debt securities as registered securities, bearer securities or
both. Unless we otherwise indicate in the applicable prospectus supplement or
pricing supplement, each series of debt securities will be registered
securities. Debt securities issued as bearer securities will have interest
coupons attached, unless issued as zero coupon securities. Unless we otherwise
indicate in the applicable prospectus supplement or pricing supplement, we will
issue registered securities only in denominations of $1,000 or integral
multiples thereof and bearer securities only in denominations of $5,000 or
integral multiples thereof.
We will not offer, sell or deliver bearer securities in connection with
their original issuance in the United States or to any United States person
other than to offices located outside the United States of certain United States
financial institutions. "United States person" means any citizen or resident of
the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States or any estate or trust the
income of which is subject to United States federal income taxation regardless
of its source. "United States" means the United States of America, including the
States and the District of Columbia, and its possessions. Purchasers of bearer
securities will be subject to certification procedures and may be affected by
certain limitations under United
9
States tax laws. Those procedures and limitations will be described in the
prospectus supplement relating to the offering of the bearer securities.
The applicable prospectus supplement will include a description of the
requirements for certification of ownership by non-United States persons that
will apply prior to the issuance of bearer securities or the payment of interest
that occurs prior to the issuance of bearer securities.
Unless otherwise indicated in the applicable prospectus supplement or
pricing supplement, registered securities of any series, other than a global
security, except as set forth below, will be exchangeable into an equal
aggregate principal amount of registered securities of the same series, tenor
and terms of different authorized denominations and bearer securities may be
exchanged for registered securities on the terms set forth in the applicable
prospectus supplement. Registered securities will not be exchangeable for bearer
securities. Unless otherwise indicated in the applicable prospectus supplement
or pricing supplement, debt securities may be presented for exchange, and
registered securities (other than a global security) may be presented for
registration of transfer, at the offices of the appropriate trustee. We also may
designate in the applicable prospectus supplement or pricing supplement the
corporate trust department of Branch Bank as an office where the transfer of the
registered securities may be registered.
No service charge will be made for any registration of transfer or exchange
of the debt securities, but we may require payment sufficient to cover any tax
or other governmental charge payable in connection therewith.
Payment and Paying Agent
Unless otherwise indicated in the applicable prospectus supplement or
pricing supplement, payment of principal of and any premium and interest on
registered securities will be made at the office of the appropriate trustee,
except that at our option interest may be paid by mailing a check to the address
of the person entitled thereto as it appears on the security register (Section
3.02 of the senior indenture; Section 4.02 of the subordinated indenture). We
also may designate in the applicable prospectus supplement or pricing supplement
the corporate trust department of Branch Bank, as an office where principal and
any premium and interest on registered securities may be paid. Paying agents
will be named in the prospectus supplement or pricing supplement and may be
terminated at any time.
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of and any premium and interest on bearer securities will be made,
subject to applicable laws and regulations, at such paying agencies outside the
United States as we may designate from time to time. Any such payment may be
made, at the option of the holder, by check or by transfer to an account
maintained by the payee with a bank located outside the United States. Unless
otherwise indicated in the applicable prospectus supplement, payment of interest
on bearer securities will be made only against surrender of the coupon relating
to the relevant interest payment date. No payment with respect to any bearer
security will be made at any office or agency in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States.
Restriction on Sale or Issuance of Voting Stock of Principal Constituent
Banks
Except as described below under "Consolidation, Merger, Sale, Conveyance
and Lease," each indenture prohibits our sale or other disposition of shares of
or securities convertible into, or options, warrants or rights to subscribe for
or purchase shares of voting stock of a Principal Constituent Bank or a
Principal Constituent Bank's issuance of its own shares of or securities
convertible into, or options, warrants or rights to subscribe for or purchase
its own shares of voting stock if, in each case, after giving effect to such
transaction the Principal Constituent Bank would cease to be a Controlled
Subsidiary. In addition, each indenture prohibits the merger or consolidation
of a Principal Constituent Bank with any other corporation unless we are or a
Controlled Subsidiary is the surviving corporation, and the lease, sale or
transfer of all or substantially all the assets of a Principal Constituent Bank
to any corporation or person, except to us or a Controlled Subsidiary or a
person that, upon such lease, sale or transfer, will become our successor
company or a Controlled Subsidiary. The indentures, however, do not prohibit
any such sale,
10
assignment, transfer or disposition of securities, any such merger or
consolidation or any such lease, sale or transfer of properties and assets if
required by law or as a condition imposed by law to the acquisition by us or any
Controlled Subsidiary, directly or indirectly, of any person if, thereafter:
. such person would be a Controlled Subsidiary;
. our Consolidated Net Banking Assets would not be decreased; and
. Branch Bank would still be a Controlled Subsidiary (Section 3.06 of
the senior indenture; Section 4.06 of the subordinated indenture).
"Controlled Subsidiary" means any subsidiary of which more than 80% of the
aggregate voting power of the outstanding shares of the voting stock is at the
time owned directly or indirectly by us or by one or more of our Controlled
Subsidiaries , after giving effect to the issuance to any person other than us
or any Controlled Subsidiary of voting stock of the subsidiary issuable on
exercise of options, warrants or rights to subscribe for such voting stock or on
conversion of securities convertible into such voting stock.
"Principal Constituent Bank" means Branch Bank and, at any time, any other
bank subsidiary the total assets of which, as set forth in the most recent
statement of condition of such bank subsidiary, equal more than 30% of the total
assets of all bank subsidiaries as determined from the most recent statements of
condition of the bank subsidiaries.
Limitation on Creation of Liens
Each indenture provides that we will not create, assume, incur or suffer to
exist any pledge, encumbrance or lien, as security for indebtedness for borrowed
money, upon any shares of, or securities convertible into, or options, warrants
or rights to subscribe for or purchase shares of, voting stock of a Principal
Constituent Bank, if, treating the pledge, encumbrance or lien as a transfer to
the secured party, the Principal Constituent Bank would not be a Controlled
Subsidiary (Section 3.07 of the senior indenture; Section 4.07 of the
subordinated indenture).
Neither indenture restricts us from incurring, assuming or becoming liable
for any type of debt nor from creating, assuming, incurring or permitting to
exist any mortgage, pledge, encumbrance, lien or charge on our property (except
the voting stock of a Principal Constituent Bank). In addition, neither
indenture requires us to maintain any financial ratios or specified levels of
net worth or liquidity and or any other provisions that would provide protection
to holders of the debt securities due to a sudden or dramatic decline in the
credit quality of the debt securities caused by a change in control,
recapitalization or other capital restructuring.
Modification of the Indentures; Waiver of Covenants
Each indenture contains provisions permitting us and the trustee to modify
the indenture with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding debt securities of each series
affected thereby, except that, without the consent of the holder of each debt
security affected thereby, no such modification may, among other things:
. change the stated maturity date of the principal of or any premium, or
any installment of interest on, any outstanding security;
. reduce the principal amount of, or any premium or interest on, any
outstanding security;
. reduce the amount of principal of an original issue discount security
payable upon acceleration of the maturity thereof;
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. change the place of payment of principal of, or any premium or
interest on, any outstanding security;
. impair the right to institute suit for the enforcement of any payment
on or with respect to any outstanding security;
. reduce the percentage in principal amount of outstanding securities of
any series the consent of whose holders is required for modification
or amendment of the indenture or for waiver of compliance with certain
provisions of the indenture or for waiver of certain defaults and
their consequences; or
. in the case of the subordinated indenture, make any change in the
subordination provisions that adversely affects the rights of any
holder of subordinated debt securities.
Prior to any acceleration of the debt securities of any series, the holders
of a majority in aggregate principal amount of the outstanding debt securities
of such series may waive any past default or event of default under the
applicable indenture, except a default under a covenant that cannot be modified
without the consent of each holder of a debt security of the series affected
thereby (Section 4.07(b) of the senior indenture; Section 5.07(b) of the
subordinated indenture). In addition, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series may rescind a
declaration of acceleration of the debt securities of any series before any
judgment has been obtained if:
. we pay the trustee certain amounts due the trustee plus all matured
installments of principal of and any premium and interest on the debt
securities of such series, other than installments due by
acceleration, and interest on the overdue installments to the extent
provided in the applicable indenture, and
. all other defaults with respect to the debt securities of that series
under the applicable indenture have been cured or waived (Section 4.01
of the senior indenture; Section 5.01 of the subordinated indenture).
Consolidation, Merger, Sale, Conveyance and Lease
Each indenture provides that we may not consolidate with or merge into
another corporation, or convey, transfer or lease our properties and assets
substantially as an entirety to any person unless:
. the successor is organized under the laws of any domestic jurisdiction
and assumes our obligations on the debt securities and under the
applicable indenture;
. after giving effect to the transaction, no event of default, and no
event which, after notice or lapse of time or both, would become an
event of default, has occurred and is continuing; and
. certain other conditions are met (Section 9.01 of the senior
indenture; Section 10.01 of the subordinated indenture).
In that event, the successor will be substituted for us and, except in the
case of a lease, we will be relieved of our obligations under the applicable
indenture and the debt securities of each series (Section 9.02 of the senior
indenture; Section 10.02 of the subordinated indenture).
The Trustee
We will have no material relationship with the trustee other than as
trustee. Any Principal Constituent Bank may transact business with the trustee
in the ordinary course.
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The indentures, under the Trust Indenture Act of 1939, are deemed to
contain certain limitations on the right of the trustee, as our creditor, to
obtain payment of claims in certain cases or to realize on certain property
received in respect of any such claim, as security or otherwise. The trustee
will be permitted to engage in transactions with us, provided that those
transactions do not result in a material relationship between the trustee and
us. The occurrence of a default under either indenture with respect to
subordinated debt securities or senior debt securities could create a
conflicting interest for the trustee under the Trust Indenture Act. If the
default has not been cured or waived within 90 days after the trustee has or
acquires a conflicting interest, the trustee generally is required by the Trust
Indenture Act to eliminate such conflicting interest or resign as trustee with
respect to the senior debt securities or the subordinated debt securities. In
the event of the trustee's resignation, we promptly will appoint a successor
trustee with respect to the affected securities.
Senior Debt Securities
The senior debt securities will be our direct, unsecured obligations and
will rank equally and ratably with all our outstanding unsecured and
unsubordinated indebtedness.
Events of Default
The senior indenture defines an event of default with respect to any
particular series of senior debt securities as being any one of the following
events unless it is either inapplicable to a particular series or specifically
deleted or modified for the senior debt securities of such series:
. default for 30 days in the payment of any interest upon any of the
senior debt securities of that series;
. default in the payment of the principal of or any premium on any of
the senior debt securities of that series when due;
. default in the payment of any sinking fund installment or analogous
obligation with respect to any of the senior debt securities of that
series when due;
. a default or event of default under any instrument under which there
may be issued or borrowed, or by which there may be secured or
evidenced, any of our indebtedness, other than the senior debt
securities of that series or indebtedness to a subsidiary, or any
indebtedness of any subsidiary, other than indebtedness of any
subsidiary to us or to another subsidiary, shall happen and not less
than $1,000,000 of such indebtedness shall be past due, or become due
by acceleration, and such indebtedness or acceleration is not
discharged or rescinded within 15 days after notice by the senior
trustee or holders of at least 25% in aggregate principal amount of
the outstanding senior debt securities of that series calculated in
accordance with the formula set forth in such series in the case of a
series of senior debt securities issued as original issue discount
securities;
. final judgment(s) or order(s) for the payment of money in excess of
$1,000,000 is entered against us or one or more Principal Constituent
Banks and within 90 days of entry is not discharged or the execution
thereof is not stayed pending appeal, or within 90 days after the
expiration of the stay the judgment(s) or order(s) is not discharged;
. default in the observance or performance of any other covenant or
agreement in the senior debt securities of such series or the senior
indenture for 90 days after notice by the senior trustee or holders of
at least 25% in aggregate principal amount of the outstanding senior
debt securities of the series calculated in accordance with the
formula set forth in such series in the case of a series of senior
debt securities issued at an original issue discount; or
. certain events of bankruptcy, insolvency or reorganization involving
us or a Principal Constituent Bank (Section 4.01).
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If an event of default with respect to the senior debt securities of any
series shall occur and be continuing, the senior trustee or the holders of not
less than 25% in aggregate principal amount (in the case of a series of senior
debt securities issued at an original issue discount, calculated in accordance
with the formula set forth in such series) of all the outstanding senior debt
securities of that series may declare the principal (or in the case of a series
of senior debt securities issued at an original issue discount, the amount
calculated in accordance with the formula set forth in such series of senior
debt securities) of all the securities of that series to be immediately due and
payable (Section 4.01). The senior indenture provides that the senior trustee,
within 90 days after the occurrence of a default with respect to senior debt
securities of any series under the senior indenture, shall mail to the holders
of the senior debt securities of that series notice of all uncured defaults
known to it that have not been waived. The term "defaults" includes events
specified above that, after notice or lapse of time or both, would become an
event of default. Except in the case of default in the payment of principal of
or any premium or interest on any of the senior debt securities of that series
or in the making of any sinking fund payment or analogous obligation with
respect to the senior debt securities of that series, however, the senior
trustee may withhold such notice if it in good faith determines that withholding
such notice is in the interest of the holders of the securities of that series
(Section 4.08).
Subject to the provisions of the senior indenture relating to the duties of
the senior trustee in case an event of default shall occur and be continuing,
the senior trustee is under no obligation to exercise any of the rights or
powers vested in it under the senior indenture at the request, order or
direction of any of the holders of the senior debt securities, unless such
holders offer to the senior trustee reasonable security or indemnity (Section
5.02(d)). Subject to certain limitations contained in the senior indenture,
including among other limitations that the senior trustee will not be exposed to
personal liability, the holders of a majority in aggregate principal amount of
the outstanding senior debt securities of all series affected, voting as one
class, have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the senior trustee, or exercising any
trust or power conferred on the senior trustee (Section 4.07).
No holder of any senior debt security of any series will have any right to
institute any proceeding with respect to the senior indenture or for any remedy
thereunder, unless:
. such holder previously shall have given to the senior trustee written
notice of a continuing event of default with respect to senior debt
securities of that series,
. the holders of not less than 25% in aggregate principal amount (in the
case of a series of senior debt securities issued at an original issue
discount, calculated in accordance with the formula set forth in such
series) of the outstanding senior debt securities of that series shall
have made written request, and offered reasonable indemnity, to the
senior trustee to institute such proceeding as trustee, and
. the senior trustee shall not have received from the holders of a
majority in principal amount of the outstanding senior debt securities
of that series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days (Section
4.04).
The holder of any senior debt security, however, will have an absolute
right to receive payment of the principal of and any premium and interest, if
any, on such senior debt security on or after the due dates expressed in such
senior debt security and to institute suit for the enforcement of any such
payment (Section 4.04).
We are obligated to furnish annually to the senior trustee a statement as
to our performance of our obligations under the senior indenture and as to any
default in such obligations (Section 3.04).
Defeasance
We may terminate certain of our obligations under the senior indenture with
respect to the senior debt securities of any series on the terms and subject to
the conditions contained in the senior indenture, by:
. depositing irrevocably with the senior trustee as trust funds in
trust:
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. U.S. dollars or U.S. Government Obligations (as defined below) in
an amount which through the payment of interest, principal and
premium, if any, in respect thereof in accordance with their
terms will provide, without any reinvestment of such interest,
principal or premium, not later than one business day before the
due date of any payment, money, or
. a combination of money and U.S. Government Obligations sufficient
to pay the principal of and any premium and interest on the
senior debt securities of such series as such are due, and
. satisfying certain other conditions precedent specified in the senior
indenture.
Such deposit and termination are conditioned among other things upon our
delivery of an opinion of independent counsel that the holders of the senior
debt securities of such series will have no federal income tax consequences as a
result of such deposit and termination. Such termination will not relieve us of
our obligation to pay when due the principal of and premium and interest on the
senior debt securities of such series if the senior debt securities of such
series are not paid from the money or U.S. Government Obligations held by the
senior trustee for payment thereof (Section 13.05).
"U.S. Government Obligations" means securities that are direct obligations
of the United States of America for the payment of which its full faith and
credit are pledged or obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof.
Subordinated Debt Securities
The subordinated debt securities will be our direct, unsecured obligations
and will rank equally and ratably with all our outstanding subordinated
indebtedness. The subordinated debt securities will have a minimum weighted
maturity of at least five years.
Subordination
Our obligation to make any payment of principal, premium or interest on the
subordinated debt securities, to the extent set forth in the subordinated
indenture, will be subordinate and junior in right of payment to the prior
payment in full of all existing and future senior indebtedness, as that term is
defined in the subordinated indenture. Upon any distribution of our assets upon
any dissolution, winding up, liquidation or reorganization, the holders of
senior indebtedness are entitled to receive payment in full of principal and any
premium and interest before the holders of the subordinated debt securities are
entitled to receive any payment on account of the principal of and any premium
or interest on the subordinated debt securities. In a reorganization or
readjustment, however, holders of the subordinated debt securities may receive
our securities or securities of any other corporation that are subordinated to
both senior indebtedness and any securities received in the reorganization or
readjustment by holders of senior indebtedness, except to the extent that any
securities so received are by their terms expressly not superior in right of
payment to the subordinated debt securities (Section 3.03). Our dissolution,
winding up, liquidation or reorganization following a conveyance, transfer or
lease of our properties and assets substantially as an entirety in compliance
with the terms described above under "Consolidation, Merger, Sale, Conveyance
and Lease" will not be deemed to be a dissolution, winding up, liquidation or
reorganization for this purpose (Section 3.03(d)). In addition, we may not pay
principal of, or any premium or interest on, the subordinated debt securities
and may not acquire any subordinated debt securities for cash or property other
than our capital stock if a default on senior indebtedness occurs and is
continuing that permits holders of such senior indebtedness to accelerate its
maturity and such default is the subject of judicial proceedings or we receive
written notice of such default from a representative of all holders of the
senior indebtedness. If we receive any such notice, a similar notice received
within 360 days thereafter relating to the same default on the same issue of
senior indebtedness shall not be effective for such purpose. We may resume
payments on the subordinated debt securities and may acquire them when that
default is cured or waived or
15
shall have ceased to exist, or the senior indebtedness to which such default
relates shall have been paid in full in cash or cash equivalents or if that
default is not the subject of judicial proceedings, 120 days pass after we
receive such written notice (Section 3.02(b)).
By reason of this subordination, in the event of our insolvency, holders of
senior indebtedness may receive more, ratably, and holders of the subordinated
debt securities may receive less, ratably, than other of our creditors.
However, this subordination will not prevent the occurrence of any event of
default (Section 3.12).
The subordinated indenture does not restrict the incurrence of additional
senior indebtedness.
"Senior indebtedness" means the principal of, and premium, if any, on:
. all of our obligations for money borrowed, whenever created, except:
. such indebtedness as is by its terms expressly stated to be
junior in right of payment to the subordinated debt securities,
and
. such indebtedness as is by its terms expressly stated to rank
equal or "pari passu" in right of payment with the subordinated
debt securities, and
. any deferrals, renewals or extensions of any such senior indebtedness.
Limited Rights of Acceleration
Unless otherwise specified in the prospectus supplement or pricing
supplement relating to any series of subordinated debt securities, payment of
principal of the subordinated debt securities may be accelerated only in the
case of an "Acceleration Event" which is defined in the indenture as any of the
bankruptcy, insolvency or reorganization events with respect to us that
constitute an event of default. There is no right of acceleration in the case
of a default in the payment of principal of or any premium or interest on the
subordinated debt securities or our performance of any other covenant in the
subordinated indenture.
Conversion or Exchange
If and to the extent mentioned in the relevant prospectus supplement, any
subordinated debt securities series may be convertible or exchangeable into
other debt securities or common stock, preferred stock or depositary shares.
The specific terms on which any subordinated debt securities series may be so
converted or exchanged will be described in the relevant prospectus supplement.
These terms may include provisions for conversion or exchange, either mandatory,
at the holder's option or at our option, in which case the amount or number of
securities the subordinated debt securities holders would receive would be
calculated at the time and in the manner described in the relevant prospectus
supplement.
Events of Default
The subordinated indenture defines an event of default with respect to any
particular series of subordinated debt securities as being any one of the
following events unless it is either inapplicable to a particular series or
specifically deleted or modified for the subordinated debt securities of that
series:
. default for 30 days in the payment of any interest on any of the
subordinated debt securities of that series;
. default in the payment of the principal of or any premium on any of
the subordinated debt securities of that series when due;
16
. default in the payment of any sinking fund installment or analogous
obligation with respect to that series when due;
. a default or event of default under any instrument under which there
may be issued or borrowed, or by which there may be secured or
evidenced, any of our indebtedness, other than the subordinated debt
securities of that series or indebtedness to a subsidiary, or any
indebtedness of any subsidiary, other than indebtedness of any
subsidiary owing to us or to another subsidiary, shall happen and not
less than $1,000,000 of such indebtedness shall be past due, or become
due by acceleration, and such indebtedness or acceleration is not
discharged or rescinded within 15 days after notice by the
subordinated trustee or holders of at least 25% in aggregate principal
amount (in the case of a series of subordinated debt securities issued
at an original issue discount, calculated in accordance with the
formula set forth in such series) of the outstanding subordinated debt
securities of that series;
. final judgment(s) or order(s) for the payment of money in excess of
$1,000,000 is entered against us or one or more Principal Constituent
Banks and within 90 days of entry is not discharged, or the execution
thereof is not stayed pending appeal, or within 90 days after the
expiration of the stay, the judgment(s) or order(s) is not discharged;
. default in the observance or performance of any other covenant or
agreement in the subordinated debt securities of such series or the
subordinated indenture for 90 days after notice by the subordinated
trustee or holders of at least 25% in aggregate principal amount (in
the case of a series of subordinated debt securities issued at an
original issue discount, calculated in accordance with the formula set
forth in such series) of the outstanding subordinated debt securities
of the series; or
. certain events of bankruptcy, insolvency or reorganization involving
us or a Principal Constituent Bank (Section 5.01).
Rights of acceleration in case an event of default occurs are limited. See
"Limited Rights of Acceleration."
In case an Acceleration Event shall have occurred and be continuing, the
subordinated trustee or the holders of not less than 25% in aggregate principal
amount (in the case of a series of subordinated debt securities issued at an
original issue discount, calculated in accordance with the formula set forth in
such series) of the outstanding subordinated debt securities of that series may
declare the principal (or, in the case of a series of subordinated debt
securities issued at an original issue discount, the amount calculated in
accordance with the formulas set forth in such series of subordinated debt
securities) of all the securities of such series to be immediately due and
payable (Section 5.01). The subordinated indenture provides that the
subordinated trustee, within 90 days after the occurrence of a default with
respect to subordinated debt securities of any series under the subordinated
indenture, shall mail to the holders of the subordinated debt securities of that
series notice of all uncured defaults known to it that have not been waived.
The term "defaults" includes events specified above which, after notice or lapse
of time or both, would become an event of default. Except in the case of
default in the payment of principal of or any premium or interest on any of the
subordinated debt securities of that series or in the making of any sinking fund
payment or analogous obligation with respect to the subordinated debt securities
of that series, however, the subordinated trustee may withhold such notice if it
in good faith determines that withholding such notice is in the interest of the
holders of the subordinated debt securities of that series (Section 5.08).
Subject to the provisions of the subordinated indenture relating to the
duties of the subordinated trustee in case an event of default shall occur and
be continuing, the subordinated trustee is under no obligation to exercise any
of the rights or powers vested in it under the subordinated indenture at the
request, order or direction of any of the holders of the subordinated debt
securities, unless such holder offers to the subordinated trustee reasonable
security or indemnity (Section 6.02(d)). Subject to certain limitations
contained in the subordinated indenture, including among other limitations that
the subordinated trustee will not be exposed to personal liability, the holders
of a majority in aggregate principal amount of the outstanding subordinated debt
securities of all series affected, voting as
17
one class, have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the subordinated trustee, or exercising
any trust or power conferred on the subordinated trustee (Section 5.07).
No holder of any subordinated debt security of any series will have any
right to institute any proceeding with respect to the subordinated indenture or
for any remedy thereunder unless:
. such holder previously shall have given to the subordinated trustee
written notice of a continuing event of default with respect to
subordinated debt securities of that series, and
. the holders of not less than 25% in aggregate principal amount (in the
case of a series of subordinated debt securities issued at an original
issue discount, calculated in accordance with the formula set forth in
such series) of the outstanding subordinated debt securities of that
series shall have made written request, and offered reasonable
indemnity, to the subordinated trustee to institute such proceeding as
trustee, and
. the subordinated trustee shall not have received from the holders of a
majority in principal amount of the outstanding subordinated debt
securities of that series a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days
(Section 5.04).
The holder of any subordinated debt security will have an absolute right,
however, to receive payment of the principal of and any premium and interest on
such subordinated debt security on or after the due dates expressed in such
subordinated debt security and to institute suit for the enforcement of any such
payment (Section 5.04).
We are obligated to furnish to the subordinated trustee annually a
statement as to our performance of our obligations under the subordinated
indenture and as to any default in such obligations (Section 4.04).
DESCRIPTION OF PREFERRED STOCK
Our articles of incorporation authorize us to issue up to 5,000,000 shares
of preferred stock in one or more series, and our board has the authority to fix
the voting, conversion, exchange, redemption, liquidation and other rights,
preferences, privileges, qualifications and limitations of the preferred stock,
all without any further vote or action by our shareholders. Of the 5,000,000
shares of preferred stock that we are authorized to issue, we have reserved for
issuance 2,000,000 shares, and have designated such shares as our Series B
Junior Participating Preferred Stock, in connection with our shareholder rights
plan described below under "Description of Common Stock." No shares of
preferred stock are currently outstanding. The issuance of preferred stock
could decrease the amount of earnings and assets available for distribution to
holders of common stock, and adversely affect the rights and powers, including
voting rights, of such holders. We will describe the particular terms of any
series of preferred stock in the applicable prospectus supplement. When issued,
shares of preferred stock will be fully paid and nonassessable.
The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holders to block such a transaction. We could also issue shares of preferred
stock to facilitate a business combination proposed by us in opposition to an
unsolicited acquisition proposal. In addition, under certain circumstances, the
issuance of preferred stock could adversely affect the voting power of the
holders of the common stock. Although the board of directors is required to make
any determination to issue such stock based on its judgment as to the best
interests of our shareholders, the board could act in a manner that would
discourage an acquisition attempt or other transaction that some or even a
majority of the shareholders might believe to be in their best interests or in
which shareholders might receive a premium for their stock over the then market
price of such stock. The board of directors does not at present intend to seek
shareholder approval prior to any issuance of currently authorized stock, unless
otherwise required by law or the rules of any market on which our securities are
traded.
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Under Federal Reserve Board regulations, if the holders of any series of
preferred stock become entitled to vote for the election of directors because
dividends on that series are in arrears, that series may then be deemed a "class
of voting securities," and a holder of 25% or more of that series (or a holder
of 5% or more if it otherwise exercises a "controlling influence" over us) may
then be subject to regulation as a bank holding company. In addition, in that
event
. any bank holding company may be required to obtain Federal Reserve
Board approval, and any foreign bank, and any company that controls a
foreign bank, that has certain types of U.S. banking operations may be
required to obtain Federal Reserve Board approval under the
International Banking Act of 1978, to acquire 5% or more of any series
of preferred stock, and
. any person other than a bank holding company may be required to obtain
Federal Reserve Board approval under the Change in Bank Control Act to
acquire 10% or more of that series of preferred stock.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any prospectus supplement of certain
provisions of the deposit agreement and of the depositary shares and depositary
receipts does not purport to be complete and is subject to and qualified in its
entirety by reference to the forms of deposit agreement and depositary receipts
relating to each series of preferred stock which have been or will be filed with
the SEC in connection with the offering of such series of preferred stock.
General
At our option, we may elect to offer fractional interests in shares of
preferred stock, rather than shares of preferred stock. If we exercise this
option, we will provide for the issuance by a depositary to the public of
receipts for depositary shares. Each depositary share will represent fractional
interests of a particular series of preferred stock, which will be set forth in
the prospectus supplement relating to a particular series of preferred stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a separate deposit agreement between us and a
bank or trust company selected by us having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000. The
prospectus supplement relating to a series of depositary shares will set forth
the name and address of the depositary. Subject to the terms of the deposit
agreement, each owner of depositary shares will be entitled, in proportion to
the applicable fractional interests in shares of preferred stock underlying such
depositary shares, to all the rights and preferences of the preferred stock
underlying such depositary shares including dividend, voting, redemption,
conversion and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional interests in shares of the related
series of preferred stock in accordance with the terms of the offering described
in the related prospectus supplement.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received in respect of preferred stock to the record holders of
depositary shares relating to such preferred stock in proportion to the numbers
of such depositary shares owned by such holders on the relevant record date. The
depositary shall distribute only the amount, however, that can be distributed
without attributing to any holder of depositary shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as part of the
next sum received by the depositary for distribution to record holders of
depositary shares.
In the event of a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
entitled thereto, unless the depositary determines that it is not feasible to
make
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such distribution. If this happens, the depositary may, with our approval, sell
the property and distribute the net sale proceeds to the holders.
The deposit agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by us to holders of the
preferred stock shall be made available to the holders of depositary shares.
Redemption of Depositary Shares
If a series of the preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the proceeds
received by the depositary resulting from the redemption, in whole or in part,
of such series of the preferred stock held by the depositary. The depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the depositary shares
to be so redeemed at their respective addresses appearing in the depositary's
books. The redemption price per depositary share will be equal to the applicable
fraction of the redemption price per share payable with respect to that series
of the preferred stock. Whenever we redeem shares of preferred stock held by the
depositary, the depositary will redeem as of the same redemption date the number
of depositary shares relating to shares of preferred stock so redeemed. If less
than all of the depositary shares are to be redeemed, the depositary shares to
be redeemed will be selected by lot or pro rata as may be determined by the
depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the depositary shares will cease, except the right to receive the
money, securities or other property payable upon such redemption and any money,
securities or other property to which the holders of the depositary shares were
entitled upon such redemption upon surrender to the depositary of the depositary
receipts evidencing the depositary shares.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in such notice of meeting to the record holders of the depositary shares
relating to such preferred stock. Each record holder of depositary shares on the
record date, which will be the same date as the record date for the preferred
stock, will be entitled to instruct the depositary as to the exercise of the
voting rights pertaining to the number of shares of preferred stock underlying
such holder's depositary shares. The depositary will endeavor, insofar as
practicable, to vote the number of shares of preferred stock underlying such
depositary shares in accordance with such instructions, and we will agree to
take all action that the depositary may deem necessary to enable the depositary
to do so.
Amendment and Termination of Depositary Agreement
We may enter into an agreement with the depositary at any time to amend the
form of depositary receipt evidencing the depositary shares and any provision of
the deposit agreement. However, the holders of a majority of the depositary
shares must approve any amendment which materially and adversely alters the
rights of the existing holders of depositary shares. A deposit agreement may be
terminated by us or by the depositary only if all outstanding depositary shares
relating thereto have been redeemed or there has been a final distribution in
respect of the preferred stock of the relevant series in connection with any
liquidation, dissolution or winding up and such distribution has been
distributed to the holders of the related depositary shares.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred stock and any redemption of the preferred stock. Holders of depositary
shares will pay transfer and other taxes and governmental charges and such other
charges as are expressly provided in the deposit agreement to be for their
accounts.
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Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary, any such
resignation or removal to take effect upon the appointment of a successor
depositary and its acceptance of such appointment. Such successor depositary
must be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The depositary will forward to the holders of depositary shares all reports
and communications from us which are delivered to the depositary and which we
are required to furnish to the holders of the preferred stock.
Neither the depositary nor BB&T will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. The obligations of BB&T and the
depositary under the deposit agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary shares or preferred
stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
preferred stock for deposit, holders of depositary shares or other persons
believed to be competent and on documents believed to be genuine.
DESCRIPTION OF COMMON STOCK
General
We are authorized to issue 1,000,000,000 shares of common stock, par value
$5.00 per share. As of June 15, 2001, there were approximately 420,268,000
shares of common stock outstanding.
Holders of shares of common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of shareholders. There are no
cumulative voting rights with respect to the election of directors. Accordingly,
the holder or holders of a majority of the outstanding shares of common stock
will be able to elect our entire board of directors. Holders of common stock
have no preemptive rights to acquire additional shares and are entitled to such
dividends as may be declared by the board of directors out of legally available
funds. The common stock is not entitled to any sinking fund, redemption or
conversion provisions. If BB&T liquidates, dissolves or winds up its business,
the holders of common stock will be entitled to share ratably in our net assets
remaining after the payment of all creditors, if any, and the liquidation
preferences of any preferred shareholders. When issued, the shares of common
stock will be fully paid and nonassessable. The common stock is listed on the
New York Stock Exchange under the symbol "BBT." The transfer agent and
registrar for the common stock is Branch Bank.
Shareholder Rights Plan
On December 17, 1996, the board of directors adopted a shareholder rights
plan pursuant to which stock purchase rights were distributed as a dividend to
our common shareholders at a rate of one right for each share of common stock
held of record as of January 17, 1997 and for each share of stock issued
thereafter. Each right entitles the holder to purchase from BB&T 1/100th of a
share of BB&T Series B Junior Participating Preferred Stock (which is
substantially equivalent to one share of our common stock) at a price of
$145.00, subject to anti-dilution adjustments, or, under certain circumstances,
other securities or property.
The rights plan is designed to enhance the board's ability to prevent an
acquiror from depriving shareholders of the long-term value of their investment
and to protect shareholders against attempts to acquire BB&T by means of unfair
or abusive takeover tactics that have been prevalent in many unsolicited
takeover attempts.
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Under the rights plan, the rights will become exercisable only if a person
or a group acquires or commences a tender offer for 20% or more of our
outstanding common stock or our board declares any person to be an "adverse
person." Our board will declare a person to be an adverse person upon its
determinations
. that the person, alone or together with its affiliates and associates,
has or will become the beneficial owner of 10% or more of our common
stock and
. that the beneficial ownership by the person (a) is intended or is
reasonably likely to cause us to repurchase the common stock
beneficially owned by the person or otherwise provide the person with
short-term financial gain contrary to our best long-term interests,
(b) is reasonably likely to have a material adverse effect on our
business or prospects or (c) otherwise is not in the best interests of
BB&T and our shareholders, employees, customers and communities in
which we and our subsidiaries do business.
Until they become exercisable, the rights attach to and trade with the
common stock. The rights will expire December 31, 2006. The rights may be
redeemed by the board at $0.01 per right until 10 days after a person or group
has accumulated 20% or more of the common stock or, if earlier, the effective
date of the board's declaration that a person has become an adverse person. All
rights held or acquired by a person or group holding 20% or more of our shares
or by an adverse person are void.
If a person or group acquired 25% or more of our common stock or the board
declared a person to be an adverse person, the rights would then be modified to
represent the right to receive, for the exercise price, common stock having a
value worth twice the exercise price.
If we were acquired in a merger or other business combination at any time
after a person or group has acquired 20% or more of our common stock, the rights
would be modified so as to entitle a holder to buy a number of shares of common
stock of the acquiring entity having a market value of twice the exercise price
of each right.
Other Provisions
Our articles and bylaws contain various provisions which may discourage or
delay attempts to gain control of BB&T. Our articles include provisions
. classifying the board of directors into three classes, each class to
serve for three years, with one class elected annually;
. authorizing the board of directors to fix the size of the board
between three and 30 directors;
. authorizing directors to fill vacancies on the board occurring between
annual shareholder meetings;
. providing that directors may be removed only for cause and only by
majority vote of shares entitled to vote;
. authorizing only the board of directors, BB&T's chief executive
officer, president or secretary to call a special meeting of
shareholders; and
. requiring a vote by the holders of two-thirds of the common stock to
alter certain of the above provisions.
Our bylaws include specific conditions under which business may be
transacted at annual shareholders' meetings, and persons may be nominated for
election as directors at annual shareholders' meetings.
Under the Bank Holding Company Act, any "company" would be required to
obtain Federal Reserve Board approval before acquiring 25% or more of the
outstanding common stock of BB&T. If the acquiror is a bank
22
holding company, this approval is required before acquiring 5% of the
outstanding stock. Obtaining "control" over BB&T would also require Federal
Reserve Board prior approval. "Control" generally means
. the ownership or control of 25% or more of a bank holding company
voting securities class,
. the ability to elect a majority of the bank holding company's
directors, or
. the ability otherwise to exercise a controlling influence over the
bank holding company's management and policies.
Certain provisions of the North Carolina banking statute apply to the
acquisition of voting stock resulting in the change of control of a bank or bank
holding company if the acquisition is not otherwise subject to approval under
the federal Bank Holding Company Act or does not involve acquisition of voting
stock of a bank holding company whose principal banking subsidiary is a national
bank. The North Carolina statutes provide that the acquisition may not be
consummated without prior approval of the Commissioner of Banks, upon
application filed 60 days before the effective date. For these purposes,
acquisition of control is presumed upon acquisition of 10 percent or more of the
outstanding voting stock of the bank or bank holding company.
In addition, the federal Change in Bank Control Act prohibits a person or
group of persons (not constituting a "company" under the Bank Holding Company
Act) from acquiring "control" of a bank holding company unless the Federal
Reserve Board has been given 60 days' prior written notice of the proposed
acquisition, and within that time period, the Federal Reserve Board has not
issued a notice disapproving the proposed acquisition or extending for up to
another 30 days the period during which such a disapproval may be issued, or
unless the acquisition otherwise requires Federal Reserve Board approval. An
acquisition may be made before expiration of the disapproval period if the
Federal Reserve Board issues written notice that it intends not to disapprove
the action. It is generally assumed that the acquisition of more than 10% of a
class of voting stock of a bank holding company with publicly held securities,
such as BB&T, would constitute the acquisition of control.
The North Carolina Control Share Acquisition Act applies to BB&T. This Act
is designed to protect shareholders of publicly owned North Carolina
corporations based in the state against certain changes in control and to
provide shareholders with the opportunity to vote on whether to afford voting
rights to certain shareholders. The Act is triggered upon the acquisition by a
person of shares of voting stock of a covered corporation that, when added to
all other shares beneficially owned by the person, would result in that person
holding one-fifth, one-third or a majority of the voting power in the election
of directors. Under the Act, shares that are the subject of an acquisition
causing a person to cross any of these thresholds have no voting rights until
they are conferred by the affirmative vote of the holders of a majority of all
outstanding voting shares, excluding those shares held by any person involved or
proposing to be involved in the acquisition of shares in excess of the
thresholds, any officer of the corporation and any employee of the corporation
who is also a director of the corporation. If voting rights are conferred on the
acquired shares, all shareholders of the corporation have the right to require
that their shares be redeemed at the highest price paid per share by the
acquiror for any of the acquired shares.
In addition, in certain instances the ability of our board to issue
authorized but unissued shares of common stock or preferred stock may have an
anti-takeover effect.
Existence of the above provisions could result in our being less attractive
to a potential acquiror, or result in our shareholders receiving less for their
shares of common stock than otherwise might be available if there were a
takeover attempt.
DESCRIPTION OF WARRANTS
We may issue warrants including warrants to purchase debt securities,
warrants to purchase common stock or preferred stock, and warrants to purchase
equity securities issued by an unaffiliated corporation or other entity and held
by us. We may issue warrants independently of or together with any other
securities, and the warrants may be attached to or separate from such
securities. We will issue each series of warrants under a separate warrant
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agreement to be entered into between us and a warrant agent. The warrant agent
will act solely as our agent in connection with the warrant of such series and
will not assume any obligation or relationship of agency for or with holders or
beneficial owners of warrants. The following sets forth certain general terms
and provisions of the warrants that we may offer. Further terms of the warrants
and the applicable warrant agreement will be set forth in the applicable
prospectus supplement.
Debt Warrants
The applicable prospectus supplement will describe the terms of any debt
warrants, including the following:
. the title of the debt warrants;
. the offering price for the debt warrants, if any;
. the aggregate number of the debt warrants;
. the designation and terms of the debt securities purchasable upon
exercise of the debt warrants;
. if applicable, the designation and terms of the securities with which
the debt warrants are issued and the number of debt warrants issued
with each of these securities;
. if applicable, the date after which the debt warrants and any
securities issued with the warrants will be separately transferable;
. the principal amount of debt securities purchasable upon exercise of a
debt warrant and the purchase price;
. the dates on which the right to exercise the debt warrants begins and
expires;
. if applicable, the minimum or maximum amount of the debt warrants that
may be exercised at any one time;
. whether the debt warrants represented by the debt warrant certificates
or debt securities that may be issued upon exercise of the debt
warrants will be issued in registered or bearer form;
. information with respect to any book-entry procedures;
. the currency, currencies or currency units in which the offering
price, if any, and the exercise price are payable;
. if applicable, a discussion of certain United States federal income
tax considerations;
. any antidilution provisions of the debt warrants;
. any redemption or call provisions applicable to the debt warrants; and
. any additional terms of the debt warrants, including terms, procedures
and limitations relating to the exchange and exercise of the debt
warrants.
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Stock and Other Warrants
The applicable prospectus supplement will describe the terms of any stock
warrants or other warrants to purchase equity securities issued by an
unaffiliated corporation or other entity and held by us, including the
following:
. the title of the stock warrants or other warrants;
. the offering price of the stock warrants or other warrants, if any;
. the aggregate number of the stock warrants or other warrants;
. the designation and terms of the common stock, preferred stock or
equity securities issued by an unaffiliated corporation or other
entity and held by us that is purchasable upon exercise of the stock
warrants or other warrants;
. if applicable, the designation and terms of the securities with which
the stock warrants or other warrants are issued and the number of such
stock warrants or other warrants issued with each such security;
. if applicable, the date after which the stock warrants or other
warrants and any securities issued with the warrants will be
separately transferable;
. the number of shares of common stock, preferred stock or equity
securities issued by an unaffiliated corporation or other entity and
held by us purchasable upon exercise of a stock warrant or other
warrant and the purchase price;
. the dates on which the right to exercise the stock warrants or other
warrants begins and expires;
. if applicable, the minimum or maximum amount of the stock warrants or
other warrants which may be exercised at any one time;
. the currency, currencies or currency units in which the offering
price, if, any, and the exercise price are payable;
. if applicable, a discussion of certain United States federal income
tax considerations;
. any antidilution provisions of the stock warrants or other warrants;
. any redemption or call provisions applicable to the stock warrants or
other warrants; and
. any additional terms of the stock warrants or other warrants,
including terms, procedures and limitations relating to the exchange
and exercise of the stock warrants or other warrants.
GLOBAL SECURITIES
Book-Entry, Delivery and Form
We have obtained the information in this section concerning DTC,
Clearstream, Euroclear and the book-entry system and procedures from sources
that we believe to be reliable, but we take no responsibility for the accuracy
of this information.
Unless otherwise mentioned in the relevant prospectus supplement, we
anticipate that securities other than common stock will be issued in the form of
one or more global certificates, or "global securities," registered in the name
of a depositary or its nominee. Unless otherwise mentioned in the relevant
prospectus supplement, the depositary will be The Depository Trust Company,
commonly referred to as DTC, and global securities will be registered, at the
request of DTC, in the name of Cede & Co. Beneficial interests in the global
securities will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as participants in DTC.
Unless otherwise mentioned in the relevant prospectus supplement, investors may
elect to hold their interests in the global securities through either DTC (in
the United States) or (in Europe) through Clearstream Banking S.A., or
"Clearstream," formerly Cedelbank, or through Euroclear Bank S.A.IN.V., as
operator of the Euroclear System, or "Euroclear." Investors may hold their
interests in the securities directly if they are participants in such systems,
or indirectly through organizations that are participants in these systems.
Clearstream and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Clearstream's and Euroclear's names on
the books of their respective depositaries, which in turn will hold these
interests in customers' securities accounts in the depositaries' names on the
books of DTC. Unless otherwise mentioned in the relevant prospectus supplement,
Citibank, N.A. will act as depositary for Clearstream and J.P. Morgan Chase &
Co. will act as depositary for Euroclear. We refer to Citibank and J.P. Morgan
Chase in these capacities as the "U.S. Depositaries." Beneficial interests in
the global securities will be held in authorized denominations of such
securities. Except as set forth below, the global securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee.
Securities represented by a global security can be exchanged for definitive
securities in registered form only if:
. DTC notifies us that it is unwilling or unable to continue as
depositary for that global security and we do not appoint a
successor depositary within 90 days after receiving that notice;
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. at any time DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 and we do not appoint a
successor depositary within 90 days after becoming aware that DTC
has ceased to be registered as a clearing agency;
. we in our sole discretion determine that that global security
will be exchangeable for definitive securities in registered form
and notify the trustee of our decision; or
. an event of default with respect to the securities represented by
that global security has occurred and is continuing.
A global security that can be exchanged as described in the preceding
sentence will be exchanged for definitive securities issued in authorized
denominations of such securities in registered form for the same aggregate
amount. The definitive securities will be registered in the names of the owners
of the beneficial interests in the global security as directed by DTC.
If applicable, we will make payments with respect to all securities
represented by a global security to the paying agent which in turn will make
payment to DTC or its nominee, as the case may be, as the sole registered owner
and the sole holder of the securities represented by global securities.
Accordingly, we, the trustee and any paying agent will have no responsibility or
liability for:
. any aspect of DTC's records relating to, or payments made on
account of, beneficial ownership interests in a note represented
by a global security;
. any other aspect of the relationship between DTC and its
participants or the relationship between those participants and
the owners of beneficial interests in a global security held
through those participants; or
. the maintenance, supervision or review of any of DTC's records
relating to those beneficial ownership interests.
DTC has advised us that its current practice is to credit participants'
accounts on each payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global security
as shown on DTC's records, upon DTC's receipt of funds and corresponding detail
information. The underwriter will initially designate the accounts to be
credited. Payments by participants to owners of beneficial interests in a
global security will be governed by standing instructions and customary
practices, as is the case with securities held for customer accounts registered
in "street name," and will be the sole responsibility of those participants.
DTC
So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner and
holder of the securities represented by that global security for all purposes of
the securities. Owners of beneficial interests in the securities will not be
entitled to have securities registered in their names. Accordingly, each person
owning a beneficial interest in a global security must rely on the procedures of
DTC and, if that person is not a DTC participant, on the procedures of the
participant through which that person owns its interest, to exercise any rights
of a holder of securities. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of the securities in
certificated form. These laws may impair the ability to transfer beneficial
interests in a global security.
We understand that, under existing industry practices, if we request
holders to take any action, or if an owner of a beneficial interest in a global
security desires to take any action which a holder is entitled to take, then DTC
would authorize the participants holding the relevant beneficial interests to
take that action and those participants would authorize the beneficial owners
owning through such participants to take that action or would otherwise act upon
the instructions of beneficial owners owning through them.
Beneficial interests in a global security will be shown on, and transfers
of those ownership interests will be effected only through, records maintained
by DTC and its participants for that global security. The conveyance of notices
and other communications by DTC to its participants and by its participants to
owners of beneficial interests in the securities will be governed by
arrangements among them, subject to any statutory or regulatory requirements in
effect.
DTC has advised us that it is a limited-purpose trust company organized
under the New York banking law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Securities Exchange Act of 1934.
DTC holds the securities of its participants and facilitates the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of its
participants. The electronic book-entry system eliminates the need for physical
certificates. DTC's participants include securities brokers and dealers,
including the underwriter, banks, trust companies, clearing corporations and
certain other organizations, some of which, and/or their representatives, own
DTC. Banks, brokers, dealers, trust companies and others that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, also have access to DTC's book-entry system. The rules applicable to
DTC and its participants are on file with the SEC.
DTC has advised us that the above information with respect to DTC has been
26
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
Clearstream
Clearstream has advised us that it is incorporated under the laws of
Luxembourg as a bank. Clearstream holds securities for its participating
organizations, or "Clearstream Participants," and facilitates the clearance and
settlement of securities transactions between Clearstream Participants through
electronic book-entry changes in accounts of Clearstream Participants, thereby
eliminating the need for physical movement of certificates. Clearstream
provides to Clearstream Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream interacts with
domestic securities markets in over 30 countries through established depository
and custodial relationships. As a bank, Clearstream is subject to regulation by
the Luxembourg Commission for the Supervision of the Financial Sector
(Commission de Surveillance du Secteur Financier). Clearstream Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriter. Clearstream's
U.S. Participants are limited to securities brokers and dealers and banks.
Indirect access to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream Participant either directly or indirectly.
Distributions with respect to securities held beneficially through
Clearstream will be credited to cash accounts of Clearstream Participants in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Clearstream.
Euroclear
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear, or "Euroclear Participants," and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear performs various other services, including
securities lending and borrowing and interacts with domestic markets in several
countries. Euroclear is operated by Euroclear Bank S.A./N.V., or the "Euroclear
Operator," under contract with Euroclear Clearance Systems plc, a Belgian
corporation. All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not Euroclear Clearance Systems. Euroclear
Clearance Systems establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks, including central banks,
securities brokers and dealers and other professional financial intermediaries
and may include the underwriter. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is a Belgian bank. As such it is regulated by the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law, which we refer to in this prospectus as the "Terms and Conditions." The
Terms and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments with
respect to securities in Euroclear. All securities in Euroclear are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to securities held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
Euroclear has further advised us that investors that acquire, hold and
transfer interests in the securities by book-entry through accounts with the
Euroclear Operator or any other securities intermediary are subject to the laws
and contractual provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the relationship
between such an intermediary and each other intermediary, if any, standing
between themselves and the global securities.
The Euroclear Operator has advised us that under Belgian law, investors
which are credited with securities on the records of the Euroclear Operator have
a co-proprietary right in the fungible pool of interests in securities on
deposit with the Euroclear Operator in an amount equal to the amount of
interests in securities credited to their accounts. In the event of the
insolvency of the Euroclear Operator, Euroclear Participants would have a right
under Belgian law to the return of the amount and type of interests in
securities credited to their accounts with the Euroclear Operator. If the
Euroclear Operator did not have a sufficient amount of interests in securities
on deposit of a particular type to cover the claims of all Euroclear
Participants credited with such interests in securities on the Euroclear
Operator's records, all Euroclear Participants having an amount of interests in
securities of such type credited to their accounts with the Euroclear Operator
would then have the right under Belgian law only to the return of their pro rata
share of the amount of interests in securities actually on deposit.
27
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such as
dividends, voting rights and other entitlements) to any person credited with
such interest in securities on its records.
Global Clearance and Settlement Procedures
Initial settlement for the securities will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream Participants and/or Euroclear Participants will
occur in the ordinary way in accordance with the applicable rules and operating
procedures of Clearstream and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities through DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of securities received through
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear Participants or Clearstream Participants on such
business day. Cash received in Clearstream or Euroclear as a result of sales of
securities by or through a Clearstream Participant or a Euroclear Participant to
a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Clearstream or Euroclear cash account only as
of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among participants of
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be modified or
discontinued at any time. Neither we nor the paying agent will have any
responsibility for the performance by DTC, Euroclear or Clearstream or their
respective direct or indirect participants of their obligations under the rules
and procedures governing their operations.
28
PLAN OF DISTRIBUTION
We may sell securities to or through underwriters, including broker dealer
affiliates of BB&T, to be designated at various times, and also may sell
securities to dealers, directly to other purchasers or through agents. The
distribution of securities may be effected at various times in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
The debt securities, preferred stock, depositary shares and warrants will
be new issues of securities with no established trading market. It has not
presently been established whether the underwriters, if any, of these securities
will make a market in these securities. If a market in these securities is made
by those underwriters, this market making may be discontinued at any time
without notice. No assurance can be given as to the liquidity of the trading
market for these securities.
This prospectus and the related prospectus supplements may be used by our
broker dealer affiliates for offers and sales related to market-making
transactions in the securities. Such broker dealer affiliates may act as
principal or agent in these transactions. These sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
29
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated June 28, 2001
Prospectus
BB&T CORPORATION
_______________
BB&T CAPITAL TRUST I
Trust Preferred Securities
Fully and Unconditionally
Guaranteed By BB&T Corporation
_______________
The Trust:
The trust is a Delaware business trust. The trust may from time to time:
. sell trust preferred securities representing undivided beneficial
interests in the trust to the public;
. sell common securities representing undivided beneficial interests in
the trust to BB&T Corporation;
. use the proceeds from these sales to buy an equal principal amount of
junior subordinated debentures of BB&T Corporation; and
. distribute the cash payments it receives on the junior subordinated
debentures it owns to the holders of the trust preferred and common
securities.
Distributions:
For each trust preferred security that you own, you will receive cumulative
cash distributions at a rate set forth in the accompanying prospectus supplement
on the liquidation amount of the preferred security. The liquidation amount per
trust preferred security will be set forth in the accompanying prospectus
supplement.
BB&T Corporation:
BB&T Corporation will fully and unconditionally guarantee the payment by
the trust of the trust preferred securities based on obligations discussed in
this prospectus. This is called the trust preferred securities guarantee.
The aggregate initial offering price of the securities that we offer will
not exceed $1,000,000,000. We will offer the securities in amounts, at prices
and on terms to be determined by market conditions at the time of our offering.
We will provide the specific terms of the securities in supplements to this
prospectus. You should read this prospectus and the prospectus supplements
carefully before you invest in the securities. This prospectus may not be used
to consummate sales of securities unless accompanied by a prospectus supplement.
1
A security is not a deposit and the securities are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________________ __, 2001.
2
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS AND THE
ACCOMPANYING PROSPECTUS SUPPLEMENT
We may provide information to you about the securities we are offering in
three separate documents that progressively provide more detail:
. this prospectus, which provides general information, some of which may
not apply to your securities;
. an accompanying prospectus supplement, which describes the terms of
the securities, some of which may not apply to your securities; and
. if necessary, a pricing supplement, which describes the specific terms
of your securities.
If the terms of your securities vary between the pricing supplement, the
prospectus supplement and the accompanying prospectus, you should rely on the
information in the following order of priority:
. the pricing supplement, if any;
. the prospectus supplement; and
. the prospectus.
Unless indicated in the applicable prospectus supplement, neither we nor
the underwriters have taken any action that would permit us to publicly sell
these securities in any jurisdiction outside the United States. If you are an
investor outside the United States, you should inform yourself about and comply
with any restrictions as to the offering of the securities and the distribution
of this prospectus.
TABLE OF CONTENTS
About this Prospectus................................ 4 Description of Junior Subordinated Debentures........ 9
Where You Can Find More Information.................. 4 Description of Trust Preferred Securities............ 20
Incorporation of Certain Information by Reference.... 4 Common Securities.................................... 32
Forward-Looking Statements........................... 5 Description of Guarantees............................ 32
BB&T Corporation..................................... 6 Relationship Among Trust Preferred Securities,
Corresponding Junior Subordinated Debentures and
Guarantees........................................... 34
The Trust............................................ 7 Global Securities.................................... 36
Reason for the Transaction........................... 8 Plan of Distribution................................. 38
Use of Proceeds...................................... 8 Validity of Securities............................... 40
Consolidated Ratio of Earnings to Fixed Charges...... 8 Experts.............................................. 40
Regulatory Considerations ........................... 8
3
ABOUT THIS PROSPECTUS
This prospectus provides you with a general description of some of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
the offering and the securities. The prospectus supplement may also add, update
or change information contained in this prospectus. Any statement that we make
in this prospectus will be modified or superseded by any inconsistent statement
made by us in a prospectus supplement. You should read both this prospectus and
any prospectus supplement together with the additional information described in
the following section.
Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "BB&T," "we," "us," "our" or similar references
mean BB&T Corporation.
WHERE YOU CAN FIND MORE INFORMATION
The registration statement that we have filed with the SEC under the
Securities Act of 1933 to register, among other securities, the offer and sale
of securities offered by this prospectus includes exhibits, schedules and
additional relevant information about us. The rules and regulations of the SEC
allow us to omit certain information included in the registration statement from
this prospectus.
In addition, we file reports, proxy statements and other information with
the SEC. You may read and copy any document we have filed at the SEC's public
reference rooms located at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549, and at regional offices of the SEC at the Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
at 7 World Trade Center, New York, New York 10048. For further information on
the SEC's public reference rooms, please call 1-800-SEC-0330. Our filings are
also available to the public from the SEC's Internet web site at
http://www.sec.gov. Information about us also may be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006, and at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Information filed with the SEC after the date of this prospectus will
automatically update and supersede this information. The following documents
filed with the SEC are incorporated by reference:
(1) annual report on Form 10-K for the year ended December 31, 2000;
(2) quarterly report on Form 10-Q for the quarter ended March 31,
2001;
(3) current reports on Form 8-K filed with the SEC on January 12,
2001, January 24, 2001 (two), February 8, 2001, April 11, 2001
and April 27, 2001; and
(4) descriptions of BB&T's common stock and preferred stock purchase
rights set forth in registration statements on Form 8-A filed
September 4, 1991 and January 10, 1997, respectively, and in any
amendment or report filed for the purpose of updating such
descriptions.
Future filings we make with the SEC, such as annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and proxy
statements, are incorporated by reference in this prospectus until we complete
the offering of the securities.
We will provide each person to whom a copy of this prospectus has been
delivered, without charge, a copy of any of the documents referred to above as
being incorporated by reference. You may request a copy by writing or
telephoning Investor Relations, 150 South Stratford Road, Suite 400, Winston-
Salem, North Carolina 27104 (336-733-3058).
4
No separate financial statements of the trust are included in this
prospectus. BB&T and the trusts do not consider that such financial statements
would be material to holders of trust preferred securities because the trust is
a special purpose entity, has no operating history or independent operations and
is not engaged in and does not propose to engage in any activity other than
holding as trust assets the corresponding junior subordinated debentures of BB&T
and issuing the trust securities. Furthermore, taken together, BB&T's
obligations under each series of corresponding junior subordinated debentures,
the junior indenture pursuant to which the corresponding junior subordinated
debentures will be issued, the related trust agreement, the related expense
agreement and the related guarantee provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of distributions and other
amounts due on the related trust preferred securities of the trust. For a more
detailed discussion see "The Trust", "Description of Trust Preferred
Securities", "Description of Junior Subordinated Debentures -- Corresponding
Junior Subordinated Debentures" and "Description of Guarantees". In addition, we
do not expect that the trust will be filing reports with the SEC under the
Securities Exchange Act of 1934.
Neither we nor the trust have authorized anyone to give any information or
make any representation about us that is different from, or in addition to, the
representations contained in this prospectus or in any of the materials that we
have incorporated into this prospectus. If anyone does give you information of
this sort, you should not rely on it. If you are in a jurisdiction where offers
to sell, or solicitations of offers to purchase, the securities offered by this
prospectus are unlawful, or if you are a person to whom it is unlawful to direct
these types of activities, then the offer presented in this prospectus does not
extend to you. The information contained in this prospectus speaks only as of
the date of this prospectus unless the information specifically indicates that
another date applies.
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference, contains certain forward-looking statements with respect to our
financial condition, results of operations, plans, objectives, future
performance and business, including, statements preceded by, followed by or that
include the words "believes," "expects," "anticipates," "estimates" or similar
expressions.
These forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those contemplated by the forward-looking
statements due to many factors, including
. competitive pressures among depositary and other financial
institutions may increase significantly;
. changes in the interest rate environment may reduce margins;
. general economic conditions, either nationally or regionally, may be
less favorable than expected, resulting in, among other things, a
deterioration in credit quality and/or a reduced demand for credit;
. legislative or regulatory changes, including changes in accounting
standards, may adversely affect the businesses in which we are
engaged;
. deposit attrition, customer loss or revenue loss following recent or
pending mergers may be greater than expected;
. costs or difficulties related to the integration of our businesses
with those of our merger partners may be greater than expected;
. expected cost savings associated with recent or pending mergers may
not be fully realized or realized within the expected time frame;
. competitors may have greater financial resources and develop products
that enable such competitors to compete more successfully than BB&T;
and
. adverse changes may occur in the securities markets.
5
BB&T CORPORATION
General
We are a financial holding company headquartered in Winston-Salem,
North Carolina. We operate, primarily through our commercial banking
subsidiaries, which do business in Alabama, Georgia, Kentucky, Maryland, North
Carolina, South Carolina, Tennessee, Virginia, Washington, D.C. and West
Virginia.
Our largest subsidiary, Branch Banking and Trust Company, referred to
in this prospectus as "Branch Bank," was chartered in 1872 and is the oldest
bank headquartered in North Carolina. At March 31, 2001, Branch Bank operated
334 banking offices in North Carolina, 100 in Georgia, 85 in West Virginia, 81
in Maryland, 33 in Tennessee, 10 in Kentucky and eight in Washington, D.C..
Branch Bank's principal subsidiaries include: BB&T Leasing Corp., based in
Charlotte, North Carolina, which specializes in lease financing to commercial
businesses and municipal governments; BB&T Investment Services, Inc., located in
Charlotte, North Carolina, which offers nondeposit investment alternatives,
including fixed-rate and variable rate annuities, mutual funds and discount
brokerage services; and BB&T Insurance Services, Inc., headquartered in Raleigh,
North Carolina, which is the 11/th/ largest retail insurance broker in the
country. Branch Bank has a number of additional subsidiaries, including Prime
Rate Premium Finance Corporation, Inc., located in Florence, South Carolina,
which provides insurance premium financing primarily to clients in our principal
market area; and Laureate Capital Corp., located in Charlotte, North Carolina,
which principally specializes in arranging financing of commercial and multi-
family real estate.
Our other commercial banking subsidiaries are Branch Banking and Trust
Company of South Carolina and Branch Banking and Trust Company of Virginia. At
March 31, 2001, Branch Banking and Trust Company of South Carolina operated 101
banking offices in South Carolina and Branch Banking and Trust Company of
Virginia operated 141 banking offices in Virginia.
Our nonbank subsidiaries include Scott & Stringfellow, Inc., an
investment banking and full-service brokerage firm headquartered in Richmond,
Virginia. At March 31, 2001, Scott & Stringfellow operated 23 full-service
brokerage offices in Virginia, 11 in North Carolina, seven in South Carolina,
one in Maryland and one in Tennessee. Scott & Stringfellow specializes in the
origination, trading and distribution of fixed-income securities and equity
products in both the public and private capital markets. Scott & Stringfellow
also provides investment banking, financial advisory and underwriting services
to a variety of regional corporate and municipal issuers.
We have a number of other nonbank subsidiaries, including BB&T
Bankcard Corporation, which provides credit card services; Regional Acceptance
Corporation, which engages in automobile financing; and W.E. Stanley, Inc., an
actuarial and employee benefits consulting firm.
The primary services offered by our subsidiaries include:
. Small business lending . Treasury services
. Commercial middle market lending . Investment and mutual funds sales
. Retail lending . Capital markets
. Home equity lending . Factoring
. Sales finance . Asset-based lending
. Mortgage lending . International banking services
. Leasing . Cash management
6
. Asset management . Electronic payment services
. Trust services . Credit and debit card services
. Agency insurance
THE TRUST
The trust is a statutory business trust formed under Delaware law
pursuant to a trust agreement, signed by BB&T, as depositor of the trust, and
the property trustee, the Delaware trustee and the administrative trustees (each
as defined below), and the filing of a certificate of trust with the Delaware
Secretary of State. The trust agreement of the trust will be amended and
restated in its entirety, as so amended and restated, the "trust agreement,"
prior to the issuance of trust preferred securities by the trust. The trust
agreement will be qualified as an indenture under the Trust Indenture Act of
1939.
The trust exists for the exclusive purposes of:
. issuing the trust preferred securities and common securities
representing undivided beneficial interests in the assets of the
trust;
. investing the gross proceeds of the trust preferred securities
and the common securities, together the "trust securities," in
junior subordinated debentures; and
. engaging in only those activities necessary or incidental
thereto.
All of the common securities will be directly or indirectly owned by
us. The common securities of the trust will rank equally, and payments will be
made pro rata, with the trust preferred securities of the trust, except that
upon an event of default under the trust agreement, the rights of the holders of
the common securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the trust preferred securities. We will acquire common securities of
the trust in an aggregate liquidation amount equal to at least three percent of
the total capital of the trust.
The trust's business and affairs will be conducted by its trustees,
each appointed by BB&T as holder of the common securities. The trustees of the
trust will be State Street Bank and Trust Company, as the property trustee, the
"property trustee," Wilmington Trust Company, as the Delaware trustee, the
"Delaware trustee," and two individual trustees, the "administrative trustees,"
who are employees or officers of or affiliated with BB&T. State Street Bank and
Trust Company, as property trustee, will act as sole trustee under the trust
agreement for purposes of compliance with the Trust Indenture Act. State Street
Bank and Trust Company will also act as trustee under the guarantees and the
junior subordinated indenture. See "Description of Guarantees" and "Description
of Junior Subordinated Debentures."
The holder of the common securities of the trust, or the holders of a
majority in liquidation amount of the trust's trust preferred securities if an
event of default under the trust agreement has occurred and is continuing, will
be entitled to appoint, remove or replace the property trustee and/or the
Delaware trustee. The right to vote to appoint, remove or replace the
administrative trustees is vested exclusively in the holders of the common
securities, and in no event will the holders of trust preferred securities have
such right.
Unless otherwise specified in the applicable prospectus supplement,
the trust has a term of approximately 50 years, but may be terminated earlier as
provided in the trust agreement.
BB&T will pay all fees and expenses related to the trust and the
offering of trust securities.
7
The principal executive office of the trust is c/o BB&T Corporation,
200 West Second Street, Winston-Salem, North Carolina 27101, telephone number
(336) 733-2000.
REASON FOR TRANSACTION
On October 21, 1996, the Federal Reserve Board announced that it had
approved the use of certain cumulative preferred stock instruments, such as the
trust preferred securities, as "Tier 1 capital" for purposes of the Federal
Reserve Board's capital guidelines for bank holding companies. Because BB&T
intends to treat the trust preferred as Tier 1 capital and, under current United
States federal tax law, will receive a tax deduction for interest in respect of
the junior subordinated debentures, the issuance of the trust preferred
securities is a cost-effective method of raising capital on an after-tax basis.
USE OF PROCEEDS
The trust will use the proceeds from the sale of the trust preferred
securities to acquire junior subordinated debentures from BB&T. BB&T intends to
use the net proceeds from the sale of the securities for general corporate
purposes unless otherwise indicated in the prospectus supplement or pricing
supplement relating to a specific issue of securities. Our general corporate
purposes may include acquisitions of other companies, repurchasing shares of our
common stock, extending credit to, or funding investments in, our subsidiaries
and such other purposes indicated in the applicable prospectus supplement or
pricing supplement. The precise amounts and timing of our use of the net
proceeds will depend upon our, and our subsidiaries', funding requirements and
the availability of other funds. Until we use the net proceeds from the sale of
any of the trust's securities for general corporate purposes, we will use the
net proceeds to reduce our short-term indebtedness or for temporary investments.
We expect that we will, on a recurrent basis, engage in additional financings as
the need arises to finance our growth, through acquisitions or otherwise, or to
fund our subsidiaries.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges were as follows
for the five fiscal years in the period ended December 31, 2000 and the three
months ended March 31, 2001 and March 31, 2000:
Three Months
Ended March 31, Year Ended December 31,
-------------------- -------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
Earnings to fixed charges:
Excluding interest on deposits........ 2.29x 2.42x 2.02x 2.56x 2.70x 2.55x 2.58x
Including interest on deposits........ 1.48 1.52 1.38 1.55 1.54 1.49 1.50
For purposes of computing these ratios, earnings represent income from
continuing operations before extraordinary items and cumulative effects of
changes in accounting principals plus income taxes and fixed charges (excluding
capitalized interest). Fixed charges, excluding interest on deposits, represent
interest (other than on deposits, but including capitalized interest), one-third
(the proportion representative of the interest factor) of rents and all
amortization of debt issuance costs. Fixed charges, including interest on
deposits, represent all interest, one-third (the proportion representative of
the interest factor) of rents and all amortization of debt issuance costs.
REGULATORY CONSIDERATIONS
The Federal Reserve Board regulates, supervises and examines BB&T,
which is a financial holding company under the Bank Holding Company Act. For a
discussion of the material elements of the regulatory framework applicable to
financial holding companies and their subsidiaries and specific information
relevant to BB&T, please refer to our annual report on Form 10-K for the fiscal
year ended December 31, 2000, our current report on Form 8-K filed on April 27,
2001 (which restated financial statements and other financial data set forth in
8
our annual report on Form 10-K), our quarterly report on Form 10-Q for the
period ended March 31, 2001, and any subsequent reports we file with the SEC,
which are incorporated by reference in this prospectus. This regulatory
framework is intended primarily for the protection of account holders. As a
result of this regulatory framework, our earnings are affected by actions of the
Federal Reserve Board, the Federal Deposit Insurance Corporation, which insures
the deposits of our banking subsidiaries within certain limits and regulates our
banking subsidiaries, and the SEC, which regulates the activities of certain
subsidiaries engaged in the securities business. In addition, our banking
subsidiaries are subject to regulation by state banking authorities.
Depositary institutions, like BB&T's bank subsidiaries, are also affected
by various federal laws, including those relating to consumer protection and
similar matters. BB&T also has other financial services subsidiaries that are
regulated, supervised and examined by the Federal Reserve Board and other state
and federal regulatory agencies and self-regulatory organizations.
Changes to federal laws and regulations and to the laws and regulations in
the states where we and our subsidiaries do business can affect the operating
environment of financial holding companies and their subsidiaries in substantial
and unpredictable ways. We cannot accurately predict whether legislation will
ultimately be enacted, and, if enacted, the ultimate effect that it, or
implementing regulations, would have upon our or our subsidiaries' financial
condition or results of operations.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
We may issue junior subordinated debentures from time to time in one or
more series under a junior subordinated indenture, as supplemented from time to
time, the "junior subordinated indenture," between us and State Street Bank and
Trust Company, as trustee, the "debenture trustee." The junior subordinated
indenture will be qualified under the Trust Indenture Act, and terms of the
junior subordinated debentures will include those stated in the junior
subordinated indenture and those made part of the junior subordinated indenture
by reference to the Trust Indenture Act.
Set forth below is a description of the general terms of the junior
subordinated debentures in which the trust will invest the proceeds from the
issuance and sale of the trust securities. The particular terms of the junior
subordinated debentures will be described in the prospectus supplement relating
to the particular trust preferred securities being offered.
General
We will issue the junior subordinated debentures as unsecured debt. The
junior subordinated debentures will be fully subordinated as set forth in the
junior subordinated indenture. See "Subordination." Each series of junior
subordinated debentures will rank equally with all other series of junior
subordinated indentures. The junior subordinated indenture does not limit the
aggregate principal amount of junior subordinated debentures which may be issued
and provides that the junior subordinated debentures may be issued from time to
time in one or more series. Because we are a holding company, our rights and the
rights of our creditors, including the holders of the junior subordinated
debentures, to participate in the assets of any of our subsidiaries upon the
subsidiary's liquidation or reorganization will be subject to the prior claims
of the subsidiary's creditors except to the extent that we may ourselves be a
creditor with recognized claims against the subsidiary. Except as otherwise
provided in the applicable prospectus supplement, the junior subordinated
indenture does not limit the incurrence or issuance by us of other secured or
unsecured debt.
The prospectus supplement relating to the particular junior subordinated
debentures being offered will describe the terms of those securities, which may
include:
. the title of the junior subordinated debentures;
. any limit upon the aggregate principal amount of junior subordinated
debentures;
9
. the date or dates on which the principal of the junior subordinated
debentures is payable or the method of determination thereof;
. any fixed or variable interest rate or rates per annum;
. the place where the principal of and premium, if any, and interest on
the junior subordinated debentures will be payable and where the
junior subordinated debentures may be presented for registration of
transfer or exchange;
. any provisions for redemption, the redemption price and any
remarketing arrangements;
. the minimum denominations;
. whether the debt securities are denominated or payable in United
States dollars or a foreign currency or units of two or more foreign
currencies;
. if other than the principal amount, the portion of the principal
amount of the debt securities payable upon acceleration of the
maturity of the debt securities;
. any index used to determine the amount of payment of principal of, and
any premium and interest on, the debt securities;
. any additional or different events of default that apply to any debt
securities of the series and any change in the right of the trustee or
the required holders of those debt securities to declare the principal
thereof due and payable;
. any additional or different covenants that apply to any debt
securities of the series;
. any additions or changes to the junior subordinated indenture with
respect to such junior subordinated debentures necessary to permit the
issuance of the junior subordinated debentures in bearer form,
registrable or not registrable as to principal, and with or without
interest coupons;
. the terms and conditions relating to the issuance of a temporary
global security representing all of the junior subordinated debentures
and the exchange of such temporary global security for definitive
junior subordinated debentures;
. whether the junior subordinated debentures will be issued in whole or
in part in the form of one or more global securities and the
depositary for any such global securities;
. the appointment of any paying agent or agents;
. the terms and conditions of any obligation or right of BB&T or a
holder to convert or exchange the junior subordinated debentures into
trust preferred securities; and
. any other terms of the debt securities that are not inconsistent with
the provisions of the applicable indenture.
Junior subordinated debentures may be sold at a substantial discount below
their stated principal amount, bearing no interest or interest at a rate which
at the time of issuance is below market rates. Certain United States federal
income tax consequences and special considerations applicable to any such junior
subordinated debentures will be described in the applicable prospectus
supplement.
10
If a prospectus supplement specifies that the junior subordinated
debentures will be denominated in a currency or currency unit other than United
States dollars, the prospectus supplement shall also specify the denomination in
which the junior subordinated debentures will be issued and the coin or currency
in which the principal, premium, if any, and interest, if any, on the junior
subordinated debentures will be payable, which may be United States dollars
based upon the exchange rate for such other currency or currency unit existing
on or about the time a payment is due.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of junior subordinated debentures,
special United States federal income tax, accounting and other considerations
will be described in the applicable prospectus supplement.
Additional Interest
If, at any time the trust is required to pay any taxes, duties, assessments
or governmental charges of whatever nature, other than withholding taxes,
imposed by the United States, or any other taxing authority, then we will be
required to pay additional interest on the junior subordinated debentures. The
amount of any additional interest will be an amount sufficient so that the net
amounts received and retained by the trust after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts that
the trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed. This means that the trust will be in the same
position it would have been in if it did not have to pay such taxes, duties,
assessments or other charges.
Denominations, Registration and Transfer
Unless otherwise indicated in the applicable prospectus supplement, we will
issue the junior subordinated debentures in registered form only, without
coupons. Junior subordinated debentures of any series will be exchangeable for
other junior subordinated debentures of the same issue and series, of any
authorized denominations, of a like principal amount, of the same original issue
date and stated maturity and bearing the same interest rate.
Junior subordinated debentures may be presented for exchange as provided
above, and may be presented for registration of transfer at the office of the
appropriate securities registrar or at the office of any transfer agent
designated by us for such purposes. No service charge will be made for any
transfer or exchange of the junior subordinated debentures. However, we or the
debenture trustee may require a holder to pay an amount sufficient to cover any
tax or other governmental charge payable in connection with a transfer or
exchange. We will appoint the debenture trustee as securities registrar under
the junior subordinated indenture. If the applicable prospectus supplement
refers to any transfer agents, in addition to the securities registrar,
initially designated by us with respect to any series of junior subordinated
debentures, we may at any time rescind the designation of any such transfer
agent or approve a change in the location through which any such transfer agent
acts, provided that we maintain a transfer agent in each place of payment of
such series. We may at any time designate additional transfer agents with
respect to any series of junior subordinated debentures. We also may designate
in the applicable prospectus supplement or pricing supplement the corporate
trust department of Branch Bank as an office where the transfer of the
registered securities may be registered.
In the event of any redemption, neither we nor the debenture trustee will
be required to:
. issue, register the transfer of, or exchange, junior subordinated
debentures of any series during a period beginning at the opening of
business 15 days before the day of selection for redemption and ending
at the close of business on the day of mailing of notice of
redemption; or
. transfer or exchange any junior subordinated debentures so selected
for redemption, except, in the case of any junior subordinated
debentures being redeemed in part, any portion thereof not to be
redeemed.
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Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, we will
pay principal and any premium and interest on junior subordinated debentures
(other than those in global form) at the office of the debenture trustee in the
city of New York or at the office of any paying agent that we may designate from
time to time. However, at our option, we may pay any interest by check mailed to
the holders of registered junior subordinated debentures at their registered
addresses or by transfer to an account maintained by a holder of registered
junior subordinated debentures, as specified in the securities register. Unless
otherwise indicated in the applicable prospectus supplement, payment of any
interest on junior subordinated debentures will be made to the person in whose
name the junior subordinated debentures are registered on the applicable record
date, except in the case of defaulted interest. We may at any time designate
additional paying agents or rescind the designation of any paying agent,
provided that we at all times maintain a paying agent in each place of payment
for each series of junior subordinated debentures. We also may designate in the
applicable prospectus supplement or pricing supplement the corporate trust
department of Branch Bank as an additional paying agent.
Any amounts deposited with the debenture trustee or any paying agent, or
then held by us in trust, for the payment of the principal of any premium, if
any, or interest on any junior subordinated debentures and remaining unclaimed
for two years after such amounts have become due and payable shall, at our
request, be repaid to us, and the holder of the junior subordinated debenture
will be able to look only to us for payment, as a general unsecured creditor.
Option to Defer Interest Payments
If provided in the applicable prospectus supplement, we will have the right
from time to time during the term of any series of junior subordinated
debentures to defer payment of interest for up to such number of consecutive
interest payment periods as may be specified in the applicable prospectus
supplement, subject to the terms, conditions and covenants, if any, specified in
such prospectus supplement. Such deferral, however, may not extend beyond the
stated maturity of such series of junior subordinated debentures. Certain United
States federal income tax consequences and special considerations applicable to
any such junior subordinated debentures will be described in the applicable
prospectus supplement.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, the
junior subordinated debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable prospectus supplement, we may,
at our option and subject to receipt of prior approval by the Federal Reserve
(if required), redeem the junior subordinated debentures of any series in whole
at any time or in part from time to time. If the junior subordinated debentures
of any series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable prospectus supplement will
specify such date or describe such conditions. Except as otherwise specified in
the applicable prospectus supplement, the redemption price for any junior
subordinated debenture so redeemed will equal any accrued and unpaid interest
thereon to the redemption date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable prospectus supplement, if a
tax event (as defined below) in respect of a series of junior subordinated
debentures or an investment company event or capital treatment event (each as
defined below) shall occur and be continuing, we may, at our option and subject
to receipt of prior approval by the Federal Reserve (if required), redeem such
series of junior subordinated debentures in whole, but not in part, at any time
within 90 days following of the occurrence of such tax event, investment company
event or capital treatment event, at a redemption price equal to 100% of the
principal amount of such junior subordinated debentures then outstanding plus
accrued and unpaid interest to the date fixed for redemption, except as
otherwise specified in the applicable prospectus supplement.
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"Tax event" means the receipt by the trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which proposed
change, pronouncement or decision is announced on or after the date of issuance
of such trust preferred securities, there is more than an insubstantial risk
that (i) the trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the corresponding series of corresponding junior subordinated
debentures, (ii) interest payable by BB&T on such series of corresponding junior
subordinated debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by BB&T, in whole or in part, for United States federal
income tax purposes, or (iii) the trust is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Investment company event" means the receipt by the trust of an opinion of
counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a written change (including any
announced prospective change) in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the trust preferred securities.
"Capital treatment event" means our reasonable determination that, as a
result of any amendment to, or change (including any proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the trust preferred securities under the trust agreement, there is more than
an insubstantial risk that we will not be entitled to treat an amount equal to
the liquidation amount of the trust preferred securities as "Tier I Capital" (or
the then equivalent thereof) for purposes of the capital adequacy guidelines of
the Federal Reserve, as then in effect and applicable to us.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of junior subordinated
debentures to be redeemed at its registered address. Unless we default in
payment of the redemption price, on and after the redemption date, interest will
cease to accrue on such junior subordinated debentures or portions thereof
called for redemption.
Restrictions on Certain Payments
If junior subordinated debentures are issued to the trust or the trustee of
the trust in connection with the issuance of trust securities by the trust and:
. there shall have occurred and be continuing an event of default with
respect to the junior subordinated debentures of which we have actual
knowledge and which we have not taken reasonable steps to cure;
. we shall be in default relating to our payment of any obligations
under the guarantee; or
. we shall have given notice of our election to defer payments of
interest on the junior subordinated debentures by extending the
interest payment period and such period, or any extension of such
period, shall be continuing;
then:
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. we shall not declare or pay any dividend on, make any distributions
relating to, or redeem, purchase, acquire or make a liquidation
payment relating to, any of its capital stock or make any guarantee
payment with respect thereto other than:
. repurchases, redemptions or other acquisitions of shares of our
capital stock in connection with any employee benefit plans or
any other contractual obligation, other than a contractual
obligation ranking equally with or junior to the junior
subordinated debentures;
. as a result of an exchange or conversion of any class or series
of our capital stock for any other class or series of our capital
stock;
. the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged;
. any declaration of a dividend in connection with any rights plan,
or the issuance of rights, stock or other property under any
rights plan, or the redemption or repurchase of rights pursuant
thereto; or
. any dividend in the form of stock, warrants, options or other
rights where the dividend stock or stock issuable upon exercise
of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks equally with or
junior to such stock; and
. we shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities issued by
us that rank equally with or junior to the junior subordinated
debentures.
Limitation on Mergers and Sales of Assets
The junior subordinated indenture provides that we may not consolidate
with, or merge into, any other corporation or convey or transfer its properties
and assets substantially as an entirety unless:
. the successor entity is a corporation, partnership or trust organized
in the United States and expressly assumes our obligations under the
junior subordinated indenture;
. after giving effect thereto, no event of default and no event which,
after notice or lapse of time, or both, would become an event of
default, shall have occurred and be continuing under the junior
subordinated indenture;
. such transaction is permitted under the trust agreement and guarantee;
and
. certain other conditions as prescribed by the junior subordinated
indenture are met.
The covenants contained in the indenture would not necessarily protect
holders of the junior subordinated debentures in the event of a decline in
credit quality resulting from takeovers, recapitalizations or similar
restructurings.
Events of Default, Waiver and Notice
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The junior subordinated indenture provides that the following are events of
default relating to the junior subordinated debentures:
. default in the payment of the principal of, or premium, if any, on,
any junior subordinated debentures at maturity;
. default for 30 days in the payment of any installment of interest on
any junior subordinated debentures;
. default for 90 days after written notice in the performance of any
other covenant in respect of the junior subordinated debentures; and
. specified events of bankruptcy, insolvency or reorganization of BB&T.
If an event of default under the junior subordinated indenture shall occur
and be continuing, either the debenture trustee or the holders of not less than
25 percent in aggregate principal amount of the junior subordinated debentures
of that series then outstanding may declare the principal of all junior
subordinated debentures of that series to be due and payable immediately. If the
holders of junior subordinated debentures fail to make such declaration, the
holders of at least 25 percent in aggregate liquidation amount of the related
trust preferred securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of that
series of junior subordinated debentures may annul the declaration and waive the
default. If the holders of junior subordinated debentures fail to annul such
declaration and waive such default, the holders of at least 25 percent in
aggregate liquidation amount of the related trust preferred securities shall
have such right.
The holders of a majority in aggregate outstanding principal amount of that
series of junior subordinated debentures may waive any default, except a default
in payment of principal or interest, unless such default has been cured and a
sum sufficient to pay all matured installments of interest and principal due
other than by acceleration has been deposited with the debenture trustee, or a
default in respect of a covenant or provision that under the junior subordinated
indenture cannot be modified or amended without the consent of the holder of
each outstanding junior subordinated debenture. If the holders of junior
subordinated debentures fail to waive such default, the holders of a majority in
aggregate liquidation amount of the related trust preferred securities shall
have such right.
The holders of a majority in principal amount of the junior subordinated
debentures of any series affected shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
debenture trustee under the junior subordinated indenture.
We are required to furnish to the debenture trustee annually a statement as
to the performance of our obligations under the junior subordinated indenture
and as to any default in such performance.
If a debenture event of default shall have occurred and be continuing, the
property trustee will have the right to declare the principal of and the
interest on the corresponding junior subordinated debentures, and any other
amounts payable under the junior subordinated indenture, to be due and payable
and to enforce its other rights as a creditor with respect to the corresponding
junior subordinated debentures.
Distribution of the Junior Subordinated Debentures
Under circumstances discussed more fully in the prospectus supplement
involving the dissolution of a trust, provided that any required regulatory
approval is obtained, junior subordinated debentures will be distributed to the
holders of the trust securities in liquidation of that trust. See "Description
of Trust Preferred Securities -- Liquidation Distribution upon Dissolution."
15
If the junior subordinated debentures are distributed to the holders of the
trust preferred securities, we will use our best efforts to have the junior
subordinated debentures listed on the New York Stock Exchange or on such other
national securities exchange or similar organization on which the trust
preferred securities are then listed or quoted.
Modification of Junior Subordinated Indenture
From time to time we and the debenture trustee may, without the consent of
the holders of the junior subordinated debentures, waive or supplement the
junior subordinated indenture for specified purposes, including, among other
things:
. evidencing the succession of another person to BB&T;
. conveying, transferring, assigning, mortgaging or pledging any
property to or with the debenture trustee or surrendering any right or
power conferred upon us in the junior subordinated indenture;
. adding to the covenants of BB&T for the benefit of other holders of
all or any series of securities;
. adding any additional events of default for the benefit of other
holders of all or any series of securities;
. changing or eliminating any of the provisions of the junior
subordinated indenture, provided that any such change or elimination
shall not apply to any outstanding securities, or shall become
effective only when there is no security outstanding of any series
created prior to the execution of the supplemental indenture that is
entitled to the benefit of such provision;
. curing ambiguities, defects or inconsistencies without materially and
adversely affecting the holders of the junior subordinated debentures
or the related trust preferred securities;
. evidencing and providing for the acceptance of appointment under the
junior subordinated indenture by a successor trustee with respect to
the securities of one or more series and adding to or changing any of
the provisions of the indenture as shall be necessary to provide for
or facilitate the administration of the trust under the indenture by
more than one trustee; and
. qualifying the junior subordinated indenture under the Trust Indenture
Act.
We and the debenture trustee may make modifications and amendments to the
indenture with the consent of the holders of a majority in principal amount of
the junior subordinated debentures at the time outstanding. However, no such
modification or amendment may, without the consent of the holder of each junior
subordinated debenture affected thereby:
. modify the payment terms of the junior subordinated debentures; or
. reduce the percentage of holders of junior subordinated debentures
necessary to modify or amend the indenture or waive compliance by us
with any covenant or past default.
If the junior subordinated debentures are held by the trust or the trustee
of the trust, no modification may be made that adversely affects the holders of
the related trust preferred securities, and no termination of the junior
subordinated indenture may occur, and no waiver of any event of default or
compliance with any covenant will be effective without the prior consent of a
majority in liquidation preference of trust securities of the trust. If the
consent of the holder of each outstanding junior subordinated debenture is
required, no modification shall be effective without the prior consent of each
holder of related trust preferred securities.
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In addition, we and the debenture trustee may execute, without the consent
of any holder of junior subordinated debentures, any supplemental junior
subordinated indenture for the purpose of creating any new series of junior
subordinated indentures.
Enforcement of Certain Rights by Holders of Trust Preferred Securities
If a debenture event of default with respect to a series of corresponding
junior subordinated debentures has occurred and is continuing and such event of
default is the result of our failure to pay interest or principal on the
corresponding junior subordinated debentures when due, a holder of related trust
preferred securities may institute a legal proceeding directly against us for
enforcement of payment to such holder of the principal of or interest on such
corresponding junior subordinated debentures having a principal amount equal to
the aggregate liquidation amount of the related trust preferred securities. We
may not amend the junior subordinated indenture to remove this right without the
prior written consent of the holders of all of the trust preferred securities
outstanding. If such right is removed, the trust may become subject to reporting
obligations under the Exchange Act. We will have the right under the junior
subordinated indenture to set off any payment made by us to such holder of trust
preferred securities in connection with any such direct action.
The holders of the trust preferred securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
unless there shall have been an event of default under the trust agreement. See
"Description of Trust Preferred Securities -- Events of Default; Notice."
Defeasance and Discharge
The junior subordinated indenture provides that when:
. all junior subordinated debentures not previously delivered to the
debenture trustee for cancellation have become due and payable or will
become due and payable at their stated maturity within one year,
. we deposit with the debenture trustee, in trust, funds sufficient to
pay all the principal of, and interest and premium, if any, on the
junior subordinated debentures when such payments are due,
. we have paid all other sums payable under the indenture by us, and
. we have delivered to the debenture trustee an officers' certificate
and an opinion of counsel each stating that all conditions precedent
in the indenture relating to the satisfaction and discharge of the
indenture have been complied with
then the junior subordinated indenture will cease to be of further effect
(except as to our obligations to pay all other sums due under the junior
subordinated indenture and to provide the officers' certificates and opinions of
counsel described therein), and we will be deemed to have satisfied and
discharged the junior subordinated indenture.
Conversion or Exchange
The junior subordinated debentures may be convertible or exchangeable into
junior subordinated debentures of another series or into trust preferred
securities of another series, on the terms provided in the applicable prospectus
supplement. Such terms may include provisions for conversion or exchange, either
mandatory, at the option of the holder, or at our option, in which case the
number of shares of trust preferred securities or other securities to be
received by the holders of junior subordinated debentures would be calculated as
of a time and in the manner stated in the applicable prospectus supplement.
Subordination
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The junior subordinated indenture contains a covenant by us that any junior
subordinated debentures issued thereunder will be subordinate and junior in
right of payment to all senior debt (as defined below) to the extent provided
therein. If we make any payment or distribution of our assets upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding, the holders of senior debt will first be entitled to
receive payment in full of principal of and premium and interest, if any, on
such senior debt before the holders of junior subordinated debentures will be
entitled to receive or retain any payment in respect of the principal of and
premium and interest, if any, on the junior subordinated debentures. However,
holders of senior debt will not be entitled to receive payment of any such
amounts if the subordination provisions of such senior debt would require
holders to pay such amounts over to the obligees on trade accounts payable or
other liabilities arising in the ordinary course of our business.
In the event of the acceleration of the maturity of any junior subordinated
debentures, the holders of all senior debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon, including any amounts due upon acceleration, before the holders of
the junior subordinated debentures will be entitled to receive or retain any
payment in respect of the principal of or premium or interest, if any, on the
junior subordinated debentures. However, the holders of senior debt will not be
entitled to receive payment of any such amounts if the subordination provisions
of such senior debt would require holders to pay such amounts over to the
obligees on trade accounts payable or other liabilities arising in the ordinary
course of BB&T's business.
No payments on accounts of principal or premium, if any, or interest in
respect of the junior subordinated debentures may be made if there shall have
occurred and be continuing a default in any payment with respect to senior debt
or an event of default with respect to any senior debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding are pending
with respect to any such default.
"Debt" means, with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent:
. every obligation of such person for money borrowed;
. every obligation of such person evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses;
. every reimbursement obligation of such person with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of such person;
. every obligation of such person issued or assumed as the deferred
purchase price of property or services other than trade accounts
payable or accrued liabilities arising in the ordinary course of
business;
. every capital lease obligation of such person;
. every obligation of such person for claims in respect of derivative
products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements; and
. every obligation of the type referred to above of another person and
all dividends of another person the payment of which, in either case,
such person has guaranteed or is responsible or liable for, directly
or indirectly, as obligor or otherwise.
"Senior debt" means the principal of and premium and interest, if any,
including interest accruing on or after the filing of any petition in bankruptcy
or for reorganization relating to us whether or not such claim for post-petition
interest is allowed in such proceeding, on debt, whether incurred on or prior to
the date of the junior
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subordinated indenture or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment to the
junior subordinated debentures or to other debt that is equal or subordinated to
the junior subordinated debentures, other than:
. any debt of BB&T which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to BB&T;
. any debt of BB&T to any of its subsidiaries;
. any debt to any of our employees;
. any debt which by its terms is subordinated to trade accounts payable
or accrued liabilities arising in the ordinary course of business to
the extent that payments made to the holders of such debt by the
holders of the junior subordinated debentures as a result of the
subordination provisions of the junior subordinated indenture would be
greater than such payments otherwise would have been as a result of
any obligation of such holders of such debt to pay amounts over to the
obligees on such trade accounts payable or accrued liabilities arising
in the ordinary course of business as a result of subordination
provisions to which such debt is subject; and
. any other debt securities issued pursuant to the junior subordinated
indenture.
The junior subordinated indenture places no limitation on the amount of
senior debt that we may incur. We expect from time to time to incur additional
indebtedness and other obligations constituting senior debt.
The junior subordinated indenture provides that any of the subordination
provisions described above that relate to any particular issue of junior
subordinated debentures may be changed prior to such issuance. Any such change
would be described in the applicable prospectus supplement.
Governing Law
The junior subordinated indenture and the junior subordinated debentures
will be governed by, and construed in accordance with, the internal laws of the
State of New York.
The Debenture Trustee
The debenture trustee will have all of the duties and responsibilities
specified under the Trust Indenture Act. Subject to those provisions, the
debenture trustee is under no obligation to exercise any of the powers vested in
it by the junior subordinated indenture at the request of any holder of junior
subordinated debentures unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities that might be incurred thereby. The
debenture trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
debenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured it.
Corresponding Junior Subordinated Debentures
BB&T may issue one or more series of junior subordinated debentures under
the junior subordinated indenture with terms corresponding to the terms of a
series of related trust preferred securities, the "corresponding junior
subordinated debentures." In each such instance, concurrently with the issuance
of the trust's trust preferred securities, the trust will invest the proceeds
thereof and the consideration paid by us for the common securities in the series
of corresponding junior subordinated debentures issued by us to the trust. Each
series of corresponding junior subordinated debentures will be in the principal
amount equal to the aggregate stated liquidation amount of the related trust
preferred securities and the common securities of the trust and will rank
equally with all other series of
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junior subordinated debentures. Holders of the related trust preferred
securities for a series of corresponding junior subordinated debentures will
have the rights, in connection with modifications to the junior subordinated
indenture or upon occurrence of debenture events of default as described under
"--Modification of Junior Subordinated Indenture," "-- Debenture Events of
Default" and "Enforcement of Certain Rights by Holders of Trust Preferred
Securities."
Unless otherwise specified in the applicable prospectus supplement, if a
tax event relating to the trust shall occur and be continuing, we may, at our
option and subject to prior approval of the Federal Reserve (if required),
redeem the corresponding junior subordinated debentures at any time within 90
days of the occurrence of such tax event, in whole but not in part, subject to
the provisions of the junior subordinated indenture and whether or not such
corresponding junior subordinated debentures are then redeemable at our option.
The redemption price for any corresponding junior subordinated debentures shall
be equal to 100% of the principal amount of such corresponding junior
subordinated debentures then outstanding plus accrued and unpaid interest to the
date fixed for redemption. For so long as the trust is the holder of all the
outstanding corresponding junior subordinated debentures of such series, the
proceeds of any such redemption will be used by the trust to redeem the
corresponding trust securities in accordance with their terms. We may not redeem
a series of corresponding junior subordinated debentures in part unless all
accrued and unpaid interest has been paid in full on all outstanding
corresponding junior subordinated debentures of such series for all interest
proceeds terminating on or prior to the date of redemption.
We will covenant, as to each series of corresponding junior subordinated
debentures:
. to directly or indirectly maintain 100% ownership of the common
securities of the trust unless a permitted successor succeeds to
ownership of the common securities
. not to voluntarily terminate, wind up or liquidate any trust, except,
if so specified in the applicable prospectus supplement and upon prior
approval of the Federal Reserve (if required):
. in connection with a distribution of corresponding junior subordinated
debentures to the holders of the trust preferred securities in
exchange therefor upon liquidation of the trust, or
. in connection with certain mergers, consolidations or amalgamations
permitted by the trust agreement, in either such case, if so specified
in the applicable prospectus supplement upon prior approval of the
Federal Reserve if then so required under applicable capital
guidelines or policies; and
. to use its reasonable efforts, consistent with the terms and
provisions of the trust agreement, to cause the trust to remain
classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The trust preferred securities will be issued pursuant to the terms of an
amended and restated trust agreement. The trust agreement will be qualified as
an indenture under the Trust Indenture Act. The property trustee, State Street
Bank and Trust Company, will act as trustee for the trust preferred securities
under the trust agreement for purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the trust preferred securities will include
those stated in the trust agreement and those made part of the trust agreement
by the Trust Indenture Act.
Set forth below is a summary of the material terms and provisions of the
trust preferred securities. This summary, which describes the material
provisions of the trust preferred securities, is not intended to be complete and
is qualified by the trust agreement, the form of which is filed as an exhibit to
the registration statement which contains this prospectus supplement, the
Delaware Business Trust Act and the Trust Indenture Act.
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The declaration authorizes the trustees to issue the trust securities on
behalf of the trust. The trust securities represent undivided beneficial
interests in the assets of the trust. We will own, directly or indirectly, all
of the common securities. The common securities rank equally, and payments will
be made on a pro rata basis, with the trust preferred securities. However, if an
event of default under the trust agreement occurs and is continuing, the rights
of the holders of the common securities to receive payments will be subordinated
to the rights of the holders of the trust preferred securities.
The trust agreement does not permit the trust to issue any securities other
than the trust securities or to incur any indebtedness. Under the trust
agreement, the property trustee will own the junior subordinated debentures
purchased by the trust for the benefit of the holders of the trust securities.
The guarantee agreement we execute for the benefit of the holders of trust
preferred securities will be a guarantee on a subordinated basis with respect to
the related trust securities but will not guarantee payment of distributions or
amounts payable on redemption or liquidation of such trust securities when the
trust does not have funds on hand available to make such payments. See
"Descriptions of Guarantees."
Distributions
Distributions on the trust preferred securities:
. will be cumulative;
. will accumulate from the date of original issuance; and
. will be payable on such dates as specified in the applicable
prospectus supplement.
In the event that any date on which distributions are payable on the trust
preferred securities is not a business day, then payment of the distribution
will be made on the next succeeding business day, and without any interest or
other payment in respect to any such delay, except that, if such business day is
in the next calendar year, payment of the distribution will be made on the
immediately preceding business day. Each date on which distributions are payable
in accordance with the foregoing is referred to as a "distribution date." The
term "distribution" includes any interest payable on unpaid distributions unless
otherwise stated.
The amount of distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of distributions
payable for any period shorter than a full quarterly period will be computed on
the basis of the actual number of days elapsed per 30-day month. Distributions
to which holders of trust preferred securities are entitled will accumulate
additional distributions at the rate per annum if and as specified in the
applicable prospectus supplement.
If provided in the applicable prospectus supplement, we have the right
under the junior subordinated indenture, pursuant to which we will issue the
corresponding junior subordinated debentures, to defer the payment of interest
on any series of the corresponding junior subordinated debentures for up to a
number of consecutive interest payment periods that will be specified in the
prospectus supplement relating to such series, an "extension period," provided,
that no extension period may extend beyond the stated maturity of the
corresponding junior subordinated debentures.
As a consequence of any such deferral, distributions on the related trust
preferred securities would be deferred, but would continue to accumulate
additional distributions at the rate per annum set forth in the prospectus
supplement for such trust preferred securities, by the trust during any
extension period. If we exercise our deferral right, then during any extension
period, we may not:
. make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities that rank equally in
all respects with or junior in interest to the junior subordinated
debentures of such series; or
21
. declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any shares of
our capital stock, other than:
. repurchases, redemptions or other acquisitions of shares of our
capital stock in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any
one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock
purchase plan or in connection with the issuance of our capital
stock, or securities convertible into or exercisable for such
capital stock, as consideration in an acquisition transaction
entered into prior to the applicable extension period,
. as a result of an exchange or conversion of any class or series
of our capital stock or any capital stock of our subsidiaries,
for any class or series of our capital stock, or of any class or
series of our indebtedness for any class or series of our capital
stock,
. the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of such
capital stock or the securities being converted or exchanged,
. any declaration of a dividend in connection with any rights plan,
or the issuance of rights, stock or other property under any
rights plan, or the redemption or repurchase of rights pursuant
thereto, or
. any dividend in the form of stock, warrants, options or other
rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks
equally with or junior to such stock.
The revenue of the trust available for distribution to holders of its trust
preferred securities will be limited to payments under the corresponding junior
subordinated debentures in which the trust will invest the proceeds from the
issuance and sale of its trust securities. See "Description of Junior
Subordinated Debentures -- Corresponding Junior Subordinated Debentures." If we
do not make interest payments on such corresponding junior subordinated
debentures, the property trustee will not have funds available to pay
distributions on the related trust preferred securities. The payment of
distributions, if and to the extent the trust has funds legally available for
the payment of such distributions and cash sufficient to make such payments, is
guaranteed by us on the basis set forth under "Description of Guarantees."
Distributions on the trust preferred securities will be payable to the
holders thereof as they appear on the register of the trust on the relevant
record dates, which, as long as the trust preferred securities remain in book-
entry form, will be one business day prior to the relevant date of distribution.
Subject to any applicable laws and regulations and the provisions of the trust
agreement, each such payment will be made as described under "Book-Entry
Issuance." In the event any trust preferred securities are not in book-entry
form, the relevant record date for such trust preferred securities shall be the
date at least 15 days prior to the relevant date of distribution, as specified
in the applicable prospectus supplement.
Redemption or Exchange
Mandatory Redemption
Upon the repayment or redemption, in whole or in part, of any corresponding
junior subordinated debentures, whether at maturity or upon earlier redemption
as provided in the junior subordinated indenture, the property trustee shall
apply the proceeds from such repayment or redemption to redeem a like amount (as
defined
22
below) of the trust securities, upon not less than 30 nor more than 60 days'
notice, at a redemption price, the "redemption price," equal to the aggregate
liquidation amount of such trust securities plus accumulated but unpaid
distributions to the date of redemption, the "redemption date," and the related
amount of the premium, if any, paid by us upon the concurrent redemption of such
corresponding junior subordinated debentures. See "Description of Junior
Subordinated Debentures -- Redemption." If less than all of any series of
corresponding junior subordinated debentures are to be repaid or redeemed on a
redemption date, then the proceeds from such repayment or redemption will be
allocated pro rata to the redemption of the related trust preferred securities
and the common securities. The amount of premium, if any, paid by us upon the
redemption of all or any part of any series of any corresponding junior
subordinated debentures to be repaid or redeemed on a redemption date shall be
allocated pro rata to the redemption of the related trust preferred securities
and the common securities.
We will have the right to redeem any series of corresponding junior
subordinated debentures:
. on or after such date as may be specified in the applicable prospectus
supplement, in whole at any time or in part from time to time; or
. at any time, in whole, but not in part, upon the occurrence of a tax
event, investment company event or capital treatment event, in any
case subject to receipt of prior approval by the Federal Reserve (if
required). See "Description of Junior Subordinated Debentures --
Redemption."
Within 90 days of the occurrence of any tax event, investment company event
or capital treatment event in respect of a series of trust preferred securities
and common securities shall occur and be continuing, we will have the right to
redeem the corresponding junior subordinated debentures in whole, but not in
part, and thereby cause a mandatory redemption of such trust preferred
securities and common securities in whole, but not in part, at the redemption
price. In the event a tax event, investment company event or capital treatment
event in respect of a series of trust preferred securities and common securities
has occurred and is continuing and we do not elect to redeem the corresponding
junior subordinated debentures and thereby cause a mandatory redemption of such
trust preferred securities and common securities or to dissolve the related
trust and cause the corresponding junior subordinated debentures to be
distributed to holders of such trust preferred securities and common securities
in exchange therefor upon liquidation of the trust as described below, such
trust preferred securities will remain outstanding.
"Like amount" means:
. with respect to a redemption of any series of trust securities, trust
securities of such series having a liquidation amount (as defined
below) equal to that portion of the principal amount of corresponding
junior subordinated debentures to be contemporaneously redeemed in
accordance with the junior subordinated indenture, the proceeds of
which will be used to pay the redemption price of such trust
securities; and
. with respect to a distribution of corresponding junior subordinated
debentures to holders of any series of trust securities in exchange
therefor in connection with a dissolution or liquidation of the trust,
corresponding junior subordinated debentures having a principal amount
equal to the liquidation amount of the trust securities of the holder
to whom such corresponding junior subordinated debentures would be
distributed.
"Liquidation amount" means the stated amount per trust security as set
forth in the applicable prospectus supplement.
Distribution of Corresponding Junior Subordinated Debentures
We will have the right at any time to liquidate the trust and cause the
junior subordinated debentures to be distributed to the holders of the trust
securities. This may require the prior approval of the Federal Reserve Board. If
the corresponding junior subordinated debentures are distributed to the holders
of the trust preferred securities, we have the right at any time to dissolve the
trust and, after satisfaction of the liabilities of creditors of the trust as
23
provided by applicable law, cause such corresponding junior subordinated
debentures in respect of the related trust preferred securities and common
securities issued by the trust to be distributed to the holders of such related
trust preferred securities and common securities in exchange therefor upon
liquidation of the trust.
After the liquidation date fixed for any distribution of corresponding
junior subordinated debentures for any series of trust preferred securities:
. such series of trust preferred securities will no longer be deemed to
be outstanding;
. the depositary or its nominee, as the record holder of such series of
trust preferred securities, will receive a registered global
certificate or certificates representing the corresponding junior
subordinated debentures to be delivered upon such distribution; and
. any certificates representing such series of trust preferred
securities not held by The Depository Trust Company ("DTC") or its
nominee will be deemed to represent the corresponding junior
subordinated debentures having a principal amount equal to the stated
liquidation amount of such series of trust preferred securities, and
bearing accrued and unpaid interest in an amount equal to the accrued
and unpaid distributions on such series of trust preferred securities
until such certificates are presented to the administrative trustees
or their agent for transfer or reissuance.
We cannot assure you as to the market prices for the trust preferred
securities or the corresponding junior subordinated debentures that may be
distributed in exchange for trust preferred securities if a dissolution and
liquidation of a trust were to occur. Accordingly, the trust preferred
securities that an investor may purchase, or the corresponding junior
subordinated debentures that the investor may receive on dissolution and
liquidation of the trust, may trade at a discount to the price that the investor
paid to purchase the trust preferred securities.
Redemption Procedures
Trust preferred securities redeemed on each redemption date will be
redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the corresponding junior subordinated debentures.
Redemptions of the trust preferred securities shall be made and the redemption
price shall be payable on each redemption date only to the extent that the trust
has funds on hand available for the payment of such redemption price. See
also "--Subordination of Common Securities."
If the trust gives a notice of redemption of its trust preferred
securities, then, by 12:00 noon, New York City time, on the redemption date, to
the extent funds are available, the property trustee will deposit irrevocably
with DTC funds sufficient to pay the applicable redemption price and will give
DTC irrevocable instructions and authority to pay the redemption price to the
holders of such trust preferred securities. See "Book-Entry Issuance." If such
trust preferred securities are no longer in book-entry form, the property
trustee, to the extent funds are available, will irrevocably deposit with the
paying agent for such trust preferred securities funds sufficient to pay the
applicable redemption price and will give such paying agent irrevocable
instructions and authority to pay the redemption price to the holders thereof
upon surrender of their certificates evidencing such trust preferred securities.
Notwithstanding the foregoing, distributions payable on or prior to the
redemption date for any trust preferred securities called for redemption will be
payable to the holders of such trust preferred securities on the relevant record
dates for the related distribution dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit:
. all rights of the holders of such trust preferred securities will
cease, except the right of the holders of such trust preferred
securities to receive the redemption price, but without interest on
such redemption price; and
. such trust preferred securities will cease to be outstanding.
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In the event that any date fixed for redemption of trust preferred
securities is not a business day, then payment of the redemption price will be
made on the next succeeding business day, and without any interest or any other
payment in respect of any such delay, except that, if such business day falls in
the next calendar year, such payment will be made on the immediately preceding
business day. In the event that payment of the redemption price in respect of
trust preferred securities called for redemption is improperly withheld or
refused and not paid either by the trust or by us pursuant to the guarantee as
described under "Description of Guarantees," distributions on such trust
preferred securities will continue to accrue at the then applicable rate, from
the redemption date originally established by the trust for such trust preferred
securities to the date such redemption price is actually paid, in which case the
actual payment date will be the date fixed for redemption for purposes of
calculating the redemption price.
Subject to applicable law (including, without limitation, United States
federal securities law), we or our subsidiaries may at any time and from time to
time purchase outstanding trust preferred securities by tender, in the open
market or by private agreement.
Payment of the redemption price on the trust preferred securities and any
distribution of corresponding junior subordinated debentures to holders of trust
preferred securities will be made to the applicable recordholders as they appear
on the register for such trust preferred securities on the relevant record date,
which shall be one business day prior to the relevant redemption date or
liquidation date, as applicable. However, if any trust preferred securities are
not in book-entry form, the relevant record date for such trust preferred
securities will be a date at least 15 days prior to the redemption date or
liquidation date, as applicable, as specified in the applicable prospectus
supplement.
If less than all of the trust preferred securities and common securities
issued by a trust are to be redeemed on a redemption date, then the aggregate
liquidation amount of such trust preferred securities and common securities to
be redeemed shall be allocated pro rata to the trust preferred securities and
the common securities based upon the relative liquidation amounts of such
classes. The property trustee will select the particular trust preferred
securities to be redeemed on a pro rata basis not more than 60 days prior to the
redemption date from the outstanding trust preferred securities not previously
called for redemption, using any method that the property trustee deems fair and
appropriate, including the selection for redemption of portions of the
liquidation amount of trust preferred securities in the minimum amounts that are
specified in the applicable prospectus supplement. The property trustee shall
promptly notify the trust registrar in writing of the trust preferred securities
selected for redemption and the liquidation amount to be redeemed. For all
purposes of the trust agreement, unless the context otherwise requires, all
provisions relating to the redemption of trust preferred securities shall
relate, in the case of any trust preferred securities redeemed or to be redeemed
only in part, to the portion of the aggregate liquidation amount of trust
preferred securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to the registered address of each holder of
trust securities to be redeemed.
Subordination of Common Securities
Payment of distributions on, and the redemption price of, the trust's trust
preferred securities and common securities, as applicable, shall be made pro
rata based on the liquidation amount of such trust preferred securities and
common securities. If, however, on any distribution date or redemption date a
debenture event of default shall have occurred and be continuing, no payment of
any distribution on, or redemption price of, any of the trust's common
securities, and no other payment on account of the redemption, liquidation or
other acquisition of such common securities, shall be made unless payment in
full in cash of all accumulated and unpaid distributions on all of the trust's
outstanding trust preferred securities for all distribution periods terminating
on or prior thereto, or in the case of payment of the redemption price the full
amount of such redemption price on all of the trust's outstanding trust
preferred securities then called for redemption, shall have been made or
provided for, and all funds available to the property trustee shall first be
applied to the payment in full in cash of all distributions on, or redemption
price of, the trust's trust preferred securities then due and payable.
In the case of any event of default under the trust agreement resulting
from a debenture event of default, we as holder of the trust's common
securities, will be deemed to have waived any right to act with respect to any
such
25
event of default under the trust agreement until the effect of all such events
of default with respect to such trust preferred securities have been cured,
waived or otherwise eliminated. Until all events of default under the trust
agreement with respect to the trust preferred securities have been so cured,
waived or otherwise eliminated, the property trustee shall act solely on behalf
of the holders of such trust preferred securities and not on our behalf, and
only the holders of such trust preferred securities will have the right to
direct the property trustee to act on their behalf.
Liquidation Distribution Upon Dissolution
Pursuant to the trust agreement, the trust shall automatically dissolve
upon expiration of its term and shall dissolve on the first to occur of:
. certain events of bankruptcy, dissolution or liquidation of BB&T;
. the distribution of a like amount of the corresponding junior
subordinated debentures to the holders of its trust securities, if we,
as depositor, have given written direction to the property trustee to
dissolve the trust, subject to our having received prior approval of
the Federal Reserve, if required;
. redemption of all of the trust's trust preferred securities as
described under "-- Redemption or Exchange -- Mandatory Redemption;"
and
. the entry of an order for the dissolution of the trust by a court of
competent jurisdiction.
If an early dissolution occurs as described above, the trustees will
liquidate the trust as expeditiously as possible by distributing, after
satisfaction of liabilities to creditors of the trust as provided by applicable
law, to the holders of such trust securities a like amount of the corresponding
junior subordinated debentures. If the property trustee determines that such
distribution is not practical, then the holders will be entitled to receive out
of the assets of the trust available for distribution to holders, after
satisfaction of liabilities to creditors of the trust as provided by applicable
law, an amount equal to, in the case of holders of trust preferred securities,
the aggregate liquidation amount plus accrued and unpaid distributions to the
date of payment, the "liquidation distribution." If the trust has insufficient
assets available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by the trust on its trust preferred securities shall be
paid on a pro rata basis. The holder(s) of the trust's common securities will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of its trust preferred securities, except that if a debenture event of
default has occurred and is continuing, the trust preferred securities shall
have a priority over the common securities.
Events of Default; Notice
Any one of the following events constitutes an event of default under the
trust agreement, a "trust event of default," regardless of the reason for such
event of default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body:
. the occurrence of a debenture event of default with respect to the
corresponding junior subordinated debentures held by the trust, a
"debenture event of default" (see "Description of Junior Subordinated
Debentures -- Debenture Events of Default"); or
. the default by the property trustee in the payment of any distribution
on any trust security of the trust when such becomes due and payable,
and continuation of such default for a period of 30 days; or
26
. the default by the property trustee in the payment of any redemption
price of any trust security of the trust when such becomes due and
payable; or
. the default in the performance, or breach, in any material respect, of
any covenant or warranty of the trustees in the trust agreement, other
than a covenant or warranty of default in the performance of which or
the breach of which is dealt with above, and continuation of such
default or breach for a period of 90 days after there has been given,
by registered or certified mail, to the defaulting trustee or trustees
by the holders of at least 25% in aggregate liquidation amount of the
outstanding trust preferred securities of the trust, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the trust
agreement; or
. the occurrence of certain events of bankruptcy or insolvency with
respect to the property trustee and our failure to appoint a successor
property trustee within 90 days.
Within the 90 days after the occurrence of any event of default actually
known to the property trustee, the property trustee will transmit notice of such
event of default to the holders of the trust preferred securities, the
administrative trustees and to us, as depositor, unless such event of default
shall have been cured or waived. We, as depositor, and the administrative
trustees are required to file annually with the property trustee a certificate
as to whether or not we or they are in compliance with all the conditions and
covenants applicable to us and to them under the trust agreement.
If a debenture event of default with respect to the corresponding junior
subordinated debentures held by the trust has occurred and is continuing, the
trust preferred securities of the trust shall have a preference over the trust's
common securities as described above. See "-- Subordination of Common
Securities" and "-- Liquidation Distribution Upon Termination." The existence of
an event of default does not entitle the holders of trust preferred securities
to accelerate the maturity.
Removal of Trustees
Unless a debenture event of default shall have occurred and be continuing,
any trustee may be removed at any time by the holder of the common securities.
If a debenture event of default has occurred and is continuing, the property
trustee and the Delaware trustee may be removed by the holders of a majority in
liquidation amount of the outstanding trust preferred securities. In no event
will the holders of the trust preferred securities have the right to vote to
appoint, remove or replace the administrative trustees, which voting rights are
vested exclusively in us, as the holder of the common securities. No resignation
or removal of a trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the trust agreement.
Co-Trustees and Separate Property Trustee
Unless an event of default shall have occurred and be continuing, at any
time or from time to time, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the trust
property may at the time be located, we, as the holder of the common securities,
and the administrative trustees shall have the power to appoint one or more
persons either to act as a co-trustee, jointly with the property trustee, of all
or any part of such trust property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the trust agreement. If a debenture event of default has occurred
and is continuing, the property trustee alone shall have power to make such
appointment.
Merger or Consolidation of Trustees
27
Any person into which the property trustee, the Delaware trustee or any
administrative trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such trustee shall be a party, or any
person succeeding to all or substantially all the corporate trust business of
such trustee, shall be the successor of such trustee under the trust agreement,
provided such person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to us or any other person, except as described
below or as otherwise described in the trust agreement. The trust may, at our
request, with the consent of the administrative trustees and without the consent
of the holders of the trust preferred securities, the property trustee or the
Delaware trustee, merge with or into, consolidate, amalgamate, or be replaced
by, or convey, transfer or lease its properties and assets substantially as an
entirety to, a trust organized as such under the laws of any state if:
. such successor entity either:
. expressly assumes all of the obligations of the trust with
respect to the trust preferred securities, or
. substitutes for the trust preferred securities other securities
having substantially the same terms as the trust preferred
securities, the "successor securities," so long as the successor
securities rank the same as the trust preferred securities in
priority with respect to distributions and payments upon
liquidation, redemption and otherwise;
. we expressly appoint a trustee of such successor entity possessing the
same powers and duties as the property trustee as the holder of the
corresponding junior subordinated debentures;
. the successor securities are listed, or any successor securities will
be listed upon notification of issuance, on any national securities
exchange or other organization on which the trust preferred securities
are then listed, if any;
. such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the trust preferred securities to be
downgraded by any nationally recognized statistical rating
organization;
. such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the trust preferred securities
(including any successor securities) in any material respect;
. such successor entity has a purpose substantially identical to that of
the trust;
. prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion from
independent counsel to the trust experienced in such matters to the
effect that:
. such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the trust
preferred securities (including any successor securities) in any
material respect, and
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. following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the trust nor such
successor entity will be required to register as an investment
company under the Investment Company Act; and
. we or any permitted successor or assignee owns all of the common
securities of such successor entity and guarantees the obligations of
such successor entity under the successor securities at least to the
extent provided by the guarantee.
Notwithstanding the foregoing, the trust may not, except with the consent
of holders of 100% in liquidation amount of the trust preferred securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the trust or the successor entity to
be classified as other than a grantor trust for United States federal income tax
purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "Description of Guarantees -- Amendments
and Assignment" and as otherwise required by law and the trust agreement, the
holders of the trust preferred securities will have no voting rights.
We and the administrative trustees may amend the trust agreement without
the consent of the holders of the trust preferred securities, unless such
amendment will materially and adversely affect the interests of any holder of
trust preferred securities:
. to cure any ambiguity, correct or supplement any provisions in the
trust agreement that may be inconsistent with any other provision, or
to make any other provisions with respect to matters or questions
arising under the trust agreement, which may not be inconsistent with
the other provisions of the trust agreement; or
. to modify, eliminate or add to any provisions of the trust agreement
to such extent as shall be necessary to ensure that the trust will be
classified for United States federal income tax purposes as a grantor
trust at all times that any trust securities are outstanding or to
ensure that the trust will not be required to register as an
"investment company" under the Investment Company Act.
Any such amendments will become effective when notice thereof is given to
the holders of trust securities.
We, the administrative trustees and the property trustee may amend the
trust agreement with:
. the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding trust securities; and
. receipt by the trustees of an opinion of counsel to the effect that
such amendment or the exercise of any power granted to the trustees in
accordance with such amendment will not affect the trust's status as a
grantor trust for United States federal income tax purposes or the
trust's exemption from status as an "investment company" under the
Investment Company Act.
Without the consent of each holder of trust securities, the trust agreement
may not be amended to:
. change the amount or timing of any distribution required to be made in
respect of the trust securities as of a specified dates; or
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. restrict the right of a holder of trust securities to institute suit
for the enforcement of any such payment on or after such date.
So long as the property trustee holds any corresponding junior subordinated
debentures, the trustees may not, without obtaining the prior approval of the
holders of a majority in aggregate liquidation amount of all outstanding trust
preferred securities:
. direct the time, method and place of conducting any proceeding for any
remedy available to the debenture trustee, or executing any trust or
power conferred on the property trustee with respect to such
corresponding junior subordinated debentures;
. waive any past default that is waivable under the junior subordinated
indenture;
. exercise any right to rescind or annul a declaration that the
principal of all the corresponding junior subordinated debentures is
due and payable; or
. consent to any amendment, modification or termination of the junior
subordinated indenture or such corresponding junior subordinated
debentures, where such consent shall be required.
If a consent under the junior subordinated indenture would require the
consent of each holder of corresponding junior subordinated debentures affected
thereby, no such consent may be given by the property trustee without the prior
consent of each holder of the corresponding trust preferred securities. The
trustees may not revoke any action previously authorized or approved by a vote
of the holders of the trust preferred securities except by subsequent vote of
the holders of the trust preferred securities. The property trustee will notify
each holder of the trust preferred securities of any notice of default with
respect to the corresponding junior subordinated debentures. In addition to
obtaining the foregoing approvals of the holders of the trust preferred
securities, prior to taking any of the foregoing actions, the trustees will
obtain an opinion of counsel experienced in such matters to the effect that such
action would not cause the trust to be classified as other than a grantor trust
for United States federal income tax purposes.
Any required approval of holders of trust preferred securities may be given
at a meeting of holders of trust preferred securities convened for such purpose
or pursuant to written consent. The property trustee will cause a notice of any
meeting at which holders of trust preferred securities are entitled to vote, or
of any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of trust preferred securities in the
manner set forth in the trust agreement.
No vote or consent of the holders of trust preferred securities will be
required for the trust to redeem and cancel its trust preferred securities in
accordance with the trust agreement.
Notwithstanding that holders of trust preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the trust
preferred securities that are owned by us or our affiliates or the trustees or
any of their affiliates, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
Payment and Paying Agency
Payments on the trust preferred securities shall be made to the depositary,
which shall credit the relevant accounts at the depositary on the applicable
distribution dates. If any trust preferred securities are not held by the
depositary, such payments shall be made by check mailed to the address of the
holder as such address shall appear on the register.
Unless otherwise specified in the applicable prospectus supplement, the
paying agent shall initially be the property trustee and any co-paying agent
chosen by the property trustee and acceptable to us and to the
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administrative trustees. The paying agent shall be permitted to resign as paying
agent upon 30 days' written notice to us and to the property trustee. In the
event that the property trustee shall no longer be the paying agent, the
administrative trustees will appoint a successor, which will be a bank or trust
company acceptable to the administrative trustees and to us, to act as paying
agent.
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the trust
preferred securities.
Registration of transfers of trust preferred securities will be effected
without charge by or on behalf of the trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The trust will not be required to register or cause to be
registered the transfer of its trust preferred securities after such trust
preferred securities have been called for redemption.
Information Concerning the Property Trustee
The property trustee, other than during the occurrence and continuance of
an event of default, undertakes to perform only the duties that are specifically
set forth in the trust agreement. After an event of default, the property
trustee must exercise the same degree of care and skill as a prudent individual
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the property trustee is under no obligation to exercise any of the
powers vested in it by the trust agreement at the request of any holder of trust
preferred securities unless offered indemnity satisfactory to it by such holder
against the costs, expenses and liabilities that might be incurred. If no event
of default has occurred and is continuing and the property trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
the trust agreement or is unsure of the application of any provision of the
trust agreement, and the matter is not one on which holders of trust preferred
securities are entitled under the trust agreement to vote, then the property
trustee will take any action that we direct. If we do not provide direction, the
property trustee may take any action that it deems advisable and in the best
interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Trust Expenses
Pursuant to the trust agreement, we, as depositor, agree to pay:
. all debts and other obligations of the trust (other than with respect
to the trust preferred securities);
. all costs and expenses of the trust (including costs and expenses
relating to the organization of the trust, the fees and expenses of
the trustees and the cost and expenses relating to the operation of
the trust); and
. any and all taxes and costs and expenses with respect thereto (other
than United States withholding taxes) to which the trust might become
subject.
Governing Law
The trust agreement will be governed by and construed in accordance with
the laws of Delaware.
Miscellaneous
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that it will not be required
to register as an "investment company" under the Investment Company Act or
characterized as other than a grantor trust for United States federal income tax
purposes. The administrative trustees are authorized and directed to conduct
their affairs so that the corresponding junior subordinated debentures will be
treated as indebtedness of BB&T for United States federal income tax purposes.
In this connection, we and the
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administrative trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of the trust or the trust agreement,
that we and the administrative trustees determine to be necessary or desirable
to achieve such end, as long as such action does not materially and adversely
affect the interests of the holders of the trust preferred securities.
Holders of the trust preferred securities have no preemptive or similar
rights.
No trust may borrow money or issue debt or mortgage or pledge any of its
assets.
COMMON SECURITIES
In connection with the issuance of trust preferred securities, the trust
will issue one series of common securities having the terms, including
distributions, redemption, voting and liquidation rights, set forth in the
applicable prospectus supplement. Except for voting rights, the terms of the
common securities will be substantially identical to the terms of the trust
preferred securities. The common securities will rank equally, and payments will
be made on the common securities pro rata, with the trust preferred securities,
except that, upon an event of default, the rights of the holders of the common
securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the trust preferred securities. Except in limited circumstances, the common
securities of the trust carry the right to vote to appoint, remove or replace
any of the trustees of that trust. We will own, directly or indirectly, all of
the common securities of the trust.
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the guarantee that
we will execute and deliver for the benefit of the holders of trust preferred
securities when we issue trust securities. The trust preferred securities
guarantee will be qualified as an indenture under the Trust Indenture Act. State
Street Bank and Trust Company will act as the guarantee trustee for purposes of
the Trust Indenture Act. The guarantee trustee will hold the trust preferred
securities guarantee for the benefit of the holders of the trust preferred
securities.
General
Pursuant to and to the extent set forth in the trust preferred securities
guarantee, we will irrevocably and unconditionally agree to pay in full to the
holders of the trust securities, except to the extent paid by the trust, as and
when due, regardless of any defense, right of set-off or counterclaim which the
trust may have or assert, the following payments, which are referred to as
"guarantee payments," without duplication:
. any accrued and unpaid distributions that are required to be paid on
the trust preferred securities, to the extent the trust has funds
available for distributions;
. the redemption price, plus all accrued and unpaid distributions, to
the extent the trust has funds available for redemptions, relating to
any trust preferred securities called for redemption by the trust; and
. upon a voluntary or involuntary dissolution, winding-up or termination
of the trust, other than in connection with the distribution of junior
subordinated debentures to the holders of trust preferred securities
or the redemption of all of the trust preferred securities, the lesser
of:
. the aggregate of the liquidation amount and all accrued and
unpaid distributions on the trust preferred securities to the
date of payment; and
. the amount of assets of the trust remaining for distribution to
holders of the trust preferred securities in liquidation of the
trust.
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The redemption price and liquidation amount will be fixed at the time the
trust preferred securities are issued.
Our obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts to the holders of trust preferred securities or
by causing the trust to pay such amounts to such holders.
The trust preferred securities guarantees will not apply to any payment of
distributions except to the extent the trust shall have funds available for such
payments. If we do not make interest payments on the junior subordinated
debentures purchased by a trust, the trust will not pay distributions on the
trust preferred securities and will not have funds available for such payments.
See "-- Status of the Guarantees." Because we are a holding company, our rights
to participate in the assets of any of our subsidiaries upon the subsidiary's
liquidation or reorganization will be subject to the prior claims of the
subsidiary's creditors except to the extent that we may ourselves be a creditor
with recognized claims against the subsidiary. Except as otherwise described in
the applicable prospectus supplement, the trust preferred securities guarantees
do not limit the incurrence or issuance by us of other secured or unsecured
debt.
The trust preferred securities guarantee, when taken together with our
obligations under the junior subordinated debentures, the related indenture and
the trust agreement, including our obligations to pay costs, expenses, debts and
liabilities of the trust, other than those relating to trust securities, will
provide a full and unconditional guarantee on a subordinated basis of payments
due on the trust preferred securities.
We have also agreed separately to irrevocably and unconditionally guarantee
the obligations of the trust with respect to the common securities to the same
extent as the trust preferred securities guarantees, except that upon an event
of default under the indenture, holders of trust preferred securities shall have
priority over holders of common securities with respect to distributions and
payments on liquidation, redemption or otherwise.
Status of the Guarantees
The guarantee will be unsecured and will rank:
. subordinate and junior in right of payment to all our other
liabilities in the same manner as the junior subordinated indenture;
and
. equally with all other trust preferred security guarantees that we
issue.
The guarantee will constitute a guarantee of payment and not of collection.
This means that the guaranteed party may sue the guarantor to enforce its rights
under the guarantee without suing any other person or entity. The guarantee will
be held for the benefit of the holders of the related trust securities. The
guarantee will be discharged only by payment of the guarantee payments in full
to the extent not paid by the trust or upon the junior subordinated debentures.
Amendments and Assignment
The trust preferred securities guarantee may be amended only with the prior
approval of the holders of not less than a majority in aggregate liquidation
amount of the outstanding trust preferred securities. No vote will be required,
however, for any changes that do not adversely affect the rights of holders of
trust preferred securities. All guarantees and agreements contained in the trust
preferred securities guarantee will bind our successors, assignees, receivers,
trustees and representatives and will be for the benefit of the holders of the
trust preferred securities then outstanding.
Termination of the Guarantees
The trust preferred securities guarantee will terminate upon full payment
of the redemption price of all trust preferred securities, upon distribution of
the junior subordinated debentures to the holders of the trust securities or
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upon full payment of the amounts payable in accordance with the trust agreement
upon liquidation of the trust. The trust preferred securities guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of trust preferred securities must restore payment of any sums
paid under the trust preferred securities or the trust preferred securities
guarantee.
Events of Default
An event of default under the trust preferred securities guarantee will
occur if we fail to perform any payment or other obligations under the
guarantee.
The holders of a majority in liquidation amount of the trust preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the guarantee trustee in respect of the
trust preferred securities guarantee or to direct the exercise of any trust or
power conferred upon the guarantee trustee under the guarantee. Any holder of
trust preferred securities may institute a legal proceeding directly against us
to enforce the guarantee trustee's rights and our obligations under the trust
preferred securities guarantee, without first instituting a legal proceeding
against the trust, the guarantee trustee or any other person or entity.
As guarantor, we are required to file annually with the guarantee trustee a
certificate as to whether or not we are in compliance with all applicable
conditions and covenants applicable under the trust preferred securities
guarantee.
Information Concerning the Guarantee Trustee
Prior to the occurrence of a default relating to the trust preferred
securities guarantee, the guarantee trustee is required to perform only the
duties that are specifically set forth in the trust preferred securities
guarantee. Following the occurrence of a default, the guarantee trustee will
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Provided that the foregoing requirements have
been met, the guarantee trustee is under no obligation to exercise any of the
powers vested in it by the trust preferred securities guarantee at the request
of any holder of trust preferred securities, unless offered indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred thereby.
We and our affiliates maintain certain accounts and other banking
relationships with the guarantee trustee and its affiliates in the ordinary
course of business.
Governing Law
The trust preferred securities guarantees will be governed by and construed
in accordance with the internal laws of the state of New York.
RELATIONSHIP AMONG TRUST PREFERRED SECURITIES,
CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND GUARANTEES
As set forth in the trust agreement, the sole purpose of the trust is to
issue the trust securities and to invest the proceeds in the junior subordinated
debentures.
As long as payments of interest and other payments are made when due on the
junior subordinated debentures, those payments will be sufficient to cover the
distributions and payments due on the trust securities. This is due to the
following factors:
. the aggregate principal amount of junior subordinated debentures will
be equal to the sum of the aggregate stated liquidation amount of the
trust securities;
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. the interest rate and the interest and other payment dates on the
junior subordinated debentures will match the distribution rate and
distribution and other payment dates for the trust securities;
. under the junior subordinated indenture, we will pay, and the trust
will not be obligated to pay, directly or indirectly, all costs,
expenses, debts and obligations of the trust, other than those
relating to the trust securities; and
. the trust agreement further provides that the trustees may not cause
or permit the trust to engage in any activity that is not consistent
with the purposes of the trust.
To the extent that funds are available, we guarantee payments of
distributions and other payments due on the trust preferred securities to the
extent described in this prospectus. If we do not make interest payments on the
junior subordinated debentures, the trust will not have sufficient funds to pay
distributions on the trust preferred securities. The trust preferred securities
guarantee is a subordinated guarantee in relation to the trust preferred
securities. The trust preferred securities guarantee does not apply to any
payment of distributions unless and until the trust has sufficient funds for the
payment of such distributions. See "Description of Guarantees."
We have the right to set off any payment that we are otherwise required to
make under the junior subordinated indenture with any payment that we have
previously made or are concurrently on the date of such payment making under a
related guarantee.
The trust preferred securities guarantee covers the payment of
distributions and other payments on the trust preferred securities only if and
to the extent that we have made a payment of interest or principal or other
payments on the junior subordinated debentures. The trust preferred securities
guarantee, when taken together with our obligations under the junior
subordinated debentures and the indenture and our obligations under the trust
agreement, will provide a full and unconditional guarantee of distributions,
redemption payments and liquidation payments on the trust preferred securities.
If we fail to make interest or other payments on the junior subordinated
debentures when due, taking account of any extension period, the trust agreement
allows the holders of the trust preferred securities to direct the property
trustee to enforce its rights under the junior subordinated debentures. If the
property trustee fails to enforce these rights, any holder of trust preferred
securities may directly sue us to enforce such rights without first suing the
property trustee or any other person or entity. See "Description of Trust
Preferred Securities -- Book Entry Issuance" and "-- Voting Rights."
A holder of trust preferred securities may institute a direct action if a
trust agreement event of default has occurred and is continuing and such event
is attributable to our failure to pay interest or principal on the junior
subordinated debentures when due. A direct action may be brought without first
(1) directing the property trustee to enforce the terms of the junior
subordinated debentures or (2) suing us to enforce the property trustee's rights
under the junior subordinated debentures. In connection with such direct action,
we will be subrogated to the rights of such holder of trust preferred securities
under the trust agreement to the extent of any payment made by us to such holder
of trust preferred securities. Consequently, we will be entitled to payment of
amounts that a holder of trust preferred securities receives in respect of an
unpaid distribution to the extent that such holder receives or has already
received full payment relating to such unpaid distribution from the trust.
We acknowledge that the guarantee trustee will enforce the trust preferred
securities guarantees on behalf of the holders of the trust preferred
securities. If we fail to make payments under the trust preferred securities
guarantees, the holders of the trust preferred securities may direct the
guarantee trustee to enforce its rights thereunder. If the guarantee trustee
fails to enforce the trust preferred securities guarantees, any holder of trust
preferred securities may directly sue us to enforce the guarantee trustee's
rights under the trust preferred securities guarantees. Such holder need not
first sue the trust, the guarantee trustee, or any other person or entity. A
holder of trust preferred securities may also directly sue us to enforce such
holder's right to receive payment under the trust preferred securities
guarantees. Such holder need not first (1) direct the guarantee trustee to
enforce the terms of the trust preferred securities guarantee or (2) sue the
trust or any other person or entity.
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A default or event of default under any of our senior debt would not
constitute a default or event of default under the junior subordinated
indenture. However, in the event of payment defaults under, or acceleration of,
our senior debt, the subordination provisions of the junior subordinated
indenture provide that no payments may be made in respect of the corresponding
junior subordinated debentures until such senior debt has been paid in full or
any payment default thereunder has been cured or waived. Failure to make
required payments on any series of corresponding junior subordinated debentures
would constitute an event of default under the junior subordinated indenture.
We and the trust believe that the above mechanisms and obligations, taken
together, are equivalent to a full and unconditional guarantee by us of payments
due on the trust preferred securities. See "Description of Guarantees --
General."
Limited Purpose of Trust
The trust's trust preferred securities evidence a beneficial interest in
the trust, and the trust exists for the sole purpose of issuing its trust
preferred securities and common securities and investing the proceeds in
corresponding junior subordinated debentures issued by BB&T. A principal
difference between the rights of a holder of a trust preferred security and a
holder of a corresponding junior subordinated debenture is that a holder of a
corresponding junior subordinated debenture is entitled to receive from us the
principal amount of and interest accrued on corresponding junior subordinated
debentures held, while a holder of trust preferred securities is entitled to
receive distributions from the trust (or from us under the applicable guarantee)
if and to the extent the trust has funds available for the payment of such
distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution, winding up or liquidation of
the trust involving the liquidation of the corresponding junior subordinated
debentures, after satisfaction of liabilities to creditors of the trust, the
holders of the related trust preferred securities will be entitled to receive,
out of the assets held by the trust, the liquidation distribution in cash. See
"Description of Trust Preferred Securities -- Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of
BB&T, the property trustee, as holder of the corresponding junior subordinated
debentures, would be a subordinated creditor of BB&T, subordinated in right of
payment to all senior debt as set forth in the junior subordinated indenture,
but entitled to receive payment in full of principal and interest before any of
our stockholders receive distributions. Since we are the guarantor under the
guarantee and have agreed to pay for all costs, expenses and liabilities of the
trust, other than the trust's obligations to the holders of its trust preferred
securities, the positions of a holder of such trust preferred securities and a
holder of such corresponding junior subordinated debentures relative to other
creditors and to our stockholders in the event of liquidation or bankruptcy are
expected to be substantially the same.
GLOBAL SECURITIES
Book-Entry, Delivery and Form
We have obtained the information in this section concerning DTC,
Clearstream, Euroclear and the book-entry system and procedures from sources
that we believe to be reliable, but we take no responsibility for the accuracy
of this information.
Unless otherwise mentioned in the relevant prospectus supplement, we and
the trust anticipate that trust preferred securities will be issued in the form
of one or more global certificates, or "global securities," registered in the
name of a depositary or its nominee. Unless otherwise mentioned in the relevant
prospectus supplement, the depositary will be The Depository Trust Company,
commonly referred to as DTC, and global securities will be registered, at the
request of DTC, in the name of Cede & Co. Beneficial interests in the global
securities will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as participants in DTC.
Unless otherwise mentioned in the relevant prospectus supplement, investors may
elect to hold their interests in the global securities through either DTC (in
the United States) or (in Europe) through Clearstream Banking S.A., or
"Clearstream," formerly Cedelbank, or through Euroclear Bank S.A.IN.V., as
operator of the Euroclear System, or "Euroclear." Investors may hold their
interests in the securities directly if they are participants in such systems,
or indirectly through organizations that are participants in these systems.
Clearstream and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Clearstream's and Euroclear's names on
the books of their respective depositaries, which in turn will hold these
interests in customers' securities accounts in the depositaries' names on the
books of DTC. Unless otherwise mentioned in the relevant prospectus supplement,
Citibank, N.A. will act as depositary for Clearstream and J.P. Morgan Chase &
Co. will act as depositary for Euroclear. We refer to Citibank and J.P. Morgan
Chase in these capacities as the "U.S. Depositaries." Beneficial interests in
the global securities will be held in authorized denominations of such
securities. Except as set forth below, the global securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee.
Securities represented by a global security can be exchanged for definitive
securities in registered form only if:
. DTC notifies us and the trust that it is unwilling or unable to
continue as depositary for that global security and the trust
does not appoint a successor depositary within 90 days after
receiving that notice;
. at any time DTC ceases to be a clearing agency registered under
36
the Securities Exchange Act of 1934 and the trust does not
appoint a successor depositary within 90 days after becoming
aware that DTC has ceased to be registered as a clearing agency;
. the trust in its sole discretion determines that that global
security will be exchangeable for definitive securities in
registered form and notify the trustee of our decision; or
. an event of default with respect to the securities represented by
that global security has occurred and is continuing.
A global security that can be exchanged as described in the preceding
sentence will be exchanged for definitive securities issued in authorized
denominations of such securities in registered form for the same aggregate
amount. The definitive securities will be registered in the names of the owners
of the beneficial interests in the global security as directed by DTC.
If applicable, the trust will make payments with respect to all securities
represented by a global security to the paying agent which in turn will make
payment to DTC or its nominee, as the case may be, as the sole registered owner
and the sole holder of the securities represented by global securities.
Accordingly, we, the trust, the trustee and any paying agent will have no
responsibility or liability for:
. any aspect of DTC's records relating to, or payments made on
account of, beneficial ownership interests in a note represented
by a global security;
. any other aspect of the relationship between DTC and its
participants or the relationship between those participants and
the owners of beneficial interests in a global security held
through those participants; or
. the maintenance, supervision or review of any of DTC's records
relating to those beneficial ownership interests.
DTC has advised us that its current practice is to credit participants'
accounts on each payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such global security
as shown on DTC's records, upon DTC's receipt of funds and corresponding detail
information. The underwriter will initially designate the accounts to be
credited. Payments by participants to owners of beneficial interests in a
global security will be governed by standing instructions and customary
practices, as is the case with securities held for customer accounts registered
in "street name," and will be the sole responsibility of those participants.
DTC
So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner and
holder of the securities represented by that global security for all purposes of
the securities. Owners of beneficial interests in the securities will not be
entitled to have securities registered in their names. Accordingly, each person
owning a beneficial interest in a global security must rely on the procedures of
DTC and, if that person is not a DTC participant, on the procedures of the
participant through which that person owns its interest, to exercise any rights
of a holder of securities. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of the securities in
certificated form. These laws may impair the ability to transfer beneficial
interests in a global security.
We understand that, under existing industry practices, if we or the trust
request holders to take any action, or if an owner of a beneficial interest in a
global security desires to take any action which a holder is entitled to take,
then DTC would authorize the participants holding the relevant beneficial
interests to take that action and those participants would authorize the
beneficial owners owning through such participants to take that action or would
otherwise act upon the instructions of beneficial owners owning through them.
Beneficial interests in a global security will be shown on, and transfers
of those ownership interests will be effected only through, records maintained
by DTC and its participants for that global security. The conveyance of notices
and other communications by DTC to its participants and by its participants to
owners of beneficial interests in the securities will be governed by
arrangements among them, subject to any statutory or regulatory requirements in
effect.
DTC has advised us that it is a limited-purpose trust company organized
under the New York banking law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the Securities Exchange Act of 1934.
DTC holds the securities of its participants and facilitates the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of its
participants. The electronic book-entry system eliminates the need for physical
certificates. DTC's participants include securities brokers and dealers,
including the underwriter, banks, trust companies, clearing corporations and
certain other organizations, some of which, and/or their representatives, own
DTC. Banks, brokers, dealers, trust companies and others that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, also have access to DTC's book-entry system. The rules applicable to
DTC and its participants are on file with the SEC.
DTC has advised us that the above information with respect to DTC has been
provided to its participants and other members of the financial community for
37
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.
Clearstream
Clearstream has advised us that it is incorporated under the laws of
Luxembourg as a bank. Clearstream holds securities for its participating
organizations, or "Clearstream Participants," and facilitates the clearance and
settlement of securities transactions between Clearstream Participants through
electronic book-entry changes in accounts of Clearstream Participants, thereby
eliminating the need for physical movement of certificates. Clearstream provides
to Clearstream Participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interacts with domestic
securities markets in over 30 countries through established depository and
custodial relationships. As a bank, Clearstream is subject to regulation by the
Luxembourg Commission for the Supervision of the Financial Sector (Commission de
Surveillance du Secteur Financier). Clearstream Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriter. Clearstream's U.S.
Participants are limited to securities brokers and dealers and banks. Indirect
access to Clearstream is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream Participant either directly or indirectly.
Distributions with respect to securities held beneficially through
Clearstream will be credited to cash accounts of Clearstream Participants in
accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Clearstream.
Euroclear
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear, or "Euroclear Participants," and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear performs various other services, including
securities lending and borrowing, and interacts with domestic markets in several
countries. Euroclear is operated by Euroclear Bank S.A./N.V., or the "Euroclear
Operator," under contract with Euroclear Clearance Systems plc, a Belgian
corporation. All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not Euroclear Clearance Systems. Euroclear
Clearance Systems establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks, including central banks,
securities brokers and dealers and other professional financial intermediaries
and may include the underwriter. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is a Belgian bank. As such it is regulated by the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law, which we refer to in this prospectus as the "Terms and Conditions." The
Terms and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments with
respect to securities in Euroclear. All securities in Euroclear are held on a
fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to securities held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
Euroclear has further advised us that investors that acquire, hold and
transfer interests in the securities by book-entry through accounts with the
Euroclear Operator or any other securities intermediary are subject to the laws
and contractual provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the relationship
between such an intermediary and each other intermediary, if any, standing
between themselves and the global securities.
The Euroclear Operator has advised us that under Belgian law, investors
which are credited with securities on the records of the Euroclear Operator have
a co-proprietary right in the fungible pool of interests in securities on
deposit with the Euroclear Operator in an amount equal to the amount of
interests in securities credited to their accounts. In the event of the
insolvency of the Euroclear Operator, Euroclear Participants would have a right
under Belgian law to the return of the amount and type of interests in
securities credited to their accounts with the Euroclear Operator. If the
Euroclear Operator did not have a sufficient amount of interests in securities
on deposit of a particular type to cover the claims of all Euroclear
Participants credited with such interests in securities on the Euroclear
Operator's records, all Euroclear Participants having an amount of interests in
securities of such type credited to their accounts with the Euroclear Operator
would then have the right under Belgian law only to the return of their pro rata
share of the amount of interests in securities actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the
38
benefits of ownership in any interests in securities on deposit with it (such as
dividends, voting rights and other entitlements) to any person credited with
such interest in securities on its records.
Global Clearance and Settlement Procedures
Initial settlement for the securities will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using DTC's Same-Day Funds Settlement System. Secondary market
trading between Clearstream Participants and/or Euroclear Participants will
occur in the ordinary way in accordance with the applicable rules and operating
procedures of Clearstream and Euroclear and will be settled using the procedures
applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its U.S.
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities through DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of securities received through
Clearstream or Euroclear as a result of a transaction with a DTC participant
will be made during subsequent securities settlement processing and dated the
business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear Participants or Clearstream Participants on such
business day. Cash received in Clearstream or Euroclear as a result of sales of
securities by or through a Clearstream Participant or a Euroclear Participant to
a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Clearstream or Euroclear cash account only as
of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among participants of
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be modified or
discontinued at any time. Neither we, the trust nor the paying agent will have
any responsibility for the performance by DTC, Euroclear or Clearstream or their
respective direct or indirect participants of their obligations under the rules
and procedures governing their operations.
39
PLAN OF DISTRIBUTION
We and the trust may sell securities to or through underwriters, including
broker dealer affiliates of BB&T, to be designated at various times, and also
may sell securities to dealers, directly to other purchasers or through agents.
The distribution of securities may be effected at various times in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
The trust preferred securities will be new issues of securities with no
established trading market. It has not presently been established whether the
underwriters, if any, of these securities will make a market in these
securities. If a market in these securities is made by those underwriters, this
market making may be discontinued at any time without notice. No assurance can
be given as to the liquidity of the trading market for these securities.
This prospectus and the related prospectus supplements may be used by our
broker dealer affiliates for offers and sales related to market-making
transactions in the securities. Such broker dealer affiliates may act as
principal or agent in these transactions. These sales will be made at prices
related to prevailing market prices at the time of sale or otherwise.
In facilitating the sale of securities, underwriters may receive
compensation from us or from purchasers of securities for whom they may act as
agents in the form of discounts, concessions or commissions. Underwriters may
sell securities to or through dealers, and these dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
securities may be considered underwriters, and any discounts or commissions
received by them from us and any profit on the resale of securities by them may
be considered underwriting discounts and commissions under the Securities Act.
Any such underwriter
40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering, other than
underwriting discounts and commissions, are as follows:
Registration statement filing fee............................ $250,000
NASD filing fee.............................................. 30,500
Trustees', registrar and transfer agent's depositaries' and
warrant agents' fees and expenses.......................... 25,000
Legal fees and expenses...................................... 50,000
Blue sky fees and expenses................................... 25,000
Accounting fees and expenses................................. 50,000
Rating agency fees........................................... 200,000
Printing and engraving costs................................. 50,000
Miscellaneous................................................ 49,500
--------
Total................................................... $730,000
Item 15. Indemnification of Directors and Officers
Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation
Act contain specific provisions relating to indemnification of directors and
officers of North Carolina corporations. In general, such sections provide that:
(i) a corporation must indemnify a director or officer who is wholly successful
in his defense of a proceeding to which he is a party because of his status as
such, unless limited by the articles of incorporation, and (ii) a corporation
may indemnify a director or officer if he is not wholly successful in such
defense if it is determined as provided by statute that the director or officer
meets a certain standard of conduct, except that when a director or officer is
liable to the corporation or is adjudged liable on the basis that personal
benefit was improperly received by him, the corporation may not indemnify him. A
director or officer of a corporation who is a party to a proceeding may also
apply to a court for indemnification, and the court may order indemnification
under certain circumstances set forth in statute. A corporation may, in its
articles of incorporation or bylaws or by contract or resolution of the board of
directors, provide indemnification in addition to that provided by statute,
subject to certain conditions.
BB&T's bylaws provide for the indemnification of any director or officer of
the registrant against liabilities and litigation expenses arising out of his
status as such, excluding: (i) any liabilities or litigation expenses relating
to activities that were at the time taken known or believed by such person to be
clearly in conflict with the best interest of BB&T or its affiliates and (ii)
that portion of any liabilities or litigation expenses with respect to which
such person is entitled to receive payment under any insurance policy.
BB&T's articles of incorporation provide for the elimination of the
personal liability of each director of the BB&T to the fullest extent permitted
by law.
BB&T maintains directors' and officers' liability insurance that, in
general, insures: (i) BB&T's directors and officers against loss by reason of
any of their wrongful acts and (ii) BB&T against loss arising from claims
against the directors and officers by reason of their wrongful acts, all subject
to the terms and conditions contained in the policy.
Certain rules of the Federal Deposit Insurance Corporation limit the
ability of certain depository institutions, their subsidiaries and their
affiliated depository institution holding companies to indemnify affiliated
parties, including institution directors. In general, subject to the ability to
purchase directors and officers liability insurance and to advance professional
expenses under certain circumstances, the rules prohibit such institutions from
II-1
indemnifying a director for certain costs incurred with regard to an
administrative or enforcement action commenced by any federal banking agency
that results in a final order or settlement pursuant to which the director is
assessed a civil money penalty, removed from office, prohibited from
participating in the affairs of an insured depository institution or required to
cease and desist from or take an affirmative action described in Section 8(b) of
the Federal Deposit Insurance Act (12 U.S.C. (S) 1818(b)).
Under the trust agreement of BB&T Capital Trust I, BB&T will agree to
indemnify the trustees of the issuer trust, and to hold the trustees harmless
against, any loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the applicable trust agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties under
such the agreement.
Item 16. Exhibits.
The following exhibits are filed as part of this registration statement
pursuant to Item 601 of Regulation S-K:
Exhibit No. Description
----------- ----------------------------------------------------------------
1.1 Form of underwriting agreement for debt securities of BB&T
1.2 Form of underwriting agreement for equity securities of BB&T
4.1 Articles of Amendment to Amended and Restated Articles of
Incorporation of BB&T related to Series B Junior Participating
Preferred Stock, which is incorporated by reference to Exhibit
3(a) of BB&T's Annual Report on Form 10-K for the year ended
December 31, 1996
4.2 Rights Agreement dated as of December 17, 1996 between BB&T and
Branch Banking and Trust Company, Rights Agent, which is
incorporated by reference to Exhibit 1 of Form 8-A filed January
10, 1997
4.3 Subordinated Indenture (including Form of Subordinated Debt
Security) between BB&T and State Street Bank and Trust Company,
Trustee, dated as of May 24, 1996, which is incorporated by
reference to Exhibit 4(d) of BB&T's registration statement on
Form S-3 (no. 333-02899)
4.4 Senior Indenture (including form of Senior Debt Security),
between BB&T and State Street Bank and Trust Company, Trustee,
dated as of May 24, 1996, which is incorporated by reference to
Exhibit 4(c) of BB&T's registration statement on Form S-3 (no.
333-02899)
4.5 Form of Deposit Agreement*
4.6 Form of Depositary Receipt*
4.7 Form of Warrant Agreement*
4.8 Form of Junior Subordinated Indenture to be entered into between
BB&T Corporation and State Street Bank and Trust Company
4.9 Certificate of Trust of BB&T Capital Trust I, as filed with the
Delaware Secretary of State on June 26, 2001
II-2
4.10 Trust Agreement of BB&T Capital Trust I dated as of June 26,
2001
4.11 Form of Amended and Restated Trust Agreement for BB&T Capital
Trust I among BB&T Corporation, as depositor, State Street Bank
and Trust Company, as Property Trustee, Wilmington Trust
Company, as Delaware Trustee, and the Administrative Trustees
named therein
4.12 Form of Capital Security Certificate for BB&T Capital Trust I
(included as Exhibit D to Exhibit 4.11)
4.13 Form of Guarantee Agreement for BB&T Capital Trust I between
BB&T Corporation, as guarantor, and State Street Bank and Trust
Company, as trustee
5.1 Opinion of Womble Carlyle Sandridge & Rice, PLLC
5.2 Opinion of Richards, Layton & Finger
12.1 Statement re Computation of Ratios
23.1 Consent of Womble Carlyle Sandridge & Rice, PLLC (included in
Exhibit 5.1)
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
23.3 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included in the signature page of this
registration statement)
25.1 Statement of Eligibility on Form T-1 of State Street Bank and
Trust Company, as trustee under the Subordinated Indenture,
which is incorporated by reference to Exhibit 25(b) of BB&T's
registration statement on Form S-3 (no. 333-02899)
25.2 Statement of Eligibility on Form T-1 of State Street Bank and
Trust Company, as trustee under the Senior Indenture, which is
incorporated by reference to Exhibit 25(a) of BB&T's
registration statement on Form S-3 (no. 333-02899)
25.3 Statement of Eligibility on Form T-1 of State Street Bank and
Trust Company, as trustee under the Junior Subordinated
Indenture
25.4 Statement of Eligibility on Form T-1 of State Street Bank and
Trust Company, as trustee under the Guarantee Agreement
25.5 Statement of Eligibility on Form T-1 of State Street Bank and
Trust Company, as trustee under the Amended and Restated Trust
Agreement of BB&T Capital Trust I
________________
*To be filed by amendment
Item 17. Undertakings.
Each of the undersigned Registrants hereby undertakes:
II-3
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(1) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(3) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1) and (2) above do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrants pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, each of the Registrants has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
each Registrant of expenses incurred or paid by a director, officer or
controlling person of each Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, each of the Registrants
will, unless, in the opinion of their counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Each of the undersigned Registrants hereby undertakes to supplement the
prospectus, after the expiration of the subscription period, to set forth the
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from
II-4
those set forth on the cover page of the prospectus, a post-effective amendment
will be filed to set forth the terms of such offering.
Each of the undersigned Registrants hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be a part of the registration statement as of the time it
was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Each of the undersigned Registrants hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the Act.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Winston-Salem, State of North Carolina, on June 26,
2001.
BB&T CORPORATION
By: /s/ Jerone C. Herring
-----------------------------------
Name: Jerone C. Herring
Title: Executive Vice President and
Secretary
POWER OF ATTORNEY
-----------------
Each of the undersigned, being a director and/or officer of BB&T
Corporation (the "Company"), hereby nominates, constitutes and appoints John A.
Allison, Scott E. Reed and Jerone C. Herring, or any one of them severally, to
be his or her true and lawful attorney-in-fact and to sign in his or her name
and on his or her behalf in any and all capacities stated below, and to file
with the Securities Exchange Commission (the "Commission"), any and all
amendments, including post-effective amendments, to this Registration Statement,
making such changes in the Registration Statement as such attorney-in-fact deems
appropriate, and generally to do all such things on his or her behalf in any and
all capacities stated below to enable the Company to comply with the provisions
of the Securities Act of 1933 and all requirements of the Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 has been signed by the following persons
in the capacities indicated on June 26, 2001.
/s/ John A. Allison, IV /s/ Scott E. Reed
------------------------------------- ---------------------------------------
Name: John A. Allison, IV Name: Scott E. Reed
Title: Chairman of the Board and Title: Senior Executive Vice President
Chief Executive Officer and Chief Financial Officer
(principal executive officer) (principal financial officer)
/s/ Sherry A. Kellett /s/ Nelle Ratrie Chilton
------------------------------------- ---------------------------------------
Name: Sherry A. Kellett Name: Nelle Ratrie Chilton
Title: Senior Executive Vice President Title: Director
and Controller
(principal accounting officer)
/s/ Albert E. Cleveland /s/ Ronald E. Deal
------------------------------------- ---------------------------------------
Name: Albert E. Cleveland Name: Ronald E. Deal
Title: Director Title: Director
/s/ Tom D. Efird /s/ Paul S. Goldsmith
------------------------------------- ---------------------------------------
Name: Tom D. Efird Name: Paul S. Goldsmith
Title: Director Title: Director
/s/ Lloyd V. Hackley /s/ Jane P. Helm
------------------------------------- ---------------------------------------
Name: L. Vincent Hackley Name: Jane P. Helm
Title: Director Title: Director
Title: Director Title: Director
/s/ Richard Janeway, M.D. /s/ J. Ernest Lathem, M.D.
----------------------------------- ---------------------------------------
Name: Richard Janeway, M.D. Name: J. Ernest Lathem, M.D.
Title: Director Title: Director
/s/ James H. Maynard /s/ Joseph A. McAleer, Jr.
----------------------------------- ---------------------------------------
Name: James H. Maynard Name Joseph A. McAleer, Jr.
Title: Director Title: Director
/s/ Albert O. McCauley /s/ J. Holmes Morrison
----------------------------------- ---------------------------------------
Name: Albert O. McCauley Name: J. Holmes Morrison
Title: Director Title: Director
/s/ Richard L. Player, Jr. /s/ C. Edward Pleasants
----------------------------------- ---------------------------------------
Name: Richard L. Player, Jr. Name: C. Edward Pleasants
Title: Director Title: Director
/s/ Nido R. Qubein /s/ E. Rhone Sasser
----------------------------------- ---------------------------------------
Name: Nido R. Qubein Name: E. Rhone Sasser
Title: Director Title: Director
/s/ Harold B. Wells
----------------------------------- ---------------------------------------
Name: Jack E. Shaw Name: Harold B. Wells
Title: Director Title: Director
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Winston-Salem, State of North Carolina, on June 26,
2001.
BB&T CAPITAL TRUST I
By: /s/ Jerone C. Herring
----------------------------------
Name: Jerone C. Herring
Title: Administrative Trustee