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): December 27, 2005
CAPITAL BANK CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 000-30062 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:
[_] 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 December 27, 2005, Capital Bank Corporation, a North Carolina
corporation (the "Company"), received a $30,000,000 loan (the "Loan") from First
Tennessee Bank National Association ("First Tennessee"). The Loan is secured by
a pledge of all of the Company's capital stock in Capital Bank, the Company's
wholly-owned subsidiary, pursuant to a Commercial Pledge Agreement with First
Tennessee (collectively, with the Loan, the "Loan Documents").
The Loan matures on January 31, 2006, at which time the principal and
interest on all funds borrowed by the Company will become due and payable. The
Company is permitted to prepay the Loan at any time without penalty. The
interest rate on the Loan is First Tennessee's base commercial rate, which may
change daily. The Loan's initial interest rate is 7.25% per annum.
The Loan Documents provide for certain events of default with
customary cure provisions, including failure to pay any principal or interest
when due, failure to comply with covenants, any material representation or
warranty made by the Company proving to be false in any material respect,
certain insolvency or receivership events affecting the Company, defaults
relating to certain other indebtedness, a change in ownership of the Company and
the occurrence of a material adverse change in the Company's financial
condition.
The Company intends to use the borrowed funds from the Loan to finance
a portion of the merger consideration for its merger with 1st State Bancorp,
Inc. ("1st State"). The merger between the Company and 1st State is scheduled to
close in early January 2006. In connection with the merger between the Company
and 1st State, FTN Midwest Securities Corp. ("FTN"), an affiliate of FTN
Financial Group, a division of First Tennessee, acted as the Company's financial
advisor. FTN provided general financial advice in connection with the merger,
including delivering a written opinion to the Company's board of directors that
the exchange ratio and the aggregate merger consideration being paid by the
Company was fair from a financial point of view to the Company. As the Company's
financial advisor in connection with the merger with 1st State, FTN will receive
customary fees for the services provided.
The foregoing description of the Loan and the Loan Documents is
qualified in its entirety by the documents attached to this report as Exhibits
10.1 and 10.2, respectively, each of which is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure included under Item 1.01 of this Current Report on Form
8-K is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
Exhibit 10.1 Promissory Note, dated December 27, 2005, between Capital Bank
Corporation and First Tennessee Bank National Association.
Exhibit 10.2 Commercial Pledge Agreement, dated December 27, 2005, between
Capital Bank Corporation and First Tennessee Bank National
Association.
SIGNATURE
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.
CAPITAL BANK CORPORATION
By: /s/ B. Grant Yarber
-----------------------
B. Grant Yarber
Chief Executive Officer
Date: January 3, 2006
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
Exhibit 10.1 Promissory Note, dated December 27, 2005, between Capital Bank
Corporation and First Tennessee Bank National Association.
Exhibit 10.2 Commercial Pledge Agreement, dated December 27, 2005, between
Capital Bank Corporation and First Tennessee Bank National
Association.