<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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Notes:
<PAGE>
CENTURY BANCORP, INC.
22 Winston Street
Thomasville, North Carolina 27360
__________
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 16, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of Century Bancorp, Inc. (the "Company") will be held on
November 16, 1999, 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 2000 Annual Meeting of Stockholders and until their successors are
duly elected and qualified or until their earlier death, resignation,
retirement, removal or disqualification;
2. To ratify the selection of Dixon Odom PLLC as the independent auditor
for the Company for the fiscal year ending June 30, 2000; 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 October 1, 1999, 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
October 14, 1999
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
1999 ANNUAL MEETING OF STOCKHOLDERS
November 16, 1999
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 1999 Annual Meeting of Stockholders (the "Annual Meeting") to be
held on November 16, 1999, 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 October 14, 1999. The Company's office is
located at 22 Winston Street, Thomasville, North Carolina 27360 and its
telephone number is (336) 475-4663.
Other than the matters listed on the attached Notice of 1999 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 or against, or may abstain 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 of Directors named in this Proxy Statement and FOR the other matters
---
described in this Proxy Statement calling
<PAGE>
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 for which no instructions are given.
---
The close of business on October 1, 1999 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 1,112,669 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 to the Board of Directors need only
receive a plurality of the votes cast in the election of directors. 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, 2000 will be approved if the votes cast in favor of
such proposal exceed the votes cast opposing the proposal.
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 209,075/3/ 18.69%
620 Trindale Road
Trinity, NC 27370
F. Stuart Kennedy 209,075/3,4/ 18.69%
1100 Dover Drive
Thomasville, NC 27360
Milton T. Riley, Jr. 211,775/3,5/ 18.93%
605 Burke Trail
Thomasville, NC 27360
</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 1,112,669 shares of Common Stock outstanding at the
Record Date and the shares underlying options that have vested or are
exercisable within 60 days under the Century Bancorp, Inc. Stock Option
Plan ("Option Plan"). Assumes exercise of only those options included with
respect to designated recipients.
/3/ Includes 159,858 shares held by the Home Savings, Inc. SSB Employee Stock
Ownership Plan (the "ESOP") and 26,883 shares held by the Home Savings,
Inc. SSB Management Recognition Plan and Trust ("MRP"). Mr. Darr, Mr.
Kennedy and Mr. Riley are trustees under the ESOP and MRP and share certain
voting and investment power with respect to such shares. Also includes
6,111 shares underlying options which are vested or are exercisable within
60 days under the Option Plan.
/4/ This number also includes 9,000 shares owned by a family limited
partnership and 2,400 shares owned by Mr. Kennedy's wife. Mr. Kennedy
disclaims beneficial ownership of shares owned by his wife.
/5/ This number also includes 1,200 shares owned by Mr. Riley's wife. Mr. Riley
disclaims beneficial ownership of shares owned by his wife.
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 (all of whom are nominees for re-election at the Annual
Meeting), each of the members of the board of directors of the Bank, the
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 as
directors 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, 46,454/4/ 4.12%
Chief Executive Officer, Treasurer
and Director
3 Paddock Lane
Thomasville, NC 27360
Drema A. Michael, Secretary and 21,275/5/ 1.90%
Assistant Treasurer
444 Hannersville Road
Lexington, NC 27292
John E. Todd, Vice President 19,952/6/ 1.78%
904 Grove Circle
Thomasville, NC 27360
John R. Hunnicutt, Director 18,201/7/ 1.63%
1014 Pine Needle Lane
Thomasville, NC 27360
Milton T. Riley, Jr., Director 211,775/8,9/ 18.93%
605 Burke Trail
Thomasville, NC 27360
F. Stuart Kennedy, Director 209,075/8,10/ 18.69%
1100 Dover Drive
Thomasville, NC 27360
Henry H. Darr, Director 209,075/8/ 18.69%
620 Trindale Road
Trinity, NC 27370
Directors and Executive Officers as 335,405/11,12/ 28.65%
a Group (7 Persons)
</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 1,112,669 shares of Common Stock outstanding at the
Record Date and the shares underlying options that have vested or are
exercisable within 60 days under the Option Plan. Assumes exercise of only
those options included with respect to designated recipients.
/4/ This number includes 2,685 shares owned by Mr. Hudson's wife. Mr. Hudson
disclaims beneficial ownership of the shares owned by his wife. This
number also includes 15,274 shares subject to options which have vested or
are exercisable within 60 days under the Option Plan, 5,462 shares
allocated to Mr. Hudson under the ESOP and 6,110 restricted shares not yet
vested under the MRP.
/5/ This number includes 9,116 shares subject to options which have vested or
are exercisable within 60 days under the Option Plan, 3,337 shares
allocated to Ms. Michael under the ESOP and 3,666 restricted shares not yet
vested under the MRP.
/6/ This number includes 9,166 shares subject to options which have vested or
are exercisable within 60 days under the Option Plan, 3,454 shares
allocated to Mr. Todd under the ESOP and 3,666 restricted shares not yet
vested under the MRP.
/7/ Includes 6,111 shares underlying options which are vested or are
exercisable within 60 days under the Option Plan and 1,222 shares not yet
vested under the MRP.
4
<PAGE>
/8/ Includes 159,858 shares held by the ESOP and 26,883 shares held by the
MRP. Mr. Darr, Mr. Kennedy, and Mr. Riley are trustees under the ESOP and
MRP and share certain voting and investment power with respect to such
shares. Also includes 6,111 shares underlying options which are vested or
are exercisable within 60 days under the Option Plan.
/9/ This number includes 1,200 for shares owned by Mr. Riley's wife.
Mr. Riley disclaims beneficial ownership of shares owned by his wife.
/10/ This number includes 9,000 shares owned by a family limited partnership.
This number also includes 2,400 shares owned by Mr. Kennedy's wife.
Mr. Kennedy disclaims beneficial ownership of shares owned by his wife.
/11/ The 159,858 shares held by the ESOP and the 26,883 shares held in the MRP
for which the trustees, Messrs. Darr, Riley and Kennedy, share certain
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.
/12/ Includes 58,050 shares underlying options which are vested or are
exercisable within 60 days under the Option Plan.
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, 1999,
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 as directors of the Company until the 2000 Annual
Meeting of Stockholders and until their successors are elected and qualified, or
until their earlier death, resignation, retirement, removal or disqualification.
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 term specified above, unless
authority to vote is withheld or such proxies are 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
Articles 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 year in which his existing term of
office expires, 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 and have been elected to
serve as directors of the Company continuously since that time. All of the
nominees have been serving as directors of the Bank since before the formation
of the Company. All of the persons listed are being nominated to serve a term
of one year and until their successors shall be elected and qualify or until
their earlier death, resignation, retirement, removal or disqualification.
<TABLE>
<CAPTION>
Age on Existing
June 30, Principal Occupation Term Director
Name 1999 During Last Five Years Expires Since
- ---- -------- ---------------------- -------- --------
<S> <C> <C> <C> <C>
Henry H. Darr 58 President, J. L. Darr & Son, Inc. 1999 1980
James G. Hudson, Jr. 59 President, Chief Executive Officer 1999 1972
and Treasurer of the Company and the
Bank
John R. Hunnicutt 63 President, McThom, Inc. and McLex, 1999 1995
Inc., licensees of McDonalds
Corporation
F. Stuart Kennedy 73 Chairman of the Board, Rex Oil 1999 1971
Company
Milton T. Riley, Jr. 62 President, Riley Properties, Inc.; 1999 1992
until 1992, partner 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.
6
<PAGE>
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
During fiscal 1999, the Board of Directors of the Company held 12
meetings. All of the existing directors of the Company, all of whom are being
nominated for re-election, 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, 1999.
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,
1999.
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 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 as a director of the Company. 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's board
receive $900 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.
7
<PAGE>
<TABLE>
<CAPTION>
Employed By
the Bank or
Age on Positions and Occupations the Company
Name June 30, 1999 During Last Five Years Since
- ---- ------------- ------------------------- ------------
<S> <C> <C> <C>
James G. Hudson, Jr. 59 President, Chief Executive 1972
Officer, and Treasurer of the
Company and the Bank
John E. Todd 53 Vice President of the Company and 1979
the Bank
Drema A. Michael 46 Secretary and Assistant Treasurer 1974
of the Company and the Bank
</TABLE>
Management Compensation
Summary Compensation Table. The following table sets forth for the fiscal
years ended June 30, 1999, 1998 and 1997 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 salary and bonuses exceeded $100,000 for services rendered in all
capacities during the fiscal year ended June 30, 1999. Mr. Hudson has no stock
appreciation rights.
8
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards All Other Compensation
------------------------------------------ -------------------------------- ------------------------
Other Annual Restricted
Name and Compensation Stock Securities Underlying
Principal Position Year Salary Bonus ($)/3/ Awards Options/in Shares
------------------ ---- ------ ----- ------------ ------ -----------------
<S> <C> <C> <C> <C> <C> <C>
James G. Hudson, Jr. 1999 $116,300/1/ $ 18,404/2/ $ -0- $ -0- -0- $22,000/7/
President, Chief Executive
Officer,
Treasurer and Director
1998 $110,700/1/ $113,623/4/ $ -0- $ 272,277/5/ 10,183/6/ $22,000/7/
1997 $105,400/1/ $ 24,020/7/ $ -0- $ -0- -0- $22,000/7/
</TABLE>
_______________________
/1/ Includes director's fees of $10,800, $10,200 and $9,600 for Mr. Hudson's
service on the Bank's Board of Directors in 1999, 1998 and 1997,
respectively.
/2/ Includes $14,442 in bonuses paid under the Bank's bonus compensation plan
and $3,962 in holiday bonuses. See "-- Bonus Compensation."
/3/ Under the "Other Annual Compensation" category, perquisites for the fiscal
years ended June 30, 1999, 1998 and 1997 did not exceed the lesser of
$50,000, or 10% of salary and bonus as reported for any named employee.
/4/ Includes $19,215 in bonuses paid under the Bank's bonus compensation plan
and $3,769 in holiday bonuses. See "-- Bonus Compensation." Also includes
the value of the shares granted to Mr. Hudson under the MRP which were
immediately vested on the date of the grant, then estimated to be $90,729.
/5/ On March 10, 1998, Mr. Hudson was awarded 4,073 shares of Common Stock of
the Company pursuant to the MRP. On such date the shares had a market value
of $89.125 per share. Subject to the provisions of the MRP, 25% of the
shares vested on the date of the grant and 25% will vest at the end of each
year thereafter. This amount represents the then estimated value of the 75%
of such shares which did not vest on the date of the grant. On June 30,
1998, after the adjustments required under the MRP as a result of the
Company's stock dividend on April 6, 1998 of two shares for each share
outstanding (the "Stock Dividend") and $30 per share special dividend on
April 6, 1998 (the "Special Dividend"), the unvested portion of Mr.
Hudson's MRP grant totaled 9,164 shares of Common Stock, which had a value
of $17.00 per share on June 30, 1998, for a total value of $155,788.
/6/ On March 10, 1998, Mr. Hudson was granted options to purchase 10,183 shares
of the Common Stock of the Company pursuant to the Option Plan. The options
initially had an exercise price of $89.125 per share. In accordance with
the terms of the Option Plan, as a result of the Stock Dividend and Special
Dividend, Mr. Hudson's options were converted into the right to purchase
30,549 shares at an exercise price of $20.45 per share.
/7/ This represents the amount accrued under supplemental income agreements
established for the benefit of Mr. Hudson in 1999, 1998 and 1997.
9
<PAGE>
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, 1999, 1998,
and 1997, the bonuses paid to Mr. Hudson totaled $14,442, $19,215 and $20,420,
respectively; and the bonuses paid to each of Mr. Todd and Ms. Michael totaled
$7,222, $9,608, $10,210, respectively. In addition, employees receive annual
discretionary holiday bonuses, which during the fiscal years 1999, 1998 and 1997
totaled $16,000, $15,000 and $14,000, 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,
1999, 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 Bank's conversion from mutual
to stock form in 1996 (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 now provides for a base
salary of $108,000. The agreement provides for a 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 also
contemplated that Mr. Hudson will receive 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) 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.
10
<PAGE>
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
term of each of these agreements is for three years. 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 with Mr. Hudson. See "-- Employment Agreement." If a
change in control and such a termination occurred during calendar year 1999, Mr.
Todd and Ms. Michael would be entitled to receive $138,828 and $134,674,
respectively, under their special termination agreements.
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 special termination agreements, or 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 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. As a result of
the Stock Dividend, the number of shares originally held in the ESOP was
increased to an aggregate of 97,758 shares. The ESOP has subsequently purchased
62,100 shares, so that as of June 30, 1999 it held 159,858 shares of Common
Stock.
Shares purchased by the ESOP are held in a suspense account for allocation
among participants as the ESOP 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
11
<PAGE>
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 also appointed. 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.
Stock Option Plan. On February 17, 1998, the Company's stockholders
approved the Century Bancorp, Inc. Stock Option Plan (the "Option Plan"). The
Stock Option Plan is administered by a committee of the Company's Board of
Directors (the "Committee"). The Company reserved 40,733 shares of Common Stock
(which, as a result of the Stock Dividend, became 122,199 shares) for issuance
upon the exercise of options which have been or may be granted under the Option
Plan. All directors, officers and employees of the Company, the Bank, and any of
the Bank's subsidiaries are eligible for participation in the Option Plan.
Options to purchase 36,661 shares of Common Stock were granted during fiscal
year 1998. As a result of the Stock Dividend, the number of shares subject to
granted options was converted to 109,983, and those options remain outstanding
at June 30, 1999. Of the 109,983 options granted, options to purchase 24,444
shares were granted to non-employee directors of the Company and the remaining
options to purchase 85,539 shares were granted to employees. Options to purchase
12,216 shares remain ungranted.
All options granted during fiscal 1998 had an initial exercise price of
$89.125 per share. However, as a result of the Stock Dividend and the Special
Dividend, in accordance with the Option Plan, the exercise price for all
outstanding options was adjusted to $20.45 per share.
The following table sets forth certain information regarding option
exercises and values of options held by Mr. Hudson. Mr. Hudson has no stock
appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Shares Acquired Value Options at Options at
Name on Exercise Realized Fiscal Year End/1/ Fiscal Year End/2/
---- --------------- --------- ---------------- ---------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James G. Hudson, Jr. -0- $ 0 15,274/1/ 15,275/1/ $0 $0
</TABLE>
_______________________
/1/ Twenty-five percent (25%) of the options granted vested on March 10, 1998
and 25% vest each year thereafter. Represents the number of shares subject
to the initial grants, as adjusted pursuant to the Option Plan to reflect
the Stock Dividend.
/2/ The exercise price of the stock options, as adjusted pursuant to the Option
Plan to reflect the Stock Dividend and the Special Dividend, is $20.45 per
share. On June 30, 1999, the fair market value of the Common Stock was
$13.625.
Options granted under the Option Plan to non-employee directors were vested
immediately upon their grant. Options which have been granted to employees have
a vesting schedule which provides that 25% of the options granted vested on the
date of the grant, and 25% will vest on each subsequent anniversary date, so
that the options will be
12
<PAGE>
completely vested on the third anniversary of the date of grant. Options become
100% vested upon death, disability or retirement, if earlier. In addition,
options become vested and exercisable in the event an optionee ceases to be an
employee of the Company or the Bank for any reason after the occurrence of a
"change in control" of the Company, as defined in the Option Plan.
Although both incentive and non-qualified options have been granted under
the Option Plan, all of the stock options granted to employees are intended to
be incentive stock options. In the case of an incentive stock option, an
optionee is not deemed to have received taxable income upon the grant or
exercise of the stock option, provided the shares are not disposed of by the
optionee for at least one year after the date of exercise and two years after
the date of grant. No compensation deduction may be taken by the Company at the
time of the grant or exercise of an incentive option, assuming these holding
periods are satisfied. Option grants to non-employee directors do not qualify
for incentive stock option treatment and are "non-qualified" options. Optionees
holding non-qualified stock options are deemed to receive ordinary income upon
exercise of their stock options in an amount equal to the amount by which the
exercise price is exceeded by the fair market value of the stock. The amount of
any ordinary income deemed to be received by the optionees upon the exercise of
non-qualified stock options is a deductible expense of the Company for tax
purposes.
No cash consideration was paid for the options which have been granted
under the Option Plan. The options have an option exercise price of $20.45, the
fair market value of the Common Stock on the date of grant (March 10, 1998), as
adjusted in accordance with the Option Plan to reflect the Stock Dividend and
the Special Dividend. The exercise price may be paid in cash or by delivery of
shares of Common Stock with a market value equal to the exercise price. Upon
exercise of an option, at the request of an optionee, the Committee in its
discretion may make a cash payment to the optionee in lieu of shares of Common
Stock. Such payment, which would result in a cancellation of the option, would
be equal to the market value per share of the Common Stock minus the option
exercise price. Shares issued upon exercise of options may be purchased in the
open market or issued from authorized, unissued shares.
Options granted under the Option Plan have a term of ten years, are not
transferable, except upon death and continue to be exercisable upon retirement.
Unless sooner terminated, the Option Plan will continue in effect for a
period of ten years from the date the Option Plan was approved by the
stockholders and became effective by its terms. The Board of Directors may at
any time alter, suspend, terminate or discontinue the Option Plan, subject to
any applicable regulatory requirements and any required stockholder approval or
any stockholder approval which the Board may deem advisable for any reason, such
as for the purpose of obtaining or retaining any statutory or regulatory
benefits under tax, securities or other laws or satisfying applicable stock
exchange or quotation system listing requirements. The Board may not, without
the consent of the optionee, make any alteration which would deprive the
optionee of his or her rights with respect to any previously granted option.
Termination of the Option Plan would not affect any previously granted options.
Management Recognition Plan. On February 17, 1998, the stockholders of the
Company approved the Home Savings, Inc. Management Recognition Plan ("MRP"). A
total of 16,293 shares of Common Stock were issued to the MRP. On March 10,
1998, restricted stock awards of 14,665 shares of the Common Stock were made to
15 directors, officers and employees of the Bank. As a result of the Stock
Dividend, the number of shares of restricted stock issued under the Option Plan
(14,665) was tripled to 43,995 shares, and the number of unissued shares held by
the MRP (1,628) was tripled to 4,884.
The MRP serves as a means of providing the directors, officers, and
employees with an ownership interest in the Company in a manner designed to
encourage such persons to continue their service to the Company and the Bank and
to provide performance incentives. The MRP is administered by a committee of the
Bank's Board of Directors (the "MRP Committee"). All directors, officers, and
employees of the Company and the Bank are eligible for participation in the MRP.
The MRP Committee, in its sole discretion, determines who will receive grants of
restricted stock under the MRP.
13
<PAGE>
The shares acquired by the MRP were issued from authorized but unissued
shares of Common Stock. Shares issued under the MRP were issued at no cost to
recipients.
Restricted shares granted under the MRP vest as determined by the MRP
Committee. The shares previously granted vest at a rate of 25% on the effective
date of the award of shares under the MRP and 25% on each subsequent anniversary
date, so that the shares will be completely vested at the end of three years
after the date of award. Awards of Common Stock under the MRP immediately vest
upon the disability or death of a recipient. Shares also become immediately
vested in the event the recipient ceases to be an employee or director of the
Bank or any subsidiary of the Bank following a "change in control" of the
Company, as defined in the MRP. The awards are not forfeitable upon vesting. The
restricted shares granted pursuant to the MRP are held in trust until they
become vested and nonforfeitable. Dividends and other distributions on such
unvested shares are similarly held in trust until the shares to which they
relate become vested and nonforfeitable. Recipients of shares under the MRP vote
all shares after they become vested and nonforfeitable and have the right to
direct the trustees' voting of shares not yet vested.
The MRP may be amended by the Board of Directors of the Bank at any time.
However, no amendment may affect any award previously made under the Plan
without the consent of the recipient.
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 with the Bank. The Bank's policy concerning loans to executive
officers and directors currently complies with those regulations.
Set forth below is a table describing the loans the Bank has made to the
directors and executive officers and members of their immediate families since
June 30, 1997.
<TABLE>
<CAPTION>
Balance Outstanding at
Borrower Type of Loan Original Loan Amount June 30, 1999
- -------- ------------ -------------------- -------------
<S> <C> <C> <C>
James G. Hudson, Jr. Mortgage/Construction $250,000 $244,355.53
Consumer $ 27,000 $ -0-
John E. Todd Consumer/Auto $ 16,700 $ 14,071.46
Mortgage $275,000 $272,165.72
Consumer $ 18,142 $ -0-
Drema A. Michael Consumer $ 18,188 $ -0-
Milton T. Riley, Jr. Commercial $750,000 $731,081.81
</TABLE>
14
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
Dixon Odom PLLC, the Company's and the Bank's independent auditor for the
year ended June 30, 1999, has been selected as the Company's and the Bank's
independent auditor for the 2000 fiscal year. Such selection is being submitted
to the Company's stockholders for ratification. A representative of Dixon Odom
PLLC 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 2000 Annual Meeting of Stockholders
will be held in November of 2000. 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 June 16, 2000, 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 60 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 10/th/ 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.
MISCELLANEOUS
The Annual Report of the Company for the year ended June 30, 1999 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.
15
<PAGE>
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
October 14, 1999
16
<PAGE>
[_] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE CENTURY BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 16, 1999
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 November 16, 1999, at 5:00 p.m. and at any and
all adjournments thereof, as follows:
With- For All
For Held 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
2000 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 PLLC as [_] [_] [_]
the independent auditor of the Company
for the year ending June 30, 2000.
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 PLLC as the independent auditor
for the Company for the 2000 fiscal year. If instructions are given with re-
spect 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
October 14, 1999.
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
- --------------------------------------------------------------------------------
