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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 18, 2001
REGISTRATION NO. 333-57112
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
FIRST BANCORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
North Carolina 6022 56-1421916
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
341 NORTH MAIN STREET
POST OFFICE BOX 508
TROY, NORTH CAROLINA 27371-0508
(910) 576-6171
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES H. GARNER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST BANCORP
341 NORTH MAIN STREET
POST OFFICE BOX 508
TROY, NORTH CAROLINA 27371-0508
(910) 576-6171
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------
WITH COPIES TO:
HENRY H. RALSTON JAMES G. HUDSON, JR. EDWARD C. WINSLOW III
ROBINSON, BRADSHAW PRESIDENT AND CHIEF BROOKS, PIERCE, MCLENDON,
& HINSON, P.A. EXECUTIVE OFFICER HUMPHREY & LEONARD, L.L.P.
101 NORTH TRYON STREET, CENTURY BANCORP, INC. 2000 RENAISSANCE PLAZA
SUITE 1900 22 WINSTON STREET 230 NORTH ELM STREET
CHARLOTTE, THOMASVILLE, POST OFFICE BOX 26000
NORTH CAROLINA 28246 NORTH CAROLINA 27360 GREENSBORO,
(704) 377-2536 (336) 475-4663 NORTH CAROLINA 27420
(336) 373-8850
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the merger described in this Registration
Statement becomes effective.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for any
offering pursuant to Rule 462(b) under the Securities Act, 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(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Proposed Proposed
Title of Each Class of Maximum Maximum
Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Unit(1) Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------
Common Stock, no
par value 590,000 $17.6875 $10,435,625 $2,608.91(2)
==================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based on the average of the high and low
reported sales price on the Nasdaq National Market System on March 14,
2001.
(2) This fee was paid at the time of initial filing of this Registration
Statement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
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CENTURY BANCORP, INC.
TO THE SHAREHOLDERS OF CENTURY BANCORP, INC.:
Century Bancorp, Inc. ("Century Bancorp") and First Bancorp ("First Bancorp")
have entered into a merger agreement dated October 19, 2000. This agreement
calls for a merger of Century Bancorp and First Bancorp, with First Bancorp
surviving the merger. References to the merger in this proxy
statement/prospectus refer to the merger of Century Bancorp into First Bancorp.
The merger cannot be completed unless it is approved by the shareholders of
Century Bancorp. For that reason, you are receiving this proxy
statement/prospectus describing the terms of the merger and other important
information. We urge you to read it carefully.
Shareholders of Century Bancorp will be asked to vote upon and approve the
merger and related actions at a shareholder meeting to be held on May 15, 2001.
A proxy that can be used to cast your vote accompanies this proxy
statement/prospectus.
Under the merger agreement and plan of merger, you will receive 1.3333 shares of
First Bancorp common stock or $20.00 of cash for each share of Century Bancorp
common stock you own as of the date the merger is completed. Century Bancorp
shareholders will be able to elect whether they receive the stock or cash merger
consideration with respect to each of their shares of Century Bancorp common
stock, provided that 586,411 shares of First Bancorp common stock in the
aggregate will be paid as merger consideration (subject to possible adjustment
under certain circumstances described in this proxy statement/prospectus), and
the form of consideration to be paid to each shareholder will be subject to
allocation rules described in this proxy statement/prospectus in the event
either cash or stock is elected by too many shareholders. You will be permitted
to elect cash merger consideration for a portion of your shares and stock merger
consideration for the remaining portion.
First Bancorp common stock is traded on the Nasdaq National Market System under
the symbol "FBNC." Based on the closing price of First Bancorp common stock on
April 16, 2001 of $19.13 and the 1.3333 exchange ratio, you will receive
approximately $25.51 worth of First Bancorp common stock for each share of
Century Bancorp common stock for which the stock merger consideration is paid.
The actual value of the First Bancorp common stock received by Century Bancorp
shareholders in the merger, however, will depend on the market value of First
Bancorp common stock at the time of completion of the merger.
YOUR VOTE IS VERY IMPORTANT. THE BOARD OF DIRECTORS OF CENTURY BANCORP HAS
UNANIMOUSLY APPROVED THE MERGER, AND YOUR BOARD STRONGLY ENCOURAGES YOU TO VOTE
FOR THE MERGER.
BECAUSE CENTURY BANCORP SHAREHOLDERS WILL RECEIVE SHARES OF FIRST BANCORP COMMON
STOCK IN CONNECTION WITH THE MERGER, THEY SHOULD CONSIDER CAREFULLY THE
DISCUSSION OF RISK FACTORS BEGINNING ON PAGE 18.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE FIRST BANCORP COMMON STOCK TO BE
ISSUED UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE, ADEQUATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE. THE SHARES OF FIRST BANCORP COMMON STOCK ARE
NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS
ASSOCIATION AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.
- -------------------------------------------------------------------------------
The date of this proxy statement/prospectus is April 18, 2001. It is first being
mailed on or about April 20, 2001.
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CENTURY BANCORP, INC.
22 WINSTON STREET
THOMASVILLE, NORTH CAROLINA 27360
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 2001
Century Bancorp, Inc. ("Century Bancorp") will hold a special meeting
of shareholders at the office of Home Savings, Inc., SSB at 22 Winston Street,
Thomasville, North Carolina, at 5:00 p.m., local time, on May 15, 2001 for the
following purposes:
(1) Approval of Merger. To consider and vote on a proposal to
approve the merger agreement dated as of October 19, 2000 between First Bancorp
and Century Bancorp and the related plan of merger, pursuant to which Century
Bancorp will merge into First Bancorp, with First Bancorp being the surviving
corporation. Under the merger agreement and plan of merger, Century Bancorp
shareholders will receive 1.3333 shares of First Bancorp common stock or $20.00
of cash for each share of Century Bancorp common stock they own as of the date
the merger is completed. Century Bancorp shareholders will be able to elect
whether they receive stock or cash merger consideration for each of their shares
of Century Bancorp common stock, provided that 586,411 shares of First Bancorp
common stock in the aggregate will be paid as merger consideration (subject to
possible adjustment under certain circumstances described in this proxy
statement/prospectus) and the form of consideration to be paid will be subject
to allocation rules in the event either cash or stock is elected by too many
shareholders. Century Bancorp shareholders will be permitted to elect cash
merger consideration for a portion of their shares and stock merger
consideration for the remaining portion.
(2) Other Business. To transact such other business as may
properly come before the special meeting, or any adjournments or postponements
of such meeting.
The merger is described more fully in the proxy statement/prospectus
attached to this notice.
Record holders of Century Bancorp common stock at the close of business
on April 12, 2001 will receive notice of and may vote at the special meeting,
including any adjournments or postponements of such meeting. Approval of the
merger agreement and plan of merger at the special meeting will require the
affirmative vote of the holders of a majority of the shares of Century Bancorp
common stock outstanding at such record date.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meeting, please take the time to vote by completing and mailing the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, we will vote your proxy in favor of the merger.
If you do not either return your card or attend and vote in favor at the special
meeting, the effect will be a vote against the merger.
By Order of the Board of Directors
/s/ James G. Hudson, Jr.
-------------------------------------
James G. Hudson, Jr.
President and Chief Executive Officer
April 18, 2001
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE MERGER.
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TABLE OF CONTENTS
Page
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SUMMARY........................................................................................................ 6
The Parties ............................................................................................. 6
The Merger ............................................................................................. 7
What Century Bancorp Shareholders Will Receive in the Merger............................................. 7
How Century Bancorp Shareholders Can Elect Stock, Cash or Both........................................... 7
Effect of the Merger on Century Bancorp Options.......................................................... 8
First Bancorp Dividend Policy Following the Merger....................................................... 8
Comparative Market Prices of Century Bancorp and First Bancorp Common Stock.............................. 8
Expected Tax Treatment as a Result of the Merger......................................................... 9
Reasons for the Merger................................................................................... 9
Opinion of Century Bancorp's Financial Advisor........................................................... 9
Shareholder Meeting...................................................................................... 9
Required Shareholder Votes............................................................................... 9
Voting Rights at the Shareholder Meeting................................................................. 10
Dissenters' Rights....................................................................................... 10
Century Bancorp Recommendation to Shareholders........................................................... 10
Share Ownership of Management and Certain Shareholders................................................... 10
Interests of Certain Persons in the Merger............................................................... 10
Effective Time........................................................................................... 11
Exchange of Stock Certificates for Merger Consideration.................................................. 11
Regulatory Approval and Other Conditions................................................................. 11
Waiver, Amendment and Termination........................................................................ 12
Accounting Treatment..................................................................................... 12
Certain Differences in Shareholders' Rights.............................................................. 12
Stock Option Agreement................................................................................... 12
Management and Operations after the Merger............................................................... 13
Selected Financial Data.................................................................................. 13
Historical and Pro Forma Comparative Per Share Data...................................................... 16
RISK FACTORS................................................................................................... 18
Century Bancorp Shareholders May Not Receive the Form of Merger Consideration Elected.................... 18
The Value of the Stock Merger Consideration Will Vary with Changes in First Bancorp's Stock Price........ 18
The Value of First Bancorp Shares May Decline Before the Stock Merger Consideration Is Received.......... 18
Adverse Effect on Operating Results...................................................................... 18
SHAREHOLDER MEETING............................................................................................ 20
Date, Place, Time and Purpose............................................................................ 20
Record Date, Voting Rights, Required Vote and Revocability of Proxies.................................... 20
Solicitation of Proxies.................................................................................. 21
Dissenters' Rights....................................................................................... 21
Recommendation by Century Bancorp's Board of Directors................................................... 21
DESCRIPTION OF TRANSACTION..................................................................................... 22
The Merger ............................................................................................. 22
What Century Bancorp Shareholders Will Receive in the Merger............................................. 22
Election Procedures...................................................................................... 23
Allocation Rules......................................................................................... 24
What Dissenting Shareholders Will Receive in the Merger.................................................. 25
Effect of the Merger on Century Bancorp Options.......................................................... 25
Background of the Merger................................................................................. 26
Century Bancorp's Reasons for the Merger................................................................. 27
First Bancorp's Reasons for the Merger................................................................... 27
Opinion of Century Bancorp's Financial Advisor........................................................... 28
Effective Time of the Merger............................................................................. 34
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Exchange of Century Bancorp Stock Certificates for the Merger Consideration.............................. 34
Conditions to Consummation of the Merger................................................................. 35
Regulatory Approval...................................................................................... 37
Waiver, Amendment and Termination........................................................................ 37
Conduct of Business Pending the Merger................................................................... 38
Management and Operations after the Merger............................................................... 39
Dividend Policy.......................................................................................... 39
Interests of Certain Persons in the Merger............................................................... 39
Expected Tax Treatment as a Result of the Merger......................................................... 42
Accounting Treatment..................................................................................... 43
Expenses and Fees........................................................................................ 44
Resales of First Bancorp Common Stock.................................................................... 44
Stock Option Agreement................................................................................... 44
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS................................................................. 45
Anti-Takeover Provisions Generally....................................................................... 45
Authorized Capital Stock................................................................................. 46
Amendment of Articles of Incorporation and Bylaws........................................................ 47
Election of Directors.................................................................................... 47
Director Removal and Vacancies........................................................................... 48
Limitations on Director Liability........................................................................ 48
Indemnification of Directors............................................................................. 49
Special Meetings of Shareholders......................................................................... 50
Shareholder Nominations and Proposals.................................................................... 50
Dissenters' Rights of Appraisal.......................................................................... 51
Shareholder Votes Required for Certain Actions........................................................... 51
Shareholders' Rights to Examine Books and Records........................................................ 52
Dividends ............................................................................................. 52
COMPARATIVE MARKET PRICES AND DIVIDENDS........................................................................ 53
BUSINESS OF CENTURY BANCORP.................................................................................... 54
BUSINESS OF FIRST BANCORP...................................................................................... 54
CERTAIN REGULATORY CONSIDERATIONS.............................................................................. 55
DESCRIPTION OF FIRST BANCORP COMMON STOCK...................................................................... 57
OTHER MATTERS.................................................................................................. 58
EXPERTS........................................................................................................ 58
OPINIONS....................................................................................................... 58
ADDITIONAL INFORMATION......................................................................................... 58
Appendices
Appendix A -- Merger Agreement, dated as of October 19, 2000, between
First Bancorp and Century Bancorp, Inc., and Plan of Merger
Appendix B -- Opinion of Trident Securities, a division of McDonald
Investments, Inc.
Appendix C -- Article 13 of the North Carolina Business Corporation Act
ii
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PLEASE NOTE
No one has been authorized to provide shareholders of Century Bancorp
with any information other than the information included in this document and
the documents that are referred to herein. Shareholders of Century Bancorp
should not rely on other information as being authorized by Century Bancorp or
First Bancorp.
This proxy statement/prospectus has been prepared as of April 18, 2001.
There may be changes in the affairs of First Bancorp or Century Bancorp since
that date that are not reflected in this document.
When used in this proxy statement/prospectus, the terms "Century
Bancorp" and "First Bancorp" refer to Century Bancorp, Inc. and First Bancorp,
respectively, and, where the context requires, to Century Bancorp and First
Bancorp and their respective subsidiaries.
OTHER INFORMATION ABOUT THE PARTIES
Important business and financial information about First Bancorp and
Century Bancorp is contained in documents that have been delivered together with
this document. These documents are described on page 59 under "ADDITIONAL
INFORMATION," and are also incorporated herein by reference.
You can obtain additional, free copies of the information described
above or additional copies of this document on written or oral request, or you
can ask questions about the merger, by writing or calling:
Drema A. Michael
Century Bancorp, Inc.
22 Winston Street
Thomasville, North Carolina 27360
Telephone: (336) 475-4663
Anna G. Hollers
First Bancorp
341 North Main Street
Post Office Box 508
Troy, North Carolina 27371-0508
Telephone: (910) 576-6171
To obtain timely delivery of the documents, you must request the
information by May 8, 2001.
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains forward-looking statements
about First Bancorp and Century Bancorp on a combined basis following the
merger. Forward-looking statements are statements about the future and are not
based on historical fact and can often by identified by such words as "expect,"
"may," "could," "intend," "project," "estimate" or "anticipate." These
forward-looking statements reflect current views as of the date of this proxy
statement/prospectus of First Bancorp and Century Bancorp, but they are based on
assumptions and are subject to risks, uncertainties and other factors. These
factors include the following:
- competitive pressure in the banking industry may increase
significantly;
- changes in the interest rate environment may reduce margins;
- general economic conditions, either national or regional, may
be less favorable than expected, resulting in, among other
things, deterioration of asset quality;
- changes may occur in the regulatory environment;
- changes may occur in business conditions and inflation; and
- changes may occur in the securities markets.
Further information on specific factors that could affect the financial
results of First Bancorp after the merger is included in the discussion of "RISK
FACTORS" beginning on page 18.
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SUMMARY TERM SHEET
First Bancorp has entered into a merger agreement with Century Bancorp, Inc.,
dated October 19, 2000, pursuant to which Century Bancorp and First Bancorp will
merge, with First Bancorp surviving the merger.
- - Upon completion of the merger, Century Bancorp shareholders will
receive 1.3333 shares of First Bancorp common stock or $20.00 of cash
for each share of Century Bancorp common stock that they own. Century
Bancorp shareholders will be able to elect whether they receive the
stock or cash merger consideration with respect to each of their shares
of Century Bancorp common stock, provided that the aggregate number of
First Bancorp shares to be paid as merger consideration will be 586,411
(i.e., 439,819, which is the number of shares of Century Bancorp common
stock required by Section 2.3 of the merger agreement to be exchanged
for the stock merger consideration, times the 1.3333 exchange ratio),
subject to possible adjustment as set forth below. Century Bancorp
shareholders will be permitted to elect cash merger consideration for a
portion of their shares and stock merger consideration for the
remaining portion.
- - It is anticipated that the merger will be a tax-free transaction for
the Century Bancorp shareholders that exchange their shares solely for
First Bancorp common stock. Receipt of both First Bancorp common stock
and cash by Century Bancorp shareholders in the merger, however, should
result in gain being recognized, but no loss being recognized, to
Century Bancorp shareholders with the amount of recognized gain not to
exceed the amount of cash received. Finally, gain or loss will be
recognized for those Century Bancorp shareholders that exchange their
shares solely for cash. To qualify as a tax-free transaction, a minimum
amount (currently 40%) of the total consideration paid to Century
Bancorp shareholders in the merger must be paid in the form of shares
of First Bancorp common stock. Depending on the price of First
Bancorp's stock at the time of the merger, the number of shares of
First Bancorp common stock to be issued in connection with the merger
may have to be increased to qualify the merger as a tax-free
reorganization under the Internal Revenue Code of 1986. If the number
of First Bancorp shares is so increased, the number of Century Bancorp
shares of common stock exchanged for cash will decrease by a
corresponding number.
- - If the average price of First Bancorp common stock is less than $11.50
during the 20-day trading period ending May 10, 2001 (which is the
third business day prior to the Century Bancorp shareholder meeting),
First Bancorp may elect to pay all of the merger consideration in cash
at a price of $20 per share to avoid termination of the merger by
Century Bancorp, in which case the merger will not qualify as a
tax-free reorganization under the Internal Revenue Code of 1986.
- - If Century Bancorp's shareholders elect to receive either too much cash
or stock consideration, the cash and stock merger consideration will be
allocated among such shareholders as provided in the merger agreement
and described in the proxy statement/prospectus, so that 586,411 shares
of First Bancorp common stock will be issued to Century Bancorp
shareholders (subject to possible adjustment as set forth below).
- - The current exchange ratio of 1.3333 represents a value of $25.51 for
each share of Century Bancorp common stock for which the stock merger
consideration will be paid, based on the April 16, 2001 price of First
Bancorp common stock. The market price of First Bancorp common stock
will, however, fluctuate prior to completion of the merger.
- - Following the merger and assuming that 586,411 shares of First Bancorp
are issued and paid as merger consideration, existing First Bancorp
shareholders initially will own approximately 94%, and the former
Century Bancorp shareholders initially will own approximately 6%, of
First Bancorp's outstanding common stock.
- - Century Bancorp shareholders who do not vote in favor of the merger and
properly exercise their dissenters' rights have the right to receive a
cash payment for the fair value of their Century Bancorp shares in cash
pursuant to procedures set forth in the North Carolina Business
Corporation Act.
- - Century Bancorp's board of directors is soliciting your proxy for use
at the meeting of Century Bancorp shareholders to be held at the office
of Home Savings, Inc., SSB at 22 Winston Street, Thomasville, North
3
10
Carolina, at 5:00 p.m., local time, on May 15, 2001. At the special
meeting you will be asked to consider and approve the merger agreement
and related plan of merger.
- - Century Bancorp's board of directors has unanimously approved the
merger agreement and plan of merger and believes that the merger is
fair to, and in the best interests of, Century Bancorp shareholders.
- - Century Bancorp strongly encourages you to vote "FOR" the merger.
- - Trident Securities, a division of McDonald Investments, Inc., an
investment banking firm located in Raleigh, North Carolina, has given
its opinion, originally dated October 19, 2000 and updated as of April
18, 2001, to Century Bancorp's board of directors that as of such dates
the merger consideration to be received by the Century Bancorp
shareholders in connection with the merger is fair from a financial
point of view to Century Bancorp shareholders.
- - First Bancorp common stock is listed on the Nasdaq National Market
System under the symbol "FBNC." Century Bancorp common stock is listed
on the Nasdaq Small Cap Market under the symbol "CENB."
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: As a Century Bancorp shareholder, you are being asked to:
- approve the merger agreement and the related plan of
merger pursuant to which Century Bancorp will merge
into First Bancorp; and
- take action upon any other business as may properly
come before the meeting, or any adjournments or
postponements of the meeting.
Century Bancorp's board of directors is not aware of any other
business to be considered at the meeting.
Q: WHAT SHOULD I DO NOW?
A: Indicate on your proxy card how you want to vote, and sign,
date, and mail the proxy card in the enclosed envelope as soon
as possible, so that your shares will be voted at the meeting.
If you sign, date and mail your proxy and do not indicate how
you want to vote, your proxy will be voted in favor of the
merger. Failing to sign and send in your proxy or attend and
vote in person at the meeting will have the effect of a vote
against the merger.
Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares of stock only if you provide
instructions on how to vote. You should instruct your broker
how to vote your shares in accordance with the directions your
broker provides. Failure to provide instructions to your
broker will result in your shares not being voted, which will
have the effect of a vote against the merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, First Bancorp will send you
written instructions for exchanging your Century Bancorp stock
certificates for the merger consideration of cash and shares
of First Bancorp common stock.
5
12
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus relating to the merger and may not include all of the
information that is important to you. To get a more complete description of the
proposed merger, you should carefully read this entire document and the
documents delivered with it. For more information about First Bancorp and
Century Bancorp, see "ADDITIONAL INFORMATION" on page 59. We have included page
references in this summary to direct you to other places in this proxy
statement/prospectus where you can find more detailed information about the
topics summarized below.
THE PARTIES (SEE PAGE 55)
Century Bancorp, Inc.
22 Winston Street
Thomasville, North Carolina 27360
Telephone: (336) 475-4663
Century Bancorp is a bank holding company headquartered in Thomasville,
North Carolina. It conducts its operations through a subsidiary bank, Home
Savings, Inc., SSB ("Home Savings"). In addition, it has made loans to the Home
Savings Employee Stock Ownership Plan with respect to which it receives interest
payments.
Home Savings was organized in 1915 and has been a member of the Federal
Home Loan Bank system and its deposits have been federally insured since the
late 1950s. Home Savings' deposits are insured by the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC") to the
maximum amount permitted by law. Home Savings provides a wide range of banking
services, including accepting time and demand deposits and making secured and
unsecured loans to individuals and businesses.
Home Savings conducts business through its full service office in
Thomasville, North Carolina. Home Savings' primary market area covers the
communities within approximately a 10-mile radius of its office, which includes
portions of Davidson, Randolph and Guilford counties in North Carolina. As of
December 31, 2000, Century Bancorp had consolidated assets of $104.9 million,
net consolidated loans of $90.8 million, consolidated deposits of $72.9 million,
consolidated investment securities of $9.2 million, and consolidated
shareholders' equity of $18.5 million.
At December 31, 2000, Century Bancorp and Home Savings had 10 full-time
employees.
First Bancorp
341 North Main Street
Post Office Box 508
Troy, North Carolina 27371-0508
Telephone: (910) 576-6171
First Bancorp is a bank holding company headquartered in Troy, North
Carolina. It conducts its operations primarily through a subsidiary bank, First
Bank ("First Bank"), from 39 North Carolina branches located within an 80-mile
radius of Troy, covering a geographical area from Maxton to the southeast, to
High Point to the north, to Lillington to the east, and to Kannapolis to the
west. First Bancorp provides a full range of banking services, including
accepting demand and time deposits, making secured and unsecured loans to
individuals and businesses and providing discount brokerage services and
self-directed individual retirement accounts. In 2000 and other recent years,
First Bank accounted for substantially all of the consolidated net income of
First Bancorp.
As of December 31, 2000, First Bancorp had consolidated assets of
$915.2 million, net consolidated loans of $738.2 million, consolidated deposits
of $770.4 million, consolidated investment securities of $117.5 million, and
consolidated shareholders' equity of $110.7 million.
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THE MERGER (SEE PAGE 22)
Pursuant to the merger agreement and related plan of merger, Century
Bancorp will merge into First Bancorp, with First Bancorp being the surviving
corporation. After the merger, the combined company will conduct the business of
Century Bancorp and Home Savings through First Bancorp's banking subsidiary,
First Bank.
After the merger is completed, it is expected that James G. Hudson,
Jr., who currently serves as the President, Chief Executive Officer and a
director of Century Bancorp, will be elected as a director of First Bancorp and
its banking subsidiary, First Bank. It is also expected that immediately after
completion of the merger, certain executive officers of Century Bancorp
(including Mr. Hudson) will be employed by First Bancorp or its banking
subsidiary, First Bank. See "DESCRIPTION OF TRANSACTION--Management and
Operations after the Merger."
WHAT CENTURY BANCORP SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 22)
Upon completion of the merger, Century Bancorp shareholders will
receive 1.3333 shares of First Bancorp common stock or $20.00 of cash for each
share of Century Bancorp common stock. Promptly after the closing of the merger,
the Century Bancorp shareholders will elect to receive the cash or stock merger
consideration with respect to each share of Century Bancorp common stock held by
them, provided that the aggregate number of First Bancorp shares to be issued in
connection with the merger shall be 586,411 (i.e., 439,819, which is the number
of shares of Century Bancorp common stock required by Section 2.3 of the merger
agreement to be exchanged for the stock merger consideration, times the 1.3333
exchange ratio), unless a higher number is required to qualify the merger as a
tax-free reorganization under the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"). Century Bancorp shareholders will be permitted to
elect cash merger consideration for a portion of their shares and stock merger
consideration for the remaining portion. If the average price of First Bancorp
common stock, however, is less than $11.50 during the 20-day trading period
ending May 10, 2001 (which is the third business day prior to the Century
Bancorp shareholder meeting), First Bancorp may elect to pay all of the merger
consideration in cash at a price of $20.00 per share of Century Bancorp common
stock to avoid termination of the merger by Century Bancorp. See "DESCRIPTION OF
TRANSACTION -- What Century Bancorp Shareholders Will Receive in the Merger." If
too many of Century Bancorp's shareholders elect to receive cash or stock merger
consideration, the cash and stock merger consideration will be allocated among
such shareholders as provided in the merger agreement and summarized below in
"DESCRIPTION OF TRANSACTION--Allocation Rules"
Based on the closing price of First Bancorp common stock on April 16,
2001 of $19.13 per share and assuming an exchange ratio of 1.3333, the Century
Bancorp shareholders receiving stock merger consideration will receive
approximately $25.51 worth of First Bancorp common stock for each share of
Century Bancorp common stock held on the date the merger is completed. The
market price of First Bancorp stock, however, may fluctuate between the date of
this proxy statement/prospectus and the date that the merger is completed. Such
fluctuation would change the value of the shares of First Bancorp common stock
that the Century Bancorp shareholders receiving stock merger consideration will
receive in the merger. For more information about what the Century Bancorp
shareholders will receive if the merger is completed, see "DESCRIPTION OF
TRANSACTION -- What Century Bancorp Shareholders Will Receive in the Merger."
First Bancorp will not issue any fractional shares of its common stock
but, instead, will pay cash (without interest) for any fractional shares that
any Century Bancorp shareholders would otherwise receive upon completion of the
merger. The cash payment will be an amount equal to the fraction of a share of
First Bancorp common stock that otherwise would be received in the merger
multiplied by the closing price of one share of First Bancorp common stock on
the Nasdaq National Market System on the last trading day before the merger is
completed.
HOW CENTURY BANCORP SHAREHOLDERS CAN ELECT STOCK, CASH OR BOTH (SEE PAGE 23)
Holders of shares of Century Bancorp common stock may indicate a
preference to receive First Bancorp common stock, cash or a combination of both
in the merger by completing the election form sent to them upon completion of
the merger. If such a holder does not so elect within a time period specified on
the election form (which in any event shall not be less than 20 business days
after the form is mailed to Century Bancorp shareholders), First Bancorp will
determine the allocation of the stock and cash merger consideration that such
holder will receive in exchange for its shares of Century Bancorp common stock.
For those holders who make an
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election, however, the amount of First Bancorp common stock and cash to be
received as merger consideration is subject to allocation among the Century
Bancorp shareholders. Neither Century Bancorp's board of directors nor its
financial advisor makes any recommendation as to whether you should choose the
First Bancorp stock or cash merger consideration. Each holder of Century Bancorp
common stock at the time of the completion of the merger should consult with his
or her own financial advisor on this decision.
EFFECT OF THE MERGER ON CENTURY BANCORP OPTIONS (SEE PAGE 25)
There are outstanding options to acquire Century Bancorp common stock
under an existing Century Bancorp stock option plan. Upon completion of the
merger, First Bancorp will assume each outstanding option, which will be
converted into an option to purchase First Bancorp common stock. The number of
shares of First Bancorp common stock subject to such options and their exercise
price will be established based on the exchange ratio applicable to outstanding
shares of Century Bancorp common stock in the merger. It is a condition to
completion of the merger, however, that each director and executive officer of
Century Bancorp agree to cancel all of his or her options.
FIRST BANCORP DIVIDEND POLICY FOLLOWING THE MERGER (SEE PAGE 39)
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.88 per share of First Bancorp common stock, which, based on an exchange
ratio of 1.3333, equates to approximately $1.17 per share of Century Bancorp
common stock. First Bancorp, however, may change this policy at any time, based
upon business conditions, its financial condition and earnings, or other
factors. Century Bancorp currently pays quarterly dividends at an annualized
rate of $0.68 per share of Century Bancorp common stock.
COMPARATIVE MARKET PRICES OF CENTURY BANCORP AND FIRST BANCORP COMMON STOCK (SEE
PAGE 54)
Shares of First Bancorp common stock are traded on the Nasdaq National
Market System under the symbol "FBNC." Shares of Century Bancorp common stock
are traded on the Nasdaq Small Cap Market under the symbol "CENB."
The following table shows the reported closing sale prices per share
for Century Bancorp common stock and First Bancorp common stock on (i) October
19, 2000, the last trading day before the public announcement of the execution
of the merger agreement, and (ii) April 16, 2001, the latest practicable date
prior to the date of this proxy statement/prospectus. This table also shows in
the column entitled "Equivalent Price per Century Bancorp Share" the value that
Century Bancorp shareholders will receive in the merger for each share of
Century Bancorp common stock for which the stock merger consideration is paid.
Century Bancorp
Common First Bancorp Equivalent Price Per Century
Stock Common Stock Bancorp Share(1)
--------------- ------------- ----------------------------
October 19, 2000........................ $14.25 $14.25 $19.00
April 16, 2001.......................... $21.10 $19.13 $25.51
- -----------------
(1) The equivalent price per share of Century Bancorp common stock at each
specified date represents the closing sales price of a share of First
Bancorp common stock on such date multiplied by an exchange ratio of
1.3333. See "COMPARATIVE MARKET PRICES AND DIVIDENDS."
We can make no assurance as to what the market price of the First
Bancorp common stock will be when the merger is completed or anytime thereafter.
Century Bancorp shareholders should obtain current stock price quotations for
First Bancorp and Century Bancorp common stock.
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EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER (SEE PAGE 42)
It is anticipated that the merger will qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code and that, for
federal income tax purposes, Century Bancorp shareholders that exchange their
shares solely for First Bancorp common stock will not recognize any gain or loss
upon the exchange. However, Century Bancorp shareholders will be required to
recognize gain upon the receipt of cash paid as part of the merger consideration
or in lieu of fractional shares, with the amount of recognized gain not to
exceed the amount of cash received. Finally, Century Bancorp shareholders will
be required to recognize gain or loss upon the exchange to the extent they
receive solely cash for their shares. If the average price of First Bancorp
common stock is less than $11.50 during the 20-day trading period ending May 10,
2001 (which is the third business day prior to the Century Bancorp shareholder
meeting) and certain other conditions are satisfied, First Bancorp may elect to
pay all of the merger consideration in cash at a price of $20 per share to avoid
termination of the merger by Century Bancorp (see "DESCRIPTION OF TRANSACTION --
What Century Bancorp Shareholders Will Receive in the Merger"), in which case
the merger would not qualify as a tax-free reorganization.
Because certain tax consequences of the merger may vary depending on
the particular circumstances of each shareholder, whether the shareholder
receives cash or stock, and other factors, each shareholder of Century Bancorp
should consult his or her own tax advisor to determine the tax consequences of
the merger under federal, state, local, and foreign tax laws.
REASONS FOR THE MERGER (SEE PAGE 27)
The board of directors of Century Bancorp and First Bancorp believe
that, among other things, the merger will provide the resulting company with
expanded opportunities for profitable growth. In addition, the boards believe
that by combining the resources and capital of First Bancorp and Century
Bancorp, the resulting company will have an improved ability to compete in the
changing and competitive financial services industry.
OPINION OF CENTURY BANCORP'S FINANCIAL ADVISOR (SEE PAGE 28)
In deciding to approve the merger agreement, the board of directors of
Century Bancorp considered an opinion from its financial advisor, Trident
Securities, a division of McDonald Investments, Inc. ("Trident"), dated October
19, 2000, that the merger consideration was fair to the Century Bancorp
shareholders from a financial point of view as of such date. An updated opinion
of Trident, dated as of April 18, 2001, is attached to this proxy
statement/prospectus as Appendix B. We encourage all Century Bancorp
shareholders to read this opinion.
SHAREHOLDER MEETING (SEE PAGE 20)
The special meeting of the Century Bancorp shareholders will be held at
the office of Home Savings at 22 Winston Street, Thomasville, North Carolina, at
5:00 p.m., local time, on May 15, 2001. The shareholders will be asked to:
- approve the merger agreement and related plan of merger; and
- transact such other business as may properly come before the
meeting, or any adjournments or postponements of such meeting.
Century Bancorp's board of directors is not aware of any other business
to be considered at the meeting. A quorum of Century Bancorp shareholders must
be present to hold the special meeting. A quorum is established when the holders
of a majority of the shares of Century Bancorp common stock entitled to vote on
a matter are represented at the meeting, either in person or by proxy.
REQUIRED SHAREHOLDER VOTES (SEE PAGE 20)
The approval of the merger agreement and related plan of merger will
require the affirmative vote of the holders of a majority of the outstanding
shares of Century Bancorp common stock.
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VOTING RIGHTS AT THE SHAREHOLDER MEETING (SEE PAGE 20)
If you are a holder of shares of Century Bancorp common stock as of the
close of business on April 12, 2001, the record date, you are entitled to vote
at the special meeting of the Century Bancorp shareholders. On such record date,
1,105,019 shares of Century Bancorp common stock were outstanding. You will be
entitled to one vote for each share of Century Bancorp common stock owned as of
the record date. You may vote either by attending the meeting and voting your
shares or by completing the enclosed proxy card and mailing it to Century
Bancorp in the enclosed envelope.
Century Bancorp is seeking your proxy to use at the special meeting of
its shareholders. We have prepared this proxy statement/prospectus to assist you
in deciding how to vote and whether or not to grant your proxy to us. Please
indicate on your proxy card how you want to vote. Sign, date and mail the proxy
to us by mail as soon as possible so that your shares will be voted at the
meeting. If you sign, date and mail your proxy card without marking how you want
to vote, your proxy will be counted as a vote for the merger. Failure to return
your proxy card or to vote in person will have the effect of a vote against the
merger. If you sign a proxy, you may revoke it at any time prior to the meeting
or by attending and voting at the meeting. You cannot vote shares held in
"street name"; only your broker can vote these shares. If you do not provide
your broker with instructions on how to vote your shares, your broker will not
be permitted to vote them, and your shares will be treated as votes against the
merger.
DISSENTERS' RIGHTS (SEE PAGE 25)
Shareholders who vote against or abstain from voting on the merger and
properly exercise their dissenters' rights prior to the shareholder meeting have
the right to receive a cash payment for the fair value of their shares of
Century Bancorp common stock. To exercise these rights, you must comply with
Article 13 of the North Carolina Business Corporation Act, the relevant portions
of which are attached as Appendix C to this proxy statement/prospectus. If you
wish to dissent, please read this information carefully as you must take
affirmative steps to preserve your rights. See "SHAREHOLDER MEETING."
CENTURY BANCORP RECOMMENDATION TO SHAREHOLDERS (SEE PAGE 21)
The Century Bancorp board of directors has unanimously approved the
merger agreement and the plan of merger and believes that the proposed merger is
fair to the Century Bancorp shareholders and is in their best interests. The
Century Bancorp board unanimously recommends that the Century Bancorp
shareholders vote FOR approval of the merger agreement and the related plan of
merger.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (SEE PAGE 21)
On the record date, Century Bancorp directors and executive officers,
their immediate family members and entities they control owned or had or shared
voting power over 268,806 shares of Century Bancorp common stock, or
approximately 24.3% of the outstanding shares of Century Bancorp common stock,
which constitutes approximately 48.7% of the vote required to approve the
merger. This number does not include stock that the Century Bancorp directors
and officers may acquire through exercising outstanding stock options (noting,
however, that it is a condition to completion of the merger that each director
and executive officer agree to cancel all of his or her options without
exercising them). On such record date, none of First Bancorp's officers and
directors owned shares of Century Bancorp common stock and neither First Bancorp
or its subsidiaries nor Century Bancorp or its subsidiaries owned any shares of
Century Bancorp common stock other than in a fiduciary capacity for others or as
a result of debts previously contracted.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 39)
The Century Bancorp board of directors and certain executive officers
may have interests in the merger that are in addition to their general interests
as Century Bancorp shareholders. The Century Bancorp directors and certain
members of Century Bancorp's management, along with other employees of Century
Bancorp, have employment or severance agreements and are covered by certain
benefit plans and other arrangements and may
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receive benefits from First Bancorp as a result of the merger. As a result,
their interests in and potential benefits from the merger are different from
those of the Century Bancorp shareholders in general. The Century Bancorp board
of directors was aware of these interests and considered them in approving and
recommending the merger.
EFFECTIVE TIME (SEE PAGE 34)
Subject to the conditions to the obligations of Century Bancorp and
First Bancorp to effect the merger, as provided in the merger agreement and
described in this proxy statement/prospectus, the merger will become effective
at the time of the filing of articles of merger with the Secretary of State of
the State of North Carolina.
If the shareholders of Century Bancorp approve the merger and all
required regulatory approvals are obtained in a timely manner, it is currently
anticipated that the merger will be completed during the second quarter of 2001.
Century Bancorp and First Bancorp cannot assure you if or when the
necessary shareholder and regulatory approvals can be obtained or that the other
conditions precedent to the merger can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES FOR MERGER CONSIDERATION (SEE PAGE 34)
Promptly after the merger is completed, Century Bancorp shareholders
will receive an election form and transmittal letter from First Bancorp's
exchange agent with instructions on how to surrender their Century Bancorp stock
certificates in exchange for the merger consideration. By completing such
election form, holders of Century Bancorp shares can elect the number of shares
of their Century Bancorp common stock for which they receive either the cash or
stock merger consideration (unless no shares of stock are paid as merger
consideration under certain circumstances described in "DESCRIPTION OF
TRANSACTION--What Century Bancorp Shareholders Will Receive in the Merger" and
subject to the allocation provisions described below in "DESCRIPTION OF
TRANSACTION--Allocation Rules"). Century Bancorp shareholders should carefully
review and complete such election form and materials and return them as
instructed, together with their stock certificates for Century Bancorp common
stock. Century Bancorp shareholders should not send their stock certificates to
Century Bancorp, First Bancorp or First Bancorp's exchange agent until they
receive these written instructions. Shares of Century Bancorp common stock held
in book-entry form or "street name" will be exchanged for the merger
consideration without the submission of any Century Bancorp stock certificate.
First Bancorp will pay cash (without interest) to Century Bancorp shareholders
in lieu of issuing any fractional shares of First Bancorp common stock.
REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGES 35 AND 36)
Before the merger may be completed, First Bancorp is required to notify
and obtain approval from the Federal Reserve and other federal and state banking
regulators. First Bancorp has filed an application with the Federal Reserve for
its approval. We expect that First Bancorp will obtain this and all other
required approvals, but neither Century Bancorp nor First Bancorp can make any
assurances that such regulatory approvals will be obtained or as to the timing
of receiving such approvals.
In addition to the required regulatory approvals, the merger can be
completed only if certain other conditions, including the following, are met or
waived (if permitted to be waived):
- Century Bancorp shareholders approve the merger agreement and
related plan of merger;
- Century Bancorp and First Bancorp receive an opinion from an
acceptable tax advisor that the merger will qualify as a
tax-free reorganization (unless the average closing price of
First Bancorp common stock is less than $11.50 for the
20-trading day period ending May 10, 2001 (which is the third
business day prior to the date of the Century Bancorp
shareholder meeting) and First Bancorp elects to pay all cash
merger consideration to keep the merger from being terminated
by Century Bancorp, in which case the merger will not qualify
as a tax-free reorganization and such opinion is not
necessary);
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- holders of not more than 10% of Century Bancorp's common stock
exercise dissenters' rights in the merger;
- Century Bancorp and First Bancorp have complied in all
material respects with their covenants made in the merger
agreement; and
- neither Century Bancorp nor First Bancorp has breached in any
material respect any of its representations made in the merger
agreement.
In addition to these conditions, the merger agreement, attached to this
proxy statement/prospectus as Appendix A, describes other conditions that must
be met before the merger may be completed.
WAIVER, AMENDMENT AND TERMINATION (SEE PAGE 37)
At any time before the merger is completed, Century Bancorp and First
Bancorp may agree to terminate the merger agreement and not proceed with the
merger.
Additionally, either of Century Bancorp or First Bancorp may terminate
the merger if the conditions for its completion of the merger have not been
satisfied or waived by June 30, 2001. However, either Century Bancorp or First
Bancorp may terminate the merger for this reason if and only if it has
materially complied with all of its obligations under the merger agreement. In
addition, Century Bancorp may terminate the merger agreement if the trading
price of First Bancorp's common stock falls below certain levels, and First
Bancorp then chooses not to pay the cash merger consideration for all shares of
Century Bancorp common stock. See "DESCRIPTION OF TRANSACTION -- What Century
Bancorp Shareholders Will Receive in the Merger."
Century Bancorp and First Bancorp also may terminate the merger if
other circumstances occur that are described in Article X of the merger
agreement, which is attached to this proxy statement/prospectus as Appendix A.
The merger agreement may be amended by the written agreement of Century
Bancorp and First Bancorp. The parties may amend the merger agreement without
shareholder approval, even if Century Bancorp shareholders already have approved
the merger. Century Bancorp shareholders, however, must approve any amendments
that would modify, in a material respect, the type or amount of consideration
that they will receive in the merger.
ACCOUNTING TREATMENT (SEE PAGE 44)
The merger will be accounted for by First Bancorp as a purchase
transaction for accounting and financial reporting purposes. Under the purchase
method, First Bancorp will record, at fair value, the acquired assets and
assumed liabilities of Century Bancorp. To the extent the total purchase price
exceeds the fair value of assets acquired and liabilities assumed, First Bancorp
will record goodwill. Under current accounting standards, any goodwill will be
amortized over the period of expected benefit (which First Bancorp expects to
initially set at 15 years) and will be included in First Bancorp's consolidated
results of operations after the merger is completed.
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS (SEE PAGE 45)
Upon completion of the merger, Century Bancorp shareholders receiving
stock merger consideration will become shareholders of First Bancorp. The First
Bancorp articles of incorporation and bylaws will govern their rights as First
Bancorp shareholders. Because of differences in the articles of incorporation
and bylaws of First Bancorp and Century Bancorp, the rights of Century Bancorp
shareholders prior to the merger will not be the same in certain important ways
as their rights as First Bancorp shareholders.
STOCK OPTION AGREEMENT (SEE PAGE 44)
Century Bancorp has granted First Bancorp an option to purchase up to
19.9% of the outstanding shares of Century Bancorp common stock at $14.25 per
share under certain circumstances if the merger is not completed and a third
party attempts to take control of Century Bancorp. Under certain circumstances,
Century Bancorp's
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successor would be obligated to repurchase the option granted by Century Bancorp
if a third party acquires control of Century Bancorp.
MANAGEMENT AND OPERATIONS AFTER THE MERGER (SEE PAGE 39)
After the merger is completed, it is expected that James G. Hudson, Jr.
will be elected as a director of First Bancorp and its banking subsidiary, First
Bank. Mr. Hudson currently serves as the President, Chief Executive Officer and
a director of Century Bancorp. The four other directors of Century Bancorp will
not be nominated for election as a director of First Bancorp but, instead, will
serve on a local advisory board of First Bancorp. In recognition of the
important role that these individuals will have in making the proposed merger
successful, First Bancorp will pay each of them, as a member of such board, $900
per month for a period of three years following the completion of the merger.
Such amount, although greater than First Bancorp's ordinary compensation of $60
per month for serving on such a board, is the same amount as the board fees they
were receiving from Century Bancorp immediately prior to the merger.
Additionally, upon completion of the merger, First Bancorp, or its banking
subsidiary, First Bank, will employ Mr. Hudson as an Executive Vice President.
See "DESCRIPTION OF TRANSACTION -- Management and Operations after the Merger"
and "-- Interests of Certain Persons in the Merger."
SELECTED FINANCIAL DATA
The following tables present for First Bancorp selected financial data
for each of the years in the five-year period ended December 31, 2000 and for
Century Bancorp selected financial data for the six-month periods ended December
31, 2000 and December 31, 1999 and for each of the years in the five-year period
ended June 30, 2000. The information is based on the consolidated financial
statements contained in reports First Bancorp and Century Bancorp have filed
with the Securities and Exchange Commission, which documents have been delivered
together with this document and are incorporated by reference in this proxy
statement/prospectus. See "ADDITIONAL INFORMATION."
You should read the following tables in conjunction with the
consolidated financial statements of First Bancorp and Century Bancorp described
above (and notes to them), recognizing that historical results are not
necessarily indicative of results to be expected for any future period. With
respect to Century Bancorp, results for the six-month period ended December 31,
2000 are not necessarily indicative of results that may be expected for any
other interim period or for the year ending June 30, 2001 as a whole. In the
opinion of the management of Century Bancorp, all adjustments (which include
normal recurring adjustments) necessary to arrive at a fair statement of interim
results for such six-month period have been included.
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FIRST BANCORP SELECTED FINANCIAL DATA
Years Ended December 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
(Dollars in thousands, except per share data)
INCOME STATEMENT DATA
Interest income.................... $ 72,915 $ 61,591 $ 57,612 $ 50,858 $ 44,444
Interest expense................... 34,220 26,488 25,070 21,835 19,137
-------- -------- -------- -------- --------
Net interest income................ 38,695 35,103 32,542 29,023 25,307
Provision for loan losses.......... 1,605 910 990 575 325
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses........ 37,090 34,193 31,552 28,448 24,982
Noninterest income................. 4,729 5,647 5,218 4,526 4,709
Noninterest expense................ 26,741 21,752 19,665 17,504 17,827
-------- -------- -------- -------- --------
Income before income taxes......... 15,078 18,088 17,105 15,470 11,864
Income taxes....................... 5,736 6,234 6,132 5,448 4,046
-------- -------- -------- -------- --------
Net income......................... $ 9,342 $ 11,854 $ 10,973 $ 10,022 $ 7,818
======== ======== ======== ======== ========
PER SHARE DATA(1)
Net income per share - basic....... $ 1.05 $ 1.32 $ 1.20 $ 1.10 $ 0.86
Net income per share - diluted..... 1.03 1.27 1.13 1.05 0.82
Cash dividends declared............ 0.77 0.63 0.60 0.51 0.41
Period end stated book value....... 12.54 12.09 12.02 11.51 10.93
Period end tangible book value..... 12.01 11.50 11.38 10.80 10.29
BALANCE SHEET DATA (AT PERIOD END)
Total assets....................... $915,167 $889,531 $779,639 $703,485 $601,338
Loans.............................. 746,089 643,224 567,224 481,525 408,241
Allowance for loan losses.......... 7,893 6,674 6,100 5,383 5,335
Deposits........................... 770,379 712,139 656,148 571,132 494,560
Borrowed funds..................... 26,200 62,500 6,000 20,000 -
Total shareholders' equity......... 110,684 106,980 109,989 105,258 99,730
PERFORMANCE RATIOS
Return on average assets........... 1.03% 1.44% 1.48% 1.55% 1.33%
Return on average equity........... 8.49% 10.98% 10.14% 9.79% 7.91%
Net interest income (taxable-
equivalent)/average earning
assets........................... 4.53% 4.56% 4.73% 4.88% 4.74%
Shareholders' equity to total
assets........................... 12.09% 12.03% 14.11% 14.96% 16.58%
CAPITAL RATIOS
Tier I risk-based capital.......... 15.43% 17.89% 20.53% 23.67% 27.36%
Total risk based capital........... 16.40% 18.82% 21.48% 24.44% 28.13%
Leverage........................... 11.60% 11.91% 13.63% 14.50% 15.78%
ASSET QUALITY RATIOS
Allowance/gross loans.............. 1.06% 1.04% 1.08% 1.12% 1.31%
Nonperforming loans/total loans.... 0.12% 0.26% 0.34% 0.39% 0.59%
Nonperforming assets/total assets.. 0.19% 0.29% 0.31% 0.35% 0.50%
Net charge-offs/average loans...... 0.06% 0.06% 0.05% 0.12% 0.05%
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CENTURY BANCORP SELECTED FINANCIAL DATA
Six Months Ended
December 31, Years Ended June 30,
-------------------- -------------------------------------------------------
2000 1999 2000 1999 1998 1997(1) 1996
-------- ------- -------- ------- ------- -------- -------
(Dollars in thousands, except per share data)
INCOME STATEMENT DATA
Interest income.................... $ 3,758 $ 3,409 $ 6,908 $ 6,740 $ 7,225 $ 6,663 $ 5,869
Interest expense................... 2,307 1,832 3,804 3,652 3,709 3,512 3,541
-------- ------- -------- ------- ------- -------- -------
Net interest income................ 1,451 1,577 3,104 3,088 3,516 3,151 2,328
Provision for loan losses.......... 9 9 18 18 18 17 165
-------- ------- -------- ------- ------- -------- -------
Net interest income after
provision for loan losses........ 1,442 1,568 3,086 3,070 3,498 3,134 2,163
Noninterest income................. 17 20 40 37 42 47 35
Noninterest expense................ 866 854 1,728 1,663 1,731 1,507 1,169
-------- ------- -------- ------- ------- -------- -------
Income before income taxes......... 593 734 1,398 1,444 1,809 1,674 1,029
Income taxes....................... 210 266 499 488 605 558 352
-------- ------- -------- ------- ------- -------- -------
Net income......................... $ 383 $ 468 $ 899 $ 956 $ 1,204 $ 1,116 $ 677
======== ======= ======== ======= ======= ======== =======
PER SHARE DATA(2)
Net income per share - basic....... $ 0.39 $ 0.48 $ 0.93 $ 0.90 $ 1.06 $ 0.82 ---
Net income per share - diluted..... 0.39 0.48 0.93 0.90 1.06 0.82 ---
Cash dividends declared............ 0.34 0.34 0.68 0.68 0.67 0.17 ---
Special return of capital ......... --- --- --- --- 10.00 --- ---
Period end stated book value....... 16.74 15.89 16.17 15.57 14.74 24.80 ---
Period end tangible book value..... 16.74 15.89 16.17 15.57 14.74 24.80 ---
BALANCE SHEET DATA (AT PERIOD END)
Total assets....................... $104,902 $94,194 $100,542 $93,709 $96,866 $100,640 $81,304
Loans.............................. 91,345 80,094 87,840 76,217 70,548 62,883 55,725
Allowance for loan losses.......... 595 577 586 568 550 550 533
Deposits........................... 72,937 72,900 73,846 74,300 73,023 69,699 69,669
Borrowed funds..................... 12,500 3,000 8,000 1,000 4,200 --- ---
Total shareholders' equity......... 18,496 17,581 17,868 17,650 18,732 30,303 11,245
PERFORMANCE RATIOS
Return on average assets(3)........ 0.70% 0.84% 0.93% 1.02% 1.19% 1.22% 0.86%
Return on average equity(3)........ 3.93% 4.56% 5.09% 5.16% 4.51% 5.43% 6.19%
Net interest income (taxable-
equivalent)/average earning
assets(3)........................ 2.94% 3.43% 3.32% 3.45% 3.59% 3.56% 3.05%
Shareholders' equity to total
assets........................... 17.63% 18.66% 17.77% 18.83% 19.34% 30.11% 13.83%
CAPITAL RATIOS
Tier I risk-based capital.......... 33.54% 36.40% 34.16% 36.20% 40.27% 59.98% 26.47%
Total risk based capital........... 34.66% 37.62% 35.30% 37.40% 41.48% 82.58% 27.72%
Leverage........................... 17.03% 18.26% 17.34% 17.93% 18.34% 29.60% 13.79%
ASSET QUALITY RATIOS
Allowance/gross loans.............. 0.65% 0.72% 0.67% 0.75% 0.78% 0.88% 0.97%
Nonperforming loans/total loans.... 0.27% 0.30% 0.21% 0.31% 0.47% 0.12% 0.52%
Nonperforming assets/total assets.. 0.38% 0.25% 0.19% 0.25% 0.35% 0.13% 0.76%
Net charge-offs/average loans...... 0.00% 0.00% 0.00% 0.00% 0.03% 0.00% 0.06%
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(1) On December 20, 1996, Home Savings converted from a mutual savings bank
to a stock savings bank and became a wholly-owned subsidiary of Century
Bancorp.
(2) All per share data reflects a 3-for-1 stock split declared in April
1998.
(3) December 31, 2000 and 1999 amounts have been annualized.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows certain comparative per share data relating
to net income, cash dividends, and book value. The equivalent pro forma
information is based on an exchange ratio of shares of First Bancorp common
stock for shares of Century Bancorp common stock in the merger of 1.3333 and
assumes that 586,411 shares of First Bancorp common stock will be issued as
merger consideration. A different number of shares of First Bancorp common stock
may, in certain circumstances, be issued and paid as merger consideration. See
"DESCRIPTION OF TRANSACTION--What Century Bancorp Shareholders Will Receive in
the Merger." The pro forma information gives effect to the merger as though it
was completed as of the beginning of the period stated.
The pro forma and equivalent pro forma data is presented for your
information only. It does not necessarily indicate the results of operations or
combined financial position that would have resulted had First Bancorp and
Century Bancorp completed the merger at the time indicated, and it does not
necessarily indicate future results of operations or the combined financial
position of First Bancorp after the merger.
You should read the information shown below in conjunction with the
historical consolidated financial statements of First Bancorp and Century
Bancorp (and notes to them) and related financial information appearing
elsewhere in this proxy statement/prospectus and the documents delivered with
and incorporated by reference in this document. See "-- Selected Financial Data"
and "ADDITIONAL INFORMATION."
FIRST BANCORP AND CENTURY BANCORP
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
Year Ended December 31, 2000
----------------------------
NET INCOME PER SHARE
First Bancorp - Historical
Basic $ 1.05
Diluted 1.03
First Bancorp - Pro forma(1)
Basic 1.00
Diluted 0.98
Century Bancorp - Historical(2)
Basic 0.84
Diluted 0.84
Century Bancorp - Pro forma equivalent(3)
Basic 1.33
Diluted 1.31
CASH DIVIDENDS PER SHARE
First Bancorp - Historical 0.77
First Bancorp - Pro forma(4) 0.77
Century Bancorp - Historical 0.68
Century Bancorp - Pro forma equivalent(3)(4) 1.03
BOOK VALUE - AT PERIOD END
First Bancorp - Historical 12.54
First Bancorp - Pro forma(5) 12.69
Century Bancorp - Historical 16.74
Century Bancorp - Pro forma equivalent(3) 16.92
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- ---------------------
(1) Pro forma assumptions include (i) that the exchange ratio of shares of
First Bancorp common stock to shares of Century Bancorp common stock is
1.3333, (ii) the issuance of 586,411 shares of First Bancorp common
stock, (iii) the payment of $20 per share of Century Bancorp common
stock, representing a total cash payment of approximately $13.2 million
for the shares of Century Bancorp common stock that are not exchanged
for First Bancorp stock, (iv) a cost of funds rate of 5.0% per annum,
and (v) a 15-year straight-line life relating to goodwill of
approximately $4.5 million to be recorded in accordance with the
purchase method of accounting.
(2) Converted from a fiscal year end of June 30 to First Bancorp's fiscal
year end of December 31.
(3) The pro forma equivalent per share data for Century Bancorp are
calculated by multiplying First Bancorp's pro forma information by the
exchange ratio of 1.3333.
(4) First Bancorp's pro forma cash dividends per share represents
historical dividends per share paid by First Bancorp. First Bancorp
currently pays quarterly dividends at an annualized rate of $0.88 per
share, which for Century Bancorp shareholders who receive shares of
First Bancorp common stock as merger consideration is a pro forma
equivalent of $1.17 per share of Century Bancorp common stock. See
"DESCRIPTION OF TRANSACTION--Management and Operations after the
Merger" and "--Dividend Policy."
(5) Based on the pro forma total shareholders' equity of First Bancorp
divided by the total pro forma shares of First Bancorp common stock,
assuming the issuance of 586,411 shares of First Bancorp common stock.
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RISK FACTORS
Upon completion of the merger, Century Bancorp shareholders will
receive shares of First Bancorp common stock and cash in exchange for their
shares of Century Bancorp common stock. Century Bancorp shareholders should be
aware of and consider particular risks and uncertainties that are applicable to
the merger.
CENTURY BANCORP SHAREHOLDERS MAY NOT RECEIVE THE FORM OF MERGER CONSIDERATION
ELECTED
The merger agreement provides that, in the aggregate, 586,411 shares of
First Bancorp common stock will be paid as merger consideration (subject to
possible adjustment as described in "DESCRIPTION OF TRANSACTION--What Century
Bancorp Shareholders Will Receive in the Merger."), regardless of the number of
Century Bancorp shareholders electing stock merger consideration or cash merger
consideration. In the event that too many Century Bancorp shareholders elect to
receive cash or stock merger consideration, the cash and stock merger
consideration will be allocated among the Century Bancorp shareholders as
described in "DESCRIPTION OF TRANSACTION--Allocation Rules." In addition, if the
average closing price of First Bancorp common stock is less than $11.50 for the
20-day trading period ending May 10, 2001 and certain other conditions are
satisfied, First Bancorp may elect to pay the cash consideration of $20.00 per
share of Century Bancorp common stock to all Century Bancorp Shareholders to
complete the merger. Accordingly, there is a risk that Century Bancorp
shareholders will not receive the form of merger consideration elected.
THE VALUE OF THE STOCK MERGER CONSIDERATION WILL VARY WITH CHANGES IN FIRST
BANCORP'S STOCK PRICE
Each share of Century Bancorp common stock owned by Century Bancorp
shareholders will be converted into the right to receive either cash or shares
of First Bancorp common stock. The price of First Bancorp common stock when the
merger takes place may vary from its price at the date of this proxy
statement/prospectus and at the date of Century Bancorp's shareholder meeting.
Such variations in the price of First Bancorp common stock may result from
changes in the business, operations or prospects of First Bancorp, regulatory
considerations, general market and economic conditions and other factors. At the
time of Century Bancorp's shareholder meeting, you will not know the exact value
of the stock merger consideration to be received when the merger is completed.
THE VALUE OF FIRST BANCORP SHARES MAY DECLINE BEFORE THE STOCK MERGER
CONSIDERATION IS RECEIVED
Each share of Century Bancorp common stock owned by Century Bancorp
shareholders will be converted into the right to receive either cash or shares
of First Bancorp common stock. The price of First Bancorp common stock that
Century Bancorp shareholders receive may decline from its price at the date of
this proxy statement/prospectus, the time of Century Bancorp's shareholder
meeting, or the time at which an election is made to receive the stock merger
consideration. Additionally, there will be a time period after the merger
between the deadline for making an election to receive the cash or stock merger
consideration and the time at which former Century Bancorp shareholders received
the certificates representing the stock merger consideration. Until such
certificates are received, Century Bancorp shareholders will not be able to sell
their First Bancorp shares on the open market and thus will not be able to avoid
losses resulting from any decline in the trading prices of First Bancorp common
stock during such period.
ADVERSE EFFECT ON OPERATING RESULTS
The merger involves the combination of two bank holding companies and
their respective subsidiaries that previously have operated independently. A
successful combination of their operations will depend substantially on First
Bancorp's ability to consolidate operations, systems and procedures and to
eliminate redundancies and costs. First Bancorp may not be able to combine the
operations of Century Bancorp and First Bancorp without encountering
difficulties, such as:
- the loss of key employees and customers;
- the disruption of operations and business;
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- deposit attrition, customer loss and revenue loss;
- possible inconsistencies in standards, control procedures and
policies;
- unexpected problems with costs, operations, personnel,
technology and credit; and
- problems with the assimilation of new operations, sites and
personnel, which could divert resources from regular banking
operations.
Similarly, First Bancorp's acquisition of First Savings Bancorp, Inc.
in September 2000, which approximated a merger of equals, presents substantially
the same risks to First Bancorp's operating results. Although First Bancorp
anticipates cost savings as a result of the acquisition of each of Century
Bancorp and First Savings Bancorp, Inc. to be meaningful, it may not be able to
realize any of the potential cost savings expected. Additionally, any cost
savings may be offset by losses in revenues or other adverse changes to
earnings.
Additionally, First Bancorp expects to merge the banking subsidiary of
Century Bancorp, Home Savings, into its banking subsidiary, First Bank. We
cannot, however, make any assurances that regulatory authorities will approve
this merger of these banking subsidiaries.
Finally, there are risks and uncertainties relating to an investment in
First Bancorp common stock or to economic conditions generally that should
affect other financial institutions in similar ways. These aspects are discussed
under the heading "A WARNING ABOUT FORWARD-LOOKING STATEMENTS."
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SHAREHOLDER MEETING
DATE, PLACE, TIME AND PURPOSE
Century Bancorp is furnishing this proxy statement/prospectus to the
holders of Century Bancorp common stock in connection with a proxy solicitation
by the Century Bancorp board of directors, which will use the proxies at a
special meeting of Century Bancorp shareholders to be held at the office of Home
Savings at 22 Winston Street, Thomasville, North Carolina, at 5:00 p.m., local
time, on May 15, 2001.
At this meeting, holders of Century Bancorp common stock will be asked
to:
- vote on a proposal to approve the merger agreement and related
plan of merger, which are attached to this proxy
statement/prospectus as Appendix A; and
- transact such other business as may properly come before the
special meeting, or any adjournments or postponements of such
meeting.
Century Bancorp's board of directors is not aware of any other business
to be considered at the special meeting.
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE AND REVOCABILITY OF PROXIES
The Century Bancorp board of directors fixed the close of business on
April 12, 2001 as the record date for determining the Century Bancorp
shareholders entitled to notice of and to vote at the special meeting of Century
Bancorp shareholders. Only holders of Century Bancorp common stock of record on
the books of Century Bancorp at the close of business on April 12, 2001 have the
right to receive notice of and to vote at the special meeting. On the record
date, there were 1,105,019 shares of Century Bancorp common stock issued and
outstanding held by approximately 266 holders of record. At the special meeting,
Century Bancorp shareholders will have one vote for each share of Century
Bancorp common stock owned on the record date.
A quorum of shareholders is required to hold the special meeting. A
quorum will exist when the holders of a majority of the outstanding shares of
Century Bancorp common stock entitled to vote on a matter are present at the
meeting. To determine whether a quorum is present, Century Bancorp will count
all shares of Century Bancorp common stock present at the special meeting either
in person or by proxy, whether or not such shares are voted for any matter.
Approval of the merger agreement and related plan of merger will
require the affirmative vote of the holders of a majority of the outstanding
shares of Century Bancorp common stock.
Brokers who hold shares in street name for customers who are the
beneficial owners of such shares may not give a proxy to vote those shares
without specific instructions from their customers. Any abstention, nonvoting
share or "broker non-vote" will have the same effect as a vote AGAINST approval
of the merger.
Properly executed proxies that Century Bancorp receives before the vote
at the Century Bancorp special meeting that are not revoked will be voted in
accordance with the instructions indicated on the proxies. Any proxy received
with no instructions indicated will be voted FOR the proposal to approve the
merger agreement and the related plan of merger, and the proxy holder may vote
the proxy in its discretion as to any other matter that may come properly before
the special meeting. If necessary, the proxy holder may vote in favor of a
proposal to adjourn the special meeting to permit further solicitation of
proxies if there are not sufficient votes to approve the proposal at the time of
the special meeting. No proxy holder, however, will vote a proxy in favor of a
proposal to adjourn the special meeting if that proxy instructed a vote against
approval of the merger.
A shareholder of Century Bancorp who has given a proxy may revoke it at
any time prior to its exercise at the Century Bancorp special meeting by (1)
giving written notice of revocation to the Corporate Secretary of Century
Bancorp, (2) properly submitting to Century Bancorp a duly executed proxy
bearing a later date, or
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(3) attending the Century Bancorp special meeting and voting in person. All
written notices of revocation and other communications with respect to
revocation of proxies should be sent to:
Century Bancorp, Inc.
22 Winston Street
Thomasville, North Carolina 27360
Attention: Drema A. Michael, Corporate Secretary
On the record date, Century Bancorp's directors and executive officers,
including their immediate family members and affiliated entities, owned or had
or shared voting power over 268,806 shares or approximately 24.3% of the
outstanding shares of Century Bancorp common stock, or approximately 48.7% of
the shares required to approve the merger. This number does not include shares
subject to options to purchase Century Bancorp common stock (noting, however,
that it is a condition to completion of the merger that each director and
executive officer agree to cancel all of his or her options without exercising
them). It is expected that the directors and executive officers of Century
Bancorp will vote their shares in favor of the merger. On such record date none
of First Bancorp officers or directors owned shares of Century Bancorp common
and neither First Bancorp or its subsidiaries nor Century Bancorp or its
subsidiaries owned any other shares of Century Bancorp common stock other than
in a fiduciary capacity for others or as a result of debts previously
contracted.
SOLICITATION OF PROXIES
Directors, officers, employees, and agents of Century Bancorp may
solicit proxies by mail, in person, or by telephone or telegraph. They will
receive no additional compensation for such services. Although Century Bancorp
does not currently expect to do so, it may engage one or more proxy solicitation
firms to assist it in the delivery of proxy materials and solicitation of votes.
Century Bancorp also may make arrangements with brokerage firms and other
custodians, nominees, and fiduciaries, if any, for the forwarding of
solicitation materials to the beneficial owners of the common stock held of
record by such persons. Century Bancorp will reimburse any such brokers,
custodians, nominees, and fiduciaries for the reasonable out-of-pocket expenses
incurred by them in connection with the services provided. Century Bancorp will
pay its own expenses incurred in connection with the merger. See "DESCRIPTION OF
TRANSACTION --Expenses and Fees."
DISSENTERS' RIGHTS
Shareholders who vote against or abstain from voting on the merger and
properly exercise their dissenters' rights prior to the shareholder meeting will
have the right to receive a cash payment for the fair value of their shares of
Century Bancorp common stock. To exercise these rights, shareholders must comply
with Article 13 of the North Carolina Business Corporation Act, the relevant
portions of which are attached as Appendix C to this proxy statement/prospectus.
If you wish to dissent, please read this information carefully as you must take
affirmative steps to preserve your rights.
RECOMMENDATION BY CENTURY BANCORP'S BOARD OF DIRECTORS
Century Bancorp's board of directors has approved the merger agreement
and related plan of merger, and it believes that completion of the merger is in
the best interests of Century Bancorp and its shareholders. Century Bancorp's
board of directors unanimously recommends that its shareholders vote FOR
approval of the merger agreement and the related plan of merger.
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DESCRIPTION OF TRANSACTION
The following information describes material aspects of the merger.
This description is not a complete description of all the terms and conditions
of the merger agreement. This description is qualified in its entirety by the
Appendices attached to this proxy statement/prospectus, including the merger
agreement and related plan of merger, which are attached as Appendix A and
incorporated into this document by reference. You are urged to read the
Appendices in their entirety.
THE MERGER
Century Bancorp will be acquired by and merged into First Bancorp, with
First Bancorp being the surviving corporation, with the merger being completed
pursuant to the merger agreement and related plan of merger.
WHAT CENTURY BANCORP SHAREHOLDERS WILL RECEIVE IN THE MERGER
Upon completion of the merger, Century Bancorp shareholders will
receive 1.3333 shares of First Bancorp common stock (the "Per Share Stock
Consideration") or $20.00 of cash (the "Per Share Cash Consideration") for each
share of Century Bancorp common stock. Promptly after the closing of the merger,
holders of shares of Century Bancorp common stock will elect to receive either
the cash or stock merger consideration with respect to each share of Century
Bancorp common stock held by them, provided that the aggregate number of First
Bancorp shares to be issued in connection with the merger shall be 586,411
(i.e., 439,819, which is the number of shares of Century Bancorp common stock
required by Section 2.3 of the merger agreement to be exchanged for the stock
merger consideration, times the 1.3333 exchange ratio), unless a higher number
is required to qualify the merger as a tax-free reorganization under the
Internal Revenue Code. Century Bancorp shareholders will be permitted to elect
cash merger consideration for a portion of their shares and stock merger
consideration for the remaining portion.
Currently, for the merger to qualify as a tax-free reorganization, at
least 40% of the total merger consideration must be paid in the form of First
Bancorp common stock. If the price of First Bancorp common stock at the time of
the merger is less than $15.00 per share, it will be necessary for First Bancorp
to issue more than 586,411 shares to qualify the merger as a tax-free
reorganization. If more shares of First Bancorp common stock are issued, a
corresponding fewer shares of Century Bancorp common stock will be exchanged for
cash consideration.
In the event that Century Bancorp shareholders elect to receive either
too much cash or stock merger consideration, the cash and stock merger
consideration will be allocated among such shareholders as provided in the
merger agreement and summarized below in "--Allocation Rules."
No fractional shares of First Bancorp common stock will be issued.
Instead, cash (without interest) will be paid in lieu of any fractional share to
which any Century Bancorp shareholder would be entitled upon completion of the
merger in an amount equal to such shareholder's fractional interest multiplied
by the closing price of such common stock on the Nasdaq National Market System
on the last trading day preceding the effective date of the merger.
Century Bancorp's board of directors may terminate the merger agreement
if:
- the average closing price (as defined below) of First Bancorp
common stock is less than $11.50 for the 20-trading day period
(the "measurement period") ending on May 10, 2001 (which is
the third business day prior to the Century Bancorp
shareholder meeting); and
- the percentage (the "First Bancorp stock percentage change")
by which the average closing price of the First Bancorp common
stock during the measurement period is lower than $15 exceeds
by more than 15 percentage points the percentage (the "index
percentage change") by which the average closing price of the
SNL index (as defined below) during the measurement period is
lower than the average closing price of the SNL index on
October 19, 2000.
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(Examples: If the average closing price of the SNL index has
declined by 10%, the average closing price of First Bancorp
common stock during the measurement period must be more than
25% lower than $15; if the average closing price of the SNL
index has declined by 15%, the average closing price of First
Bancorp common stock during the measurement period must be
more than 30% lower than $15);
provided, however, that:
- in such case, First Bancorp has the right to pay the Per Share
Cash Consideration of $20.00 for all shares of Century Bancorp
common stock, in which case no Century Bancorp shareholders
will receive First Bancorp common stock in the merger and
Century Bancorp will not have the right to terminate the
merger agreement and the merger; and
- in such case, the merger will not qualify as a tax-free
reorganization and all closing conditions and opinions
relating to such qualification no longer will be required or
applicable.
For purposes of the adjustment provisions described above,
- "average closing price" means, during any specified period,
with respect to First Bancorp common stock, the average of the
daily closing sales price for such stock on the Nasdaq
National Market System during the specified period and, with
respect to the SNL index, the average of the daily closing
prices of such SNL index as reported by SNL Securities LC
during the specified period; and
- "SNL index" means the SNL Nationwide Bank Index ($500 million
to $1 billion), an index of stocks of banks and bank holding
companies with assets from $500 million to $1 billion
published by SNL Securities LC, a research and publishing
company located in Charlottesville, Virginia.
The actual market value of a share of First Bancorp common stock at the
effective time of the merger and at the time stock certificates for those shares
are delivered following surrender and exchange of stock certificates
representing shares of Century Bancorp common stock may be more or less than the
average closing price during the measurement period. Century Bancorp
shareholders are urged to obtain current market prices for First Bancorp common
stock.
The above description is adapted from the provisions contained in
Section 10.1(f) of the merger agreement, which is attached to this proxy
statement/prospectus as Appendix A.
ELECTION PROCEDURES
First Bancorp has appointed Registrar & Transfer Company as its
exchange agent in connection with the merger. At the effective time of the
merger, First Bancorp will deposit with the exchange agent, for the benefit of
Century Bancorp shareholders, certificates representing shares of First Bancorp
common stock and cash to be issued or paid as the merger consideration, subject
to the allocation rules described below in "--Allocation Rules."
In accordance with the allocation procedures, Century Bancorp
shareholders as of the date of the completion of the merger will be entitled to
elect to receive for each share of Century Bancorp common stock either the Per
Share Stock Consideration or the Per Share Cash Consideration. Shares of Century
Bancorp common stock for which cash has been elected, all dissenting shares, and
shares held by holders of less than 100 shares with respect to which an election
of merger consideration has not been made are referred to as "Cash Election
Shares," and the product of the number of Cash Election Shares and the Per Share
Cash Consideration is referred to as the "Cash Election Amount." All shares for
which stock has been elected are referred to as "Stock Election Shares." Under
the merger agreement, shares of Century Bancorp common stock for which no
election is made, or is deemed not to have been made, are referred to as "No
Election Shares." Subject to the allocation rules described below, No Election
Shares will be converted into Stock Election Shares or Cash Election Shares as
determined by First Bancorp in its sole discretion.
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All shareholder elections must be made on the election form that will
be provided to the holders of Century Bancorp common stock after the effective
time of the merger. To be effective, an election form must be received, properly
completed and accompanied by the stock certificate(s) in respect of which the
election is being made, by the exchange agent no later than the election
deadline specified in the election form (which shall not in any event be less
than 20 business days after the form is mailed to Century Bancorp shareholders).
A record holder that fails to submit an effective election form prior to the
election deadline will be deemed not to have made an election, and such holder's
shares shall constitute No Election Shares. In the event that any stock
certificate has been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate to have been lost, stolen or
destroyed, and, the posting of a bond in a customary amount as indemnity against
any claim that may be made with respect to the certificate, the exchange agent
will issue in exchange for the lost, stolen or destroyed certificate the merger
consideration deliverable in respect of the Century Bancorp common stock
represented by the certificate.
Elections may be revoked or changed upon written notice to the exchange
agent prior to the election deadline. If a shareholder revokes the election form
and does not properly make a new election by the election deadline, the holder's
shares will be deemed No Election Shares. The exchange agent may use reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made, and any good faith decisions of the exchange agent
shall be binding and conclusive. Neither First Bancorp nor the exchange agent is
under any obligation to notify any person of any defect in an election form.
Neither Century Bancorp or First Bancorp (or their respective boards of
directors) nor Century Bancorp's financial advisor makes any recommendation as
to whether you should choose First Bancorp common stock or cash for your shares
of Century Bancorp common stock. You should consult with your own financial
advisor about this decision.
ALLOCATION RULES
If necessary, the exchange agent will allocate among Century Bancorp
shareholders the cash and stock consideration so that 586,411 shares of First
Bancorp common stock (subject to possible adjustment in certain circumstances as
described above in "-What Century Bancorp Shareholders Will Receive in the
Merger") will be issued and paid as merger consideration.
ALLOCATION OF FIRST BANCORP COMMON STOCK WHEN TOO FEW SHAREHOLDERS
ELECT TO RECEIVE CASH. If the Cash Election Amount is less than the total amount
of cash to be paid as merger consideration:
- each Cash Election Share (other than dissenting shares; see
"--What Dissenting Shareholders Will Receive in the Merger")
will be converted into the right to receive the Per Share Cash
Consideration;
- the exchange agent will designate, on a pro rata basis, first
from among holders of No Election Shares and then, if
necessary, from among holders of Stock Election Shares, a
sufficient number of such shares ("Cash Designee Shares") so
that the sum of Cash Designee Shares and Cash Election Shares
multiplied by the Per Share Cash Consideration equals as close
as practicable the total amount of cash to be paid as merger
consideration; and
- the Cash Designee Shares will be converted into the right to
receive the Per Share Cash Consideration, and any Stock
Election Shares and any No Election Shares, in each case, not
selected as Cash Designee Shares will be converted into the
right to receive the Per Share Stock Consideration.
ALLOCATION OF CASH WHEN TOO MANY SHAREHOLDERS ELECT TO RECEIVE CASH. If
the Cash Election Amount is greater than the total amount of cash to be paid as
merger consideration:
- each Stock Election Share and each No Election Share will be
converted into the right to receive the Per Share Stock
Consideration;
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- the exchange agent will designate, on a pro rata basis, from
among holders of Cash Election Shares other than the
dissenting shares, a sufficient number of such shares ("Stock
Designee Shares") so that the number of Stock Designee Shares
multiplied by the Per Share Cash Consideration equals as close
as practicable the difference between the Cash Election Amount
and the total amount of cash to be paid as merger
consideration; and
- the Stock Designee Shares will be converted into the right to
receive the Per Share Stock Consideration, and any Cash
Election Shares not selected as Stock Designee Shares will be
converted into the right to receive the Per Share Cash
Consideration.
Due to the limitations on the number of shares of Century Bancorp
common stock to be converted into the right to receive the Per Share Stock
Consideration and the Per Share Cash Consideration, no assurance can be given
that you will receive the form of merger consideration you request.
WHAT DISSENTING SHAREHOLDERS WILL RECEIVE IN THE MERGER
Shareholders who vote against or abstain from voting on the merger and
properly exercise their dissenters' rights prior to the shareholder meeting have
the right to receive a cash payment for the fair value of their shares of
Century Bancorp common stock. Any such payment will be in lieu of the Per Share
Cash Consideration of $20.00 per share of Century Bancorp common stock and could
be more than, the same as, or less than such amount. To exercise these rights,
you must comply with Article 13 of the North Carolina Business Corporation Act,
the relevant portions of which are attached as Appendix C to this proxy
statement/prospectus and which sets forth in detail the procedures by which
these rights are exercisable and by which the fair value of shares is determined
and paid. If you wish to dissent, please read this information carefully as you
must take affirmative steps to preserve your rights.
EFFECT OF THE MERGER ON CENTURY BANCORP OPTIONS
Century Bancorp's directors and several of its employees hold options
to purchase shares of Century Bancorp common stock. When the merger becomes
effective, each outstanding option or other right to purchase Century Bancorp
common stock granted under Century Bancorp's stock option plan will become an
option to purchase First Bancorp common stock. First Bancorp will assume each
option in accordance with the terms of Century Bancorp's stock option plan and
the agreements that evidence the options and will deliver First Bancorp common
stock upon the exercise of each option. All Century Bancorp options not already
exercisable have or will become vested, non-forfeitable and exercisable as a
result of the proposed merger and the change-in-control provisions in the
Century Bancorp stock options plan. After the merger becomes effective:
- First Bancorp and the compensation committee of its board of
directors will be substituted for Century Bancorp and the
compensation committee of Century Bancorp's board of directors
administering the Century Bancorp stock option plan;
- each option assumed by First Bancorp may be exercised only for
shares of First Bancorp common stock;
- the number of shares of First Bancorp common stock subject to
the converted Century Bancorp options will be equal to the
number of shares of Century Bancorp common stock subject to
the options immediately before the merger became effective
multiplied by the exchange ratio, rounded up to the next
highest share; and
- the per share exercise price under each converted Century
Bancorp option will be adjusted by dividing the exercise price
immediately before the merger by the exchange ratio and
rounding down to the nearest cent.
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Notwithstanding the foregoing:
- each Century Bancorp option that is an "incentive stock
option" will be adjusted as required by Section 424 of the
Internal Revenue Code and the related regulations so that the
conversion will not constitute a modification, extension or
renewal of the option within the meaning of Section 424(h) of
the Internal Revenue Code; and
- it is a condition to the closing of the merger that each
executive officer and director of Century Bancorp agree to
cancel his or her options to purchase Century Bancorp common
stock.
For information with respect to stock options held by Century Bancorp's
management, see "-- Interests of Certain Persons in the Merger."
BACKGROUND OF THE MERGER
At a meeting held on February 16, 2000, Century Bancorp's board of
directors considered issues related to the possible sale or merger of the
company. The board decided to retain Trident Securities, a division of McDonald
Investments, Inc., to advise the board.
Management and Trident made an assessment of Century Bancorp's value
and prospects. They identified the companies who were candidates to acquire or
merge with it. Trident solicited indications of interest from those companies.
Century Bancorp's board of directors met in July 2000 and reviewed the
responses received. After reviewing the proposals and receiving advice from
Century Bancorp management and Trident, the directors authorized the companies
submitting proposals to perform examinations of Century Bancorp's books and
records on a limited, off-site basis. Following those examinations,
representatives of the companies were invited to meet with Century Bancorp's
board of directors.
After the meetings, the companies submitted detailed written
indications of interest, which were subject to performing comprehensive
examinations of Century Bancorp's books and records and other matters. After
receiving financial advice from Trident and reviewing the proposals received,
including the trading characteristics of the stock of the proposing companies
and the financial statements of the companies separately and in comparison to
selected peer groups, the board determined that the proposal from First Bancorp
offered the best total value for Century Bancorp's shareholders. The board
agreed to permit First Bancorp to conduct comprehensive examinations and,
subject to satisfactory mutual examinations, to negotiate an agreement that
would provide for the merger of Century Bancorp into First Bancorp.
Based on the results of the mutual examinations, the boards of Century
Bancorp and First Bancorp directed their representatives to prepare and
negotiate a definitive merger agreement. On October 19, 2000, Century Bancorp's
board of directors met with its legal counsel and Trident to consider a proposed
merger agreement tendered by First Bancorp. At that meeting, legal counsel
advised the board about legal and fiduciary duties associated with the proposed
transaction.
Century Bancorp's management and its financial and legal advisors
reported the results of Century Bancorp's examination of First Bancorp's books
and records and associated interviews and site visits, which were satisfactory.
Legal counsel explained the terms of the proposed agreement to Century Bancorp's
board, and Trident made a presentation regarding the business and financial
aspects of the proposed transaction (including the option that Century Bancorp
was asked to provide to First Bancorp (see "--Stock Option Agreement")) and the
fairness, from a financial point of view, of the merger consideration proposed
to be paid by First Bancorp to Century Bancorp's shareholders. The Century
Bancorp board examined the procedures for electing stock or cash and considered
the possible effects of changes in stock prices prior to a closing date.
After receiving advice and discussing the issues, the board of
directors unanimously approved the terms of the merger agreement, the plan of
merger, the option agreement and all related documents.
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CENTURY BANCORP'S REASONS FOR THE MERGER
Century Bancorp's board of directors, with the assistance of its
financial and legal advisors, evaluated the financial, legal and market
considerations involved in the decision to recommend the merger to the
shareholders of Century Bancorp. The board of directors believes that the
transactions provided for in the merger agreement are in the best interests of
Century Bancorp and its shareholders.
The terms of the merger, including the consideration payable to Century
Bancorp's shareholders, are the result of a comprehensive, competitive process
conducted on an arms' length basis. The board believes that it conducted a
thorough and complete search for a merger partner from among the companies it
believed most likely to be interested in acquiring Century Bancorp on terms
favorable to Century Bancorp's shareholders.
Century Bancorp's board of directors considered the following factors
before concluding that the merger is in the best interests of the company and
its shareholders:
- the financial terms of the proposed merger;
- a review of the terms of the proposed transaction with outside
financial and legal advisors;
- information concerning the business, operations, earnings,
asset quality and financial condition of First Bancorp and the
prospects of the combined organization;
- the fact that the merger agreement permits Century Bancorp's
shareholders, within certain limits, to elect to receive cash
or First Bancorp stock in exchange for their Century Bancorp
common stock;
- a comparison of the terms of the proposed merger with
comparable transactions in North Carolina, the southeastern
United States and elsewhere;
- competitive factors and consolidation trends in the banking
industry;
- Trident's opinion that the consideration to be received in the
merger is fair, from a financial point of view, to Century
Bancorp's shareholders;
- alternatives to the merger, including continuing to operate
Century Bancorp as an independent company, in light of
economic conditions, the competitive environment in the
financial services industry and the board's analysis of
Century Bancorp's financial condition, past performance and
future prospects; and
- the effects of the transaction on Century Bancorp and its
customers, communities and employees.
The board of directors considered the separate agreements and benefits
proposed for employees, management and members of the board of directors, which
it found to be reasonable. See "-- Interests of Certain Persons in the Merger."
While the board of directors considered the foregoing factors
individually, the board did not assign any specific or relative weights to the
factors considered and did not make any determination with respect to any
individual factor. The board made its determination with respect to the merger
agreement based on the unanimous conclusion reached by its members, in light of
the factors that each of them considered appropriate, that the agreement is in
the best interests of Century Bancorp's shareholders.
FIRST BANCORP'S REASONS FOR THE MERGER
The First Bancorp board believes that the merger presents an important
opportunity for First Bancorp to increase shareholder value through growth by
merging with a profitable, well-managed financial institution in
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Thomasville and Davidson County that complements First Bancorp's existing
presence in surrounding areas. The First Bancorp board believes that the
opportunities created by the merger to increase First Bancorp's shareholder
value more than offset risks inherent in the merger.
In reaching its decision to approve the merger agreement, First
Bancorp's board of directors consulted with management of First Bancorp, as well
as its financial advisors regarding the financial aspects of the proposed
transaction and its legal advisors regarding the terms of the transaction. In
reaching its decision to approve the merger agreement, the First Bancorp board
considered the following material factors:
- the First Bancorp board's familiarity with and review
of Century Bancorp's business, operations, financial
condition, earnings and prospects. In making this
assessment, the First Bancorp board took into account
the results of First Bancorp's due diligence review
of Century Bancorp;
- the business, operations, financial condition,
earnings and prospects of the combined entity that
would result from the merger of First Bancorp with
Century Bancorp;
- the belief of senior management of First Bancorp and
the First Bancorp board that First Bancorp and
Century Bancorp have similar and compatible
approaches to delivering financial performance and
shareholder value and operating a community banking
organization, and that their management and employees
possess complementary skills and expertise;
- the pro forma and prospective financial impact of the
merger upon First Bancorp;
- the structure of the proposed merger, the terms of
the merger agreement and the expectation that the
merger will qualify as a transaction that is tax-free
for federal income tax purposes;
- the current and prospective economic and competitive
environments facing financial institutions, including
First Bancorp;
- the attractiveness of the Century Bancorp franchise
and the complementary position of Century Bancorp's
Thomasville market to the other markets served by
First Bancorp in Davidson County and along the I-85
corridor;
- the financial terms of the merger, including the
relationship of the value of the consideration
issuable in the merger to the market value, tangible
book value and earnings per share of Century Bancorp
common stock;
- the non-financial terms of the merger, including
arrangements relating to continued involvement of the
management and members of the board of directors of
Century Bancorp with the combined company; and
- the likelihood that the merger will be approved by
applicable regulatory authorities without undue
conditions or delay.
This discussion of the information and factors considered by First
Bancorp's board of directors includes the material factors considered by the
First Bancorp board. The First Bancorp board did not assign any relative or
specific weights to these factors, and individual directors may have given
different weights to different factors.
OPINION OF CENTURY BANCORP'S FINANCIAL ADVISOR
Century Bancorp retained Trident to act as its financial advisor in
connection with a possible merger and related matters. As part of its
engagement, Trident agreed, if requested by Century Bancorp, to render an
opinion with respect to the fairness, from a financial point of view, to the
holders of Century Bancorp common stock, of the merger consideration as set
forth in the merger agreement. Trident is a nationally recognized specialist for
the financial services industry, in general, and for thrifts in particular.
Trident is regularly engaged in evaluations of
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similar businesses and in advising institutions with regard to mergers and
acquisitions, as well as raising debt and equity capital for such institutions.
Century Bancorp selected Trident as its financial advisor based upon Trident's
qualifications, expertise and reputation in such capacity.
Trident delivered a written opinion dated October 19, 2000 that the
merger consideration was fair to Century Bancorp shareholders, from a financial
point of view, as of the date of such opinion. Trident updated its October 19,
2000 opinion as of the date of this proxy statement/prospectus. No limitations
were imposed by Century Bancorp on Trident with respect to the investigations
made or the procedures followed in rendering its opinion.
THE FULL TEXT OF TRIDENT'S WRITTEN OPINION TO THE CENTURY BANCORP BOARD
OF DIRECTORS, DATED AS OF THE DATE OF THIS PROXY STATEMENT/PROSPECTUS, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND EXTENT OF REVIEW BY
TRIDENT, IS ATTACHED AS APPENDIX B AND IS INCORPORATED HEREIN BY REFERENCE. IT
SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH THIS PROXY
STATEMENT/PROSPECTUS. THE FOLLOWING SUMMARY OF TRIDENT'S OPINION IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. TRIDENT'S OPINION IS
ADDRESSED TO THE CENTURY BANCORP BOARD OF DIRECTORS AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF CENTURY BANCORP AS TO HOW SUCH SHAREHOLDER
SHOULD VOTE AT THE CENTURY BANCORP SPECIAL MEETING DESCRIBED IN THIS DOCUMENT.
Trident, in connection with rendering its opinion:
- reviewed Century Bancorp's Annual Reports to
Shareholders and Annual Reports on Form 10-KSB for
each of the years ended June 30, 2000, June 30, 1999
and June 30, 1998, including the audited financial
statements contained therein;
- reviewed First Bancorp's Annual Reports to
Shareholders and Annual Reports on Form 10-K for each
of the years ended December 31, 1999, December 31,
1998 and December 31, 1997, including the audited
financial statements contained therein, and First
Bancorp's Quarterly Reports on Form 10-Q for the
three month periods ended June 30, 2000 and March 31,
2000;
- reviewed certain other public and non-public
information, primarily financial in nature, relating
to the respective businesses, earnings, assets and
prospects of Century Bancorp and First Bancorp
provided to Trident or publicly available;
- participated in meetings and telephone conferences
with members of senior management of Century Bancorp
and First Bancorp concerning the financial condition,
business, assets, financial forecasts and prospects
of the respective companies, as well as other matters
Trident believed relevant to its inquiry;
- reviewed certain stock market information for Century
Bancorp common stock and First Bancorp common stock
and compared it with similar information for certain
companies, the securities of which are publicly
traded;
- compared the results of operations and financial
condition of Century Bancorp and First Bancorp with
that of certain companies which Trident deemed to be
relevant for purposes of its opinion;
- reviewed the financial terms, to the extent publicly
available, of certain acquisition transactions which
Trident deemed to be relevant for purposes of its
opinion;
- reviewed the merger agreement dated October 19, 2000
and its schedules and exhibits and certain related
documents; and
- performed such other reviews and analyses as Trident
deemed appropriate.
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The oral and written opinions provided by Trident to Century Bancorp
were necessarily based upon economic, monetary, financial market and other
relevant conditions as of the dates thereof.
In connection with its review and arriving at its opinion, Trident
relied upon the accuracy and completeness of the financial information and other
pertinent information provided by Century Bancorp and First Bancorp to Trident
for purposes of rendering its opinion. Trident did not assume any obligation to
independently verify any of the information provided as being complete and
accurate in all material respects. With regard to the financial forecasts
established and developed for Century Bancorp and First Bancorp with the input
of their respective managements, as well as projections of cost savings and
operating synergies, Trident assumed that this information reflects the best
available estimates and judgments of Century Bancorp and First Bancorp as to the
future performance of the separate and combined entities and that the
projections provided a reasonable basis upon which Trident could formulate its
opinion. Neither Century Bancorp nor First Bancorp publicly discloses such
internal management projections of the type utilized by Trident in connection
with Trident's role as financial advisor to Century Bancorp. Therefore, such
projections cannot be assumed to have been prepared with a view towards public
disclosure. The projections were based upon numerous variables and assumptions
that are inherently uncertain, including, among others, factors relative to the
general economic and competitive conditions facing Century Bancorp and First
Bancorp. Accordingly, actual results could vary significantly from those set
forth in the respective projections.
Trident does not claim to be an expert in the evaluation of loan
portfolios or the allowance for loan losses with respect thereto and therefore
assumes that such allowances for Century Bancorp and First Bancorp are adequate
to cover such losses. In addition, Trident does not assume responsibility for
the review of individual credit files and did not make an independent
evaluation, appraisal or physical inspection of the assets or individual
properties of Century Bancorp or First Bancorp, nor was Trident provided with
such appraisals. Furthermore, Trident assumes that the merger will be
consummated in accordance with the terms set forth in the merger agreement,
without any waiver of any material terms or conditions by Century Bancorp, and
that obtaining the necessary regulatory approvals for the merger will not have
an adverse effect on either separate institution or the combined entity. Trident
assumes that the merger will be recorded as a "purchase" in accordance with
generally accepted accounting principles.
In connection with rendering its opinion to Century Bancorp's board of
directors, Trident performed a variety of financial and comparative analyses,
which are briefly summarized below. Such summary does not purport to be a
complete description of the analyses performed by Trident. Moreover, Trident
believes that these analyses must be considered as a whole and that selecting
portions of such analyses and the factors considered by it, without considering
all such analyses and factors, could create an incomplete understanding of the
scope of the process underlying the analyses and, more importantly, the opinion
derived from them. The preparation of a financial advisor's opinion is a complex
process involving subjective judgments and is not necessarily susceptible to
partial analyses or a summary description of such analyses. In its full
analysis, Trident also included assumptions with respect to general economic,
financial market and other financial conditions. Furthermore, Trident drew from
its past experience in similar transactions, as well as its experience in the
valuation of securities and its general knowledge of the banking industry as a
whole. Any estimates in Trident's analyses were not necessarily indicative of
actual future results or values, which may significantly diverge more or less
favorably from such estimates. Estimates of company valuations do not purport to
be appraisals nor to necessarily reflect the prices at which companies or their
respective securities actually may be sold. None of the analyses performed by
Trident were assigned a greater significance by Trident than any other in
deriving its opinion.
Comparable Transaction Analysis. Trident reviewed and compared
financial performance and pricing information for groups of comparable pending
and completed thrift merger transactions (through October 13, 2000) it deemed
pertinent to its analysis of the merger. The pricing ratios for the merger were
compared to the average and median ratios of (i) price to last twelve months of
earnings, (ii) price to tangible book value, (iii) price to capital-adjusted
tangible book value, and (iv) tangible book value premium to core deposits for
each of the following comparable transaction groups:
- all recent thrift acquisitions in the United States announced
within the preceding 12 months ("All Recent Median");
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- all thrift acquisitions in the United States announced within
the preceding 90 days ("Last 90 Days Median");
- all pending thrift acquisitions in the United States that have
been announced but have yet to close ("All Pending Median");
- all Southeast thrift acquisitions announced within the
preceding 12 months ("Southeast Recent Median");
- all North Carolina thrift acquisitions announced within the
preceding 12 months ("North Carolina Recent Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months involving acquired thrifts with assets
of $75 million to $125 million ("Acquired Assets Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months with a total deal size of $15 million
to $35 million ("Transaction Size Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months involving acquired thrifts with
returns on average assets of 85 basis points to 11.5 basis
points ("Return on Assets Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months involving acquired thrifts with
returns on average equity of 5% to 7% ("Return on Equity
Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months involving acquired thrifts with
tangible capital of 15% to 25% ("Tangible Capital Median");
- all thrift acquisitions in the United States announced within
the preceding 12 months involving acquired thrifts with
non-performing assets/assets of 0.00% to 0.25%
("Non-Performing Assets Median"); and
- Guideline thrift acquisitions announced since March 1999
involving acquired thrifts with capital levels and returns on
average equity similar to Century Bancorp ("Guideline
Median").
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The following table represents a summary analysis of the comparable
transactions analyzed by Trident based on the announced transaction values:
Price/ Tangible
Price/ Capital Book
Tangible Adjusted Price/ Premium/
Book Tangible LTM Core
Deals Value Book(1) Earnings(2) Deposits(3)
----- -------- -------- ----------- -----------
ALL RECENT MEDIAN 69 140.9% 174.5% 19.2x 9.0%
LAST 90 DAYS MEDIAN 17 139.8% 171.2% 15.9x 8.8%
ALL PENDING MEDIAN 31 140.3% 166.1% 18.0x 8.0%
SOUTHEAST RECENT MEDIAN 10 129.5% 176.3% 18.3x 8.2%
NORTH CAROLINA RECENT MEDIAN 3 162.4% 206.8% 27.8x 14.1%
ACQUIRED ASSETS MEDIAN 10 178.5% 194.5% 24.5x 9.9%
TRANSACTION SIZE MEDIAN 18 135.1% 175.7% 20.1x 8.2%
RETURN ON ASSETS MEDIAN 11 168.4% 193.5% 17.7x 11.2%
RETURN ON EQUITY MEDIAN 14 142.5% 184.2% 19.9x 9.4%
TANGIBLE CAPITAL MEDIAN 12 116.6% 173.0% 19.6x 9.1%
NON-PERFORMING ASSETS MEDIAN 27 120.7% 166.6% 19.8x 7.0%
GUIDELINE MEDIAN 13 120.8% 172.1% 24.0x 6.7%
CENTURY BANCORP(4) 123.1% 166.3% 24.5x 7.4%
- -----------------
(1) Price and capital have been adjusted to eliminate the impact of excess
capital (assumes 7% capital is adequate).
(2) This ratio is price divided by last 12 months earnings per share.
(3) Tangible book value premium as a percentage of core deposits.
(4) Century Bancorp price per share is the merger consideration of $20.00
per share.
Discounted Cash Flow Analysis. Trident prepared a discounted cash flow
analysis with regard to Century Bancorp's estimated value on a stand-alone
basis. This analysis utilized a range of discount rates of 12% to 15% and a
range of terminal multiples of 13.0x to 18.0x earnings. The analyses resulted in
a range of present values of between $8.35 and $12.04 per share. Trident noted
that the discounted cash flow analysis was included because it is a widely used
valuation methodology, but that the results of such methodology are highly
dependent upon the numerous assumptions that must be made, including earnings
growth rates, dividend pay-out rates and discount rates.
Due Diligence Examination of First Bancorp. Trident reviewed its
on-site due diligence examination of First Bancorp. Trident examined First
Bancorp's historical balance sheets and income statements, along with recent
operating results and a variety of financial ratios through June 30, 2000. Given
First Bancorp's pending merger with First Savings Bancorp, Inc at the time,
Trident also considered the pro forma financial condition and operating
performance at June 30, 2000 of First Bancorp and First Savings Bancorp, Inc. as
a combined company, which acquisition closed on September 14, 2000. Trident
discussed First Bancorp's business strategy, strengths and weaknesses,
profitability, growth, net interest margin, non-interest income, operating
expenses, intangible assets, borrowed funds, market area, capital, asset
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quality and reserve coverage, concentrations of credit and loan portfolio
composition, interest-rate risk, subsidiary activities, culture, use of
technology, stock pricing, recent bank analysts' reports, and other issues.
Comparable Company Analysis. Trident reviewed and compared stock market
data and selected financial information for First Bancorp with corresponding
information for actively traded banks possessing similar financial and
performance characteristics as First Bancorp. For purposes of this analysis,
Trident considered the pro forma financial condition and performance at June 30,
2000 of First Bancorp and First Savings Bancorp, Inc. as a combined company,
which acquisition closed on September 14, 2000. The groups of comparison banks
were grouped according to the parameters listed below:
NUMBER OF COMPANIES
COMPARABLE GROUPS IN GROUP
----------------------------------------------------------- -------------------
Median for All U.S. Banks 665
Median for Southeast Banks 160
Median for North Carolina Banks 39
Median for Banks with Assets - $750 million to $1.3 billion 62
Median for Banks with Market Capitalization - $100 million to $150 44
million
Median for Banks with Return on Average Assets - 140 basis points to 81
160 basis points
Median for Banks with Return on Average Equity - 12% to 14% 112
Median for Banks with Tangible Capital Median - 10% to 12% 79
Median for Guideline Companies* 13
* Actively traded companies of similar asset size, tangible capital
levels, and return on equity.
The table below represents a summary analysis of all of the comparable
groups based on market prices as of October 17, 2000 and the latest publicly
available financial data as of or for the twelve months ended December 31, 1999.
FIRST
MEAN MEDIAN BANCORP(1)
------- ------- ----------
Price to last twelve months reported earnings 11.6x 11.4x 11.1x
Price to last twelve months adjusted earnings(2) 12.2x 12.2x 13.3x
Price to last twelve months core earnings(3) 10.9x 10.8x 12.5x
Price to book value 139.80% 138.80% 128.60%
Price to tangible book value 143.80% 145.90% 134.60%
Dividend yield 3.50% 3.40% 5.70%
Return on average assets 1.18% 1.22% 1.43%
Return on average equity 12.70% 12.70% 11.80%
- ----------------------
(1) Based on pro forma financial information for First Bancorp as of June
30, 2000 for First Bancorp and First Savings Bancorp, Inc. as a
combined company.
(2) Adjusted earnings are defined as pre-tax earnings, minus non-recurring
gains, plus non-recurring losses, taxed at a 35% rate.
(3) Core earnings are defined as pre-tax earnings, minus non-recurring
gains, plus non-recurring losses, plus loan loss provisions, taxed at a
35% rate.
The analysis reveals that First Bancorp trades similarly to banks
included in comparable groups of banks based on price to earnings for the last
twelve months, but at a slight discount based on price to book value and price
to tangible book value. First Bancorp's higher return on average assets results
in a lower return on average equity because of its higher level of equity to
assets. First Bancorp's stock price is not significantly different from the
comparable groups of banks.
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Based on the aforementioned analyses and Trident's experience with
numerous mergers involving thrift institutions, it is Trident's opinion that the
merger consideration to be received by Century Bancorp shareholders in the
merger is fair from a financial point of view.
No company used as a comparison in the above analyses is identical to
Century Bancorp, First Bancorp or the combined entity and no other transaction
is identical to the merger. Accordingly, an analysis of the results of the
foregoing is not purely mathematical; rather, such analyses involve complex
considerations and judgments concerning differences in financial market and
operating characteristics of the companies and other factors that could affect
the public trading volume or price of the companies to which Century Bancorp,
First Bancorp and the combined entity are being compared.
IN CONNECTION WITH THE DELIVERY OF ITS OPINION DATED AS OF THE DATE OF
THIS PROXY STATEMENT/PROSPECTUS, TRIDENT PERFORMED PROCEDURES TO UPDATE, AS
NECESSARY, CERTAIN OF THE ANALYSES DESCRIBED ABOVE AND REVIEWED THE ASSUMPTIONS
ON WHICH THE ANALYSES DESCRIBED ABOVE WERE BASED AND THE FACTORS CONSIDERED IN
CONNECTION THEREWITH. TRIDENT DID NOT PERFORM ANY ANALYSES IN ADDITION TO THOSE
DESCRIBED ABOVE IN UPDATING THE OPINION.
For its financial advisory services provided to Century Bancorp,
Trident has been paid fees of $50,000 to date and will be paid an additional fee
that will amount to 2% of the aggregate consideration received by Century
Bancorp stockholders (less the $50,000 previously paid) at the time of closing
of the merger. In addition, Century Bancorp has agreed to reimburse Trident for
all reasonable out-of-pocket expenses, incurred by it on Century Bancorp's
behalf, and to indemnify Trident against certain liabilities, including any
which may arise under the federal securities laws. The fees payable to Trident
were recommended by Trident and were approved by Century Bancorp after an
investigation with respect to the appropriateness of the proposed fees.
Trident, directly or through McDonald Investments, Inc., is a member of
all principal securities exchanges in the United States and in the conduct of
its broker-dealer activities has from time to time purchased securities from,
and sold securities to, Century Bancorp and/or First Bancorp. As a market maker,
Trident may also have purchased and sold the securities of Century Bancorp
and/or First Bancorp for Trident's own account and for the accounts of its
customers. Additionally, Trident served as Century Bancorp's sales agent in Home
Savings' mutual-to-stock conversion in 1996, and received total fees and
commissions of $555,000 for that transaction.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to complete
the merger, the merger will become effective on the date and at the time of the
filing of articles of merger with the Secretary of State of the State of North
Carolina. Century Bancorp and First Bancorp will use their reasonable efforts to
cause the effective time to occur as soon as practicable following the last to
occur of (i) the effective date (including any applicable waiting period in
respect thereof) of the last required consent of any regulatory authority having
authority over and approving or exempting the merger and (ii) the date on which
the shareholders of Century Bancorp approve the merger.
Century Bancorp and First Bancorp anticipate that the merger will
become effective in the second quarter of 2001. However, delays in the
completion of the merger could occur.
EXCHANGE OF CENTURY BANCORP STOCK CERTIFICATES FOR THE MERGER CONSIDERATION
Promptly after the merger is completed, Century Bancorp shareholders
will receive an election form and transmittal letter from First Bancorp's
exchange agent with instructions on how to surrender their Century Bancorp stock
certificates in exchange for the merger consideration. By completing such
election form, holders of Century Bancorp shares will be permitted to elect the
number of shares of their Century Bancorp common stock for which they wish to
receive either the cash or stock merger consideration (unless no shares of stock
are paid as merger consideration under certain circumstances described in
"--What Century Bancorp Shareholders Will Receive in the Merger" and subject to
the allocation provisions described below in "--Allocation Rules"). Century
Bancorp shareholders should carefully review and complete such election form and
materials and return them as instructed, together with their stock certificates
for Century Bancorp common stock.
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Century Bancorp shareholders should not send their stock certificates
to Century Bancorp, First Bancorp or First Bancorp's exchange agent until they
receive the election form and transmittal letter with instructions from the
exchange agent.
Shares of Century Bancorp common stock held in book-entry form or
"street name" will be exchanged without the submission of any Century Bancorp
stock certificate. First Bancorp will pay cash (without interest) to Century
Bancorp shareholders in lieu of issuing any fractional shares of First Bancorp
common stock.
Dissenting Century Bancorp shareholders must follow the procedures
required by Article 13 of the North Carolina Business Corporation Act. See
"--What Dissenting Shareholders Will Receive in the Merger."
After Century Bancorp shareholders surrender to the exchange agent
their duly endorsed stock certificates representing Century Bancorp common
stock, the exchange agent will mail such shareholders (i) stock certificates
representing the number of shares of First Bancorp common stock to which such
shareholders are entitled, and (ii) one or more checks for the amount (without
interest) to be paid in cash as merger consideration and in lieu of any
fractional shares and for the amount of all undelivered dividends or
distributions (without interest) in respect of the shares of First Bancorp
common stock, if any, declared after the completion of the merger. First Bancorp
is not obligated to deliver the stock certificates or other consideration to any
former Century Bancorp shareholder until such shareholder has properly
surrendered his or her Century Bancorp stock certificates (unless such
certificates are held in book-entry form or "street name," in which case they
automatically will be exchanged without being surrendered).
Whenever a dividend or other distribution with a record date after the
date on which the merger is completed is declared by First Bancorp on First
Bancorp common stock, the declaration will include dividends or other
distributions on all shares of First Bancorp common stock that may be issued in
connection with the merger. First Bancorp, however, will not pay any dividend or
other distribution that is payable to any former Century Bancorp shareholder
that has not properly surrendered his or her Century Bancorp stock certificates.
If any Century Bancorp shareholder's stock certificate has been lost, stolen, or
destroyed, the exchange agent will issue the shares of First Bancorp common
stock and any cash in lieu of fractional shares, and such dividends or
distributions will be delivered, upon the shareholder's submission of an
affidavit claiming the certificate to be lost, stolen, or destroyed and the
posting of a bond as indemnity against any claim that may be made with respect
to the certificate.
At the time the merger becomes effective, the stock transfer books of
Century Bancorp will be closed, and no transfer of shares of Century Bancorp
common stock by any shareholder will be made or recognized. If certificates
representing shares of Century Bancorp common stock are presented for transfer
after the merger becomes effective, they will be canceled and exchanged, as
applicable, for shares of First Bancorp common stock, a check for the amount to
be paid in cash as merger consideration, a check for the amount due in lieu of
fractional shares, if any, and a check for any undelivered dividends or
distributions on the First Bancorp common stock after the merger.
CONDITIONS TO CONSUMMATION OF THE MERGER
First Bancorp and Century Bancorp are required to complete the merger
only after the satisfaction of various conditions, which are set forth in
Article IX of the merger agreement attached as Appendix A. These conditions
include the following:
- the holders of a majority of the outstanding shares of Century
Bancorp common stock must approve the merger;
- dissenters' rights shall have been perfected with respect to
no more than 10% of the outstanding shares of Century Bancorp
common stock;
- First Bancorp and Century Bancorp must receive the required
regulatory approvals for the merger (but not for the merger of
their banking subsidiaries), which approvals shall not be
conditioned or restricted in a manner, not reasonably
anticipated as of the date of the merger agreement, that, in
the reasonable
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judgment of the board of directors of either of the merger
parties, would so materially adversely impact the economic or
business assumptions contemplated by the merger agreement that
had such condition or requirement been known, such party would
not, in its reasonable judgment, have entered into the merger
agreement;
- First Bancorp and Century Bancorp must have received all other
consents required to complete the merger or to prevent any
default under any contract or permit except to the extent that
the failure to obtain any such consents would not,
individually or in the aggregate, result in a material adverse
effect on such person;
- there must not be any order or any action taken by any court,
governmental or regulatory authority of competent jurisdiction
prohibiting or restricting the merger or making it illegal;
- First Bancorp and Century Bancorp must receive a written
opinion of an acceptable tax advisor as to the tax-free nature
of the merger under the Internal Revenue Code (unless first
Bancorp elects to pay all Century Bancorp shareholders cash
under the limited circumstances described under "-- What
Century Bancorp Shareholders Will Receive in the Merger");
- the shares of First Bancorp common stock to be issued in the
merger must be approved for listing on the Nasdaq National
Market System, subject to official notice of issuance;
- all options to acquire Century Bancorp common stock held by
the executive officers and directors of Century Bancorp shall
have been cancelled without any conversion or exercise
thereof;
- the representations and warranties of Century Bancorp and
First Bancorp as set forth in the merger agreement must be
accurate in all material respects as of the date of completion
of the merger;
- Century Bancorp and First Bancorp must have performed and
complied in all material respects with all covenants and
agreements made by them in the merger agreement;
- the registration statement filed with the Securities and
Exchange Commission covering the issuance of the shares of
First Bancorp common stock in connection with the merger must
have been declared effective, and no stop orders suspending
such effectiveness shall have been initiated;
- First Bancorp must have received all required state securities
or "Blue Sky" authorizations or permits; and
- certain other conditions must be satisfied, including the
receipt of various certificates from the officers of Century
Bancorp and First Bancorp.
The foregoing is a summary of the applicable closing conditions; you are
encouraged to refer to the merger agreement for a complete listing of such
conditions.
Century Bancorp and First Bancorp have agreed in the merger agreement
to use their reasonable efforts to perform or fulfill all conditions and
obligations to be performed or fulfilled by them under the merger agreement so
that the merger will be completed.
We cannot assure you as to if or when all of the conditions to the
merger can or will be satisfied or waived by the party permitted to do so.
Except in limited circumstances, if all conditions for the merger have not been
satisfied or waived on or before June 30, 2001, the board of directors of either
Century Bancorp or First Bancorp may terminate the merger agreement and abandon
the merger. See "-- Waiver, Amendment and Termination."
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REGULATORY APPROVAL
Although First Bancorp and Century Bancorp have agreed to use their
reasonable efforts to obtain all required regulatory consents, we cannot assure
you that these regulatory approvals will be obtained, when they will be
obtained, or, if obtained, that there will not be litigation challenging these
approvals. First Bancorp and Century Bancorp are aware of the following required
regulatory approvals to complete the merger:
The merger is subject to approval by the Federal Reserve pursuant to
Section 3 of the Bank Holding Company Act of 1956, as amended. First Bancorp and
Century Bancorp have filed the required application and notification with the
Federal Reserve for approval of the merger. Assuming Federal Reserve approval,
the parties may not consummate the merger until 30 days after that approval
(unless such waiting period is reduced by the regulatory authorities to as few
as 15 days). During that time, the Department of Justice may challenge the
merger on antitrust grounds.
The Federal Reserve is prohibited from approving any transaction that:
- would result in a monopoly;
- would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in
any part of the United States; or
- may have the effect in any part of the United States of
substantially lessening competition, tending to create a
monopoly, or otherwise resulting in a restraint of trade,
unless the Federal Reserve finds that the public interest
created by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served
clearly outweighs the anticompetitive effects of the proposed
merger.
In reviewing a transaction under the Bank Holding Company Act, the
Federal Reserve also will consider the financial and managerial resources and
future prospects of the companies and their subsidiary banks and the convenience
and needs of the communities to be served.
As noted above, the merger may not be consummated until between 15 and
30 days after Federal Reserve approval, during which time the Department of
Justice may challenge the merger on antitrust grounds. The commencement of an
antitrust action by the Department of Justice would stay the effectiveness of
Federal Reserve approval of the merger, unless a court specifically orders
otherwise. In reviewing the merger, the Department of Justice could analyze the
merger's effect on competition differently from the Federal Reserve, and, thus,
it is possible that the Department of Justice could reach a different conclusion
than the Federal Reserve regarding the merger's competitive effects.
Additionally, it is possible that private persons or state attorneys general may
file antitrust actions, irrespective of the approvals of the Federal Reserve or
the Department of Justice.
WAIVER, AMENDMENT AND TERMINATION
To the extent permitted by law, the parties to the merger agreement may
amend the agreement by a writing signed by each of the parties, whether before
or after shareholder approval of the merger. After shareholder approval,
however, no amendment may be made that modifies in any material respect the
consideration to be received by the Century Bancorp shareholders without the
further approval of the shareholders of Century Bancorp.
In addition, before or at the time of completion of the merger, Century
Bancorp or First Bancorp may waive any default in the performance of any term of
the merger agreement by any other party or may waive or extend the time for the
compliance or fulfillment by the other parties of any and all of their
obligations under the merger agreement. In addition, either party may waive any
of the conditions precedent to its obligations under the merger agreement,
unless a violation of any law or governmental regulation would result from the
waiver. To be effective, a waiver must be in writing and signed by the waiving
party.
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At any time before completion of the merger, the boards of directors of
First Bancorp and Century Bancorp may agree in writing to terminate the merger
agreement. In addition, either Century Bancorp's board of directors or First
Bancorp's board of directors may terminate the merger agreement in the following
circumstances:
- if the Century Bancorp shareholders fail to approve the merger
agreement and related plan of merger at the Century Bancorp
special meeting or adjournment thereof;
- if there is any law or regulation that makes completion of the
merger illegal or if any judgment, order, injunction or decree
prohibits Century Bancorp or First Bancorp from completing the
merger or other transactions contemplated by the merger
agreement and such judgment, order, injunction or decree has
become final and non-appealable;
- if the merger is not consummated by June 30, 2001 and the
party seeking termination is in material compliance with all
of its obligations under the merger agreement and the
conditions to that party's obligation to consummate the merger
agreement have not been fulfilled or waived;
- if a condition to the obligation to complete the merger of the
party seeking termination has become incapable of fulfillment
(notwithstanding the efforts of the party seeking to
terminate) and the other party has not waived it; or
- if the other party has materially breached any covenant,
agreement, representation or warranty in the merger agreement
and such breach has not been cured by 30 days after the date
on which written notice of such breach is given to the
breaching party.
Century Bancorp's board of directors also may terminate the merger
agreement if the price of the First Bancorp common stock decreases below certain
price levels and First Bancorp elects not to pay cash merger consideration of
$20.00 per share of Century Bancorp common stock with respect to all shares of
Century Bancorp common stock. See "-- What Century Bancorp Shareholders Will
Receive in the Merger."
If the merger is terminated, the merger agreement will become void and
have no effect, except that the confidentiality and expense provisions will
survive. Termination of the merger agreement will not relieve a breaching party
from liability for any uncured breach of a representation, warranty, covenant,
or agreement. The stock option agreement is governed by its own terms as to its
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
The merger agreement requires Century Bancorp and Home Savings to
conduct business only in the usual, regular and ordinary course before the
merger becomes effective and imposes certain specific limitations on the
operations of Century Bancorp and its banking subsidiary, Home Savings, during
this period. The specific restrictions are listed in Article VII of the merger
agreement, which is attached as Appendix A to this proxy statement/prospectus.
The merger agreement specifically permits Century Bancorp to declare and pay
regular quarterly dividends on Century Bancorp common stock at the annual rate
of $0.68 per share with record and payment dates conforming to past practices.
The merger agreement also permits the payment of any quarterly dividend if
necessary to prevent Century Bancorp shareholders from failing to receive a
quarterly dividend from either Century Bancorp or First Bancorp during a
particular calendar quarter (due to the timing of the merger).
Century Bancorp also has agreed that, except with respect to the merger
agreement and the transactions contemplated in the merger agreement, neither it
nor any of its representatives will directly or indirectly solicit or engage in
any negotiations concerning any proposal for the acquisition of Century Bancorp.
Century Bancorp or its representatives may, however, to the extent necessary to
comply with the fiduciary duties of Century Bancorp's board of directors as
advised by its outside counsel, subject to a confidentiality agreement
containing customary terms, furnish any information concerning Century Bancorp
in response to a request for information or access made in connection with an
acquisition proposal from a third party, negotiate with such party concerning
any written acquisition proposal, not recommend shareholder approval of the
merger and terminate the merger agreement, but only if neither Century Bancorp
nor any of its representatives solicited, initiated or encouraged such proposal.
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Unless the merger agreement has been terminated, the board of directors of
Century Bancorp must notify First Bancorp immediately if any such acquisition
proposal has been made.
First Bancorp and Century Bancorp also have agreed to use their
reasonable efforts to obtain any consents that are necessary or desirable for
consummation of the merger.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
It is not expected that the merger will change the present management
team or board of directors of First Bancorp, except as follows. After the merger
is completed, it is expected that James G. Hudson, Jr. will be elected as a
director of First Bancorp and its banking subsidiary, First Bank. Mr. Hudson
currently serves as the President, Chief Executive Officer and a director of
Century Bancorp. The four other directors of Century Bancorp will not be
nominated for election as directors of First Bancorp but, instead, will serve on
a local advisory board of First Bancorp. In recognition of the important role
that these individuals will have in making the proposed merger successful, First
Bancorp will pay each of them, as a member of such board, $900 per month for a
period of three years following the completion of the merger. Such amount,
although greater than First Bancorp's ordinary compensation of $60 per month for
serving on such a board, is the same amount as the board fees they were
receiving from Century Bancorp immediately prior to the merger. Additionally,
upon completion of the merger, Mr. Hudson will be employed by First Bancorp as
an Executive Vice President.
Information concerning the current management of First Bancorp and
Century Bancorp is included in the documents delivered with this proxy
statement/prospectus and incorporated by reference herein. See "ADDITIONAL
INFORMATION." For additional information regarding the interests of certain
persons in the merger, see "-- Interests of Certain Persons in the Merger."
DIVIDEND POLICY
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.88 per share of First Bancorp common stock, which, based on an exchange
ratio of 1.3333, equates to approximately $1.17 per share of Century Bancorp
common stock. First Bancorp, however, may change this policy at any time, based
upon business conditions, its financial condition and earnings, or other
factors. Century Bancorp currently pays quarterly dividends at an annualized
rate of $0.68 per share of Century Bancorp common stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Members of Century Bancorp's management and Century Bancorp's
board of directors may be deemed to have certain interests in the merger that
are in addition to their interests as shareholders of Century Bancorp generally.
Century Bancorp's board of directors was aware of these interests and considered
them, among other matters, in approving and recommending the merger agreement.
FIRST BANCORP EMPLOYMENT AGREEMENT. Upon completion of the merger,
First Bancorp will enter into an employment agreement with James G. Hudson, Jr.
The existing employment agreement between Century Bancorp and Mr. Hudson will be
terminated, and First Bancorp will make a payment to Mr. Hudson resulting from
this termination. Such payment shall be made in a lump sum equal to the
following amount: (i) Mr. Hudson's annual salary at the effective time of the
merger (his current salary is $122,000), plus (ii) an amount equal to 1.06 times
the amount of Mr. Hudson's annual salary at the time of the merger, plus (iii)
an amount equal to 1.06 times the amount determined in clause (ii) above.
The employment agreement between First Bancorp and Mr. Hudson will be
for an initial term of three years, at an initial annual salary of $135,000 per
year plus an amount equal to the expected increase in Mr. Hudson's health
insurance costs under First Bancorp's health insurance plans. Mr. Hudson will be
eligible for insurance, pension, profit-sharing, stock option and other benefit
plans as are or may be available generally to the employees of First Bancorp.
Mr. Hudson will receive an initial grant of 10,000 options under the First
Bancorp Stock Option Plan on the date of completion of the merger.
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Additionally, under such employment agreement, Mr. Hudson will be
eligible for participation in First Bancorp's Supplemental Executive Retirement
Plan or, at his option, First Bancorp will assume the obligations of Home
Savings to Mr. Hudson under its two existing Supplemental Income Agreements.
These existing Supplemental Income Agreements provide that Mr. Hudson will
receive specified monthly payments for 15 years upon reaching 65 years of age.
In the event of Mr. Hudson's death before all payments have been made, benefits
would be payable to designated beneficiaries. In addition, if Mr. Hudson should
die prior to reaching 65 years of age, certain monthly payments would be made
under such agreements for a 15-year period to designated beneficiaries. In the
event Mr. Hudson terminates his employment, for reasons other than death, prior
to reaching 65 years of age, the monthly retirement benefit payment would be
reduced. The benefits payable under the Century Bancorp Supplemental Income
Agreements are funded by the purchase of life insurance the proceeds of which
are expected to reimburse Home Savings for the payments required under these
agreements. During the fiscal year ended June 30, 2000, Century Bancorp accrued
$22,000 towards the cost of the benefits to be provided to Mr. Hudson under the
Supplemental Income Agreements. Mr. Hudson also will be eligible to participate
in First Bancorp's Split Dollar Insurance Plan and will be given title to the
automobile being provided to him by Home Savings at the time of completion of
the merger.
Under Mr. Hudson's employment agreement, if First Bancorp terminates
Mr. Hudson's employment for any reason other than death, gross negligence or
certain other misconduct, First Bancorp will be obligated to pay him his base
salary for the remainder of the term of his employment agreement. In the case of
disability, these payments would be reduced by any payments from First Bancorp's
disability insurance plan and by any earnings Mr. Hudson receives from
alternative employment while disabled. If Mr. Hudson voluntarily terminates his
employment, First Bancorp would have no further obligations to him other than
compensation and vested employee benefits earned through the date of
termination.
Mr. Hudson's employment agreement also will provide that if there is a
change in control of First Bancorp during the term of the employment agreement
and Mr. Hudson's employment is terminated by him or by First Bancorp within 12
months after the change in control, the vesting of certain employee benefits
would be accelerated and he would receive a severance payment amounting to
approximately 2.9 times his base annual salary.
Pursuant to his employment agreement, Mr. Hudson also will agree not to
compete with First Bancorp within a 50-mile radius of Thomasville, North
Carolina during the term of the employment agreement and for a period of one
year after termination of employment if First Bancorp terminates employment with
cause or if Mr. Hudson voluntarily terminates his employment. If First Bancorp
terminates employment for any other reason, the restrictions on competition will
last for the remainder of the term of the agreement.
CENTURY BANCORP BOARD OF DIRECTORS. After the merger is completed, it
is expected that Mr. Hudson will be elected as a director of First Bancorp and
its banking subsidiary, First Bank. The four other directors of Century Bancorp
will not be nominated for election as a director of First Bancorp but, instead,
will serve on a local advisory board of First Bancorp. In recognition of the
important role that these individuals will have in making the proposed merger
successful, First Bancorp will pay each of them, as a member of such board, $900
per month for a period of three years following the completion of the merger.
Such amount, although greater than First Bancorp's ordinary compensation of $60
per month for serving on such a board, is the same amount as the board fees they
were receiving from Century Bancorp immediately prior to the merger.
CENTURY BANCORP STOCK OPTIONS. The directors and executive officers of
Century Bancorp hold options to purchase Century Bancorp common stock. Upon
completion of the merger, these options, unless canceled, will be converted into
options to purchase First Bancorp common stock. See "-- Effect of the Merger on
Century Bancorp Options." All Century Bancorp options not already exercisable
have or will become vested, non-forfeitable and exercisable as a result of the
proposed merger and the change-in-control provisions in the stock option plan
under which they were granted.
The following table sets forth, with respect to (1) each executive
officer, (2) a group consisting of all the executive officers, and (3) Century
Bancorp's non-executive officers and directors as a group, the number of shares
of Century Bancorp common stock covered by outstanding Century Bancorp options
held by such persons as of the Century Bancorp record date.
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Number of
Shares
Number of Underlying Weighted
Shares Options Average
Underlying Currently Exercise Price Aggregate Value
Options Held Exercisable(1) Per Option of Options(2)
------------ --------------- -------------- ---------------
James G. Hudson, Jr.(3) 30,549 30,549 $ 20.45 $19,856.85
Drema A. Michael(3) 18,330 18,330 $ 20.45 $11,914.50
John E. Todd(3) 18,330 18,330 $ 20.45 $11,914.50
Executive Officer Group (3 persons)(3) 67,209 67,209 $ 20.45 $43,685.85
Non-Executive Officer-Director Group 24,444 24,444 $ 20.45 $15,888.60
(4 persons)
- ----------------------
(1) The information in this column assumes the completion of the merger
accelerating the holder's ability to exercise the options.
(2) Based on the closing price of Century Bancorp common stock of $21.10 as
listed on the Nasdaq Small Cap Market on April 16, 2001.
(3) It is a condition to the merger that each executive officer and
director of Century Bancorp cancel his or her options without any
conversion or exercise thereof.
CENTURY BANCORP SPECIAL TERMINATION AGREEMENTS. Century Bancorp has
entered into special termination agreements with John E. Todd, Vice President of
Home Savings, and Drema A. Michael, Secretary and Assistant Treasurer of Home
Savings. The special termination agreements provide for payment to the covered
officer in the event of a "change in control" (as defined therein) of Century
Bancorp or Home Savings followed by termination of the officer's employment by
Home Savings within 24 months other than for "cause," as such term is defined in
the agreements, or in the event there are certain specified changes in the
officer's employment circumstances within 24 months following the "change in
control" and the officer voluntarily terminates his or her employment. In the
event of such a termination of employment, the officer is entitled to payment of
an amount equal to two times his or her salary and bonuses, as determined for
income tax purposes for the most recent calendar year, payable in cash in a lump
sum or in equal monthly payments, at the election of the employee. The
completion of the merger will constitute a "change in control" for purposes of
the special termination agreements. If the merger is completed and such a
termination occurs during calendar year 2001, Mr. Todd and Ms. Michael, would be
entitled to receive $146,394 and $143,796 respectively, under their special
termination agreements.
CENTURY BANCORP SEVERANCE PLAN. Home Savings has adopted a severance
plan for the benefit of its full-time employees. Upon completion of the merger,
First Bancorp will assume the obligations under this plan. Mr. Hudson, Mr. Todd
and Ms. Michael, who are subject to the special termination agreements described
above, are not covered by the severance plan. The severance plan provides that
in the event there is a "change in control" (as defined in the severance plan)
of Home Savings or Century Bancorp and (i) Home Savings or any successor thereof
terminates the employment of any full time employee of Home Savings in
connection with, or within 24 months after, the "change in control," other than
for "cause" (as defined in the severance plan), or (ii) an employee terminates
his or her employment with Home Savings or any successor following a decrease in
the level of such employee's annual base salary rate or a transfer of such
employee to a location more than 40 miles distant from the employee's primary
work station within 24 months after a "change in control," the employee shall be
entitled to a severance benefit equal to the greater of (a) an amount equal to
two weeks' salary at the employee's existing salary rate multiplied by the
employee's number of complete years of service as an employee of Home Savings or
its successor or (b) the amount of one month's salary at the employee's salary
rate at the time of termination, subject to a maximum payment equal to one half
of the employee's annual salary. The completion of the merger will constitute a
"change in control" for purposes of the severance plan.
MANAGEMENT RECOGNITION PLAN. On February 17, 1998, Century Bancorp's
shareholders approved the Home Savings, Inc. Management Recognition Plan (the
"Management Recognition Plan"). Adjusted for stock splits, the Company
authorized this plan to acquire a total of 48,879 shares of Century Bancorp
common stock to be eligible for awards and grants to be made under the plan. On
March 10, 1998, 43,995 of these shares were granted to 15 directors, officers
and employees of Home Savings. The remaining 4,884 shares of Century Bancorp
common
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stock held by the Management Recognition Plan that were not granted will be
canceled and retired as of the closing of the merger. All of the granted shares
have vested and are not forfeitable as of March 9, 2001. The Management
Recognition Plan will be terminated as soon as practicable after the completion
of the merger.
EMPLOYEE STOCK OWNERSHIP PLAN. The Home Savings Employee Stock
Ownership Plan will be terminated as soon as reasonably practicable after the
completion of the merger. Upon such termination, each participant in such plan
will have the right or option either to receive the benefits to which he or she
is entitled under the plan or to have such benefits "rolled" into a qualified
individual retirement account or an appropriate First Bancorp benefit plan.
ADDITIONAL BENEFITS. Employees of Century Bancorp who become employees
of First Bancorp and who do not own any options to acquire Century Bancorp
common stock at the effective time of the merger will be entitled to a one-time
increase in annual salary in the amount of the additional annual cost, if any,
to each such employee of participating in First Bancorp's health insurance plan
as compared to the cost of participating in Century Bancorp's health insurance
plan immediately prior to the merger. The additional cost is expected to be no
more than $840 per employee per year for approximately ten employees. Each
employee of Century Bancorp who becomes an employee of First Bancorp (including
Mr. Hudson) will be entitled to either term life insurance in an amount equal to
five times the employee's then current annual salary or an adjustment to the
employee's annual salary deemed sufficient by First Bancorp for the employee to
purchase that amount of life insurance, with the choice between these two
options being made by First Bancorp. The additional cost for this benefit is
expected to be in the aggregate approximately $5,000 per year.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. After completion of
the merger, First Bancorp has agreed to indemnify the present and former
directors and officers of Century Bancorp and its subsidiaries against certain
liabilities arising out of actions or omissions (including the merger) occurring
at or prior to the time the merger becomes effective to the fullest extent
permitted under North Carolina law and Century Bancorp's articles of
incorporation and bylaws. First Bancorp also has agreed to maintain, for a
period of at least six years after completion of the merger, Century Bancorp's
existing directors' and officers' liability insurance policy or a comparable
policy.
EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER
The following is a summary of the material U.S. federal income tax
consequences of the merger to holders of Century Bancorp common stock and does
not discuss any aspects of state, local or foreign taxation. The discussion may
not apply to special situations, such as Century Bancorp shareholders, if any,
who hold Century Bancorp common stock other than as a capital asset, who
received Century Bancorp common stock upon the exercise of employee stock
options or otherwise as compensation, who hold Century Bancorp common stock as
part of a "straddle" or "conversion transaction," or who are insurance
companies, securities dealers, financial institutions or foreign persons. This
summary is based upon U.S. federal tax laws, regulations, rulings and decisions
now in effect and on proposed regulations, all of which are subject to change
(possibly with retroactive effect) by legislation, administrative action, or
judicial decision. No ruling has been or will be requested from the Internal
Revenue Service on any matter relating to the tax consequences of the merger.
Consummation of the merger is conditioned upon receipt by First Bancorp
and Century Bancorp of an opinion of KPMG LLP concerning the material federal
income tax consequences of the merger. Assuming that the merger is completed in
accordance with the merger agreement and based upon factual statements and
representations made by the parties to the merger, it is KPMG's opinion that:
- The merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code;
- No gain or loss will be recognized by (and no amount will be
included in the income of) Century Bancorp, First Bancorp or
holders of Century Bancorp common stock to the extent they
exchange their Century Bancorp common stock solely for First
Bancorp common stock pursuant to the merger (except with
respect to any cash received in lieu of a fractional share
interest in Bancorp common stock). Receipt of both First
Bancorp common stock and cash by Century Bancorp shareholders
in the merger
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should result in gain being recognized, but no loss being
recognized, to Century Bancorp shareholders with the amount of
recognized gain not to exceed the amount of cash received.
Finally, gain or loss will be recognized for those Century
Bancorp shareholders that exchange their shares solely for
cash;
- The aggregate tax basis of the First Bancorp common stock
received by holders of Century Bancorp common stock who
exchange their Century Bancorp common stock for First Bancorp
common stock in the merger will be the same as the aggregate
tax basis of the Century Bancorp common stock surrendered in
exchange for the First Bancorp common stock, decreased by the
amount of cash received by such shareholders but increased by
the amount of gain the shareholders recognized in the exchange
(including gain treated as a dividend) (reduced by the basis
allocable to a fractional share interest in First Bancorp
common stock for which cash is received);
- The holding period of the First Bancorp common stock received
by holders who exchange their Century Bancorp common stock for
First Bancorp common stock in the merger will include the
holding period of the Century Bancorp common stock surrendered
in exchange therefor, provided that such Century Bancorp
common stock is held as a capital asset at the time the merger
is completed; and
- The payment of cash to the holders of Century Bancorp common
stock in lieu of fractional share interests of First Bancorp
common stock will be treated for U.S. federal income tax
purposes as if the fractional shares were distributed as part
of the exchange and then were redeemed by First Bancorp. These
cash payments will be treated as having been received as
distributions in full payment in exchange for the stock
redeemed, as provided in Section 302(a) of the Internal
Revenue Code;
provided, however, that if the average price of First Bancorp common stock is
less than $11.50 during the 20-day trading period ending May 10, 2001 (which is
the third business day prior to the Century Bancorp shareholder meeting) and
certain other conditions are satisfied, all of the merger consideration may be
paid in cash (see "-- What Century Bancorp Shareholders Will Receive in the
Merger"), in which case the merger would not qualify as a tax-free
reorganization under the Internal Revenue Code.
As noted above, no ruling has been sought by the Internal Revenue
Service as to whether the merger qualifies as a tax-free reorganization. The
fact that no ruling has been sought should not be construed as an indication
that the Internal Revenue Service would necessarily reach the same conclusion
regarding the merger than set out in this summary. The opinion of KPMG LLP
referred to in this summary is not binding upon the Internal Revenue Service,
any other tax authority or any court, and no assurance can be given that a
position contrary to those expressed in this summary will not be asserted by a
tax authority and ultimately sustained by a court of law.
Section 1.368-3 of the Treasury Regulations requires that each
shareholder that receives First Bancorp shares pursuant to the merger attach to
such shareholder's U.S. federal income tax return for the taxable year in which
the merger occurs, a complete statement of all facts pertinent to the
nonrecognition of gain or loss upon the merger. Shareholders should consult
their own tax advisors regarding these disclosure requirements.
Because certain tax consequences of the merger may vary depending upon
the particular circumstances of each Century Bancorp shareholder, whether the
shareholder receives cash or stock merger consideration, and other factors, each
Century Bancorp shareholder should consult his or her own tax advisor to
determine the particular tax consequences of the merger to such holder
(including the application and effect of state, local and foreign tax laws).
ACCOUNTING TREATMENT
The merger will be accounted for by First Bancorp as a purchase
transaction for accounting and financial reporting purposes. Under the purchase
method, First Bancorp will record, at fair value, the acquired assets and
assumed liabilities of Century Bancorp. To the extent the total purchase price
exceeds the fair value of assets acquired and liabilities assumed, First Bancorp
will record goodwill. Under current accounting standards, any goodwill will be
amortized over the period of expected benefit (which First Bancorp expects to
initially set at 15 years) and will be included in First Bancorp's consolidated
results of operations after the merger is completed. Financial statements of
First Bancorp issued after completion of the merger will reflect the impact of
Century
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Bancorp but past periods shown will not be restated to reflect Century Bancorp's
historical financial position or results of operations. The unaudited historical
and pro forma comparative per share data contained in this proxy
statement/prospectus has been prepared using the purchase method of accounting.
EXPENSES AND FEES
The merger agreement provides that each of the parties will pay all of
its own expenses in connection with the transactions contemplated by the merger
agreement.
RESALES OF FIRST BANCORP COMMON STOCK
First Bancorp common stock to be issued to the Century Bancorp
shareholders in connection with the merger will be registered under the
Securities Act of 1933. All shares of First Bancorp common stock received by
holders of Century Bancorp common stock and all shares of First Bancorp common
stock issued and outstanding immediately prior to the completion of the merger
will be freely transferable upon consummation of the merger by those Century
Bancorp shareholders not deemed to be "affiliates" of Century Bancorp.
"Affiliates" generally are defined as persons or entities who control, are
controlled by, or are under common control with Century Bancorp at the time of
the shareholder meeting (generally, executive officers, directors and 10% or
greater shareholders).
Rule 145 promulgated under the Securities Act restricts the sale of
First Bancorp common stock received in the merger by affiliates of Century
Bancorp and certain of their family members and related interests. Under the
rule, during the one-year period following the consummation of the merger,
affiliates of Century Bancorp may resell publicly the First Bancorp common stock
received by them in the merger within certain limitations as to the amount of
First Bancorp common stock sold in any three-month period and as to the manner
of sale. After the one-year period, affiliates of Century Bancorp who are not
affiliates of First Bancorp may resell their shares without restriction. The
ability of affiliates of Century Bancorp to resell shares of First Bancorp
common stock received in the merger under Rule 145 will be subject to First
Bancorp having satisfied its Securities Exchange Act of 1934 reporting
requirements for specified periods prior to the time of sale. Affiliates of
Century Bancorp will receive additional information regarding the effect of Rule
145 on their ability to resell First Bancorp common stock received in the
merger. Such affiliates also would be permitted to resell First Bancorp common
stock received in the merger pursuant to an effective registration statement
under the Securities Act of 1933 or an available exemption from the Securities
Act registration requirements. This proxy statement/prospectus does not cover
any resales of First Bancorp common stock received by persons who may be deemed
to be affiliates of Century Bancorp.
Century Bancorp will use its reasonable efforts to cause each person or
entity that is an "affiliate" for purposes of complying with Rule 145 to enter
into a written agreement relating to such restrictions on sale or other
transfer.
Additionally, shareholders of Century Bancorp who become affiliates of
First Bancorp will be subject to the above-described volume limitations on the
resale of First Bancorp stock, whether obtained in connection with the merger or
otherwise, for as long as they remain affiliates of First Bancorp and for an
additional three months thereafter.
STOCK OPTION AGREEMENT
At the same time as the merger agreement, and as a condition to the
parties entering into the merger agreement, Century Bancorp granted First
Bancorp an option to purchase up to 19.9% of the shares of Century Bancorp
common stock issued and outstanding before giving effect to the exercise of the
option at a cash price per share equal to $14.25, under the circumstances
described below. Under such stock option agreement, First Bancorp's total profit
resulting from the exercise of the option may not exceed $663,000.
The purpose of the option agreement is to increase the likelihood that
the merger will be completed by making it more difficult and more expensive for
a third party to gain control of Century Bancorp or its banking subsidiary, Home
Savings. Accordingly, the option is exercisable only upon the occurrence of
certain events that generally involve the acquisition or attempted acquisition
of Century Bancorp or Home Savings, a significant portion of Century Bancorp's
then outstanding common stock or all or a significant portion of the assets of
Century
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Bancorp or Home Savings. In addition, the stock option agreement provides that
if a third party obtains control of Century Bancorp (whether by the acquisition
of shares of stock, merger, consolidation or otherwise), First Bancorp may
require the repurchase of the option and all shares purchased pursuant to the
option. The repurchase price for the option and the shares would be equal to the
amounts paid to purchase shares pursuant to the option plus the lesser of (i)
$663,000 and (ii) the sum of (x) to the extent the option has been exercised,
the positive difference, if any, between the market value of the option shares
repurchased and the exercise price paid or payable, and (y) to the extent the
option has not been exercised, the market value of the option.
The exercise of the option granted under the stock option agreement may
be subject to certain regulatory approvals, but First Bancorp disclaims
beneficial ownership of the shares subject to such option unless and until the
option is actually exercised.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
In the merger, Century Bancorp shareholders will exchange their shares
of Century Bancorp common stock for shares of First Bancorp common stock and
cash. Century Bancorp is a North Carolina corporation governed by its articles
of incorporation and bylaws and North Carolina law. First Bancorp is a North
Carolina corporation governed by its articles of incorporation and bylaws and
North Carolina law. There are significant differences between the rights of
Century Bancorp shareholders and First Bancorp shareholders. The following is a
summary and comparison of certain provisions of the articles of incorporation
and bylaws of Century Bancorp and First Bancorp. This summary and comparison,
however, is not intended to be complete and is qualified it its entirety by
reference to the North Carolina Business Corporation Act (the "North Carolina
Act"), as well as First Bancorp's articles of incorporation and bylaws and
Century Bancorp's articles of incorporation and bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
The articles of incorporation and bylaws of certain corporations
contain provisions designed to assist the board of directors in playing a role
if any group or person attempts to acquire control of the company, so that the
board of directors can protect the interests of the company and its shareholders
under the circumstances. These provisions may help the board of directors
determine that a sale of control is in the best interests of the shareholders or
may enhance the board's ability to maximize the value to be received by the
shareholders upon a sale of control of the company.
Anti-takeover provisions may, however, tend to discourage some takeover
bids. As a result, the corporation's shareholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand, defeating undesirable
acquisition offers can be a very expensive and time-consuming process. To the
extent that these provisions discourage undesirable proposals, the company may
be able to avoid expenditures of time and money.
These anti-takeover provisions also may discourage open market
purchases by a company that may desire to acquire another corporation. Such open
market purchases may increase the market price of the target's common stock
temporarily and enable shareholders to sell their shares at a price higher than
that they might otherwise obtain. In addition, anti-takeover provisions may
decrease the market price of the target's common stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. Provisions such as those
establishing a classified board or permitting removal of directors only for
cause may make it more difficult and time consuming for a potential acquirer to
obtain control of the target company by replacing the board of directors and
management. Furthermore, these provisions may make it more difficult for a
corporation's shareholders to replace the board of directors or management, even
if a majority of the shareholders believe that replacing the board or management
is in the best interests of the corporation. Because of these factors, these
provisions may tend to perpetuate the incumbent board of directors and
management.
Unlike Century Bancorp, First Bancorp does not have any anti-takeover
protections arising from the structure of its board of directors. As described
below, First Bancorp has authorized but unissued shares of common stock
available for various uses, but does not have any other anti-takeover
protections such as the requirement of a supermajority vote to approve certain
business combinations. Century Bancorp's articles of incorporation and bylaws,
however, contain certain of these provisions. Its articles of incorporation and
bylaws provide for a
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classified board in the event that there are nine or more directors, as
described in greater detail below in "--Election of Directors." Currently,
Century Bancorp has only five directors. Additionally, Century Bancorp's
articles of incorporation require a supermajority vote for certain business
combinations. See "--Shareholder Votes Required for Certain Actions." Century
Bancorp also has authorized but unissued shares of common stock and authorized
but unissued shares of preferred stock available for various uses.
AUTHORIZED CAPITAL STOCK
FIRST BANCORP. First Bancorp's articles of incorporation authorize the
issuance of up to 12,500,000 shares of First Bancorp common stock, no par value
per share, of which 8,755,161 shares were outstanding as of April 16, 2001.
There are no other shares of capital stock of First Bancorp outstanding. First
Bancorp's board of directors may authorize the issuance of additional shares of
First Bancorp common stock without further action by First Bancorp shareholders,
unless such action is required in a particular case by applicable laws or
regulations or by any stock exchange or quotation system upon which First
Bancorp common stock may be listed or quoted. The First Bancorp shareholders do
not have the preemptive right to purchase or subscribe to any unissued
authorized shares of First Bancorp common stock.
Subject to the payment of cash in lieu of fractional shares, First
Bancorp expects to issue 586,411 (i.e., 439,819, which is the number of shares
of Century Bancorp common stock required by Section 2.3 of the merger agreement
to be exchanged for the stock merger consideration, times the 1.3333 exchange
ratio) shares of First Bancorp common stock in connection with the merger
(subject to possible adjustment as described in "DESCRIPTION OF
TRANSACTION--What Century Bancorp Shareholders Will Receive in the Merger").
First Bancorp will issue shares of its common stock pursuant to assumed and
exercised options. It is a condition to the merger, however, that all executive
officers and directors agree to cancel all of their options without exercise.
Based on the number of shares of First Bancorp common stock outstanding
on April 16, 2001, it is anticipated that, immediately following the
consummation of the merger, a total of approximately 9,341,572 shares of First
Bancorp common stock will be outstanding.
The authority to issue additional authorized shares of First Bancorp
common stock provides First Bancorp with the flexibility necessary to meet its
future needs without the delay resulting from seeking shareholder approval. The
authorized but unissued shares of First Bancorp common stock can be issued from
time to time for any corporate purpose, including, without limitation, stock
splits, stock dividends, employee benefit and compensation plans, acquisitions,
and public or private sales for cash as a means of raising capital. Such shares
could be used to dilute the stock ownership of persons seeking to obtain control
of First Bancorp. In addition, the sale of a substantial number of shares of
First Bancorp common stock to persons who have an understanding with First
Bancorp concerning the voting of such shares, or the distribution or declaration
of a dividend of shares of First Bancorp common stock (or the right to receive
First Bancorp common stock) to First Bancorp shareholders, may have the effect
of discouraging or increasing the cost of unsolicited attempts to acquire
control of First Bancorp.
CENTURY BANCORP. The authorized capital stock of Century Bancorp
consists of (a) 20,000,000 shares of common stock, no par value per share, of
which 1,105,019 were outstanding as of April 12, 2001, and (b) 5,000,000 shares
of preferred stock, no par value per share, none of which is issued and
outstanding. Century Bancorp's board may issue, without any further action by
the Century Bancorp shareholders, unless such action is required in a particular
case by applicable law or regulation or by any stock exchange or quotation
system on which Century Bancorp's common stock may be traded or quoted, shares
of Century Bancorp preferred stock, in one or more classes or series, with
voting, conversion, dividend and liquidation rights as the board of directors
may determine. Among other potential uses, this authorized but unissued
preferred stock could be issued to dilute the stock ownership of persons seeking
to obtain control of Century Bancorp or as part of a shareholder rights plan.
Century Bancorp thus could use the authorized but unissued preferred stock as a
defensive measure against unwanted takeover attempts. First Bancorp's articles
of incorporation do not authorize any preferred stock and thus do not provide
its shareholders with this form of protection against hostile takeovers. Century
Bancorp's directors have the right to authorize the issuance and sale of
authorized but unissued shares of common stock, without shareholder approval,
subject to similar limitations for similar purposes as First Bancorp as
described above.
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AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS
Under the North Carolina Act, most amendments to the articles of
incorporation must be proposed by the board of directors and approved by a
majority of shareholders entitled to vote. Except as otherwise required in a
bylaw adopted by the shareholders or by the articles of incorporation or the
North Carolina Act, a majority of the board of directors of a North Carolina
corporation may amend or repeal its bylaws; provided, however, that a bylaw
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the board of directors unless the articles of incorporation or a
bylaw adopted by the shareholders authorizes the board of directors to adopt,
amend or repeal that particular bylaw or the bylaws generally.
FIRST BANCORP. At a shareholder meeting held by First Bancorp on June
27, 2000, First Bancorp shareholders approved a bylaw establishing the number of
directors of First Bancorp at not less than three and not more than 18.
CENTURY BANCORP. Century Bancorp's articles of incorporation provide
that the supermajority voting provision relating to business combinations (see
"--Shareholder Votes Required for Certain Actions") cannot be amended unless the
supermajority vote necessary to approve the business combination is obtained.
Century Bancorp has no shareholder approved bylaws.
ELECTION OF DIRECTORS
FIRST BANCORP. The First Bancorp board of directors is comprised of
between three and 18 members, as fixed at or prior to each annual meeting by the
board of directors. At each annual meeting, directors are elected to hold office
until the next annual meeting of shareholders and until their successors are
duly elected and qualified. In general, each shareholder has one vote for each
share of common stock owned, and the persons receiving the highest number of
votes at a meeting at which a quorum is present are elected to the board.
However, the board of directors may also be elected by the use of cumulative
voting. The right to elect the board by cumulative voting may be exercised only
if: (1) the meeting notice or proxy statement accompanying the notice states
conspicuously that cumulative voting is authorized at the meeting; or (2) a
shareholder or proxy holder present at the meeting announces, before the voting
for directors starts, his or her intention to vote cumulatively. If such an
announcement is made, the meeting will be recessed for at least two, but not
more than seven days (or any other time period unanimously agreed upon).
Cumulative voting is advantageous to minority shareholders. Without cumulative
voting, the holders of a majority of the shares of First Bancorp common stock
could elect 100% of the directors. Cumulative voting permits minority
shareholders to concentrate their votes and obtain representation on the First
Bancorp board of directors. If cumulative voting is chosen pursuant to one of
the procedures described above, each shareholder is entitled to multiply the
number of votes he or she is entitled to cast by the number of directors for
whom he or she is entitled to vote and cast the product for a single candidate
or distribute the product among two or more candidates.
CENTURY BANCORP. The Century Bancorp board must consist of at least
five, but not more than 15 members, with the exact number to be determined from
time to time by the board of directors. Currently, the size of the board of
Century Bancorp is five. The Century Bancorp articles of incorporation and
bylaws provide that, at all times when the total number of the members of the
board of directors is nine or more, the board of directors will be classified
and divided into three classes, with each class being as nearly equal in number
as possible and each director serving a three-year term of office. The effect of
Century Bancorp having a classified board of directors is that only
approximately one-third of the members of Century Bancorp's board of directors
are elected each year, which effectively requires two annual meetings for the
Century Bancorp shareholders to change a majority of the members of the board of
directors. By potentially delaying the time within which an acquirer could
obtain working control of Century Bancorp's board of directors, this provision
may discourage some potential mergers, tender offers or hostile takeover
attempts. Century Bancorp shareholders will not have this protection after the
merger because First Bancorp's board of directors is not classified. During all
times where the board of Century Bancorp consists of less than nine members, all
directors will be elected at each annual meeting to hold office until the next
annual meeting of shareholders and until their successors are duly elected and
qualified.
The holders of Century Bancorp common stock are entitled to one vote
per share held of record on all matters submitted to a shareholder vote. The
Century Bancorp shareholders do not have the right to vote
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cumulatively in the election of directors. As a result of the absence of
cumulative voting, the majority of votes represented at a meeting may elect all
directors, and the remaining minority shareholders may not elect any directors.
The absence of cumulative voting makes it more difficult for shareholders that
hold a minority of the outstanding shares of Century Bancorp common stock to
elect representatives of their choice. Because First Bancorp has cumulative
voting for directors, minority shareholders will have a greater opportunity to
obtain representation on the board after completion of the merger.
DIRECTOR REMOVAL AND VACANCIES
FIRST BANCORP. First Bancorp's bylaws provide that at any shareholder
meeting for which the notice of meeting states that one purpose of the meeting
is the removal of any or all directors, one or more directors may be removed
with or without cause by a majority vote of those shareholders entitled to vote.
However, unless the entire board is removed, an individual director cannot be
removed if the number of votes sufficient to elect him or her under cumulative
voting is voted against removal. If a director is elected by a voting group of
shareholders, only the shareholders of that voting group may participate in the
vote to remove him or her. In addition, the First Bancorp bylaws provide that no
individual may be elected to or may serve on the board at any time after such
individual's 72nd birthday, except that a director who is elected prior to his
or her 72nd birthday and reaches the age of 72 while serving his or her term may
serve until the next annual meeting of shareholders. In connection with First
Bancorp's acquisition of First Savings Bancorp, Inc., First Bancorp agreed to
waive its mandatory retirement rule for William E. Samuels and Felton J. Capel,
former directors of First Savings Bancorp, Inc., until each reaches age 75, as
permitted by its bylaws for directors added to the board in connection with
acquisitions.
Vacancies occurring on the First Bancorp board may be filled by the
shareholders at any annual or special meeting, the board of directors at any
regular or special meeting, the affirmative vote of a majority of the remaining
directors even though less than a quorum of the board, or by the sole director
remaining in office. If the vacant office was held by a director elected by a
voting group of shareholders, only the remaining director or directors elected
by that voting group or the shareholders of that voting group are entitled to
fill the vacancy. A director that is elected to fill a vacancy serves for the
unexpired term of his or her predecessor.
CENTURY BANCORP. The Century Bancorp bylaws provide that at any
shareholder meeting for which the notice of meeting states that one purpose of
the meeting is the removal of one or more directors, the shareholders may remove
a director from office with cause if the number of votes for removal is greater
than the number of votes opposing removal. However, if the director is elected
by a voting group, only the shareholders of that voting group may participate in
the vote on removal.
Any vacancy occurring on the Century Bancorp board may be filled by the
board of directors. If the remaining directors do not constitute a quorum, the
directors may fill the vacancy by the affirmative vote of a majority of the
remaining directors or the sole remaining director. If the vacant office was
held by a director elected by a voting group of shareholders, only the remaining
director or directors elected by that voting group or the shareholders of that
voting group are entitled to fill the vacancy. A director that is elected to
fill a vacancy will serve for the unexpired term of his or her predecessor.
Additionally, the North Carolina Act permits shareholders to fill a vacancy on a
board of directors, unless the corporation's articles of incorporation provide
otherwise. It is unclear whether the bylaws of Century Bancorp provide
otherwise, and thus the shareholders of Century Bancorp also may be able to fill
such a vacancy.
LIMITATIONS ON DIRECTOR LIABILITY
FIRST BANCORP. The First Bancorp articles of incorporation provide
that, to the fullest extent permitted by the North Carolina Act, a director of
First Bancorp will not be personally liable to the corporation or its
shareholders for monetary damages for breach of his or her duty as a director.
The limitation on monetary damages does not preclude other equitable remedies
such as injunctive relief or rescission, and such limitation may not be
available for violations of federal and state banking and securities laws.
CENTURY BANCORP. The Century Bancorp articles of incorporation provide
substantially the same exculpation from liability for directors as the articles
of incorporation of First Bancorp.
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INDEMNIFICATION OF DIRECTORS
FIRST BANCORP. Under the North Carolina Act, a corporation may
indemnify any director against liability if such person:
- acted in his or her official capacity as a director;
- conducted himself or herself in good faith;
- reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that his or her
conduct was in the best interests of the corporation, and in
all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
- in the case of any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
Under the North Carolina Act, a corporation may not indemnify a
director:
- in connection with a proceeding by or in the right of the
corporation in which such person was held liable to the
corporation; or
- in connection with a proceeding in which such person was held
liable on the basis that personal benefit was improperly
received by him or her.
Unless limited by its articles of incorporation, a North Carolina
corporation must indemnify, against reasonable expenses incurred, a director who
is wholly successful, on the merits or otherwise, in defending any proceeding to
which the director was a party because of his or her status as a director of the
corporation. Expenses incurred by a director in defending a proceeding may be
paid by the corporation in advance of the final disposition of the proceeding if
that director furnishes the corporation a written undertaking to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation against such expenses. A director may apply for
court-ordered indemnification under certain circumstances.
Under the North Carolina Act, unless a corporation's articles of
incorporation provide otherwise,
- an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered
indemnification to the same extent as a director, and
- the corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same
extent as to a director.
In addition and separate from the statutory indemnification rights
discussed above, the North Carolina Act provides that a corporation may in its
articles of incorporation or bylaws or by contract or resolution indemnify or
agree to indemnify any one or more of its directors, officers, employees, or
agents against liability and expenses in any proceeding (including without
limitation a proceeding brought by or on behalf of the corporation itself)
arising out of their status as such or their activities in any of the foregoing
capacities. A corporation may not indemnify or agree to indemnify a person
against liability or expenses he or she may incur on account of his activities
that were at the time taken known or believed by him or her to be clearly in
conflict with the best interests of the corporation. A corporation may likewise
and to the same extent indemnify or agree to indemnify any person who, at the
request of the corporation, is or was serving as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise or as a trustee or
administrator under an employee benefit plan. Any such provision for
indemnification also may include provisions for recovery from the corporation of
reasonable costs, expenses, and attorneys' fees in connection with the
enforcement of rights to indemnification and may further include provisions
establishing reasonable procedures for determining and enforcing the rights
granted therein.
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First Bancorp's bylaws provide for mandatory indemnification, to the
fullest extent permitted by law, of any person who at any time serves or has
served as a director, officer, employee or agent of First Bancorp, or, at the
request of First Bancorp, is or was serving as a director, officer, employee or
agent of another entity against:
- reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him or her in connection with any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and
whether or not brought on or on behalf of the corporation
seeking to hold him or her liable by reason of the fact that
he or she was acting in such capacity; and
- reasonable payments made by him or her in satisfaction of any
judgment, money decree, fine, penalty or settlement for which
he or she may have become liable in any such action, suit or
proceeding.
First Bancorp's board of directors must take all such action as may be
necessary and appropriate to authorize First Bancorp to fulfill its mandatory
indemnification obligations, including without limitation, to the extent needed,
making a good faith evaluation of the manner in which the claimant for indemnity
acted and of the reasonable amount of indemnity to such claimant and giving
notice to, and obtaining approval by, the shareholders of the corporation. First
Bancorp's bylaws do not provide for any additional, permissive indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling
First Bancorp pursuant to the foregoing provisions, First Bancorp has been
informed that, in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
CENTURY BANCORP. Century Bancorp's bylaws provide for substantially the
same mandatory indemnification described above for First Bancorp. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers, or persons controlling Century Bancorp
pursuant to the foregoing provisions, Century Bancorp has been informed that, in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
SPECIAL MEETINGS OF SHAREHOLDERS
FIRST BANCORP. First Bancorp's bylaws provide that special meetings of
First Bancorp shareholders may be called by the President, the board of
directors or by a shareholder at the written request of the holders of at least
10% of the shares entitled to vote on the issues proposed to be considered at
the special meeting.
CENTURY BANCORP. Century Bancorp's bylaws provide that special meetings
of Century Bancorp shareholders may be called by the Chief Executive Officer,
President, Chairman of the Board, or the board of directors. However, because
shareholder ability to call a special meeting is not specifically authorized in
its articles of incorporation or bylaws, under the North Carolina Act, so long
as Century Bancorp is a public corporation (that is, has a class of stock
registered under the Securities Exchange Act of 1934), its shareholders are not
entitled to call a special meeting.
SHAREHOLDER NOMINATIONS AND PROPOSALS
FIRST BANCORP. First Bancorp's bylaws provide that the nomination of
persons for election to the First Bancorp board of directors may be made at an
annual or special meeting of shareholders (a) by or at the direction of the
board of directors, or (b) by any shareholder of the corporation entitled to
vote for the election of directors who was a shareholder of record at the time
of giving of proper written notice to the secretary of the corporation and who
complies with the notice procedures set forth in the First Bancorp bylaws.
Shareholders of record entitled to vote at the annual meeting also may propose
other business to be brought before the annual meeting if they comply with the
notice procedures set forth in the First Bancorp bylaws.
CENTURY BANCORP. The Century Bancorp bylaws provide that nomination of
persons for election to the Century Bancorp board may be made at a meeting of
the shareholders (a) by the board of directors, or (b) by any
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holder of shares entitled to be voted at the meeting for the election of
directors. All nominations by shareholders must be in writing and must comply
with the notice procedures set forth in the Century Bancorp bylaws. Neither the
articles of incorporation nor bylaws of Century Bancorp establish any notice
procedures for shareholder proposals of business to be brought before an annual
meeting.
DISSENTERS' RIGHTS OF APPRAISAL
FIRST BANCORP. Under the North Carolina Act, shareholders generally are
entitled to dissent from, and obtain payment of the fair value of their shares
when certain fundamental changes in the corporation or the shareholders' rights
occur. However, dissenters' rights generally are not available to shareholders
of a corporation, like First Bancorp, with its common stock listed on the Nasdaq
National Market System, unless the governing documents of the corporation
issuing those shares provide otherwise, or, in the case of a merger or share
exchange, shareholders receive consideration other than cash or shares of stock
of another corporation listed on a national exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. First Bancorp's articles of
incorporation and bylaws do not provide for any additional dissenters' rights.
CENTURY BANCORP. In contrast to First Bancorp, Century Bancorp is a
North Carolina corporation with its stock listed on the Nasdaq Small Cap Market
(rather than on a national securities exchange or the Nasdaq National Market
System), and thus Century Bancorp shareholders' rights to dissent are not so
limited. Century Bancorp shareholders have a right to dissent under the North
Carolina Act to the merger of Century Bancorp into First Bancorp. See
"SHAREHOLDER MEETING -- Dissenters' Rights." Century Bancorp's articles of
incorporation and bylaws do not provide for any additional dissenters' rights.
SHAREHOLDER VOTES REQUIRED FOR CERTAIN ACTIONS
FIRST BANCORP. Neither the articles of incorporation nor bylaws of
First Bancorp address the voting requirements for different actions.
Accordingly, the provisions of the North Carolina Act apply. In general, a
majority of outstanding shares or a majority of votes cast must approve an
action for it to be effective. In connection with a significant merger, however,
the affirmative vote of the holders of at least a majority of the outstanding
shares is required to consummate the merger. Since the number of shares of First
Bancorp common stock issued and outstanding after the merger does not exceed by
more than 20% the number of shares of First Bancorp common stock issued and
outstanding immediately prior to the merger, no shareholder vote is required by
First Bancorp shareholders either to approve the merger or the issuance of its
shares of common stock as merger consideration.
CENTURY BANCORP. Century Bancorp is also subject to the North Carolina
Act. However, its articles of incorporation provide that the affirmative vote of
the holders of at least 75% of the outstanding shares of Century Bancorp common
stock is required to approve certain business combinations. This supermajority
voting requirement does not apply, however, if the transaction has been approved
by at least 75% of all of the directors of Century Bancorp (or 75% of the
non-related, continuing directors of Century Bancorp if the business combination
is proposed by a related person) at a duly called or convened regular or special
meeting of the board of directors. The proposed merger with First Bancorp was
unanimously approved by the Century Bancorp directors, making the supermajority
provision inapplicable to it.
For purposes of the supermajority provision, a "business combination"
is any transaction in connection with a combination or merger of Century
Bancorp, the acquisition of more than 10% of Century Bancorp's voting stock or a
purchase or sale of a substantial portion (20% or more) of the assets of Century
Bancorp or any subsidiary thereof, in each case, which requires (if applicable)
the approval of or notice to and absence of objection by (a) any federal or
state regulatory authority of banks, savings banks, savings and loan
associations or their holding companies, (b) the Federal Trade Commission or the
Antitrust Division of the United States Department of Justice or (c) the
shareholders of Century Bancorp. A reorganization, acquisition, merger or
purchase or sale of assets or combination initiated by Century Bancorp upon the
vote of at least 51% of its non-related, continuing directors is not deemed a
business combination.
Century Bancorp's articles of incorporation further provide that the
board of directors, when evaluating the merits of any business combination,
shall, in connection with the exercise of its judgment in determining what is in
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the best interests of the company and its shareholders, give due consideration
to all relevant factors, including, without limitation: (a) the social and
economic effects of acceptance of such offer on the depositors, borrowers, other
customers, employees and creditors of Century Bancorp and its subsidiaries and
on the communities in which Century Bancorp and its subsidiaries operate or are
located; (b) the ability of Century Bancorp and its subsidiaries to fulfill the
objectives of a bank and/or savings bank and/or savings and loan association
holding company, and of commercial banking and/or savings bank and/or savings
and loan entities under applicable federal and state statutes and regulations;
(c) the business and financial condition and prospects and earnings prospects of
the person or persons proposing the business combination (including existing and
likely financial obligations of such person or persons) and the possible effects
of such conditions and prospects upon Century Bancorp and its subsidiaries and
the communities in which they are located; (d) the competence, experience and
integrity of the person or persons proposing the business combination and its or
their management; and (e) the prospects for successful completion of the
proposed business combination.
Even though the constituency provision described above provides that
the board has sole discretion in making such determination, the provision may
discourage or make more difficult certain business combinations, and therefore,
may adversely affect the ability of the shareholders to benefit from certain
transactions opposed by Century Bancorp's board of directors. The supermajority
provisions of Century Bancorp's articles of incorporation may have the effect of
delaying, deferring or preventing a change in control of Century Bancorp that
some holders of Century Bancorp may deem to be in their best interests. First
Bancorp does not have any such supermajority approval requirements.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
FIRST BANCORP. The North Carolina Act gives a shareholder of a North
Carolina corporation the right to inspect and copy books and records of the
corporation during regular business hours if he or she gives the corporation
written notice of his or her demand at least five business days before the date
of the inspection. To inspect certain records, written demand must also be made
in good faith and for a proper purpose and must describe with reasonable
particularity the purpose of the request and the records the shareholder desires
to inspect.
CENTURY BANCORP. The Century Bancorp shareholders have the right to
inspect and copy Century Bancorp's books and records as set forth above.
DIVIDENDS
FIRST BANCORP. First Bancorp shareholders are entitled to receive such
dividends or distributions as the board of directors authorizes in its
discretion. First Bancorp's ability to pay dividends is subject to the
restrictions of North Carolina corporate law. A corporation generally may
authorize and make dividends so long as after making the dividend, the
corporation would be able to pay its debts as they become due in the ordinary
course of business and the corporation's total assets would not be less that the
sum of its total liabilities plus the amount that would be needed, if the
corporation were to be dissolved at the time of the dividend, to satisfy claims
of shareholders who have preferential rights superior to the rights of the
shareholders receiving the dividend.
There are various statutory limitations on the ability of First
Bancorp's banking subsidiaries to pay dividends to First Bancorp. See "CERTAIN
REGULATORY CONSIDERATIONS."
CENTURY BANCORP. The rights of Century Bancorp shareholders to receive
dividends are substantially similar to those of First Bancorp shareholders.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
First Bancorp common stock is traded on the Nasdaq National Market
System under the symbol "FBNC." Century Bancorp common stock is traded on the
Nasdaq Small Cap Market under the symbol "CENB." The following table sets forth,
for the calendar periods indicated, the high and low closing sale prices for
First Bancorp and Century Bancorp common stock as reported by the Nasdaq Stock
Market and the cash dividends declared per share of First Bancorp common stock
and Century Bancorp common stock for the indicated periods. The stock prices do
not include retail mark-ups, mark-downs or commissions.
First Bancorp Century Bancorp
------------------------------------- ----------------------------------------
Cash Cash
Price Range Dividends Price Range(1) Dividends
--------------------- Declared -------------------- Declared
High Low Per Share High Low Per Share(1)
------ ------ --------- ------ ------ ------------
1998
First Quarter 28.00 19.50 0.15 39.00 28.25 0.17
Second Quarter 24.67 20.67 0.15 36.75 15.25 10.17(2)
Third Quarter 22.67 19.33 0.15 16.88 12.00 0.17
Fourth Quarter 22.00 16.00 0.15 14.50 12.75 0.17
1999
First Quarter 19.83 16.00 0.16 14.00 13.50 0.17
Second Quarter 18.17 14.67 0.16 14.00 13.00 0.17
Third Quarter 19.67 15.71 0.16 13.81 13.63 0.17
Fourth Quarter 20.00 15.50 0.16 13.75 12.75 0.17
2000
First Quarter 17.25 12.06 0.17 13.25 12.75 0.17
Second Quarter 16.94 12.63 0.17 14.25 12.75 0.17
Third Quarter 15.50 13.50 0.22 15.13 14.06 0.17
Fourth Quarter 16.13 14.25 0.22 19.19 14.25 0.17
2001
First Quarter 21.25 15.88 0.22 22.38 18.63 0.17
Second Quarter (through 19.63 18.00 0.00 22.00 21.00 0.00
April 16, 2001)
- ------------------------
(1) Adjusted for the effect of the 3-for-1 stock split declared in the second
quarter of 1998.
(2) Century Bancorp paid a special, non-recurring $10.00 return of capital
dividend in the second quarter of 1998.
On April 16, 2001, the last sale price of First Bancorp common stock as
reported on the Nasdaq National Market System was $19.13 per share and the last
sale price of Century Bancorp common stock as reported on the Nasdaq Small Cap
Market was $21.10 per share. On October 19, 2000, the last business day prior to
the public announcement of the merger, the last sale price of First Bancorp
common stock as reported on the Nasdaq National Market System was $14.25 per
share and the last sale price of Century Bancorp common stock as reported by the
Nasdaq Small Cap Market also was $14.25 per share.
The holders of First Bancorp common stock are entitled to receive
dividends when and if declared by First Bancorp's board of directors out of
funds legally available therefor. Although First Bancorp currently intends to
continue to pay quarterly cash dividends on the First Bancorp common stock,
there can be no assurance that First Bancorp's dividend policy will remain
unchanged after completion of the merger. The declaration and payment of
dividends after the merger will depend on business conditions, operating
results, capital and reserve requirements,
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and the First Bancorp board's consideration of other relevant factors. The
principal source of funds for the payment of dividends by First Bancorp is
dividends from First Bank.
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.88 per share of First Bancorp common stock, which, based on an exchange
ratio of 1.3333, equates to approximately $1.17 per share of Century Bancorp
common stock. First Bancorp, however, may change this policy at any time, based
upon business conditions, its financial condition and earnings, or other
factors. Century Bancorp currently pays quarterly dividends at an annualized
rate of $0.68 per share of Century Bancorp common stock.
First Bancorp and Century Bancorp are each legal entities separate and
distinct from their subsidiaries, and their revenues depend in significant part
on the payment of dividends from their respective subsidiary banks. First
Bancorp's and Century Bancorp's subsidiary depository institutions are subject
to certain legal restrictions on the amount of dividends they are permitted to
pay. See "CERTAIN REGULATORY CONSIDERATIONS."
BUSINESS OF CENTURY BANCORP
Century Bancorp is a bank holding company headquartered in Thomasville,
North Carolina. It conducts its operations through its subsidiary bank, Home
Savings, which is a North Carolina-chartered stock savings bank. In addition, it
has made a loan to the Home Savings Employee Stock Ownership Plan, with respect
to which it receives interest payments.
Home Savings was organized in 1915. It has been a member of the Federal
Home Loan Bank system and its deposits have been federally insured since the
late 1950s. Home Savings' deposits are insured by the Savings Association
Insurance Fund of the FDIC to the maximum amount permitted by law. Home Savings
provides a wide range of banking services, including accepting time and demand
deposits and making secured and unsecured loans to individuals and businesses.
Home Savings conducts business through its full service office in
Thomasville, North Carolina. Home Savings' primary market area covers the
communities within a 10-mile radius of its office, which includes portions of
Davidson, Randolph and Guilford counties in North Carolina. As of December 31,
2000, Century Bancorp had consolidated assets of $104.9 million, net
consolidated loans of $90.8 million, consolidated deposits of $72.9 million,
consolidated investment securities of $9.2 million, and consolidated
shareholders' equity of $18.5 million.
At December 31, 2000, Century Bancorp and Home Savings had ten
full-time employees.
Century Bancorp's principal executive offices are located at 22 Winston
Street, Thomasville, North Carolina 27360, and its telephone number is (336)
475-4663.
Additional information with respect to Century Bancorp and Home Savings
is included elsewhere herein and in documents delivered with this proxy
statement/prospectus and incorporated by reference herein. See "ADDITIONAL
INFORMATION."
BUSINESS OF FIRST BANCORP
First Bancorp is a one-bank holding company. The principal activity of
First Bancorp is the ownership and operation of First Bank, a North
Carolina-chartered bank with its main office in Troy, North Carolina. First
Bancorp also owns and operates two nonbank subsidiaries, Montgomery Data
Services, Inc., a data processing company, and First Bancorp Financial Services,
Inc., which currently owns and operates various real estate properties. First
Bancorp also owns First Bank Insurance Services, Inc., a provider of non-FDIC
insured insurance and investment products and First Troy Realty Corporation, a
real estate investment trust.
First Bancorp was incorporated in North Carolina on December 8, 1983,
as Montgomery Bancorp, for the purpose of acquiring all of the outstanding
common stock of First Bank of Montgomery through stock-for-stock exchanges. On
December 31, 1986, the holding company changed its name to First Bancorp to
conform its name to the name of the bank, which had changed its name from Bank
of Montgomery to First Bank in 1985.
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First Bank was organized in North Carolina in 1934 and began banking
operations in 1935 as the Bank of Montgomery, named for the county in which it
operated. First Bank now operates in a 15-county area centered in Troy, North
Carolina. Troy, with a population of approximately 3,400, is located in the
center of Montgomery County, approximately 60 miles east of Charlotte, 50 miles
south of Greensboro and 80 miles southwest of Raleigh. First Bank conducts
business in North Carolina from 39 branches located within an 80-mile radius of
Troy, covering a geographical area from Maxton to the southeast, to High Point
to the north, to Lillington to the east, and to Kannapolis to the west. Ranked
by assets, First Bank was the 9th largest bank in North Carolina as of December
31, 2000. First Bank provides a full range of banking services, including the
accepting of demand and time deposits and the making of secured and unsecured
loans to individuals and businesses. In 2000, as in recent prior years, First
Bank accounted for substantially all of the consolidated net income of First
Bancorp.
As of December 31, 2000, First Bancorp had consolidated assets of
$915.2 million, net consolidated loans of $738.2 million, consolidated deposits
of $770.4 million, consolidated investment securities of $117.5 million, and
consolidated shareholders' equity of $110.7 million.
First Bancorp's principal executive offices are located at 341 North
Main Street, Troy, North Carolina 27371, and its telephone number is (910)
576-6171.
Additional information with respect to First Bancorp and First Bank is
included in the documents delivered with this proxy statement/prospectus and
incorporated by reference herein. See "ADDITIONAL INFORMATION."
CERTAIN REGULATORY CONSIDERATIONS
First Bancorp is a bank holding company registered with the Federal
Reserve under the Bank Holding Company Act of 1956, as amended. Century Bancorp
is a savings bank holding company, also registered with the Federal Reserve
under the Bank Holding Company Act. As such, each of First Bancorp, Century
Bancorp and their banking subsidiaries are subject to the supervision,
examination and reporting requirements of the Bank Holding Company Act and the
regulations of the Federal Reserve. First Bancorp's and Century Bancorp's
banking subsidiaries also are subject to supervision and examinations by federal
and state banking authorities. Set forth below is a brief summary of certain of
the areas of regulation. Additional information relating to Century Bancorp is
included in Century Bancorp's 2000 Annual Report on Form 10-KSB and additional
information relating to First Bancorp is included in First Bancorp's 2000 Annual
Report on Form 10-K. See "ADDITIONAL INFORMATION."
The merger is subject to prior approval by the Federal Reserve pursuant
to Section 3 of the Bank Holding Company Act. First Bancorp and Century Bancorp
have filed the required applications and notification with the Federal Reserve
for approval of the merger. Assuming Federal Reserve approval, the parties may
not consummate the merger until after termination of a waiting period between 15
and 30 days after that approval. During that time, the United States Department
of Justice may challenge the merger on antitrust grounds.
The Federal Reserve is prohibited from approving any transaction under
the applicable statutes that:
- would result in a monopoly;
- would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in
any part of the United States; or
- may have the effect in any part of the United States of
substantially lessening competition, tending to create a
monopoly or otherwise resulting in a restraint of trade,
unless the Federal Reserve finds that the public interest
created by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served
clearly outweighs the anticompetitive effects of the proposed
merger.
In addition, in reviewing a transaction under the Bank Holding Company
Act, the Federal Reserve will consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. Consideration of financial resources generally focuses
on capital
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adequacy, which is discussed below, and consideration of managerial resources
includes consideration of the competence, experience and integrity of the
officers, directors and principal shareholders of the companies and their
subsidiary banks. The analysis of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977, as amended.
Under the Community Reinvestment Act, the Federal Reserve must take
into account the record of performance of each of First Bancorp and Century
Bancorp and their respective subsidiaries in meeting the credit needs of the
entire community, including the low- and moderate-income neighborhoods in which
they operate. Each of First Bancorp's and Century Bancorp's subsidiary banks has
a "satisfactory" rating under the Community Reinvestment Act.
Additionally, any merger of Century Bancorp's banking subsidiary, Home
Savings, into First Bank will be subject to the approval of the Federal Reserve,
the FDIC, the North Carolina Banking Commission and the Administrator of the
Savings Institutions Division of the North Carolina Department of Commerce. Such
agencies will apply similar standards to their review of the bank merger as
applied by the Federal Reserve to the merger of the holding companies. Obtaining
these approvals is not a condition to the closing of the merger of First Bancorp
and Century Bancorp. We cannot assure you, however, that these approvals will be
obtained or that such approvals will be given without the imposition by a
regulatory authority of a condition that would materially adversely impact the
financial or economic benefits of the merger of the banking subsidiaries.
First Bancorp and Century Bancorp and their banking subsidiaries are
subject to certain federal and state laws and regulations relating to the
following areas as summarized below:
- Restrictions on the Payment of Dividends - First Bancorp and
Century Bancorp are legal entities separate and distinct from
their banking and other subsidiaries, but depend principally
on dividends from their subsidiary depository institutions for
cash flow to pay dividends to their shareholders. There are
statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to First
Bancorp and Century Bancorp as well as by First Bancorp and
Century Bancorp to their shareholders. The subsidiary banks of
First Bancorp and Century Bancorp are subject to dividend
restrictions imposed by the State of North Carolina and to the
regulations of the Federal Reserve. Under such state dividend
restrictions, at December 31, 2000, First Bank could declare
aggregate annual dividends to First Bancorp of approximately
$54,041,000, and, at June 30, 2000, Home Savings could declare
aggregate annual dividends to Century Bancorp of approximately
$458,000. The payment of dividends by First Bancorp and
Century Bancorp also may be affected or limited by other
factors, such as the requirement to maintain adequate capital
above state or federal regulatory guidelines.
- Capital Adequacy - First Bancorp and Century Bancorp and their
banking subsidiaries are required by state and federal
regulators to comply with certain capital adequacy standards
related to risk exposure and the leverage position of
financial institutions. Any bank or thrift that fails to meet
its capital guidelines may be subject to a variety of
enforcement remedies and certain other restrictions on its
business. As of December 31, 2000, First Bancorp, Century
Bancorp and their banking subsidiaries were in compliance with
all such capital adequacy standards.
- Support of Subsidiary Institutions - Under Federal Reserve
policy, First Bancorp and Century Bancorp are expected to act
as sources of financial strength for, and commit their
resources to support, First Bank and Home Savings and any
other banking subsidiaries, even in times when First Bancorp
or Century Bancorp might not be inclined to provide such
support.
- Prompt Corrective Action - Federal banking regulators are
required to audit First Bancorp, Century Bancorp, First Bank
and Home Savings to determine whether they are adequately
capitalized. If a banking institution is deemed by regulators
to be insufficiently capitalized, the regulators are required
to take certain actions designed to improve the capitalization
of the financial institution.
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On November 12, 1999, the President signed into law the
Gramm-Leach-Bliley Act. This statute contains several provisions that may affect
how First Bancorp or Century Bancorp does business or the nature of the
competition that it faces. The act permits banks, insurance companies and
securities firms to affiliate within a single corporate structure, now known as
a financial holding company. Using the financial holding company structure,
insurance companies and securities firms may acquire bank holding companies,
such as First Bancorp and Century Bancorp, and bank holding companies may
acquire insurance companies and securities firms. A bank holding company that
wishes to become a financial holding company must satisfy a number of
conditions, including that all of the insured depository institution
subsidiaries of the bank holding company have at least a "satisfactory"
Community Reinvestment Act rating. In addition, a financial holding company may
not commence a new financial activity or acquire control of a company engaged in
such activities without satisfying this Community Reinvestment Act requirement.
As a result of this new act, First Bancorp and Century Bancorp may face
increased competition from more and larger financial institutions.
The act also may cause First Bancorp to consider whether to expand its
securities or insurance businesses. First Bancorp currently acts as a broker of
non-FDIC insured insurance and investment products through its subsidiary, First
Bank Insurance Services, Inc. The act allows increased activity in the insurance
and securities underwriting businesses to be conducted through a subsidiary of a
financial holding company and would involve both additional risk and regulatory
burdens. First Bancorp has not made any decisions on whether to expand its
securities or insurance operations. The act also contains certain provisions
that impose additional duties on banking institutions regarding customer
privacy.
DESCRIPTION OF FIRST BANCORP COMMON STOCK
The First Bancorp articles of incorporation currently authorize the
issuance of 12,500,000 shares of First Bancorp common stock, no par value. As of
April 16, 2001, 8,755,161 shares of First Bancorp common stock were issued and
outstanding and 836,666 shares were reserved for issuance under First Bancorp's
benefit plans. The capital stock of First Bancorp does not represent or
constitute a deposit account and is not insured by the FDIC, the Bank Insurance
Fund, the Savings Association Insurance Fund, or any governmental agency.
Shares of First Bancorp common stock may be issued at such time or
times and for such consideration as the First Bancorp board of directors may
deem advisable, subject to such limitations as may be set forth in the laws of
the State of North Carolina, the First Bancorp articles of incorporation or
bylaws or the rules of the Nasdaq National Market System.
The holders of First Bancorp common stock are entitled to receive, to
the extent permitted by law, only such dividends as may be declared from time to
time by the First Bancorp board of directors out of legally available funds. The
ability of First Bancorp to pay dividends is affected by the ability of its
subsidiary depository institution, First Bank, to pay dividends, which is
limited by applicable regulatory requirements and capital guidelines. On
December 31, 2000, under such requirements and guidelines, First Bancorp's
depository institution had $54,041,000 of funds legally available for the
payment of dividends. See "CERTAIN REGULATORY CONSIDERATIONS."
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets, or winding-up of First Bancorp, the holders of First
Bancorp common stock will be entitled to receive all of the remaining assets of
First Bancorp, of whatever kind, available for distribution to shareholders
ratably in proportion to the number of shares of First Bancorp common stock
held. The First Bancorp board may distribute in kind to the holders of First
Bancorp common stock such remaining assets of First Bancorp or may sell,
transfer or otherwise dispose of all or any part of such remaining assets to any
other person or entity and receive payment therefor in cash, stock or
obligations of such other person or entity, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of First Bancorp common stock. Neither the merger or consolidation of First
Bancorp into any other corporation, nor the merger of any other corporation into
First Bancorp, nor any purchase or redemption of shares of stock of First
Bancorp of any class, will be deemed to be a dissolution, liquidation or
winding-up of First Bancorp for purposes of this paragraph.
Because First Bancorp is a holding company, its right and the rights of
its creditors and shareholders, including the holders of First Bancorp common
stock, to participate in the distribution of assets of a subsidiary on its
liquidation or recapitalization may be subject to prior claims of its
subsidiaries' creditors.
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In connection with the conversion by Home Savings from a mutual savings
bank to a stock savings bank in 1996, a liquidation account was established by
Home Savings for the benefit of depositors of the bank as of June 30, 1996 who
continued to maintain their deposits at Home Savings after such date. This
liquidation account will be assumed by First Bank in connection with the
anticipated merger of Home Savings into First Bank after completion of the
merger of Century Bancorp into First Bancorp and will entitle those depositors
to certain liquidation preferences in the unlikely event of a complete
liquidation of First Bank.
For a further description of First Bancorp common stock, see "EFFECT OF
THE MERGER ON RIGHTS OF SHAREHOLDERS."
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Century Bancorp
board of directors knows of no matters that will be presented for consideration
at the Century Bancorp special meeting other than as described in this proxy
statement/prospectus. However, if any other matters shall properly come before
the Century Bancorp special meeting or any adjournment or postponement of such
meeting and are voted on, the enclosed proxy will be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters.
EXPERTS
The consolidated financial statements of First Bancorp and its
subsidiaries as of December 31, 2000 and 1999 and for each of the years in the
three-year period ended December 31, 2000 have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Century Bancorp and its
subsidiaries as of June 30, 2000 and 1999 and for each of the years in the
three-year period ended June 30, 2000 have been incorporated herein by reference
and in the registration statement in reliance upon the report of Dixon Odom
PLLC, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
OPINIONS
Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina will pass
upon the legality of the shares of First Bancorp common stock to be issued in
the merger. Certain legal matters will be passed upon for Century Bancorp by
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., Greensboro, North
Carolina.
Certain tax consequences of the transaction have been passed upon by
KPMG LLP.
ADDITIONAL INFORMATION
First Bancorp and Century Bancorp file annual, quarterly and current
reports, proxy and information statements, and other information with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
You may read and copy this information at the Public Reference Section at the
Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information about issuers that file electronically with the Commission. The
address of that site is http://www.sec.gov. In addition, you can read and copy
this information at the regional offices of the Securities and Exchange
Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
You can also inspect reports, proxy and information statements, and other
information about First Bancorp and Century Bancorp at the offices of the Nasdaq
Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
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First Bancorp filed a registration statement with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the First Bancorp common stock offered to the Century Bancorp shareholders. The
registration statement contains additional information about First Bancorp and
the First Bancorp common stock. The Securities and Exchange Commission allows
First Bancorp to omit certain information included in the registration statement
from this proxy statement/prospectus. The registration statement may be
inspected and copied at the Commission's public reference facilities described
above.
Important business and financial information about First Bancorp and
Century Bancorp is included in documents that are delivered with this proxy
statement/prospectus and incorporated by reference herein, as described below:
First Bancorp's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 is incorporated by reference into this proxy
statement/prospectus.
The following documents filed with the Securities and Exchange
Commission by Century Bancorp are incorporated by reference into with this proxy
statement/prospectus:
- Century Bancorp's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2000;
- Century Bancorp's Quarterly Reports on Form 10-QSB for the
quarters ended September 30, and December 31, 2000; and
- Century Bancorp's Current Report on Form 8-K dated October 19,
2000.
A copy of First Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 is delivered with this proxy statement/prospectus.
Copies of Century Bancorp's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2000, its Annual Report to Shareholders for the fiscal year
ended June 30, 2000 and its Quarterly Report on Form 10-QSB for the quarter
ended December 31, 2000 are delivered with this proxy statement/prospectus.
First Bancorp and Century Bancorp also incorporate by reference
additional documents filed by them pursuant to Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934 after the end of their respective most recently
ended fiscal years and prior to final adjournment of the Century Bancorp special
meeting and, provided the merger is approved by the shareholders of Century
Bancorp, until the deadline for the shareholders to elect to receive cash or
stock consideration as merger consideration. Any statement contained in this
proxy statement/prospectus or in a document incorporated or deemed to be
incorporated by reference in this proxy statement/prospectus shall be deemed to
be modified or superseded to the extent that a statement contained herein or in
any subsequently filed document that also is, or is deemed to be, incorporated
by reference herein modifies or supersedes such statement.
You may obtain copies of the information incorporated by reference in
this proxy statement/prospectus upon written or oral request. The section on
"OTHER INFORMATION ABOUT THE PARTIES" on page i above contains information about
how such requests should be made.
All information contained in this proxy statement/prospectus, delivered
with the proxy statement/prospectus, or incorporated herein by reference with
respect to First Bancorp was supplied by First Bancorp; and all information
contained in this proxy statement/prospectus, delivered with the proxy
statement/prospectus, or incorporated herein by reference with respect to
Century Bancorp was supplied by Century Bancorp.
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APPENDIX A
MERGER AGREEMENT AND PLAN OF MERGER
- --------------------------------------------------------------------------------
MERGER AGREEMENT
AMONG
FIRST BANCORP
AND
CENTURY BANCORP, INC.
Dated as of October 19, 2000
- --------------------------------------------------------------------------------
67
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINED TERMS
1.1 Definitions..............................................................................................1
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 The Holding Company Merger...............................................................................7
2.2 Company Shares...........................................................................................8
2.3 Merger Consideration.....................................................................................9
2.4 Election and Allocation Procedures.......................................................................9
2.5 Closing Payment.........................................................................................11
2.6 Exchange Procedures.....................................................................................11
2.7 Dissenting Shares.......................................................................................12
2.8 Company Stock Options...................................................................................12
ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 The Bank Merger.........................................................................................13
3.2 Company Bank Shares.....................................................................................13
ARTICLE IV
THE CLOSING
4.1 Closing.................................................................................................14
4.2 Deliveries by the Company...............................................................................14
4.3 Deliveries by the Buyer.................................................................................14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization, Standing and Power........................................................................14
5.2 Authority; No Conflicts.................................................................................15
5.3 Capital Stock; Subsidiaries.............................................................................15
5.4 SEC Filings; Company Financial Statements...............................................................16
5.5 Absence of Undisclosed Liabilities......................................................................16
5.6 Absence of Certain Changes or Events....................................................................16
5.7 Tax Matters.............................................................................................16
5.8 Assets..................................................................................................17
5.9 Securities Portfolio and Investments....................................................................18
5.10 Environmental Matters...................................................................................18
5.11 Compliance with Laws....................................................................................18
5.12 Labor Relations.........................................................................................19
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5.13 Employee Benefit Plans..................................................................................19
5.14 Material Contracts......................................................................................20
5.15 Legal Proceedings.......................................................................................20
5.16 Reports.................................................................................................21
5.17 Registration Statement; Proxy Statement.................................................................21
5.18 Accounting, Tax, and Regulatory Matters.................................................................21
5.19 State Takeover Laws.....................................................................................21
5.20 Charter Provisions......................................................................................21
5.21 Records.................................................................................................21
5.22 Derivatives.............................................................................................21
5.23 Certain Regulated Businesses............................................................................22
5.24 Commissions.............................................................................................22
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
6.1 Organization............................................................................................22
6.2 Authority; No Conflicts.................................................................................22
6.3 Buyer's Stock; Subsidiaries.............................................................................23
6.4 SEC Filings; Buyer Financial Statements.................................................................23
6.5 Absence of Undisclosed Liabilities......................................................................23
6.6 Absence of Certain Changes or Events....................................................................24
6.7 Tax Matters.............................................................................................24
6.8 Assets..................................................................................................25
6.9 Securities Portfolio and Investments....................................................................25
6.10 Environmental Matters...................................................................................25
6.11 Compliance with Laws....................................................................................26
6.12 Labor Relations.........................................................................................26
6.13 Employee Benefit Plans..................................................................................26
6.14 Material Contracts......................................................................................28
6.15 Legal Proceedings.......................................................................................28
6.16 Reports.................................................................................................28
6.17 Registration Statement; Proxy Statement.................................................................28
6.18 Accounting, Tax, and Regulatory Matters.................................................................29
6.19 Derivatives.............................................................................................29
6.20 Certain Regulated Businesses............................................................................29
6.21 Commissions.............................................................................................29
ARTICLE VII
COVENANTS
7.1 Covenants of the Company................................................................................29
7.2 Covenants of the Buyer..................................................................................31
7.3 Covenants of All Parties to the Agreement...............................................................34
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information...................................................................................35
8.2 Access to Premises......................................................................................35
8.3 Environmental Survey....................................................................................35
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8.4 Confidentiality.........................................................................................36
8.5 Publicity...............................................................................................36
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions.......................................................................................36
9.2 Conditions to the Obligations of the Company............................................................37
9.3 Conditions to the Obligations of the Buyer..............................................................38
ARTICLE X
TERMINATION
10.1 Termination.............................................................................................39
10.2 Procedure and Effect of Termination.....................................................................40
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses................................................................................................40
11.2 Survival of Representations.............................................................................40
11.3 Amendment and Modification..............................................................................41
11.4 Waiver of Compliance; Consents..........................................................................41
11.5 Notices.................................................................................................41
11.6 Assignment..............................................................................................42
11.7 Separable Provisions....................................................................................42
11.8 Governing Law...........................................................................................42
11.9 Counterparts............................................................................................42
11.10 Interpretation..........................................................................................42
11.11 Entire Agreement........................................................................................42
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EXHIBITS
Exhibit A Form of Plan of Merger in respect of the Holding Company Merger
Exhibit B Form of Employment Agreement of James G. Hudson, Jr.
Exhibit C Form of Company Option Agreement
COMPANY'S DISCLOSURE SCHEDULE
Section 5.2 Authority; No Conflicts
Section 5.3 Subsidiaries
Section 5.5 Absence of Undisclosed Liabilities
Section 5.6 Absence of Certain Changes or Events
Section 5.7 Tax Matters
Section 5.9 Securities Portfolio and Investments
Section 5.11 Compliance with Laws
Section 5.13 Employee Benefit Plans
Section 5.14 Material Contracts
Section 5.19 State Takeover Laws
Section 5.24 Commissions
BUYER'S DISCLOSURE SCHEDULE
Section 6.3 Subsidiaries
Section 6.5 Absence of Undisclosed Liabilities
Section 6.6 Absence of Certain Changes or Events
Section 6.7 Tax Matters
Section 6.8 Assets
Section 6.9 Securities Portfolio and Investments
Section 6.13 Employee Benefit Plans
Section 6.14 Material Contracts
Section 6.21 Commissions
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT"), dated as of the 19th day of
October, 2000, is by and among:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "BUYER"); and
CENTURY BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
bank holding company (the "COMPANY").
BACKGROUND STATEMENT
The Buyer and the Company desire to effect a merger pursuant to which
the Company will merge into the Buyer, with the Buyer being the surviving
corporation (the "HOLDING COMPANY MERGER"); and subsequent to the Holding
Company Merger, it is expected that the Buyer Bank and the Company Bank will
effect a merger pursuant to which the Company Bank will merge and combine into
the Buyer Bank, with the Buyer Bank being the surviving corporation (the "BANK
MERGER," and together with the Holding Company Merger, the "MERGERS"). In
consideration of the Holding Company Merger, the shareholders of the Company
will receive shares of common stock of the Buyer and/or cash. It is intended
that the Mergers qualify as tax-free reorganizations under Section 368 of the
Internal Revenue Code. The Mergers are expected to be accounted for under the
purchase method.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"AFFILIATE" means, with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this Agreement, "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise. Without
limiting the foregoing, as used with respect to the Company, the term
"AFFILIATES" includes its subsidiaries.
"AGREEMENT" means this Merger Agreement.
"ASSETS" means all of the assets, properties, businesses and rights of
a Person of every kind, nature, character and description, whether real,
personal or mixed, tangible or intangible, accrued or contingent, whether or not
carried on any books and records of such Person, whether or not owned in such
Person's name and wherever located.
"AVERAGE CLOSING PRICE" has the meaning given to it in SECTION 10.1(F).
"BANK MERGER" has the meaning given to it in the Background Statement
hereof.
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"BENEFIT PLANS" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, restricted stock,
severance pay, vacation, bonus, or other incentive plan, all other written
employee programs or agreements, all medical, vision, dental, or other health
plans, all life insurance plans, and all other employee benefit plans or fringe
benefit plans, including without limitation "employee benefit plans" as that
term is defined in Section 3(3) of ERISA maintained by, sponsored in whole or in
part by, or contributed to by, a Person or any of its subsidiaries for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate.
"BUSINESS DAY" means any day excluding (a) Saturday, (b) Sunday and (c)
any day that shall be a legal holiday in the State of North Carolina.
"BUYER" has the meaning given to it in the introductory paragraph
hereof.
"BUYER BANK" means First Bank, a North Carolina bank and a wholly owned
subsidiary of the Buyer.
"BUYER CONTRACTS" has the meaning given to it in SECTION 6.14.
"BUYER ERISA AFFILIATE" has the meaning given to it in SECTION 6.13.
"BUYER FINANCIAL STATEMENTS" means, with respect to the Buyer and its
subsidiaries, the consolidated audited statements of income and stockholder's
equity and cash flows for the years ended December 31, 1999, 1998 and 1997 and
consolidated audited balance sheets as of December 31, 1999, 1998 and 1997, as
well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since December 31, 1999 and the consolidated interim balance sheet as of each
such quarter.
"BUYER SEC REPORTS" has the meaning given to it in SECTION 6.4.
"BUYER'S STOCK" means the common stock of First Bancorp, no par value,
as traded on the Nasdaq National Market System.
"BUYER'S STOCK PERCENTAGE CHANGE" has the meaning given to it in
SECTION 10.1(F).
"CASH DESIGNEE SHARES" has the meaning given to it in SECTION 2.4.
"CASH ELECTION AMOUNT" has the meaning given to it in SECTION 2.4.
"CASH ELECTION SHARES" has the meaning given to it in SECTION 2.4.
"CLOSING" means the closing of the Mergers, as identified more
specifically in ARTICLE IV.
"CLOSING DATE" has the meaning given to it in SECTION 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.
"COMPANY" has the meaning given to it in the introductory paragraph
hereof.
"COMPANY BANK" means Home Savings, Inc., SSB, a North Carolina stock
savings bank.
"COMPANY BANK SHARES" has the meaning given to it in SECTION 3.2(A).
"COMPANY CONTRACTS" has the meaning given to it in SECTION 5.14.
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"COMPANY FINANCIAL STATEMENTS" means, with respect to the Company and
its subsidiaries, the consolidated audited statements of income and
stockholder's equity and cash flows for the years ended June 30, 2000, 1999 and
1998 and consolidated audited balance sheets as of June 30, 2000, 1999 and 1998,
as well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since June 30, 2000 and the consolidated interim balance sheet as of each such
quarter.
"COMPANY OPTION AGREEMENT" means the Option Agreement dated as of the
date hereof between the Buyer and the Company substantially in the form of
EXHIBIT C.
"COMPANY OPTIONS" has the meaning given to it in SECTION 2.8.
"COMPANY PARTIES" means the Company and the Company Bank.
"COMPANY SEC REPORTS" has the meaning given to it in SECTION 5.4.
"COMPANY SHARES" has the meaning given to it in SECTION 2.2(A).
"CONFIDENTIALITY AGREEMENTS" has the meaning given to it in SECTION
8.4.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person given or granted with
respect to any Contract, Law, Order, or Permit.
"CONTRACT" means any agreement, warranty, indenture, mortgage,
guaranty, lease, license or other contract, agreement, arrangement, commitment
or understanding, written or oral, to which a Person is a party.
"DEFAULT" means (i) any breach or violation of or default under any
Contract, Order or Permit (including any noncompliance with restrictions on
assignment, where assignment is defined to include a change of control of the
parties to this agreement or any of their subsidiaries or the merger or
consolidation of any of them with another Person), (ii) any occurrence of any
event that with the passage of time or the giving of notice or both would
constitute such a breach or violation of or default under any Contract, Order or
Permit, or (iii) any occurrence of any event that with or without the passage of
time or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.
"DISSENTING SHARES" has the meaning given to it in SECTION 2.7.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
"EFFECTIVE TIME" has the meaning given to it in SECTION 2.1(E) or
SECTION 3.1, as appropriate.
"ELECTION DEADLINE" has the meaning given to it in SECTION 2.4.
"ELECTION FORM" has the meaning given to it in SECTION 2.4.
"ENVIRONMENTAL ASSESSMENT" means any and all soil and groundwater
tests, surveys, environmental assessments and other inspections, tests and
inquiries conducted by the Buyer or any agent of the Buyer and related to the
Real Property of the Company and its subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, directive, license, approval, guidance,
interpretation, order or other legal requirement relating to the protection of
human health or the environment, including but not limited to any requirement
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of materials that are or may constitute a threat to
human health or the environment.
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Without limiting the foregoing, each of the following is an Environmental Law:
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. ss. 9601 et seq.) ("CERCLA"), the Hazardous Material Transportation Act
(49 U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss. 6901 et seq.) ("RCRA"), the Federal Water Pollution Control Act (33
U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the Safe Drinking
Water Act (42 U.S.C. ss. 300 et seq.) and the Occupational Safety and Health Act
(29 U.S.C. ss. 651 et seq.) ("OSHA"), as such laws and regulations have been or
are in the future amended or supplemented, and each similar federal, state or
local statute, and each rule and regulation promulgated under such federal,
state and local laws.
"ENVIRONMENTAL SURVEY" has the meaning given to it in SECTION 8.3.
"ERISA PLAN" means any Benefit Plan that is an "employee welfare
benefit plan," as that term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA.
"EXCHANGE AGENT" has the meaning given to it in SECTION 2.6.
"EXCHANGE RATIO" means 1.3333 (i.e., $20.00 divided by $15) shares of
the Buyer's Stock for each Company Share, subject to adjustment pursuant to
SECTION 10.1(F).
"FDIC" means the Federal Deposit Insurance Corporation.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles as recognized by the American Institute of
Certified Public Accountants, as in effect from time to time, consistently
applied and maintained on a consistent basis for a Person throughout the period
indicated and consistent with such Person's prior financial practice.
"GOVERNMENTAL AUTHORITY" means any nation, province or state, or any
political subdivision thereof, and any agency, department, natural person or
other entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, including Regulatory Authorities.
"HAZARDOUS MATERIAL" means any substance or material that either is or
contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law or is otherwise regulated under any Environmental Law, or the
presence of which in some quantity requires investigation, notification or
remediation under any Environmental Law.
"HOLDING COMPANY MERGER" has the meaning given to it in the Background
Statement hereof.
"HUDSON EMPLOYMENT AGREEMENT" means the Employment Agreement to be
entered into at or prior to Closing between the Buyer and James G. Hudson, Jr.,
substantially in the form attached hereto as EXHIBIT B.
"INDEX PERCENTAGE CHANGE" has the meaning given to it in SECTION
10.1(F).
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
know-how, trade secrets, whether patentable or unpatentable and whether or not
reduced to practice (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production process and techniques,
technical data, designs, drawings, specifications, pricing and cost information
and business and marketing plans and proposals), (e) all computer software
(including data and related documentation) and (f) all other proprietary rights.
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"KNOWLEDGE OF THE BUYER PARTIES" means the actual personal knowledge of
any of the directors and officers of the Buyer and the Buyer Bank and any of
their subsidiaries.
"KNOWLEDGE OF THE COMPANY PARTIES" means the actual personal knowledge
of any of the directors and officers of the Company and the Company Bank and any
of their subsidiaries.
"LAW" means any code, law, ordinance, rule, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, business or operations promulgated, interpreted or enforced by any
Governmental Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured or otherwise.
"LIEN" means, whether contractual or statutory, any conditional sale
agreement, participation or repurchase agreement, assignment, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) easements, restrictions of record and title exceptions that could
not reasonably be expected to have a Material Adverse Effect, and (iii) pledges
to secure deposits, Liens to secure advances from the Federal Home Loan Bank of
Atlanta and other Liens incurred in the ordinary course of the banking business.
"LITIGATION" means any action, arbitration, cause of action, complaint,
criminal prosecution, governmental investigation, hearing, or administrative or
other proceeding, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN COLLATERAL" means all of the assets, properties, businesses and
rights of every kind, nature, character and description, whether real, personal,
or mixed, tangible or intangible, accrued or contingent, owned by whomever and
wherever located, in which the Company or any of its subsidiaries has taken a
security interest with respect to, on which the Company or any of it
subsidiaries has placed a Lien with respect to, or which is otherwise used to
secure, any loan made by the Company or any of its subsidiaries or any note,
account, or other receivable payable to the Company or any of its subsidiaries.
"MAILING DATE" has the meaning given to in SECTION 2.4.
"MARKET VALUE" of the Buyer's Stock on any date shall be the closing
price of such stock on the Nasdaq National Market System (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source), or if such date is not a trading day, on the last trading day preceding
that date.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Person shall mean an event, change, or
occurrence that, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Person and its subsidiaries, taken as
a whole, or (ii) the ability of such Person to perform its obligations under
this Agreement or to consummate the Mergers or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in market interest rates, real estate markets or other
market conditions applicable to banks or thrift institutions generally, (c)
changes in GAAP or regulatory accounting principles generally applicable to
banks and their holding companies, (d) actions and omissions of a Person (or any
of its
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subsidiaries) taken with the prior informed consent of the other Person in
contemplation of the transactions contemplated hereby, and (e) the Mergers (and
the reasonable expenses incurred in connection therewith) and compliance with
the provisions of this Agreement on the operating performance of the Persons.
"MEASUREMENT PERIOD" has the meaning given to it in SECTION 10.1(F).
"MERGER CONSIDERATION" has the meaning given to it in SECTION 2.3(A).
"MERGERS" has the meaning given to it in the Background Statement
hereof.
"NO ELECTION SHARE" has the meaning given to it in SECTION 2.4.
"NORTH CAROLINA ADMINISTRATOR" means the North Carolina Administrator,
Savings Institutions Division, North Carolina Department of Commerce.
"ORDER" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Person in question or any of its subsidiaries participates in the management
(including but not limited to participating in a fiduciary capacity) and, where
required by the context, said term means the owner or operator of such facility
or property, but only with respect to such facility or property.
"PENSION PLAN" means any ERISA Plan that also is a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code or Section
3(35) of ERISA).
"PERMIT" means any approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right given by a Governmental
Authority to which any Person is a party or that is or may be binding upon or
inure to the benefit of any Person or its securities, Assets or business.
"PERSON" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a trust, a
Governmental Authority or any other legal entity.
"PER SHARE CASH CONSIDERATION" has the meaning given to it in SECTION
2.3.
"PER SHARE STOCK CONSIDERATION" has the meaning given to in SECTION
2.3.
"PROXY STATEMENT" has the meaning given to it in SECTION 5.17.
"REAL PROPERTY" means all of the land, buildings, premises, or other
real property in which a Person has ownership or possessory rights, whether by
title, lease or otherwise (including banking facilities and any foreclosed
properties). Notwithstanding the foregoing, "Real Property", as used with
respect to any of the Company and its subsidiaries, does not include any Loan
Collateral not yet foreclosed and conveyed to the Company or one of its
subsidiaries as of the date with respect to which the term "Real Property" is
being used.
"REGISTRATION STATEMENT" has the meaning given to it in SECTION 5.17.
"REGULATORY AUTHORITIES" means, collectively, the Federal Trade
Commission, the United States Department of Justice, the Federal Reserve Board,
the North Carolina Administrator, the North Carolina Commissioner of Banks, the
FDIC, the National Association of Securities Dealers and the SEC, and all other
regulatory agencies having jurisdiction over the Parties and their respective
subsidiaries.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights
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convertible into or exchangeable for, shares of the capital stock of a Person or
by which a Person is or may be bound to issue additional shares of its capital
stock or other Rights.
"SEC" means the Securities and Exchange Commission.
"SNL INDEX" has the meaning given to it in SECTION 10.1(F).
"SECURITIES DOCUMENTS" means all forms, proxy statements, registration
statements, reports, schedules and other documents filed or required to be filed
by a Person or any of its subsidiaries with any Regulatory Authority pursuant to
the Securities Laws.
"SECURITIES LAWS" means the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Trust Indenture Act of 1939, each as amended, and the
rules and regulations of any Governmental Authority promulgated under each.
"SHAREHOLDER MEETING" has the meaning given to it in SECTION 5.17.
"STOCK ADJUSTMENT" has the meaning given to it in SECTION 2.3(D).
"STOCK DESIGNEE SHARES" has the meaning given to it in SECTION 2.4.
"STOCK ELECTION SHARES" has the meaning given to it in SECTION 2.4.
"SURVIVING BANK" has the meaning given to it in SECTION 3.1.
"SURVIVING HOLDING COMPANY" has the meaning given to it in SECTION
2.1(A).
"TAX" or "TAXES" means any and all taxes, charges, fees, levies or
other assessments (whether federal, state, local or foreign), including without
limitation income, gross receipts, excise, property, estate, sales, use, value
added, transfer, license, payroll, franchise, ad valorem, withholding, Social
Security and unemployment taxes, as well as any interest, penalties and other
additions to such taxes, charges, fees, levies or other assessments.
"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
"TAXABLE PERIOD" shall mean any period prescribed by any Governmental
Authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is required
to be filed or Tax is required to be paid.
"TOTAL CASH MERGER CONSIDERATION" has the meaning given to it in
SECTION 2.3.
"TOTAL STOCK MERGER CONSIDERATION" has the meaning given to it in
SECTION 2.3.
ARTICLE II
THE HOLDING COMPANY MERGER;
CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1. THE HOLDING COMPANY MERGER.
(a) The Merger. On the terms and subject to the conditions of this
Agreement, the Plan of Merger in respect of the Holding Company Merger, which
shall be substantially in the form attached hereto as EXHIBIT A, and North
Carolina Law, the Company shall merge into the Buyer, the separate existence of
the Company shall cease, and the Buyer shall be the surviving corporation (the
"SURVIVING HOLDING COMPANY").
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(b) Governing Documents. The articles of incorporation of the
Buyer in effect at the Effective Time (as defined below) of the Holding Company
Merger shall be the articles of incorporation of the Surviving Holding Company
until further amended in accordance with applicable law. The bylaws of the Buyer
in effect at such Effective Time shall be the bylaws of the Surviving Holding
Company until further amended in accordance with applicable law.
(c) Directors and Officers. Subject to SECTION 7.2(B) and the
Hudson Employment Agreement, from and after the Effective Time of the Holding
Company Merger, until successors or additional directors are duly elected or
appointed in accordance with applicable law, (i) the directors of the Buyer at
such Effective Time shall be the directors of the Surviving Holding Company, and
(ii) the officers of the Buyer at such Effective Time shall be the officers of
the Surviving Holding Company.
(d) Approval. The parties hereto shall take and cause to be taken
all action necessary to approve and authorize (i) this Agreement and the other
documents contemplated hereby (including without limitation the above-described
Plan of Merger) and (ii) the Holding Company Merger and the other transactions
contemplated hereby.
(e) Effective Time. The Holding Company Merger shall become
effective on the date and at the time of filing of the related Articles of
Merger, in the form required by and executed in accordance with the laws of
North Carolina, or at such other time specified therein. The date and time when
the Holding Company Merger shall become effective is herein referred to as the
"EFFECTIVE TIME" of the Holding Company Merger.
(f) Filing of Articles of Merger. At the Closing, the Buyer and
the Company shall cause the Articles of Merger (containing the above-referenced
Plan of Merger) in respect of the Holding Company Merger to be executed and
filed with the Secretary of State of North Carolina, as required by the laws of
North Carolina, and shall take any and all other actions and do any and all
other things to cause the Holding Company Merger to become effective as
contemplated hereby.
2.2 COMPANY SHARES.
(a) Each share of the Company's capital stock (the "COMPANY
SHARES"), no par value per share, issued and outstanding to Persons, except for
Company Shares held by the Buyer and its Affiliates immediately prior to the
Effective Time of the Holding Company Merger (other than shares held in a
fiduciary capacity or as a result of debts previously contracted), shall, by
virtue of the Holding Company Merger and without any action on the part of the
holders thereof, be canceled and converted at such Effective Time into the right
to receive the Merger Consideration (as defined below) in accordance with this
ARTICLE II.
(b) Each Company Share, by virtue of the Holding Company Merger
and without any action on the part of the holder thereof, shall at the Effective
Time of the Holding Company Merger no longer be outstanding, shall be canceled
and retired and shall cease to exist, and each holder of certificates
representing any such Company Shares shall thereafter cease to have any rights
with respect to such shares, except for the right to receive the Merger
Consideration.
(c) Trustees of the Home Savings, Inc. SSB Employee Stock
Ownership Plan will elect to receive Per Share Cash Consideration for the number
of unallocated Company Shares held by such plan necessary to produce an amount
of cash sufficient to repay the Company's loan to such Plan. Remaining
unallocated Company Shares held by such plan will be allocated to participants
on a pro rata basis in accordance with their respective account balances. The
Company Shares held by such plan will be distributed to participants upon a
termination of such plan following the Effective Time in accordance with the
terms of the plan.
(d) Each Company Share in The Home Savings, Inc. SSB Management
Recognition Plan and Trust at the Effective Time that has not been granted to a
participant in such plan shall be canceled without any conversion thereof, and
no payment shall be made with respect thereto.
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(e) Notwithstanding anything contained in this SECTION 2.2 to the
contrary, any Company Shares held in the treasury of the Company immediately
prior to the Effective Time of the Holding Company Merger shall be canceled
without any conversion thereof, and no payment shall be made with respect
thereto.
(f) From and after the Effective Time of the Holding Company
Merger, there shall be no transfers on the stock transfer books of the Surviving
Holding Company of the Company Shares that were outstanding immediately prior to
the Effective Time of the Holding Company Merger. If, after such Effective Time,
certificates representing Company Shares are presented to the Surviving Holding
Company, they shall be canceled, and exchanged and converted into the Merger
Consideration as provided for herein.
2.3 MERGER CONSIDERATION.
(a) Subject to SECTIONS 2.2, 2.4, 2.5 and 2.6, at the Effective
Time of the Holding Company Merger, the holders of Company Shares outstanding at
such Effective Time, other than the Buyer and its Affiliates, shall be entitled
to receive, and the Buyer shall pay or issue and deliver, in the aggregate, (i)
a number of shares of the Buyer's Stock for each Company Share based on the
Exchange Ratio (the "PER SHARE STOCK CONSIDERATION"), or (ii) an amount equal to
$20.00 in cash for each such Company Share (the "PER SHARE CASH CONSIDERATION").
The foregoing consideration, collectively and in the aggregate, shall be
referred to herein as the "MERGER CONSIDERATION."
(b) Subject to the allocation provisions of SECTION 2.4, each
holder of a Company Share may elect to receive the Per Share Stock Consideration
or the Per Share Cash Consideration for each such Company Share; provided,
however, that the aggregate number of Company Shares with respect to which the
Per Share Stock Consideration shall be paid as the Merger Consideration shall be
439,819 shares (subject to equitable adjustment for any stock dividend, stock
split or other stock payment by the Company after the date hereof but prior to
the Effective Time), subject to adjustment so that the amount of the Merger
Consideration paid in shares of the Buyer's Stock shall not be less than the
amount (currently 40%) necessary to qualify the Holding Company Merger as a
reorganization under Section 368 of the Code, as determined by the Company at or
immediately after the Effective Time upon consultation with its independent
accountants and counsel. Such amount of the Buyer's Stock paid as Merger
Consideration shall be referred to in this Agreement as the "TOTAL STOCK MERGER
CONSIDERATION," and such amount of cash paid as Merger Consideration shall be
referred to as the "TOTAL CASH MERGER CONSIDERATION."
(c) No fractional shares of the Buyer's Stock shall be issued or
delivered in connection with the Holding Company Merger. In lieu of any such
fractional share, subject to SECTION 2.5, each holder of Company Shares who
would otherwise have been entitled to a fraction of a share of the Buyer's Stock
shall be entitled to receive cash (without interest) in an amount equal to such
fraction multiplied by the Market Value of one share of the Buyer's stock on the
trading day immediately prior to the Effective Time.
(d) In the event the Buyer changes the number of shares of the
Buyer's Stock issued and outstanding prior to the Effective Time of the Holding
Company Merger as a result of a stock split, stock dividend or similar
recapitalization with respect to such stock (each a "STOCK ADJUSTMENT") and the
record date therefor (in the case of a stock dividend) or the effective date
thereof (in the case of a stock split or similar recapitalization for which a
record date is not established) shall be prior to such Effective Time, the
Exchange Ratio shall be equitably adjusted to reflect such change.
2.4 ELECTION AND ALLOCATION PROCEDURES.
(a) Election.
(i) An election form ("ELECTION FORM"), together with the
other transmittal materials described in SECTION 2.6, shall be mailed
as soon as reasonably practicable after the Effective Time to each
holder of Company Shares of record at the Effective Time. Such date of
mailing shall be referred to hereinafter as the "MAILING DATE." Each
Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instruction) of Company
Shares to elect to receive the Per Share Cash Consideration with
respect to all or any of such holder's Company Shares (shares as to
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which the election is made, "CASH ELECTION SHARES"). In addition, all
Dissenting Shares shall be deemed Cash Election Shares. The "CASH
ELECTION AMOUNT" shall be equal to the Per Share Cash Consideration
multiplied by the total number of Cash Election Shares. All Company
Shares other than the Cash Election Shares and the No Election Shares
(as defined below) shall be referred to herein as the "STOCK ELECTION
SHARES"
(ii) Any Company Share with respect to which the holder
(or the beneficial owner, as the case may be) shall not have submitted
to the Exchange Agent an effective, properly completed Election Form on
or before a date after the Effective Date to be agreed upon by the
parties hereto (which date will be set forth on the Election Form), but
in any event not earlier than the 20th Business Day after the Mailing
Date (such deadline, the "ELECTION DEADLINE"), shall be converted
either into the Per Share Stock Consideration or the Per Share Cash
Consideration as set forth in SECTION 2.4(B) (such shares, the "NO
ELECTION SHARES"), with the exception that No Election Shares held by a
holder of less than 100 Company Shares shall be deemed to be Cash
Election Shares.
(iii) The Buyer shall make available one or more Election
Forms as may be reasonably requested by all persons who become holders
(or beneficial owners) of Company Shares between the Mailing Date and
the close of business on the business day prior to the Election
Deadline, and the Buyer shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein.
(iv) Any such election shall have been properly made only
if the Exchange Agent shall have actually received a properly completed
Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more
certificates (or customary affidavits and indemnification regarding the
loss or destruction of such certificates or the guaranteed delivery of
such certificates) representing all Company Shares covered by such
Election Form, together with duly executed transmittal materials
included with the Election Form. Any Election Form may be revoked or
changed by the person submitting such Election Form (or the beneficial
owner of the shares covered by such Election Form through appropriate
and customary documentation and instruction) at or prior to the
Election Deadline. In the event an Election Form is revoked prior to
the Election Deadline and no other valid election is made, the Company
Shares represented by such Election Form shall be No Election Shares.
Subject to the terms of this Agreement and of the Election Form, the
Exchange Agent shall have reasonable discretion to determine whether
any election, revocation or change has been properly or timely made and
to disregard immaterial defects in the Election Forms, and any good
faith decisions of the Exchange Agent regarding such matters shall be
binding and conclusive. Neither the Buyer nor the Exchange Agent shall
be under any obligation to notify any person of any defect in an
Election Form.
(b) Allocation. As soon as reasonably practicable after the
Effective Time, the Buyer shall cause the Exchange Agent to allocate the Total
Cash Merger Consideration and Total Stock Merger Consideration among the holders
of Company Shares, which shall be effected by the Exchange Agent as follows:
(i) If the Total Cash Merger Consideration is greater
than the Cash Election Amount, then:
(A) each Cash Election Share shall be converted
into the right to receive an amount of cash equal to the Per
Share Cash Consideration;
(B) the Exchange Agent will select, on a pro
rata basis, first from among the holders of No Election Shares
and then, if necessary, from among the holders of Stock
Election Shares, a sufficient number of such shares ("CASH
DESIGNEE SHARES") such that the sum of Cash Designee Shares
and Cash Election Shares multiplied by the Per Share Cash
Consideration equals as closely as practicable the Total Cash
Merger Consideration. Each Cash Designee Share shall be
converted into the right to receive the Per Share Cash
Consideration; and
(C) each remaining unconverted Company Share
(after application of subsections (A) and (B) above) shall be
converted into the right to receive the Per Share Stock
Consideration.
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(ii) If the Total Cash Merger Consideration is less than
the Cash Election Amount then:
(A) each Stock Election Share and each No
Election Share (other than any No Election Shares held by
holders of less than 100 Company Shares, which shares are
automatically deemed Cash Election Shares) shall be converted
into the right to receive the Per Share Stock Consideration;
(B) the Exchange Agent will select, on a pro
rata basis from among the holders of Cash Election Shares
(other than holders of No Election Shares holding less than
100 Company Shares), a sufficient number of such shares
("STOCK DESIGNEE SHARES") such that the number of such Stock
Designee Shares multiplied by the Per Share Cash Consideration
equals as closely as practicable the difference between the
Cash Election Amount and the Total Cash Merger Consideration.
The Stock Designee Shares shall be converted into the right to
receive the Per Share Stock Consideration; and
(C) each remaining unconverted Company Share
(after application of subsections (A) and (B) above) shall be
converted into the right to receive an amount of cash equal to
the Per Share Cash Consideration.
(iii) In the event that the Exchange Agent is required
pursuant to this SECTION 2.4 to designate from among all Stock Election
Shares the Cash Designee Shares to receive the Per Share Cash
Consideration, each holder of Stock Election Shares shall be allocated
a pro rata portion of the total Cash Designee Shares. Such pro ration
shall reflect the proportion that the number of Stock Election Shares
of each holder of Stock Election Shares bears to the total number of
Stock Election Shares.
(iv) In the event the Exchange Agent is required pursuant
to this SECTION 2.4 to designate from among all holders of Cash
Election Shares the Stock Designee Shares to receive the Per Share
Stock Consideration, each holder of Cash Election Shares (other than
holders of No Election Shares holding less than 100 Company Shares)
shall be allocated a pro rata portion of the total Stock Designee
Shares. Such pro ration shall reflect the proportion that the number of
Cash Election Shares of each holder of Cash Election Shares bears to
the total number of Cash Election Shares.
2.5 CLOSING PAYMENT. At the Effective Time of the Holding Company
Merger or as soon thereafter as is reasonably practicable, the holders of the
Company Shares shall surrender the certificates representing such shares to the
Buyer and in exchange therefor, the Buyer shall issue and deliver to each such
holder certificates representing the number of shares of the Buyer's Stock to
which it is entitled hereunder and cash payments to which such holder is
entitled hereunder (including, with respect to any fractional shares thereof).
The Buyer shall not be obligated to deliver any of such shares of the Buyer's
Stock or cash payments until such holder surrenders the certificates
representing such holder's Company Shares.
2.6 EXCHANGE PROCEDURES.
(a) After the Effective Time of the Holding Company Merger, the
Buyer shall cause the exchange agent selected by the Buyer (the "EXCHANGE
AGENT"), subject to the reasonable satisfaction of the Company and which may be
an Affiliate of the Buyer, to mail to the shareholders of the Company of record
at the Effective Time the Election Form, as required under SECTION 2.4, and
other appropriate transmittal materials (which shall specify that delivery shall
be effected, and risk of loss and title to the certificates representing shares
of the Company prior to such Effective Time shall pass, only upon proper
delivery of such certificates to the Exchange Agent). After such Effective Time,
each holder of Company Shares issued and outstanding at such Effective Time
(other than any of such shares held by the Buyer or any Affiliate thereof or
canceled pursuant to SECTION 2.2(E)) shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the number of shares of the
Buyer's Stock and the cash to which such holder is entitled hereunder (including
any cash payments to which such holder is entitled hereunder in respect of
rights to receive fractional shares). The Buyer shall not be obligated to
deliver any of such payments in cash or stock until such holder surrenders the
certificate(s) representing such holder's Company Shares. The certificate(s) so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding,
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neither the Buyer nor the Exchange Agent shall be liable to any holder of
Company Shares for any amounts paid or properly delivered in good faith to a
public official pursuant to any applicable abandoned property Law.
(b) To the extent permitted by applicable Law, former shareholders
of record of the Company shall be entitled to vote after the Total Stock Merger
Consideration has been allocated pursuant to the provisions of this Article at
any meeting of the Buyer's shareholders the number of whole shares of the
Buyer's Stock into which their respective Company Shares are converted pursuant
to the Holding Company Merger, regardless of whether such holders have exchanged
their certificates representing such Company Shares for certificates
representing the Buyer's Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by the Buyer on
the Buyer's Stock, the record date for which is at or after the Effective Time
of the Holding Company Merger, the declaration shall include dividends or other
distributions on all shares of the Buyer's Stock issuable pursuant to this
Agreement, but beginning at such Effective Time no dividend or other
distribution payable to the holders of record of the Buyer's Stock as of any
time subsequent to such Effective Time of the Holding Company Merger shall be
delivered to the holder of any certificate representing any of the Company
Shares issued and outstanding at such Effective Time until such holder
surrenders such certificate for exchange as provided in this SECTION 2.6.
However, upon surrender of such certificate(s), both the certificate(s)
representing the shares of the Buyer's Stock to which such holder is entitled
and any such undelivered dividends (without any interest) shall be delivered and
paid with respect to each share represented by such certificates.
2.7 DISSENTING SHARES. Notwithstanding any other provision of this
Agreement to the contrary, Company Shares that are outstanding immediately prior
to the Effective Time and that are held by stockholders who shall have not voted
in favor of the Merger or consented thereto in writing and who properly shall
have demanded appraisal for such shares in accordance with North Carolina Law
(collectively, the "DISSENTING SHARES") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders instead shall
be entitled to receive payment of the appraised value of such shares held by
them in accordance with the provisions of North Carolina Law, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to appraisal of
such shares under North Carolina Law shall thereupon be deemed to have been
converted into and to have become exchangeable, as of the Effective Time, for
the right to receive, without any interest thereon, the Merger Consideration
upon surrender in the manner provided in SECTION 2.6 of the certificate or
certificates that, immediately prior to the Effective Time, evidenced such
shares. The Company shall give the Buyer (i) prompt notice of any written
demands for appraisal of any shares of Company Shares, attempted withdrawals of
such demands for appraisal or any other instruments served pursuant to North
Carolina Law and received by the Company relating to shareholders' rights of
appraisal, and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands under North Carolina Law consistent with the
obligations of the Company thereunder. The Company shall not, except with the
prior written consent of the Buyer, (x) make any payment with respect to such
demand, (y) offer to settle or settle any demand for appraisal or (z) waive any
failure to timely deliver a written demand for appraisal or timely take any
other action to perfect appraisal rights in accordance with North Carolina Law.
2.8 COMPANY STOCK OPTIONS.
(a) At the Effective Time of the Holding Company Merger, each
option or other right to purchase Company Shares pursuant to stock options or
warrants ("COMPANY OPTIONS") granted by the Company under its Benefit Plans that
are outstanding at the Effective Time of the Holding Company Merger shall be
converted into and become rights with respect to the Buyer's Stock, and the
Buyer shall assume each Company Option, in accordance with the terms of the
applicable Benefit Plan of the Company and the stock option or warrant agreement
by which such Company Option is evidenced, except that from and after such
Effective Time: (i) the Buyer and its compensation committee shall be
substituted for the Company and the compensation committee of its board of
directors (including if applicable, the entire Board of Directors of the
Company) administering such Benefit Plan or Plans of the Company; (ii) the
Company Options assumed by the Buyer may be exercised solely for shares of the
Buyer's Stock; (iii) the number of shares of the Buyer's Stock subject to such
converted Company Options shall be equal to the number of Company Shares subject
to such Company Options immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded to the next highest share; and (iv) the per-share
exercise price under each such converted Company Option shall be adjusted by
dividing the exercise price of the Company Option immediately prior to the
Effective Time by the Exchange Ratio, rounded down to the nearest cent.
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(b) In addition, notwithstanding clauses (ii), (iii) and (iv) of
SECTION 2.8(A), each assumed Company Option that is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code.
(c) As soon as practicable after the Effective Time of the Holding
Company Merger, the Buyer shall deliver to the participants in each Benefit Plan
of the Company who remain employed by the Buyer an appropriate notice setting
forth such participant's rights pursuant thereto, and the grants pursuant to
such Benefit Plan shall continue in effect on substantially the same terms and
conditions (subject to the adjustments required by the above subsection (a)
after giving effect to the Holding Company Merger), and the Buyer shall comply
with the terms of each Benefit Plan of the Company to ensure, to the extent
required by, and subject to the provisions of, such Benefit Plan, that the
Company Options that qualified as incentive stock options prior to the Effective
Time of the Holding Company Merger continue to qualify as incentive stock
options after such Effective Time. At or prior to the Effective Time of the
Holding Company Merger, and at all times thereafter, the Buyer shall have
reserved a sufficient number of shares of the Buyer's Stock for issuance upon
exercise of the Company Options assumed by it in accordance with this SECTION
2.8. The Buyer agrees to file as promptly as practicable, and in no event later
than 60 days, after the Effective Time, a registration statement on Form S-8
covering the shares of the Buyer's Stock issuable pursuant to such options.
(d) Following the Effective Time of the Holding Company Merger, in
the event of any Stock Adjustment by the Buyer, or any consolidation or merger
of the Buyer with or into any other entity, or the sale or transfer or all or
substantially all of the Buyer's assets, the rights of the holders of
outstanding Company Options shall be appropriately adjusted so that such holders
will be in the same position as if their options had been exercised immediately
before such corporate action or transaction.
ARTICLE III
THE BANK MERGER;
CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 THE BANK MERGER. After the consummation of the Holding Company
Merger, it expected that the Company Bank shall merge and combine into the Buyer
Bank, the separate existence of the Company Bank shall cease, and the Buyer Bank
shall be the surviving corporation (the "SURVIVING BANK"). The date and time
when the Bank Merger shall become effective is herein referred to as the
"EFFECTIVE TIME" of the Bank Merger.
3.2 COMPANY BANK SHARES.
(a) Each share of the Company Bank's capital stock (the "COMPANY
BANK SHARES"), no par value, issued and outstanding to Persons immediately prior
to the Effective Time of the Bank Merger shall, by virtue of the Bank Merger and
without any action on the part of the holder thereof, be canceled and retired
and shall cease to exist, and each holder of certificates representing any such
shares shall thereafter cease to have any rights with respect to such shares.
(b) From and after the Effective Time of the Bank Merger, there
shall be no transfers on the stock transfer books of the Surviving Bank of the
Company Bank Shares that were outstanding immediately prior to the Effective
Time of the Bank Merger. If, after the Effective Time of the Bank Merger,
certificates representing the Company Bank Shares are presented to the Surviving
Bank, they shall be canceled.
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ARTICLE IV
THE CLOSING
4.1 CLOSING. The Closing of the Holding Company Merger shall take
place at the offices of Robinson, Bradshaw & Hinson, P.A. in Charlotte, North
Carolina as soon as reasonably practical after all conditions to Closing have
been met, or on such other date or at such other location as the Buyer and the
Company may mutually agree (such date, the "CLOSING DATE"). At the Closing, the
parties will execute, deliver and file all documents necessary to effect the
transactions contemplated herein, including the Articles of Merger in respect of
both Mergers.
4.2 DELIVERIES BY THE COMPANY. At or by the Closing, the Company
shall have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.3;
(b) the Hudson Employment Agreement; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Buyer, or as may reasonably be requested by the
Buyer at or prior to the Closing.
4.3 DELIVERIES BY THE BUYER. At or by the Closing, the Buyer shall
have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.2;
(b) the Hudson Employment Agreement; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Company, or as may reasonably be requested by
the Company at or prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company's Disclosure Schedule, the Company
represents and warrants to the Buyer that the statements contained in this
ARTICLE V are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
5.1 ORGANIZATION, STANDING AND POWER.
(a) The Company is a bank holding company registered with the
Board of Governors of the Federal Reserve System under the Bank Holding Company
Act of 1956, as amended, and the Company Bank is a stock savings bank under
North Carolina Law. The Company Bank is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations thereunder, and
subject to dollar limits under such Act, all deposits in the Company Bank are
fully insured by the FDIC to the extent permitted by Law.
(b) Each of the Company and its subsidiaries is either a bank or a
corporation, duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or organization. Each of the
Company and its subsidiaries has the corporate or other applicable power and
authority to carry on, in all Material respects, its businesses as now conducted
and to own, lease and operate its Assets. Each of the Company and its
subsidiaries is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
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business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, the
Company has the corporate power and authority necessary to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of the Company's
obligations under this Agreement and the consummation of the transactions
contemplated hereby, including the Mergers, have been duly and validly
authorized by all necessary corporate action (and by Closing, all such
shareholder action) in respect thereof on the part of the Company. This
Agreement represents a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company Parties of the transactions
contemplated hereby, nor compliance by the Company Parties with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Company Parties' articles of incorporation, charter, bylaws or any other
similar governing document, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of the Company or any of its subsidiaries under, any Contract or Permit of
the Company or any of its subsidiaries, except as could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) subject to
obtaining the requisite Consents referred to in SECTION 9.1(B) of this
Agreement, violate any Law or Order applicable to the Company or any of its
subsidiaries or any of their Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws and banking Regulatory Authorities, no notice to, filing
with, or Consent of, any Governmental Authority is necessary for the
consummation by the Company and the Company Bank of the Mergers and the other
transactions contemplated in this Agreement.
5.3 CAPITAL STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of (a)
20,000,000 shares of common stock, no par value per share, of which 1,105,019
shares are issued and outstanding as of the date of this Agreement, and (b)
5,000,000 shares of Preferred Stock, no par value per share, none of which is
issued and outstanding, and except for such 1,105,019 shares of common stock,
there are no shares of capital stock or other equity securities of the Company
outstanding. The authorized capital stock of the Company Bank consists of
100,000 shares of common stock, no par value per share, of which 1,000 shares
are issued and outstanding as of the date of this Agreement and are owned and
held by the Company, and except for such 1,000 shares of common stock, there are
no shares of capital stock or other equity securities of the Company Bank
outstanding. SECTION 5.3 of the Company's Disclosure Schedule lists all of the
Company's direct and indirect subsidiaries other than the Company Bank as of the
date of this Agreement. The Company or one of its subsidiaries owns all of the
issued and outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of
the Company and its subsidiaries are duly and validly issued and outstanding and
are fully paid and nonassessable. None of the outstanding shares of capital
stock of the Company or any of its subsidiaries has been issued in violation of
any preemptive rights of the current or past shareholders of such Persons.
Except as set forth on SECTION 5.3 of the Company's Disclosure Schedule, no
equity securities of any subsidiary of the Company are or may become required to
be issued (other than to the Company or any of its subsidiaries) by reason of
any Rights, and there are no Contracts by which any subsidiary of the Company is
bound to issue (other than to the Company or subsidiary of the Company)
additional shares of its capital stock or Rights or by which the Company or any
of its subsidiaries is or may be bound to transfer any shares of the capital
stock of any subsidiary of the Company (other than to the Company or any of its
subsidiaries). There are no equity securities reserved for any of the foregoing
purposes, and there are no Contracts
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relating to the rights of the Company or any of its subsidiaries to vote or to
dispose of any shares of the capital stock of any subsidiary of the Company.
5.4 SEC FILINGS; COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed and made available to the Buyer all
forms, reports, and documents required to be filed by the Company with the SEC
since December 31, 1996 (collectively, the "COMPANY SEC REPORTS"). The Company
SEC Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the Securities Laws, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the Company Financial Statements (including, in each
case, any related notes) contained in the Company SEC Reports, including any
Company SEC Reports filed after the date of this Agreement until the Effective
Time, complied or will comply as to form in all Material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared or will be prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements, or, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC), and fairly presented or will fairly
present the consolidated financial position of the Company and its subsidiaries
as at the respective dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments that were not or are not expected to be Material in amount or effect
(except as may be indicated in such financial statements or notes thereto).
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Company nor
any of its subsidiaries has any Liabilities that could reasonably be expected to
have a Material Adverse Effect on the Company, except Liabilities that are
accrued or reserved against in the consolidated balance sheets of the Company as
of June 30, 2000, included in the Company Financial Statements or reflected in
the notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to June 30, 2000. Neither the Company nor any of its
subsidiaries has incurred or paid any Liability since June 30, 2000, except for
(a) such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and (b) Liabilities that could not
reasonably be expected to have a Material Adverse Effect on the Company. No
facts or circumstances exist that could reasonably be expected to serve as the
basis for any other Liabilities of the Company or any of its subsidiaries,
except as could not reasonably be expected to have a Material Adverse Effect on
the Company.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 2000, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Company, and
(ii) each of the Company and its subsidiaries has conducted in all Material
respects its respective businesses in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
5.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of
Company and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before June 30, 2000, and, to the Knowledge of the Company Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Company, except to the extent reserved against in the
Company Financial Statements dated prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
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(b) None of the Company or its subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Material Taxes due or to become due
for any of the Company or its subsidiaries for the period or periods through and
including the date of the respective Company Financial Statements has been made
and is reflected on such Company Financial Statements.
(d) Each of the Company and its subsidiaries is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and such omissions as could not reasonably be
expected to have a Material Adverse Effect on the Company.
(e) None of the Company and its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement, or other arrangement that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G or 162(m) of the Internal
Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any of
the Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Company and its subsidiaries that occurred
during any Taxable Period in which any of the Company and its subsidiaries has
incurred a net operating loss that carries over to another Taxable Period.
(h) Neither the Company nor any of its subsidiaries has filed any
consent under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with
respect to Taxes will be made without the prior consent of the Buyer, which
consent will not be unreasonably withheld.
(j) Neither the Company nor any of its subsidiaries has or has had
a permanent establishment in any foreign country, as defined in any applicable
tax treaty or convention between the United States and such foreign country.
5.8 ASSETS. Each of the Company and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for Liens to secure public deposits in the ordinary course of
business consistent with past practice. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company, all tangible
properties used in the businesses of the Company and its subsidiaries are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with each of their past practices. Except
as could not reasonably be expected to have a Material Adverse Effect on the
Company, all Material Assets held under leases or subleases by any of the
Company and its subsidiaries are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of specific performance, injunctive relief and other equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. Each of the
Company and its subsidiaries currently maintain insurance in amounts, scope, and
coverage reasonably necessary for their operations. None of the Company or its
subsidiaries has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be increased in any Material respect. The Assets of the Company and its
subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
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5.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by
the Company or any of its subsidiaries (whether owned of record or beneficially)
are held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for those Liens to secure
public deposits in the ordinary course of business consistent with past practice
and Liens that could not reasonably be expected to have a Material Adverse
Effect on the Company. There are no voting trusts or other agreements or
undertakings to which the Company or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since June 30, 2000, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Company and its subsidiaries, taken as a whole.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Company Parties, each of the Company
and its subsidiaries, its Participation Facilities, and its Loan Collateral are,
and have been, in compliance with all Environmental Laws, except those
violations that could not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) To the Knowledge of the Company Parties, there is no
Litigation pending or threatened before any court, governmental agency, or
authority, or other forum in which any of the Company and its subsidiaries or
any of its Participation Facilities has been or, with respect to threatened
Litigation, may reasonably be expected to be named as a defendant (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, or involving a site owned, leased, or
operated by the Company or any of its subsidiaries or any of its Participation
Facilities, except for such Litigation pending or threatened that could not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) To the Knowledge of the Company Parties, there is no
Litigation pending or threatened before any court, governmental agency or
authority or other forum in which any of its Loan Collateral (or the Company or
any of its subsidiaries in respect of such Loan Collateral) has been or, with
respect to threatened Litigation, may reasonably be expected to be named as a
defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving Loan Collateral, except for such
Litigation pending or threatened that is could not reasonably be expected to
have a Material Adverse Effect on the Company.
(d) To the Knowledge of the Company Parties, no facts exist that
provide a reasonable basis for any Litigation of a type described in subsections
(b) or (c), except such as could not reasonably be expected to have a Material
Adverse Effect on the Company.
(e) To the Knowledge of the Company Parties, during and prior to
the period of (i) any of the Company's or its subsidiaries' ownership or
operation of any of their respective current properties, (ii) any of the
Company's or its subsidiaries' participation in the management of any
Participation Facility, or (iii) any of the Company's or subsidiaries' holding
of a security interest in Loan Collateral, there have been no releases of
Hazardous Material in, on, under, or affecting (or potentially affecting) such
properties, except such as could not reasonably be expected to have a Material
Adverse Effect on the Company.
5.11 COMPLIANCE WITH LAWS. Each of the Company and its subsidiaries
has in effect all Permits necessary for it to own, lease, or operate its
Material Assets and to carry on, in all Material respects, its business as now
conducted, except for those Permits the absence of which could not reasonably be
expected to have a Material Adverse Effect on the Company, and there has
occurred no Default under any such Permit, other than Defaults that could not
reasonably be expected to have a Material Adverse Effect on the Company. None of
the Company or its subsidiaries: (a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting its business, except
for violations that could not reasonably be expected to have a Material Adverse
Effect on the Company (provided that this clause (a) shall not apply to
Environmental Laws, which are covered in SECTION 5.10 above); and (b) has
received any notification or communication from any agency or department of
federal, state, or local government or any Regulatory Authority or the staff
thereof (i) asserting that any of the Company and its
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subsidiaries is not in compliance with any of the Laws or Orders that such
governmental authority or Regulatory Authority enforces, except where such
noncompliance could not reasonably be expected to have a Material Adverse Effect
on the Company, (ii) threatening to revoke any Permits, except where the
revocation of which could not reasonably be expected to have a Material Adverse
Effect on the Company, or (iii) requiring the Company or any of its subsidiaries
(x) to enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or (y) to
adopt any board or directors resolution or similar undertaking that restricts
Materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
5.12 LABOR RELATIONS. Neither the Company nor any of its
subsidiaries is the subject of any Litigation asserting that it has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state Law) or seeking to compel it to bargain with any labor
organization as to wages or conditions of employment, nor is any of them a party
to or bound by any collective bargaining agreement, Contract, or other agreement
or understanding with a labor union or labor organization, nor is there any
strike or other labor dispute involving any of them, pending or threatened, or
to the Knowledge of the Company Parties, is there any activity involving any of
the Company's or its subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) The Company has made available to the Buyer prior to the
execution of this Agreement correct and complete copies in each case of all
Material Company Benefits Plans.
(b) All Company Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, except as could not reasonably be expected to have a Material Adverse
Effect on the Company.
(c) Neither the Company nor any of its subsidiaries has an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3)and 3(37)(A)). Each
"employee pension benefit plan," as defined in Section 3(2) of ERISA, ever
maintained by the Company or its subsidiaries that was intended to qualify under
Section 401(a) of the Internal Revenue Code and with respect to which the
Company or any of its subsidiaries has any Liability, is disclosed as such in
SECTION 5.13 of the Company's Disclosure Schedule.
(d) The Company has made available to the Buyer prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Company Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Company Benefit Plans or amendments, all
determination letters, Material rulings, Material opinion letters, Material
information letters, or Material advisory opinions issued by the Internal
Revenue Service, the United States Department of Labor, or the Pension Benefit
Guaranty Corporation after December 31, 1994, (iii) annual reports or returns,
audited or unaudited financial statements, actuarial valuations and reports, and
summary annual reports prepared for any Company Benefit Plan with respect to the
most recent plan year, and (iv) the most recent summary plan descriptions and
any Material modifications thereto.
(e) Each Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Company Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Company ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and the Company is
not aware of any circumstance that will or could reasonably be expected to
result in revocation of such exemption. With respect to each such Company
Benefit Plan, to the Knowledge of the Company Parties, no event has occurred
that will or could reasonably be expected to give rise to a loss of any intended
Tax consequences under the Internal Revenue Code or to any Tax under Section 511
of the Internal Revenue Code that could reasonably be expected to have a
Material Adverse Effect on the Company. There is no Material Litigation pending
or, to the Knowledge of the Company Parties, threatened relating to any Company
ERISA Plan.
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(f) Neither the Company nor any of its subsidiaries has engaged in
a transaction with respect to any Company Benefit Plan that, assuming the
Taxable Period of such transaction expired as of the date of this Agreement,
would subject the Company or any of its subsidiaries to a Material tax or
penalty imposed by either Section 4975 of the Internal Revenue Code or Section
502(i) of ERISA in amounts that could reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company or any of its subsidiaries
nor any administrator or fiduciary of any Company Benefit Plan (or any agent of
any of the foregoing) has engaged in any transaction, or acted or failed to act
in any manner, that could subject the Company or any of its subsidiaries to any
direct or indirect Liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary, or other duty under ERISA, where such Liability could
reasonably be expected to have a Material Adverse Effect on the Company. No oral
or written representation or communication with respect to any aspect of the
Company Benefit Plans has been made to employees of the Company or any of its
subsidiaries that is not in accordance with the written or otherwise preexisting
terms and provisions of such plans, except where any Liability with respect to
such representation or disclosure could not reasonably be expected to have a
Material Adverse Effect on the Company.
(g) Neither the Company nor any of its subsidiaries maintains or
has ever maintained a Company Pension Plan.
(h) Neither the Company nor any of its subsidiaries has any
Material obligation for retiree health and retiree life benefits under any of
the Company Benefit Plans other than with respect to benefit coverage mandated
by applicable Law.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Company or it subsidiaries from the Company or
any of its subsidiaries under any Company Benefit Plan or otherwise, (ii)
Materially increase any benefit otherwise payable under any Company Benefit
Plan, or (iii) result in any acceleration of the time of any Material payment or
vesting of any Material benefit.
5.14 MATERIAL CONTRACTS. None of the Company or its subsidiaries,
nor any of their respective Assets, businesses, or operations, is a party to, or
is bound or affected by, or receives benefits under, (i) any employment,
severance, termination, consulting, or retirement Contract, (ii) any Contract
relating to the borrowing of money by the Company or its subsidiaries or the
guarantee by the Company or its subsidiaries of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Reserve or Federal Home Loan
Bank advances of depository institution subsidiaries, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), and (iii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-KSB filed by the Company with
the SEC as of the date of this Agreement that has not been filed as an exhibit
to the Company's Form 10-KSB filed for the fiscal year ended June 30, 2000, or
in another SEC Document and identified to the Buyer (together with all Contracts
referred to in SECTIONS 5.8 and 5.13(A) of this Agreement, the "COMPANY
CONTRACTS"). With respect to each Company Contract: (i) the Contract is in full
force and effect; (ii) none of the Company or its subsidiaries is in Default
hereunder, other than Defaults that could not reasonably be expected to have a
Material Adverse Effect on the Company; (iii) neither the Company nor any of its
subsidiaries has repudiated or waived any Material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
the Company Parties, in Default in any respect, other than Defaults that could
not reasonably be expected to have a Material Adverse Effect on the Company, or
has repudiated or waived any Material provision thereunder. Except for Federal
Reserve and Federal Home Loan Bank advances, all of the indebtedness of the
Company and its subsidiaries for money borrowed (not including deposit
Liabilities) is prepayable at any time without penalty or premium.
5.15 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of the Company Parties, threatened against the
Company or any of its subsidiaries, or against any Asset, employee benefit plan,
interest, or right of any of them, except as could not reasonably be expected to
have a Material Adverse Effect on the Company, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any the Company or its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company. There
is no Litigation to which the Company or any of its subsidiaries is a party that
names the Company or any of its subsidiaries as a defendant or cross-defendant
and where the maximum exposure is estimated to be $25,000 or more.
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5.16 REPORTS. Since December 31, 1996, or the date of organization
if later, each of the Company and its subsidiaries has timely filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Company. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied with all applicable Laws, except noncompliance that
could not reasonably be expected to have a Material Adverse Effect on the
Company.
5.17 REGISTRATION STATEMENT; PROXY STATEMENT. Subject to the
accuracy of the representations contained in SECTION 6.17, the information
supplied by the Company or its subsidiaries for inclusion in the registration
statement (the "REGISTRATION STATEMENT") covering the shares of the Buyer's
Stock to be issued pursuant to this Agreement shall not, at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a Material fact
or omit to state any Material fact required to be stated therein or necessary to
make the statements therein not misleading. The information supplied by or on
behalf of the Company and its subsidiaries for inclusion in the proxy
statement/prospectus to be sent to the shareholders of the Company to consider,
at a special meeting (the "SHAREHOLDER MEETING"), the Holding Company Merger
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "PROXY STATEMENT") will not, on the date the Proxy Statement is
first mailed to shareholders, at the time of the Shareholder Meeting and at the
Effective Time, contain any untrue statement of a Material fact or omit to state
any Material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If at any time prior
to the Effective Time any event relating to the Company or its subsidiaries or
any of their affiliates, officers or directors should be discovered by the
Company or its subsidiaries that should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement, the Company will
promptly inform the Buyer. The Proxy Statement shall comply in all Material
respects with the requirements of the Securities Laws and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by the Buyer
and its subsidiaries that is contained or incorporated by reference in, or
furnished in connection with the preparation of, the Registration Statement or
the Proxy Statement.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of
the Company Parties none of the Company or its subsidiaries or any Affiliate
thereof has taken or agreed to take any action, that could not reasonably be
expected to (i) prevent the transactions contemplated hereby, including the
Mergers, from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) Materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in SECTION 9.1(B) of this
Agreement.
5.19 STATE TAKEOVER LAWS. Each of the Company and its subsidiaries
has taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable "moratorium," "control share," "fair price,"
"business combination," or other anti-takeover laws and regulations of the State
of North Carolina.
5.20 CHARTER PROVISIONS. Each of the Company and its subsidiaries
has taken all action so that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any of them or restrict or impair the ability of the Buyer or any of its
subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, the capital stock of the Company or any of its subsidiaries that may
be directly or indirectly acquired or controlled by it.
5.21 RECORDS. Complete and accurate copies of the articles of
incorporation or charter and bylaws of each of the Company and its subsidiaries
have been made available to the Buyer. The stock book of each such Person
contains, in all Material respects, complete and accurate records of the record
share ownership of the issued and outstanding shares of stock thereof.
5.22 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Company or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
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5.23 CERTAIN REGULATED BUSINESSES. Neither the Company nor any of
its subsidiaries is an "investment company" as defined in the Investment Company
Act of 1940, as amended, nor is it a "public utility holding company" as defined
in the Public Utility Holding Company Act of 1935, as amended.
5.24 COMMISSIONS. No broker, finder or other Person is entitled to
any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated hereby by reason of any action taken by the Company,
any of its subsidiaries or any of the Company's shareholders.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Except as set forth on the Buyer's Disclosure Schedule, the Buyer
represents and warrants to the Company that the statements contained in this
ARTICLE VI are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date.
6.1 ORGANIZATION.
(a) The Buyer is a bank holding company registered with the Board
of Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Buyer Bank is a bank under North Carolina Law. The
Buyer Bank is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and subject to dollar
limits under such Act, all deposits in the Buyer Bank are fully insured by the
FDIC to the extent permitted by Law.
(b) Each of the Buyer and the Buyer Bank is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on, in all
Material respects, its businesses as now conducted and to own, lease and operate
its Assets. Each of the Buyer and the Buyer Bank is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed.
6.2 AUTHORITY; NO CONFLICTS.
(a) Subject to required regulatory and shareholder approvals, the
Buyer has the corporate power and authority necessary to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of and performance of its
obligations under this Agreement and the other documents contemplated hereby,
and the consummation of the transactions contemplated herein, including the
Mergers, have been duly and validly authorized by all necessary corporate action
(and by Closing, all such shareholder action) in respect thereof on the part of
the Buyer. This Agreement represents a legal, valid, and binding obligation of
the Buyer, enforceable against it in accordance with its terms (except in all
cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the
Buyer, nor the consummation by the Buyer Parties of the transactions
contemplated hereby, nor compliance by the Buyer Parties with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of the Buyer Parties' articles of incorporation or bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of the Buyer or any of its subsidiaries under,
any Contract or Permit of the Buyer or any of its subsidiaries, except as could
not reasonably be expected to have a Material Adverse Effect on the Buyer, or
(iii) subject to obtaining the requisite Consents referred to in SECTION 9.1(B)
of this Agreement, violate any Law or Order applicable to the Buyer Parties or
any of their respective Assets.
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(c) Other than in connection or compliance with the provisions of
the Securities Laws and banking Regulatory Authorities, no notice to, filing
with, or Consent of, any Governmental Authority is necessary for the
consummation by the Buyer and the Buyer Bank of the Mergers and the other
transactions contemplated in this Agreement.
6.3 BUYER'S STOCK; SUBSIDIARIES.
(a) The authorized capital stock of the Buyer consists of
12,500,000 shares of common stock, no par value per share, of which 8,930,779
shares are issued and outstanding as of the date of this Agreement, and except
for such shares, there are no shares of capital stock of the Buyer outstanding.
The authorized capital stock of the Buyer Bank consists of 2,500,000 shares of
common stock, $5.00 par value per share, of which 1,134,042 shares are issued
and outstanding as of the date of this Agreement, and except for such shares,
there are no shares of capital stock of the Buyer Bank outstanding. The Buyer
owns all of the issued and outstanding shares of capital stock of the Buyer
Bank, and no shares of capital stock of the Buyer Bank are owned by any other
Person. SECTION 6.3 of the Buyer's Disclosure Schedule lists all of the Buyer's
direct and indirect subsidiaries other than the Buyer Bank as of the date of
this Agreement. The Buyer or one of its subsidiaries owns all of the issued and
outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of
the Buyer and its subsidiaries are duly and validly issued and outstanding and
are fully paid and nonassessable. Shares of the Buyer's Stock to be issued
hereunder are duly authorized and, upon issuance, will be validly issued and
outstanding and fully paid and nonassessable, free and clear of any Liens,
pledges or encumbrances. None of the outstanding shares of capital stock of the
Buyer or any of its subsidiaries has been issued in violation of any preemptive
rights of the current or past shareholders of such Persons, and none of the
shares of the Buyer's Stock to be issued pursuant to this Agreement will be
issued in violation of any preemptive rights of the current or past shareholders
of the Buyer.
6.4 SEC FILINGS; BUYER FINANCIAL STATEMENTS.
(a) The Buyer has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Buyer with the SEC since
December 31, 1996 (collectively, the "BUYER SEC REPORTS"). The Buyer SEC Reports
(i) at the time filed, complied in all Material respects with the applicable
requirements of the Securities Laws, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated in
such Buyer SEC Reports or necessary in order to make the statements in such
Buyer SEC Reports, in light of the circumstances under which they were made, not
misleading. None of the Buyer's subsidiaries is required to file any forms,
reports, or other documents with the SEC.
(b) Each of the Buyer Financial Statements (including, in each
case, any related notes) contained in the Buyer SEC Reports, including any Buyer
SEC Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Buyer and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be Material in amount or effect (except as may
be indicated in such financial statements or notes thereto).
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. Neither the Buyer nor any
of its subsidiaries has any Liabilities that could reasonably be expected to
have a Material Adverse Effect on the Buyer, except Liabilities that are accrued
or reserved against in the consolidated balance sheets of the Buyer as of
December 31, 1999, included in the Buyer Financial Statements or reflected in
the notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to December 31, 1999. Neither the Buyer nor any of its
subsidiaries has incurred or paid any Liability since December 31, 1999, except
for (a) such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and (b) Liabilities that could not
reasonably be expected to have a Material Adverse Effect on the Buyer. No facts
or circumstances exist that could reasonably be expected to serve as
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the basis for any other Liabilities of the Buyer or any of its subsidiaries,
except as could not reasonably be expected to have a Material Adverse Effect on
the Buyer.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999,
(i) there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Buyer, and (ii)
each of the Buyer and its subsidiaries has conducted, in all Material Respects,
its respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement and the transactions
contemplated hereby).
6.7 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of
the Buyer and its subsidiaries have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1999, and, to the Knowledge of the Buyer
Parties, all Tax Returns filed are complete and accurate in all Material
respects. All Tax Returns for periods ending on or before the date of the most
recent fiscal year end immediately preceding the Effective Time will be timely
filed or requests for extensions will be timely filed. All Taxes shown on filed
Tax Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that could reasonably be expected to have a
Material Adverse Effect on the Buyer, except to the extent reserved against in
the Buyer Financial Statements dated prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the Buyer or its subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Material Taxes due or to become due
for any of the Buyer or its subsidiaries for the period or periods through and
including the date of the respective Buyer Financial Statements has been made
and is reflected on such Buyer Financial Statements.
(d) Each of the Buyer and its subsidiaries is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and such omissions as could not reasonably be
expected to have a Material Adverse Effect on the Buyer.
(e) None of the Buyer and its subsidiaries has made any payments,
is obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any of
the Assets of the Buyer and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Buyer and its subsidiaries that occurred
during any Taxable Period in which any of the Buyer and its subsidiaries has
incurred a net operating loss that carries over to another Taxable Period ending
after December 31, 1999.
(h) Neither the Buyer nor any of its subsidiaries has filed any
consent under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with
respect to Taxes will be made without the prior consent of the Company, which
consent will not be unreasonably withheld.
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(j) Neither the Buyer nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
6.8 ASSETS. Each of the Buyer and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. Except as could not reasonably be expected to have a Material Adverse
Effect on the Buyer, all tangible properties used in the businesses of the Buyer
and its subsidiaries are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with each of their
past practices. Except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, all Material Assets held under leases or subleases
by any of the Buyer and its subsidiaries are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the specific performance, injunctive relief or
other equitable remedies is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force and
effect. Each of the Buyer and its subsidiaries currently maintain insurance in
amounts, scope, and coverage reasonably necessary for their operations. None of
the Buyer or its subsidiaries has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be increased in any Material respect. The Assets of the Buyer and
its subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
6.9 SECURITIES PORTFOLIO AND INVESTMENTS. All securities owned by
the Buyer or any of its subsidiaries (whether owned of record or beneficially)
are held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for those Liens to secure
public deposits in the ordinary course of business consistent with past practice
and those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Buyer. There are no voting trusts or other agreements or
undertakings to which the Buyer or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since December 31, 1999, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Buyer and its subsidiaries, taken as a whole.
6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of the Buyer Parties, each of the Buyer and
its subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(b) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Buyer and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by the
Buyer or any of its subsidiaries or any of its Participation Facilities, except
for such Litigation pending or threatened that could not reasonably be expected
to have a Material Adverse Effect on the Buyer.
(c) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of its Loan Collateral (or the Buyer or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
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(d) To the Knowledge of the Buyer Parties, no facts exist that
provide a reasonable basis for any Litigation of a type described in subsections
(b) or (c), except such could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(e) To the Knowledge of the Buyer Parties, during and prior to the
period of (i) any of the Buyer's or its subsidiaries' ownership or operation of
any of their respective current properties, (ii) any of the Buyer's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Buyer's or subsidiaries' holding of a security interest in Loan
Collateral, there have been no releases of Hazardous Material in, on, under, or
affecting (or potentially affecting) such properties, except such as could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.11 COMPLIANCE WITH LAWS. Each of the Buyer and its subsidiaries
has in effect all Permits necessary for it to own, lease, or operate its
Material Assets and to carry on, in all Material respects, its business as now
conducted, except for those Permits the absence of which could not reasonably be
expected to have a Material Adverse Effect on the Buyer, and there has occurred
no Default under any such Permit, other than Defaults that could not reasonably
be expected to have a Material Adverse Effect on the Buyer. None of the Buyer or
its subsidiaries: (a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
and (b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any of the Buyer and its subsidiaries is
not in compliance with any of the Laws or Orders that such governmental
authority or Regulatory Authority enforces, except where such noncompliance
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
(ii) threatening to revoke any Permits, except where the revocation of which
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
or (iii) requiring the Buyer or any of its subsidiaries (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any board
or directors resolution or similar undertaking that restricts Materially the
conduct of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
6.12 LABOR RELATIONS. Neither the Buyer nor any of its subsidiaries
is the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Buyer Parties, is there any activity involving any of the Buyer's or its
subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.13 EMPLOYEE BENEFIT PLANS.
(a) The Buyer has made available to the Company prior to the
execution of this Agreement correct and complete copies in each case of all
Material Buyer Benefits Plans.
(b) All Buyer Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, except
as could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(c) Neither the Buyer nor any of its subsidiaries has an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(d) Each "employee pension benefit plan," as defined in Section
3(2) of ERISA, ever maintained by the Buyer or its subsidiaries that was
intended to qualify under Section 401(a) of the Internal Revenue Code and with
respect to which the Buyer or any of its subsidiaries has any Liability, is
disclosed as such in SECTION 6.13 of the Buyer's Disclosure Schedule.
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(e) The Buyer has made available to the Company prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such Buyer
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such Buyer Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters, or Material advisory opinions issued by the Internal Revenue Service,
the United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1994, (iii) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports, and summary
annual reports prepared for any Buyer Benefit Plan with respect to the most
recent plan year, and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(f) Each Buyer ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Buyer Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Buyer ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and to the Knowledge
of the Buyer, there is no circumstance that will or could reasonably be expected
to result in revocation of such exemption. With respect to each such Buyer
Benefit Plan, to the Knowledge of the Buyer Parties, no event has occurred that
will or could reasonably be expected to give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under Section 511 of
the Internal Revenue Code that could reasonably be expected to have a Material
Adverse Effect on the Buyer. There is no Material Litigation pending or, to the
Knowledge of the Buyer Parties, threatened relating to any Buyer ERISA Plan.
(g) Neither the Buyer nor any of its subsidiaries has engaged in a
transaction with respect to any Buyer Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Buyer or any of its subsidiaries to a Material tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts that could reasonably be expected to have a Material Adverse
Effect on the Buyer. Neither the Buyer or any of its subsidiaries nor any
administrator or fiduciary of any Buyer Benefit Plan (or any agent of any of the
foregoing) has engaged in any transaction, or acted or failed to act in any
manner, that could subject the Buyer or any of its subsidiaries to any direct or
indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary, or other duty under ERISA, where such Liability could reasonably
be expected to have a Material Adverse Effect on the Buyer. No oral or written
representation or communication with respect to any aspect of the Buyer Benefit
Plans has been made to employees of the Buyer or any of its subsidiaries that is
not in accordance with the written or otherwise preexisting terms and provisions
of such plans, except where any Liability with respect to such representation or
disclosure could not reasonably be expected to have a Material Adverse Effect on
the Buyer.
(h) Since the date of the most recent actuarial valuation, there
has been (i) no Material change in the financial position or funded status of
any Buyer Pension Plan, (ii) no Material change in the actuarial assumptions
with respect to any Buyer Pension Plan, and (iii) no Material increase in
benefits under any Buyer Pension Plan as a result of plan amendments or changes
in applicable Law, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer. Neither any Buyer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by the Buyer or its subsidiaries, or the
single-employer plan of any entity that is considered one employer with the
Buyer under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "BUYER ERISA AFFILIATE") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. All contributions with respect to
a Buyer Pension Plan or any single-employer plan of a Buyer ERISA Affiliate have
or will be timely made and there is no Lien or expected to be a Lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. Neither the Buyer nor any of its
subsidiaries has provided, or is required to provide, security to a Buyer
Pension Plan or to any single-employer plan of a Buyer ERISA Affiliate pursuant
to Section 401(a)(29) of the Internal Revenue Code. All premiums required to be
paid under ERISA Section 4006 have been timely paid by the Buyer, except to the
extent any failure that could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(i) No Liability under Title IV of ERISA has been or is expected
to be incurred by the Buyer or it subsidiaries with respect to any defined
benefit plan currently or formerly maintained by any of them or by any Buyer
ERISA Affiliate that has not been satisfied in full (other than Liability for
Pension Benefit Guaranty
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Corporation premiums which have been paid when due), except to the extent any
failure could not reasonably be expected to have a Material Adverse Effect on
the Buyer.
(j) Neither the Buyer nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Buyer
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will, by themselves, (i) result in any Material
payment (including without limitation severance, unemployment compensation,
golden parachute, or otherwise) becoming due to any director or any employee of
the Buyer or it subsidiaries from the Buyer or any of its subsidiaries under any
Buyer Benefit Plan or otherwise, (ii) Materially increase any benefit otherwise
payable under any Buyer Benefit Plan, or (iii) result in any acceleration of the
time of any Material payment or vesting of any Material benefit.
6.14 MATERIAL CONTRACTS. None of the Buyer or its subsidiaries, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Buyer or its subsidiaries or the guarantee by the
Buyer or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Buyer with the SEC as of the date of this
Agreement that has not been filed as an exhibit to the Buyer's Form 10-K filed
for the fiscal year ended December 31, 1999, or in another SEC Document and
identified to the Company (together with all Contracts referred to in SECTIONS
6.8 and 6.13 of this Agreement, the "BUYER CONTRACTS"). With respect to each
Buyer Contract: (i) the Contract is in full force and effect; (ii) none of the
Buyer or its subsidiaries is in Default hereunder, other than Defaults that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
(iii) neither the Buyer nor any of its subsidiaries has repudiated or waived any
Material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of the Buyer Parties, in Default in any respect,
other than Defaults that could not reasonably be expected to have a Material
Adverse Effect on the Buyer, or has repudiated or waived any Material provision
thereunder. Except for Federal Reserve or Federal Home Loan Bank advances, all
of the indebtedness of the Buyer and its subsidiaries for money borrowed (not
including deposit Liabilities) is prepayable at any time without penalty or
premium.
6.15 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of the Buyer Parties, threatened against the Buyer
or any of its subsidiaries, or against any Asset, employee benefit plan,
interest, or right of any of them, except as could not reasonably be expected to
have a Material Adverse Effect on the Buyer, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any the Buyer or its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Buyer. There is
no Litigation as of the date of this Agreement to which the Buyer or any of its
subsidiaries is a party and that names the Buyer or any of its subsidiaries as a
defendant or cross-defendant and where the maximum exposure is estimated to be
$25,000 or more.
6.16 REPORTS. Since December 31, 1996, or the date of organization
if later, each of the Buyer and its subsidiaries has timely filed all reports
and statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Buyer. As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied with all applicable Laws, except noncompliance that could not
reasonably be expected to have a Material Adverse Effect on the Buyer
6.17 REGISTRATION STATEMENT; PROXY STATEMENT. Subject to the
accuracy of the representations contained in SECTION 5.17, the information
supplied by the Buyer and its subsidiaries for inclusion in the Registration
Statement shall not, at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC, contain any
untrue statement of a Material fact or omit to state any Material fact required
to be stated therein or necessary to make the statements therein not misleading.
The
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information supplied by the Buyer and its subsidiaries for inclusion in the
Proxy Statement will not, on the date the Proxy Statement/Prospectus is first
mailed to shareholders, at the time of the Shareholder Meeting and at the
Effective Time, contain any untrue statement of a Material fact or omit to state
any Material fact necessary to make the statements therein, in light of
circumstances under which they were made, not misleading. If at any time prior
to the Effective Time any event relating to the Buyer or the Buyer Bank or any
of their affiliates, officers or directors should be discovered by the Buyer or
the Buyer Bank that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, the Buyer or the Buyer Bank
will promptly inform the Company. The Proxy Statement shall comply in all
Material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, the
Buyer makes no representation or warranty with respect to any information
supplied by the Company and its subsidiaries that is contained or incorporated
by reference in, or furnished in connection with the preparation of, the
Registration Statement or the Proxy Statement.
6.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. To the Knowledge of
the Buyer Parties, none of the Buyer or it subsidiaries or any Affiliate thereof
has taken or agreed to take any action, that could reasonably be expected to (i)
prevent the transactions contemplated hereby, including the Mergers, from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (ii) Materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in SECTION 9.1(B) of this
Agreement.
6.19 DERIVATIVEs. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Buyer or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
6.20 CERTAIN REGULATED BUSINESSES. Neither the Buyer nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
6.21 COMMISSIONS. No broker, finder or other Person is entitled to
any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated hereby by reason of any action taken by the Buyer, any
of its subsidiaries or any of the Buyer's shareholders.
ARTICLE VII
COVENANTS
7.1 COVENANTS OF THE COMPANY.
(a) Ordinary Conduct of Business. Except as otherwise expressly
permitted by this Agreement, the Company will, and each will cause its
subsidiaries (including the Company Bank) to, from the date of this Agreement to
the Closing, conduct its business in the ordinary course in substantially the
same manner as presently conducted and make reasonable commercial efforts
consistent with past practices to preserve its relationships with other Persons.
Additionally, except as otherwise contemplated by this Agreement or as set forth
on SECTION 7.1(A) of the Company's Disclosure Schedule, the Company will not,
and it will not permit its subsidiaries (including the Company Bank) to, do any
of the following without the prior written consent of the Buyer:
(i) amend its governing documents;
(ii) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver any stock or stock options or other
equity equivalents of any class or any other of its securities (other
than the issuance of any Company Shares pursuant to the exercise of
options set forth on SECTION 5.3 of the Company's Disclosure Schedule),
or amend any of the terms of any securities outstanding as of the date
hereof;
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(iii) (A) split, combine or reclassify any shares of its
capital stock, (B) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (except for regular quarterly
cash dividends paid in accordance with past practice at the rate of
$0.68 per share per annum, including the payment of any quarterly
portion thereof as is necessary to prevent the Company's shareholders
from failing to receive a quarterly dividend from either the Company or
the Buyer during any particular calendar quarter, or (C) redeem or
otherwise acquire any of its securities (other than the acceptance of
any Company Shares as payment of the exercise price in connection with
the exercise of options set forth on SECTION 5.3 of the Company's
Disclosure Schedule);
(iv) (A) incur or assume any long-term debt or issue any
debt securities other than in the ordinary course of business
consistent with past practice or, except under existing lines of credit
and in amounts not Material to it, incur or assume any short-term debt
other than in the ordinary course of business, (B) other than in the
ordinary course of business consistent with past practice assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
Person, (C) make any loans, advances or capital contributions to, or
investments in, any other Person, other than in the ordinary course and
consistent with past practice up to an amount per loan of $400,000,
pledge or otherwise encumber shares of its capital stock, or (E)
mortgage or pledge any of its assets, tangible or intangible, or create
or suffer to exist any Lien thereupon, other than Liens permitted by
the proviso clause in the definition of Liens and Liens created or
existing in the ordinary course of business consistent with past
practice;
(v) except as required by Law or as contemplated herein,
adopt or amend any Benefit Plan;
(vi) grant to any director or executive officer or
employee any stock options or increase in his or her compensation
(except in the ordinary course of business consistent with past
practice) or pay or agree to pay to any such person other than in the
ordinary course of business any bonus, severance or termination
payment, specifically including any such payment that becomes payable
upon the termination of such person by it after the Closing;
(vii) enter into or amend any employment Contract
(including any termination agreement), except that any automatic
renewals contained in currently existing contracts and agreements shall
be allowed and compensation payable under employment Contracts may be
increased in the ordinary course of business consistent with past
practice;
(viii) acquire, sell, lease or dispose of any assets outside
the ordinary course of business, or any other assets that in the
aggregate are Material to it, or acquire any Person (or division
thereof), any equity interest therein or the assets thereof outside the
ordinary course of business consistent with past practice;
(ix) change or modify any of the accounting principles or
practices used by it or revalue in any Material respect any of its
assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business or as required by GAAP or any Regulatory
Authority;
(x) (A) enter into, cancel or modify any Contract (other
than loans, advances, capital contributions or investments permitted by
subclause (iv)(C) of this SECTION 7.1) other than in the ordinary
course of business consistent with past practices, but not in any event
involving an amount in excess of $10,000; (B) authorize or make any
capital expenditure or expenditures that, individually or in the
aggregate, are in excess of $10,000; or (C) enter into or amend any
Contract with respect to any of the foregoing;
(xi) pay, discharge or satisfy, cancel, waive or modify
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in or contemplated by the Company
Financial Statements, or incurred in the ordinary course of business
consistent with past practices;
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(xii) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(xiii) take, or agree in writing or otherwise to take, any
action that would make any of the representations or warranties of the
Company contained in this Agreement untrue or incorrect or result in
any of the conditions set forth in this Agreement not being satisfied;
or
(xiv) agree, whether in writing or otherwise, to do any of
the foregoing.
(b) Consents. The Company will exercise its best efforts to
obtain such Consents as may be necessary or desirable for the
consummation of the transactions contemplated hereby from the
appropriate parties to those Contracts listed on SECTION 5.2 of the
Company's Disclosure Schedule such that such Contracts shall survive
the Mergers and not be breached thereby.
(c) Acquisition Proposals. Any offer or proposal by any Person
or group concerning any tender or exchange offer, proposal for a
merger, share exchange, recapitalization, consolidation or other
business combination involving the Company or any of its subsidiaries
or divisions of any of the foregoing, or any proposal or offer to
acquire in any manner, directly or indirectly, a significant equity
interest in, or a substantial portion of the assets of, the Company or
any of its subsidiaries, other than pursuant to the transactions
contemplated by this Agreement, is hereby defined as an "ACQUISITION
PROPOSAL". The Company shall not, and shall not permit any of its
subsidiaries' to, permit any of their respective officers, directors,
affiliates, representatives or agents to, directly or indirectly, (a)
take any action to solicit, initiate or encourage any Acquisition
Proposal, or (b) participate in any discussions or negotiations with or
encourage any effort or attempt by any other Person or take any other
action to facilitate an Acquisition Proposal. From and after the date
hereof, the Company and its subsidiaries and all officers, directors,
employees of, and all investment bankers, attorneys and other advisors
and representatives of, the Company and its subsidiaries shall cease
doing any of the foregoing. Notwithstanding the foregoing, the Company
or any such Persons may, directly or indirectly, subject to a
confidentiality agreement containing customary terms, furnish to any
party information and access in response to a request for information
or access made incident to an Acquisition Proposal made after the date
hereof and may participate in discussions and negotiate with such party
concerning any written Acquisition Proposal made after the date hereof,
not recommend shareholder approval of the Holding Company Merger and
terminate this Agreement (provided that neither the Company nor any
such Person, after the date hereof, solicited, initiated or encouraged
such Acquisition Proposal), if the board of directors of the Company or
any such Person shall have determined based upon the written advice of
outside counsel reasonably acceptable to the Buyer (which shall in any
event include Brooks Pierce McLendon Humphrey & Leonard, L.L.P.) that
failing to take such action would violate the directors' fiduciary
duties under applicable law. Unless this Agreement has been terminated,
the board of directors of the Company shall notify the Buyer
immediately if any Acquisition Proposal is made and shall in such
notice indicate in reasonable detail the identity of the offeror and
the terms and conditions of such Acquisition Proposal and shall keep
the Buyer promptly advised of all Material developments that could
culminate in the board of directors withdrawing, modifying or amending
its recommendation of the Merger and the other transactions
contemplated by this Agreement. Unless this Agreement has been
terminated, neither the Company nor any of its subsidiaries shall waive
or modify any provisions contained in any confidentiality agreement
entered into relating to a possible acquisition (whether by merger,
stock purchase, asset purchase or otherwise) or recapitalization of the
Company or any of its subsidiaries.
(d) Shareholder Approval. Subject to SECTION 7.1(C), the
Company will, at the earliest practicable date, hold a meeting of its
shareholders for the purpose of approving the Mergers. In connection
with such shareholder meeting, subject to SECTION 7.1(C), the Company's
board of directors will recommend to the Company's shareholders such
approvals.
7.2 COVENANTS OF THE BUYER.
(a) Reservation of Shares of the Buyer's Stock. The Buyer
shall reserve for issuance a sufficient number of shares of the Buyer's Stock to
cover the issuances of such stock required hereby.
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(b) Directors.
(i) As soon as reasonably practicable after the Effective
Time of the Holding Company Merger, the Buyer shall use its reasonable
best efforts to cause James G. Hudson, Jr. to be elected or appointed
as a member of the board of directors of the Buyer and the Buyer Bank,
but conditional upon obtaining any necessary regulatory approvals and,
with respect to the Buyer's board of directors, upon the Buyer's
shareholders approving an increase in the size of the Buyer's board of
directors by one or a vacancy on such board becoming available. To the
extent that a vacancy on the Buyer's board of directors does not become
available prior to the Buyer's next scheduled annual meeting of
shareholders, the Buyer shall include in its proxy statement relating
to such meeting a proposal to increase the size of its board of
directors by one. The Buyer shall include such designated individual as
a candidate for election as a director and recommend and solicit
proxies for his election at such next annual meeting. After such
meeting, such designated person shall be subject to same nomination and
election procedures as the other directors on the boards of the Buyer
and the Buyer Bank.
(ii) Additionally, for a period of three years after the
Effective Time, each of the Company's board members at the Effective
Time who does not join the Buyer's board of directors shall be paid
$900 per month for their good faith service in promoting the Buyer and
the Buyer Bank as a member of local advisory board of the Buyer (which
advisory board the Buyer agrees to maintain for at least three years).
(c) Employees.
(i) Except as covered by the Hudson Employment Agreement,
any and all of the Company Parties' employees will be employed on an
"at-will" basis, and nothing in this Agreement shall be deemed to
constitute an employment agreement with any such person to obligate the
Buyer or any Affiliate thereof to employ any such person for any
specific period of time or in any specific position or to restrict the
Buyer's or any of its Affiliates' right to terminate the employment of
any such person at any time and for any reason satisfactory to it
(subject to the Company's Special Termination Agreements with John E.
Todd and Drema A. Michael and the Company Bank's Severance Plan for its
employees).
(ii) Such Company Parties' employees who continue
employment with the Buyer or any of its subsidiaries will be eligible
for benefits consistent with those of existing employees of the Buyer
or such subsidiary, with credit for past service with the Company or
the Company Bank for purposes of participation, eligibility and vesting
(including with respect to any amounts to be contributed by the Buyer
or one of its subsidiaries or amounts that will vest under any Buyer
Benefit Plan, but not including the calculation of any other benefit
accrual); provided, however, that any such continuing employee will not
be subject to any exclusion or penalty for pre-existing conditions that
were covered under the Company's or any of its subsidiaries' medical
plans as of the Closing Date or any waiting period relating to coverage
under the Buyer's or any of its subsidiaries' medical plans. There
shall be no waiting periods applicable to any such Company employees to
participate in such benefits (including applicable insurance benefits).
(iii) The Buyer or one of its subsidiaries shall honor any
and all vacation accrued by the employees of the Company and the
Company Bank and any sick leave up to 90 days, and any such employee
who is not retained for employment by the Buyer shall be paid for all
accrued but unused vacation as of the date of termination of
employment. The employees of the Company and the Company Bank who
qualify for the Company Bank's extended sick leave (of between 10 and
60 days) shall be deemed to have a number of days of accrued, unused
sick leave equal to the number of extended sick leave days for which
they qualify in addition to any normal accrued sick leave of up to 10
days held by them.
(iv) For each employee of the Company or the Company Bank
who at the Effective Time does not own any options (whether or not
vested) to purchase Company Shares and who becomes an employee of the
Buyer or any of it subsidiaries immediately after the Effective Time,
the Buyer shall make or shall cause to be made a one-time increase to
the salary compensation of each such employee in order to compensate
him or her for the higher cost of insurance available from the Buyer
and its subsidiaries immediately after the Effective Time, as compared
to the cost of insurance available from the Company and its
subsidiaries immediately prior to the Effective Time.
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(v) Company Bank Severance Plan. At the Effective Time,
the Buyer shall assume the obligations under the Company Bank's
Severance Plan.
(vi) Special Termination Agreements. At the Effective
Time, the Buyer shall assume the obligations of the Special Termination
Agreements with John E. Todd and Drema A. Michael.
(vii) Special Payment to James G. Hudson, Jr. At or prior
to the Effective Time, James G. Hudson, Jr. has agreed to terminate his
current employment agreement with the Company Bank and enter into an
new employment agreement with the Buyer substantially in the form of
EXHIBIT B, and in the event that such existing agreement is terminated
and such new agreement is entered into by Mr. Hudson, the Buyer shall
make a lump sum payment to Mr. Hudson equal to the following amount:
(x) Mr. Hudson's annual salary at the Effective Time, plus (y) 1.06
times Mr. Hudson's salary at the Effective Time, plus (z) 1.06 times
the amount determined in clause (y) above. The Buyer will enter in to
the Hudson Employment Agreement at the Effective Time.
(viii) Payment to John E. Todd. At the Effective Time, the
Buyer shall give to John E. Todd the Company car that he currently
drives.
(ix) Employee Life Insurance. The Buyer shall provide to
each previous Company or Company Bank employee that becomes an employee
of the Buyer or the Buyer Bank while an employee of the Buyer or the
Buyer Bank either term life insurance coverage in an amount equal to
five times such employee's then current annual salary or an adjustment
for such employee's annual salary deemed sufficient by the Buyer for
such employee to purchase such amounts of life insurance, which choice
shall be made by the Buyer in its sole discretion.
(x) Employee Stock Ownership Plan. The Home Savings, Inc.
SSB Employee Stock Ownership Plan shall be terminated as soon as
practicable after the Effective Time.
(xi) Management Recognition Plan. The Home Savings, Inc.
SSB Management Recognition Plan and Trust will be terminated as soon as
practicable after the Effective Time and Company Shares held by such
trust on the Effective Time that have not been granted at the Effective
Time will be cancelled and retired as of the Effective Time.
(d) Directors and Officers Insurance and Indemnification.
(i) The Buyer shall maintain, or shall cause the Buyer
Bank to maintain, in effect for six years from the Closing Date, if
available, the current directors' and officers' liability insurance
policies maintained by the Company; provided, however, that Buyer may
substitute therefor policies of at least the same coverage containing
terms and conditions that are not taken as a whole Materially less
favorable to the insured with respect to matters occurring prior to the
Effective Time of the Holding Company Merger.
(ii) From and after the Effective Time, the Buyer shall,
or shall cause the Buyer Bank to, indemnify, defend and hold harmless
each person who is now, or who has been at any time before the date
hereof or who becomes before the Effective Time, an officer or director
of the Company or Company Bank (the "INDEMNIFIED PARTIES") against all
losses, claims, damages, costs, expenses (including reasonable
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement (which settlement shall require the prior written consent of
Buyer, which consent shall not be unreasonably withheld) of or in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, or administrative (each a "CLAIM"), in which
an Indemnified Person is, or is threatened to be made, a party or
witness arising in whole or in part out of the fact that such person is
or was a director, officer or employee of the Company Bank or any of
its subsidiaries if such Claim pertains to any matter or fact arising,
existing or occurring before the Effective Time (including without
limitation the Mergers and the other transactions contemplated hereby),
regardless of whether such Claim is asserted or claimed before, at or
after the Effective Time (the "INDEMNIFIED LIABILITIES"), to the
fullest extent permitted by applicable Law in effect as of the date
hereof or as amended applicable to a time before the Effective Time.
Any Indemnified
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Person wishing to claim indemnification under this SECTION 7.2(G)(II),
upon learning of any Claim, shall notify the Buyer (but the failure so
to so notify shall not relieve the Buyer or the Buyer Bank from any
liability that it may have under this SECTION 7.2(G)(II), except to the
extent such failure Materially prejudices the Buyer or its Affiliates).
In the event of any such Claim, whether arising before, on or after the
Effective Time, (1) the Buyer shall have the right to assume the
defense thereof (in which event the Indemnified Parties will cooperate
in the defense of any such matter) and upon such assumption, the Buyer
shall not be liable to any Indemnified Person for any legal expenses of
other counsel or any other expenses subsequently incurred by any
Indemnified Person in connection with the defense therefor, except that
if the Buyer elects not to assume such defense, or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that
there are or may be (whether or not any have yet actually arisen)
issues that raise conflicts of interest between the Buyer and the
Indemnified Parties, the Indemnified Parties may retain counsel
reasonably satisfactory to them, and the Buyer shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (2) the
Buyer shall be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties (unless counsel for one or
more Indemnified Parties advises his or her client that a conflict
exists between his or her client and one or more other Indemnified
Parties, in which event the fees and expenses of such counsel shall
also be paid by the Buyer) whose reasonable fees and expenses shall be
paid promptly as statements are received, (3) the Buyer shall not be
liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld), and (4) the Buyer
shall have no obligation hereunder to any Indemnified Person when and
if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that
indemnification of such Indemnified Person in the manner contemplated
hereby is prohibited by applicable Law (it being acknowledged by the
parties hereto that in the event of any good faith dispute about the
lawfulness of such indemnification, the Buyer or the Buyer Bank may
place the amounts at issue in escrow pending the final and
nonappealable determination of such dispute). The obligations of the
Buyer and the Buyer Bank pursuant to this SECTION 7.2(G) are intended
to be enforceable against the Buyer and the Buyer Bank directly by the
Indemnified Parties. The indemnification provided herein shall be in
addition to any indemnification rights that any Indemnified Parties may
have by Law, pursuant to the Articles of Incorporation or Bylaws of the
Company or any of its subsidiaries or pursuant to the terms of any
employee benefit plan or trust for which any Indemnified Party serves
as a fiduciary.
7.3 COVENANTS OF ALL PARTIES TO THE AGREEMENT.
(a) Reorganization for Tax Purposes. Each of the parties hereto
undertakes and agrees to use its reasonable efforts to cause the Mergers to
qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and that it will not intentionally take any action that would cause the Mergers
to fail to so qualify.
(b) Notification. Each of the parties hereto agrees to notify
promptly the other parties hereto of any event, fact, or other circumstance
arising after the date hereof that would have caused any representation or
warranty herein, including, in the case of the Company, any information on any
schedule hereto, to be untrue or misleading had such event, fact, or
circumstance arisen prior to the execution of this Agreement. The parties hereto
will exercise their reasonable best efforts to ensure that no such events,
facts, or other circumstances occur, come to pass, or become true.
(c) Consummation of Agreement. Subject to SECTION 7.1(C), the
parties hereto each agree to use their reasonable efforts to perform or fulfill
all conditions and obligations to be performed or fulfilled by them under this
Agreement so that the transactions contemplated hereby shall be consummated.
Except for events that are the subject of specific provisions of this Agreement,
if any event should occur, either within or outside the control of the Company
Parties, or the Buyer Parties, that would Materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, each party will
notify the others of any such event and, subject to SECTION 7.1(C), the parties
will use their reasonable, diligent and good faith efforts to cure or minimize
the same as expeditiously as possible. Subject to SECTION 7.1(C), each party
hereto shall use its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement and to assist in the procuring or providing of all documents that must
be procured or provided pursuant to the provisions hereof. Notwithstanding
anything to the contrary contained in this Agreement, but subject to SECTION
7.1(C), none of the parties hereto will take any action that would (i)
Materially affect or delay receipt of the approvals contemplated in SECTION
9.1(B) from the Regulatory Authorities,
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or (ii) Materially adversely affect or delay its ability to perform its
covenants and agreements made pursuant to this Agreement.
(d) Corporate Action. Subject to the terms and conditions hereof
(including SECTION 7.1(C)), each of the parties hereto shall, and each of them
shall cause their subsidiaries to, take all corporate action, including the
recommendation of the Mergers by their respective boards of directors to their
respective shareholders, and use each of their best efforts to cause all
shareholder action to be taken, necessary to consummate and give effect to the
respective Mergers.
(e) Maintenance of Corporate Existence. Each of the parties hereto
shall, and each of them shall cause their Affiliates to, maintain in full force
and effect each their respective corporate or legal existences.
(f) Applications and Reports. The Buyer shall prepare and file as
soon as reasonably practical after the date of this Agreement, and the Company
shall cooperate in the preparation and, where appropriate, filing of, all
applications, reports and statements with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement.
(g) Registration Statement and Proxy Statement. As soon as
reasonably practicable after the execution of the Agreement and after the
furnishing by the Company and the Company Bank of all information required to be
contained therein, the Buyer shall file with the SEC the Registration Statement
on Form S-4 (or on such other form as shall be appropriate), which shall contain
the Proxy Statement. The Buyer and the Company shall each use their reasonable
best efforts to cause the Proxy Statement to comply in all Material respects
with the requirements of the Securities Laws and the rules and regulations
thereunder. The Buyer and the Company shall each use all reasonable efforts to
cause the Registration Statement to become effective as soon thereafter as
practicable. Subject to SECTION 7.1(C), the Proxy Statement shall include the
recommendation of the Boards of Directors of the Company in favor of the Holding
Company Merger.
(h) Option Agreement. Concurrently with or immediately after the
execution of this Agreement by the Company, the Company shall execute and
deliver the Company Option Agreement.
(i) Closing. Subject to the terms and conditions hereof (including
SECTION 7.1(C)), the parties hereto shall use their reasonable best efforts to
consummate the Closing within 30 days after all conditions to the Closing have
been satisfied.
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 ACCESS TO INFORMATION. Prior to the Closing Date, the parties
hereto shall, and shall cause each of their subsidiaries to:
(a) give the other and its authorized representatives reasonable
access, during normal business hours and upon reasonable notice, to its books,
records, offices and other facilities and properties; and
(b) furnish the other with such financial and operating data and
other information with respect to its business, condition (financial or
otherwise) and properties, as it may reasonably request.
8.2 ACCESS TO PREMISES. Prior to Closing, the Company shall, and
shall cause its subsidiaries to, give the Buyer and its authorized
representatives reasonable access to all of the Company's and its subsidiaries'
Real Property for the purpose of inspecting such property.
8.3 ENVIRONMENTAL SURVEY. At its option, the Buyer may cause to be
conducted Phase I environmental assessments of the Real Property of the Company
and its subsidiaries, whether owned or leased, or
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any portion thereof, together with such other studies, testing and intrusive
sampling and analyses as the Company shall deem necessary or desirable
(collectively, the "ENVIRONMENTAL SURVEY"). The Company shall complete all such
Phase I environmental assessments within 60 days following the date of this
Agreement and thereafter conduct and complete any such additional studies,
testing, sampling and analyses within 60 days following completion of all Phase
I environmental assessments. Subject to the breach of any representation or
warranty contained herein, the costs of the Environmental Survey shall be paid
by the Buyer.
8.4 CONFIDENTIALITY. Prior to Closing, except as otherwise
provided in SECTION 8.5, each of parties hereto shall not, and shall not permit
its subsidiaries to, and each shall use its best efforts to cause its and its
subsidiaries' respective employees, lenders, accountants, representatives,
agents, consultants and advisors not to, discuss or disclose, or use for any
purpose other than the transactions contemplated hereby, the subject matter or
transactions contemplated by this Agreement or information pertaining to the
Company or any of its Subsidiaries, with any other Person without the prior
consent of the other parties hereto, unless (a) such information is public other
than as a result of a violation of this Agreement, or (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
Consent necessary or desirable for the consummation of the transactions
contemplated hereby.
8.5 PUBLICITY. Without the prior consent of the other parties, no
party hereto shall issue any news release or other public announcement or
disclosure, or any general public announcement to its employees, suppliers or
customers, regarding this Agreement or the transactions contemplated hereby,
except as may be required by Law, but in which case the disclosing party shall
provide the other parties hereto with reasonable advance notice of the timing
and substance of any such disclosure.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 MUTUAL CONDITIONS. The respective obligations of each party
hereto to perform this Agreement and consummate the Mergers and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by all parties hereto pursuant to SECTION
11.4 of this Agreement:
(a) Adverse Proceedings. Neither the Company, the Company Bank,
the Buyer, the Buyer Bank, nor any shareholder of any of the foregoing shall be
subject to any order, decree or injunction of a court of competent jurisdiction
that enjoins or prohibits the consummation of this Agreement or the Mergers, and
no Governmental Authority shall have instituted a suit or proceeding that is
then pending and seeks to enjoin or prohibit the transactions contemplated
hereby. Any party who is subject to any such order, decree or injunction or the
subject of any such suit or proceeding shall take any reasonable steps within
that party's control to cause any such order, decree or injunction to be
modified so as to permit the Closing and to cause any such suit or proceeding to
be dismissed.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Mergers shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No such Consent obtained from any Regulatory Authority shall be
conditioned or restricted in a manner (including requirements relating to the
raising of additional capital or the disposition of Assets) not reasonably
anticipated as of the date of this Agreement that in the reasonable judgment of
the Board of Directors of the Buyer, the Buyer Bank, the Company or the Company
Bank hereto would so Materially adversely impact the economic or business
assumptions of the transactions contemplated by this Agreement that had such
condition or requirement been known, such party would not, in its reasonable
judgment, have entered into this Agreement.
(c) Consents and Approvals. Each party hereto shall have obtained
any and all Consents required for consummation of the Mergers or for the
preventing of any Default under any Contract or Permit of such Person, including
those Consents listed on SECTION 5.2 of the Company's Disclosure Schedule,
except to the extent that the
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failure to obtain such any such Consents would not, individually or in the
aggregate result in a Material Adverse Effect on such Person.
(d) Effectiveness of Registration Statement. The Registration
Statement filed with the SEC covering the shares of the Buyer's Stock to be
issued pursuant hereto shall have been declared effective by the SEC, and no
stop order suspending such effectiveness shall have been initiated or, to the
Knowledge of the Buyer Parties, threatened by the SEC.
(e) Approval. The Company's shareholders shall have approved this
Agreement and the Holding Company Merger in accordance with applicable corporate
law.
(f) Tax Opinion. On the basis of facts, representations and
assumptions that shall be consistent with the state of facts existing at the
Closing Date, the Buyer and the Company shall have received an opinion of KPMG
LLP or another tax advisor reasonably acceptable in form and substance to each
of them dated as of the Closing Date, substantially to the effect that, for
federal income tax purposes: (i) the Mergers, when consummated in accordance
with the terms hereof, will each constitute a reorganization within the meaning
of Section 368(a) of the Code, (ii) no gain or loss will be recognized by the
Buyer, the Buyer Bank, the Company or the Company Bank by reason of the Mergers,
(iii) the exchange or cancellation of Company Shares or Company Bank Shares in
the Mergers will not give rise to recognition of gain or loss for federal income
tax purposes to the shareholders of the Company and the Company Bank to the
extent such shareholders receive Buyer's Stock in exchange for their Company
Shares, (iv) the basis of the Buyer's Stock to be received by a shareholder of
the Company will be the same as the basis of the stock of the Company
surrendered in connection with the Mergers, and (v) the holding period of the
shares of the Buyer's Stock to be received by a shareholder of the Company will
include the period during which the shareholder held the Company Bank Shares
surrendered in connection with the Mergers, provided that the Company Shares
surrendered in connection with the Mergers are held as a capital asset at the
Effective Time of such Mergers. Each of the Buyer and the Company shall provide
a letter to the tax advisor setting forth the facts, assumptions and
representations on which such tax advisor may rely in rendering its opinion.
(g) Blue Sky Approvals. The Buyer shall have received all state
securities or "Blue Sky" Permits or other authorizations or confirmations as to
the availability of exemptions from "Blue Sky" registration requirements as may
be necessary, and no stop orders or proceedings shall be pending, or to the
Knowledge of the Buyer Parties or the Company Parties, threatened by a state
"Blue Sky" administrator to suspend the effectiveness of any registration
statement filed therewith with respect to the issuance of the Buyer's Stock in
the Holding Company Merger.
(h) Nasdaq Listing. As of the Effective Time, the Buyer shall have
satisfied all requirements in order for the shares of the Buyer's Stock to be
issued to shareholders of the Company in connection with the Holding Company
Merger to be listed on the Nasdaq National Market System as of the Effective
Time.
9.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the transactions contemplated hereby shall be further
subject to the fulfillment of the following conditions, unless waived by such
parties pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Buyer contained in
this Agreement shall be true and correct in all Material respects as of the
Closing Date as though made as of such date (except for representations and
warranties that are made as of a specific date). The Buyer shall have performed
and complied in all Material respects with all covenants and agreements
contained in this Agreement required to be performed and complied with by it at
or prior to the Closing.
(b) All documents required to have been executed and delivered by
the Buyer to the Company at or prior to the Closing shall have been so executed
and delivered, whether or not such documents have been or will be executed and
delivered by the other parties contemplated thereby.
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(c) The Company shall have received from Trident Securities, a
division of McDonald Investments Inc., a letter, dated not more than five
Business Days prior to the Proxy Statement, that the Merger Consideration is
fair, from a financial point of view, to the holders of the Company's Shares.
(d) The Company shall have received an opinion of Robinson,
Bradshaw & Hinson, P.A., counsel to the Buyer, dated as of the Closing Date, in
form and substance reasonably acceptable to the Company.
(e) As of the Closing Date, the Company shall have received the
following documents with respect to the Buyer:
(i) a true and complete copy of its articles of
incorporation and all amendments thereto, certified by the jurisdiction
of its incorporation as of a recent date;
(ii) a true and complete copy of its bylaws, certified by
its Secretary or an Assistant Secretary;
(iii) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation have not been
amended since the date of the certificate described in subsection (i)
above and that nothing has occurred since such date that would
adversely affect its existence;
(iv) a true and complete copy of the resolutions of its
board of directors and shareholders authorizing the execution, delivery
and performance of this Agreement, and all instruments and documents to
be delivered in connection herewith, and the transactions contemplated
hereby, certified by its Secretary or an Assistant Secretary; and
(v) a certificate from its Secretary or an Assistant
Secretary certifying the incumbency and signatures of its officers who
will execute documents at the Closing or who have executed this
Agreement.
(f) The Exchange Agent shall have delivered to the Company a
certificate, dated as of the Closing Date, to the effect that the Exchange Agent
has received from the Buyer appropriate instructions and authorization for the
Exchange Agent to issue a sufficient number of shares of Buyer Stock in exchange
for all of the Company Shares and the Company Bank Shares and to the effect that
the Exchange Agent has received the Total Cash Merger Consideration from the
Buyer and appropriate instructions and authorization to deliver the Total Cash
Merger Consideration as required by this Agreement.
9.3 CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations of
the Buyer to effect the transactions contemplated hereby shall be further
subject to the fulfillment of the following conditions, unless waived by the
Buyer pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Company contained in
this Agreement shall be true and correct in all Material respects as of the
Closing Date as though made as of such date (except for representations and
warranties that are made as of a specific date). The Company shall have
performed and complied in all Material respects with all covenants and
agreements contained in this Agreement required to be performed and complied
with by them at or prior to the Closing.
(b) Holders of Company Shares representing no more than ten
percent (10%) of the issued and outstanding Company Shares immediately prior to
the Effective Time shall have exercised dissenters' or similar rights with
respect to the Holding Company Merger.
(c) All documents required to have been executed and delivered by
the Company or any third party to the Buyer at or prior to the Closing shall
have been so executed and delivered, whether or not such documents have been or
will be executed and delivered by the other parties contemplated thereby.
(d) The Buyer shall have received a legal opinion from counsel to
the Company, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Buyer.
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(e) As of the Closing Date, the Buyer shall have received the
following documents with respect to each of the Company and its subsidiaries
(including the Company Bank):
(i) a certificate of its corporate existence issued by
the jurisdiction of its incorporation as of a recent date and a
certificate of existence or authority as a foreign corporation issued
as of a recent date by each of the jurisdictions in which it is
qualified to do business as a foreign corporation;
(ii) a true and complete copy of its articles of
incorporation or charter and all amendments thereto, certified by the
jurisdiction of its incorporation as of a recent date;
(iii) a true and complete copy of its bylaws, certified by
its Secretary or an Assistant Secretary;
(iv) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation or charter have
not been amended since the date of the certificate described in
subsection (ii) above, and that nothing has occurred since the date of
issuance of the certificate of existence specified in subsection (i)
above that would adversely affect its existence;
(v) with respect to the Company only, a true and complete
copy of the resolutions of its Board of Directors and shareholders
authorizing the execution, delivery and performance of this Agreement,
and all instruments and documents to be delivered in connection
herewith, and the transactions contemplated hereby, certified by its
Secretary or an Assistant Secretary; and
(vi) with respect to the Company only, a certificate from
its Secretary or an Assistant Secretary certifying the incumbency and
signatures of its officers who will execute documents at the Closing or
who have executed this Agreement.
(f) Each of the Company Options (whether or not vested) held by
the Company's officers and directors shall have been cancelled, effective
immediately prior to the Effective Time, without the issuance of any Company
Shares or any payment being made in respect thereof, pursuant to written
documentation satisfactory to the Buyer.
ARTICLE X
TERMINATION
10.1 TERMINATION. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) By mutual written consent of the Company and the Buyer;
(b) By either the Buyer or the Company, if there shall be any law
or regulation that makes consummation of this Agreement illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the Company
or its shareholders, the Company Bank, the Buyer or its shareholders, or the
Buyer Bank from consummating this Agreement is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
(c) By either the Buyer or the Company, if the conditions to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall not have been fulfilled or waived by June 30, 2001, and if the
party seeking termination is in Material compliance with all of its obligations
under this Agreement;
(d) By either the Buyer or the Company, if a condition to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall have become incapable of fulfillment (notwithstanding the
efforts of the party seeking to terminate as set forth in SECTION 7.3(D)), and
has not been waived;
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(e) At any time on or prior to the Closing Date, by the Buyer in
writing, if the Company or the Company Bank has, or by the Company, if the Buyer
has, in any Material respect, breached (i) any covenant or agreement contained
herein or (ii) any representation or warranty contained herein, and in either
case if such breach has not been cured by the earlier of 30 days after the date
on which written notice of such breach is given to the party committing such
breach or the Closing Date; and
(f) By the Company, if its board of directors determines to
terminate this Agreement (and the Holding Company Merger) and (i) the Average
Closing Price of the Buyer's Stock is less than $11.50 for the 20-trading day
period (the "MEASUREMENT PERIOD") ending three Business Days prior to the date
of the Shareholder Meeting, and (ii) the percentage (the "BUYER'S STOCK
PERCENTAGE CHANGE") by which the Average Closing Price of the Buyer's Stock
during the Measurement Period is lower than $15.00 exceeds by more than 15
percentage points the percentage (the "INDEX PERCENTAGE CHANGE") by which the
Average Closing Price of the SNL Index during the Measurement Period is lower
than the Average Closing Price of the SNL Index on October 19, 2000 (Examples:
If the Average Closing Price of the SNL Index has declined by 10%, the Average
Closing Price of the Buyer's Stock during the Measurement Period must be more
than 25% lower than $15.00; if the Average Closing Price of the SNL Index has
declined by 15%, the Average Closing Price of the Buyer's Stock during the
Measurement Period must be more than 30% lower than $15.00); provided, however,
that in such case the Buyer shall have the right to pay to the holder of each
Company Share $20.00 in cash, in which case the Company shall not have the right
to terminate this Agreement and the Merger.
For purposes of this subclause (f): "AVERAGE CLOSING PRICE" means, with
respect to the Buyer's Stock, the average of the daily closing sales price
thereof on the Nasdaq National Market System during a specified period as
reported in The Wall Street Journal and, with respect to the SNL Index , the
average of the daily closing prices of such SNL Index as reported by SNL
Securities; and "SNL INDEX" means the SNL Nationwide Bank Index ($500 million to
$1 billion).
10.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of a
termination contemplated hereby by any party pursuant to SECTION 10.1, the party
seeking to terminate this Agreement shall give prompt written notice thereof to
the other party, and the transactions contemplated hereby shall be abandoned,
without further action by any party hereto. In such event:
(a) The parties hereto shall continue to be bound by (i) their
obligations of confidentiality set forth in the Confidentiality Agreements, and
all copies of the information provided by the Company hereunder will be returned
to the Company or destroyed immediately upon its request therefor, (ii) the
provisions set forth in SECTION 8.4 relating to publicity and (iii) the
provisions set forth in SECTION 11.1 relating to expenses.
(b) All filings, applications and other submissions relating to
the transactions contemplated hereby shall, to the extent practicable, be
withdrawn from the Person to which made.
(c) The terminating party shall be entitled to seek any remedy to
which such party may be entitled at law or in equity for the violation or breach
of any agreement, covenant, representation or warranty contained in this
Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, (i) the Buyer shall pay all costs and expenses incurred by it
and the Buyer Bank in connection with this Agreement and the Mergers and (ii)
the Company Bank shall pay all costs and expenses incurred by it and the Company
in connection with this Agreement and the Mergers.
11.2 SURVIVAL OF REPRESENTATIONS. The representations and
warranties made by the parties hereto will not survive the Closing, and no party
shall make or be entitled to make any claim based upon such representations
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and warranties after the Closing Date. No warranty or representation shall be
deemed to be waived or otherwise diminished as a result of any due diligence
investigation by the party to whom the warranty or representation was made or as
a result of any actual or constructive knowledge by such party with respect to
any facts, circumstances or claims or by the actual or constructive knowledge of
such person that any warranty or representation is false at the time of signing
or Closing.
11.3 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by written agreement of all parties hereto.
11.4 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided
in this Agreement, any failure of the Buyer, on one hand, and the Company, on
the other, to comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the other party or parties only
by a written instrument signed by the party or parties granting such waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this SECTION 11.4.
11.5 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered by hand or by facsimile
transmission, one Business Day after sending by a reputable national over-night
courier service or three Business Days after mailing when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties in
the manner provided below:
(a) Any notice to any of the Company shall be delivered to the
following addresses:
Century Bancorp, Inc.
22 Winston Street
Thomasville, North Carolina 27360
Attention: James G. Hudson, Jr.
Telephone: (336) 475-4663
Facsimile: (336) 476-8889
with a copy to:
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
2000 Renaissance Plaza
230 North Elm Street
P.O. Box 2600
Greensboro, North Carolina 27420
Attention: Edward C. Winslow III
Telephone: (336) 373-8850
Facsimile: (336) 378-1001
(b) Any notice to the Buyer shall be delivered to the following
addresses:
First Bancorp
341 North Main Street
P.O. Box 508
Troy, North Carolina 27371
Attention: James H. Garner
Telephone: (910) 576-2265
Facsimile: (910) 567-0662
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with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Attention: Henry H. Ralston
Telephone: (704) 377-2536
Facsimile: (704) 378-4000
Any party may change the address to which notice is to be given by notice given
in the manner set forth above.
11.6 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties.
11.7 SEPARABLE PROVISIONS. If any provision of this Agreement shall
be held invalid or unenforceable, the remainder nevertheless shall remain in
full force and effect.
11.8 GOVERNING LAW. The execution, interpretation and performance
of this Agreement shall be governed by the internal laws and judicial decisions
of the State of North Carolina.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 ENTIRE AGREEMENT. This Agreement, including the agreements and
documents that are Schedules and Exhibits hereto, embodies the entire agreement
and understanding of the parties with respect of the subject matter of this
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the transactions contemplated hereby and
subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
CENTURY BANCORP, INC.
By: /s/ James G. Hudson, Jr.
-------------------------------------------------
Name: James G. Hudson, Jr.
----------------------------------------
Title: President
----------------------------------------
BUYER:
FIRST BANCORP
By: /s/ James H. Garner
-------------------------------------------------
Name: James H. Garner
----------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
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EXHIBIT A
FORM OF PLAN OF MERGER
OF
CENTURY BANCORP, INC.
INTO
FIRST BANCORP
A. Corporations Participating in Merger.
Century Bancorp, Inc., a North Carolina corporation (the "Merging
Corporation"), will merge with and into First Bancorp, a North Carolina
corporation, which will be the surviving corporation (the "Surviving
Corporation") of such merger.
B. Name of Surviving Corporation.
After the merger, the Surviving Corporation shall have the name "First
Bancorp"
C. Merger.
The merger of the Merging Corporation into the Surviving Corporation
shall be effected pursuant to the terms and conditions of this Plan. Upon the
merger becoming effective, the corporate existence of the Merging Corporation
will cease, and the corporate existence of the Surviving Corporation will
continue. The merger shall become effective on the date and at the time of
filing of the Articles of Merger containing this Plan with the North Carolina
Secretary of State or at such other time as may be specified in such Articles of
Merger. The time when the merger becomes effective is hereinafter referred to as
the "Effective Time."
D. Conversion and Exchange of Shares.
At the Effective Time, the outstanding shares of the common stock of
the corporations participating in the merger will be converted and exchanged as
follows:
1. Merging Corporation. Each outstanding share of the common
stock of the Merging Corporation shall at the Effective Time no longer be
outstanding and shall be canceled and retired and shall cease to exist, and the
holders of the certificates representing such shares shall thereafter cease to
have any rights with respect to such shares except for the right to receive, in
consideration for the foregoing and subject to certain election procedures, the
issuance and delivery of 1.3333 shares of common stock of the Surviving
Corporation for each share of the common stock of the Merging Corporation
outstanding immediately prior to the merger (the "Exchange Ratio") or $20.00 in
cash for each share of the common stock of the Merging Corporation outstanding
immediately prior to the merger.
2. Surviving Corporation.
(a) Each outstanding share of the common stock of the Surviving
Corporation shall remain outstanding after the Effective Time and shall not be
affected by the merger.
(b) In the event the Surviving Corporation changes the numbers of
shares of its common stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend or similar reorganization with respect
to such stock and the record date thereof (in the case of a stock dividend) or
the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
such Effective Time, the Exchange Ratio shall be equitable adjusted to reflect
such change.
3. Fractional Shares. No fractional shares of the common stock of
the Surviving Corporation shall be delivered as consideration for the merger
described herein. In lieu of any such fractional share, upon tender of the
certificates representing shares of common stock of the Merging Corporation,
each holder of common stock of the Merging Corporation shall be entitled to
receive cash (without interest) in an amount equal to such fraction
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multiplied by the Market Value of one share of the common stock of the Surviving
Corporation on the trading day immediately prior to the Effective Time. For
purposes of this Section 3, "Market Value" of the common stock of the Surviving
Corporation means the closing price of such stock on the Nasdaq Small Cap Market
(as reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source), or if such closing date is not a trading day, on the last
trading day preceding that date.
4. Surrender of Share Certificates. Each holder of a certificate
representing shares to be converted or exchanged in the merger shall surrender
such certificate for cancellation, and after the Effective Time and after such
surrender, shall be entitled to receive in exchange therefor the consideration
to which it is entitled under this Plan. Until so surrendered, each outstanding
certificate that prior to the Effective Time represented shares of common stock
of the Merging Corporation shall be deemed for all purposes to evidence
ownership of the consideration to be issued and paid for the conversion or
exchange of such shares under this Plan.
5. No Further Transfers. From and after the Effective Time of the
merger, there shall be no further transfers on the stock transfer books of the
Merging Corporation of the shares of the Merging Corporation that were
outstanding immediately prior to the Effective Time of the merger. If after such
Effective Time, certificates representing shares of the Merging Corporation are
presented to the Surviving Corporation, they shall be canceled, and exchanged
and converted into the merger consideration as provided for herein.
E. Abandonment.
At any time prior to the merger becoming effective, the board of
directors of the Merging Corporation or the Surviving Corporation may, in each
of their discretion, abandon the merger.
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APPENDIX B
FAIRNESS OPINION OF TRIDENT SECURITIES, A DIVISION OF MCDONALD INVESTMENTS, INC.
TRIDENT SECURITIES
A DIVISION OF MCDONALD INVESTMENTS INC.
4601 SIX FORKS ROAD, SUITE 400
RALEIGH, NORTH CAROLINA 27609
TELEPHONE (919) 781-8900
FACSIMILE (919) 787-1670
April 18, 2001
Board of Directors
Century Bancorp, Inc.
22 Winston Street
Thomasville, North Carolina 27360
Members of the Board:
You have requested our opinion with respect to the fairness, from a
financial point of view, as of the date hereof, to the holders of the common
stock ("Century Common Stock") of Century Bancorp, Inc. ("Century"), of the
Merger Consideration (as defined below) to be received by such holders in a
merger (the "Merger") of Century with First Bancorp, as set forth in the Merger
Agreement (the "Agreement") dated as of October 19, 2000. Unless otherwise
noted, all terms used herein shall have the same meaning as defined in the
Agreement.
As more specifically set forth in the Agreement, and subject to a
number of conditions and procedures described in the Agreement, each share of
Century Common Stock issued and outstanding at the Effective Time shall be
converted into the right to receive, at the election of the holder, either cash
or shares of First Bancorp Common Stock (the "Merger Consideration"). To the
extent that Century shareholders receive cash, each share of Century Common
Stock so exchanged will be converted into $20.00 of cash. To the extent Century
shareholders receive First Bancorp Common Stock, each share so exchanged will be
converted into 1.3333 shares of First Bancorp Common Stock. Century Shareholders
will have the right to elect to receive cash or First Bancorp Common Stock for
each of their shares of Century Common Stock, subject to the condition that no
less than 40% of the aggregate value of the Merger Consideration will consist of
First Bancorp Common Stock. The terms and conditions of the Merger are more
fully set forth in the Agreement.
Trident Securities, a division of McDonald Investments Inc., as part of
its investment banking business, is customarily engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes.
We have acted as Century's financial advisor in connection with, and
have participated in certain negotiations leading to, the Agreement. In
connection with rendering our opinion set forth herein, we have among other
things:
(i) Reviewed Century's Annual Reports to Shareholders and Annual
Reports on Form 10-K for each of the years ended June 30,
2000, June 30, 1999 and June 30, 1998, including the audited
financial statements contained therein, and Century's
Quarterly Reports on Form 10-Q for each of the quarters ended
September 30, 2000 and December 31, 2000;
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(ii) Reviewed First Bancorp's Annual Reports to Shareholders and
Annual Reports on Form 10-K for each of the years ended
December 31, 2000, December 31, 1999 and December 31, 1998,
including the audited financial statements contained therein;
(iii) Reviewed certain other public and non-public information,
primarily financial in nature, relating to the respective
businesses, earnings, assets and prospects of Century and
First Bancorp provided to us or publicly available;
(iv) Participated in meetings and telephone conferences with
members of senior management of Century and First Bancorp
concerning the financial condition, business, assets,
financial forecasts and prospects of the respective companies,
as well as other matters we believed relevant to our inquiry;
(v) Reviewed certain stock market information for Century Common
Stock and First Bancorp Common Stock, and compared it with
similar information for certain companies, the securities of
which are publicly traded;
(vi) Compared the results of operations and financial condition of
Century and First Bancorp with that of certain companies,
which we deemed to be relevant for purposes of this opinion;
(vii) Reviewed the financial terms, to the extent publicly
available, of certain acquisition transactions, which we
deemed to be relevant for purposes of this opinion;
(viii) Reviewed the Agreement dated October 19, 2000 and certain
related documents; and
(ix) Performed such other reviews and analyses as we have deemed
appropriate.
In our review and analysis and in arriving at our opinion, we have
assumed and relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have relied upon the accuracy and
completeness of the representations, warranties and covenants of Century and
First Bancorp contained in the Agreement. We have not been engaged to undertake,
and have not assumed any responsibility for, nor have we conducted, an
independent investigation or verification of such matters. We have not been
engaged to and we have not conducted a physical inspection of any of the assets,
properties or facilities of either Century or First Bancorp, nor have we made or
obtained or been furnished with any independent valuation or appraisal of any
such assets, properties or facilities or any of the liabilities of either
Century or First Bancorp. With respect to financial forecasts used in our
analysis, we have assumed that such forecasts reflect the best currently
available estimates and judgements of the management of Century and First
Bancorp, as to the future performance of Century, First Bancorp, and Century and
First Bancorp combined, as the case may be. We have not been engaged to and we
have not assumed any responsibility for, nor have we conducted any independent
investigation or verification of such matters, and we express no view as to such
financial forecasts or the assumptions on which they are based. We have also
assumed that all of the conditions to the consummation of the Merger, as set
forth in the Agreement, including the tax-free treatment of the Merger to the
holders of Century Common Stock, would be satisfied and that the Merger would be
consummated on a timely basis in the manner contemplated by the Agreement.
We will receive a fee for our services as financial advisor to Century
and for rendering this opinion, a substantial portion of which is contingent
upon closing of the Merger. In the past, we have also provided certain other
investment banking services for Century and First Bancorp and have received
compensation for such services.
In the ordinary course of business, we may actively trade securities of
Century and First Bancorp for our own account and for the accounts of customers
and, accordingly, we may at any time hold a long or short position in such
securities.
This opinion is based on economic and market conditions and other
circumstances existing on, and information made available as of, the date
hereof. In addition, our opinion is, in any event, limited to the fairness, as
of the date hereof, from a financial point of view, of the Merger Consideration
to be received by the holders of
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Century Common Stock, and does not address the underlying business decision of
Century's Board of Directors to effect the Merger, does not compare or discuss
the relative merits of any other terms of the Merger, and does not constitute a
recommendation to any Century shareholder as to how such shareholder should vote
with respect to the Merger. This opinion does not represent an opinion as to
what the value of Century Common Stock or First Bancorp Common Stock may be at
the Effective Time of the Merger or as to the prospects of Century's business or
First Bancorp's business.
This opinion is directed to the Board of Directors of Century and may
not be reproduced, summarized, described or referred to or given to any other
person without our prior consent. Notwithstanding the foregoing, this opinion
may be included in the proxy statement to be mailed to the holders of Century
Common Stock in connection with the Merger, provided that this opinion will be
reproduced in such proxy statement in full, and any description of or reference
to us or our actions, or any summary of the opinion in such proxy statement,
will be in form reasonably acceptable to us and our counsel.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Merger Consideration is fair to the holders of Century
Common Stock from a financial point of view.
Very truly yours,
/s/ TRIDENT SECURITIES
------------------------------------------
TRIDENT SECURITIES
A Division of McDonald Investments Inc.
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APPENDIX C
ARTICLE 13 OF THE NORTH CAROLINA BUSINESS CORPORATION ACT
GENERAL STATUTES OF NORTH CAROLINA
CHAPTER 55. NORTH CAROLINA
BUSINESS CORPORATION ACT
ARTICLE 13. DISSENTERS' RIGHTS
ss. 55-13-01 Definitions.
In this Article:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring corporation
by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under G.S. 55-13-02 and who exercises that right when and
in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate currently paid
by the corporation on its principal bank loans, if any, but not less than the
rate provided by G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
ss. 55-13-02 Right to Dissent.
(a) In addition to any rights granted under Article 9, a
shareholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the
corporation (other than a parent corporation in a merger under G.S. 55-11-04) is
a party unless (i) approval by the shareholders of that corporation is not
required under G.S. 55-11-03(g) or (ii) such shares are then redeemable by the
corporation at a price not greater than the cash to be received in exchange for
such shares;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired, unless
such shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than as permitted by
G.S. 55-12-01, including a sale in dissolution, but not including a sale
pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed in cash to
the shareholders within one year after the date of sale;
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(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a dissenter's shares
because it
(i) alters or abolishes a preferential right of
the shares;
(ii) creates, alters, or abolishes a right in
respect of redemption, including a provision
respecting a sinking fund for the redemption
or repurchase, of the shares;
(iii) alters or abolishes a preemptive right of
the holder of the shares to acquire shares
or other securities;
(iv) excludes or limits the right of the shares
to vote on any matter, or to cumulate votes;
(v) reduces the number of shares owned by the
shareholder to a fraction of a share if the
fractional share so created is to be
acquired for cash under G.S. 55-6-04; or
(vi) changes the corporation into a nonprofit
corporation or cooperative organization;
(5) Any corporate action taken pursuant to a shareholder
vote to the extent the articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting shareholders are entitled
to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his
shares under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
(c) Notwithstanding any other provision of this Article, there
shall be no right of shareholders to dissent from, or obtain payment of the fair
value of the shares in the event of, the corporate actions set forth in
subdivisions (1), (2), or (3) of subsection (a) of this section if the affected
shares are any class or series which, at the record date fixed to determine the
shareholders entitled to receive notice of and to vote at the meeting at which
the plan of merger or share exchange or the sale or exchange of property is to
be acted on, were (i) listed on a national securities exchange or designated as
a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or (ii) held by at least 2,000
record shareholders. This subsection does not apply in cases in which either:
(1) The articles of incorporation, bylaws, or a
resolution of the board of directors of the corporation issuing the shares
provide otherwise; or
(2) In the case of a plan of merger or share exchange,
the holders of the class or series are required under the plan of merger or
share exchange to accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of
fractional shares of the surviving or acquiring corporation, or of any other
corporation which, at the record date fixed to determine the shareholders
entitled to receive notice of and vote at the meeting at which the plan of
merger or share exchange is to be acted on, were either listed subject to notice
of issuance on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc., or held by at least 2,000 record shareholders; or
c. A combination of cash and shares as set
forth in sub-subdivisions a. and b. of this subdivision.
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ss. 55-13-03 Dissent by Nominees and Beneficial Owners.
(a) A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if he dissents with respect to
all shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:
(1) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is
the beneficial shareholder.
ss. 55-13-20 Notice of Dissenters' Rights.
(a) If proposed corporate action creating dissenters' rights under
G.S. 55-13-02 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S.
55-13-02 is taken without a vote of shareholders, the corporation shall no later
than 10 days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this
section, such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
ss. 55-13-21 Notice of Intent to Demand Payment.
(a) If proposed corporate action creating dissenters' rights under
G.S. 55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder
who wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation
must actually receive, before the vote is taken written notice of his intent to
demand payment for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed
action.
(b) A shareholder who does not satisfy the requirements of
subsection (a) is not entitled to payment for his shares under this Article.
ss. 55-13-22 Dissenters' Notice.
(a) If proposed corporate action creating dissenters' rights under
G.S. 55-13-02 is authorized at a shareholders' meeting, the corporation shall
mail by registered or certified mail, return receipt requested, a written
dissenters' notice to all shareholders who satisfied the requirements of G.S.
55-13-21.
(b) The dissenters' notice must be sent no later than 10 days
after shareholder approval, or if no shareholder approval is required, after the
approval of the board of directors, of the corporate action creating dissenters'
rights under G.S. 55-13-02, and must:
(1) State where the payment demand must be sent and where
and when certificates for certificated shares must be deposited;
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(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment demand is
received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than 60 days after
the date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
ss. 55-13-23 Duty to Demand Payment.
(a) A shareholder sent a dissenters' notice described in G.S.
55-13-22 must demand payment and deposit his share certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this Article.
ss. 55-13-24 Share Restrictions.
(a) The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
ss. 55-13-25 Payment.
(a) As soon as the proposed corporate action is taken, or within
30 days after receipt of a payment demand, the corporation pay each dissenter
who complied with G.S. 55-13-23 the amount the corporation estimates to be the
fair value of his shares, plus interest accrued to the date of payment.
(b) The payment shall be accompanied by:
(1) The corporation's most recent available balance sheet
as of the end of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of cash flows for that
year, and the latest available interim financial statements, if any;
(2) An explanation of how the corporation estimated the
fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand
payment under G.S. 55-13-28; and
(5) A copy of this Article.
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ss. 55-13-26 Failure to Take Action.
(a) If the corporation does not take the proposed action within 60
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action, it must send a
new dissenters' notice under G.S. 55-13-22 and repeat the payment demand
procedure.
ss. 55-13-27 Reserved.
ss. 55-13-28 Procedure if Shareholder Dissatisfied with Corporation's
Payment or Failure to Perform.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of the amount in excess of the payment by the corporation under G.S.
55-13-25 for the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under
G.S. 55-13-25 is less than the fair value of his shares or that the interest due
is incorrectly calculated;
(2) The corporation fails to make payment under G.S.
55-13-25; or
(3) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date set
for demanding payment.
(b) A dissenter waives his right to demand payment under this
section unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation made payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
ss. 55-13-29 Reserved.
ss. 55-13-30 Court Action.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled,
the dissenter may commence a proceeding within 60 days after the earlier of (i)
the date payment is made under G.S. 55-13-25, or (ii) the date of the
dissenter's payment demand under G.S. 55-13-28 by filing a complaint with the
Superior Court Division of the General Court of Justice to determine the fair
value of the shares and accrued interest. A dissenter who takes no action within
the 60-day period shall be deemed to have withdrawn his dissent and demand for
payment.
(b) [Reserved for future codification purposes.]
(c) The court shall have the discretion to make all dissenters
(whether or not residents of this State) whose demands remain unsettled parties
to the proceeding as in an action against their shares and all parties must be
served with a copy of the complaint. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the superior court in which the proceeding
is commenced under subsection (a) is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The parties are
entitled to the same discovery rights as parties in other civil proceedings. The
proceeding shall be tried as in other civil actions. However, in a proceeding by
a dissenter in a
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corporation that was a public corporation immediately prior to consummation of
the corporate action giving rise to the right of dissent under G.S. 55-13-02,
there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation.
ss. 55-13-31 Court Costs and Counsel Fees.
(a) The court in an appraisal proceeding commenced under G.S.
55-13-30 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, and shall assess
the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substantially comply with
the requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in
favor of either or any other party, if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not
in good faith with respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to be paid out
of the amounts awarded the dissenters who were benefited.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 55-2-02 of the North Carolina Business Corporation Act enables
a corporation in its articles of incorporation to eliminate or limit, with
certain exceptions, the personal liability of directors for monetary damages for
breach of their duties as directors. No such provision is effective to eliminate
or limit a director's liability for: (i) acts or omissions that the director at
the time of the breach knew or believed to be clearly in conflict with the best
interests of the corporation; (ii) improper distributions as described in
Section 55-8-33 of the North Carolina Act; (iii) any transaction from which the
director derived an improper personal benefit; or (iv) acts or omissions
occurring prior to the date the exculpatory provision became effective. First
Bancorp's articles of incorporation limit the personal liability of its
directors to the fullest extent permitted by the North Carolina Act.
Sections 55-8-50 through 55-8-58 of the North Carolina Act permit a
corporation to indemnify its directors, officers, employees or agents under
either or both a statutory or nonstatutory scheme of indemnification. Under the
statutory scheme, a corporation may, with certain exceptions, indemnify a
director, officer, employee or agent of the corporation who was, is, or is
threatened to be made, a party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative, or
investigative because of the fact that such person was or is a director,
officer, agent or employee of the corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. This indemnity may include the obligation to pay any
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan) or reasonable expenses incurred in
connection with a proceeding (including counsel fees), but no such
indemnification may be granted unless such director, officer, employee or agent
(i) conducted himself in good faith, (ii) reasonably believed (a) that any
action taken in his official capacity with the corporation was in the best
interests of the corporation or (b) that in all other cases his conduct was not
opposed to the corporation's best interests, and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. Whether a director has met the requisite standard of conduct for the
type of indemnification set forth above is determined by the board of directors,
a committee of directors, special legal counsel or the shareholders in
accordance with Section 55-8-55 of the North Carolina Act. A corporation may not
indemnify a director under the statutory scheme in connection with a proceeding
by or in the right of the corporation in which a director was adjudged liable to
the corporation or in connection with any other proceeding in which a director
was adjudged liable on the basis of having received an improper personal
benefit.
In addition to, and notwithstanding the conditions of and limitations
on, the indemnification described above under the statutory scheme, Section
55-8-57 of the North Carolina Act permits a corporation to indemnify, or agree
to indemnify, any of its directors, officers, employees or agents against
liability and expenses (including attorneys' fees) in any proceeding (including
proceedings brought by or on behalf of the corporation) arising out of their
status as such or their activities in such capacities, except for any
liabilities or expenses incurred on account of activities that were, at the time
taken, known or believed by the person to be clearly in conflict with the best
interests of the corporation. First Bancorp's bylaws provide for indemnification
to the fullest extent permitted under the North Carolina Act, and First Bancorp
has separate indemnification agreements with various current and past directors
and officers.
Because of its agreements to indemnify, First Bancorp may indemnify its
directors, officers, employees and agents in accordance with either the
statutory or nonstatutory standard. Sections 55-8-52 and 55-8-56 of the North
Carolina Act require a corporation, unless its articles of incorporation provide
otherwise, to indemnify a director or officer who has been wholly successful, on
the merits or otherwise, in the defense of any proceeding to which such director
or officer was made a party because he is or was a director or officer of the
corporation against reasonable expenses actually incurred by the director or
officer in connection with the proceeding. Unless prohibited by the articles of
incorporation, a director or officer also may make application and obtain
court-ordered indemnification if the court determines that such director or
officer is fairly and reasonably entitled to such indemnification as provided in
Sections 55-8-54 and 55-8-56 of the North Carolina Act.
Additionally, Section 55-8-57 of the North Carolina Act authorizes a
corporation to purchase and maintain insurance on behalf of an individual who is
or was a director, officer, employee or agent of the corporation against
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certain liabilities incurred by such a person, whether or not the corporation is
otherwise authorized by the North Carolina Act to indemnify that person. First
Bancorp has purchased and maintains such insurance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed herein or have been, as noted,
previously filed:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
2.1 Merger Agreement, dated as of October 19, 2000, between First
Bancorp and Century Bancorp, Inc. (included as Appendix A to
the Proxy Statement/Prospectus included as part of this
Registration Statement).
3.1 Articles of Incorporation and amendments thereto, filed as
Exhibit 3(a) to First Bancorp's Registration Statement Number
33-12692, is incorporated herein by reference.
3.2 Amendment to Articles of Incorporation, adding a new Article
Nine, filed as Exhibit 3(e) to First Bancorp's Annual Report
on Form 10-K for the year ended December 31, 1988, is
incorporated herein by reference.
3.3 Amendment to Articles of Incorporation, adding a new Article
X, filed as Exhibit 3.a.iii to First Bancorp's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999, is
incorporated herein by reference.
3.4 Amendments to Article IV of Articles of Incorporation, filed
as Exhibit 3.a.iv to First Bancorp's Quarterly Report on Form
10-Q for the quarter ended June 30, 1999, is incorporated
herein by reference.
3.5 Bylaws and amendments thereto, filed as Exhibit 3(b) to First
Bancorp's Annual Report on Form 10-KSB for the year ended
December 31, 1994, is incorporated herein by reference.
3.6 Amendment of Section 3.04 of Article Three of the Bylaws of
First Bancorp, filed as Exhibit 3.6 to First Bancorp's
Registration Statement on Form S-4 (File No. 333-34216), is
incorporated herein by reference.
3.7 Amendment of Section 3.19 of Article Three of the Bylaws of
First Bancorp., filed as Exhibit 3.7 to First Bancorp's
Registration Statement on Form S-4 (File No. 333-34216), is
incorporated herein by reference.
3.8 Amendment of Section 3.02 of Article Three of the Bylaws of
First Bancorp, filed as Exhibit 3.b.iv to First Bancorp's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000, is incorporated herein by reference.
4.1 Form of common stock certificate, filed as Exhibit 4 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999, is incorporated herein by reference.
4.2 Articles IV, V and X of the Articles of Incorporation of the
Registrant (included in Exhibits, 3.1, 3.3 and 3.4 hereto).
5.1 Opinion of Robinson, Bradshaw & Hinson, P.A., regarding
legality of common stock.
8.1 Opinion of KPMG LLP regarding federal income tax consequences.
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Data processing Agreement dated October 1, 1984 by and between
Bank of Montgomery (First Bank) and Montgomery Data Services,
Inc., filed as Exhibit 10(k) to First Bancorp's Registration
Statement Number 33-12692, is incorporated herein by
reference.
10.2 First Bank Salary and Incentive Plan, as amended, filed as
Exhibit 10(m) to First Bancorp's Registration Statement Number
33-12692, is incorporated herein by reference.
10.3 First Bancorp Savings Plus and Profit Sharing Plan (401(k)
savings incentive plan and trust), as amended January 25, 1994
and July 19, 1994, filed as Exhibit 10(c) to First Bancorp's
Annual Report on Form 10-KSB for the year ended December 31,
1994, is incorporated herein by reference.
10.4 Directors and Officers Liability Insurance Policy of First
Bancorp, dated July 16, 1991, filed as Exhibit 10(g) to First
Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by reference.
10.5 Indemnification Agreement between First Bancorp and its
Directors and Officers, filed as Exhibit 10(t) to First
Bancorp's Registration Statement Number 33-12692, is
incorporated herein by reference.
10.6 First Bancorp Employees' Pension Plan, as amended on August
16, 1994, filed as Exhibit 10(g) to First Bancorp's Annual
Report on Form 10-KSB for the year ended December 31, 1994, is
incorporated herein by reference.
10.7 First Bancorp Senior Management Supplemental Executive
Retirement Plan dated May 31, 1993, filed as Exhibit 10(k) to
First Bancorp's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, is incorporated herein by reference.
10.8 First Bancorp Senior Management Split-Dollar Life Insurance
Agreements between First Bancorp and the Executive Officers,
as amended on December 22, 1994, filed as Exhibit 10(i) to
First Bancorp's Annual Report on Form 10-KSB for the year
ended December 31, 1994, is incorporated herein by reference.
10.9 First Bancorp 1994 Stock Option Plan filed as Exhibit 10(n) to
First Bancorp's Quarterly Report on Form 10-QSB for the
quarter ended March 31, 1994, is incorporated herein by
reference.
10.10 Severance Agreement between First Bancorp and Patrick A.
Meisky dated December 29, 1995, filed as Exhibit 10(o) to
First Bancorp's Annual Report on Form 10-KSB for the year
ended December 31, 1995, is incorporated herein by reference.
10.11 Amendment to the First Bancorp Savings Plus and Profit Sharing
Plan (401(k) savings incentive plan and trust), dated December
17, 1996, filed as Exhibit 10(m) to First Bancorp's Annual
Report on Form 10-KSB for the year ended December 31, 1996, is
incorporated herein by reference.
10.12 First Amendment to the First Bancorp Senior Management
Executive Retirement Plan dated April 21, 1998, filed as
Exhibit 10(o) to First Bancorp's Annual Report on Form 10-K
for the year ended December 31, 1998, is incorporated herein
by reference.
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.13 Employment Agreement between First Bancorp and James H. Garner
dated August 17, 1998, filed as Exhibit 10(l) to First
Bancorp's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, is incorporated herein by reference.
10.14 Employment Agreement between First Bancorp and Anna G. Hollers
dated August 17, 1998, filed as Exhibit 10(m) to First
Bancorp's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, is incorporated herein by reference.
10.15 Employment Agreement between First Bancorp and Teresa C. Nixon
dated August 17, 1998, filed as Exhibit 10(n) to First
Bancorp's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, is incorporated herein by reference.
10.16 Employment Agreement between First Bancorp and Eric P. Credle
dated August 17, 1998, filed as Exhibit 10.p to First
Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by reference.
10.17 Amendments 1 and 2 to First Bancorp's 1994 Stock Option Plan
filed as Exhibit 10.q to First Bancorp's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, is incorporated
herein by reference.
10.18 Employment Agreement dated August 18, 1998 between First
Bancorp and David C. Grigg, filed as Exhibit 10.r to First
Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1999, is incorporated herein by reference.
10.19 Employment Agreement dated September, 14, 2000 between First
Bancorp and John F. Burns, filed as Exhibit 10.w to First
Bancorp's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000, is incorporated herein by reference.
10.20 Stock Option Agreement dated as of October 19, 2000 between
First Bancorp and Century Bancorp, Inc., filed as Exhibit 99.3
to First Bancorp's Form 8-K filed on October 20, 2000, is
incorporated herein by reference.
10.21 Purchase and Assumption Agreement with Bank of Davie dated
August 22, 2000, filed as Exhibit 10.u to First Bancorp's
Quarterly Report on Form 10-Q for the quarter ended September
30, 2000, is incorporated herein by reference.
10.22 Purchase and Assumption Agreement with First Union National
Bank dated September 13, 2000, filed as Exhibit 10.v to First
Bancorp's Quarterly Report on 10-Q for the quarter ended
September 30, 2000, in incorporated herein by reference.
21.1 List of Subsidiaries of Registrant, filed as Exhibit 21 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999, is incorporated herein by reference.
23.1 Consent of Robinson, Bradshaw & Hinson, P.A. (included in
Exhibit 5.1).
23.2 Consent of KPMG LLP.
23.3 Consent of KPMG LLP regarding its tax opinion.
23.4 Consent of Dixon Odom, PLLC.
23.5 Consent of Trident Securities, a division of McDonald
Investments, Inc.
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EXHIBIT NO. DESCRIPTION
- ----------- -----------
23.6* Power of Attorney of Jack D. Briggs.
23.7* Power of Attorney of David L. Burns.
23.8* Power of Attorney of Jesse S. Capel.
23.9* Power of Attorney of George R. Perkins, Jr.
23.10* Power of Attorney of G.T. Rabe, Jr.
23.11* Power of Attorney of Edward T. Taws.
23.12* Power of Attorney of Frederick H. Taylor.
23.13* Power of Attorney of Goldie H. Wallace.
23.14* Power of Attorney of A. Jordan Washburn.
23.15* Power of Attorney of John C. Willis.
23.16* Power of Attorney of James H. Garner.
23.17* Power of Attorney of Eric P. Credle.
23.18* Power of Attorney of Virginia C. Thomasson.
23.19* Power of Attorney of H. David Bruton, M.D.
23.20* Power of Attorney of John F. Burns.
23.21* Power of Attorney of Felton J. Capel.
23.22* Power of Attorney of Frank G. Hardister.
23.23* Power of Attorney of Thomas F. Phillips.
23.24* Power of Attorney of William E. Samuels.
99.1* Form of Revocable Proxy.
- ---------------
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) 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 that is
incorporated by reference into 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.
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(2) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by person who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable Form.
(3) That every prospectus (i) that is filed pursuant to Paragraph
(2) immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes 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.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the 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, the registrant will, unless in
the opinion of its 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.
(3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(4) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement
when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Troy, North
Carolina, on April 17, 2001.
First Bancorp
(Registrant)
By: /s/ James H. Garner
--------------------------------------
James H. Garner
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 17, 2001.
/s/ James H. Garner
-------------------------------------------------
James H. Garner
President, Chief Executive Officer and Director
/s/ Anna G. Hollers /s/ Eric P. Credle
------------------------------------------------- --------------------------------------------
Anna G. Hollers Eric P. Credle
Executive Vice President Senior Vice President and
Chief Financial Officer (Chief
Financial and Accounting Officer)
/s/ Jack D. Briggs* /s/ Edward T. Taws*
------------------------------------------------- --------------------------------------------
Jack D. Briggs Edward T. Taws
Chairman of the Board Director
Director
/s/ David L. Burns* /s/ Frederick H. Taylor*
------------------------------------------------- --------------------------------------------
David L. Burns Frederick H. Taylor
Director Director
/s/ Jesse S. Capel* /s/ Goldie H. Wallace*
------------------------------------------------- --------------------------------------------
Jesse S. Capel Goldie H. Wallace
Director Director
/s/ George R. Perkins, Jr.* /s/ A. Jordan Washburn*
------------------------------------------------- --------------------------------------------
George R. Perkins, Jr. A. Jordan Washburn
Director Director
/s/ G.T. Rabe, Jr.* /s/ John C. Willis*
------------------------------------------------- --------------------------------------------
G.T. Rabe, Jr. John C. Willis
Director Director
/s/ Virginia C. Thomasson* /s/ H. David Bruton, M.D.*
------------------------------------------------- --------------------------------------------
Virginia C. Thomasson H. David Bruton, M.D.
Director Director
/s/ John F. Burns* /s/ Frank G. Hardister*
------------------------------------------------- --------------------------------------------
John F. Burns Frank G. Hardister
Director Director
/s/ Felton J. Capel* /s/ Thomas F. Phillips*
------------------------------------------------- --------------------------------------------
Felton J. Capel Thomas F. Phillips
Director Director
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/s/ William E. Samuels*
-------------------------------------------------
William E. Samuels
Director
-------------------------------------------------
* By: /s/ Anna G. Hollers
-------------------------------------------
Anna G. Hollers
Executive Vice President
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