<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Century Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CENTURY BANCORP, INC.
22 Winston Street
Thomasville, North Carolina 27360
----------
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 23, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders
(the "Annual Meeting") of Century Bancorp, Inc. (the "Company") will be held on
October 23, 1997, at 5:00 p.m., Eastern Time, at the main office of the Company
at 22 Winston Street, Thomasville, North Carolina.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. To elect five persons who will serve as directors of the Company until
the 1998 Annual Meeting of stockholders or until their successors are
duly elected and qualified;
2. To ratify the selection of Dixon, Odom & Company, LLP as the
independent auditor for the Company for the fiscal year ending June
30, 1998; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to be considered at the Annual Meeting.
The Board of Directors has established August 29, 1997, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournments thereof. In the event there are not
sufficient shares present in person or by proxy to constitute a quorum at the
time of the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies by the Company.
By Order of the Board of Directors
/s/ Drema A. Michael
Drema A. Michael
Secretary
Thomasville, North Carolina
September 23, 1997
A form of proxy is enclosed to enable you to vote your shares at the Annual
Meeting. You are urged, regardless of the number of shares you hold, to
complete, sign, date and return the proxy promptly. A return envelope, which
requires no postage if mailed in the United States, is enclosed for your
convenience.
<PAGE>
CENTURY BANCORP, INC.
PROXY STATEMENT
1997 ANNUAL MEETING OF STOCKHOLDERS
October 23, 1997
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
General
This Proxy Statement is being furnished to stockholders of Century Bancorp,
Inc. (the "Company") in connection with the solicitation by the board of
directors of the Company (the "Board of Directors" or "Board") of proxies to be
used at the 1997 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on October 23, 1997, at 5:00 p.m., Eastern Time, at the main office of the
Company at 22 Winston Street, Thomasville, North Carolina, and any adjournments
thereof. This Proxy Statement and the accompanying form of proxy were first
mailed to stockholders on or about September 24, 1997. The Company's office is
located at 22 Winston Street, Thomasville, North Carolina 27360 and its
telephone number is (910) 475-4663.
Other than the matters listed on the attached Notice of 1997 Annual Meeting
of Stockholders, the Board of Directors knows of no matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares represented thereby in accordance with their best judgment on such
other business, if any, that may properly come before the Annual Meeting or any
adjournments thereof.
Revocability of Proxy
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a beneficial owner of
shares of the Company's outstanding common stock (the "Common Stock") that are
not registered in your own name, you will need appropriate documentation from
the holder of record of your shares to vote personally at the Annual Meeting.
Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses, if any. In addition to
the use of the mail, proxies may be solicited personally or by telephone by
directors, officers and regular employees of the Company and its wholly-owned
savings bank subsidiary, Home Savings, Inc. SSB (the "Bank"), without additional
compensation therefor. Brokerage houses and nominees have been requested to
forward these proxy materials to the beneficial owners of shares held of record
by such persons and, upon request, the Company will reimburse such persons for
their reasonable out-of-pocket expenses in doing so.
Voting Securities and Vote Required for Approval
Regardless of the number of shares of Common Stock owned, it is important
that stockholders be present in person or represented by proxy at the Annual
Meeting. Stockholders are requested to vote by completing, signing, dating and
returning the enclosed proxy in the enclosed postage-paid envelope. Any
stockholder may vote for, against, or withhold authority to vote on any matter
to come before the Annual Meeting. If the enclosed proxy is properly completed,
signed, dated and returned, and not revoked, it will be voted in accordance with
the instructions therein. If a proxy is returned with no instructions given, the
proxy will be voted FOR the nominees for election to the Board
---
<PAGE>
of Directors named in this Proxy Statement and for the other matters described
in this Proxy Statement calling for a vote of the stockholders. If instructions
are given with respect to some but not all proposals, such instructions as are
given will be followed and the proxy will be voted FOR the proposals on which no
---
instructions are given.
The close of business on August 29, 1997 has been fixed by the Board of
Directors as the record date ("Record Date") for the determination of those
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. As of the Record Date, the Company had outstanding
407,330 shares of Common Stock. Each share of Common Stock entitles its owner to
one vote on each matter calling for a vote of stockholders at the Annual
Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Since many of our stockholders cannot
attend the Annual Meeting, it is necessary that a large number be represented by
proxy. Accordingly, the Board of Directors has designated proxies to represent
those stockholders who cannot be present in person and who desire to be so
represented. In the event there are not sufficient stockholders present, in
person or by proxy, to constitute a quorum or to approve or ratify any proposal
at the time of the Annual Meeting, the Annual Meeting may be adjourned in order
to permit the further solicitation of proxies.
In order to be elected, a nominee need only receive a plurality of the
votes cast in the election of the applicable class of directors for which he has
been nominated. As a result, those persons nominated for election who receive
the largest number of votes will be elected as directors. Accordingly, shares
not voted for any reason with respect to any one or more nominees will not be
counted as votes against such nominees. No stockholder has the right to
cumulatively vote his or her shares in the election of directors.
The proposal to ratify the appointment of the Company's independent auditor
for the year ending June 30, 1998 will be approved if the votes cast in favor of
such action exceed the votes cast opposing the action.
Abstentions will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Abstentions will not be counted in tabulating the
votes cast on any proposal submitted to the stockholders. Broker non-votes will
not be counted either for determining the existence of a quorum or for
tabulating votes cast on any proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires that any person who acquires the beneficial ownership of more than 5%
of the Common Stock of the Company notify the Securities and Exchange Commission
(the "SEC") and the Company. Following is certain information, as of the Record
Date, regarding all persons or "groups", as defined in the Exchange Act, who
held of record or who are known to the Company to own beneficially more than 5%
of the Company's Common Stock.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Name and Address Beneficial of
of Beneficial Owner Ownership/1/ Class/2/
- ------------------- ------------ ----------
<S> <C> <C>
Henry H. Darr 37,586/3/ 9.2%
620 Trindale Road
Trinity, NC 27370
F. Stuart Kennedy 37,586/4/ 9.2%
1100 Dover Drive
Thomasville, NC 27360
Milton T. Riley, Jr. 37,986/5/ 9.3%
605 Burke Trail
Thomasville, NC 27360
Salem Investment Counselors/6/ 20,800 5.1%
480 Shepherd Street
Winston-Salem, NC 27103
</TABLE>
- ---------------------------------
/1/ Unless otherwise noted, all shares are owned directly or indirectly by the
named individuals, by their spouses and minor children, or by other entities
controlled by the named individuals.
/2/ Based upon a total of 407,330 shares of Common Stock outstanding at the
Record Date.
/3/ Mr. Darr serves as a trustee of the Home Savings, Inc. SSB Employee Stock
Ownership Plan (the "ESOP") which holds 32,586 shares of the Company's Common
Stock. The trustees of the ESOP share certain voting and investment power of
such shares.
/4/ Mr. Kennedy serves as a trustee of the ESOP which holds 32,586 shares of the
Company's Common Stock. The trustees of the ESOP share certain voting and
investment power of such shares. This number also includes 3,000 shares owned by
a family limited partnership and 800 shares owned by Mr. Kennedy's wife. Mr.
Kennedy disclaims beneficial ownership of shares owned by his wife.
/5/ Mr. Riley serves as a trustee of the ESOP which holds 32,586 shares of the
Company's Common Stock. The trustees of the ESOP share certain voting and
investment power of such shares. This number also includes 400 shares owned by
Mr. Riley's wife. Mr. Riley disclaims beneficial ownership of shares owned by
his wife.
/6/ Salem Investment Counselors is an investment advisory firm that manages
complete portfolios for its clients. It has no discretionary holdings.
Set forth below is certain information, as of the Record Date, regarding
those shares of Common Stock owned beneficially by each of the members of the
Board of Directors (including nominees for re-election at the Annual Meeting),
each of the members of the board of directors of the Bank, certain executive
officers of the Company and the Bank, and the directors and executive officers
of the Company and the Bank as a group (all persons listed are directors of the
Company and the Bank).
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Beneficial of
Name and Address Ownership/1/,/2/ Class/3/
- ---------------- ---------------- -----------
<S> <C> <C>
James G. Hudson, Jr., President, Chief 4,500/4/ 1.1%
Executive Officer and Treasurer
24 Culbreth Avenue
Thomasville, NC 27360
Drema A. Michael, Secretary and 480/5/ .12%
Assistant Treasurer
444 Hannersville Road
Lexington, NC 27292
John R. Hunnicutt, Director 3,215/6/ .79%
1014 Pine Needle Lane
Thomasville, NC 27360
Milton T. Riley, Jr., Director 37,986/7/ 9.3%
605 Burke Trail
Thomasville, NC 27360
F. Stuart Kennedy, Director 37,586/8/ 9.2%
1100 Dover Drive
Thomasville, NC 27360
Henry H. Darr, Director 37,586/9/ 9.2%
620 Trindale Road
Trinity, NC 27360
Directors and Executive Officers as a
Group (6 Persons) 56,181/10/ 13.8%
</TABLE>
- --------------------------------
/1/ Voting and investment power is not shared unless otherwise indicated.
/2/ Unless otherwise noted, all shares are owned directly or indirectly by
the named individuals, their spouses and minor children, or other entities
controlled by the named individuals.
/3/ Based upon a total of 407,330 shares of Common Stock outstanding at the
Record Date.
/4/ This number includes 495 shares owned solely by Mr. Hudson and 3,110
shares owned jointly by Mr. Hudson and his wife. This number also includes 895
shares owned by Mr. Hudson's wife. Mr. Hudson disclaims beneficial ownership of
the shares owned by his wife.
/5/ These shares are owned jointly by Ms. Michael and Richard Brown.
/6/ These shares are owned jointly by Mr. Hunnicutt and his wife.
/7/ Mr. Riley serves as a trustee of the ESOP which holds 32,586 shares of
the Company's Common Stock. The trustees of the ESOP share certain voting and
investment power of such shares. This number also includes 400 for shares owned
by Mr. Riley's wife. Mr. Riley disclaims beneficial ownership of shares owned by
his wife.
/8/ Mr. Kennedy serves as a trustee of the ESOP which holds 32,586 shares
of the Company's Common Stock. The trustees of the ESOP share certain voting and
investment power of such shares. This number also includes 3,000 shares owned by
a family limited partnership. This number also includes 800 shares owned by Mr.
Kennedy's wife. Mr. Kennedy disclaims beneficial ownership of shares owned by
his wife.
4
<PAGE>
/9/ Mr. Darr serves as a trustee of the ESOP which holds 32,586 shares of
the Company's Common Stock. The trustees of the ESOP share certain voting and
investment power of such shares.
/10/ The 32,586 shares held by the ESOP for which the trustees, Messrs.
Darr, Riley and Kennedy, share voting and investment power have been included
only once in the total number of shares owned beneficially by the directors and
executive officers as a group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of the Company's Common
Stock, to file reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater than ten percent beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the fiscal year ended June 30, 1997,
all of its executive officers and directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
5
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
The Articles of Incorporation of the Company provide that the number of
directors of the Company shall not be less than five nor more than fifteen, with
the exact number within this range to be fixed from time to time by the Board of
Directors. The Board of Directors has currently fixed the size of the Board at
five members.
The Board of Directors has nominated the five persons named below for
election as directors to serve for the terms specified, or until their earlier
death, resignation, retirement, removal or disqualification or until their
successors are elected and qualified.
The persons named in the accompanying form of proxy intend to vote any
shares of Common Stock represented by valid proxies received by them to elect
the five nominees listed below as directors for the terms specified, unless
authority to vote is withheld or such proxies are duly revoked. Each of the
nominees for election is currently a member of the Board of Directors. In the
event that any of the nominees should become unavailable to accept nomination or
election, it is intended that the proxyholders will vote to elect in his stead
such other person as the present Board of Directors may recommend or to reduce
the number of directors to be elected at the Annual Meeting by the number of
such persons unable or unwilling to serve (subject to the requirements of the
Company's Certificate of Incorporation and Bylaws). The present Board of
Directors has no reason to believe that any of the nominees named herein will be
unable to serve if elected to office. In order to be elected as a director, a
nominee need only receive a plurality of the votes cast.
The following table sets forth as to each nominee, his name, age, principal
occupation during the last five years, the term for which he has been nominated,
and the year he was first elected as a director of the Bank. All of the nominees
were appointed to serve as initial directors of the Company in connection with
its incorporation in July, 1996.
6
<PAGE>
<TABLE>
<CAPTION>
Age on
June 30, Principal Occupation Term Director
Name 1997 During Last Five Years Expires Since
- ---- ------- ---------------------- ------- --------
<S> <C> <C> <C> <C>
Henry H. Darr 56 President, J. L. Darr & Son, Inc. 1998 1980
James G. Hudson, Jr. 57 President, Chief Executive Officer and 1998 1972
Treasurer of the Company and the Bank
John R. Hunnicutt 61 President, McThom, Inc. and McLex, Inc., 1998 1995
licensees of McDonalds Corporation
F. Stuart Kennedy 71 Chairman of the Board, Rex Oil Company 1998 1971
Milton T. Riley, Jr. 60 Personal investments; until 1992, partner 1998 1992
with Dixon, Odom & Co., certified public
accountants
</TABLE>
Mr. Darr and Mr. Kennedy are cousins.
The Board of Directors recommends a vote FOR all of the nominees for
election as directors.
Board of Directors of the Bank
The Bank also has a five member board of directors which is composed of the
same persons who are currently directors of the Company.
Meetings of the Board and Committees of the Board
The Company was organized in July, 1996 by the board of directors of the
Bank to acquire and hold the capital stock of the Bank issued in connection with
the Bank's conversion from mutual to stock form (the "Conversion"). The Company
did not actively engage in any business until after the consummation of the
Conversion on December 20, 1996. Consequently, the meetings of the Board of
Directors held during the fiscal year ended June 30, 1997 were held in
connection with the organization of the Company and the Conversion. During
fiscal 1997, the Board of Directors of the Company held four meetings. All of
the existing directors of the Company, including the nominees for election
listed above, attended at least 75% of the aggregate number of meetings of the
Board of Directors and committees of the Board on which they served during the
year ended June 30, 1997.
The Board of Directors of the Company has a standing Audit Committee. The
Company's Audit Committee consists of Mr. Riley, Mr. Kennedy and Mr. Hunnicutt.
This Committee meets periodically to supervise examination of the assets and the
liabilities and the internal audit program of the Company and its subsidiaries
and to cause outside audits to be performed on the financial statements of the
Company. The Audit Committee met one time during the fiscal year ended June 30,
1997.
In addition, the full Board of Directors acts as a nominating committee
each year prior to the annual meeting of stockholders to nominate persons for
election to the Board of Directors.
The Bank's board of directors has appointed three standing committees to
which certain responsibilities have been delegated -- the Loan Committee, the
Audit Committee and the Executive Committee. The Bank's Audit
7
<PAGE>
Committee consists of Mr. Riley and Ms. Michael. In addition the Bank's board of
directors appoints other committees of its members to perform certain more
limited functions from time to time.
The Board of Directors of the Company does not have a compensation
committee. The Bank's full board of directors serves as the Company's
compensation committee and determines the compensation of the executive officers
of the Company and the Bank. The salaries of each of the executive officers is
determined based upon the executive officer's contributions to the Bank's
overall profitability, maintenance of regulatory compliance standards,
professional leadership, and management effectiveness in meeting the needs of
day to day operations. The board of directors also compares the compensation of
the Bank's executive officers with compensation paid to executives of comparable
financial institutions in North Carolina and executives of other businesses in
the Bank's market area. Mr. Hudson participates in the deliberations of the
board of directors regarding compensation of executive officers other than
himself. He does not participate in the discussion or decisions regarding his
own compensation.
Director Compensation
Board Fees. Members of the Board of Directors receive no fees or
compensation for their service. However, all members of the Company's Board of
Directors are also directors of the Bank. For their service on the Bank's board
of directors, all members of the Bank board receive $800 per month.
In addition, all non-employee directors who serve on the Bank's board
committees receive $150 per meeting for their service. Board fees are subject to
adjustment annually.
Executive Officers
The following table sets forth certain information with respect to the
persons who are executive officers of the Company and the Bank.
<TABLE>
<CAPTION>
Employed By
the Bank or
Age on Positions and Occupations the Company
Name June 30, 1997 During Last Five Years Since
- ---- ------------- ----------------------- -----
<S> <C> <C> <C>
James G. Hudson, Jr. 57 President, Chief Executive Officer, and 1972
Treasurer of the Company and the Bank
John E. Todd 51 Vice President of the Company and the 1979
Bank
Drema A. Michael 44 Secretary and Assistant Treasurer of 1974
the Company and the Bank
</TABLE>
Management Compensation
Summary Compensation Table. The following table sets forth for the fiscal
years ended June 30, 1997 and 1996 certain information as to the cash
compensation received by Mr. Hudson, the President, Chief Executive Officer and
Treasurer of the Company and the Bank. There were no other executive officers
whose cash compensation exceeded $100,000 for services rendered in all
capacities.
8
<PAGE>
<TABLE>
<CAPTION>
Other Annual
Name and Compensation All Other
Principal Position Year Salary Bonus ($)/3/ Compensation
- ------------------ ---- --------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James G. Hudson, Jr. 1997 $105,400/1/ $24,020/2/ $ -0- $22,000/4/
President, Chief Executive
Officer, Treasurer and Director
1996 $100,800/5/ $13,745/6/ $ -0- $22,000/7/
</TABLE>
- -----------------------
/1/ Includes director's fees of $9,600 for Mr. Hudson's service on the
Bank's board of directors.
/2/ Includes $20,420 in bonuses paid under the Bank's bonus compensation
plan and $3,600 in holiday bonuses. See "-- Bonus Compensation."
/3/ Under the "Other Annual Compensation" category, perquisites for the
fiscal years ended June 30, 1996 and June 30, 1997 did not exceed the
lesser of $50,000, or 10% of salary and bonus as reported for Mr. Hudson.
/4/ This represents the amount accrued under supplemental income agreements
established for the benefit of Mr. Hudson.
/5/ Includes director's fees of $9,000 for Mr. Hudson's services on the
Bank's board of directors.
/6/ Includes $10,283 in bonuses paid under the Bank's bonus compensation plan
and $3,462 in holiday bonuses. See "--Bonus Compensation."
/7/ This represents the amount accrued under supplemental income agreements
established for the benefit of Mr. Hudson.
Bonus Compensation
The Bank has approved a bonus compensation plan pursuant to which James
G. Hudson, Jr., President, Chief Executive Officer and Treasurer, receives bonus
compensation equal to 1% of the Bank's income before taxes and John E. Todd,
Vice President, and Drema A. Michael, Secretary and Assistant Treasurer, are
each entitled to receive bonuses equal to 0.5% of the Bank's income before
taxes. During the fiscal years ended June 30, 1997, 1996, and 1995, the bonuses
paid to Mr. Hudson totalled $20,420, $10,283 and $15,861, respectively; and the
bonuses paid to each of Mr. Todd and Ms. Michael totalled $10,210, $5,142 and
$7,932, respectively. In addition, employees receive annual discretionary
holiday bonuses, which during the fiscal years 1997, 1996 and 1995 totalled
$14,000, $13,000 and $12,000, in the aggregate for all employees. As is the case
with the Bank's compensation arrangements in general, the Bank's bonus
compensation plan is subject to regulatory oversight and, therefore, could be
changed in the future in response to regulatory requirements or otherwise.
Supplemental Income Plans
The Bank has entered into two separate Supplemental Income Agreements with
James G. Hudson, Jr., President, Chief Executive Officer and Treasurer. These
agreements provide that Mr. Hudson will receive certain 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 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 Supplemental Income Agreements are funded by the purchase of life insurance.
During the fiscal year ended June 30, 1997, the Bank accrued $22,000 towards the
cost of the benefits to be provided to Mr. Hudson under the supplemental income
plans.
Employment Agreement
In connection with the Conversion, the Bank entered into an employment
agreement with James G. Hudson, Jr., President, Chief Executive Officer and
Treasurer, in order to establish his duties and compensation and to provide for
his continued employment with the Bank. The agreement provided for an initial
annual base salary of $93,600.
9
<PAGE>
The agreement provides for an initial term of employment of three years.
Commencing on the first anniversary date and continuing on each anniversary date
thereafter, following a performance evaluation of the employee, the agreement
may be extended for an additional year so that the remaining term shall be three
years unless written notice of non-renewal is given by the board of directors of
the Bank. The agreement also provides that base salary shall be reviewed by the
board of directors not less often than annually. In the event of a change in
control (as defined below), Mr. Hudson's base salary shall be increased by at
least 6% annually and the agreement will automatically be extended so that it
will have a three year term after the change in control. In addition, the
employment agreement provides for possible profitability and discretionary
bonuses and participation in all other pension, profit-sharing or retirement
plans maintained by the Bank or by the Company for employees of the Bank, as
well as fringe benefits normally associated with Mr. Hudson's office. It is now
expected that Mr. Hudson will continue to be eligible to receive bonuses under
the existing bonus compensation plan for executive officers, as such plan may be
amended in the future. See " -- Bonus Compensation." It is not now contemplated
that Mr. Hudson will receive additional discretionary bonuses, other than
holiday bonuses computed on the same basis as those paid to other employees. The
employment agreement provides that it may be terminated by the Bank for cause,
as defined in the agreement, and that it may otherwise be terminated by the Bank
(subject to vested rights) or by Mr. Hudson.
The employment agreement provides that the nature of Mr. Hudson's
compensation, duties or benefits cannot be diminished following a change in
control of the Bank or the Company. For purposes of the employment agreement, a
change in control generally will occur if (i) after the effective date of the
employment agreement, any "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act) directly or indirectly, acquires beneficial
ownership of voting stock, or acquires irrevocable proxies or any combination of
voting stock and irrevocable proxies, representing 25% or more of any class of
voting securities of either the Company or the Bank, or acquires in any manner
control of the election of a majority of the directors of either the Company or
the Bank, (ii) either the Company or the Bank consolidates or merges with or
into another corporation, association or entity, or is otherwise reorganized,
where neither the Company nor the Bank is the surviving corporation in such
transaction, or (iii) all or substantially all of the assets of either the
Company or the Bank are sold or otherwise transferred to, or are acquired by,
any other entity or group.
Special Termination Agreements
In connection with the Conversion, the Company entered into special
termination agreements with John E. Todd, Vice President of the Bank, and Drema
A. Michael, Secretary and Assistant Treasurer of the Bank. Such agreements are
intended to ensure that the Bank maintains a stable and competent management
base. The continued success of the Bank depends, to a significant degree, on the
skill and competence of its officers.
The special termination agreements provide for payment to the covered
officer only in the event of a change in control of the Company or the Bank
followed by termination of the officer's employment by the Bank within 24 months
for other than "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 a change in control of the Bank or the
Company and the officer terminates his or her employment. In the event of such a
termination of employment, the officer is entitled to payment in an amount equal
to two times his or her salary and bonuses for income tax purposes for the most
recent calendar year, payable in a lump sum or in equal monthly payments. The
initial term of each of these agreements is for a period commencing upon the
effective date of the Conversion and ending three calendar years later. At the
end of each anniversary date of the agreements, they may be extended for another
year so that the remaining term shall be three years unless written notice of
non-renewal is given by the Company's Board of Directors. For purposes of the
special termination agreements, "change in control" has the same meaning as in
the employment agreement to be entered into with Mr. Hudson. See "-- Employment
Agreement." If a change in control and such a termination occurred during
calendar year 1997, Mr. Todd and Ms. Michael would be entitled to receive
$126,058 and $116,826, respectively, under their special termination agreements.
10
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Severance Plan
In connection with the Conversion, the Bank's Board of Directors adopted a
Severance Plan for the benefit of its employees. The Severance Plan provides
that in the event there is a "change in control" (as defined in the Severance
Plan) of the Bank or the Company and (i) the Bank or any successor of the Bank
terminates the employment of any full time employee of the Bank 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 the Bank 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 times the employee's
number of complete years of service as a Bank employee 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. Officers
of the Bank who, at the time of a "change in control," are parties to employment
agreements having a remaining term of more than two years are not covered by the
Severance Plan.
Employee Stock Ownership Plan
In connection with the Conversion, the Bank established the Employee Stock
Ownership Plan ("ESOP") for eligible employees of the Bank. Employees with 1,000
hours of employment in a plan year and who have attained age 21 are eligible to
participate. As part of the Conversion, the ESOP borrowed funds from the Company
and used the funds to purchase 32,586 of the shares of Common Stock issued in
the Conversion. Collateral for the loan is the Common Stock purchased by the
ESOP. The loan will be repaid principally from the Bank's discretionary
contributions to the ESOP over a period of 15 years or less. Dividends, if any,
paid on shares held by the ESOP may also be used to reduce the loan. The loan
has not been guaranteed by the Bank.
Shares purchased by the ESOP are held in a suspense account for allocation
among participants as the loan is repaid. Contributions to the ESOP and shares
released from the suspense account in an amount proportional to the repayment of
the ESOP loan are allocated among ESOP participants on the basis of relative
compensation in the year of allocation. Benefits vest in annual increments with
full vesting upon attaining five years of service (with credit given for years
of service prior to the Conversion). Prior to the completion of five years of
credited service, a participant who terminates employment for reasons other than
death, retirement (or early retirement), or disability will receive only vested
benefits under the ESOP. Forfeitures are reallocated among remaining
participating employees in the same proportion as contributions. Benefits
immediately vest and are payable upon death or disability. The Bank's
contributions to the ESOP are not fixed, so benefits payable under the ESOP
cannot be estimated.
The Bank has established a committee of the board of directors to
administer the ESOP. Trustees for the ESOP were appointed prior to the
Conversion. The ESOP committee may instruct the trustees regarding investment of
funds contributed to the ESOP. Participating employees may instruct the trustees
as to the voting of all shares allocated to their respective ESOP accounts. The
unallocated shares held in the suspense account, and all allocated shares for
which voting instructions are not received, will be voted by the trustees in
their discretion subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.
Certain Indebtedness and Transactions of Management
The Bank makes loans to its executive officers and directors in the
ordinary course of its business. These loans are currently made on substantially
the same terms, including interest rates, collateral and repayment terms, as
those then prevailing for comparable transactions with nonaffiliated persons,
and do not involve more than the normal risk of collectibility or present any
other unfavorable features. Applicable regulations prohibit the Bank from making
loans to its executive officers and directors at terms more favorable than could
be obtained by persons not affiliated
11
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with the Bank. The Bank's policy concerning loans to executive officers and
directors currently complies with such regulations.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Dixon, Odom & Company, LLP, the Company's and the Bank's independent
auditor for the year ended June 30, 1997, has been selected as the Company's and
the Bank's independent auditor for the 1998 fiscal year. Such selection is being
submitted to the Company's stockholders for ratification. A representative of
Dixon, Odom & Company, LLP is expected to attend the Annual Meeting and will be
afforded an opportunity to make a statement, if he so desires, and to respond to
appropriate questions from stockholders.
The Board of Directors recommends that the stockholders vote FOR this
---
proposal.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
It is presently anticipated that the 1998 Annual Meeting of Stockholders
will be held in October of 1998. In order for stockholder proposals to be
included in the proxy material for that meeting, such proposals must be received
by the Secretary of the Company at the Company's principal executive office not
later than May 26, 1998, and meet all other applicable requirements for
inclusion therein.
The Company's Bylaws provide that, in order to be eligible for
consideration at an annual meeting of stockholders, all nominations of
directors, other than those made by the Company's Board of Directors, must be
made in writing and must be delivered to the Secretary of the Company not less
than 50 days nor more than 90 days prior to the meeting at which such
nominations will be made; provided, however, if less than 21 days notice of the
meeting is given to stockholders, such nominations must be delivered to the
Secretary of the Company not later than the close of business on the seventh day
following the day on which the notice of meeting was mailed.
OTHER MATTERS
Management knows of no other matters to be presented for consideration at
the Annual Meeting or any adjournments thereof. If any other matters shall
properly come before the Annual Meeting, it is intended that the proxyholders
named in the enclosed form of proxy will vote the shares represented thereby in
accordance with their judgment, pursuant to the discretionary authority granted
therein.
12
<PAGE>
MISCELLANEOUS
The Annual Report of the Company for the year ended June 30, 1997, which
includes consolidated financial statements audited and reported upon by the
Company's independent auditor, is being mailed along with this Proxy Statement;
however, it is not intended that the Annual Report be deemed a part of this
Proxy Statement or a solicitation of proxies.
THE FORM 10-KSB FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
PROVIDED FREE OF CHARGE TO THE COMPANY'S STOCKHOLDERS UPON WRITTEN REQUEST
DIRECTED TO: CENTURY BANCORP, INC., POST OFFICE BOX 989, 22 WINSTON STREET,
THOMASVILLE, NORTH CAROLINA 27361-0989, ATTENTION: JAMES G. HUDSON, JR.
By Order of the Board of Directors,
/s/ Drema A. Michael
Drema A. Michael
Secretary
Thomasville, North Carolina
September 23, 1997
13
<PAGE>
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE CENTURY BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 23, 1997
5:00 p.m.
The undersigned hereby appoints the official proxy committee consisting of
all the members of the Board of Directors of Century Bancorp, Inc. (the
"Company"), each with full power of substitution, to act as attorneys and
proxies for the undersigned, and to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote only at the Annual Meeting of
Stockholders, to be held at the offices of the Company, 22 Winston Street,
Thomasville, North Carolina, on October 23, 1997, at 5:00 p.m. and at any and
all adjournments thereof, as follows:
FOR AGAINST FOR ALL EXCEPT
1. The approval of the election of
the following named directors: [_] [_] [_]
Henry H. Darr, James G. Hudson, Jr., John R. Hunnicutt, F. Stuart Kennedy and
Milton T. Riley, Jr. who will serve as directors of the Company until the
1998 Annual Meeting of Stockholders or until their successors are duly
elected and qualify. INSTRUCTION: To withhold authority to vote for any
individual nominee, mark "For All Except" and write that nominee's name in
the space provided below.
------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of Dixon, Odom &
Company, LLP as the independent [_] [_] [_]
auditor of the Company for the year
ending June 30, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
If a proxy is returned and no instructions are given, the proxy will be
voted for the nominees for election to the Board of Directors named on this
Revocable Proxy and for the ratification of Dixon, Odom & Company, LLP as the
independent auditor for the Company for the 1998 fiscal year. If instructions
are given with respect to one but not both proposals, such instructions as are
given will be followed and the proxy will be voted for the proposal on which no
instructions are given.
-----------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
- --Stockholder sign above ------------ Co-holder (if any) sign above-------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Detach above card, sign, date and mail in postage paid envelope provided.
CENTURY BANCORP, INC.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The above signed acknowledges receipt from the Company, prior to the
execution of this Proxy, of a Notice of Annual Meeting and a Proxy Statement
dated September 23, 1997.
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign, but only one signature is
required.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
