UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 29, 2005
CAPITAL BANK CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 0-30062 56-2101930
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification Number)
4901 Glenwood Ave.
Raleigh, North Carolina 27612
(Address of principal executive offices)
(919) 645-6400
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|x| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2 (b) under the
Exchange Act (17 CFR 240.14d-2 (b))
|_| Pre-commencement communications pursuant to Rule 13e-4 (c) under the
Exchange Act (17 CFR 240.13e-4 (c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 29, 2005, Capital Bank Corporation, a North Carolina corporation
("CBC"), and 1st State Bancorp, Inc., a Virginia corporation ("FSBC"), entered
into a definitive merger agreement (the "Agreement"), pursuant to which FSBC
will merge with and into CBC (the "Merger").
Under the terms of the Agreement, each share of FSBC common stock will be
automatically converted into the right to receive, at the election of the
holder, either: (i) 0.691829 shares of CBC common stock multiplied by an
exchange ratio plus an amount equal to $11.4486 in cash, (ii) 1.0 share of CBC
common stock multiplied by an exchange ratio, or (iii) an amount equal to $37.15
in cash. The exchange ratio is equal to $37.15 divided by the average of the
daily closing sales price of CBC common stock on Nasdaq during the 20 trading
day period ending three business days prior to the closing date (the "Average
Closing Price"). Pursuant to the Agreement, the Average Closing Price can be no
higher than $18.00 per share and if it is less than $15.00 per share, CBC will
have the option to (x) consummate the transaction using the lower Average
Closing Price, (y) set the Average Closing Price at $15.00 per share and pay the
holders of FSBC common stock receiving shares of CBC common stock in the Merger
an amount in cash equal to $15.00 minus the lower Average Closing Price or (z)
set the Average Closing Price at $15.00 per share and pay no additional
consideration to the holders of FSBC common stock receiving CBC common stock in
the transaction. If CBC chooses the option set forth in (z) above, FSBC will
have the right to terminate the transaction. Finally, certain allocation
procedures will be used to cause the mix of stock and cash consideration to be
paid to FSBC shareholders to be approximately 65%/35%, respectively.
The completion of the Merger is subject to approval by the shareholders of both
companies, regulatory approvals and normal and customary closing conditions. At
the same time that the Agreement was signed, officers, directors and certain
shareholders of FSBC entered into an agreement with CBC pursuant to which each
such person agreed, among other things, to vote his or her shares in favor of
the Merger. The Merger is expected to close in January 2006.
Under the terms of the Agreement, CBC has agreed to appoint four FSBC
representatives to its board of directors and to the board of directors of
Capital Bank, CBC's wholly owned subsidiary.
The above description of the Agreement does not purport to be a complete
statement of the parties' rights and obligations under the Agreement and the
transactions contemplated thereby. The above description is qualified in its
entirety by reference to the Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 2.1 and incorporated herein by reference.
On June 29, 2005, CBC and FSBC issued a joint press release announcing the
execution of the Agreement. A copy of the joint press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and incorporated herein by
reference.
FORWARD-LOOKING STATEMENTS
Information in this Current Report or in the information filed or furnished with
this Current Report contains forward-looking statements. These statements
involve risks and uncertainties that could cause actual results to differ
materially, including without limitation, the possibility that fewer than the
required number of CBC and FSBC shareholders vote to approve the Merger; the
occurrence of events that would have a material adverse effect on CBC or FSBC as
described in the Agreement, including the risk of adverse operating results,
delays in obtaining or failure to receive required regulatory approvals; the
risk that the Agreement could be terminated under circumstances that would
require FSBC to pay a termination fee of $2 million; the risk that the Merger
will not be consummated; the actual operations of
the acquired branches after the acquisition; the ability of CBC to integrate the
operations of FSBC into its operations and other uncertainties arising in
connection with the proposed Merger. Additional factors that could cause actual
results to differ materially are discussed in documents filed with the
Securities and Exchange Commission (the "SEC") by CBC and FSBC, including
without limitation Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K. Except as required by law, CBC does not
undertake a duty to update any forward looking statements in this Current Report
or in the information filed or furnished with this Current Report.
The proposed transaction will be submitted to CBC's and FSBC's shareholders for
their consideration. CBC and FSBC will file a registration statement, a joint
proxy statement/prospectus, and other relevant documents concerning the proposed
transaction with the SEC. SHAREHOLDERS OF CBC AND FSBC ARE NOT BEING ASKED TO
TAKE ANY ACTION AT THIS TIME BUT ARE URGED TO READ THE REGISTRATION STATEMENT
AND THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS
TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. You will be
able to obtain a free copy of the joint proxy statement/prospectus, as well as
other filings containing information about CBC and FSBC, at the SEC's Web site
(http://www.sec.gov). Copies of the joint proxy statement/prospectus and the SEC
filings that will be incorporated by reference in the joint proxy
statement/prospectus can be obtained, without charge, by directing a request to
Richard W. Edwards at PO Box 18949, Raleigh, NC 27619 (800) 308-3971 or A.
Christine Baker at 445 S. Main Street, PO Box 1797, Burlington, NC 27216-1797
(336) 227-8861.
Each of CBC and FSBC and its respective directors and executive officers may be
deemed to be participants in the solicitation of proxies from the shareholders
of CBC and FSBC, as the case may be, in connection with the Merger. Information
about the directors and executive officers of FSBC and their ownership of FSBC
common stock is set forth in the proxy statement, dated January 5, 2005, for
FSBC's 2005 annual meeting of shareholders held on February 8, 2005, as filed
with the SEC on a Schedule 14A. Information about the directors and executive
officers of CBC and their ownership of CBC common stock is set forth in the
proxy statement, dated April 28, 2005, for CBC's 2005 annual meeting of
shareholders held on May 26, 2005, as filed with the SEC on a Schedule 14A.
Additional information regarding the interests of such participants may be
obtained by reading the joint proxy statement/prospectus when it becomes
available.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibits accompany this Report:
Exhibit 2.1 Merger Agreement, dated June 29, 2005, by and among Capital Bank
Corporation and 1st State Bancorp, Inc.
Exhibit 2.2 List of Schedules Omitted from Merger Agreement included as
Exhibit 2.1 above
Exhibit 99.1 Joint Press Release of Capital Bank Corporation and 1st State
Bancorp, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 29, 2005
CAPITAL BANK CORPORATION
By: /s/ Richard W. Edwards
__________________________
Richard W. Edwards
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ---------- ----------------------
Exhibit 2.1 Merger Agreement, dated June 29, 2005, by and among Capital Bank
Corporation and 1st State Bancorp, Inc.
Exhibit 2.2 List of Schedules Omitted from Merger Agreement included as
Exhibit 2.1 above
Exhibit 99.1 Joint Press Release of Capital Bank Corporation and 1st State
Bancorp, Inc.