<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1995
REGISTRATION NO. 33-57005
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CCB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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NORTH CAROLINA 6025 56-1347849
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Identification No.)
Classification Code No.)
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111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
(919) 683-7777
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
ERNEST C. ROESSLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
(919) 683-7777
(Name, address and telephone number of agent for service)
COPIES TO:
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ANTHONY GAETA, JR., ESQ. ROBERT A. SINGER, ESQ.
WARD AND SMITH, P.A. BROOKS, PIERCE, MCLENDON,
TWO HANNOVER SQUARE HUMPHREY & LEONARD, L.L.P.
POST OFFICE BOX 2091 230 NORTH ELM STREET, SUITE 2000
RALEIGH, NORTH CAROLINA POST OFFICE BOX 26000
27602 GREENSBORO, NORTH CAROLINA 27420
(919) 836-1800 (910) 373-8850
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APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. ( )
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
<PAGE>
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501 OF REGULATION S-K
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ITEM OF FORM S-4 CAPTION IN PROSPECTUS/JOINT PROXY STATEMENT
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front Cover
Page of Prospectus........................................... Cover page; Cross-Reference Sheet; Outside front cover
page of Prospectus/Joint Proxy Statement
2. Inside Front and Outside Back Cover Pages of Prospectus...... Inside front cover page of Prospectus/Joint Proxy
Statement; AVAILABLE INFORMATION
3. Risk Factors, Ratio of Earnings to Fixed Charges and Other
Information.................................................. SUMMARY; SELECTED FINANCIAL INFORMATION; UNAUDITED
COMPARATIVE PER SHARE DATA
4. Terms of the Transaction..................................... THE SPECIAL MEETINGS; THE MERGER; RIGHTS OF DISSENTING
SHAREHOLDERS; CAPITAL STOCK OF CCBF AND SCBC
5. Pro Forma Financial Information.............................. UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION;
PRO FORMA CAPITALIZATION
6. Material Contracts with the Company Being Acquired........... THE MERGER -- Recommendation and Reasons
7. Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel....................... THE MERGER -- SCBC Fairness Opinion; THE
MERGER -- CCBF Fairness Opinion; LEGAL MATTERS;
EXPERTS
9. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... INDEMNIFICATION
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants.................. Not Applicable
11. Incorporation of Certain Information by Reference............ INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE; CCB
FINANCIAL CORPORATION
12. Information with Respect to S-2 or S-3 Registrants........... Not Applicable
13. Incorporation of Certain Information by Reference............ Not Applicable
14. Information with Respect to Registrants Other Than S-2 or S-3
Registrants.................................................. Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies.................... INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE;
SECURITY CAPITAL BANCORP
16. Information with Respect to S-2 or S-3 Companies............. Not Applicable
17. Information with Respect to Companies Other than S-2 or S-3
Companies.................................................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
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18. Information if Proxies, Consents or Authorizations are to be
Solicited.................................................... THE SPECIAL MEETINGS; RIGHTS OF DISSENTING
SHAREHOLDERS; Appendix B; THE MERGER -- Required
Shareholder Approvals, -- Directors and Officers, and
-- Interests of Certain Persons With Respect to the
Merger; CCB FINANCIAL CORPORATION -- Beneficial
Ownership of CCBF Stock, and -- Management and
Additional Information; SECURITY CAPITAL BANCORP --
Beneficial Ownership of SCBC Stock, and -- Management
and Additional Information; INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
19. Information if Proxies, Consents or Authorizations are not to
be Solicited or in an Exchange Offer......................... Not Applicable
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<PAGE>
February , 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of CCB Financial Corporation ("CCB") to be held on
Thursday, March 16, 1995, at 11:00 a.m., Eastern Time, at the George
Watts Hill Alumni Center, Stadium Drive at Ridge Road on the campus of
the University of North Carolina at Chapel Hill, Chapel Hill, North
Carolina. Notice of the Special Meeting, along with a Prospectus/Joint
Proxy Statement relating to the matters to be addressed at the Special
Meeting, is enclosed.
At this important meeting, you will be asked to consider and vote
upon CCB's proposed merger with Security Capital Bancorp ("SCBC") and
the exchange of 0.50 shares of CCB common stock for each share of
common stock of SCBC (the "Merger"). Additionally, in order for CCB to
meet certain obligations in the Merger, we are proposing a bylaw
amendment whereby the Board of Directors of CCB may set and change the
actual number of directors and may appoint directors to fill any
vacancies created by any increase (the "Bylaw Amendment").
Your Board of Directors believes that the Merger is a significant
strategic acquisition for CCB that will provide considerable
shareholder value over time. The accompanying Prospectus/Joint Proxy
Statement provides a detailed description of the Merger and the Bylaw
Amendment, including a description of the effect of the Merger and the
Bylaw Amendment on the rights of shareholders of CCB. Please give this
information your careful attention.
The affirmative vote of the holders of a majority of the shares
of common stock of CCB represented, in person or by proxy, at the
Special Meeting is required for approval of the Merger and the Bylaw
Amendment. In addition to shareholder approval, the Merger is subject
to approval by various governmental agencies and certain other
conditions.
The Merger has been unanimously approved and adopted by the
Boards of Directors of CCB and SCBC, respectively, as being in the
best interests of CCB and SCBC, and their respective shareholders.
Accordingly, the Board of Directors of CCB unanimously recommends that
the shareholders of CCB vote FOR approval of the Merger and the Bylaw
Amendment.
In view of the importance of the action to be taken with respect
to the Merger and the Bylaw Amendment, we urge you to complete, sign
and date your proxy and return it promptly in the enclosed envelope,
whether or not you plan to attend the Special Meeting. If you attend
the Special Meeting, you may vote in person, even if you have
previously mailed your proxy. Regardless of the amount of common stock
of CCB you own, it is important that your shares be voted at the
Special Meeting.
Thank you for your consideration of this important matter and
prompt response.
Very truly yours,
ERNEST C. ROESSLER
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
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CCB FINANCIAL CORPORATION
111 CORCORAN STREET
POST OFFICE BOX 931
DURHAM, NORTH CAROLINA 27702
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that a Special Meeting of Shareholders of CCB
Financial Corporation ("CCBF") will be held at the George Watts Hill Alumni
Center, Stadium Drive at Ridge Road on the campus of the University of North
Carolina at Chapel Hill, Chapel Hill, North Carolina, at 11:00 A.M., E.S.T., on
March 16, 1995, for the following purposes:
1. PROPOSAL TO APPROVE MERGER AGREEMENT. To consider and vote on a
proposal to approve an Amended and Restated Agreement of Combination, dated
as of December 1, 1994, and the related plan of merger (collectively, the
"Merger Agreement"), among CCBF, Security Capital Bancorp ("SCBC") and New
Security Capital, Inc. ("NSC", which is being formed as a subsidiary of
CCBF) (a copy of which Agreement is attached as Appendix A to the
Prospectus/Joint Proxy Statement which accompanies this Notice), and to
approve the transactions described therein, including without limitation
the issuance of up to a maximum of 6,080,462 shares of CCBF's $5.00 par
value common stock (each with an attached preferred stock purchase right)
to effect the combination of SCBC and CCBF through the merger of NSC into
SCBC (the "Merger") with the result that SCBC will become a wholly-owned
subsidiary of CCBF;
2. PROPOSAL TO APPROVE BYLAW AMENDMENT. To consider and vote on a
proposal to approve an amendment to Article III, Sections 2 and 7, of
CCBF's Bylaws to provide that, within the current specified minimum and
maximum numbers, CCBF's Board of Directors from time to time may set and
change the actual number of directors of CCBF and may appoint directors to
fill vacancies created by any such increases; and,
3. OTHER BUSINESS. To transact such other business as properly may be
presented for action at the meeting.
EACH CCBF SHAREHOLDER IS INVITED TO ATTEND THE SPECIAL MEETING IN PERSON.
HOWEVER, TO INSURE THAT A QUORUM IS PRESENT AT THE MEETING, EACH CCBF
SHAREHOLDER IS REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED APPOINTMENT OF
PROXY AND RETURN IT PROMPTLY TO CCBF IN THE ENCLOSED STAMPED, RETURN ENVELOPE.
SIGNING AND RETURNING AN APPOINTMENT OF PROXY WILL NOT AFFECT A CCBF
SHAREHOLDER'S RIGHT TO ATTEND THE SPECIAL MEETING AND VOTE IN PERSON.
By Order of the Board of Directors
ERNEST C. ROESSLER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Durham, North Carolina
February , 1995
CCBF'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
CCBF SHAREHOLDERS VOTE TO APPROVE
THE MERGER AGREEMENT AND THE BYLAW AMENDMENT
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February , 1995
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of Security Capital Bancorp ("SCBC") to be held at SCBC's
principal office at 507 West Innes Street, Salisbury, North Carolina,
on Thursday, March 16, 1995, at 11:00 o'clock, a.m., E.S.T.
On November 4, 1994, SCBC and CCB Financial Corporation ("CCB")
entered into an Agreement of Combination and related Plan of Merger,
which were amended and restated as of December 1, 1994 (collectively,
the "Agreement"), to combine SCBC and CCB by merging SCBC and a
subsidiary of CCB (the "Merger") and, through a series of
transactions, merging SCBC's bank subsidiaries, Security Capital Bank,
OMNIBANK, Inc., SSB, Citizens Savings, Inc., SSB, and Home Savings
Bank, Inc., SSB, into Central Carolina Bank and Trust Company, CCB's
principal banking subsidiary. The Agreement, which has been adopted
unanimously by the Boards of Directors of SCBC and CCB, generally
provides for a tax-free exchange in which you will receive .50 of a
share of CCB common stock for each share of SCBC common stock held by
you. Your Board has received the written opinion of The
Robinson-Humphrey Company, Inc., an independent investment banking
firm, that the consideration to be received in the Merger by SCBC's
shareholders is fair from a financial point of view.
The purpose of our Special Meeting is to consider and vote upon a
proposal to approve the Agreement. This proposal requires approval by
a majority of the votes entitled to be cast by holders of SCBC's
common stock at the Special Meeting. CCB's shareholders will consider
and vote upon proposals to approve the Agreement and to amend CCB's
Bylaws to satisfy certain conditions to the Merger at a special
meeting to be held on the same date as our Special Meeting.
The Merger is an important step which your Board of Directors has
considered carefully. The combination of SCBC and CCB will result in a
company having approximately $4.7 billion in assets, will
significantly enhance the already impressive financial strength of the
two companies, will result in a more efficient and, therefore, more
competitive banking organization, and will provide an expanded array
of services to our customers and the communities we serve. Most
importantly, the Merger will provide you with an opportunity to
participate in the ownership of a company having a substantial
presence in the most important and fastest growing North Carolina
banking markets and having the breadth of services, efficiency and
capital strength necessary to compete successfully in an increasingly
competitive marketplace and to achieve levels of profitability not
necessarily obtainable by SCBC as an independent entity.
Whether or not you plan to attend the Special Meeting, you are
urged to complete, sign and promptly return the enclosed proxy card in
the accompanying postage-paid envelope to assure that your shares will
be voted at the Special Meeting. Please consider carefully this
important matter and the attached Prospectus/Joint Proxy Statement. On
behalf of our Board of Directors, I urge you to vote FOR the proposal
to approve the Agreement.
Sincerely,
MILES J. SMITH, JR.
CHAIRMAN OF THE BOARD OF
DIRECTORS
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SECURITY CAPITAL BANCORP
507 WEST INNES STREET
POST OFFICE BOX 1387
SALISBURY, NORTH CAROLINA 28144
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that a Special Meeting of Shareholders of Security
Capital Bancorp ("SCBC") will be held at SCBC's principal office at 507 West
Innes Street, Salisbury, North Carolina, at 11:00 A.M., E.S.T., on March 16,
1995, for the following purposes:
1. PROPOSAL TO APPROVE PROPOSED MERGER. To consider and vote on a proposal
to approve an Amended and Restated Agreement of Combination, dated as of
December 1, 1994, and the related plan of merger (collectively, the "Merger
Agreement"), among SCBC, CCB Financial Corporation ("CCBF") and New
Security Capital, Inc. ("NSC", which is being formed as a subsidiary of
CCBF) (a copy of which Agreement is attached as Appendix A to the
Prospectus/Joint Proxy Statement which accompanies this Notice), and to
approve the transactions described therein, including without limitation
the merger of NSC into SCBC (the "Merger") with the result that SCBC will
become a wholly-owned subsidiary of CCBF and all outstanding shares of
SCBC's no par common stock will be converted into shares of CCBF's $5.00
par value common stock (each with an attached preferred stock purchase
right); and,
2. OTHER BUSINESS. To transact such other business as properly may be
presented for action at the meeting.
At the effective time of the Merger, each outstanding share of SCBC's no par
value common stock ("SCBC Stock"), will be converted into .50 of a share of
CCBF's $5.00 par value common stock and .50 of a preferred stock purchase right.
UNDER NORTH CAROLINA LAW EACH SCBC SHAREHOLDER HAS THE RIGHT TO DISSENT FROM THE
MERGER AND TO DEMAND PAYMENT OF THE FAIR VALUE OF HIS OR HER SHARES OF SCBC
STOCK. A SCBC SHAREHOLDER'S RIGHT TO DISSENT IS CONTINGENT UPON HIS OR HER
STRICT COMPLIANCE WITH THE REQUIREMENTS OF ARTICLE 13 OF THE NORTH CAROLINA
BUSINESS CORPORATION ACT. THE FULL TEXT OF ARTICLE 13 IS ATTACHED AS APPENDIX B
TO THE PROSPECTUS/JOINT PROXY STATEMENT WHICH ACCOMPANIES THIS NOTICE AND IS
INCORPORATED HEREIN BY REFERENCE.
EACH SCBC SHAREHOLDER IS INVITED TO ATTEND THE SPECIAL MEETING IN PERSON.
HOWEVER, TO INSURE THAT A QUORUM IS PRESENT AT THE MEETING, EACH SCBC
SHAREHOLDER IS REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED APPOINTMENT OF
PROXY AND RETURN IT PROMPTLY TO SCBC IN THE ENCLOSED STAMPED, RETURN ENVELOPE.
SIGNING AND RETURNING AN APPOINTMENT OF PROXY WILL NOT AFFECT AN SCBC
SHAREHOLDER'S RIGHT TO ATTEND THE SPECIAL MEETING AND VOTE IN PERSON.
By Order of the Board of Directors
MILES J. SMITH, JR.
CHAIRMAN OF THE BOARD
Salisbury, North Carolina
February , 1995
SCBC'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SCBC SHAREHOLDERS VOTE TO APPROVE THE MERGER AGREEMENT
<PAGE>
PROSPECTUS
CCB FINANCIAL CORPORATION
6,080,462 SHARES
COMMON STOCK
PAR VALUE $5.00
EACH WITH AN ATTACHED
PREFERRED SHARE PURCHASE RIGHT
JOINT PROXY STATEMENT
FOR SPECIAL MEETINGS OF SHAREHOLDERS OF
CCB FINANCIAL CORPORATION
AND
SECURITY CAPITAL BANCORP
TO BE HELD ON MARCH 16, 1995
This Prospectus relates to shares of the $5.00 par value common stock ("CCBF
Stock"), each with an attached right to purchase .01 of a share of CCBF Series A
Junior Participating Preferred Stock (a "CCBF Right"), of CCB Financial
Corporation ("CCBF") that will be issued in connection with the proposed merger
(the "Merger") of New Security Capital, Inc. ("NSC") with and into Security
Capital Bancorp ("SCBC"). CCBF is a North Carolina corporation which is
registered with the Board of Governors of the Federal Reserve System as a bank
holding company and which is the parent company of Central Carolina Bank and
Trust Company ("CCB"). NSC is a North Carolina corporation which is being formed
as a wholly-owned subsidiary of CCBF for the sole purpose of facilitating the
combination of SCBC and CCBF. As described in the Amended and Restated Agreement
of Combination, dated as of December 1, 1994 (the "Merger Agreement"), among
SCBC, CCBF and NSC, upon consummation of the Merger, NSC would be merged into
SCBC and each outstanding share of SCBC's no par value common stock ("SCBC
Stock") held by SCBC's shareholders would be converted into and exchanged for
.50 of a share of CCBF Stock and .50 of a CCBF Right (the "Exchange Ratio"), and
SCBC would become the wholly-owned subsidiary of CCBF. Immediately following the
Merger, SCBC would be merged into CCBF, and SCBC's bank subsidiary, Security
Capital Bank ("SCB"), would be merged into CCB. (See "THE MERGER".) References
in this Prospectus/Joint Proxy Statement to the CCBF Stock into which SCBC Stock
will be converted shall be deemed to include the CCBF Rights attached to such
CCBF Stock. For additional information about the CCBF Rights, see "CAPITAL STOCK
OF CCBF AND SCBC".
SCBC's shareholders are entitled to their statutory dissenters' rights in
accordance with North Carolina law. (See "RIGHTS OF DISSENTING SHAREHOLDERS".)
In lieu of issuing fractional shares of CCBF Stock, cash will be distributed to
each SCBC shareholder otherwise entitled to receive a fractional share in an
amount equal to that fraction multiplied by the "market value" of one whole
share of CCBF Stock. (See "THE MERGER -- Treatment of Fractional Shares".)
This Prospectus also serves as SCBC's and CCBF's Joint Proxy Statement in
connection with their respective Boards of Directors' solicitation of
appointments of proxy to be used at special meetings of their shareholders (the
"Special Meetings"), including any adjournments thereof, to be held for the
purposes described herein. (See "THE SPECIAL MEETINGS".)
At the SCBC Special Meeting, the holders of record of SCBC Stock as of the close
of business on February 1, 1995 will consider and vote upon a proposal to
approve the Merger Agreement pursuant to which SCBC will become a subsidiary of
CCBF. Upon consummation of the Merger, each outstanding share of SCBC Stock
(excluding shares held by SCBC, CCBF or any of their subsidiaries, other than in
a fiduciary capacity or as a result of debts previously contracted, and
excluding shares held by SCBC shareholders who exercise their statutory
dissenters' rights in accordance with North Carolina law) will be converted into
.50 of a share of CCBF Stock. (See "THE MERGER -- Terms of the Merger" and
" -- Dissenter's Rights.")
At the CCBF Special Meeting, the holders of record of CCBF Stock as of the close
of business on February 1, 1995, will consider and vote upon proposals (i) to
approve the Merger Agreement and to issue up to a maximum of 6,080,462 shares of
CCBF Stock to effect the combination of SCBC and CCBF through the Merger and
(ii) to approve an amendment to CCBF's Bylaws to permit CCBF's Board to set and
change from time to time the number of directors within a specified maximum and
minimum and to appoint directors to fill any vacancies thereby created (the
"Bylaw Amendment"). (See "PROPOSAL TO AMEND CCBF'S BYLAWS").
The outstanding shares of SCBC Stock and CCBF Stock are included for quotation
on the National Market System of the Nasdaq Stock Market, Inc. (the "Nasdaq
National Market"). The shares of CCBF Stock issued in the Merger also will be
quoted on the Nasdaq National Market.
This Prospectus/Joint Proxy Statement and the accompanying forms of appointment
of proxies are first being mailed to shareholders of SCBC and CCBF on or about
February , 1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/JOINT PROXY
STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus/Joint Proxy Statement is February , 1995.
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No person is authorized to give any information or make any representation
other than those contained in this Prospectus/Joint Proxy Statement, and, if
given or made, such information or representation should not be relied upon as
having been authorized by CCBF or SCBC. This Prospectus/Joint Proxy Statement
does not constitute an offer to sell, or a solicitation of an offer to purchase
or exchange the securities offered by this Prospectus/Joint Proxy Statement in
any jurisdiction in which such offer is not authorized or to or from any person
to whom it is unlawful to make such offer or solicitation. The information
contained in this Prospectus/Joint Proxy Statement regarding CCBF and its
affiliates has been furnished by CCBF, and the information herein regarding SCBC
and its affiliates has been furnished by SCBC. Neither the delivery of this
Prospectus/Joint Proxy Statement nor any distribution of the securities being
made hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of CCBF or SCBC or their affiliates since the
date of this Prospectus/Joint Proxy Statement or that information contained
herein or in the documents incorporated herein by reference is correct as of any
time subsequent to the date hereof or the dates thereof.
THE SHARES OF CCBF STOCK AND ATTACHED CCBF RIGHTS BEING OFFERED TO SCBC'S
SHAREHOLDERS ARE NOT DEPOSITS OF ANY BANK OR OTHER FINANCIAL INSTITUTION AND ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
TABLE OF CONTENTS
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AVAILABLE INFORMATION.................................. 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........ 3
SUMMARY................................................ 4
Special Meetings of Shareholders..................... 4
The Merger........................................... 5
Selected Financial Information....................... 10
UNAUDITED COMPARATIVE PER SHARE DATA................... 15
RECENT DEVELOPMENTS.................................... 17
THE SPECIAL MEETINGS................................... 21
General; Proposals to be Considered.................. 21
Record Dates......................................... 21
Voting Securities; Votes Required for Approval....... 21
Voting and Revocation of Proxies..................... 22
Proxy Solicitation Expenses.......................... 22
Recommendations...................................... 22
THE MERGER............................................. 23
General.............................................. 23
Conversion of SCBC Stock and SCBC Options; Exchange
Ratio............................................. 24
Surrender and Exchange of Certificates............... 24
Treatment of Fractional Shares....................... 25
Recommendation and Reasons........................... 25
SCBC Fairness Opinion................................ 28
CCBF Fairness Opinion................................ 30
Required Shareholder Approvals....................... 33
Required Regulatory Approvals........................ 33
Conduct of Business Pending Merger................... 34
Dividends............................................ 35
Prohibition on Solicitation.......................... 35
Accounting Treatment................................. 35
Certain Income Tax Consequences...................... 36
Conditions to Merger................................. 37
Amendment of Merger Agreement; Waiver................ 37
Termination of Merger Agreement...................... 37
Effective Time and Closing Date...................... 38
Directors and Officers............................... 38
Interests of Certain Persons With Respect to the
Merger............................................ 39
Nasdaq National Market Qualification................. 41
Dividend Reinvestment and Stock Purchase
Plans............................................. 41
Restrictions on Resale of CCBF Stock by Affiliates... 42
Expenses............................................. 42
Stock Repurchase Program............................. 42
RIGHTS OF DISSENTING SHAREHOLDERS...................... 43
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION..... 45
PRO FORMA CAPITALIZATION............................... 52
MARKET AND DIVIDEND INFORMATION REGARDING CCBF STOCK
AND SCBC STOCK....................................... 53
CCB FINANCIAL CORPORATION.............................. 54
General.............................................. 54
Subsidiaries......................................... 54
Beneficial Ownership of CCBF Stock................... 54
Management and Additional Information................ 56
SECURITY CAPITAL BANCORP............................... 56
General.............................................. 56
Subsidiaries......................................... 56
Beneficial Ownership of SCBC Stock................... 57
Management and Additional Information................ 58
SUPERVISION AND REGULATION............................. 58
CAPITAL STOCK OF CCBF AND SCBC......................... 68
INDEMNIFICATION........................................ 74
LEGAL MATTERS.......................................... 75
EXPERTS................................................ 75
PROPOSAL TO AMEND CCBF'S BYLAWS........................ 76
OTHER MATTERS.......................................... 77
PROPOSALS OF SHAREHOLDERS.............................. 77
APPENDIX A -- Amended and Restated
Agreement of Combination dated as of December 1,
1994.............................................. A-1
APPENDIX B -- Article 13 of the North Carolina Business
Corporation Act Regarding the Rights of Dissenting
Shareholders......................................... B-1
APPENDIX C -- Opinion of The Robinson-Humphrey Company,
Inc.................................................. C-1
APPENDIX D -- Opinion of Wheat, First Securities,
Inc.................................................. D-1
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2
<PAGE>
AVAILABLE INFORMATION
CCBF and SCBC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and, in accordance
therewith, file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by CCBF and SCBC can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and at the Commission's
Regional Offices located in Chicago (Northwestern Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661-2511) and in New York (7 World
Trade Center, 13th Floor, New York, New York 10048). Copies of such material can
be obtained by mail from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
CCBF has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended (the "1933 Act"), with respect to
the CCBF Stock and CCBF Rights offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus/Joint Proxy Statement does not
contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, all of which may be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the prescribed fees.
AS FURTHER DESCRIBED BELOW, THIS PROSPECTUS/JOINT PROXY STATEMENT
INCORPORATES BY REFERENCE DOCUMENTS RELATING TO CCBF AND SCBC WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THOSE DOCUMENTS (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS) WILL BE PROVIDED WITHOUT CHARGE UPON REQUEST AS DESCRIBED
BELOW. REQUESTS FOR DOCUMENTS REGARDING CCBF SHOULD BE DIRECTED TO W. HAROLD
PARKER, JR., SENIOR VICE PRESIDENT AND CONTROLLER, CCB FINANCIAL CORPORATION,
POST OFFICE BOX 931, DURHAM, N.C. 27702, TELEPHONE (919) 683-7631. REQUESTS FOR
DOCUMENTS REGARDING SCBC SHOULD BE DIRECTED TO PRESSLEY A. RIDGILL, CHIEF
FINANCIAL OFFICER, SECURITY CAPITAL BANCORP, POST OFFICE BOX 1387, SALISBURY,
N.C. 28145-1387, TELEPHONE (704) 855-6127. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS BEFORE THE SPECIAL MEETINGS, ANY SUCH REQUEST SHOULD BE MADE BY
MARCH 9, 1995.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by CCBF with the Commission (SEC
File No. 0-12358) are incorporated by reference into this Prospectus/Joint Proxy
Statement: (i) CCBF's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, as amended by Form 10-K/A dated July 20, 1994; (ii) CCBF's
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 1994,
June 30, 1994 and September 30, 1994; (iii) CCBF's Current Reports on Form 8-K
dated March 14, 1994, August 17, 1994, November 4, 1994, November 17, 1994 and
December 21, 1994; and (iv) the description of CCBF Stock contained in its
current report on Form 8-K dated July 1, 1983, as amended by Form 8-K/A1 dated
January 30, 1995.
The following documents previously filed by SCBC with the Commission (SEC
File No. 0-12359) are incorporated by reference into this Prospectus/Joint Proxy
Statement: (i) SCBC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993; (ii) SCBC's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1994, June 30, 1994 and September 30, 1994; (iii) SCBC's
Current Reports on Form 8-K dated February 1, 1994, April 13, 1994, September
28, 1994, November 8, 1994 and December 6, 1994; and (iv) the description of
SCBC Stock contained in SCBC's Current Report on Form 8-K dated July 12, 1983,
as amended by Form 8-K/A1 dated January 30, 1995.
In addition, all other documents filed by CCBF or SCBC pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the date the Special Meetings
have been finally adjourned shall be deemed to be incorporated by reference
herein. Any statements contained in a document incorporated or deemed to be
incorporated by reference herein will be deemed to be modified or superseded for
purposes of this Prospectus/Joint Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
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SUMMARY
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE SPECIAL MEETINGS, THE
MERGER AGREEMENT AND THE TRANSACTIONS DESCRIBED THEREIN AND IS NOT INTENDED TO
BE A COMPLETE DESCRIPTION OF ALL MATERIAL FACTS REGARDING SCBC, CCBF, THE MERGER
OR OTHER MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS. THE SUMMARY IS
QUALIFIED IN ALL RESPECTS BY REFERENCE TO THE MORE DETAILED INFORMATION INCLUDED
IN THIS PROSPECTUS/JOINT PROXY STATEMENT, THE APPENDICES HERETO (INCLUDING THE
MERGER AGREEMENT, A COPY OF WHICH IS ATTACHED AS APPENDIX A) AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE.
SPECIAL MEETINGS OF SHAREHOLDERS
GENERAL. This Prospectus/Joint Proxy Statement is being furnished in
connection with the solicitation by the Boards of Directors of SCBC and CCBF of
appointments of proxy for use at special meetings (collectively, the "Special
Meetings") of their respective shareholders, and at any adjournments thereof, to
be held as provided and for the purposes described below. (See "THE
MERGER -- Voting and Revocation of Proxies".)
PURPOSES OF SPECIAL MEETINGS. The purpose of the SCBC Special Meeting is
(i) to consider and vote on a proposal to approve the Merger Agreement among
SCBC, CCBF and NSC attached as Appendix A and to approve the transactions
described therein, including without limitation the Merger and the conversion of
the outstanding shares of SCBC Stock into shares of CCBF Stock, and (ii) to
transact such other business as properly may be presented for action at the
meeting.
The purposes of the CCBF Special Meeting are (i) to consider and vote on a
proposal to approve the Merger Agreement among SCBC, CCBF and NSC, and to
approve the transactions described therein, including without limitation the
issuance of up to a maximum of 6,080,462 shares of CCBF Stock to effect the
combination of SCBC and CCBF through the Merger, (ii) to consider and vote on a
proposal to approve an amendment to Article III, Sections 2 and 6, of CCBF's
Bylaws to provide that, within the current minimum and maximum numbers specified
in the Bylaws, CCBF's Board of Directors from time to time may set and change
the actual number of directors of CCBF and may appoint directors to fill
vacancies created by any such increases (the "Bylaw Amendment"), and (iii) to
transact such other business as properly may be presented for action at the
meeting.
DATE, PLACE AND TIME. The SCBC Special Meeting will be held at SCBC's
principal office at 507 West Innes Street, Salisbury, North Carolina, on March
16, 1995, at 11:00 A.M., E.S.T. time.
The CCBF Special Meeting will be held at the George Watts Hill Alumni
Center, Stadium Drive at Ridge Road on the campus of the University of North
Carolina at Chapel Hill, Chapel Hill, North Carolina, on March 16, 1995, at
11:00 A.M., E.S.T.
RECORD DATES. The close of business on February 1, 1995 has been fixed as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at both the SCBC Special Meeting and the CCBF
Special Meeting. Only those SCBC and CCBF shareholders of record on the Record
Date will be eligible to vote at their respective Special Meetings on the
matters described herein. (See "THE SPECIAL MEETINGS -- Record Dates".)
VOTING SECURITIES. The voting securities of SCBC are the shares of SCBC
Stock, of which approximately 11,775,867 shares were issued and outstanding on
the Record Date. (See "THE SPECIAL MEETINGS -- Voting Securities; Votes Required
for Approval".)
The voting securities of CCBF are the shares of CCBF Stock, of which
approximately 9,108,895 shares were issued and outstanding on the Record Date.
(See "THE SPECIAL MEETINGS -- Voting Securities; Votes Required for Approval".)
VOTES REQUIRED FOR APPROVAL. At the SCBC Special Meeting, each SCBC
shareholder will be entitled to cast one vote for each share of SCBC Stock held
of record on the Record Date on each matter submitted for voting. The
affirmative vote of the holders of a majority of the shares of SCBC Stock
entitled to be voted at the SCBC Special Meeting is required to approve the
Merger Agreement. Because the affirmative vote of an absolute majority of all
outstanding SCBC Stock is required, abstentions, broker non-votes and shares
otherwise not voted in the affirmative will have the same effect as votes
against the Merger Agreement. (See "THE SPECIAL MEETINGS -- Voting Securities;
Votes Required for Approval".)
At the CCBF Special Meeting, each CCBF shareholder will be entitled to cast
one vote for each share of CCBF Stock held of record on the Record Date on each
matter submitted for voting. The affirmative vote of the holders of a majority
of the shares of CCBF Stock represented, in person and by proxy, and entitled to
be voted at the CCBF Special Meeting is required to approve the Merger Agreement
and the Bylaw Amendment. Provided that a quorum is present, abstentions and
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broker nonvotes will have no effect in the voting at the CCBF Special Meeting.
(See "THE SPECIAL MEETINGS -- Voting Securities; Votes Required for Approval".)
VOTING OF PROXIES. The persons named to represent SCBC's shareholders as
proxies at the SCBC Special Meeting are Miles J. Smith, Jr. and E. K. Prewitt,
Jr. (the "SCBC Proxies"). Shares of SCBC Stock represented by each appointment
of proxy which is properly executed and returned by a SCBC shareholder, and not
revoked, will be voted by the SCBC Proxies in accordance with the directions
contained therein. If no directions are given, such shares will be voted by the
SCBC Proxies "FOR" approval of the Merger Agreement and the transactions
contemplated therein. On such other matters that may properly come before the
SCBC Special Meeting, the SCBC Proxies will be authorized to vote in accordance
with their best judgment on such matters. (See "THE SPECIAL MEETINGS -- Voting
and Revocation of Proxies".)
The persons named to represent CCBF's shareholders as proxies at the CCBF
Special Meeting are Richard W. Every, W. Harold Parker, Jr. and Manuel L. Rojas
(the "CCBF Proxies"). Shares of CCBF Stock represented by each appointment of
proxy which is properly executed and returned by a CCBF shareholder, and not
revoked, will be voted by the CCBF Proxies in accordance with the directions
contained therein. If no directions are given, such shares will be voted by the
CCBF Proxies "FOR" approval of the Merger Agreement and the transactions
contemplated therein, and "FOR" approval of the Bylaw Amendment. On such other
matters that may properly come before the CCBF Special Meeting, the CCBF Proxies
will be authorized to vote in accordance with their best judgment on such
matters. (See "THE SPECIAL MEETINGS -- Voting and Revocation of Proxies".)
REVOCATION OF APPOINTMENTS OF PROXY. Any SCBC shareholder who executes an
appointment of proxy has the right to revoke it at any time before it is
exercised by filing with the Secretary of SCBC either an instrument revoking it
or a duly executed appointment of proxy bearing a later date, or by attending
the SCBC Special Meeting and announcing his or her intention to vote in person.
(See "THE SPECIAL MEETINGS -- Voting and Revocation of Proxies".)
Any CCBF shareholder who executes an appointment of proxy has the right to
revoke it at any time before it is exercised by filing with the Secretary of
CCBF either an instrument revoking it or a duly executed appointment of proxy
bearing a later date, or by attending the CCBF Special Meeting and announcing
his or her intention to vote in person. (See "THE SPECIAL MEETINGS -- Voting and
Revocation of Proxies".)
PROXY SOLICITATION EXPENSES. Except under certain circumstances involving a
wrongful termination or breach of the Merger Agreement, SCBC and CCBF each will
pay expenses associated with its own Special Meeting, and they will share the
costs of preparing, assembling and mailing this Prospectus/Joint Proxy
Statement. In addition to the use of the mail, appointments of proxy may be
solicited personally or by telephone by SCBC's and CCBF's respective officers,
directors and employees, none of whom will be compensated separately for any
such solicitation activities. (See "THE SPECIAL MEETINGS -- "Proxy Solicitation
Expenses", and "THE MERGER -- Termination of Merger Agreement" and
" -- Expenses".)
THE MERGER
GENERAL. SCBC and CCBF have entered into the Merger Agreement which
provides for the Merger and certain other transactions as described therein.
SCBC is a North Carolina business corporation which is registered with the Board
of Governors of the Federal Reserve System (the "Federal Reserve") under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), as a bank holding
company. Its principal subsidiaries are (i) Security Capital Bank ("SCB"), a
North Carolina commercial bank headquartered in Salisbury, North Carolina, (ii)
OMNIBANK, Inc., A State Savings Bank ("OMNIBANK"), a North Carolina savings bank
headquartered in Salisbury, North Carolina, (iii) Citizens Savings, Inc., SSB
("Citizens"), a North Carolina savings bank headquartered in Concord, North
Carolina, and (iv) Home Savings Bank, Inc., SSB ("Home Savings"), a North
Carolina savings bank headquartered in Kings Mountain, North Carolina. SCBC's
principal offices are located at 507 West Innes Street (Post Office Box 1387),
Salisbury, North Carolina 28145, and its telephone number at that address is
(704) 636-3775. (See "SECURITY CAPITAL BANCORP".)
CCBF also is a North Carolina business corporation which is registered with
the Federal Reserve under the BHCA as a bank holding company. NSC is a proposed
North Carolina business corporation which is being formed as a wholly-owned
subsidiary of CCBF for the sole purpose of facilitating the combination of SCBC
and CCBF through the Merger and has not conducted any business operations.
Following the organization of NSC, CCBF will cause NSC to become a party to the
Merger Agreement. CCBF's principal subsidiaries are (i) Central Carolina Bank
and Trust Company ("CCB"), a North Carolina commercial bank headquartered in
Durham, North Carolina, (ii) CCB Savings Bank of Lenoir, Inc., SSB ("Lenoir",
which currently is expected to be merged into CCB during February 1995), a North
Carolina savings bank headquartered in Lenoir, North Carolina, (iii) Graham
Savings Bank, Inc., SSB ("Graham"), a North Carolina savings bank headquartered
in
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Graham, North Carolina, and (iv) Central Carolina Bank-Georgia ("CCB-Georgia"),
a Georgia credit card bank headquartered in Columbus, Georgia. CCBF's principal
offices are located at 111 Corcoran Street (Post Office Box 931), Durham, North
Carolina 27702, and its telephone number at that address is (919) 683-7777. (See
"CCB FINANCIAL CORPORATION".)
EFFECT OF MERGER. At the time the Merger becomes effective (the "Effective
Time"), NSC will be merged with and into SCBC, and SCBC will become a
wholly-owned subsidiary of CCBF. It currently is anticipated that, immediately
after the Effective Time, SCBC will be merged into CCBF (as SCBC's parent
corporation), and SCBC will cease to exist as a separate corporation. CCBF will
be the surviving corporation of that merger and will continue to conduct its and
SCBC's business. (See "THE MERGER -- General" and " -- Effective Time and
Closing Date".)
The Merger Agreement also provides that, in a series of transactions
completed prior to the Merger, SCBC's savings bank subsidiaries will be
consolidated into OMNIBANK which, in turn, will be converted into a North
Carolina interim commercial bank and merged into SCB (the "Bank Conversions")
and that, immediately following the Merger and the merger of SCBC into CCBF, SCB
will be merged into CCB (the "Bank Merger"). (See "THE MERGER -- General".)
CONVERSION OF SCBC STOCK AND EXCHANGE RATIO. At the Effective Time, each
outstanding share of SCBC Stock (other than shares as to which SCBC's
shareholders exercise their "Dissenters' Rights" under North Carolina law) will
be converted into, and thereafter may be exchanged for, .50 of a share of CCBF
Stock and .50 of a CCBF Right. (See "THE MERGER -- Conversion of SCBC Stock and
Stock Options; Exchange Ratio" and " -- Surrender and Exchange of Certificates",
"RIGHTS OF DISSENTING SHAREHOLDERS", and "CAPITAL STOCK OF CCBF AND SCBC".)
TREATMENT OF FRACTIONAL SHARES. In lieu of issuing fractional shares of
CCBF Stock, cash will be distributed to each SCBC shareholder otherwise entitled
to receive a fractional share in an amount equal to that fraction multiplied by
the "market value" of one whole share of CCBF Stock. (See "THE
MERGER -- Treatment of Fractional Shares".)
RECOMMENDATIONS AND REASONS. SCBC'S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT SCBC'S SHAREHOLDERS VOTE TO APPROVE THE MERGER AGREEMENT. SCBC's
Board of Directors has adopted the Merger Agreement and believes the Merger and
the actions to be taken in connection therewith are in the best interest of SCBC
and its shareholders, and unanimously recommends that SCBC's shareholders vote
FOR approval of the Merger Agreement. In making its recommendation, the SCBC
Board considered, among other things, the opinion of its financial advisor that
the proposed consideration to be paid by CCBF to SCBC's shareholders, in the
form of the Exchange Ratio of .50 of a share of CCBF Stock and .50 of a CCBF
Right for each outstanding share of SCBC Stock, is fair to SCBC's shareholders
from a financial point of view. (See "THE MERGER -- Recommendation and Reasons"
and " -- SCBC Fairness Opinion".)
CCBF'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT CCBF'S SHAREHOLDERS
VOTE TO APPROVE THE MERGER AGREEMENT. CCBF's Board of Directors has adopted the
Merger Agreement, believes the Merger is in the best interest of CCBF and its
shareholders, and unanimously recommends that CCBF's shareholders vote FOR
approval of the Merger Agreement. In making its recommendation, the CCBF Board
considered, among other things, the opinion of its financial advisor that the
Exchange Ratio is fair to the holders of CCBF Stock from a financial point of
view. (See "THE MERGER -- Recommendation and Reasons" and " -- CCBF Fairness
Opinion".)
FAIRNESS OPINIONS. SCBC's Board of Directors retained The Robinson-Humphrey
Company, Inc. ("Robinson-Humphrey") as SCBC's financial advisor to provide
general business and financial analyses of SCBC, assist SCBC in identifying
potential transactions between SCBC and other companies, advise SCBC concerning
any such transactions, assist SCBC in negotiations relating to any such
transaction and provide an opinion to the Board of the fairness to SCBC's
shareholders of any such transaction from a financial point of view. After its
review of a variety of relevant factors, Robinson-Humphrey has given SCBC's
Board of Directors a written opinion dated November 4, 1994 (the "SCBC Fairness
Opinion", a copy of which is attached as Appendix C to this Prospectus/Joint
Proxy Statement), to the effect that the terms of the Merger as provided in the
Merger Agreement are fair to SCBC's shareholders from a financial point of view.
For its services, SCBC has agreed to pay Robinson-Humphrey a fee of $300,000 in
compensation for Robinson-Humphrey's rendering of the SCBC Fairness Opinion (the
"Opinion Fee"), plus an additional fee for its financial advisory services (the
"Advisory Fee") equal to (i) .75% of the aggregate market value of the shares of
CCBF Stock to be issued in the Merger and all cash payments made by CCBF in lieu
of issuing fractional shares of CCBF Stock, less (ii) the sum of the Opinion Fee
and $75,000. The Opinion Fee was paid upon Robinson-Humphrey's issuance of the
SCBC Fairness Opinion, and the Advisory Fee is payable at the Effective Time. In
addition, SCBC has agreed to reimburse Robinson-Humphrey for its reasonable and
necessary out-of-pocket expenses and third party expenses incurred by
Robinson-Humphrey in connection with its engagement by SCBC in
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the event the Merger is not consummated, and to indemnify Robinson-Humphrey
against certain liabilities. (See "THE MERGER -- SCBC Fairness Opinion".)
CCBF's Board of Directors retained Wheat, First Securities, Inc. ("Wheat")
as CCBF's financial advisor to provide, among other services, financial analyses
of the proposed combination transaction and an opinion to the Board of the
fairness, from a financial point of view, of the Exchange Ratio to the holders
of CCBF Stock. Wheat has delivered to CCBF's Board of Directors a written
opinion dated January 30, 1995 (the "CCBF Fairness Opinion", a copy of which is
attached as Appendix D to this Prospectus/Joint Proxy Statement), to the effect
that, as of the date of the CCBF Fairness Opinion, the Exchange Ratio was fair,
from a financial point of view, to the holders of CCBF Stock. For its services,
CCBF has agreed to pay Wheat an aggregate of $350,000 in fees as compensation
for Wheat's rendering of the CCBF Fairness Opinion and for its financial
advisory services. Of such amount, $50,000 was paid upon the execution of the
Merger Agreement, $100,000 was paid upon Wheat's issuance of the CCBF Fairness
Opinion, and the remaining $200,000 is payable at the Effective Time. In
addition, CCBF has agreed to reimburse Wheat for its reasonable out-of-pocket
expenses incurred in connection with its engagement by CCBF, and to indemnify
Wheat against certain liabilities. (See "THE MERGER -- CCBF Fairness Opinion".)
SCBC's obligation to consummate the Merger is conditioned on its receipt
from Robinson-Humphrey immediately prior to consummation of the Merger of
confirmation of the SCBC Fairness Opinion. The Merger Agreement also provides
that CCBF's obligations to consummate the Merger are conditioned on its receipt
from Wheat of confirmation of the CCBF Fairness Opinion immediately prior to
consummation of the Merger. However, CCBF's Board of Directors has waived that
condition based on several factors. (See "THE MERGER -- Conditions to Merger".)
REQUIRED APPROVALS OF SHAREHOLDERS. Under the Merger Agreement and North
Carolina law, the Merger Agreement must be approved by the affirmative vote of
the holders of a majority of the shares of SCBC Stock entitled to be voted at
the SCBC Special Meeting. (See "THE MERGER -- Required Shareholder Approvals".)
North Carolina law does not require that CCBF's shareholders vote on or
approve the Merger Agreement. However, bylaws of the Nasdaq Stock Market, Inc.
(which apply to CCBF by virtue of the qualification of CCBF Stock for quotation
on the Nasdaq National Market) require that the Merger Agreement be approved by
the affirmative vote of the holders of a majority of the shares of CCBF Stock
represented, in person and by proxy, and entitled to be voted at the CCBF
Special Meeting. (See "THE MERGER -- Required Shareholder Approvals".)
REQUIRED REGULATORY APPROVALS. The Merger, the Bank Conversions and the
Bank Merger are subject to approvals of certain regulatory authorities.
Applications for all such required approvals have been filed and are pending.
While no assurances are or can be given, SCBC and CCBF believe that all such
required regulatory approvals will be obtained. (See "THE MERGER -- Required
Regulatory Approvals".)
CONDUCT OF BUSINESS PENDING MERGER. The Merger Agreement provides that,
prior to the Effective Time, SCBC and CCBF each will conduct its business in the
usual, regular and ordinary course consistent with past practices, use its best
efforts to maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees, and take no action which would adversely affect or delay the
ability of either SCBC or CCBF to obtain any necessary approvals of any
governmental authority required for the Merger or the other transactions
contemplated by the Merger Agreement or to perform its covenants and agreements
under the Merger Agreement. Further, except as permitted by the Merger
Agreement, SCBC and CCBF each will refrain from taking certain actions relating
to the operation of its business without the prior approval of the other party.
(See "THE MERGER -- Conduct of Business Pending Merger" and " -- Dividends".)
The Merger Agreement provides that, prior to the Effective Time, CCBF shall
not acquire or agree to acquire any financial institution holding company or
financial institution unless, after full disclosure to SCBC of the proposed
terms thereof, the Executive Committee of SCBC's Board concludes that such
proposed acquisition would not significantly delay or impede the Merger and the
transactions related thereto, would not create a reasonable likelihood that any
required regulatory approval for the Merger or such transactions would not be
obtained, or would not be reasonably likely to diminish the economic benefits of
the Merger to SCBC and its shareholders. (See "THE MERGER -- Conduct of Business
Pending Merger".)
PROHIBITION ON SOLICITATION. The Merger Agreement provides that neither
SCBC nor CCBF will solicit or encourage, or authorize any person to solicit,
from any third party any inquiries or proposals with respect to any disposition
of its business or assets, or the acquisition of its voting securities, or its
merger with any corporation or entity other than as provided by the Merger
Agreement. Further, subject to fiduciary obligations of its Board of Directors,
neither SCBC nor CCBF will provide any information or assistance or negotiate
with any person in furtherance of any such inquiry or to obtain such a proposal.
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If the Merger Agreement is terminated by reason of SCBC or CCBF entering
into a letter of intent or agreement to be acquired by, merge with or sell all
or substantially all its assets to a third party or if SCBC or CCBF (without the
consent of the other) engages in negotiations with a third party with respect to
any such transaction and, within six months of the termination of the Merger
Agreement, enters into a letter of intent or agreement with such third party,
then SCBC or CCBF, as the case may be, would be obligated to pay to the other a
termination fee of $6.2 million. (See "THE MERGER -- Prohibition on
Solicitation" and " -- Termination of Merger Agreement".)
ACCOUNTING TREATMENT. The Merger Agreement requires that the Merger qualify
to be treated as a pooling-of-interests for accounting and financial reporting
purposes. Generally, if the number of fractional shares of CCBF Stock resulting
from the Merger for which cash are paid in effecting the Merger, shares of CCBF
Stock or SCBC Stock repurchased by CCBF or by SCBC, and shares held by SCBC
stockholders who exercise their "Dissenters' Rights", together would represent
more than 10% of the shares issued by CCBF in connection with the Merger, then
the Merger will not qualify for the pooling-of-interests method of accounting.
In such event, or if for any other reason the Merger could not be accounted for
as a pooling-of-interests, SCBC or CCBF would be entitled to terminate the
Merger Agreement and abandon the Merger. (See "THE MERGER -- Accounting
Treatment", " -- Termination of Plan of Merger" and " -- Stock Repurchase Plan",
and "RIGHTS OF DISSENTING SHAREHOLDERS.")
CERTAIN INCOME TAX CONSEQUENCES. CCBF and SCBC have received an opinion
(the "Tax Opinion") from KPMG Peat Marwick LLP, tax advisors to CCBF and SCBC,
to the effect that the Merger and the Bank Merger will constitute tax-free
reorganizations under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that the shareholders of SCBC will not recognize gain
or loss for federal income tax purposes to the extent such shareholders exchange
shares of SCBC Stock for shares of CCBF Stock. (See "THE MERGER -- Certain
Income Tax Consequences".)
Because of the complexity of federal income tax laws and because tax
consequences may vary depending upon a shareholder's individual circumstances or
tax status, it is recommended that each of SCBC's shareholders consult his or
her own tax advisor concerning the federal (and applicable state, local or
other) tax consequences of the Merger.
CONDITIONS TO MERGER. In addition to required regulatory and shareholder
approvals, consummation of the Merger is conditioned upon the fulfillment of
certain other conditions set forth in the Merger Agreement, including without
limitation (i) receipt of an opinion of KPMG Peat Marwick LLP, that the Merger
qualifies for pooling-of-interests accounting treatment, (ii) receipt of the Tax
Opinion of KPMG Peat Marwick LLP, to the effect that the Merger will qualify as
a tax-free reorganization under the Code, (iii) the receipt by SCBC and CCBF of
Fairness Opinions from their respective financial advisors, (iv) the absence of
any order, decree or injunction enjoining or prohibiting the consummation of the
Merger, (v) the absence of the perfection of "Dissenters' Rights" by a
sufficient number of SCBC shareholders to result in the Merger not qualifying
for pooling-of-interests accounting treatment, and (vi) certain other conditions
customary in transactions of this nature. Further, SCBC's obligation to
consummate the Merger is conditioned upon the approval of the Bylaw Amendment by
CCBF's shareholders, the maintenance of an average closing price of no less than
$36.00 per share of CCBF Stock over the ten trading days preceding the date on
which the Effective Time is to occur, and confirmation of the SCBC Fairness
Opinion by Robinson-Humphrey immediately prior to consummation of the Merger.
(See "THE MERGER -- Conditions to Merger", " -- Required Approvals", and
" -- Accounting Treatment".)
WAIVER AND AMENDMENT. Prior to the Effective Time, any provision of the
Merger Agreement may be waived by the party entitled to the benefits of such
provision, except that no condition may be waived which, if not satisfied, would
result in the violation of any law or applicable governmental regulation. In
addition, to the extent permitted by law, the Merger Agreement may be amended at
any time upon the written agreement of SCBC and CCBF without the approval of
their shareholders, except that no changes involving material matters, including
the manner or basis in which shares of SCBC Stock will be exchanged for CCBF
Stock, may be made after the Special Meetings without shareholder approval. (See
"THE MERGER -- Amendment of Merger Agreement; Waiver".)
TERMINATION OF MERGER AGREEMENT. The Merger Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time, whether before or
after any requisite shareholder approval, (i) by mutual consent of the Boards of
Directors of SCBC and CCBF, or (ii) by the Board of Directors of either SCBC or
CCBF: (A) at any time after September 30, 1995; (B) if any appropriate
regulatory authority has denied approval of the Merger, the Bank Conversions or
the Bank Merger, or an order, judgment or decree of any such regulatory
authority or court having jurisdiction has imposed any condition or requirement
which would so materially adversely impact the economic or business benefits of
the Merger as to render the consummation of the Merger inadvisable in the
reasonable opinion of the Board of Directors of SCBC or CCBF, and such denial or
imposition has become final and nonappealable; (C) in the event of a material
breach by the other party of any representation, warranty, covenant or other
agreement contained in the Merger Agreement, which breach is not cured
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within 30 days after written notice thereof is given by the non-breaching party;
or (D) if there has occurred a suit or other proceeding by any governmental
regulatory agency or body to restrain or prohibit the Merger, the Bank
Conversions or the Bank Merger or a suit by an SCBC or CCBF shareholder seeking
to restrain the Merger, the Bank Conversions or the Bank Merger or seeking
monetary damages should such transactions be consummated; (iii) by SCBC, if the
Bylaw Amendment is not approved by CCBF's shareholders before April 20, 1995; or
(iv) by SCBC, if the average closing price for a share of CCBF Stock on the
Nasdaq National Market for any period of 30 consecutive trading days shall be
less than $36.00. (See "THE MERGER -- Termination of Merger Agreement".)
EFFECTIVE TIME. Assuming the receipt of all required approvals, it
currently is expected that the Merger will become effective during the second
quarter of 1995. (See "THE MERGER -- Effective Time and Closing Date".) The
Board of Directors of either CCBF or SCBC may terminate the Merger Agreement if
the Effective Time shall not have occurred by September 30, 1995. (See "THE
MERGER -- Termination of Merger Agreement".)
DIRECTORS AND OFFICERS. Following the Effective Time, CCBF's and CCB's then
current directors will continue to serve for the remainder of their terms of
office. Additionally, subject to approval of the Bylaw Amendment at the CCBF
Special Meeting, Miles J. Smith, Jr., David B. Jordan, John M. Barnhardt, Jimmy
K. Stegall, James L. Williamson and J. G. Rutledge, III (each of whom currently
serves as a director of SCBC) will be appointed to serve as directors of CCBF
and CCB.
The Merger Agreement provides that CCBF's Chairman, W. L. Burns, Jr., will
continue to serve as Chairman of CCBF's and CCB's Boards of Directors, and
SCBC's Vice Chairman and Chief Executive Officer, David B. Jordan, will be
appointed to serve as Vice Chairman and a member of the Executive Committee of
CCBF's and CCB's Boards of Directors. Ernest C. Roessler will continue to serve
as CCBF's and CCB's President and Chief Executive Officer. Ralph A. Barnhardt,
Vice Chairman of SCBC, and Lloyd G. Gurley, President and Chief Administrative
Officer of SCBC, each will be appointed to serve as an Executive Vice President
of CCBF and CCB. It currently is contemplated that, after the Merger, CCBF's and
CCB's other executive officers will continue to serve in their current positions
as officers of CCBF and CCB. (See "THE MERGER -- Directors and Officers".)
INTERESTS OF CERTAIN PERSONS. The Merger Agreement provides that, following
the Effective Time, CCBF will continue to honor in accordance with their terms
all employment, severance, deferred compensation, split dollar insurance, salary
continuation, consulting and other compensation contracts between SCBC or any of
its subsidiaries and any current or former director, officer or employee
thereof.
The current employment agreements of David B. Jordan, Vice Chairman and
Chief Executive Officer of SCBC, Ralph A. Barnhardt, Vice Chairman of SCBC, and
LIoyd G. Gurley, President and Chief Administrative Officer of SCBC, each of
whom is also an executive officer of one or more SCBC subsidiaries, will be
amended and restated as of the Effective Time and assumed by CCBF and CCB. The
terms of employment of Messrs. Jordan and Gurley will be extended and certain
additional benefits will be provided to Messrs. Jordan, Gurley and Barnhardt.
Each will become a senior executive officer of CCBF and CCB. In addition, Mr.
Gurley's agreement will provide that CCB will repurchase his primary residence
should he relocate to CCBF's principal office or upon certain other events.
Pressley A. Ridgill, Chief Financial Officer of SCBC and its subsidiaries, has
elected not to accept employment with CCBF and CCB beyond a transition period
following the Effective Time. SCBC and CCBF have agreed with Mr. Ridgill that,
to induce him to remain in the employ of SCBC until the Effective Time and in
the employ of CCBF through the expiration of such transition period, and in
settlement of his employment agreement, Mr. Ridgill will receive a payment of
$250,000 and his employment agreement, including the non-competition provisions
thereof, will be terminated. (See "THE MERGER -- Interests of Certain Persons
With Respect to the Merger".)
RIGHTS OF DISSENTING SHAREHOLDERS. Subject to certain conditions, each SCBC
shareholder has the right under the North Carolina Business Corporation Act (the
"NCBCA") to "dissent" from the Merger and receive the "fair value" of the
shareholder's shares of SCBC Stock in cash ("Dissenters' Rights"). An SCBC
shareholder who (i) does not vote in favor of the Merger Agreement, (ii) submits
timely written notice of intent to demand payment for the shareholder's shares,
(iii) demands payment and deposits the shareholder's share certificates by the
date set forth in and in accordance with the terms and conditions of a
"dissenters' notice"sent to such shareholder, and (iv) otherwise satisfies the
requirements specified in Appendix B to this Prospectus/Joint Proxy Statement,
will be offered the amount SCBC estimates to be the fair value of the
shareholder's shares of SCBC Stock, plus accrued interest to the date of
payment, and will be paid such amount in cash provided the shareholder agrees in
writing to accept such amount in full satisfaction of the shareholder's demand.
In order to exercise Dissenters' Rights, an SCBC shareholder must follow
carefully all steps prescribed in Appendix B. (See "RIGHTS OF DISSENTING
SHAREHOLDERS" and Appendix B.) An SCBC shareholder who returns a signed
appointment of proxy, but fails to provide instructions as to the manner in
which such shares are to be voted, will be deemed to have voted in favor of the
Merger Agreement and will not be entitled to assert Dissenters' Rights.
9
<PAGE>
DIFFERENCES IN CAPITAL STOCK OF SCBC AND CCBF. In connection with the
Merger, SCBC's shareholders (other than shareholders who exercise Dissenters'
Rights) will become CCBF shareholders. There are certain differences between the
rights of the respective shareholders of SCBC and CCBF. SCBC shareholders should
consider carefully the differences in CCBF Stock and SCBC Stock under the
governing instruments of those corporations and North Carolina law. (See
"CAPITAL STOCK OF CCBF AND SCBC".)
RESALES OF CCBF STOCK RECEIVED IN MERGER. The shares of CCBF Stock into
which SCBC Stock will be converted in the Merger will be freely transferable by
the holders thereof except in the case of shares held by persons who may be
deemed to be "Affiliates" of SCBC or CCBF under applicable federal securities
laws. Generally, SCBC's Affiliates include its directors, executive officers,
principal shareholders and other persons who may be deemed to "control" SCBC.
(See "THE MERGER -- Restrictions on Resale of CCBF Stock by Affiliates".) The
CCBF Rights attached to the shares of CCBF Stock received by SCBC's shareholders
will not be transferable separately from the shares of CCBF Stock to which they
relate. (See "CAPITAL STOCK OF CCBF AND SCBC".)
STOCK REPURCHASE PROGRAM. The Merger Agreement contemplated that CCBF would
purchase shares of CCBF Stock and/or SCBC Stock prior to the Effective Time,
subject to the limitations that such purchases be effected in compliance with
applicable securities laws and regulations, including public disclosures in
advance of the commencement of such stock purchase program, and that such
purchases not be of a type or in an aggregate amount as would cause the Merger
not to qualify as a tax-free reorganization under the Code or not to be properly
accounted for under generally accepted accounting principles as a
pooling-of-interests. It also was contemplated that, if so requested by CCBF,
SCBC would repurchase shares of SCBC Stock prior to the Effective Time. Any such
repurchases would also be subject to the limitations on CCBF's stock purchases
described above. In the event SCBC repurchased shares of SCBC Stock at CCBF's
request and the Merger was not consummated, CCBF would pay to SCBC a sum equal
to the difference between the aggregate price paid by SCBC for all SCBC Stock so
repurchased and the average closing sales price for a share of SCBC Stock on the
Nasdaq National Market over the 10 consecutive trading days following the date
on which the termination of the Merger Agreement is publicly announced. (See
"THE MERGER -- Stock Repurchase Program".)
SELECTED FINANCIAL INFORMATION
The following tables set forth certain selected consolidated financial
information for CCBF and SCBC on a historical basis and for CCBF on an unaudited
pro forma combined basis. This financial information has been based on, and
should be read in conjunction with, CCBF's and SCBC's audited financial
statements and interim unaudited financial statements, including the related
notes thereto, which are incorporated by reference in this Prospectus/Joint
Proxy Statement. (See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE".) In the
opinion of the respective management of CCBF and SCBC, all adjustments necessary
for a fair presentation of results of interim periods of CCBF and SCBC (none of
which were other than normal accruals) have been included.
SCBC's financial information as of September 30, 1994 includes the assets
and liabilities of First Federal Savings and Loan Association of Charlotte
("First Federal") which was acquired on September 23, 1994. SCB purchased the
outstanding stock of First Federal for approximately $41,000,000 in cash. The
acquisition was accounted for by the purchase method and resulted in the
recognition of $12,459,000 of goodwill and $3,222,000 of deposit base premium.
Immediately after the stock purchase and the conversion of First Federal into an
interim commercial bank, First Federal, which had assets of $293,767,000, net
loans of $135,595,000 and deposits of $248,777,000, was merged into SCB. In
connection with the First Federal acquisition, SCBC recognized significant
non-recurring charges during the nine months ended September 30, 1994.
The selected unaudited pro forma combined financial information has been
prepared using historical financial information for CCBF and SCBC and assuming
the Merger had been effective prior to the periods presented and was accounted
for under the pooling-of-interests method of accounting. For a description of
the pooling-of-interests accounting method with respect to the Merger and the
related effects on the historical financial statements of CCBF, see "THE
MERGER" -- Accounting Treatment". The pro forma combined financial information
presented is not necessarily indicative of actual results that might have been
achieved had the Merger been consummated prior to the periods presented, and is
not indicative of future results that may be obtained on a combined basis. The
pro forma combined financial information does not reflect any restructuring
expenses which may be recognized, transaction expenses which will be incurred or
cost savings from operating efficiencies which may be realized in connection
with the Merger. Current estimates of restructuring expenses for 1995 are $5.5
million and transaction expenses will be an estimated $3 million. The cost
savings associated with these possible operating efficiencies and synergies have
not been quantified, nor are any such savings assured. It is anticipated that
any such savings will not be achieved until the fiscal quarters following the
quarter in which the expenses of the Merger and the Bank Merger are recognized.
10
<PAGE>
CCB FINANCIAL CORPORATION
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income................... $ 174,651 136,040 190,689 169,736 186,577 196,201 188,089
Interest expense.................. 68,447 52,787 73,821 70,637 96,039 110,148 108,598
Net interest income............... 106,204 83,253 116,868 99,099 90,538 86,053 79,491
Provision for loan and
lease losses.................... 5,800 4,535 6,453 5,983 7,407 6,345 4,942
Net interest income
after provision................. 100,404 78,718 110,415 93,116 83,131 79,708 74,549
Other income...................... 29,950 25,549 36,408 30,630 32,597 29,729 27,321
Net investment security gains..... 45 249 2,652 2,065 56 17 569
Other expenses.................... 87,607 74,446 105,610 88,574 85,502 79,497 72,068
Income before income taxes
and cumulative changes in
accounting principles........... 42,792 30,070 43,865 37,237 30,282 29,957 30,371
Income taxes...................... 14,451 10,096 14,640 11,915 8,828 9,440 9,360
Income before cumulative changes
in accounting principles........ 28,341 19,974 29,225 25,322 21,454 20,517 21,011
Cumulative changes in accounting
principles (1).................. -- (1,371) (1,371) -- -- -- --
Net income........................ $ 28,341 18,603 27,854 25,322 21,454 20,517 21,011
PER SHARE
Income before cumulative changes
in accounting principles:
Primary......................... $ 2.98 2.47 3.50 3.30 2.81 2.70 2.78
Fully diluted (2)............... 2.98 2.38 3.41 3.10 2.66 2.56 2.63
Net income:
Primary......................... 2.98 2.30 3.33 3.30 2.81 2.70 2.78
Fully diluted (2)............... 2.98 2.22 3.25 3.10 2.66 2.56 2.63
Cash dividends.................... .98 .92 1.24 1.14 1.05 .99 .93
Book value........................ 27.89 25.60 26.37 24.40 22.23 20.38 18.67
Average shares outstanding:
Primary......................... 9,516 8,099 8,345 7,664 7,628 7,598 7,559
Fully diluted (2)............... 9,516 8,607 8,726 8,578 8,565 8,536 8,497
AVERAGE BALANCES
Assets............................ $3,254,371 2,543,994 2,694,973 2,179,452 2,062,153 1,996,695 1,856,079
Loans and lease financing......... 2,236,597 1,697,206 1,804,656 1,489,943 1,408,595 1,331,896 1,244,880
Earning assets.................... 3,024,779 2,352,534 2,496,290 2,003,920 1,893,055 1,815,883 1,680,223
Deposits.......................... 2,792,385 2,231,061 2,358,451 1,912,362 1,805,230 1,750,897 1,611,033
Interest-bearing liabilities...... 2,535,722 1,979,098 2,098,921 1,683,427 1,614,056 1,557,520 1,424,950
Shareholders' equity.............. 257,070 201,508 209,672 176,869 161,010 146,595 133,220
</TABLE>
11
<PAGE>
CCB FINANCIAL CORPORATION (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SELECTED PERIOD END BALANCES
Assets............................ $3,412,719 2,886,434 3,257,643 2,312,218 2,158,196 2,102,248 1,983,812
Loans and lease financing......... 2,385,216 1,905,982 2,159,489 1,521,136 1,444,875 1,379,290 1,303,211
Reserve for loan and lease
losses.......................... 29,752 23,685 26,963 19,027 17,742 16,234 14,656
Deposits.......................... 2,889,116 2,552,590 2,816,771 2,028,506 1,885,597 1,845,054 1,736,263
Shareholders' equity.............. 265,374 216,177 251,004 189,845 169,847 154,867 141,886
RATIOS (ANNUALIZED)
Income before cumulative changes
in accounting principles to:
Average assets.................. 1.16% 1.05 1.08 1.16 1.04 1.03 1.13
Average shareholders'
equity....................... 14.74 13.25 13.94 14.32 13.32 14.00 15.77
Net income to:
Average assets.................. 1.16 .98 1.03 1.16 1.04 1.03 1.13
Average shareholders'
equity....................... 14.74 12.34 13.28 14.32 13.32 14.00 15.77
Net interest margin, taxable
equivalent (3).................. 4.86 4.92 4.87 5.16 5.05 5.00 5.01
Net loan and lease losses to
average loans and lease
financing....................... .18 .27 .24 .32 .43 .36 .33
Dividend payout ratio............. 32.89 40.00 37.24 34.55 37.26 36.56 33.56
</TABLE>
(1) The cumulative changes in accounting principles reflect the adoption of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" ("SFAS 106"), which
resulted in a one-time net charge of $2,271,234 ($3,736,834 pre-tax) in
recognition of the the entire Accumulated Postretirement Benefit Obligation
and the adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), which resulted in a one-time
benefit of $900,000.
(2) Assumes full conversion of convertible subordinated debentures issued by
CCBF in 1985. The convertible subordinated debentures were called for
redemption during 1993 and substantially all were converted into CCBF Stock.
(3) Net interest margin is computed by dividing taxable equivalent net interest
income by average earnings assets.
12
<PAGE>
SECURITY CAPITAL BANCORP
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income.............................. $ 46,489 48,710 64,223 71,853 83,061 85,457 81,323
Interest expense............................. 19,525 21,338 28,135 35,129 47,950 51,320 50,970
Net interest income.......................... 26,964 27,372 36,088 36,724 35,111 34,137 30,353
Provision for loan losses.................... 269 507 653 1,848 1,924 1,620 963
Net interest income after provision.......... 26,695 26,865 35,435 34,876 33,187 32,517 29,390
Other income................................. 6,225 7,686 10,209 8,940 8,664 6,581 5,277
Net investment security gains (losses)....... (70) 310 310 8 549 888 239
Other expenses (1)........................... 20,123 18,401 23,842 27,540 25,481 22,755 21,405
Income before income taxes................... 12,727 16,460 22,112 16,284 16,919 17,231 13,501
Income taxes (2)............................. 9,842 5,332 7,273 6,323 5,642 5,938 4,491
Net income................................... $ 2,885 11,128 14,839 9,961 11,277 11,293 9,010
PER SHARE
Net income................................... $ .25 .94 1.26 .84 .95 .95 .85
Cash dividends (3)........................... .33 .29 .39 .31 .23 .19 .15
Book value................................... 10.12 10.46 10.63 9.90 9.32 8.58 8.76
Average shares outstanding................... 11,727 11,795 11,772 11,833 11,821 11,830 10,618
AVERAGE BALANCES
Assets....................................... $ 927,087 915,885 918,360 915,900 921,825 884,625 883,333
Loans........................................ 493,720 497,995 494,943 528,869 571,284 567,948 564,155
Earning assets............................... 875,660 866,061 868,984 871,360 873,376 837,041 786,347
Deposits..................................... 788,276 784,480 787,535 775,618 779,021 753,328 708,345
Interest-bearing liabilities................. 730,414 719,705 721,298 728,749 754,129 720,319 682,652
Stockholders' equity......................... 126,103 120,140 121,007 112,422 104,733 96,757 89,032
SELECTED PERIOD END BALANCES
Assets....................................... $1,173,422 922,798 928,935 913,711 914,772 907,260 863,245
Loans........................................ 636,208 486,049 473,202 510,429 551,338 585,566 546,788
Allowance for loan losses.................... 9,242 7,171 7,227 6,909 5,429 4,732 4,620
Deposits..................................... 1,015,029 779,392 784,456 773,635 775,140 767,929 739,128
Stockholders' equity......................... 119,133 122,502 124,220 116,928 110,145 101,336 93,047
RATIOS (ANNUALIZED)
Net income to:
Average assets............................. .42% 1.62 1.62 1.09 1.22 1.28 1.02
Average stockholders' equity............... 3.05 12.35 12.26 8.81 10.77 11.67 10.12
Net interest margin (4)...................... 4.12 4.22 4.15 4.21 4.02 4.08 3.86
Net loan losses to average loans............. .08 .07 .07 .07 .22 .27 .11
Dividend payout ratio........................ 132.00 30.85 30.95 36.90 24.21 20.00 17.65
</TABLE>
(1) In 1994, SCBC recognized significant non-recurring expenses in connection
with the acquisition of First Federal which related to severance,
professional fees, marketing and discontinued contracts.
(2) During the third quarter of 1994, SCBC recognized a one-time charge of
approximately $5,600,000 to record deferred tax liabilities in connection
with the proposed merger of SCBC's three savings bank subsidiaries into its
commercial bank subsidiary during early 1995.
(3) Dividends per share for all periods prior to December 31, 1992 have been
computed by dividing cash dividends paid by the weighted average number of
shares outstanding as adjusted retroactively for stock splits and dividends
due to the restatement of financial information for a 1992 transaction
accounted for as a pooling-of-interests.
(4) Net interest margin is computed by dividing taxable equivalent net interest
income by average earnings assets.
13
<PAGE>
CCB FINANCIAL CORPORATION PRO FORMA COMBINED
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income................... $ 221,140 184,750 254,912 241,589 269,638 281,658 269,412
Interest expense.................. 87,972 74,125 101,956 105,766 143,989 161,468 159,568
Net interest income............... 133,168 110,625 152,956 135,823 125,649 120,190 109,844
Provision for loan and
lease losses.................... 6,069 5,042 7,106 7,831 9,331 7,965 5,905
Net interest income
after provision................. 127,099 105,583 145,850 127,992 116,318 112,225 103,939
Other income...................... 36,175 33,235 46,617 39,570 41,261 36,310 32,598
Net investment security
gains (losses).................. (25) 559 2,962 2,073 605 905 808
Other expenses.................... 107,730 92,847 129,452 116,114 110,983 102,252 93,473
Income before income taxes and
cumulative changes in accounting
principles...................... 55,519 46,530 65,977 53,521 47,201 47,188 43,872
Income taxes...................... 24,293 15,428 21,913 18,238 14,470 15,378 13,851
Income before cumulative changes
in accounting principles........ 31,226 31,102 44,064 35,283 32,731 31,810 30,021
Cumulative changes in accounting
principles (1).................. -- (1,371) (1,371) -- -- -- --
Net income........................ $ 31,226 29,731 42,693 35,283 32,731 31,810 30,021
PER SHARE
Income before cumulative changes
in accounting principles:
Primary......................... $ 2.03 2.22 3.10 2.60 2.42 2.35 2.33
Fully diluted (2)............... 2.03 2.18 3.05 2.52 2.35 2.29 2.27
Net income:
Primary......................... 2.03 2.12 3.00 2.60 2.42 2.35 2.33
Fully diluted (2)............... 2.03 2.08 2.96 2.52 2.35 2.29 2.27
Cash dividends (3)................ .86 .77 1.05 .92 .79 .72 .67
Book value........................ 24.97 23.69 24.43 22.42 20.66 18.97 18.20
Average shares outstanding:
Primary......................... 15,380 13,996 14,230 13,580 13,539 13,513 12,868
Fully diluted (2)............... 15,380 14,505 14,612 14,494 14,476 14,451 13,806
AVERAGE BALANCES
Assets............................ $4,181,458 3,459,879 3,613,333 3,095,352 2,983,978 2,881,320 2,739,412
Loans and lease financing......... 2,730,317 2,195,201 2,299,599 2,018,812 1,979,879 1,899,844 1,809,035
Earning assets.................... 3,900,439 3,218,595 3,365,274 2,875,280 2,766,431 2,652,924 2,466,570
Deposits.......................... 3,580,661 3,015,541 3,145,986 2,687,980 2,584,251 2,504,225 2,319,378
Interest-bearing liabilities...... 3,266,136 2,698,803 2,820,219 2,412,176 2,368,185 2,277,839 2,107,602
Shareholders' equity.............. 383,173 321,648 330,679 289,291 265,743 243,352 222,252
</TABLE>
14
<PAGE>
CCB FINANCIAL CORPORATION PRO FORMA COMBINED (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SELECTED PERIOD END BALANCES
Assets............................ $4,586,141 3,809,232 4,186,578 3,225,929 3,072,968 3,009,508 2,847,057
Loans and lease financing......... 3,021,424 2,392,031 2,632,691 2,031,565 1,996,213 1,964,856 1,849,999
Reserve for loan and lease
losses.......................... 38,994 30,856 34,190 25,936 23,171 20,966 19,276
Deposits.......................... 3,904,145 3,331,982 3,601,227 2,802,141 2,660,737 2,612,983 2,475,391
Shareholders' equity.............. 384,507 338,679 375,224 306,773 279,992 256,203 234,933
RATIOS (ANNUALIZED)
Income before cumulative changes
in accounting principles to:
Average assets.................. 1.00% 1.20 1.22 1.14 1.10 1.10 1.10
Average shareholders'
equity....................... 10.90 12.93 13.33 12.20 12.32 13.07 13.51
Net income to:
Average assets.................. 1.00 1.15 1.18 1.14 1.10 1.10 1.10
Average shareholders'
equity....................... 10.90 12.36 12.91 12.20 12.32 13.07 13.51
Net interest margin, taxable
equivalent (4).................. 4.69 4.73 4.68 4.88 4.72 4.71 4.64
Net loan and lease losses to
average loans and lease
financing....................... .16 .22 .20 .25 .37 .33 .26
Dividend payout ratio............. 42.36 36.32 35.00 35.38 32.64 30.64 28.76
</TABLE>
(1) The cumulative changes in accounting principles reflect CCBF's adoption of
SFAS 106, which resulted in a one-time net charge of $2,271,234 ($3,736,834
pre-tax) in recognition of the entire Accumulated Postretirement Benefit
Obligation, and adoption of SFAS 109, which resulted in a one-time benefit
of $900,000. The impact of SCBC adopting SFAS 106 and SFAS 109 was
immaterial and therefore no cumulative effect is presented on their behalf
in the pro formas.
(2) Assumes full conversion of convertible subordinated debentures issued by
CCBF in 1985. The convertible subordinated debentures were called for
redemption during 1993 and substantially all were converted into CCBF Stock.
(3) Computed by dividing cash dividends paid by the primary average shares
outstanding for the period presented.
(4) Net interest margin is computed by dividing taxable equivalent net interest
income by average earning assets.
UNAUDITED COMPARATIVE PER SHARE DATA
The following tables set forth CCBF's and SCBC's book values, cash
dividends declared and net income per share at the date and for the periods
presented (i) on an historical basis, and (ii) on a pro forma combined and
equivalent per SCBC share basis (each assuming the Merger became effective prior
to the periods presented and was accounted for as a pooling-of-interests).
<TABLE>
<CAPTION>
AT AT
SEPTEMBER 30, DECEMBER 31,
1994 1993
<S> <C> <C>
BOOK VALUE PER COMMON SHARE:
CCBF (1)...................................................................................... $ 27.89 26.37
SCBC (1)...................................................................................... 10.12 10.63
Pro forma combined (2)........................................................................ 24.97 24.43
Equivalent per SCBC share (3)................................................................. 12.49 12.22
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
1994 1993 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
CASH DIVIDENDS PER COMMON SHARE:
CCBF.................................................................. $ .98 .92 1.24 1.14 1.05 .99 .93
SCBC.................................................................. .33 .29 .39 .31 .23 .19 .15
Pro forma combined (4)................................................ .98 .92 1.24 1.14 1.05 .99 .93
Equivalent per SCBC share(3).......................................... .49 .46 .62 .57 .53 .50 .47
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES PER PRIMARY
COMMON SHARE (5):
CCBF.................................................................. 2.98 2.47 3.50 3.30 2.81 2.70 2.78
SCBC.................................................................. .25 .94 1.26 .84 .95 .95 .85
Pro forma combined (6)................................................ 2.03 2.22 3.10 2.60 2.42 2.35 2.33
Equivalent per SCBC share (3)......................................... 1.02 1.11 1.55 1.30 1.21 1.18 1.17
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES PER FULLY
DILUTED COMMON SHARE (5):
CCBF (7).............................................................. 2.98 2.38 3.41 3.10 2.66 2.56 2.63
SCBC.................................................................. .25 .94 1.26 .84 .95 .95 .85
Pro forma combined (7)(8)............................................. 2.03 2.18 3.05 2.52 2.35 2.29 2.27
Equivalent per SCBC share (3)......................................... 1.02 1.09 1.53 1.26 1.18 1.15 1.14
</TABLE>
(1) SCBC and CCBF historical book values per share are based solely on period
end shares outstanding and do not include common share equivalents.
(2) The pro forma combined book values per share of CCBF Stock are based upon
the historical total common equity for SCBC and CCBF divided by total pro
forma shares of CCBF Stock, assuming conversion of the SCBC Stock at the
Exchange Ratio.
(3) SCBC pro forma equivalent per share amounts are computed by multiplying the
CCBF pro forma combined amounts by the Exchange Ratio.
(4) CCBF pro forma combined dividends per share represent historical dividends
per share paid by CCBF.
(5) Income before cumulative changes in accounting principles and primary and
fully diluted income per share before cumulative changes in accounting
principles for the nine months ended September 30, 1993 do not include the
cumulative effect of changes in accounting principles resulting from the
adoption by CCBF on January 1, 1993 of SFAS 106 and SFAS 109. The impact of
adoption of SFAS 106 and SFAS 109 on net income, primary net income per
share and fully diluted net income per share, was a net charge of
$1,371,000, $(.17) and $(.16), respectively, for the nine months ended
September 30, 1993. The cumulative effect of SCBC's adoption on January 1,
1993 of SFAS 106 and SFAS 109 was not material for the nine months ended
September 30, 1993.
(6) The pro forma combined income per primary share before cumulative changes in
accounting principles (based on weighted average primary shares outstanding)
is based on the combined historical income before cumulative changes in
accounting principles of SCBC and CCBF divided by the weighted average pro
forma combined primary common shares of CCBF.
(7) Assumes full conversion of convertible subordinated debentures issued by
CCBF in 1985. The convertible subordinated debentures were called for
redemption during 1993 and substantially all were converted into shares of
CCBF Stock.
(8) The pro forma combined income before cumulative changes in accounting
principles per fully diluted share (based on weighted average fully diluted
shares outstanding) is based on the combined historical income before
cumulative changes in accounting principles of SCBC and CCBF divided by the
weighted average pro forma combined fully diluted common shares of CCBF.
16
<PAGE>
The following table sets forth (i) on an historical basis, the closing
prices per share of CCBF Stock and SCBC Stock on the Nasdaq National Market on
November 4, 1994 (the last trading date prior to the public announcement of the
Merger), and (ii) the equivalent pro forma market value of SCBC Stock on that
date (assuming that the Merger became effective on that date and was accounted
for as a pooling-of-interests).
<TABLE>
<CAPTION>
AT NOVEMBER 4, 1994
<S> <C>
MARKET VALUE PER SHARE (1):
CCBF Stock............................................................................................... $39.125
SCBC Stock............................................................................................... 15.25
Equivalent pro forma SCBC Stock (2)...................................................................... 19.56
</TABLE>
(1) Closing price on the Nasdaq National Market on the indicated date.
(2) Equivalent pro forma amount is calculated by multiplying the CCBF Stock
market value by the Exchange Ratio.
RECENT DEVELOPMENTS
CCBF. CCBF's net income for the fourth quarter of 1994 was $10,137,000 and
$38,478,000 for the year ended December 31, 1994. These amounts compare to
$9,251,000 and $27,854,000 for the fourth quarter and year ended December 31,
1993. Net income per share for the fourth quarter of 1994 was $1.08 compared to
$1.03 for the fourth quarter of 1993. For the year ended December 31, 1994,
primary and fully diluted income per share before cumulative changes in
accounting principles was $4.06 compared to $3.50 and $3.41, respectively, for
1993. Net income per share for the year ended December 31, 1994 was $4.06 for
both primary and fully diluted shares and $3.33 and $3.25, respectively, for
1993's primary and fully diluted net income per share.
Net income for the fourth quarter of 1994 was up from 1993's level due to a
$4,937,000 increase in net interest income which was partially offset by an
increased provision for loan and lease losses of $1,202,000 due to loan growth
and a $2,724,000 decrease in other income from decreased gains on sales of
investment securities. Other expenses for the fourth quarter of 1994 were
comparable to 1993's fourth quarter expenses.
Net interest income for the year ended December 31, 1994 totaled
$144,756,000, a 23.9% increase over the same period in 1993. The increase in net
interest income was due to volume increases as average earning assets increased
$581,733,000, primarily from the 1993 acquisitions of financial institutions.
The net interest margin remained at a constant 4.87% from 1993 to 1994 and the
interest rate spread narrowed from 4.31% in 1993 to 4.27% in 1994 due to
repricing of liabilities. Other income remained relatively constant from 1993's
$39,060,000 to 1994's $40,534,000. Other expenses increased $13,315,000 due in
part to increased personnel and other operating expenses from the acquisitions,
higher deposit insurance due to increased deposit volume and amortization of
intangible assets acquired in the 1993 acquisitions.
At December 31, 1994, assets totaled $3,548,186,000 compared to 1993's
$3,257,643,000. In addition to internal growth, the mix of earning assets
changed from lower-yielding investments to higher-yielding loans and lease
financing. Consequently, loans outstanding grew to $2,508,511,000 at year-end
1994 from $2,159,489,000 at December 31, 1993. The aggregate of the investment
securities portfolio and other short-term investments fell in that same one-year
period from $822,136,000 to $765,650,000 at December 31, 1994.
The allowance for loan losses was $31,283,000 at December 31, 1994 or 1.25%
of outstanding loans and lease financing. Net charge-offs to average loans and
lease financing was .20% for the year ended December 31, 1994 compared to .24%
for 1993 and was the lowest rate since 1984. Risk assets, comprised of
nonaccrual loans and lease financing, real estate acquired under foreclosure and
accruing loans ninety days or more past due, fell to $13,983,000 at December 31,
1994 or .39% of total assets. This compares to December 31, 1993's risk assets
of $23,252,000 which was .71% of total assets at that date.
17
<PAGE>
The following table sets forth certain selected consolidated financial
information for CCBF on a historical basis. This financial information has been
based on CCBF's interim unaudited financial statements, and the results of
operations are not necessarily indicative of operations that may be expected in
the future. In the opinion of management of CCBF, all adjustments necessary for
a fair presentation of results of interim periods of CCBF (none of which were
other than normal accruals) have been included.
CCB FINANCIAL CORPORATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income................................................. $ 67,080 54,649 241,731 190,689
Interest expense................................................ 28,528 21,034 96,975 73,821
Net interest income............................................. 38,552 33,615 144,756 116,868
Provision for loan and lease losses............................. 3,120 1,918 8,920 6,453
Net interest income after provision............................. 35,432 31,697 135,836 110,415
Other income.................................................... 10,156 10,859 40,107 36,408
Net investment security gains................................... 382 2,403 427 2,652
Other expenses.................................................. 31,317 31,163 118,925 105,610
Income before income taxes and cumulative changes in accounting
principles.................................................... 14,653 13,796 57,445 43,865
Income taxes.................................................... 4,516 4,545 18,967 14,640
Income before cumulative changes in accounting principles....... 10,137 9,251 38,478 29,225
Cumulative changes in accounting principles (1)................. -- -- -- (1,371)
Net income...................................................... $ 10,137 9,251 38,478 27,854
PER SHARE
Income before cumulative changes in accounting principles:
Primary....................................................... $ 1.08 1.03 4.06 3.50
Fully diluted (2)............................................. 1.08 1.03 4.06 3.41
Net income:
Primary....................................................... 1.08 1.03 4.06 3.33
Fully diluted (2)............................................. 1.08 1.03 4.06 3.25
Cash dividends.................................................. .34 .32 1.32 1.24
Book value...................................................... 27.60 26.37 27.60 26.37
Average shares outstanding:
Primary....................................................... 9,392 9,081 9,485 8,345
Fully diluted (2)............................................. 9,392 9,081 9,485 8,726
AVERAGE BALANCES
Assets.......................................................... $3,478,191 3,142,556 3,310,785 2,694,973
Loans and lease financing....................................... 2,446,040 2,123,504 2,289,388 1,804,656
Earning assets.................................................. 3,236,019 2,922,864 3,078,023 2,496,290
Deposits........................................................ 2,955,638 2,736,345 2,833,534 2,358,451
Interest-bearing liabilities.................................... 2,725,739 2,454,427 2,583,616 2,098,921
Shareholders' equity............................................ 261,445 233,649 258,173 209,672
</TABLE>
18
<PAGE>
CCB FINANCIAL CORPORATION (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SELECTED PERIOD END BALANCES
Assets.......................................................... $3,548,186 3,257,643 3,548,186 3,257,643
Loans and lease financing....................................... 2,508,511 2,159,489 2,508,511 2,159,489
Reserve for loan and lease losses............................... 31,283 26,963 31,283 26,963
Deposits........................................................ 3,032,170 2,816,771 3,032,170 2,816,771
Shareholders' equity............................................ 251,390 251,004 251,390 251,004
RATIOS (ANNUALIZED)
Income before cumulative changes in accounting
principles to:
Average assets................................................ 1.16% 1.17 1.16 1.08
Average shareholders' equity.................................. 15.38 15.71 14.90 13.94
Net income to:
Average assets................................................ 1.16 1.17 1.16 1.03
Average shareholders' equity.................................. 15.38 15.71 14.90 13.28
Net interest margin, taxable equivalent (3)..................... 4.91 4.75 4.87 4.87
Net loan and lease losses to average loans and lease
financing..................................................... .26 .18 .20 .24
Dividend payout ratio........................................... 31.48 31.07 32.51 37.24
</TABLE>
(1) The cumulative changes in accounting principles reflect the adoption of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" ("SFAS 106"), which
resulted in a one-time net charge of $2,271,234 ($3,736,834 pre-tax) in
recognition of the the entire Accumulated Postretirement Benefit Obligation
and the adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"), which resulted in a one-time
benefit of $900,000.
(2) Assumes full conversion of convertible subordinated debentures issued by
CCBF in 1985. The convertible subordinated debentures were called for
redemption during 1993 and substantially all were converted into CCBF Stock.
(3) Net interest margin is computed by dividing taxable equivalent net interest
income by average earnings assets.
SCBC. For the three months ended December 31, 1994, SCBC's net income
increased 1.1% to $3,749,000, or $.32 per share, compared with net income of
$3,710,000, or $.32 per share, for the same period in 1993. For the year ended
December 31, 1994, net income decreased to $6,634,000, or $.57 per share,
compared with net income of $14,839,000, or $1.26 per share, for the year ended
December 31, 1993. This decrease was primarily due to the recognition of a
one-time charge of approximately $5.6 million, during the third quarter of 1994,
to record deferred tax liabilities in connection with the proposed merger of
OmniBank, Citizens and Home Savings into SCB during 1995. This decrease in net
income was also impacted by the recognition of significant non-recurring charges
by SCBC during the third quarter of 1994 in connection with its acquisition of
First Federal.
Net interest income increased from $8,716,000 for the three months ended
December 31, 1993 to $11,249,000 for the three months ended December 31, 1994.
This increase is primarily related to the acquisition of First Federal, which
has been accounted for under the purchase method of accounting, and the overall
rise in interest rates between the periods. SCBC's provision for loan losses
decreased from $146,000 for the three months ended December 31, 1993 to $90,000
for the three months ended December 31, 1994, primarily due to management's
assessment of the allowance for loan losses in relation to the overall loan
portfolio. Other income decreased $322,000, primarily due to a $330,000 decline
in gains on sales of loans and mortgage-backed securities. Other expenses
increased $2,135,000 primarily due to the inclusion of First Federal's
operations noted above.
As of December 31, 1994 and 1993, total assets were $1,165,614,000 and
$928,935,000, respectively. This increase, along with the other balance sheet
increases noted below, is primarily due to the acquisition of First Federal
which has been accounted for under the purchase method of accounting. Net loans
increased from $465,975,000 at December 31, 1993, to $638,914,000 at December
31, 1994. Deposits increased from $784,456,000 at December 31, 1993, to
$1,012,145,000 at December 31, 1994. The allowance for loan losses at December
31, 1994, was $9,317,000, or 1.43% of gross loans.
19
<PAGE>
The following table sets forth certain unaudited consolidated financial
data for SCBC. In the opinion of management of SCBC, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of the
financial position and results of operations for the three months and years
ended December 31, 1994 and 1993 have been included, and the results are not
necessarily indicative of operations that may be expected in the future.
SECURITY CAPITAL BANCORP
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
(IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS
Interest income..................................................... $ 21,047 15,513 67,536 64,223
Interest expense.................................................... 9,798 6,797 29,323 28,135
Net interest income................................................. 11,249 8,716 38,213 36,088
Provision for loan losses........................................... 90 146 359 653
Net interest income after provision................................. 11,159 8,570 37,854 35,435
Other income........................................................ 2,201 2,523 8,426 10,209
Net investment security gains (losses).............................. -- -- (70) 310
Other expenses (1).................................................. 7,577 5,442 27,700 23,842
Income before income taxes.......................................... 5,783 5,651 18,510 22,112
Income taxes (2).................................................... 2,034 1,941 11,876 7,273
Net income.......................................................... $ 3,749 3,710 6,634 14,839
PER SHARE
Net income.......................................................... $ .32 .32 .57 1.26
Cash dividends...................................................... .11 .11 .44 .39
Book value.......................................................... 10.17 10.63 10.17 10.63
Average shares outstanding.......................................... 11,772 11,703 11,738 11,772
AVERAGE BALANCES
Assets.............................................................. $1,120,170 933,068 983,132 918,360
Loans............................................................... 643,219 486,985 530,712 494,943
Earning assets...................................................... 1,101,880 875,482 931,805 868,984
Deposits............................................................ 1,033,119 793,308 853,005 787,535
Interest-bearing liabilities........................................ 968,700 724,358 791,303 721,298
Stockholders' equity................................................ 119,758 123,459 124,684 121,007
SELECTED PERIOD END BALANCES
Assets.............................................................. $1,165,614 928,935 1,165,614 928,935
Loans............................................................... 648,231 473,202 648,231 473,202
Allowance for loan losses........................................... 9,317 7,227 9,317 7,227
Deposits............................................................ 1,012,145 784,456 1,012,145 784,456
Stockholders' equity................................................ 119,760 124,220 119,760 124,220
RATIOS (ANNUALIZED)
Net income to:
Average assets.................................................... 1.34% 1.60 .67 1.62
Average stockholders' equity...................................... 12.52 12.02 5.32 12.26
Net interest margin (3)............................................. 4.08 3.98 4.11 4.15
Net loan losses to average loans.................................... .01 .07 .06 .07
Dividend payout ratio............................................... 34.38 34.38 77.19 30.95
</TABLE>
(1) In 1994, SCBC recognized significant non-recurring expenses in connection
with the acquisition of First Federal which related to severance,
professional fees, marketing and discontinued contracts.
(2) During the third quarter of 1994, SCBC recognized a one-time charge of
approximately $5,600,000 to record deferred tax liabilities in connection
with the proposed merger of SCBC's three savings bank subsidiaries into its
commercial bank subsidiary during early 1995.
(3) Net interest margin is computed by dividing taxable equivalent net interest
income by average earning assets.
20
<PAGE>
THE SPECIAL MEETINGS
GENERAL; PROPOSALS TO BE CONSIDERED
This Prospectus/Joint Proxy Statement is being furnished to holders of SCBC
Stock in connection with the solicitation of proxies by SCBC's Board of
Directors for use at the SCBC Special Meeting which has been called to consider
and vote upon (i) a proposal to approve the Merger Agreement, and (ii) to
transact such other business as may properly come before the SCBC Special
Meeting or any adjournment or adjournments thereof.
This Prospectus/Joint Proxy Statement also is being furnished to holders of
CCBF Stock in connection with the solicitation of proxies by CCBF's Board of
Directors for use at the CCBF Special Meeting which has been called to consider
and vote upon (i) a proposal to approve the Merger Agreement, (ii) a proposal to
approve the Bylaw Amendment, and (iii) to transact such other business as may
properly come before the CCBF Special Meeting or any adjournment or adjournments
thereof.
Each copy of this Prospectus/Joint Proxy Statement mailed to holders of
SCBC Stock is accompanied by an appointment of proxy for use at the SCBC Special
Meeting, and each copy of this Prospectus/Joint Proxy Statement mailed to
holders of CCBF Stock is accompanied by an appointment of proxy for use at the
CCBF Special Meeting.
HOLDERS OF SCBC STOCK AND CCBF STOCK ARE URGED TO COMPLETE, DATE AND SIGN
THE APPOINTMENT OF PROXY WHICH ACCOMPANIES THEIR COPY OF THIS PROSPECTUS/JOINT
PROXY STATEMENT AND TO RETURN IT IMMEDIATELY TO SCBC OR CCBF, AS APPLICABLE.
DATE, PLACE AND TIME
SCBC. The SCBC Special Meeting will be held at SCBC's principal office at
507 West Innes Street, Salisbury, North Carolina, on Thursday, March 16, 1995,
at 11:00 A.M., E.S.T.
CCBF. The CCBF Special Meeting will be held at the George Watts Hill Alumni
Center, Stadium Drive at Ridge Road on the campus of the University of North
Carolina at Chapel Hill, Chapel Hill, North Carolina on Thursday, March 16,
1995, at 11:00 A.M., E.S.T.
RECORD DATES
SCBC. SCBC's Board of Directors has fixed the close of business on February
1, 1995, as the record date (the "SCBC Record Date") for the determination of
the holders of SCBC Stock entitled to receive notice of and to vote at the SCBC
Special Meeting.
CCBF. CCBF's Board of Directors also has fixed the close of business on
February 1, 1995, as the record date (the "CCBF Record Date") for the
determination of the holders of CCBF Stock entitled to receive notice of and to
vote at the CCBF Special Meeting.
VOTING SECURITIES; VOTES REQUIRED FOR APPROVAL
SCBC. As of the SCBC Record Date, there were 11,775,867 outstanding shares
of SCBC Stock. At the SCBC Special Meeting, each SCBC shareholder will be
entitled to cast one vote for each share of SCBC Stock held of record on the
SCBC Record Date on each matter submitted for voting. The affirmative vote of
the holders of a majority of the shares of SCBC Stock entitled to vote at the
SCBC Special Meeting is required to approve the Merger Agreement. Because the
affirmative vote of an absolute majority of all outstanding SCBC Stock is
required, abstentions, broker non-votes and shares otherwise not voted in the
affirmative will have the same effect as votes against the Merger Agreement.
As of January 25, 1995, SCBC's directors and executive officers and their
affiliates owned or had voting power with respect to an aggregate of 1,125,065
shares, or approximately 9.4%, of the then outstanding shares of SCBC Stock. All
such persons have indicated their intention to vote their shares of SCBC Stock
in favor of the Merger Agreement.
As of January 25, 1995, CCBF's directors and executive officers and their
affiliates owned or had voting power with respect to 100 shares of the then
outstanding shares of SCBC Stock. It is expected that these shares will be voted
at the SCBC Special Meeting in favor of the Merger Agreement.
As of January 25, 1995, subsidiaries of SCBC, acting in fiduciary
capacities, had sole or shared voting power with respect to 257,221 shares of
SCBC Stock for various accounts. All such shares of SCBC Stock were held under
arrangements
21
<PAGE>
that provide for exercise of voting power by co-fiduciaries, settlors,
beneficiaries or others and, as a matter of policy, such subsidiaries vote such
shares only in accordance with the instructions of such other persons.
CCBF. As of January 25, 1995, there were 9,108,895 outstanding shares of
CCBF Stock. At the CCBF Special Meeting, each CCBF shareholder will be entitled
to cast one vote for each share of CCBF Stock held of record on the CCBF Record
Date on each matter submitted for voting. The affirmative vote of the holders of
a majority of the shares of CCBF Stock represented, in person and by proxy, and
entitled to be voted at the CCBF Special Meeting is required to approve the
Merger Agreement and the Bylaw Amendment. Provided that a quorum is present,
abstentions and broker nonvotes will have no effect in the voting at the CCBF
Special Meeting.
As of January 25, 1995, CCBF's directors and executive officers and their
affiliates owned or had voting power with respect to 536,625 shares, or
approximately 5.91%, of the then outstanding shares of CCBF Stock. All such
persons have indicated their intention to vote their shares of CCBF Stock in
favor of the Merger Agreement and the Bylaw Amendment.
VOTING AND REVOCATION OF PROXIES
Shares of SCBC Stock and CCBF Stock represented by an appointment of proxy
properly signed and received at or prior to the appropriate Special Meeting,
unless subsequently revoked, will be voted in accordance with the instructions
thereon. An appointment of proxy will not be revoked by the death or incapacity
of the shareholder executing it unless, before the shares are voted, notice of
such death or incapacity is filed with the Secretary of SCBC or CCBF, as
applicable, or with any other person authorized to tabulate votes on behalf of
SCBC or CCBF, as applicable. If an appointment of proxy is signed and returned
without indicating any voting instructions, shares of SCBC Stock represented
thereby will be voted FOR the proposal to approve the Merger Agreement, and
shares of CCBF Stock represented thereby will be voted FOR the Merger Agreement
and FOR the Bylaw Amendment. An appointment of proxy may be revoked by the
person giving it at any time before the shares represented thereby are voted by
the filing with the Secretary of SCBC or CCBF, as applicable, prior to or at the
appropriate Special Meeting of an instrument revoking it or of a duly executed
appointment of proxy bearing a later date, or by voting in person at the
appropriate Special Meeting. All written notices of revocation and other
communications with respect to revocation of SCBC proxies should be addressed as
follows: Security Capital Bancorp, Post Office Box 1387, Salisbury, North
Carolina 28145-1387, Attn: Edward K. Prewitt, Jr., Corporate Secretary. All
written notices of revocation and other communications with respect to
revocation of CCBF proxies should be addressed as follows: CCB Financial
Corporation, Post Office Box 931, Durham, North Carolina 27702, Attn: Richard W.
Every, Corporate Secretary. Attendance at a Special Meeting will not in and of
itself constitute revocation of an appointment of proxy.
The Boards of Directors of SCBC and CCBF are not aware of any business to
be acted upon at their respective Special Meeting other than as described
herein. If, however, other matters are properly brought before either Special
Meeting, or any adjournment or adjournments thereof, the Proxies appointed for
that Special Meeting will have discretionary authority to vote on such matters
in accordance with their best judgment; provided, however, that such
discretionary authority (i) will only be exercised to the extent permissible
under the applicable federal securities law and (ii) will not extend to any
motion to adjourn the SCBC Special Meeting made by SCBC or the CCBF Special
Meeting made by CCBF, in either case for the purpose of soliciting additional
proxies.
PROXY SOLICITATION EXPENSES
Except under certain circumstances involving a wrongful termination or
breach of the Merger Agreement, proxy solicitation costs in connection with the
SCBC Special Meeting will be borne by SCBC and such costs in connection with the
CCBF Special Meeting will be borne by CCBF. In addition to solicitation by mail,
directors, officers and employees of SCBC and CCBF, who will not be specifically
compensated for such services, may solicit appointments of proxy from their
respective shareholders personally or by telephone or telegram or other forms of
communication. Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to beneficial owners of SCBC Stock
and CCBF Stock and will be reimbursed for their reasonable expenses incurred in
doing so by SCBC or CCBF, as applicable. (See "THE MERGER -- Termination of
Merger Agreement" and " -- Expenses".)
RECOMMENDATIONS
SCBC. SCBC's Board of Directors has unanimously adopted the Merger
Agreement. The Board believes the Merger will provide SCBC's shareholders with
an increase in the value of their stockholdings, an increase in the current
dividend return on their investments, and an opportunity to participate in
further appreciation in the value of the shares of CCBF Stock they acquire in
the Merger. The Board believes the combination of SCBC and CCBF, and the
consolidation of SCBC's
22
<PAGE>
financial institution subsidiaries into CCB, will allow SCBC's shareholders to
participate in the ownership of a larger entity which will be better able to
compete more effectively in the economic and competitive environments facing
financial institutions than would SCBC on an independent basis. On this basis,
SCBC's Board concluded that the Merger is fair to, and in the best interests of,
SCBC's shareholders, and adopted and determined to recommend that SCBC's
shareholders approve the Merger Agreement.
In reaching its conclusions, SCBC's Board of Directors consulted with
legal, financial, accounting and other advisors, as well as SCBC's management,
and considered a number of factors, including (i) the Board's familiarity with
and review of SCBC's business, financial condition, operations, earnings,
markets and future prospects; (ii) the Board's review, with the assistance of
SCBC's management and advisors, of the business, financial condition, operations
and earnings of CCBF on historical, pro forma and prospective bases, and the
enhanced opportunities for operating efficiencies, competitiveness and growth
that the Merger will make possible; (iii) the opinion of Robinson-Humphrey that
the receipt of CCBF Stock pursuant to the Merger at the Exchange Ratio is fair
to SCBC's shareholders from a financial point of view; (iv) the expectation that
the Merger generally will be a tax-free transaction to SCBC and its shareholders
and will be accounted for under the pooling-of-interests method of accounting;
and (v) a variety of other factors affecting and relating to SCBC's overall
strategic focus, including the similarity in the business outlook, approach and
cultures of SCBC and CCBF, the business line diversity that the Merger will
allow, and the geographic proximity and contiguity of SCBC's and CCBF's existing
market areas. SCBC's Board did not assign any relative or specific weights to
the factors considered. See "THE MERGER -- Recommendation and Reasons".)
CCBF. CCBF's Board of Directors also has unanimously adopted the Merger
Agreement and recommends its approval by CCBF shareholders. CCBF's Board of
Directors believes that the acquisition of profitable, well-managed financial
institutions is the most effective means of expanding CCBF's markets and market
presence. CCBF's Board of Directors has concluded that its combination with SCBC
through the Merger fits into the Board's long-range strategic plan to maximize
shareholder value through growth.
In reaching its conclusions, CCBF's Board of Directors consulted with
legal, financial, accounting and other advisors, as well as CCBF's management,
and considered a number of factors, including (i) the Board's familiarity with
and review of CCBF's business, financial condition, operations, earnings,
markets and future prospects; (ii) the Board's review, with the assistance of
CCBF's management and advisors, of the business, financial condition, operations
and earnings of SCBC on historical, pro forma and prospective bases, and the
enhanced opportunities for operating efficiencies, competitiveness and growth
that the Merger will make possible; (iii) the oral opinion of Wheat that the
Exchange Ratio was fair, from a financial point of view, to the holders of CCBF
Stock; (iv) the expectation that the Merger will be accounted for under the
pooling-of-interests method of accounting; and (v) a variety of other factors
affecting and relating to CCBF's overall strategic focus, including the
similarity in the business outlook, approach and cultures of SCBC and CCBF, the
geographic proximity and contiguity of SCBC's and CCBF's existing market areas,
the increased market share of the combined entity in certain markets, and the
ongoing composition of the Board of Directors and executive management. CCBF's
Board did not assign any relative or specific weights to the factors considered.
(See "THE MERGER -- Recommendation and Reasons".)
CCBF's Board of Directors also recommends approval of the Bylaw Amendment.
(See "PROPOSAL TO AMEND CCBF'S BYLAWS".)
THE MERGER
THE FOLLOWING IS A SUMMARY OF INFORMATION ABOUT THE MERGER AND CERTAIN OF
THE IMPORTANT TERMS AND CONDITIONS OF THE MERGER AGREEMENT AND THE OTHER
TRANSACTIONS DESCRIBED THEREIN, AND IS NOT INTENDED TO BE A COMPLETE DESCRIPTION
OF ALL MATERIAL FACTS REGARDING THE MERGER. THE SUMMARY IS QUALIFIED IN ALL
RESPECTS BY REFERENCE TO THE FULL MERGER AGREEMENT ATTACHED HERETO AS APPENDIX
A, THE STATUTES REGARDING DISSENTERS' RIGHTS ATTACHED HERETO AS APPENDIX B, AND
THE OTHER APPENDICES TO THIS PROSPECTUS/JOINT PROXY STATEMENT (EACH OF WHICH IS
INCORPORATED HEREIN BY REFERENCE). ALL SCBC AND CCBF SHAREHOLDERS ARE URGED TO
READ THE MERGER AGREEMENT AND THE OTHER APPENDICES IN THEIR ENTIRETY.
GENERAL
The Merger Agreement provides for the merger of NSC into SCBC and the
conversion and exchange of each outstanding share of SCBC Stock (other than
shares held by shareholders who exercise their Dissenters' Rights) into and for
newly issued shares of CCBF Stock. At the Effective Time, (i) NSC will be merged
into and its existence will be combined with that
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of SCBC as the surviving corporation, and NSC will cease to exist as a separate
entity, (ii) SCBC's shareholders (other than shareholders who exercise their
Dissenters' Rights) will become shareholders of CCBF, and (iii) SCBC will become
a wholly-owned subsidiary of CCBF. It currently is anticipated that, immediately
after the Effective Time, SCBC will be merged into and its corporate existence
will be combined with that of CCBF (as SCBC's parent corporation), and SCBC will
cease to exist as a separate corporation. CCBF will be the surviving corporation
of that merger and will continue to conduct its and SCBC's business under the
management of its then current officers and directors and under the supervision
and regulation of the Federal Reserve and the Commissioner; provided, however,
that as of the Effective Time, certain senior executive officers of SCBC will
become executive officers of CCBF and six of the current directors of SCBC will
be appointed to CCBF's Board of Directors. (See " -- Conversion of SCBC Stock
and Exchange Ratio" and
" -- Directors and Officers", and "RIGHTS OF DISSENTING SHAREHOLDERS".)
The Merger Agreement also provides for the Bank Conversions (in which, in a
series of transactions completed prior to the Merger, SCBC's savings bank
subsidiaries will be consolidated into OMNIBANK which, in turn, will be
converted into a North Carolina interim commercial bank and merged into SCB),
and for the Bank Merger (in which, immediately following the Merger and the
merger of SCBC into CCBF, SCB will be merged into CCB).
CONVERSION OF SCBC STOCK AND SCBC OPTIONS; EXCHANGE RATIO
At the Effective Time, and without any action on the part of SCBC or CCBF
or their shareholders, each outstanding share of SCBC Stock (other than shares
held by CCBF, SCBC or their subsidiaries other than in a fiduciary capacity, and
other than shares as to which SCBC shareholders properly exercise Dissenters'
Rights) automatically will be converted into and become, and thereafter may be
exchanged for, .50 of a share of newly issued CCBF Stock and .50 of a CCBF
Right. (See "RIGHTS OF DISSENTING SHAREHOLDERS".) If there is a change in the
number of outstanding shares of CCBF Stock or SCBC Stock prior to the Effective
Time (other than pursuant to CCBF's long term incentive plan, certain incentive
or option plans maintained by SCBC, or pursuant to repurchases of CCBF Stock by
CCBF as contemplated in the Merger Agreement (see " -- Stock Repurchase
Program"), then appropriate and proportionate adjustments will be made in the
Exchange Ratio as necessary to eliminate any dilutive or antidilutive effect of
such change in outstanding shares. Management of CCBF and SCBC currently are not
aware of any change (completed or proposed) in the outstanding shares of CCBF
Stock or SCBC Stock such as would result in an adjustment in the Exchange Ratio.
At the Effective Time, all rights with respect to then outstanding options
held by employees and directors of SCBC and its subsidiaries to purchase shares
of SCBC Stock ("SCBC Options"), whether or not then exercisable, will be
converted into (at the Exchange Ratio) and will become rights with respect to
CCBF Stock, and CCBF will assume SCBC's obligations with respect to each such
SCBC Option in accordance with the terms of the applicable stock option plan of
SCBC ("SCBC Option Plan") under which such SCBC Option was granted and the
related option agreement. (See " -- Interests of Certain Persons with Respect to
the Merger".)
SURRENDER AND EXCHANGE OF CERTIFICATES
As of the Effective Time, SCBC's stock transfer books will be closed and no
further transfer of SCBC Stock will be made or recognized. As soon as possible
following the Effective Time, SCBC shareholders will receive transmittal forms
with instructions for forwarding their certificates formerly evidencing shares
of SCBC Stock ("Old Certificates") for surrender to CCBF's exchange agent (the
"Exchange Agent"). Upon surrender to the Exchange Agent of their Old
Certificates, SCBC shareholders will be entitled to receive (i) certificates
("New Certificates") evidencing the number of whole shares of CCBF Stock into
which their shares of SCBC Stock will have been converted, together with cash
for any fractional share (see " -- Treatment of Fractional Shares"), or (ii) in
the case of a shareholder properly exercising Dissenters' Rights, the amount of
cash determined as provided in Article 13 of the NCBCA. (See "RIGHTS OF
DISSENTING SHAREHOLDERS".)
A New Certificate, or any check representing cash in lieu of fractional
shares and/or declared but unpaid dividends, may be issued in a name other than
the name in which a surrendered Old Certificate is registered only if (i) the
Old Certificate surrendered is properly endorsed, accompanied by a guaranteed
signature if required by the transmittal form and otherwise in proper form for
transfer, and (ii) the person requesting the issuance of such New Certificate
either affixes any required stock transfer stamps to the Old Certificate
surrendered, or pays to the Exchange Agent funds for the purchase of such tax
stamps and for any other taxes required by reason of the issuance of the New
Certificate in a name other than the registered holder of the Old Certificate
surrendered, or establishes to the satisfaction of the Exchange Agent that all
such taxes have been paid or are not applicable.
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Until surrendered as described above, each Old Certificate will be deemed
for all corporate purposes to evidence only the right to receive the number of
shares of CCBF Stock to which the shareholder has become entitled. However,
after the Effective Time and regardless of whether they have surrendered their
Old Certificates, SCBC shareholders shall be entitled to vote and to receive any
dividends or other distributions (for which the record date is after the
Effective Time) on the number of whole shares of CCBF Stock into which their
SCBC Stock has been converted; provided, however, that no such dividends or
other distributions that become payable after 90 days following the Effective
Time to the owners of CCBF Stock will be paid to the holders of such Old
Certificates unless and until their Old Certificates are surrendered. Upon
surrender of each Old Certificate, there will be paid the amount, without
interest thereon, of dividends and other distributions, if any, that became
payable on the shares of CCBF Stock represented by such certificate after the
Effective Time but had not been paid to the record owner thereof.
Shareholders whose Old Certificates have been lost, stolen or destroyed
will be required to furnish to CCBF evidence satisfactory to the Exchange Agent
of ownership of such Old Certificates and of such loss, theft or destruction,
and to furnish appropriate and customary indemnification (which may include an
indemnity bond), in order to receive the New Certificates or cash to which they
are entitled.
Neither SCBC, CCBF, the Exchange Agent nor any other person will be liable
to former holders of SCBC Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar law.
SCBC'S SHAREHOLDERS SHOULD NOT FORWARD THEIR OLD CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY RECEIVE INSTRUCTIONS TO DO SO.
TREATMENT OF FRACTIONAL SHARES
No fraction of a share of CCBF Stock (or any fraction of a CCBF Right), or
any script or certificate representing any such fractional share, will be issued
in connection with the Merger. Each SCBC shareholder (and each holder of an SCBC
Option) who otherwise would be entitled to receive a fraction of a share of CCBF
Stock upon the conversion of that shareholder's shares of SCBC Stock at the
Effective Time (or upon the exercise of the SCBC Option) shall receive, in lieu
thereof, cash (without interest) in an amount equal to that fraction multiplied
by the "market value" of one whole share of CCBF Stock at the Effective Time
(or, in the case of an SCBC Option, on the date of exercise). As used above,
"market value" shall be equal to the closing price of CCBF Stock on the Nasdaq
National Market (as reported by THE WALL STREET JOURNAL or, if not so reported,
by any other authoritative source) on the last trading day preceding the
Effective Time (or, in the case of an SCBC Option, the date of exercise). No
SCBC shareholders will be entitled to any dividend or other distribution or any
voting or other rights as a shareholder with respect to any fractional share of
CCBF Stock.
RECOMMENDATION AND REASONS
SCBC'S AND CCBF'S RESPECTIVE BOARDS OF DIRECTORS HAVE UNANIMOUSLY ADOPTED
THE MERGER AGREEMENT AND EACH RECOMMENDS THAT THEIR RESPECTIVE SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
HISTORY OF NEGOTIATIONS. During the Summer of 1994, SCBC's Board of
Directors, with the assistance of SCBC's management, Robinson-Humphrey and other
advisors, began an analysis of SCBC's then current and reasonably foreseeable
strategic options in light of SCBC's historical and anticipated results of
operations, its markets and its prospects for significant growth therein, its
ability to consummate acquisitions of other financial institutions and its
ability to respond to increasing competitive pressures, and in light of the
likelihood of an intensification of the consolidation trend in the financial
institutions industry resulting from federal "interstate banking" legislation,
near-term economic factors and the impact of a possible decline in the
securities market's valuation of bank holding companies generally having the
size and other characteristics of SCBC. Based on the conclusions drawn from this
analysis, the Board authorized and directed SCBC's management, with the
assistance of Robinson-Humphrey, to explore with a selected group of companies a
potential combination transaction. SCBC's Board determined that only those
companies having market areas complementary to those of SCBC, specified
financial and similar characteristics, management philosophies and cultures
similar to those of SCBC, and the ability to offer a tax-free share exchange
without significantly impairing the value of their stock, would be likely to
propose transaction terms acceptable to the Board.
SCBC's management and Robinson-Humphrey contacted a number of companies
believed to meet the specifications established by the Board. Additionally,
during this same period, several companies not included within this group
initiated contact with SCBC. During October 1994, discussions were held with
each company expressing an interest in a possible
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transaction. Of those companies, those meeting the specifications of SCBC's
Board were invited to make presentations to a special committee of the Board and
SCBC's legal and financial advisors regarding the terms of any transaction they
would propose and such other matters as they deemed relevant. CCBF was one of
those companies and made its presentation on October 26, 1994. At its meeting on
October 27, 1994, SCBC's Board considered the presentations made by various
companies and the general terms of possible transactions communicated by
companies not invited to make presentations. Based on the report of its special
committee, the analysis of management and the advice and analysis of
Robinson-Humphrey with respect to the probable terms and value of a transaction
with each of the above companies, and its prior analysis of SCBC described
above, the Board concluded that negotiation of a definitive agreement with CCBF
should be undertaken.
During the following week, SCBC's management and legal counsel presented a
proposed merger agreement to CCBF and, with Robinson-Humphrey, negotiated
mutually acceptable modifications thereto. A draft of the proposed definitive
agreement was distributed to the members of SCBC's Board and, on November 4,
1994, the Board, together with SCBC's management and advisors, reviewed and
considered the provisions of the proposed agreement. After a review of the
agreement and based on its prior analyses and conclusions, the advice of legal
counsel, and the Fairness Opinion of Robinson-Humphrey, the Board concluded that
a combination of SCBC and CCBF, upon the terms set forth in the proposed
agreement, would be in the best interests of SCBC and its shareholders, and
unanimously determined to adopt a definitive merger agreement (in the form
presented to it) and recommend its approval by SCBC's shareholders.
CCBF retained Wheat to act as its financial advisor in connection with the
Merger. A draft of the proposed definitive agreement was distributed to the
members of CCBF's Board and, on November 4, 1994, that Board, together with
CCBF's management and advisors, reviewed and considered the provisions of the
proposed agreement. After a review of the agreement and based on Wheat's oral
opinion that the Exchange Ratio was fair, from a financial point of view, to the
holders of CCBF Stock, CCBF's Board concluded that a combination of SCBC and
CCBF, upon the terms set forth in the proposed agreement, would be in the best
interests of CCBF and its shareholders, and unanimously determined to adopt a
definitive merger agreement (in the form presented to it) and recommend its
approval by CCBF's shareholders.
Pursuant to authority granted to it by SCBC's Board, as of December 1,
1994, the Executive Committee of the Board unanimously approved amendments (the
"Amendments") to and a restatement of the previously adopted definitive merger
agreement by adopting the Merger Agreement. The Amendments were designed to
facilitate approval of the Merger by CCBF's shareholders, to contemplate SCBC's
purchase of SCBC Stock (see " -- Stock Repurchase Program") and to alter
technical aspects of the structure of the Merger in order to make the merger
procedure more efficient. The Merger Agreement, as amended and restated, was
ratified by the SCBC Board on January 26, 1995.
On December 9, 1994, and pursuant to authority granted to him by CCBF's
Board, CCBF's President and Chief Executive Officer, Ernest C. Roessler, also
approved the Amendments and the restated Merger Agreement was executed by CCBF.
The Merger Agreement, as amended and restated, was ratified by the CCBF Board on
January 17, 1995.
REASONS FOR THE MERGER. In reaching its conclusion that the Merger is fair
to, and in the best interests of, SCBC's shareholders, SCBC's Board of Directors
consulted with legal, financial, accounting and other advisors, as well as
SCBC's management, and considered a number of factors. SCBC's Board did not
assign any relative or specific weights to the factors considered. The factors
considered included:
(i) the SCBC Board's review, based in part on the advice of
Robinson-Humphrey, its financial advisor, of presentations by SCBC's
management regarding the business, operations, earnings and financial
condition of SCBC and CCBF on historical, prospective and pro forma
bases, the enhanced opportunities for operating efficiencies,
expanded customer service, competitiveness and growth that the Merger
will make possible, and the respective contributions the parties
would bring to a combined institution;
(ii) the financial advice and the opinion of Robinson-Humphrey that the
issuance of CCBF Stock pursuant to the Merger at the Exchange Ratio
is fair to SCBC's shareholders from a financial point of view;
(iii) a variety of factors affecting and relating to the overall strategic
focus of SCBC and CCBF, including the similarity in business
outlook, approach and corporate cultures of SCBC and CCBF, the
business line diversity that the combination of SCBC with CCBF would
allow, and the geographic proximity and similarities of CCBF's
existing market areas to SCBC's existing market areas;
(iv) the expectation that the Merger generally will be a tax-free
transaction to SCBC and its shareholders and that the Merger will be
accounted for under the pooling-of-interests method of accounting
(see "THE MERGER -- Certain Federal Income Tax Consequences" and
" -- Accounting Treatment"); and
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(v) the current and prospective economic and competitive environments
facing financial institutions, including SCBC, and the likelihood of
an intensification of the consolidation trend in the financial
institutions industry resulting from federal "interstate banking"
legislation, near-term economic factors and the impact of a possible
general decline in the securities markets' valuation of securities of
bank holding companies similar to SCBC.
CCBF's Board of Directors, as a part of its long-range strategic plan to
increase shareholder value, has sought growth in CCBF's business by expanding
its geographic markets and increasing its presence in its existing markets. In
that regard, potential acquisition candidates have been identified and evaluated
and growth through other means, including the establishment of new branch
offices, has been explored. CCBF's Board of Directors believes that the
acquisition of profitable, well-managed financial institutions is the most
effective means of expanding CCBF's markets and market presence. CCBF's Board of
Directors has concluded that its combination with SCBC through the Merger fits
into the Board's long-range strategic plan to maximize shareholder value through
growth.
In reaching its conclusion that the Merger is fair to, and in the best
interests of, CCBF's shareholders, CCBF's Board of Directors consulted with
legal, financial, accounting and other advisors, as well as CCBF's management,
and considered a number of factors. CCBF's Board did not assign any relative or
specific weights to the factors considered. The factors considered included:
(i) CCBF's Board's review, based in part on the advice of Wheat, its
financial advisor, of presentations by CCBF's management regarding the business,
operations, earnings and financial condition of CCBF and SCBC on historical,
prospective and pro forma bases, the enhanced opportunities for operating
efficiencies, expanded customer services, competitiveness and growth that the
Merger will make possible, and the respective contributions the parties would
bring to a combined institution;
(ii) the assumptions and methodology used in setting the Exchange Ratio and
other financial terms;
(iii) the oral opinion of Wheat that the Exchange Ratio was fair, from a
financial point of view, to the holders of CCBF Stock;
(iv) a variety of factors affecting and relating to the overall strategic
focus of SCBC and CCBF, including the similarity in business outlook, approach
and corporate cultures of SCBC and CCBF, the business line diversity that the
combination of SCBC with CCBF would allow, the geographic proximity and
similarities of CCBF's existing market areas to SCBC's existing market areas,
the increased market share of the combined entity in certain markets, and the
ongoing composition of the Board of Directors and executive management;
(v) the expectation that the Merger will be accounted for under the
pooling-of-interests method of accounting (see "THE MERGER -- Certain Federal
Income Tax Consequences" and " -- Accounting Treatment");
(vi) the potential dilution in CCBF's current book value and income per
share, the one-time charges to consummate the Merger, the repurchase of CCBF
shares, and the demands on management resources associated with completing the
transaction; and
(vii) the current and prospective economic and competitive environments
facing financial institutions, including CCBF.
Examples of the enhanced opportunities for efficiencies considered by both
SCBC's Board and CCBF's Board include those associated with:
(Bullet) Integration of electronic data processing and other operations,
including consolidation of operations centers and information
services;
(Bullet) Combined corporate and financial management activities;
(Bullet) Integration of staff support functions of the combined company;
(Bullet) Combined delivery of corporate logistical functions, such as
payroll, purchasing and accounts payable;
(Bullet) Combined corporate programs for insurance and employee benefits;
and
(Bullet) The efficiencies which can be derived from the merger of SCB and
SCBC's savings bank subsidiaries into CCB.
The cost savings associated with these possible operating efficiencies and
synergies have not been quantified, nor are any such savings assured. It is
anticipated that any such savings will not be achieved until the fiscal quarters
following the quarter in which the expenses of the Merger and the Bank Merger
are recognized.
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SCBC'S BOARD OF DIRECTORS AND CCBF'S BOARD OF DIRECTORS EACH UNANIMOUSLY
RECOMMENDS THAT THEIR RESPECTIVE SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER
AGREEMENT.
SCBC FAIRNESS OPINION
In the Summer of 1994, SCBC engaged Robinson-Humphrey as its financial
advisor for the purposes of providing general business and financial analyses of
SCBC, assisting SCBC in identifying potential transactions between SCBC and
other companies, advising SCBC concerning any such transactions and assisting
SCBC in negotiating any such transaction. Further, as part of this engagement,
Robinson-Humphrey agreed to render to SCBC's Board of Directors an opinion with
respect to the fairness to SCBC's shareholders of the consideration to be paid
in any such transaction from a financial point of view. Representatives of
Robinson-Humphrey attended meetings of SCBC's Board of Directors at which the
Merger was considered and rendered advice as to certain relevant considerations.
On October 27, 1994, Robinson-Humphrey delivered to SCBC's Board its oral
opinion that, as of such date, the consideration to be paid by CCBF pursuant to
the Merger was fair to SCBC's shareholders from a financial point of view. On
November 4, 1994, Robinson-Humphrey delivered a written opinion to SCBC's Board
to this same effect (the "SCBC Fairness Opinion"). SCBC's obligation to
consummate the Merger is conditioned on its receipt from Robinson-Humphrey
immediately prior to consummation of the Merger of confirmation of the SCBC
Fairness Opinion.
THE FULL TEXT OF THE SCBC FAIRNESS OPINION, WHICH SETS FORTH CERTAIN
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEWS UNDERTAKEN,
IS ATTACHED AS APPENDIX C. THE SUMMARY OF THE SCBC FAIRNESS OPINION SET FORTH
BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPINION ITSELF.
Robinson-Humphrey is not affiliated with SCBC or CCBF. However,
Robinson-Humphrey previously had been engaged by SCBC from time to time to
provide general business and financial analyses to the SCBC Board.
Based on its analyses as described below, Robinson-Humphrey has rendered to
SCBC's Board of Directors that, based on the matters set forth therein,
consideration to be received pursuant to the Merger is fair, from a financial
point of view, to the SCBC shareholders. The text of the SCBC Fairness Opinion
is attached as Appendix C to this Prospectus/Joint Proxy Statement and should be
read in its entirety by SCBC's shareholders.
The consideration to be received by SCBC's shareholders in the Merger was
determined by SCBC and CCBF in their negotiations. No limitations were imposed
by SCBC's Board or management upon Robinson-Humphrey with respect to the
investigations made or the procedures followed by Robinson-Humphrey in rendering
its opinion.
In connection with rendering the SCBC Fairness Opinion, Robinson-Humphrey
performed a variety of financial analyses. However, the preparation of a
fairness opinion involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances, and, therefore, such an opinion is not readily
susceptible to summary description. Robinson-Humphrey, in conducting its
analyses and in arriving at its opinion, did not conduct a physical inspection
of any of the properties or assets of SCBC, and has not made or obtained any
independent valuation or appraisals of any properties, assets or liabilities of
SCBC. Robinson-Humphrey has assumed and relied upon the accuracy and
completeness of the financial and other information that was provided to it by
SCBC or that was publicly available. The SCBC Fairness Opinion is necessarily
based on economic, market and other conditions in effect on, and the information
made available to it as of, the date of its analyses.
VALUATION METHODOLOGIES. In connection with the SCBC Fairness Opinion and
the presentation of that opinion to SCBC's Board of Directors, Robinson-Humphrey
performed two valuation analyses with respect to SCBC: (i) an analysis of
comparable prices and terms of recent transactions involving banks buying banks;
and (ii) a discounted cash flow analysis. For purposes of the comparable company
and comparable transaction analyses, CCBF Stock was valued at $39.00 per share.
Both of these methodologies are discussed briefly below.
COMPARABLE TRANSACTION ANALYSIS. Robinson-Humphrey performed three analyses
of premiums paid for selected banks with comparable characteristics to SCBC.
Comparable transactions were considered to be (i) transactions since January 1,
1994, where the seller was a bank located in the Southeast United States with
total assets between $200 million and $2 billion, (ii) transactions since
January 1, 1994, where the seller was a bank with total assets between $200
million and $2 billion, and (iii) transactions since January 1, 1994, where the
seller was a bank located in North Carolina.
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(i) Based on the first of the foregoing comparable transactions
categories (banks buying banks in the Southeast with total assets between
$200 million and $2 billion during 1994), the analysis yielded a range of
transaction values to book value of 149.60% to 287.35%, with a mean of
219.21% and a median of 206.58%. These compare to a transaction value for
the Merger of approximately 192.69% of SCBC's book value as of September
30, 1994.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions of 150.75% to 287.35%,
with a mean of 226.91% and a median of 243.61%. These compare to a
transaction value to SCBC's tangible book value at September 30, 1994, of
approximately 223.62%.
The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 11.24
times to 27.01 times per share earnings, with a mean of 19.89 times and a
median of 20.29 times per share earnings. These compare to a transaction
value to SCBC's September 30, 1994 trailing twelve month earnings per
share, excluding the $5.6 million restructuring charge recognized by SCBC
in the quarter ended September 30, 1994, of 18.57 times per share earnings
for the Merger.
Lastly, the analysis yielded a range of transaction values as a percentage
of total assets for the comparable transactions ranging from 14.32% to
23.97%, with a mean of 18.74% and a median of 19.16%. These compare to a
transaction value to total assets at September 30, 1994 of approximately
19.97% for the Merger.
(ii) Based on transactions since January 1, 1994, where the seller was
a bank with total assets between $200 million and $2 billion, the analysis
yielded a range of transaction values to book value of 59.17% to 372.56%,
with a mean of 196.68% and a median of 195.92%. These compare to a
transaction value for the Merger of approximately 192.69% of SCBC's book
value as of September 30, 1994.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions ranging from 59.17% to
372.56%, with a mean of 208.06% and a median of 214.47%. These compare to a
transaction value to SCBC's tangible book value at September 30, 1994, of
approximately 223.62%.
The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 8.18
times to 67.00 times per share earnings, with a mean of 16.66 times and a
median of 15.90 times per share earnings. These compare to a transaction
value to the September 30, 1994 trailing twelve month earnings per share,
excluding the $5.6 million restructuring charge in SCBC's third quarter, of
18.57 times per share earnings for the Merger.
Lastly, the analysis yielded a range of transaction values as a percentage
of total assets for the comparable transactions ranging from 2.83% to
30.69%, with a mean of 16.26% and a median of 16.11%. These compare to a
transaction value to total assets at September 30, 1994 of approximately
19.97% for the Merger
(iii) Based on transactions since January 1, 1994, in the third
comparable transactions category (where the seller was a bank located in
North Carolina), the analysis yielded a range of transaction values to book
value of 135.24% to 240.17%, with a mean of 182.65% and a median of
186.18%. These compare to a transaction value for the Merger of
approximately 192.69% of SCBC's book value as of September 30, 1994.
The analysis yielded a range of transaction values as a percentage of
tangible book value for the comparable transactions ranging from 146.14% to
240.17%, with a mean of 207.07% and a median of 217.41%. These compare to a
transaction value to SCBC's tangible book value at September 30, 1994 of
approximately 223.62% for the Merger.
The analysis yielded a range of transaction values as a multiple of
trailing twelve month earnings per share. These values ranged from 9.82
times to 32.95 times per share earnings, with a mean of 20.99 times and a
median of 20.13 times per share earnings. These compare to a transaction
value to SCBC's September 30, 1994 trailing twelve months earnings per
share, excluding the $5.6 million restructuring charge, of 18.57 times per
share earnings.
Lastly, the analysis yielded a range of transaction values as a percentage
of total assets for the comparable transactions ranging from 11.24% to
24.46%, with a mean of 18.04% and a median of 19.25%. These compare to a
transaction value to SCBC's total assets at September 30, 1994 of
approximately 19.97%.
No company or transaction used in these comparable transaction evaluation
is identical to SCBC. Accordingly, an evaluation of the foregoing necessarily
involves complex considerations and judgments, as well as other factors that
affect the public trading value or the acquisition value of the company to which
it is being compared.
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DISCOUNTED CASH FLOW ANALYSIS. Using discounted cash flow analysis,
Robinson-Humphrey estimated the present value of the future stream of after-tax
cash flows that SCBC could produce through 1998, under various circumstances,
assuming that SCBC performed in accordance with the earnings/return projections
of management at the time that SCBC entered into acquisition discussions in
October of 1994. Robinson-Humphrey estimated the terminal value of SCBC at the
end of the period by applying multiples of earnings ranging from 9.0 times to
11.0 times per share earnings and then discounting the cash flow streams,
dividends paid to shareholders and terminal value using differing discount rates
(ranging from 9.0% to 11.0%) chosen to reflect different assumptions regarding
the required rates of return of SCBC and the inherent risk surrounding the
underlying projections. This discounted cash flow analysis indicated a reference
range of $219.0 million to $260.4 million, or $18.60 to $22.12 per share, for
SCBC.
COMPENSATION OF ROBINSON-HUMPHREY. Pursuant to the engagement letter
between SCBC and Robinson-Humphrey, SCBC agreed to pay a $300,000 Opinion Fee at
the time the SCBC Fairness Opinion was rendered and an Advisory Fee equal to
.75% of the aggregate market value of the shares of CCBF stock to be issued in
the Merger and all cash payments made by CCBF in lieu of issuing fractional
shares of CCBF Stock, less the sum of the Opinion Fee and $75,000. The Advisory
Fee is payable at the Effective Time. In the event the Merger is not
consummated, SCBC will reimburse Robinson-Humphrey for its reasonable and
necessary out-of-pocket expenses and third party expenses incurred by
Robinson-Humphrey in connection with its engagement by SCBC. SCBC has also
agreed to indemnify and hold harmless Robinson-Humphrey and its officers and
employees against certain liabilities in connection with its services under the
engagement letter, except for liabilities resulting from the gross negligence of
Robinson-Humphrey.
As part of its investment banking business, Robinson-Humphrey is regularly
engaged in the valuation of securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. SCBC's Board of Directors decided to retain
Robinson-Humphrey based on its experience as a financial advisor in mergers and
acquisitions of financial institutions, particularly transactions in the
Southeast, and its knowledge of financial institutions and SCBC in particular.
CCBF FAIRNESS OPINION
On October 28, 1994, CCBF engaged Wheat as its financial advisor in
connection with CCBF's proposed combination with SCBC. In that regard, Wheat
agreed to provide, to the extent requested by CCBF, various services which
included providing financial analyses of the proposed combination transaction.
Further, as part of its engagement, Wheat agreed to render to CCBF's Board of
Directors an opinion as to the fairness of the Exchange Ratio, from a financial
point of view, to the holders of CCBF Stock.
Representatives of Wheat attended the meeting of CCBF's Board of Directors
on November 4, 1994, at which the Merger was considered and approved and
rendered advice as to certain relevant considerations. At the meeting, Wheat
expressed to CCBF's Board its oral opinion that, as of such date, the Exchange
Ratio was fair, from a financial point of view, to the holders of CCBF Stock. A
written opinion dated January 30, 1995 and reflecting Wheat's opinion has been
delivered to CCBF's Board of Directors to the effect that, as of such date, the
Exchange Ratio was fair, from a financial point of view, to the holders of CCBF
Stock (the "CCBF Fairness Opinion"). The Merger Agreement provides that CCBF's
obligations to consummate the Merger are conditioned on its receipt from Wheat
of confirmation of the CCBF Fairness Opinion immediately prior to consummation
of the Merger. However, CCBF's Board of Directors has waived that condition
based on several factors, including without limitation the fact that the CCBF
Fairness Opinion has been delivered and is dated as of the date of this
Prospectus/Joint Proxy Statement rather than November 4, 1994 when Wheat's oral
opinion was given and CCBF's Board of Directors approved the original Merger
Agreement, the fact that the Exchange Ratio (and, therefore, the number of
shares of CCBF Stock to be issued in connection with the Merger) is fixed and
will not fluctuate with changes in the market price of CCBF Stock, and the
belief that an update of the CCBF Fairness Opinion would produce no value to
CCBF.
The full text of the CCBF Fairness Opinion which sets forth certain
assumptions made, matters considered and limitations on the reviews undertaken,
is attached as Appendix D to this Prospectus/Joint Proxy Statement, is
incorporated herein by reference, and should be read in its entirety in
connection with this Prospectus/Joint Proxy Statement. The summary of the
opinion of Wheat set forth below is qualified in its entirety by reference to
the opinion. The CCBF Fairness Opinion is directed only to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of CCBF Stock and
does not address any other aspect of the Merger and does not constitute a
recommendation to any shareholder of CCBF or SCBC as to how such shareholder
should vote with respect to the Merger.
Wheat acts as a market maker for CCBF and, in the course of its normal
trading activities, Wheat may from time to time effect transactions and hold
positions in the securities of CCBF and SCBC. In addition, Wheat has acted as
financial advisor
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to CCBF in connection with another acquisition transaction and has acted as
managing underwriter in public offerings of CCBF equity and debt securities and
has received fees from CCBF for its services in each of these transactions.
In arriving at its written opinion, Wheat reviewed certain publicly
available business and financial information relating to CCBF and SCBC and
certain other information provided to it, including, among other things, the
following: (i) CCBF's Annual Reports to Shareholders, Annual Reports on Form
10-K and related financial information for the three fiscal years ended December
31, 1993; (ii) SCBC's Annual Reports to Shareholders, Annual Reports on Form
10-K and related financial information for the three fiscal years ended December
31, 1993; (iii) CCBF's Quarterly Reports on Form 10-Q and related financial
information for the three months ended March 31, 1994, for the six months ended
June 30, 1994, and for the nine months ended September 30, 1994; (iv) SCBC's
Quarterly Reports on Form 10-Q and related financial information for the three
months ended March 31, 1994, for the six months ended June 30, 1994, and for the
nine months ended September 30, 1994; (v) certain publicly available information
with respect to historical market prices and trading activity for CCBF Stock and
SCBC Stock and for certain publicly traded financial institutions which Wheat
deemed relevant; (vi) certain publicly available information with respect to
banking companies and the financial terms of certain other mergers and
acquisitions which Wheat deemed relevant; (vii) the Merger Agreement; (viii) the
Registration Statement, including this Prospectus/Joint Proxy Statement; (ix)
other financial information concerning businesses and operations of CCBF and
SCBC, including certain audited financial information and certain internal
financial analyses and forecasts for CCBF and SCBC prepared by the senior
management of each entity; and (x) such financial studies, analyses, inquiries
and other matters as Wheat deemed appropriate. Wheat also met with management of
CCBF and SCBC to discuss the business and prospects of each company. No
limitations were imposed by CCBF's Board or management upon Wheat with respect
to the investigations made or the procedures followed by Wheat in rendering its
opinion.
In connection with its review, Wheat relied upon and assumed the accuracy
and completeness of all of the foregoing information provided to it or publicly
available, including representations and warranties of CCBF and SCBC included in
the Merger Agreement, and Wheat has not assumed any responsibility for
independent verification of such information. Wheat relied upon the managements
of CCBF and SCBC as to the reasonableness and achievability of their financial
and operational forecasts and projections provided to it and the assumptions and
bases therefor, and assumed that such forecasts and projections reflect the best
currently available estimates and judgements of such management and that such
forecasts and projections will be realized in the amounts and in the time
periods currently estimated by such management. Wheat also assumed, without
independent verification, that the aggregate allowances for loan losses and
other contingencies for CCBF and SCBC are adequate to cover such losses. Wheat
did not review any individual credit files of CCBF or SCBC, nor did it make an
independent evaluation or appraisal of the assets or liabilities of CCBF or
SCBC.
Additionally, Wheat considered certain financial and stock market data of
CCBF and SCBC, compared that data with similar data for certain publicly-held
financial institutions and considered the financial terms of certain other
comparable transactions that recently have been announced or effected, as
further discussed below. Wheat also considered such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as it deemed relevant.
In connection with rendering the CCBF Fairness Opinion, Wheat performed a
variety of financial analyses. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analysis or summary description. Moreover, the evaluation of the
fairness, from a financial point of view, of the Exchange Ratio to the holders
of CCBF Stock was to some extent a subjective one based on the experience and
judgment of Wheat and not merely the result of mathematical analysis of
financial data. Accordingly, notwithstanding the separate factors summarized
below, Wheat believes that its analyses must be considered as a whole and that
selecting portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. The ranges of valuations resulting
from any particular analysis described below should not be taken to be Wheat's
view of the actual value of CCBF or SCBC.
In performing its analyses, Wheat made numerous assumptions with respect to
industry performance, business and economic conditions and other matters, many
of which are beyond the control of CCBF or SCBC. The analyses performed by Wheat
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, analyses relating to the values of business do not purport to be
appraisals or to reflect the prices at which businesses actually may be sold. In
rendering its opinion, Wheat assumed that, in the course of obtaining the
necessary regulatory approvals for the Merger, no conditions will be imposed
that will have a material effect on the contemplated benefits of the Merger, on
a pro forma basis, to CCBF.
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Wheat's opinion is just one of the many factors taken into consideration by
CCBF's Board of Directors in determining to approve the Merger Agreement.
Wheat's opinion does not address the relative merits of the Merger as compared
to any alternative business strategies that might exist for CCBF, nor does it
address the effect of any other business combination in which CCBF might engage.
The following is a summary of the analyses performed by Wheat in connection
with its opinion.
COMPARISON OF SELECTED COMPANIES. Wheat compared the financial performance
and market trading information of CCBF and SCBC to that of a group of bank
holding companies in Alabama, Georgia, North Carolina, South Carolina, Tennessee
and Virginia (the "Group"). The Group included Carolina First Corporation,
Centura Banks, Inc., ColonialBanc Group, Inc., F&M National Corporation, First
National Bancorp, Jefferson Bankshares, Inc., National Commerce Bancorporation
and United Carolina Bancshares Corporation.
Based on financial data as of and for the twelve months ended September 30,
1994, CCBF and SCBC had (i) tangible equity to tangible assets of 7.17% and
8.84%, respectively, compared to 7.60% for CCBF as the combined company on a pro
forma basis, and an average of 7.85% for the Group; (ii) nonperforming assets to
loans and other real estate owned of .70% and .53%, respectively, compared to
.66% for CCBF as the combined company on a pro forma basis, and an average of
1.20% for the Group; (iii) reserves for loan losses to nonperforming assets of
178.76% and 273.03%, respectively, compared to 194.69% for CCBF as the combined
company on a pro forma basis, and an average of 181.81% for the Group; (iv)
returns on average assets before extraordinary items of 1.17% and 1.53%,
respectively, compared to 1.25% for CCBF as the combined company on a pro forma
basis, and an average of 1.17% for the Group; and (v) returns on average equity
before extraordinary items of 14.97% and 11.35%, respectively, compared to
13.76% for CCBF as the combined company on a pro forma basis, and an average of
13.71% for the Group.
ANALYSIS OF SELECTED TRANSACTIONS. Wheat performed an analysis of premiums
paid in 11 selected pending or recently completed acquisitions of banks or bank
holding companies headquartered in Arkansas, Kentucky, Maryland, Mississippi,
New Jersey, Pennsylvania, South Carolina and Virginia and announced between
November 1, 1993 and October 31, 1994 (the "Selected Transactions"). Multiples
of book value, tangible book value, trailing twelve months earnings and
annualized latest quarter earnings, as well as deposit premiums paid in the
Selected Transactions, were compared to the multiples and premiums implied by
the Exchange Ratio. The Selected Transactions included the following pending
transactions: Synovus Financial Corporation and NBSC Corporation; Meridian
Bancorp, Inc. and United Counties Bancorporation; Boatmen's Bancshares, Inc. and
Worthen Banking Corporation; Union Planters Corporation and Grenada Sunburst
System Corporation; National Westminster Bancorp and Central Jersey Bancorp; and
BB&T Financial Corporation and Commerce Bank. The Selected Transactions also
included the following completed transactions: First Fidelity Bancorporation and
Baltimore Bancorp; National Westminster Bancorp and Citizens First Bancorp,
Inc.; Keystone Financial, Inc., and The Frankford Corporation; BB&T Financial
Corporation and L.S.B. Bancshares, Inc. of South Carolina; and Banc One
Corporation and Liberty National Bancorp, Inc.
Based on the market value of CCBF Stock as of November 3, 1994 and
financial data as of September 30, 1994, the analysis yielded ratios implied by
the Exchange Ratio (i) to book value of 192.6%, compared to an average of 218.5%
for the Selected Transactions; (ii) to tangible book value of 224.4%, compared
to an average of 232.3% for the Selected Transactions; (iii) to trailing twelve
months earnings before extraordinary items of 16.3x, compared to an average of
17.1x for the Selected Transactions; and (iv) to latest quarter earnings before
extraordinary items annualized to 16.3x, compared to an average of 16.1x for the
Selected Transactions. Additionally, Wheat examined the consideration implied by
the Exchange Ratio less tangible equity as a function of total deposits,
yielding a ratio of 13.0% compared to an average of 11.4% for the Selected
Transactions.
EARNINGS PER SHARE/BOOK VALUE ANALYSIS. Wheat compared the projected fully
diluted earnings per share of CCBF Stock to the projected fully diluted earnings
per share of CCBF as the combined company on a pro forma basis, including
expense savings anticipated by the management of CCBF. For the earnings
projections of CCBF, Wheat used the earnings estimates prepared by CCBF's
management for the two years ending December 31, 1995 and 1996. For the earnings
projections of SCBC, Wheat used the earnings estimates prepared by SCBC's
management for the two years ending December 31, 1995 and 1996. Based on such
analysis and assuming that all the projected cost savings are achieved in the
first full year after completion of the Merger, the Merger would be 5.5%
dilutive to CCBF's fully diluted earnings per share in the first full year after
the completion of Merger. CCBF's management has indicated that the Merger would
be non-dilutive to CCBF's earnings per share in the second full year after
completion of the Merger.
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Wheat also calculated the pro forma fully diluted tangible book value,
excluding Merger-related charges, for CCBF as the combined company as of
September 30, 1994. Based on the Exchange Ratio, the pro forma fully diluted
tangible book value would equal $21.57 per share, compared to CCBF's fully
diluted tangible book value of $25.56 per share.
DISCOUNTED DIVIDEND ANALYSIS. Using discounted dividend analysis, Wheat
estimated the present value of the future stream of dividends that SCBC could
produce through 1998, under various circumstances, assuming SCBC performed in
accordance with the earnings forecasts of its management and projected expense
savings were achieved. Wheat then estimated the terminal value for SCBC Stock at
the end of the period by applying multiples ranging from 9.00x to 12.00x of
SCBC's projected 1998 earnings. The dividend stream and terminal values were
then discounted to present values using different discount rates (ranging from
10.00% to 14.00%) chosen to reflect different assumptions regarding the required
rates of return to holders or prospective buyers of SCBC Stock. This discounted
dividend analysis indicated reference ranges between $16.15 and $22.87 per share
for SCBC Stock. These values compare to the value implied by the Exchange Ratio
of $19.50, based on the market value of CCBF Stock as of November 3, 1994.
No company or transaction used as a comparison in the above analysis is
identical to CCBF, SCBC or the Merger. Accordingly, an analysis of the results
of the foregoing necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading value of the
companies used for comparison in the above analysis.
The CCBF Fairness Opinion is based solely upon the information available to
Wheat and the economic, market and other circumstances as they existed as of its
date. Events occurring after that date could materially affect the assumptions
and conclusions contained in Wheat's opinion. Wheat has not undertaken to
reaffirm or revise its opinion or otherwise comment on any events occurring
after the date hereof.
COMPENSATION TO WHEAT. For its services, CCBF has agreed to pay Wheat an
aggregate of $350,000 in fees as compensation for Wheat's rendering of the CCBF
Fairness Opinion and for its financial advisory services. Of those fees, $50,000
was paid upon the execution of the Merger Agreement, $100,000 was paid upon
Wheat's issuance of the CCBF Fairness Opinion, and the remaining $200,000 is
payable at the Effective Time. In addition, CCBF has agreed to reimburse Wheat
for its reasonable out-of-pocket expenses incurred in connection with the
activities contemplated by its engagement, regardless of whether the Merger is
consummated, and to indemnify Wheat against certain liabilities, including
certain liabilities under the federal securities laws. The payment of the above
fees is not contingent upon Wheat rendering a favorable opinion with respect to
the Merger.
Wheat is a nationally recognized investment banking firm regularly engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. CCBF's Board of Directors
selected Wheat to serve as its financial advisor in connection with the Merger
on the basis of Wheat's expertise.
REQUIRED SHAREHOLDER APPROVALS
The Merger Agreement must be approved by SCBC's shareholders and CCBF's
shareholders. Under the NCBCA, the affirmative vote at the SCBC Special Meeting
of the holders of a majority of the shares of SCBC Stock entitled to be voted is
required for SCBC's shareholders to approve the Merger Agreement. The NCBCA does
not require that CCBF's shareholders vote on or approve the Merger Agreement.
However, bylaws of the Nasdaq Stock Market, Inc. (which apply to CCBF by virtue
of the qualification of CCBF Stock for quotation on the Nasdaq National Market)
require that the Merger Agreement be approved by the affirmative vote of the
holders of a majority of the shares of CCBF Stock represented, in person and by
proxy, and entitled to be voted at the CCBF Special Meeting. The Merger
Agreement provides that the required approvals of CCBF's and SCBC's shareholders
are conditions to consummation of the Merger. (See " -- Conditions to Merger".)
REQUIRED REGULATORY APPROVALS
The Merger is subject to approval by the Federal Reserve under the BHCA.
The Bank Conversions are subject to approval of the Federal Deposit Insurance
Corporation (the "FDIC"), the Administrator (the "Administrator") of the Savings
Institutions Division of the North Carolina Department of Commerce (the "Savings
Division"), the North Carolina Commissioner of Banks (the "Commissioner") and
the North Carolina State Banking Commission (the "Banking Commission"). The Bank
Merger is subject to approval of the FDIC, the Commissioner and the Banking
Commission.
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Under the BHCA, the Federal Reserve is required, in approving a transaction
such as the Merger, to take into consideration, among other factors, the
financial and managerial resources and future prospects of the combined company
and its financial institution subsidiaries and the convenience and needs of the
communities served. The BHCA prohibits the Federal Reserve from approving the
Merger if it would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner result in a restraint of trade, unless the
Federal Reserve finds that the anti-competitive effects of the Merger are
clearly outweighed in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities served. In
addition, under the Community Reinvestment Act of 1977, as amended, the Federal
Reserve must take into account the record of performance of SCBC's and CCBF's
financial institution subsidiaries in meeting the credit needs of the entire
communities, including low- and moderate-income neighborhoods, served by such
institutions.
Under the BHCA, the Merger may not be consummated until the 30th day
following the date of Federal Reserve approval, during which time the United
States Department of Justice may challenge the Merger on antitrust grounds. The
commencement of an antitrust action would stay the effectiveness of the Federal
Reserve's approval unless a court specifically orders otherwise. SCBC and CCBF
believe that the Merger does not raise substantial antitrust concerns, that no
divestitures should be required to consummate the Merger, and that if any
divestitures were required in order to consummate the Merger, they will not be
material to the financial condition or results of operations of SCBC, CCBF or
the combined company following the Merger.
The BHCA provides for the publication of notice and public comment on the
applications and authorizes the Federal Reserve to permit interested parties to
intervene in the proceedings. If an interested party is permitted to intervene,
such intervention could delay the regulatory approvals required for consummation
of the Merger.
The Merger Agreement provides that the obligation of each of SCBC and CCBF
to consummate the Merger is conditioned upon the receipt of all requisite
regulatory approvals (see " -- Conditions to Merger") upon terms and conditions
that would not so materially adversely impact the economic or business benefits
of the transactions contemplated by the Merger Agreement as to render the
consummation of the Merger inadvisable in the reasonable opinion of the Board of
Directors of either SCBC or CCBF. Applications for required regulatory approvals
have been filed and currently are pending. SCBC and CCBF have no reason to
believe that any such regulatory approvals will not be obtained. However, there
is no assurance that any governmental agency will approve or take any other
required action with respect to the Merger, the Bank Conversions or the Bank
Merger and, even if approvals are received or action is taken, there can be no
assurance as to the date of such approvals or action, that such approvals or
action will not be conditioned upon matters that would cause the parties to
abandon the Merger or that no action will be brought challenging such approvals
or action, including a challenge by the Department of Justice or, if such a
challenge is made, the result thereof.
SCBC and CCBF are not aware of any governmental approvals or actions that
may be required for consummation of the Merger except as described above. Should
any such approval or action be required, it is presently contemplated that such
approval or action would be sought. There is no assurance, however, that any
such approval or action, if needed, could be obtained and would not be
conditioned in a manner that would cause the parties to abandon the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement provides that, during the period from November 4, 1994
(the date the initial Merger Agreement was executed) to the Effective Time,
except as provided in the Merger Agreement, each of SCBC and CCBF will conduct,
and will cause each of its respective subsidiaries to conduct, its business in
the usual, regular and ordinary course consistent with past practice, use its
best efforts to maintain and preserve intact its business organization,
employees and advantageous business relationships and retain the services of its
officers and key employees, and take no action which would adversely affect or
delay the ability of either SCBC or CCBF to obtain any necessary approvals of
any governmental authority required for the Merger or the other transactions
contemplated by the Merger Agreement or to perform its covenants and agreements
under the Merger Agreement.
In addition to other restrictions described elsewhere herein, the Merger
Agreement provides that, prior to the Effective Time and except in the ordinary
course of its business or as otherwise required by applicable law or regulation,
neither CCBF nor SCBC may (in addition to other prohibited actions) (i) incur
indebtedness for borrowed money, (ii) sell, transfer, mortgage, encumber or
otherwise dispose of any of its properties or assets, (iii) make any significant
investment by purchase of securities, contributions to capital, or purchase of
property or assets of any person other than its direct or indirect subsidiaries,
(iv) increase the compensation or fringe benefits of any of its employees, or
commit itself to any retirement or benefit plan or
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employment agreement with or for the benefit of any employee, or (v) settle any
claim, action or proceeding against it involving monetary damages. Further,
prior to the Effective Time neither CCBF nor SCBC may (i) with certain
exceptions, adjust, split, combine or reclassify any shares of its capital
stock, or sell or issue additional shares of such stock, (ii) enter into or
terminate, or make any change in, a significant contract or lease, (iii) amend
its charter or bylaws, or (iv) agree or make any commitment to take any action
prohibited by the Merger Agreement.
Further, the Merger Agreement provides that, prior to the Effective Time,
CCBF shall not acquire or agree to acquire any other financial institution
holding company or financial institution unless, after full disclosure to SCBC
of the proposed terms thereof, the Executive Committee of SCBC's Board concludes
that such proposed acquisition would not significantly delay or impede the
Merger and the transactions related thereto, would not create a reasonable
likelihood that any required regulatory approval for the Merger or such
transactions would not be obtained, or would not be reasonably likely to
diminish the economic benefits of the Merger to SCBC and its shareholders.
DIVIDENDS
Under the Merger Agreement, SCBC and CCBF each have agreed that it will not
declare or pay any dividends other than such regular quarterly dividends as may
be in accordance with their ordinary and customary practices and in an annual
amount not in excess of the total cash dividends paid by SCBC or CCBF, as the
case may be, during the twelve month period ended September 30, 1994; provided,
however, that if SCBC determines in good faith that the Effective Time will
occur on a date during a calendar quarter that, taking into consideration CCBF's
anticipated dividend payment date during that quarter, would result in SCBC's
shareholders not being eligible to receive a dividend from SCBC or the dividend
declared by CCBF for that quarter, then SCBC may accelerate its quarterly
dividend payment date for such quarter to insure the payment of a dividend to
SCBC's shareholders (it being the intention of SCBC and CCBF that SCBC's
shareholders shall not fail to receive one dividend, but shall not receive two
dividends, for any single calendar quarter with respect to their SCBC Stock or
the CCBF Stock they will receive in the Merger).
PROHIBITION ON SOLICITATION
Each of SCBC and CCBF has agreed in the Merger Agreement that neither it
nor any of its subsidiaries will solicit, encourage or authorize any individual,
corporation, or other entity, including its directors, officers and other
employees, to solicit from any third party any inquiries or proposals with
respect to the disposition of its business or assets, or the acquisition of its
voting securities, or its merger with any corporation or entity other than as
provided by the Merger Agreement, or (subject to the fiduciary obligations of
its Board of Directors) provide any information or assistance or negotiate with
any individual corporation or other entity in furtherance of such inquiries or
to obtain such a proposal, and that it will notify the other party to the Merger
Agreement immediately if any such inquiries or proposals are received by it.
However, if the Merger Agreement is terminated by reason of SCBC or CCBF
entering into a letter of intent or agreement to be acquired by, merge with or
sell all or substantially all its assets to a third party, or if SCBC or CCBF
(without the consent of the other) engages in negotiations with a third party
respecting any such transaction and, within six months of the termination of the
Merger Agreement, enters into a letter of intent or agreement with such third
party, then SCBC or CCBF, as the case may be, would be obligated under the
Merger Agreement to pay to the other a termination fee of $6.2 million. (See
" -- Termination of Merger Agreement".)
ACCOUNTING TREATMENT
The Merger Agreement requires that the Merger be treated as a
"pooling-of-interests" for accounting purposes. Accordingly, under generally
accepted accounting principles, the consolidated assets and liabilities of SCBC
will be reported on the books of CCBF at their respective book values at the
Effective Time and CCBF's consolidated financial statements for prior periods
will be restated to reflect the consolidated assets, liabilities and operations
of SCBC for such periods. No goodwill or other intangible assets will be created
in connection with the Merger.
Among other requirements, in order for the Merger to qualify for
pooling-of-interests accounting treatment, substantially all (at least 90%) of
the outstanding shares of SCBC Stock must be exchanged for CCBF Stock.
Generally, if the number of fractional shares of CCBF Stock resulting from the
Merger for which cash is paid, shares held by SCBC shareholders who exercise
their Dissenters' Rights, and shares of CCBF Stock or SCBC Stock repurchased by
CCBF or SCBC, together represent more than 10% of the shares to be issued by
CCBF in connection with the Merger, then the Merger will not qualify for the
pooling-of-interests method of accounting. Consummation of the Merger is
conditioned on receipt by SCBC and CCBF of an opinion of their independent
accountants, KPMG Peat Marwick LLP, that the Merger will qualify to be treated
as a pooling-of-interests for accounting purposes. (See " -- Conditions to
Merger".)
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CERTAIN INCOME TAX CONSEQUENCES
The following is a summary discussion of the material federal income tax
consequences of the Merger to shareholders of SCBC. The summary is based on the
law as currently constituted and is subject to change in the event of changes in
the law, including amendments to applicable statutes or regulations or changes
in judicial or administrative rulings, some of which could be given retroactive
effect.
THIS SUMMARY IS NOT A COMPLETE DESCRIPTION OF ALL TAX CONSEQUENCES OF THE
MERGER. THE SUMMARY DOES NOT ADDRESS ANY FOREIGN, STATE OR LOCAL TAX
CONSEQUENCES, EXCEPT FOR CERTAIN NORTH CAROLINA INCOME TAX CONSEQUENCES, NOR
DOES IT ADDRESS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY APPLY TO THE
MERGER. ALSO, THE TAX OPINION DOES NOT ADDRESS INCOME TAX CONSIDERATIONS THAT
MAY AFFECT THE TREATMENT OF A PARTICIPANT IN AN SCBC OPTION PLAN OR AN SCBC
SHAREHOLDER WHO ACQUIRED SCBC STOCK PURSUANT TO SUCH A PLAN. EACH SCBC
SHAREHOLDER'S INDIVIDUAL CIRCUMSTANCES MAY AFFECT THE TAX CONSEQUENCES OF THE
MERGER TO SUCH SHAREHOLDER. THEREFORE, SCBC'S SHAREHOLDERS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER
AND THE EXCHANGE OF THEIR SCBC STOCK FOR SHARES OF CCBF STOCK (INCLUDING,
WITHOUT LIMITATION, TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE AND LOCAL AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS).
CCBF and SCBC have received the Tax Opinion of KPMG Peat Marwick LLP, tax
advisors to CCBF and SCBC, which reaches certain conclusions with respect to
certain federal and North Carolina income tax consequences of the Merger. Where
appropriate or useful, this discussion will refer to the Tax Opinion and
particular conclusions expressed therein. Additionally, the facts and
representations upon which the Tax Opinion is based are set forth in such Tax
Opinion which is an exhibit to CCBF's Registration Statement. (See "AVAILABLE
INFORMATION".) However, the Tax Opinion represents only that advisor's best
judgment as to the matters expressed therein and has no binding effect on the
Internal Revenue Service (the "IRS") or any official status of any kind. There
is no assurance that the IRS could not successfully contest in the courts an
opinion expressed by the advisor as set forth in the Tax Opinion or that
legislative, administrative or judicial decisions or interpretations may not be
forthcoming that would significantly change the opinions set forth in the Tax
Opinion. The IRS will not currently issue private letter rulings concerning a
transaction's qualification under certain types of reorganizations or certain
federal income tax consequences resulting from such qualification. Accordingly,
no private letter ruling has been, nor is it anticipated that such a ruling will
be, requested from the IRS with respect to the Merger.
The Tax Opinion concludes that:
(i) The Merger and the Bank Merger will constitute tax-free
reorganizations within the meaning of Section 368(a) of the Code;
(ii) No gain or loss will be recognized by CCBF, NSC or SCBC by reason of
the Merger;
(iii) No gain or loss will be recognized by SCBC's shareholders upon their
receipt solely of CCBF Stock (including any fractional share interests to which
they may be entitled), together with attached CCBF Rights, in exchange for their
holdings of SCBC Stock;
(iv) The tax basis in the CCBF Stock received by an SCBC shareholder
(including any fractional share interests to which they may be entitled) will be
the same as the tax basis in the SCBC Stock surrendered in the exchange
therefor;
(v) The holding period for CCBF Stock received by an SCBC shareholder
(including any fractional share interests to which they may be entitled) in
exchange for SCBC Stock will include the period during which the shareholder
held the SCBC Stock surrendered in the exchange, provided that the SCBC Stock
was held as a capital asset at the Effective Time;
(vi) The receipt of cash in lieu of a fractional share of CCBF Stock will
be treated as if the fractional share of CCBF Stock was distributed as part of
the exchange to the SCBC shareholder and then redeemed by CCBF, resulting in
capital gain or loss measured by the difference, if any, between the amount of
cash received for such fractional share and the shareholder's basis in the
fractional share;
(vii) No gain or loss will be recognized by CCB or SCB by reason of the
Bank Merger.
The Tax Opinion also concludes that the Merger and the Bank Merger will be
treated in substantially the same manner for North Carolina income tax purposes
as for federal income tax purposes.
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SCBC'S SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS IN ORDER TO
MAKE AN INDIVIDUAL EVALUATION OF THE FEDERAL, STATE OR LOCAL TAX CONSEQUENCES OF
THE MERGER.
CONDITIONS TO MERGER
Consummation of the Merger is subject to various conditions specified in
the Merger Agreement, including without limitation, (i) required approvals of
the Merger Agreement by SCBC's and CCBF's respective shareholders; (ii) receipt
of all regulatory approvals required for consummation of the transactions
described in the Merger Agreement without the imposition by any regulatory
agency of a condition or requirement to any such approval that so materially
adversely impacts the economic benefits of the Merger as to cause SCBC's or
CCBF's Board of Directors to reasonably consider consummation of the Merger to
be inadvisable; (iii) that the Merger qualify for pooling-of-interests
accounting treatment, and that SCBC and CCBF receive an opinion of their
independent accountants, KPMG Peat Marwick LLP, that the Merger so qualifies;
(iv) that the shares of CCBF Stock to be issued in connection with the Merger be
qualified for quotation on the Nasdaq National Market; and, (v) receipt of the
Tax Opinion.
SCBC's and CCBF's separate obligations under the Merger Agreement are
subject to various other conditions specified therein, including without
limitation, (i) that the representations and warranties of the other party be
and remain true and correct in all material respects; (ii) that the other party
perform in all material respects all obligations and covenants required to be
performed by it under the Merger Agreement; (iii) receipt of certain
certificates and opinions of the other party's senior officers and legal
counsel; and, (iv) receipt by each of its respective Fairness Opinion. The
Merger Agreement also provides that CCBF's obligations to consummate the Merger
are conditioned on its receipt from Wheat of confirmation of the CCBF Fairness
Opinion immediately prior to consummation of the Merger. However, CCBF's Board
of Directors has waived that condition based on several factors.
Additionally, SCBC's obligations are subject to certain separate
conditions, including without limitation, (i) approval of the Bylaw Amendment at
the CCBF Special Meeting, (ii) the average of the closing sale prices of CCBF
Stock on the Nasdaq National Market over the ten consecutive trading days
preceding the date on which the Effective Time occurs being not less than
$36.00, and (iii) confirmation of the SCBC Fairness Opinion by Robinson-Humphrey
immediately prior to consummation of the Merger.
CCBF's obligations also are subject to receipt of a written agreement as to
certain matters from persons who are considered "Affiliates" of SCBC. (See
" -- Restrictions on Resale of CCBF Stock Received by Certain Persons".)
AMENDMENT OF MERGER AGREEMENT; WAIVER
Prior to the Effective Time, any provision of the Merger Agreement may be
waived by the party entitled to the benefit of such provision; provided,
however, that no condition may be waived which, if not satisfied, would result
in a violation of any law or applicable governmental regulation. The Merger
Agreement may be amended, modified or supplemented at any time prior to the
Effective Time, and whether before or after the Special Meetings, by an
agreement in writing approved by SCBC's and CCBF's respective Board of
Directors. However, following the Special Meetings, no changes involving
material matters, including the manner or basis in which shares of SCBC Stock
will be converted into and exchanged for CCBF Stock, may be made without the
approval of SCBC's and CCBF's shareholders.
TERMINATION OF MERGER AGREEMENT
The Merger Agreement may be terminated, whether before or after the Special
Meetings, upon the mutual consent of SCBC's and CCBF's respective Board of
Directors, and may be terminated by the Board of Directors of either SCBC or
CCBF in the event, among other things, (i) of a material breach by the other
party of any representation, warranty, covenant or other agreement in the Merger
Agreement which is not cured within 30 days after written notice to the party
committing such breach; (ii) that any regulatory authority has denied approval
of any of the transactions contemplated by the Merger Agreement, or that an
order, judgment or decree from any regulatory authority or any court having
competent jurisdiction has imposed any condition or requirement which would so
substantially and adversely impact the economic or business benefits of the
Merger to such party and its shareholders as to render inadvisable in the
reasonable opinion of such party's Board of Directors the consummation of the
Merger (provided that such denial or imposition has become final and
nonappealable); (iii) of the occurrence of a suit or other proceeding by any
regulatory authority or other governmental body or agency to restrain or
prohibit any of the transactions contemplated by the Merger Agreement, or a suit
by a SCBC or CCBF shareholder seeking to restrain such transactions or to obtain
money damages should such transactions be consummated (unless counsel
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for the party wishing to proceed with the Merger renders an opinion that such a
suit is likely to be resolved in a way which would not deprive any party of the
material benefits of the Merger or in a way which would not result in
substantial money damages to one or more directors of such party which would not
be covered by insurance); or, (iv) that the Effective Time shall not have
occurred on or before September 30, 1995.
Additionally, SCBC may terminate the Merger Agreement if (i) the average of
the closing prices of CCBF Stock on the Nasdaq National Market over any period
of 30 consecutive trading days prior to the Effective Time shall be less than
$36.00, or if (ii) the Bylaw Amendment is not approved by CCBF's shareholders on
or before April 20, 1995.
In the event of the termination and abandonment of the Merger Agreement
pursuant to the termination provisions thereof, the Merger Agreement will become
void and have no effect, except that certain provisions of the Merger Agreement
relating to expenses, indemnification and confidentiality of information
obtained pursuant to the Merger Agreement or in connection with the negotiation
thereof will survive any such termination and abandonment and no party will be
relieved or released from any liability arising out of an intentional breach of
any provision of the Merger Agreement. In the event the Merger fails to be
consummated because of the wrongful termination, or willful or grossly negligent
breach of any representation, warranty, covenant, undertaking, term or
restriction, of the Merger Agreement by a party, the party wrongfully
terminating or breaching the Merger Agreement shall (i) reimburse the other
party for all of its expenses incident to entering into and carrying out the
Merger Agreement and the transactions contemplated thereby, including filing
fees and financial adviser, legal, accounting and investment banking fees and
expenses, and (ii) pay the other party liquidated damages of $2.0 million in
full compensation of all other harm suffered by such party as a result thereof.
Further, in the event the Merger Agreement is terminated because (i) SCBC or
CCBF enters into a letter of intent or an agreement with a third party that
provides for the third party to acquire SCBC or any subsidiary of SCBC or to
acquire CCBF or any subsidiary of CCBF, whether by merger, asset purchase or
otherwise (a "Prohibited Transaction"), or (ii) prior to the termination of the
Merger Agreement, SCBC or CCBF engages in negotiations with a third party
concerning a Prohibited Transaction and, within six months after termination of
the Merger Agreement, SCBC or CCBF enters into a letter of intent or agreement
with such third party respecting a Prohibited Transaction (without the written
consent of the other), then SCBC or CCBF (whichever has engaged in a Prohibited
Transaction or has entered into a letter of intent or agreement with respect
thereto) shall pay the other a termination fee of $6.2 million.
EFFECTIVE TIME AND CLOSING DATE
The Merger will become effective on the date and at the time (the
"Effective Time") on which Articles of Merger executed by NSC and SCBC have been
accepted for filing by the North Carolina Secretary of State, or at such later
date and time as is specified by NSC and SCBC in the Articles of Merger so
filed. However, unless otherwise mutually agreed by SCBC and CCBF, the Effective
Time will occur on the first business day following the last to occur of (i) the
date that is 30 days after the date of the later to occur of the order of the
Federal Reserve approving the Merger and the last to be granted of the orders of
the FDIC approving the Bank Conversions and the Bank Merger, (ii) the effective
date of the last required order, approval or exemption of any federal or state
regulatory agency approving or exempting the Merger, the Bank Conversions and/or
the Bank Merger, (iii) the expiration of all required waiting periods after the
filing of notices with, or the receipt of regulatory approvals from, all federal
or state regulatory agencies required for consummation of the Merger, the Bank
Conversions and the Bank Merger, and (iv) the later of the dates on which SCBC's
shareholders and CCBF's shareholders approve the Merger Agreement.
Following and subject to the fulfillment of all conditions described in the
Merger Agreement, the closing of the Merger will be held on the date that the
Effective Time occurs or on such other prior date as is mutually agreed upon by
SCBC and CCBF (the "Closing Date"). Although there is no assurance as to whether
or when the Merger will occur, it presently is expected that the Effective Time
will occur during the second calendar quarter of 1995. (See " -- Conditions to
Merger" and " -- Required Approvals".) The Board of Directors of either CCBF or
SCBC may terminate the Merger Agreement if the Effective Time shall not have
occurred by September 30, 1995. (See " -- Termination of Merger Agreement".)
It currently is expected that the Bank Conversions will be effected
immediately prior to the Effective Time, and that the merger of SCBC into CCBF,
and the Bank Merger, will be effected, in that order, immediately following the
Effective Time.
DIRECTORS AND OFFICERS
Following the Effective Time, CCBF's and CCB's then current directors will
continue to serve for the remainder of their terms of office as directors of
CCBF and of CCB as the surviving bank in the Bank Merger. However, the Merger
Agreement provides that, subject to approval of the Bylaw Amendment at the CCBF
Special Meeting, at the Effective Time Miles J.
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Smith, Jr., David B. Jordan, John M. Barnhardt, Jimmy K. Stegall, James L.
Williamson and J.G. Rutledge, III, each of whom currently serves as a member of
SCBC's Board of Directors, shall be appointed to serve as directors of CCBF
until CCBF's next meeting of shareholders at which directors are elected; and,
at that next CCBF shareholders' meeting held following the Effective Time,
CCBF's Board of Directors will nominate and recommend such persons for
reelection as CCBF directors. Those six persons also shall be appointed to serve
as directors of CCB.
The Merger Agreement provides that CCBF's Chairman, W. L. Burns, Jr., will
continue to serve as Chairman of CCBF's and CCB's Boards of Directors, and that
SCBC's Vice Chairman and Chief Executive Officer, David B. Jordan, will be
appointed to serve as Vice Chairman and a member of the Executive Committee of
CCBF's and CCB's Boards of Directors. Ernest C. Roessler will continue to serve
as CCBF's and CCB's President and Chief Executive Officer, and Ralph A.
Barnhardt, Vice Chairman of SCBC, and Lloyd G. Gurley, President and Chief
Administrative Officer of SCBC, each will be appointed to serve as an Executive
Vice President of CCBF and CCB. It currently is contemplated that CCBF's and
CCB's other executive officers will continue to serve in their current positions
as officers of CCBF and of CCB.
INTERESTS OF CERTAIN PERSONS WITH RESPECT TO THE MERGER
Certain members of SCBC's management and Board of Directors have certain
interests in the Merger that are in addition to their interests as shareholders
of SCBC generally. SCBC's Board of Directors was aware of these interests and
considered them, among other things, in adopting the Merger Agreement and
recommending the transactions contemplated thereby.
INDEMNIFICATION AND INSURANCE. Pursuant to the Merger Agreement, from and
after the Effective Time CCBF will indemnify, defend and hold harmless the
present and former officers, directors, employees and agents of SCBC and its
subsidiaries from and against all suits, actions, complaints, demands, costs,
fines, losses, expenses, claims, damages or liabilities arising out of actions
or omissions occurring on or prior to the Effective Time to the full extent then
permitted under North Carolina law and by SCBC's Restated Articles of
Incorporation and Bylaws as in effect on the date of the Merger Agreement,
including provisions relating to advances of expenses incurred in the defense of
any action or suit.
Furthermore, for a period of at least three years after the Effective Time,
CCBF will maintain a policy or policies of directors' and officers' liability
insurance covering those persons who were, on the date of the Merger Agreement,
covered by SCBC's directors' and officers' liability insurance policies. CCBF's
policy or polices shall have terms no less favorable than those SCBC in effect
on the date of the initial Merger Agreement.
EMPLOYMENT AGREEMENTS. The current employment agreements of David B. Jordan
(Vice Chairman and Chief Executive Officer of SCBC and Chief Executive Officer
of OMNIBANK), Ralph A. Barnhardt (Vice Chairman of SCBC and Chief Executive
Officer of Citizens Savings), and Lloyd G. Gurley (President and Chief
Administrative Officer of SCBC and Chief Executive Officer of SCB) will be
amended prior to the Effective Time. Each of these employment agreements will be
assumed by CCBF and CCB.
Mr. Jordan's agreement, as amended, will extend his employment term through
March 15, 2001 (an increase of three years) and will provide for at an annual
base salary of no less than his current base salary ($217,639 as of the date of
this Prospectus/Joint Proxy Statement); provided, however, that at any time on
or after his 60th birthday, Mr. Jordan may elect to reduce his day-to-day
involvement in the business of CCBF and CCB and accept, beginning one year after
such election, a reduced annual base salary of no less than $150,000 (the
"Reduced Amount"). He will also be entitled to receive throughout the term of
his agreement a senior officer benefit allowance equal to three percent (3%) of
his annual base salary. Mr. Jordan will be eligible to participate in the
benefit plans and, until he elects to reduce his day-to-day involvement, the
incentive bonus plans of CCBF and CCB on generally the same terms as other
senior executive officers. Mr. Jordan's amended agreement will continue the
severance payment provisions of his current agreement relating to a termination
of employment in connection with a change-in-control (substituting CCBF and CCB
for SCBC and SCB in such provisions). Further, in the event he should die prior
to the expiration of the agreement's term, Mr. Jordan's spouse (or, if she
predeceases him, his estate) would receive the lesser of three times the then
Reduced Amount or the then applicable Reduced Amount that would have been paid
to Mr. Jordan through the expiration of the term. Under the amended agreement,
Mr. Jordan will be nominated each year for election to the Boards of Directors
of CCBF and CCB, and will serve as Vice Chairman and as a member of the
Executive Committees of those Boards.
The employment agreement of Mr. Barnhardt will be amended to provide for an
annual salary of no less than his current base salary ($133,459) as of the date
of this Prospectus/Joint Proxy Statement. On January 1, 1996, Mr. Barnhardt's
role in the business activities of CCBF and CCB will be reduced. Over the
remaining two and one-fourth years of his employment term, Mr. Barnhardt will
receive an annual base salary of no less than his base salary as of December 31,
1995. He will be
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eligible to participate in CCBF's and CCB's benefit plans and, until January 1,
1996, incentive bonus plan on generally the same terms as other senior executive
officers. He will also receive a senior officer benefit allowance equal to three
percent (3%) of his annual salary. The provisions of Mr. Barnhardt's current
agreement respecting severance payments in the event of termination of his
employment in connection with a change-in-control will be continued. Mr.
Barnhardt will serve as an Executive Vice President of CCBF and CCB.
Mr. Gurley's employment agreement with SCBC will be amended to provide for
an annual base salary of $185,000 (an increase of approximately $13,500 over his
current base salary) and to extend its term through March 15, 2001 (an increase
of three years). He will be entitled to participate in the benefit and incentive
bonus plans of CCBF and CCB on generally the same terms as other senior
executive officers, and he will also receive an annual senior officer benefit
allowance equal to three percent (3%) of his salary. The provisions of Mr.
Gurley's current agreement providing for severance payments upon a termination
of his employment in connection with a change-in-control will be continued.
Further, in the event Mr. Gurley agrees to transfer his primary business
location to CCBF's principal office during the term of his agreement or in the
event Mr. Gurley's employment is terminated without cause (whether in connection
with a change-in-control or otherwise), and Mr. Gurley is unable to sell his
current primary residence within a specified period of time for a net amount
equal to the greater of its fair market value or his total construction costs,
CCB shall purchase the residence for the greater of those two amounts. Mr.
Gurley will serve as an Executive Vice President of CCBF and CCB.
Pressley A. Ridgill (Senior Vice President and Chief Financial Officer of
SCBC, SCB and SCBC's savings bank subsidiaries) has elected not to accept
employment with CCBF and CCB beyond a transition period following the Effective
Time. SCBC and CCBF have agreed with Mr. Ridgill that, to induce him to remain
in the employ of SCBC until the Effective Time and in the employ of CCBF through
the expiration of such transition period, and in settlement of his employment
agreement, Mr. Ridgill will receive a payment of $250,000 and his employment
agreement, including the non-competition provisions thereof, will be terminated.
EFFECT ON EMPLOYEE BENEFIT PLANS AND OPTIONS. SCBC and CCBF have agreed in
the Merger Agreement that SCBC's employee benefit plans will be reviewed and
appropriate amendments, consolidations or terminations will be made thereto at
or after the Effective Time; provided, however, that the employees of SCBC and
its subsidiaries (i) shall be eligible to receive group hospitalization,
medical, life, disability and similar benefits on the same basis and under the
same terms available to the present employees of CCBF and its subsidiaries, (ii)
in the event an SCBC employee benefit plan is terminated, shall become fully
vested, with each participating SCBC employee having the right or option either
to receive the benefits to which he or she is entitled as a result of such
termination or to have such benefits "rolled" into the appropriate CCBF employee
benefit plan, on the same basis and applying the eligibility standards as would
apply to the employees of CCBF and its subsidiaries as if such employee's prior
service to SCBC or one of its subsidiaries had been performed on behalf of CCBF
and its subsidiaries for qualification, participation and vesting (but not for
funding purposes), and (iii) in the event an SCBC employee benefit plan is
merged into a CCBF employee benefit plan, shall be entitled to participate in
such CCBF plan on the same basis and applying the same eligibility standards as
would apply to employees of CCBF and its subsidiaries. SCBC and CCBF have agreed
that the overall level of benefits offered or provided to the employees of SCBC
and its subsidiaries under the CCBF benefit plans will be no less than that
offered or provided to the present employees of CCBF and its subsidiaries, and
that for purposes of qualification, participation and vesting, the employees of
SCBC and its subsidiaries shall receive credit for their periods of service to
SCBC and those subsidiaries.
The various deferred compensation plans and agreements of certain current
and former officers and directors of SCBC or one or more of its subsidiaries
will be continued (and, if deemed appropriate and practical by CCBF's Board of
Directors, merged with comparable plans of CCBF) after the Effective Time;
provided, however, that (i) no existing rights or benefits of the persons who
have deferred or who are deferring compensation under any deferred compensation
plan or agreement of SCBC or any of its subsidiaries will be eliminated, reduced
or adversely affected in any manner, (ii) SCBC's deferred compensation plan for
its directors will continue in effect, but no further deferrals of directors'
fees shall be made thereunder, after the Effective Time, and (iii) SCBC's
deferred compensation plan for its senior executive management shall remain in
effect and further deferrals of compensation may be made thereunder after the
Effective Time.
Under the Merger Agreement, at the Effective Time, all rights with respect
to SCBC Options which are outstanding at the Effective Time, whether or not then
exercisable, will be converted into and will become rights with respect to CCBF
Stock, and CCBF will assume SCBC's obligations with respect to each such SCBC
Option, in accordance with the terms of the applicable SCBC Option Plan and the
related option agreements. From and after the Effective Time, (i) each SCBC
Option assumed by CCBF may be exercised solely for shares of CCBF Stock, (ii)
the number of shares of CCBF Stock
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subject to each SCBC Option will be equal to the number of shares of SCBC Stock
subject to such SCBC Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, and (iii) the per share exercise price under each such
SCBC Option will be adjusted by dividing the per share exercise price thereunder
by the Exchange Ratio and rounding down to the nearest cent, provided that the
number of shares of CCBF Stock subject to each SCBC Option and the per share
exercise price will, in accordance with the terms of the SCBC Option and the per
share exercise price, be subject to further adjustment as appropriate to reflect
any stock split, stock dividend, recapitalization or other similar transaction
subsequent to the Effective Time. Under the Merger Agreement, after the date
thereof, no further options to acquire SCBC Stock may be granted by SCBC.
Under the Merger Agreement, all restrictions or limitations on transfer
with respect to SCBC Stock awarded under SCBC Option Plans or any other plan,
program or arrangement, to the extent that such restrictions or limitations have
not already lapsed, will remain in full force and effect with respect to the
CCBF Stock into which SCBC Stock is converted pursuant to the Merger Agreement.
SCBC had determined, prior to the execution of the Merger Agreement, to
terminate its Employee Stock Ownership Plan during 1995. It is currently
anticipated that this Plan will be terminated on or about January 2, 1995 and
that, as soon as practicable thereafter, all shares of SCBC Stock held by the
Plan will be distributed to the employees of SCBC and its subsidiaries to whom
such shares have been allocated.
The Merger Agreement provides that CCBF will continue to pay the premiums
on the split dollar life insurance policies for David B. Jordan, Ralph A.
Barnhardt and Lloyd G. Gurley, each of whom is a director and an executive
officer of SCBC, until the earlier of (i) the death of the insured or (ii) the
termination for cause of such employee's employment by CCBF and CCB. Pursuant to
these split dollar insurance agreements, various SCBC subsidiaries pay all
premiums on the respective policies. Each such subsidiary has an interest in the
cash surrender value and death benefits equal to the cumulative premiums paid by
it on the insurance policies for which it is responsible. Such interest is
secured by a collateral assignment of the policy. The face amounts of the split
dollar life insurance policies for Messrs. Jordan, Barnhardt and Gurley are
$600,000, $150,000 and $475,000, respectively. These split dollar life insurance
arrangements are in addition to the life insurance programs maintained by SCBC
and its subsidiaries for all employees generally.
Additional information regarding SCBC's and CCBF's respective employee
benefit plans, as well as information with regard to their executive
compensation and employment agreements, and with regard to transactions with
SCBC's directors and executive officers, is incorporated by reference or set
forth in SCBC's Annual Report on Form 10-K for the year ended December 31, 1993,
and in CCBF's Annual Report on Form 10-K for the year ended December 31, 1993
(as amended by Form 10-K/A dated July 20, 1994), which documents are
incorporated herein by reference. (See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE".)
NASDAQ NATIONAL MARKET QUALIFICATION
The SCBC Stock and the CCBF Stock are qualified for quotation on the Nasdaq
National Market. The Merger Agreement provides that the inclusion of the shares
of the CCBF Stock issuable pursuant to the Merger for quotation on the Nasdaq
National Market is a condition to the consummation of the Merger.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLANS
SCBC has in effect a Dividend Reinvestment and Stock Purchase Plan (the
"SCBC Plan") pursuant to which SCBC's shareholders and eligible employees of
SCBC and its subsidiaries may purchase shares of SCBC Stock through reinvestment
of dividends on shares participating in the SCBC Plan and through optional cash
payments. Under the SCBC Plan, SCBC Stock may be purchased by the plan
administrator in market transactions and/or privately negotiated transactions
with unaffiliated third parties, or directly from SCBC in the form of
newly-issued shares of SCBC Stock. The SCBC Board has determined in its
discretion under the SCBC Plan that all SCBC Stock purchased for participants in
the SCBC Plan shall be acquired in market or privately negotiated transactions.
The SCBC Plan will be terminated as of the Effective Time.
CCBF also has in effect a Dividend Reinvestment and Stock Purchase Plan
(the "CCBF Plan") pursuant to which its shareholders may purchase shares of CCBF
Stock through the reinvestment of dividends and optional cash payments. Under
the CCBF Plan, CCBF Stock is purchased by the plan administrator in open market
transactions and/or in negotiated transactions only, and no newly-issued shares
of CCBF Stock are issued to participants in the CCBF Plan. After the Effective
Time, the CCBF Plan will be continued in effect and be available to SCBC's
former shareholders who have become CCBF shareholders.
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RESTRICTIONS ON RESALE OF CCBF STOCK BY AFFILIATES
Certain restrictions under the 1933 Act will apply to the resale of shares
of CCBF Stock issued to certain persons in connection with the Merger. Any
person who is an "Affiliate" of SCBC or CCBF at the time the Merger Agreement is
submitted to a vote of SCBC's shareholders may not resell or transfer shares of
CCBF Stock received in connection with the Merger during a period of three years
following the Effective Time unless (i) such person's offer and sale of those
shares has been registered under the 1933 Act, (ii) such person's offer and
resale is made in compliance with Rule 145 promulgated under the 1933 Act (which
permits limited sales under certain circumstances), or (iii) another exemption
from registration is available. Additionally, as a condition of treating the
Merger as a pooling-of-interests for accounting purposes, Affiliates of SCBC and
CCBF will be prohibited from selling or transferring any shares of CCBF Stock
from the date generally 30 days prior to consummation of the Merger until CCBF
shall have published results of its operations for a period covering at least 30
days following the Effective Time. The Merger Agreement provides that, within 50
days following the Effective Time, CCBF will publish and distribute publicly
unaudited interim consolidated financial statements reflecting its results of
combined operations for at least 30 days. Because the CCBF Rights to be received
by SCBC's shareholders pursuant to the Merger are attached to, and cannot be
transferred separately from, the shares of CCBF Stock to which they relate, the
CCBF Rights held by Affiliates will be subject to these same restrictions.
An "Affiliate" of SCBC, as defined by rules promulgated under the 1933 Act,
is a person who directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with SCBC. The above
restrictions are expected to apply to the directors and executive officers of
SCBC (and to any relative or spouse of any such person or any relative of any
such spouse, any of whom live in the same home as such person, and any trust,
estate, corporation or other entity in which such person has a 10% or greater
beneficial or equity interest), and may apply to any current SCBC shareholder
that owns an amount of stock sufficient to be considered to "control" SCBC or
that otherwise is an "Affiliate" of SCBC. Stock transfer instructions will be
given by CCBF to its stock transfer agent with respect to the CCBF Stock to be
received by persons deemed by CCBF to be subject to these restrictions, and the
certificates for such stock may be appropriately legended.
The Merger Agreement provides that SCBC will use its best efforts to cause
each of its Affiliates to deliver to CCBF, at least 30 days prior to the
Effective Time, a written agreement (an "Affiliate Agreement") providing that
such person will not offer, sell, pledge, transfer or otherwise dispose of any
shares of CCBF Stock except in compliance with the restrictions described above.
CCBF's obligation to consummate the Merger is conditioned on its receipt of the
Affiliate Agreements. (See " -- Conditions to Merger".)
PERSONS WHO ARE OR MAY BE AFFILIATES OF SCBC SHOULD CONSULT WITH THEIR OWN
LEGAL COUNSEL REGARDING THE APPLICATION OF THE ABOVE RESTRICTIONS TO THEIR CCBF
STOCK.
EXPENSES
The Merger Agreement provides that SCBC and CCBF will each pay its own
expenses incident to preparing, entering into and carrying out the Merger
Agreement and the transactions contemplated thereby, including filing fees and
the fees and expenses of its financial advisors, investment bankers, accountants
and counsel. However, if a party wrongfully terminates or willfully or grossly
breaches any representation, warranty, covenant, undertaking, term or
restriction contained in the Merger Agreement, such party shall pay all of the
above-described costs and expenses of the other party, together with the sum of
$2.0 million as liquidated damages in full compensation of all other harm
suffered by the non-defaulting party as a result thereof. (See " -- Termination
of Merger Agreement".)
STOCK REPURCHASE PROGRAM
The Merger Agreement contemplated that CCBF may purchase shares of CCBF
Stock and/or SCBC Stock prior to the Effective Time, subject to the limitations
that such purchases be effected in compliance with applicable securities laws
and regulations, including public disclosures in advance of the commencement of
such stock purchase program, and that such purchases not be of a type or in an
aggregate amount as would cause the Merger not to qualify as a tax-free
reorganization under the Code or not to be properly accounted for under
generally accepted accounting principles as a pooling-of-interests. (See
" -- Accounting Treatment", " -- Certain Income Tax Consequences" and
" -- Conditions to Merger".)
The Merger Agreement also contemplated that, if so requested by CCBF, SCBC
would repurchase shares of SCBC Stock prior to the Effective Time. Any such
repurchases would also be subject to the limitations on CCBF's stock purchases
described above. In the event SCBC repurchased shares of SCBC Stock as described
above and the Merger was not consummated, CCBF would be obligated to pay to SCBC
a sum equal to the difference between the aggregate price paid by SCBC
42
<PAGE>
for all SCBC Stock so repurchased and the average closing sales price for a
share of SCBC Stock on the Nasdaq Stock Market over the 10 consecutive trading
days following the date on which the termination of the Merger Agreement is
publicly announced.
The purchases of CCBF Stock and/or the proposed SCBC Stock described above
were authorized by CCBF's Board of Directors and the Executive Committee of
SCBC's Board of Directors, respectively, based on their conclusions that (i)
such purchases are an appropriate investment opportunity for, and use of the
available funds of, CCBF and SCBC, and (ii) such purchases would reduce the
earnings and book value dilution resulting to CCBF from its issuance of CCBF
Stock in the Merger, thereby potentially enhancing the market value of CCBF
Stock following the Effective Time.
Through the date of this Prospectus/Joint Proxy Statement, CCBF has
repurchased a total of 407,905 shares of CCBF Stock for a total purchase price
of approximately $15,530,242. No shares of SCBC Stock have been purchased, nor
are any such purchases by CCBF or SCBC anticipated. All such CCBF Stock was
purchased on or before December 15, 1994, and, in order to comply with
applicable securities laws, no further purchases will occur prior to final
adjournment of both Special Meetings.
RIGHTS OF DISSENTING SHAREHOLDERS
The Merger will give rise to Dissenters' Rights under Article 13 of the
NCBCA for SCBC's shareholders. Pursuant to Article 13, any SCBC shareholder who
objects to the Merger may exercise Dissenters' Rights and become entitled to be
paid the fair value of such shareholder's shares of SCBC Stock if the Merger is
consummated. The following is only a summary of the Dissenters' Rights of SCBC's
shareholders. A COMPLETE COPY OF ARTICLE 13 IS ATTACHED HERETO AS APPENDIX B AND
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS/JOINT PROXY STATEMENT. ANY
SHAREHOLDER WHO INTENDS TO EXERCISE DISSENTERS' RIGHTS SHOULD REVIEW THE TEXT OF
ARTICLE 13 CAREFULLY AND COMPLY EXACTLY WITH ITS REQUIREMENTS, AND ALSO SHOULD
CONSULT WITH HIS ATTORNEY. EXCEPT AS PROVIDED BELOW, NO FURTHER NOTICES WILL BE
GIVEN TO SHAREHOLDERS REGARDING THE EXISTENCE OF DISSENTERS' RIGHTS OR ANY TIME
PERIODS WITHIN WHICH THOSE RIGHTS MUST BE EXERCISED.
Article 13 provides in detail the procedure that must be followed by a
dissenting shareholder in order to exercise Dissenters' Rights. That procedure
is summarized below.
Any SCBC shareholder who desires to assert Dissenters' Rights MUST (i) give
to SCBC, and SCBC must actually receive, BEFORE THE VOTE ON THE MERGER IS TAKEN,
written notice of the shareholder's intent to demand payment for his shares if
the Merger is consummated, and (ii) not vote his shares in favor of the Merger.
Failure by a shareholder to satisfy either requirement will mean that the
shareholder will not be entitled to assert Dissenters' Rights and obtain payment
for his shares under Article 13. A dissenting shareholder's notice to SCBC
should be mailed to Pressley A. Ridgill, Chief Financial Officer, Security
Capital Bancorp, Post Office Box 1387, Salisbury, N.C. 28145-1387. (An SCBC
shareholder's failure to vote against the Merger will not constitute a waiver of
the shareholder's Dissenters' Rights so long as the shareholder gives the
required notice in a timely manner as described above and does not vote, in
person or by proxy, in favor of the Merger. However, the notice requirement will
not be satisfied by a shareholder's vote in person against the Merger, or
submission of an appointment of proxy with instructions to vote against the
Merger. Accordingly, an SCBC shareholder who votes against the Merger still must
give the required notice in a timely manner in order to assert Dissenters'
Rights. Shareholders should note that if they sign and return a blank
appointment of proxy with no instructions as to how their shares should be
voted, they will be deemed to have voted in favor of the Merger and thereafter
will not be entitled to assert Dissenters' Rights.)
If the Merger Agreement is approved by SCBC's shareholders, then, within
ten days of the date the Merger is consummated, SCBC must send a written notice
(by registered or certified mail, return receipt requested) to each of its
Shareholders who has taken the actions described above and is entitled to
exercise Dissenters' Rights. That notice will: (i) state where the dissenting
shareholder's payment demand must be sent, and where and when share certificates
must be deposited; (ii) supply a form for demanding payment; (iii) set a date by
which SCBC must receive the dissenting shareholder's payment demand (which may
not be fewer than 30 nor more than 60 days after the date the dissenters' notice
is mailed); and, (iv) be accompanied by a copy of Article 13.
An SCBC shareholder who has been sent the dissenters' notice must demand
payment AND must deposit his share certificates by the date set forth in and in
accordance with the terms and conditions of the dissenters' notice; otherwise,
such shareholder is not entitled to payment for his shares under Article 13. A
shareholder who demands payment and deposits his share certificates as required
retains all other rights as a shareholder until such rights are cancelled or
modified by consummation of the Merger.
43
<PAGE>
As soon as the Merger is consummated or upon receipt of a payment demand,
SCBC will offer to pay each of its dissenting shareholders who timely demanded
payment and deposited their share certificates the amount SCBC estimates to be
the fair value of the shareholder's shares, plus interest accrued to the date of
payment, and will pay this amount to each dissenting shareholder who agrees in
writing to accept it in full satisfaction of his demand. SCBC's offer of payment
will be accompanied by: (i) certain of SCBC's most recent available financial
statements; (ii) a statement of SCBC's estimate of the fair value of its shares;
(iii) an explanation of how the interest was calculated; (iv) a statement of the
dissenting shareholder's right to demand payment if dissatisfied with SCBC's
offer; and, (v) a copy of Article 13.
If the Merger is not consummated within 60 days after the date set by SCBC
for demanding payment and depositing share certificates, SCBC must return the
deposited certificates and if, thereafter, the Merger is consummated, SCBC must
send a new dissenters' notice and repeat the payment demand procedure set forth
above.
If a dissenter believes the amount offered for his shares as described
above is less than their fair value or that interest due is incorrectly
calculated, or if SCBC fails to make payment within 30 days to a dissenter who
accepts its offer, or if SCBC fails to consummate the Merger and does not return
the deposited certificates within 60 days after the date it set for demanding
payment, then the dissenting shareholder may notify SCBC in writing of the
shareholder's own estimate of the fair value of his shares and the amount of
interest due and may demand payment of such estimate, or may reject SCBC's offer
and demand payment of the fair value of his shares and interest due. In any such
event, if a dissenting shareholder fails to take any such action within the
30-day period, that shareholder will be deemed to have waived his rights under
Article 13 and to have withdrawn his dissent and demand for payment.
If a dissenting shareholder has taken all required actions and his demand
for payment remains unsettled, the shareholder may commence a proceeding within
60 days after the date of his payment demand and petition the court to determine
the fair value of his shares and accrued interest. Upon service on it of the
petition filed with the court, SCBC must pay to the dissenting shareholder the
amount originally offered by it. If the shareholder does not commence the
proceeding within said 60-day period, he has an additional 30 days to either (i)
accept in writing the amount offered by SCBC, upon which acceptance SCBC will
pay such amount in full satisfaction of the dissenter's demand, or (ii) withdraw
his demand for payment and resume the status of a nondissenting shareholder. A
dissenting shareholder who takes no action within this 30-day period is deemed
to have withdrawn his dissent and demand for payment.
In the court proceeding described above, the court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value, and has discretion to make all dissenting shareholders
whose demands remain unsettled parties to the proceeding. Each dissenting
shareholder made a party to the proceeding must be served with a copy of the
petition and is entitled to judgment for the amount, if any, by which the court
finds the fair value of his shares, plus interest, to exceed the amount paid by
SCBC. Court costs, appraisal and counsel fees may be assessed by the court as it
deems equitable.
Article 13 contains certain additional provisions with respect to dissent
by nominees who hold shares for others, and by beneficial owners whose shares
are held in the name of other persons, and reference is made to Appendix B for a
more complete description thereof.
44
<PAGE>
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following Pro Forma Combined Condensed Balance Sheet and Statements of
Income and accompanying notes are presented to show the impact of the Merger on
CCBF's and SCBC's historical financial positions and results of operations. The
Merger is reflected in the Pro Forma Combined Condensed Balance Sheet and
Statements of Income under the pooling-of-interests method of accounting.
The Pro Forma Combined Condensed Balance Sheet presented assumes that the
Merger was consummated on September 30, 1994 and the Pro Forma Combined
Condensed Statements of Income assume that the Merger was consummated at the
beginning of each period presented.
From November 9, 1994 through December 15, 1994, CCBF repurchased 407,905
shares of CCBF Stock as part of its previously announced stock repurchase
program. (See "THE MERGER -- Stock Repurchase Program".) These shares were
purchased in open market transactions at a total cost of approximately
$15,530,242. In accordance with the NCBCA, the repurchased shares were retired.
The pro forma earnings are not necessarily indicative of actual results
that might have been achieved had the Merger been consummated at the beginning
of the periods presented, and may not be indicative of future results that will
be obtained on a combined basis. The Pro Forma Combined Condensed Balance Sheet
and Statements of Income do not reflect any restructuring expenses which may be
recognized, transaction expenses which will be incurred or cost savings from
operating efficiencies which may be realized in connection with the Merger.
Current estimates of restructuring expenses for 1995 are $5.5 million and
transaction expenses will be an estimated $3 million. The cost savings
associated with these possible operating efficiencies and synergies have not
been quantified, nor are any such savings assured. It is anticipated that any
such savings will not be achieved until the fiscal quarters following the
quarter in which the expenses of the Merger and the Bank Merger are recognized.
45
<PAGE>
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA PRO FORMA
CCBF SCBC ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Cash and due from banks................................................. $ 148,483 23,852 -- 172,335
Time deposits in other banks............................................ 26,819 -- -- 26,819
Federal funds sold and other short-term investments..................... 139,000 84,323 -- 223,323
Investment securities:
Available for sale.................................................... 540,347 249,615 -- 789,962
Held for investment................................................... 68,972 125,335 -- 194,307
Loans and lease financing............................................... 2,385,216 636,208 -- 3,021,424
Less reserve for loan and lease losses................................ 29,752 9,242 -- 38,994
Net loans and lease financing...................................... 2,355,464 626,966 -- 2,982,430
Premises and equipment.................................................. 41,905 21,161 -- 63,066
Other assets............................................................ 91,729 42,170 -- 133,899
Total assets....................................................... $3,412,719 1,173,422 -- 4,586,141
LIABILITIES
Deposits:
Noninterest-bearing................................................... $ 405,839 49,312 -- 455,151
Interest-bearing...................................................... 2,483,277 965,717 -- 3,448,994
Total deposits..................................................... 2,889,116 1,015,029 -- 3,904,145
Federal funds purchased and securities sold under agreements to
repurchase............................................................ 38,381 -- -- 38,381
Other short-term borrowed funds......................................... 63,507 5,381 -- 68,888
Long-term debt.......................................................... 76,486 19,411 -- 95,897
Other liabilities....................................................... 79,855 14,468 -- 94,323
Total liabilities.................................................. 3,147,345 1,054,289 -- 4,201,634
SHAREHOLDERS' EQUITY
Common stock............................................................ 47,582 51,595 (22,171)(1) 77,006
Additional paid-in capital.............................................. 83,589 -- 22,171(1) 105,760
Retained earnings....................................................... 143,937 72,069 -- 216,006(2)
Unrealized loss on investment securities available for sale............. (6,499) (4,531) -- (11,030)
Less: Unearned common stock held by management recognition plans........ (3,235) -- -- (3,235)
Total shareholders' equity......................................... 265,374 119,133 -- 384,507
Total liabilities and shareholders' equity......................... $3,412,719 1,173,422 -- 4,586,141
</TABLE>
(1) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock. At September 30, 1994, CCBF and SCBC had 9,516,379 and 11,769,399
shares outstanding, respectively.
(2) The pro forma combined retained earnings do not reflect any restructuring
expenses which may be recognized, transaction expenses which will be
incurred or cost savings from operating efficiencies which may be realized
in connection with the Merger.
46
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loans and leases................................................................. $143,768 30,042 173,810
Investment securities............................................................ 26,371 15,788 42,159
Other............................................................................ 4,512 659 5,171
Total interest income......................................................... 174,651 46,489 221,140
INTEREST EXPENSE
Deposits......................................................................... 63,165 18,945 82,110
Long-term debt and other borrowings.............................................. 5,282 580 5,862
Total interest expense........................................................ 68,447 19,525 87,972
Net interest income................................................................ 106,204 26,964 133,168
Provision for loan and lease losses................................................ 5,800 269 6,069
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES...................... 100,404 26,695 127,099
OTHER INCOME
Service charges on deposit accounts.............................................. 14,291 3,259 17,550
Nondeposit fees and commissions.................................................. 11,649 2,400 14,049
Other............................................................................ 4,011 566 4,577
Investment securities gains (losses), net........................................ 45 (70) (25)
Total other income............................................................ 29,996 6,155 36,151
OTHER EXPENSES
Personnel........................................................................ 43,954 10,856(2) 54,810
Net occupancy and equipment...................................................... 13,206 2,784 15,990
Federal deposit and other insurance.............................................. 5,135 1,534 6,669
Other operating.................................................................. 25,313 4,949(2) 30,262
Total other expenses.......................................................... 87,608 20,123 107,731
Income before income taxes......................................................... 42,792 12,727 55,519
Income taxes....................................................................... 14,451 9,842(3) 24,293
NET INCOME......................................................................... $ 28,341 2,885 31,226
NET INCOME PER SHARE
Primary.......................................................................... $ 2.98 .25 2.03
Fully diluted.................................................................... 2.98 .25 2.03
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary.......................................................................... 9,516,389 11,726,524 15,379,651(4)
Fully diluted.................................................................... 9,516,389 11,726,524 15,379,651(4)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statements of Income.
(2) SCBC recognized significant non-recurring expenses in connection with its
September 23, 1994 acquisition of First Federal related to severance,
professional fees, marketing and discontinued contracts.
(3) Includes a one-time charge of approximately $5,600,000 taken by SCBC during
the quarter ended September 30, 1994 to record deferred tax liabilities in
connection with the merger of SCBC's three savings bank subsidiaries into
its commercial bank subsidiary during early 1995.
(4) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
47
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loans and leases................................................................... $110,610 31,372 141,982
Investment securities.............................................................. 22,092 16,756 38,848
Other.............................................................................. 3,338 582 3,920
Total interest income........................................................... 136,040 48,710 184,750
INTEREST EXPENSE
Deposits........................................................................... 50,055 20,649 70,704
Long-term debt and other borrowings................................................ 2,732 689 3,421
Total interest expense.......................................................... 52,787 21,338 74,125
Net interest income.................................................................. 83,253 27,372 110,625
Provision for loan and lease losses.................................................. 4,535 507 5,042
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 78,718 26,865 105,583
OTHER INCOME
Service charges on deposit accounts................................................ 13,239 3,773 17,012
Nondeposit fees and commissions.................................................... 9,494 2,059 11,553
Other.............................................................................. 2,816 1,854 4,670
Investment securities gains, net................................................... 249 310 559
Total other income.............................................................. 25,798 7,996 33,794
OTHER EXPENSES
Personnel.......................................................................... 38,650 10,136 48,786
Net occupancy and equipment........................................................ 12,064 2,559 14,623
Federal deposit and other insurance................................................ 3,875 1,338 5,213
Other operating.................................................................... 19,857 4,368 24,225
Total other expenses............................................................ 74,446 18,401 92,847
Income before income taxes and cumulative changes in accounting principles........... 30,070 16,460 46,530
Income taxes......................................................................... 10,096 5,332 15,428
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES (2) (3).................... $ 19,974 11,128 31,102
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES PER SHARE (2) (3)
Primary............................................................................ $ 2.47 .94 2.22
Fully diluted...................................................................... 2.38 .94 2.18
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 8,098,668 11,795,033 13,996,185(4)
Fully diluted...................................................................... 8,607,458 11,795,033 14,504,975(4)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Income before cumulative changes in accounting principles and primary and
fully diluted income per share before cumulative changes in accounting
principles for the nine months ended September 30, 1993 do not include the
cumulative effect of changes in accounting principles resulting from the
adoption by CCBF on January 1, 1993 of SFAS 106 and SFAS 109. The impact of
adoption of SFAS 106 and SFAS 109 on net income, primary net income per
share and fully diluted net income per share was a net charge of $1,371,000,
$(.17) and $(.16), respectively, for the nine months ended September 30,
1993.
(3) The cumulative effect of SCBC's adoption on January 1, 1993 of SFAS 106 and
SFAS 109 was not material for the nine months ended September 30, 1993.
(4) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
48
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loans and leases................................................................... $155,394 41,195 196,589
Investment securities.............................................................. 30,757 22,254 53,011
Other.............................................................................. 4,538 774 5,312
Total interest income........................................................... 190,689 64,223 254,912
INTEREST EXPENSE
Deposits........................................................................... 69,939 27,255 97,194
Long-term debt and other borrowings................................................ 3,882 880 4,762
Total interest expense.......................................................... 73,821 28,135 101,956
Net interest income.................................................................. 116,868 36,088 152,956
Provision for loan and lease losses.................................................. 6,453 653 7,106
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 110,415 35,435 145,850
OTHER INCOME
Service charges on deposit accounts................................................ 18,208 4,976 23,184
Nondeposit fees and commissions.................................................... 13,343 2,800 16,143
Other.............................................................................. 4,857 2,433 7,290
Investment securities gains, net................................................... 2,652 310 2,962
Total other income.............................................................. 39,060 10,519 49,579
OTHER EXPENSES
Personnel.......................................................................... 53,404 13,314 66,718
Net occupancy and equipment........................................................ 16,644 3,390 20,034
Federal deposit and other insurance................................................ 5,468 1,832 7,300
Other operating.................................................................... 30,094 5,306 35,400
Total other expenses............................................................ 105,610 23,842 129,452
Income before income taxes and cumulative changes in accounting principles........... 43,865 22,112 65,977
Income taxes......................................................................... 14,640 7,273 21,913
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES (2) (3).................... 29,225 14,839 44,064
INCOME BEFORE CUMULATIVE CHANGES IN ACCOUNTING PRINCIPLES PER SHARE (2) (3)
Primary............................................................................ $ 3.50 1.26 3.10
Fully diluted...................................................................... 3.41 1.26 3.05
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 8,344,540 11,771,739 14,230,410(4)
Fully diluted...................................................................... 8,726,133 11,771,739 14,612,003(4)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Income before cumulative changes in accounting principles and primary and
fully diluted income per share before cumulative changes in accounting
principles for the year ended December 31, 1993 do not include the
cumulative effect of changes in accounting principles resulting from the
adoption by CCBF on January 1, 1993 of SFAS 106 and SFAS No. 109. The impact
of adoption of SFAS 106 and SFAS 109 on net income, primary net income per
share and fully diluted net income per share was a net charge of $1,371,000,
$(.17) and $(.16), respectively, for the year ended December 31, 1993.
(3) The cumulative effect of SCBC's adoption on January 1, 1993 of SFAS 106 and
SFAS 109 was not material for the year ended December 31, 1993.
(4) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
49
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loan and leases.................................................................... $138,420 48,277 186,697
Investment securities.............................................................. 26,549 22,302 48,851
Other.............................................................................. 4,767 1,274 6,041
Total interest income......................................................... 169,736 71,853 241,589
INTEREST EXPENSE
Deposits........................................................................... 67,232 33,695 100,927
Long-term debt and other borrowings................................................ 3,405 1,434 4,839
Total interest expense........................................................ 70,637 35,129 105,766
Net interest income.................................................................. 99,099 36,724 135,823
Provision for loan and lease losses.................................................. 5,983 1,848 7,831
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 93,116 34,876 127,992
OTHER INCOME
Service charges on deposit accounts................................................ 16,624 5,255 21,879
Nondeposit fees and commissions.................................................... 11,861 2,344 14,205
Other.............................................................................. 2,144 1,341 3,485
Investment securities gains, net................................................... 2,066 8 2,074
Total other income............................................................ 32,695 8,948 41,643
OTHER EXPENSES
Personnel.......................................................................... 46,104 14,536 60,640
Net occupancy and equipment........................................................ 15,671 3,488 19,159
Federal deposit and other insurance................................................ 4,206 2,026 6,232
Other operating.................................................................... 22,593 7,490 30,083
Total other expenses.......................................................... 88,574 27,540 116,114
Income before income taxes........................................................... 37,237 16,284 53,521
Income taxes......................................................................... 11,915 6,323 18,238
NET INCOME........................................................................... $ 25,322 9,961 35,283
NET INCOME PER SHARE
Primary............................................................................ $ 3.30 .84 2.60
Fully diluted...................................................................... 3.10 .84 2.52
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 7,663,659 11,832,570 13,579,944(2)
Fully diluted...................................................................... 8,577,782 11,832,570 14,494,067(2)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
50
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1991
(UNAUDITED)
<TABLE>
<CAPTION>
CCBF
PRO FORMA
CCBF SCBC COMBINED (1)
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
INTEREST INCOME
Loan and leases.................................................................... $149,045 59,572 208,617
Investment securities.............................................................. 31,996 22,004 54,000
Other.............................................................................. 5,536 1,485 7,021
Total interest income......................................................... 186,577 83,061 269,638
INTEREST EXPENSE
Deposits........................................................................... 91,545 45,879 137,424
Long-term debt and other borrowings................................................ 4,494 2,071 6,565
Total interest expense........................................................ 96,039 47,950 143,989
Net interest income.................................................................. 90,538 35,111 125,649
Provision for loan and lease losses.................................................. 7,407 1,924 9,331
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........................ 83,131 33,187 116,318
OTHER INCOME
Service charges on deposit accounts................................................ 15,596 4,627 20,223
Nondeposit fees and commissions.................................................... 12,960 2,228 15,188
Other.............................................................................. 4,042 1,809 5,851
Investment securities gains, net................................................... 55 549 604
Total other income............................................................ 32,653 9,213 41,866
OTHER EXPENSES
Personnel.......................................................................... 45,029 13,821 58,850
Net occupancy and equipment........................................................ 15,779 2,570 18,349
Federal deposit and other insurance................................................ 3,772 2,427 6,199
Other operating.................................................................... 20,922 6,663 27,585
Total other expenses.......................................................... 85,502 25,481 110,983
Income before income taxes........................................................... 30,282 16,919 47,201
Income taxes......................................................................... 8,828 5,642 14,470
NET INCOME........................................................................... $ 21,454 11,277 32,731
NET INCOME PER SHARE
Primary............................................................................ $ 2.81 .95 2.42
Fully diluted...................................................................... 2.66 .95 2.35
WEIGHTED AVERAGE SHARES OUTSTANDING
Primary............................................................................ 7,627,952 11,821,315 13,538,610(2)
Fully diluted...................................................................... 8,565,452 11,821,315 14,476,110(2)
</TABLE>
(1) No pro forma adjustments are reflected in the Pro Forma Combined Condensed
Statement of Income.
(2) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
51
<PAGE>
CAPITALIZATION
The following table sets forth: (i) the unaudited historical capitalization
of CCBF as of September 30, 1994; (ii) the unaudited historical capitalization
of SCBC as of September 30, 1994; and (iii) the unaudited pro forma
capitalization of CCBF and SCBC assuming the Merger had been consummated on
September 30, 1994. This financial information has been based on, and should be
read in conjunction with, CCBF's and SCBC's interim unaudited financial
statements, including the related notes thereto, which are incorporated by
reference in this Prospectus/Joint Proxy Statement. (See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE".)
<TABLE>
<CAPTION>
PRO FORMA
CCBF SCBC COMBINED
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
LONG-TERM DEBT
CCBF:
Advances from Federal Home Loan Bank with varying maturities to 2014 with rates from
3.00% to 8.41% (1).................................................................. $ 24,825 24,825
6 3/4% subordinated notes due 2003................................................... 40,000 40,000
Collateralized mortgage obligations and other long-term debt......................... 11,661 11,661
SCBC:
Advances from Federal Home Loan Bank with varying maturities to 2012 with rates from
4.61% to 11.80% (1)................................................................. 19,411 19,411
Total long-term debt............................................................... 76,486 19,411 95,897
SHAREHOLDERS' EQUITY
CCBF:
Serial preferred stock. Authorized 5,000,000 shares; none issued..................... -- --
Common stock, $5 par value; 30,000,000 shares authorized; 9,516,379 shares issued and
15,401,079 shares pro forma combined issued, respectively (2)(4).................... 47,582 77,006
Additional paid-in capital........................................................... 83,589 105,760
Retained earnings (3)................................................................ 143,937 216,006
Less: Unrealized loss on investment securities available for sale.................... (6,499) (11,030)
Less: Unearned common stock held by management recognition plans..................... (3,235) (3,235)
SCBC:
Preferred stock, no par value. Authorized 5,000,000 shares; none issued.............. --
Common stock, no par value; 25,000,000 shares authorized;
11,769,399 shares issued........................................................... 51,595
Retained earnings.................................................................... 72,069
Unrealized loss on investment securities available for sale.......................... (4,531)
Total shareholders' equity......................................................... 265,374 119,133 384,507
Total long-term debt and shareholders' equity...................................... $341,860 138,544 480,404
</TABLE>
(1) These obligations are direct obligations of subsidiaries of CCBF and SCBC
and, as such, constitute claims against such subsidiaries prior to CCBF's
and SCBC's respective equity interest therein.
(2) Based on the Exchange Ratio of .50 for conversion of SCBC Stock into CCBF
Stock.
(3) The pro forma combined retained earnings do not reflect any restucturing
expenses which may be recognized, transaction expenses which will be
incurred or cost savings from operating efficiencies which may be realized
in connection with the Merger.
(4) From November 9, 1994 through December 15, 1994, CCBF repurchased 407,905
shares of CCBF Stock as part of its previously announced stock repurchase
program. (See "THE MERGER -- Stock Repurchase Program".) These shares were
purchased in open market transactions at a total cost of approximately
$15,530,242. In accordance with the NCBCA, the repurchased shares were
retired. No shares of SCBC Stock were repurchased by CCBF or SCBC.
52
<PAGE>
MARKET AND DIVIDEND INFORMATION REGARDING
CCBF STOCK AND SCBC STOCK
CCBF Stock and SCBC Stock each is qualified for quotation on the Nasdaq
National Market. On February 1, 1995, there were 9,108,895 outstanding shares of
CCBF Stock held of record by an aggregate of approximately 4,200 shareholders of
record, and there were 11,775,867 outstanding shares of SCBC Stock held of
record by approximately 3,300 shareholders of record. The following table lists
the high and low closing prices as reported by the Nasdaq National Market, and
the amounts of cash dividends declared, with respect to CCBF Stock and SCBC
Stock for each quarterly period since January 1, 1992. (See "CAPITAL STOCK OF
CCBF AND SCBC".)
<TABLE>
<CAPTION>
CCBF STOCK SCBC STOCK
CASH CASH
DIVIDEND DIVIDEND
QUARTERLY PERIOD HIGH LOW DECLARED HIGH LOW DECLARED
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
First quarter (1)............................................... $37.75 34.00 .34 17.50 16.25 .11
YEAR ENDED DECEMBER 31, 1994:
Fourth quarter.................................................. 44.00 32.75 .34 18.25 15.00 .11
Third quarter................................................... 44.50 39.25 .34 16.25 13.25 .11
Second quarter.................................................. 40.00 33.25 .32 15.25 13.00 .11
First quarter................................................... 37.50 32.75 .32 14.25 13.00 .11
YEAR ENDED DECEMBER 31, 1993:
Fourth quarter.................................................. 37.25 32.50 .32 14.75 13.25 .10
Third quarter................................................... 37.75 35.50 .32 14.75 13.00 .10
Second quarter.................................................. 42.50 34.50 .30 13.75 12.50 .10
First quarter................................................... 41.00 36.00 .30 14.75 11.00 .095
YEAR ENDED DECEMBER 31, 1992:
Fourth quarter.................................................. 35.75 32.00 .30 12.25 10.75 .095
Third quarter................................................... 36.17 30.17 .30 12.50 10.00 .095
Second quarter.................................................. 31.17 29.00 .27 11.00 9.50 .06
First quarter................................................... 30.17 27.83 .27 11.00 8.75 .06
</TABLE>
(1) Through January 27, 1995.
53
<PAGE>
CCB FINANCIAL CORPORATION
GENERAL
CCBF is a North Carolina business corporation organized in 1982 and
registered as a bank holding company with the Federal Reserve under the BHCA and
the bank holding company laws of North Carolina. CCBF's principal business is
providing banking and other financial services through its banking subsidiaries.
CCBF's principal offices are located at 111 Corcoran Street, Durham, North
Carolina.
Through its subsidiaries, CCBF offers numerous banking services consistent
with the needs and conveniences of the areas that it serves. These services
include accepting time and demand deposits, making secured and unsecured loans,
renting safe deposit boxes, sending and receiving wire transfers, performing
trust functions for corporations, pension trusts, and individuals, and providing
certain insurance and securities brokerage services. In addition, it provides
assistance and counseling to individuals, institutions and corporations
regarding financial matters.
Vigorous competition exits in all major areas where CCBF is presently
engaged in business. Its financial institution subsidiaries compete not only
with other major commercial banks, but also with diversified and other financial
institutions such as thrift institutions, money market and other mutual funds,
mortgage companies, leasing companies, finance companies and a variety of
financial services and advisory companies. CCBF has primarily focused its
business and strategy on meeting this competition and the commercial banking
needs of its retail and commercial customers through its branch network.
For additional information about CCBF and its business operations,
reference should be made to CCBF's Annual Report on Form 10-K for the year ended
December 31, 1993 (as amended by Form 10-K/A dated July 20, 1994) and the other
documents incorporated by reference herein. (See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE").
SUBSIDIARIES
CCBF's wholly-owned subsidiaries include the following:
(i) CCB, a North Carolina commercial bank headquartered in Durham, North
Carolina, and which operates 106 banking offices in 16 counties located
primarily in the central and Piedmont regions of North Carolina;
(ii) Lenoir, a North Carolina savings bank headquartered in Lenoir, North
Carolina, and which operates four banking offices in Caldwell County, North
Carolina, and currently is proposed to be merged into CCB during February 1995;
(iii) Graham, a North Carolina savings bank headquartered in Graham, North
Carolina, and which operates two banking offices in Alamance County, North
Carolina; and
(iv) CCB-Georgia, a Georgia credit card bank headquartered in Columbus,
Georgia.
Additionally, CCB has four wholly-owned subsidiaries: CCB Investment and
Insurance Service Corporation, CCBDE, Inc., 1st Home Mortgage Acceptance
Corporation, and Southland Associates, Inc.
BENEFICIAL OWNERSHIP OF CCBF STOCK
Set forth below is information regarding the only person known to
management of CCBF to beneficially own more than 5% of the issued and
outstanding shares of CCBF Stock as of January 25, 1995.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS BENEFICIAL OWNERSHIP OF CLASS(1)
<S> <C> <C>
Central Carolina Bank and Trust Company
Durham, North Carolina...................................................................... 685,330(2) 7.52%
</TABLE>
(1) The calculation of the percentage of class beneficially owned is based on
the shares of CCBF Stock outstanding on February 1, 1995.
(2) Shares beneficially owned by CCB are held through its Trust Department in
various fiduciary capacities. In addition to the shares reflected above, CCB
holds certain other shares in various fiduciary capacities as to which it
disclaims beneficial ownership. The aggregate number of shares includes
573,711 shares over which CCB exercises sole voting power, 114,745 shares
over which it has shared voting power, 321,604 shares over which it has sole
investment power, and 276,009 shares over which it has shared investment
power, all in its various fiduciary capacities.
54
<PAGE>
Set forth below is information as of January 25, 1995 regarding the
beneficial ownership of CCBF Stock by its current directors and certain of its
executive officers individually, and by all directors and executive officers of
CCBF as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT AND NATURE OF OUTSTANDING
NAME BENEFICIAL OWNERSHIP (1) CCBF STOCK (15)
<S> <C> <C>
J. Harper Beall, III................................................................ 14,815(2) *
James B. Brame, Jr.................................................................. 1,971 *
Timothy B. Burnett.................................................................. 1,000 *
W. L. Burns, Jr..................................................................... 133,642(3) 1.47%
Arthur W. Clark..................................................................... 27,531 *
Kinsley van R. Dey, Jr.............................................................. 9,352(4) *
Mrs. Frances Hill Fox............................................................... 222,702 2.44%
T. E. Haigler, Jr................................................................... 2,400 *
Edward S. Holmes.................................................................... 4,320(5) *
Owen G. Kenan....................................................................... 3,730(6) *
Eugene J. McDonald.................................................................. 1,691(7) *
Hamilton W. McKay, Jr., M.D......................................................... 4,036(8) *
Eric B. Munson...................................................................... 275 *
Ernest C. Roessler.................................................................. 14,931(9) *
John B. Stedman..................................................................... 42,815(10) *
H. Allen Tate, Jr................................................................... 16,826(11) *
Dr. Phail Wynn, Jr.................................................................. 527 *
J. Scott Edwards.................................................................... 19,350(12) *
Richard L. Furr..................................................................... 14,711(13) *
All current directors and executive officers as a group (19 persons)................ 536,625(14) 5.89%
</TABLE>
(1) Except as otherwise noted, each individual exercises sole voting and
investment power with respect to all shares shown as beneficially owned.
(2) Includes 4,320 shares with respect to which he has sole voting power only,
and 4,321 shares which he could purchase under a currently exercisable
option and as to which he is considered to have sole investment power only.
(3) Includes 34,884 shares with respect to which Mr. Burns has shared voting
and investment power, and 13,071 shares with respect to which he has sole
voting power only.
(4) Includes 1,012 shares with respect to which Mr. Dey has shared voting and
investment power.
(5) Does not include 21,648 shares held by Mr. Holmes' spouse and with respect
to which he disclaims any beneficial ownership.
(6) Includes 3,530 shares with respect to which Mr. Kenan has shared voting and
investment power.
(7) Includes 1,585 shares with respect to which Mr. McDonald has shared voting
and investment power.
(8) Does not include 1,057 shares held by Dr. McKay's spouse and son and with
respect to which he disclaims any beneficial ownership.
(9) Includes 4,320 shares with respect to which Mr. Roessler has sole voting
power only, 2,183 shares with respect to which he has shared voting and
investment power, and 2,051 shares which he could purchase under a
currently exercisable option and as to which he is considered to have sole
investment power only.
(10) Includes 2,366 shares with respect to which Mr. Stedman has shared voting
and investment power.
(11) Includes 6,418 shares with respect to which Mr. Tate has shared voting and
investment power. Does not include a total of 2,787 shares held by or for
Mr. Tate's spouse and children and with respect to which he disclaims any
beneficial ownership.
(12) Includes 4,282 shares with respect to which Mr. Edwards has sole voting
power only, 262 shares with respect to which he exercises shared voting and
investment power, and 1,192 shares which he could purchase under a
currently exercisable option and as to which he is considered to have sole
investment power only.
55
<PAGE>
(13) Includes 4,282 shares with respect to which Mr. Furr has sole voting power
only, 1,738 shares with respect to which he exercises shared voting and
investment power, and 1,192 shares which he could purchase under a
currently exercisable option and as to which he is considered to have sole
investment power only.
(14) Includes an aggregate of 443,616 shares with respect to which current
directors and officers have sole voting and investment power, 53,978 shares
with respect to which they have shared voting and investment power, 30,275
shares with respect to which they have sole voting power only, and 8,756
shares which such persons could purchase under currently exercisable
options and as to which they have sole investment power only. Directors and
officers included in the group hold options to purchase an aggregate of
8,885 additional shares that currently are not exercisable.
(15) An asterisk (*) indicates less than 1.0%. The calculation of the percentage
of class beneficially owned by persons included in the group is based on
the 9,108,895 shares of CCBF Stock outstanding on February 1, 1995, plus
the number of shares as to which those persons hold currently exercisable
purchase options.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to CCBF's directors and executive officers,
executive and director compensation and compensation plans, certain
relationships and related transactions and other related matters as to CCBF is
incorporated by reference or set forth in CCBF's Annual Report on Form 10-K for
the year ended December 31, 1993 (as amended by Form 10-K/A dated July 20, 1994)
which is incorporated herein by reference. Shareholders of CCBF or SCBC desiring
a copy of that document may contact CCBF at its address or phone number listed
elsewhere in this Prospectus/Joint Proxy Statement under the heading
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE".
SECURITY CAPITAL BANCORP
GENERAL
SCBC is a North Carolina business corporation organized in 1983 and
registered as a bank holding company with the Federal Reserve under the BHCA and
the bank holding company laws of North Carolina. SCBC's principal business is
providing banking and other financial services through its banking subsidiaries.
SCBC's principal offices are located at 507 West Innes Street, Salisbury, North
Carolina.
Through its subsidiaries, SCBC offers numerous banking services consistent
with the needs and conveniences of the areas that it serves. These services
include accepting time and demand deposits, making secured and unsecured loans,
renting safe deposit boxes, sending and receiving wire transfers, performing
trust functions for corporations, pension trusts, and individuals, and providing
certain insurance and securities brokerage services. In addition, it provides
assistance and counseling to individuals, institutions and corporations
regarding financial matters.
Vigorous competition exists in all major areas where SCBC is presently
engaged in business. Its financial institution subsidiaries compete not only
with other major commercial banks, but also with diversified and other financial
institutions such as thrift institutions, money market and other mutual funds,
mortgage companies, leasing companies, finance companies and a variety of
financial services and advisory companies. SCBC has primarily focused its
business and strategy on meeting this competition and the commercial banking
needs of its retail and commercial customers through its branch network.
For additional information about SCBC and its business operations,
reference should be made to SCBC's Annual Report on Form 10-K for the year ended
December 31, 1993 and the other documents incorporated by reference herein. (See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE").
SUBSIDIARIES
SCBC's wholly-owned subsidiaries include the following:
(i) SCB, a North Carolina commercial bank headquartered in Salisbury, North
Carolina, and which operates 39 banking offices in 12 counties in the south
central and western Piedmont regions of North Carolina;
(ii) OMNIBANK, a North Carolina savings bank headquartered in Salisbury,
North Carolina, and which operates three banking offices in Rowan County, North
Carolina;
(iii) Citizens, a North Carolina savings bank headquartered in Concord,
North Carolina, and which operates five banking offices in Cabarrus County,
North Carolina;
56
<PAGE>
(iv) Home Savings, a North Carolina savings bank headquartered in Kings
Mountain, North Carolina, and which operates two banking offices in Gaston and
Cleveland Counties, North Carolina; and
(v) Estates Development Corporation ("Estates"), a North Carolina
corporation which formerly engaged in real estate activities and is now in the
process of winding down and terminating those operations.
The Merger Agreement provides that, in a series of transactions completed
prior to the Merger, Citizens and Home will be consolidated into OMNIBANK which,
in turn, will be converted into a North Carolina interim commercial bank and
merged into SCB.
Additionally, SCB has a wholly-owned subsidiary, First Security Credit
Corporation, which is a North Carolina corporation that operates as a consumer
finance company, and seven other wholly-owned subsidiaries that currently are
inactive and are not engaging in any business operations. SCBC acquired five of
these inactive subsidiaries as part of its acquisition of First Federal in
September 1994. In connection with that transaction, SCBC undertook with the
Federal Reserve to dissolve and liquidate these five subsidiaries as soon as
reasonably practicable. It is currently anticipated that at or before the
Effective Time, SCB will purchase the assets and assume the liabilities of these
five subsidiaries and cause their liquidation and dissolution in accordance with
the provisions of the NCBCA.
BENEFICIAL OWNERSHIP OF SCBC STOCK
To the knowledge of management of SCBC, as of January 25, 1995 no
shareholder beneficially owned more than 5% of the issued and outstanding shares
of SCBC Stock.
Set forth below is information as of January 25, 1995, regarding the
beneficial ownership of SCBC Stock by its current directors and certain of its
executive officers individually, and by all directors and executive officers of
SCBC as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
AMOUNT AND NATURE OF OUTSTANDING
NAME BENEFICIAL OWNERSHIP SCBC STOCK (19)
<S> <C> <C>
John M. Barnhardt................................................................... 14,909(1) *
Ralph A. Barnhardt.................................................................. 135,668(2,3) 1.14%
Edward A. Brown..................................................................... 3,134 *
Henry B. Gaye....................................................................... 83,387(4) *
Dan L. Gray......................................................................... 16,872 *
Lloyd G. Gurley..................................................................... 24,353(5) *
David B. Jordan..................................................................... 137,717(2,6) 1.16%
William C. Kluttz, Jr............................................................... 10,918(7) *
Erwin E. Lampert, Jr................................................................ 13,876(8) *
William G. Loeblein................................................................. 21,161(9) *
F. Taft McCoy, Jr................................................................... 77,256(10) *
Harold Mowery....................................................................... 12,757(11) *
J. G. Rutledge, III................................................................. 50,281(12) *
Carl M. Short, Jr................................................................... 32,258(13) *
Miles J. Smith, Jr.................................................................. 134,946(14) 1.15%
W. Erwin Spainhour.................................................................. 8,345 *
Fred J. Stanback, Jr................................................................ 208,373(15) 1.77%
Jimmy K. Stegall.................................................................... 51,636(16) *
Thomas A. Tate, Sr.................................................................. 26,403 *
E. William Wagoner.................................................................. 6,901(17) *
James L. Williamson................................................................. 8,088(18) *
Pressley A. Ridgill................................................................. 45,826(2,19) *
All current directors and executive officers as a group (22 persons)................ 1,125,065 9.40%
</TABLE>
(1) Includes 800 shares held by a company Mr. Barnhardt controls and 4,806
shares held by his spouse.
(2) Other than shares allocated to the named officer's individual accounts, the
number of shares shown as beneficially owned does not include shares held
by the SCBC ESOP or in SCBC's Executive Management Incentive Compensation
Plan (the "Incentive Plan"). The named officer serves as a Trustee and
member of the Administrative Committee of the ESOP. All shares held by the
ESOP have been allocated to the ESOP participants. Such shares are voted in
accordance
57
<PAGE>
with the instructions provided by such participants. At February 1, 1995,
the ESOP and the Incentive Plan held 467,348 shares and 12,866 shares of
SCBC Stock, respectively.
(3) Includes 84,375 shares that Mr. Barnhardt has the right to purchase under
SCBC Option Plans (with a weighted average exercise price of $6.00 per
share), 3,688 shares held jointly with his spouse, 2,653 shares held by his
spouse, 486 shares held by his children, and 224 shares allocated to his
Incentive Plan account.
(4) Includes 22,862 shares held by Mr. Gaye's spouse and 2,126 shares held by a
company he controls.
(5) Includes 2,000 shares held by Mr. Gurley's spouse. Does not include 30,000
shares that may be purchased under an SCBC Option Plan in equal
installments beginning in 1996 (at an exercise price of $13.625 per share).
(6) Includes 75,500 shares that Mr. Jordan has the right to purchase under SCBC
Option Plans (with a weighted average exercise price of $6.17 per share),
5,000 shares held by his spouse, and 210 shares allocated to his Incentive
Plan account.
(7) Includes 6,334 shares held by Mr. Kluttz as custodian for his children.
(8) Includes 2,700 held in a trust of which Mr. Lampert is a trustee and 1,237
shares held by his spouse.
(9) Includes 7,087 shares over which Mr. Loeblein has shared voting and
investment power.
(10) Includes 24,000 shares held by Mr. McCoy's spouse. Mr. McCoy disclaims any
beneficial interest in such shares.
(11) Includes 2,396 shares held by Mr. Mowery's spouse.
(12) Includes 25,018 shares held by Mr. Rutledge's spouse.
(13) Includes 517 shares held in a trust of which Mr. Short is a co-trustee.
(14) Includes 5,257 shares held by Mr. Smith's spouse.
(15) Includes 6,750 shares over which Mr. Stanback has voting power, 99,115
shares with respect to which he has a power-of-attorney, and 3,375 shares
held by his spouse. Mr. Stanback disclaims any beneficial interest in these
shares.
(16) Includes 2,777 shares over which Mr. Stegall has voting and investment
power.
(17) Includes 3,999 shares held by a company Mr. Wagoner controls and 675 shares
held by his children.
(18) Includes 7,088 shares that Mr. Williamson has the right to purchase under
an SCBC Option Plan (at an exercise price of $7.67 per share).
(19) Includes 30,937 shares that Mr. Ridgill has the right to purchase under
SCBC Options Plans (with a weighted average exercise price of $5.60 per
share) and 175 shares allocated to his Incentive Plan account.
(20) An asterisk (*) indicates less than 1.0%. Except as otherwise noted, the
calculation of the percentage of class beneficially owned is based on the
11,775,867 shares of SCBC Stock outstanding on February 1, 1995.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to SCBC's directors and executive officers,
executive and director compensation and compensation plans, certain
relationships and related transactions and other related matters as to SCBC is
incorporated by reference or set forth in SCBC's Annual Report on Form 10-K for
the year ended December 31, 1993 which is incorporated herein by reference.
Shareholders of SCBC or CCBF desiring a copy of that document may contact SCBC
at its address or phone number listed elsewhere in this Prospectus/Joint Proxy
Statement under the heading "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE".
SUPERVISION AND REGULATION
REGULATION
Federal and state legislation and regulation have significantly affected
the operations of financial institutions in the past several years and have
increased competition among commercial banks, savings institutions and other
providers of financial services. In addition, federal legislation has imposed
new limitations on the investment authority of, and higher insurance and
examination assessments on, financial institutions and has made other changes
that may adversely affect the future operations and competitiveness of regulated
financial institutions with other financial intermediaries. The operations of
regulated depository institutions and their holding companies, including SCBC
and CCBF and their depository institution subsidiaries, will continue to be
subject to changes in applicable statutes and regulations from time to time.
58
<PAGE>
CCBF AND SCBC. As bank holding companies registered under the BHCA, CCBF
and SCBC both are subject to the regulations of the Federal Reserve. Under the
BHCA, CCBF's and SCBC's activities and those of their subsidiaries are limited
to banking, managing or controlling banks, furnishing services to or performing
services for their subsidiaries or engaging in any other activity which the
Federal Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
The BHCA prohibits CCBF and SCBC from acquiring direct or indirect control
of more than 5% of the outstanding voting stock or substantially all of the
assets of any bank or savings bank or merging or consolidating with another bank
holding company or savings bank holding company without prior approval of the
Federal Reserve. (See "THE MERGER -- Required Approvals".) Congress has approved
legislation which, one year after enactment, will permit adequately capitalized
and managed bank holding companies to acquire control of a bank in any state
(the "Interstate Banking Law"). The Interstate Banking Law was enacted into law
in September 1994. Existing state laws setting minimum age restrictions on
target banks could be retained, so long as the age requirement does not exceed
five years. Acquisitions will be subject to anti-trust provisions that cap at
10% the portion of the United States' bank deposits a single bank holding
company may control, and cap at 30% the portion of a state's deposits a single
bank holding company may control. A state will have the authority to waive the
30% cap.
Under the Interstate Banking Law, beginning on June 1, 1997, banks will
also be permitted to merge with one another across state lines, subject to
concentration, capital and Community Reinvestment Act requirements and
regulatory approval. A state can authorize mergers earlier than June 1, 1997, or
it can opt out of interstate branching by enacting legislation before June 1,
1997.
Effective with the date of enactment, a state can also choose to permit
out-of-state banks to open new branches within its borders. In addition, if a
state chooses to allow interstate acquisition of branches, then an out-of-state
bank may also acquire branches by merger.
Interstate branches that primarily siphon off deposits without servicing a
community's credit needs will be prohibited. If loans are less than 50% of the
average of all institutions in the state, the branch will be reviewed to see if
it is meeting community credit needs. If it is not, the branch may be closed and
the bank may be restricted from opening a new branch in the state.
The Interstate Banking Law also modifies the controversial safety and
soundness provisions contained in Section 39 of the 1991 Banking Law described
below which required the banking regulatory agencies to write regulations
governing such topics as internal controls, loan documentation, credit
underwriting, interest rate exposure, asset growth, compensation and fees and
whatever else those agencies determined to be appropriate. The legislation
exempts bank holding companies from these provisions and requires the agencies
to write guidelines, as opposed to regulations, dealing with these areas. It
also gives more discretion to the banking regulatory agencies with regard to
prescribing standards for banks' asset quality, earnings and stock valuation.
The Interstate Banking Law also expands current exemptions from the
requirement that banks be examined on a 12-month cycle. Exempted banks will be
inspected every 18 months. Other provisions address paperwork reduction and
regulatory improvements, small business and commercial real estate loan
securitization, truth-in-lending amendments on high cost mortgages,
strengthening of the independence of certain financial regulatory agencies,
money laundering, flood insurance reform and extension of certain statutes of
limitations. At this time, SCBC and CCBF are unable to predict how the
Interstate Banking Law may affect their operations.
Additionally, the BHCA prohibits CCBF and SCBC from engaging in, or
acquiring ownership or control of more than 5% of the outstanding voting stock
of any company engaged in a non-banking business, including thrifts, unless such
business is determined by the Federal Reserve to be so closely related to
banking as to be properly incident thereto. The BHCA generally does not place
territorial restrictions on the activities of such non-banking related
activities.
Federal Reserve approval (or, in certain cases, non-disapproval) also must
be obtained prior to any person acquiring control of CCBF or SCBC or one of
their depository institution subsidiaries. Control is conclusively presumed to
exist if, among other things, a person acquires more than 25% of any class of
voting stock of the institution or holding company or controls in any manner the
election of a majority of the directors of the institution or the holding
company. Control is presumed to exist if a person acquires more than 10% of any
class of voting stock and the institution or the holding company has registered
securities under Section 12 of the 1934 Act or the acquiror will be the largest
shareholder after the acquisition.
59
<PAGE>
There are a number of obligations and restrictions imposed on bank holding
companies and their insured depository institution subsidiaries by law and
regulatory policies that are designed to minimize potential loss to depositors
of such depository institutions and the FDIC insurance funds in the event the
depository institution becomes in danger of default or in default. For example,
under the recently enacted Federal Deposit Insurance Corporation Improvement Act
of 1991 (the "1991 Banking Law"), to reduce the likelihood of receivership of an
insured depository institution subsidiary, a bank holding company is required to
guarantee the compliance of any insured depository institution subsidiary that
may become "undercapitalized" with the terms of any capital restoration plan
filed by such subsidiary with its appropriate federal banking agency up to the
lesser of (i) an amount equal to 5% of the institution's total assets at the
time the institution became undercapitalized or (ii) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all acceptable capital standards as of the time the institution
fails to comply with such capital restoration plan. Under a policy of the
Federal Reserve with respect to bank holding company operations, a bank holding
company is required to serve as a source of financial strength to its depository
institution subsidiaries and to commit resources to support such institutions in
circumstances where it might not do so absent such policy. Under the BHCA, the
Federal Reserve also has the authority to require a bank holding company to
terminate any activity or to relinquish control of a nonbank subsidiary (other
than a nonbank subsidiary of a bank) upon the Federal Reserve's determination
that such activity or control constitutes a serious risk to the financial
soundness and stability of any depository institution subsidiary of the bank
holding company.
In addition, the "cross-guarantee" provisions of the Federal Deposit
Insurance Act ("FDIA") require insured depository institutions under common
control to reimburse the FDIC for any loss suffered by either the Savings
Association Insurance Fund (the "SAIF") or the Bank Insurance Fund ("BIF") of
the FDIC as a result of the default of a commonly controlled insured depository
institution or for any assistance provided by the FDIC to a commonly controlled
insured depository institution in danger of default. The FDIC may decline to
enforce the cross-guarantee provisions if it determines that a waiver is in the
best interest of the SAIF or the BIF or both. The FDIC's claim is superior to
claims of shareholders of the insured depository institution or its holding
company but subordinate to claims of depositors, secured creditors and holders
of subordinated debt (other than affiliates) of the commonly controlled insured
depository institutions.
CCBF and SCBC each is subject to the obligations and restrictions described
above, and their depository institution subsidiaries are subject to the
cross-guarantee provisions of the FDIC. However, management of CCBF and SCBC
currently do not expect that any of these provisions will have an impact on the
operations of their respective holding companies or their respective
subsidiaries.
Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines which require a minimum ratio of total capital to
risk-weighted assets (including certain off-balance sheet activities, such as
standby letters of credit) of 8%. At least half of the total capital is required
to be "Tier I capital," principally consisting of common shareholders' equity,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less certain goodwill items. The remainder ("Tier II
capital") may consist of a limited amount of subordinated debt, certain hybrid
capital instruments and other debt securities, perpetual preferred stock, and a
limited amount of the general loan loss allowance. In addition to the risk-based
capital guidelines, the Federal Reserve has adopted a minimum leverage capital
ratio, under which a bank holding company must maintain a minimum level of Tier
I capital to average total consolidated assets of at least 3% in the case of a
bank holding company which has the highest regulatory examination rating and is
not contemplating significant growth or expansion. All other bank holding
companies are expected to maintain a leverage capital ratio of at least 1% to 2%
above the stated minimum.
60
<PAGE>
The following table sets forth the regulatory capital position of CCBF and
SCBC on a historical basis, and of CCBF on a pro forma combined basis, as of
September 30, 1994. (For the regulatory capital positions of CCBF's and SCBC's
depository institution subsidiaries as of September 30, 1994, see the
discussions below).
<TABLE>
<CAPTION>
RISK-BASED CAPITAL
LEVERAGE CAPITAL TIER 1 TOTAL
AMOUNT % OF ASSETS AMOUNT % OF ASSETS AMOUNT % OF ASSETS
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
CCBF
Actual......................................... $248,632 7.54% $248,632 9.50% $319,492 12.20%
Minimum capital standard....................... 98,864 3.00 104,722 4.00 209,445 8.00
Excess of actual regulatory capital over
minimum regulatory capital standard......... $149,768 4.54% $143,910 5.50% $110,047 4.20%
SCBC
Actual......................................... $107,845 11.59% $107,845 18.64% $115,099 19.90%
Minimum capital standard....................... 27,920 3.00 23,138 4.00 46,276 8.00
Excess of actual regulatory capital over
minimum regulatory capital standard......... $ 79,925 8.59% $ 84,707 14.64% $ 68,823 11.90%
CCBF PRO FORMA COMBINED
Actual......................................... $356,477 8.44% $356,477 11.15% $436,429 13.65%
Minimum capital standard....................... 126,783 3.00 127,934 4.00 255,868 8.00
Excess of actual regulatory capital over
minimum regulatory capital standard......... $229,694 5.44% $228,543 7.15% $180,561 5.65%
</TABLE>
The 1991 Banking Law requires each federal banking agency, including the
Federal Reserve, to revise its risk-based capital standards within 18 months of
enactment of the statute to ensure that those standards take adequate account of
interest rate risk, concentration of credit risk and the risks of
non-traditional activities, as well as reflect the actual performance and
expected risk of loss on multi-family mortgages. In August 1992, the Federal
Reserve, the FDIC and the Office of the Comptroller of the Currency issued a
joint advance notice of proposed rulemaking, soliciting comments on a proposed
framework for implementing these revisions. Under the proposal, an institution's
assets, liabilities, and off-balance sheet positions would be weighed by risk
factors that approximate the instruments' price sensitivity to a 100 basis point
change in interest rates. Institutions with interest rate risk exposure in
excess of a threshold level would be required to hold additional capital
proportional to that risk. The notice also asked for comments on how the
risk-based capital guidelines of each agency may be revised to take account of
concentration and credit risk and the risk of nontraditional activities. CCBF
AND SCBC ARE STUDYING THE NOTICE AND CANNOT ASSESS AT THIS POINT THE IMPACT, IF
ANY, THE PROPOSAL WOULD HAVE ON THE CAPITAL REQUIREMENTS OF CCBF OR SCBC OR
THEIR RESPECTIVE DEPOSITORY INSTITUTION SUBSIDIARIES.
Under current federal law, transactions between depository institutions and
any affiliate are governed by Section 23A and 23B of the Federal Reserve Act. An
affiliate of a depository institution is any company or entity that controls, is
controlled by or is under common control with the institution. In a holding
company context, the parent holding company of a depository institution and any
companies which are controlled by such parent holding company are affiliates of
the depository institution. Generally, Sections 23A and 23B (i) limit the extent
to which the depository institution or its subsidiaries may engage in "covered
transactions" with any one affiliate to an amount equal to 10% of such
institution's capital stock and surplus, and contain an aggregate limit on all
such transactions with all affiliates to an amount equal to 20% of such capital
stock and surplus and (ii) require that all such transactions be on terms
substantially the same, or at least as favorable, to the savings institution or
the subsidiary as those provided to a nonaffiliate. The term "covered
transaction" includes the making of loans or other extensions of credit to an
affiliate, the purchase of assets from an affiliate, the purchase of, or an
investment in, the securities of an affiliate, the acceptance of securities of
an affiliate as collateral for a loan or extension of credit to any person, or
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate. In addition to the restrictions imposed by Sections 23A and 23B, no
depository institution may (i) loan or otherwise extend credit to an affiliate,
except for any affiliate which engages only in activities that are permissible
for bank holding companies, or (ii) purchase or invest in any stocks, bonds,
debentures, notes or similar obligations of any affiliate, except for affiliates
that are subsidiaries of the institution.
61
<PAGE>
Additionally, the FDIC has adopted regulations that affect contracts
between a bank holding company or its non-depository subsidiaries or related
interests under common control, and the holding company's insured depository
institution affiliates. Certain types of contracts between an insured depository
institution and any company which directly or indirectly controls it (or which
is under common control with it) could be considered unsafe and unsound,
including those relating to: (i) making or purchasing loans, (ii) servicing
loans, (iii) performing trust functions, (iv) providing bookkeeping or data
processing services, (v) furnishing management services, (vi) selling or
transferring any department or subsidiary, (vii) payments for intangible assets,
(viii) transferring any asset for less than fair market value as evidenced by an
independent written appraisal, or (ix) prepaying any liability more than 30 days
prior to its due date. The FDIC also has proposed regulations which would
prohibit any insured depository institution from entering into any contract with
any person to provide goods, products or services if such contract is determined
to adversely affect the safety or soundness of the insured institution.
Section 4(i) of the BHCA authorizes the Federal Reserve to approve the
application of a bank holding company to acquire any savings institution under
Section 4(c)(8) of the BHCA. In approving such an application, the Federal
Reserve is precluded from imposing any restrictions on transactions between the
bank holding company and the acquired savings institution, except as required by
Section 23A or 23B of the Federal Reserve Act or any other applicable law.
Further, the FDIA, as amended by the 1991 Banking Law, authorizes the merger or
consolidation of any BIF member with any SAIF member, the assumption of any
liability by any BIF member to pay any deposits of any SAIF member or VICE
VERSA, or the transfer of any assets of any BIF member to any SAIF member in
consideration for the assumption of liabilities of such BIF member or VICE
VERSA, provided that certain conditions are met and, in the case of any
acquiring, assuming or resulting depository institution which is a BIF member,
such institution continues to make payment of SAIF assessments on the portion of
liabilities attributable to any acquired, assumed or merged SAIF-insured
institution.
As a result of their ownership of North Carolina-chartered commercial
banks, CCBF and SCBC each is registered under the bank holding company laws of
North Carolina. Accordingly, CCBF and SCBC and their subsidiaries are subject to
regulation by the Commissioner. The Commissioner has asserted authority to
examine North Carolina bank holding companies and their affiliates and is in the
process of formulating regulations in this area. Further, as a result of their
ownership of North Carolina-chartered savings banks, CCBF and SCBC each also is
registered under the savings bank holding company laws of North Carolina. Thus,
CCBF and SCBC also are subject to regulation and supervision by the
Administrator.
CCB AND SCB. CCB and SCB each is organized as a North Carolina-chartered
commercial bank and is subject to various statutory requirements and to rules
and regulations promulgated and enforced by the Commissioner and the FDIC. Their
deposits are insured by the BIF. SCB also has a portion of its deposits insured
by the SAIF as a result of its acquisition of First Federal in September 1994. A
portion of CCB's deposits are SAIF-insured as a result of the assumption of
certain deposits of a thrift institution during 1993. Further, upon the
anticipated merger of Lenoir into CCB, the portion of CCB's deposits
attributable to Lenoir also will be SAIF-insured.
North Carolina commercial banks, such as CCB and SCB, are subject to legal
limitations on the amounts of dividends they are permitted to pay. Prior
approval of the Commissioner is required if the total of all dividends declared
by CCB or SCB in any calendar year exceeds its net profits (as defined by
statute) for that year combined with its retained net profits (as defined by
statute) for the preceding two calendar years, less any required transfers to
surplus. Also, under the 1991 Banking Law an insured depository institution,
such as CCB or SCB, is prohibited from making capital distributions, including
the payment of dividends, if, after making such distribution, the institution
would become "undercapitalized" (as such term is defined in the statute). Based
on their current financial condition, CCBF and SCBC do not expect that this
provision will have any impact on CCB's or SCB's ability to pay dividends.
As a North Carolina chartered, FDIC-insured commercial bank which is not a
member of the Federal Reserve System, CCB and SCB each is subject to capital
requirements imposed by the FDIC. Under the FDIC's regulations, state nonmember
banks that (a) receive the highest rating during the examination process and (b)
are not anticipating or experiencing any significant growth, are required to
maintain a minimum leverage ratio of 3% of Tier I capital to average total
consolidated assets; all other banks are required to maintain a minimum ratio of
1% or 2% above the stated minimum, with a minimum leverage ratio of not less
than 4%.
62
<PAGE>
The following table sets forth CCB's and SCB's regulatory capital positions
at September 30, 1994:
<TABLE>
<CAPTION>
RISK-BASED CAPITAL
LEVERAGE CAPITAL TIER 1 TOTAL
AMOUNT % OF ASSETS AMOUNT % OF ASSETS AMOUNT % OF ASSETS
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
CCB
Actual......................................... $208,826 6.98% $208,826 8.60% $256,362 10.56%
Minimum capital standard....................... 89,741 3.00 97,097 4.00 194,193 8.00
Excess of actual regulatory capital over
minimum regulatory capital standard......... $119,085 3.98% $111,729 4.60% $ 62,169 2.56%
SCB
Actual......................................... $ 48,302 11.92% $ 48,302 15.20% $ 52,283 16.46%
Minimum capital standard....................... 12,157 3.00 12,707 4.00 25,415 8.00
Excess of actual regulatory capital over
minimum regulatory capital standard......... $ 36,145 8.92% $ 35,595 11.20% $ 26,868 8.46%
</TABLE>
CCB and SCB each also is subject to insurance assessments imposed by the
FDIC. Under current law, as amended by the 1991 Banking Law, the insurance
assessment to be paid by BIF-insured institutions shall be as specified in a
schedule required to be issued by the FDIC that would specify, at semiannual
intervals, target reserve ratios designed to increase the reserve ratio to 1.25%
of estimated insured deposits (or such higher ratio as the FDIC may determine in
accordance with the statute) in 15 years. Further, the FDIC is authorized, under
the 1991 Banking Law, to impose one or more special assessments in any amount
deemed necessary to enable repayment of amounts borrowed by the FDIC from the
United States Treasury Department. Effective January 1, 1993, the FDIC replaced
the uniform assessment rate with a transitional risk-based assessment schedule
which became fully effective in January 1994, having assessments ranging from
0.23% to 0.31% of an institution's average assessment base. The actual
assessment to be paid by each BIF member is based on an institution's assessment
risk classification, which is determined based on whether the institution is
considered "well capitalized," "adequately capitalized" or "under capitalized,"
as such terms have been defined in applicable federal regulations adopted to
implement the prompt corrective action provisions of the 1991 Banking Law, and
whether such institution is considered by its supervisory agency to be
financially sound or to have supervisory concerns. (See "- Impact of the 1991
Banking Law".) Based on the current financial condition and capital levels of
CCB and SCB, CCBF and SCBC do not expect that the transitional risk-based
assessment schedule will have a material impact on CCB's or SCB's future
earnings.
Further, under current federal law, depository institutions are subject to
the restrictions contained in Section 22(h) of the Federal Reserve Act with
respect to loans to directors, executive officers and principal stockholders.
Under Section 22(h), loans to directors, executive officers and stockholders who
own more than 10% of a depository institution (18% in the case of institutions
located in an area with less than 30,000 in population), and certain affiliated
entities of any of the foregoing, may not exceed, together with all other
outstanding loans to such person and affiliated entities, the institution's
loan-to-one-borrower limit as established by federal law (as discussed below).
Section 22(h) also prohibits loans above amounts prescribed by the appropriate
federal banking agency to directors, executive officers and shareholders who own
more than 10% of an institution, and their respective affiliates, unless such
loans are approved in advance by a majority of the board of directors of the
institution. Any "interested" director may not participate in the voting. The
Federal Reserve has prescribed the loan amount (which includes all other
outstanding loans to such person), as to which such prior board of director
approval is required, as being the greater of $25,000 or 5% of capital and
surplus (up to $500,000). Further, pursuant to Section 22(h), the Federal
Reserve requires that loans to directors, executive officers, and principal
shareholders be made on terms substantially the same as offered in comparable
transactions to other persons.
CCB and SCB each is subject to FDIC-imposed loan-to-one-borrower limits
which are substantially the same as those applicable to national banks. Under
these limits, no loans and extensions of credit to any borrower outstanding at
one time and not fully secured by readily marketable collateral shall exceed 15%
of the unimpaired capital and unimpaired surplus of the bank. Loans and
extensions of credit fully secured by readily marketable collateral may comprise
an additional 10% of unimpaired capital and unimpaired surplus. These limits
also authorize banks to make loans to one borrower, for any purpose, in an
amount not to exceed $500,000.
Regulations promulgated by the FDIC pursuant to the 1991 Banking Law place
limitations on the ability of insured depository institutions to accept, renew
or roll-over deposits by offering rates of interest which are significantly
higher than the prevailing rates of interest on deposits offered by other
insured depository institutions having the same type of charter in
63
<PAGE>
such depository institution's normal market area. Under these regulations, "well
capitalized" depository institutions may accept, renew or roll-over such
deposits without restriction, "adequately capitalized" depository institutions
may accept, renew or roll-over such deposits with a waiver from the FDIC
(subject to certain restrictions on payments of rates) and "undercapitalized"
depository institutions may not accept, renew or roll-over such deposits. The
regulations contemplate that the definitions of "well capitalized," "adequately
capitalized" and "undercapitalized" will be the same as the definition adopted
by the agencies to implement the corrective action provisions of the 1991
Banking Law. (See " -- Impact of the 1991 Banking Law".)
CCB and SCB each is subject to examination by the FDIC and the
Commissioner. First Security Credit Corporation, SCB's consumer finance company
subsidiary, also is subject to such examination. In addition, CCB and SCB each
is subject to various other state and federal laws and regulations, including
state usury laws, laws relating to fiduciaries, consumer credit and equal
credit, fair credit reporting laws and laws relating to branch banking. CCB and
SCB, as insured North Carolina commercial banks, each are prohibited from
engaging as a principal in activities that are not permitted for national banks,
unless (i) the FDIC determines that the activity would pose no significant risk
to the appropriate deposit insurance fund and (ii) the bank is, and continues to
be, in compliance with all applicable capital standards.
Under Chapter 53 of the North Carolina General Statutes, if the capital
stock of a North Carolina commercial bank is impaired by losses or otherwise,
the Commissioner is authorized to require payment of the deficiency by
assessment upon the bank's shareholders, pro rata, and to the extent necessary,
if any such assessment is not paid by any shareholder, upon 30 days notice, to
sell as much as is necessary of the stock of such shareholder to make good the
deficiency. CCBF is the sole shareholder of CCB, and SCBC is the sole
shareholder of SCB.
SAVINGS BANK SUBSIDIARIES. CCBF's and SCBC's savings banks subsidiaries
(the "Savings Banks") are North Carolina-chartered savings banks and members of
the Federal Home Loan Bank system (the "FHLB System"). Their deposits are
insured by the FDIC through the SAIF, and they each are subject to examination
and regulation by the FDIC and the Administrator and to regulations governing
such matters as capital standards, mergers, establishment of branch offices,
subsidiary investments and activities, and general investment authority.
Effective October 1, 1991, the North Carolina General Assembly enacted
Chapter 54C of the North Carolina General Statutes ("Chapter 54C") which created
a state savings bank ("SSB") charter. An SSB is a North Carolina chartered
financial institution regulated by the FDIC and the Administrator (but not by
the OTS) with its deposit accounts insured by either the SAIF or the BIF of the
FDIC. Each of the Savings Banks converted to an SSB charter in order to reduce
the regulatory cost and burden imposed by the overlapping regulatory
jurisdiction of three regulatory agencies. The conversions were effected in
order to reduce substantially the amounts that the Savings Banks would otherwise
pay to OTS in assessments, application and securities filing fees.
Prior to their conversions to savings bank charters, the Savings Banks were
regulated by the OTS in addition to the FDIC and the Administrator.
Consequently, they were subject to various operating requirements and
restrictions imposed by the OTS. Additionally, they were regulated by the
Administrator under North Carolina law as savings and loan associations rather
than as savings banks. The following discussion sets forth the regulatory
requirements and restrictions to which the Savings Banks became subject upon
their conversions to savings banks.
As SAIF-insured institutions, the Savings Banks are subject to insurance
assessments imposed by the FDIC. Under current law, as amended by the 1991
Banking Law, the insurance assessment paid by SAIF-insured institutions must be
the greater of 0.15% of the institution's average assessment base (as defined)
or such rate as the FDIC, in its sole discretion, determines to be appropriate
to be able to increase (or maintain) the reserve ratio to 1.25% of estimated
insured deposits (or such higher ratio as the FDIC may determine in accordance
with the statute) within a reasonable period of time. Through December 31, 1993,
the assessment rate could not be less than 0.23% of the institution's average
assessment base, and from January 1, 1994 through December 31, 1997, the
assessment rate must not be less than 0.18% of the institution's average
assessment base. In each case the assessment rate may be higher if the FDIC, in
its sole discretion, determines such higher rate to be appropriate. Effective
January 1, 1993, the annual assessment rate is determined pursuant to the
transitional risk-based assessment schedule issued by the FDIC pursuant to the
1991 Banking Law, which imposes assessments ranging from 0.23% to 0.31% of an
institution's average assessment base. The actual assessment to be paid by each
SAIF member will be based on the institution's assessment risk classification,
which will be determined based on whether the institution is considered "well
capitalized", "adequately capitalized" or "undercapitalized" (as such terms have
been defined in federal regulations adopted to implement the prompt corrective
action provisions of the 1991 Banking Law), and whether such institution is
considered by its supervisory agency to be financially sound or to have
supervisory concerns. (See " -- Impact of the 1991 Banking Law".) The Savings
Banks do not anticipate any material increase in their insurance assessments.
64
<PAGE>
Upon their conversions to savings banks, the Savings Banks ceased to be
subject to the capital requirements of the OTS and became subject to the capital
requirements of the FDIC and the Administrator. The FDIC requires each of the
Savings Banks to have a minimum leverage ratio of Tier I capital to average
total assets of at least 3%; provided, however, that all institutions, other
than those (i) receiving the highest rating during the examination process and
(ii) not anticipating or experiencing any significant growth, are required to
maintain a ratio of 1% or 2% above the stated minimum, with a minimum leverage
ratio of not less than 4%. The FDIC also requires each of the Savings Banks to
have a ratio of total capital to risk-weighted assets of at least 8%. The
Administrator requires a net worth equal to at least 5% of total assets. At
September 30, 1994, each of the Savings Banks complied with the net worth
requirements of the FDIC and the Administrator.
The following table sets forth the consolidated FDIC regulatory capital
positions of Lenoir, Graham, OMNIBANK, Citizens and Home Savings as of September
30, 1994:
<TABLE>
<CAPTION>
RISK-BASED CAPITAL
LEVERAGE CAPITAL TIER ONE TOTAL
AMOUNT % OF ASSETS AMOUNT % OF ASSETS AMOUNT % OF ASSETS
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
LENOIR
Actual............................................. $22,834 9.83% $22,834 21.07% $24,908 22.98%
Minimum capital standard........................... 6,971 3.00 4,335 4.00 8,671 8.00
Excess of actual regulatory capital over minimum
regulatory capital standard..................... $15,863 6.83% $18,499 17.07% $16,237 14.98%
GRAHAM
Actual............................................. $22,314 17.87% $22,314 36.26% $23,364 37.97%
Minimum capital standard........................... 3,747 3.00 2,462 4.00 4,923 8.00
Excess of actual regulatory capital over minimum
regulatory capital standard..................... $18,567 14.87% $19,852 32.26% $18,441 29.97%
OMNIBANK
Actual............................................. $27,047 11.82% $27,047 20.06% $28,735 21.31%
Minimum capital standard........................... 6,867 3.00 5,394 4.00 10,788 8.00
Excess of actual regulatory capital over minimum
regulatory capital standard..................... $20,180 8.82% $21,653 16.06% $17,947 13.31%
CITIZENS
Actual............................................. $13,736 6.62% $13,736 12.00% $15,171 13.25%
Minimum capital standard........................... 6,223 3.00 4,579 4.00 9,159 8.00
Excess of actual regulatory capital over minimum
regulatory capital standard..................... $ 7,513 3.62% $ 9,157 8.00% $ 6,012 5.25%
HOME SAVINGS
Actual............................................. $ 7,430 7.75% $ 7,430 14.46% $ 8,074 15.72%
Minimum capital standard........................... 2,876 3.00 2,055 4.00 4,109 8.00
Excess of actual regulatory capital over minimum
regulatory capital standard..................... $ 4,554 4.75% $ 5,375 10.46% $ 3,965 7.72%
</TABLE>
Federal Reserve regulations adopted pursuant to the Depository Institutions
Deregulation and Monetary Control Act of 1980 require savings associations and
savings banks to maintain reserves against their transaction accounts (primarily
negotiable order of withdrawal accounts) and certain nonpersonal time deposits.
The reserve requirements are subject to adjustment by the Federal Reserve. As of
September 30, 1994, each of the Savings Banks was in compliance with the
applicable reserve requirements of the Federal Reserve.
The Savings Banks are subject to the same FDIC regulations as CCB and SCB
regarding the ability of insured depository institutions to accept, renew, or
roll-over deposits offering rates of interest significantly higher than
generally prevailing market rates. Management of CCBF and SCBC do not believe
these regulations will have a materially adverse effect on the current
operations of their respective savings bank subsidiaries.
65
<PAGE>
The Savings Banks are subject to North Carolina law which requires that at
least 60% of their respective assets be investments that qualify under certain
Internal Revenue Service guidelines. As of September 30, 1994, each Savings Bank
was in compliance with the North Carolina law.
FDIC law and regulations generally provide that state savings banks may not
engage as principal in any type of activity, or in any activity in an amount,
not permitted for national banks, or directly acquire or retain any equity
investment of a type or in an amount not permitted for national banks. The FDIC
has authority to grant exceptions to these prohibitions (other than with respect
to non-service corporation equity investments) if it determines no significant
risk to the SAIF is posed by the amount of the investment or the activity to be
engaged in and if the savings bank is and continues to be in compliance with
fully phased-in capital standards. National banks are generally not permitted to
hold equity investments other than shares of service corporations and certain
federal agency securities. Moreover, the activities in which service
corporations are permitted to engage are limited to those of service
corporations for national banks.
FDIC regulations generally prohibit any savings institution (state or
federal) from directly or indirectly acquiring or retaining any corporate debt
security that is not of investment grade (generally referred to as "junk
bonds"). Any savings institution that held corporate debt securities not of
investment grade prior to August 9, 1989 was required to divest those securities
as quickly as could be prudently done, but in no event later than July 1, 1994,
and to file an application setting forth its plans for divestiture with the
FDIC. At September 30, 1994, none of the Savings Banks owned any corporate debt
securities not of investment grade for which such divestiture was required.
Additionally, FDIC regulations impose restrictions on the lending limits of
state-chartered savings banks, including percentage limitations on the total
investment in various types of loans, including limitations which (i) limit
total non-residential real estate loans to 400% of capital, (ii) limit total
commercial, corporate, business or agricultural loans to 10% of assets, and
(iii) limit total consumer loans, commercial paper and corporate debt securities
to 35% of assets. At September 30, 1994, each Savings Bank was in compliance
with such requirements.
FIRREA also generally requires any savings institution that proposes to
establish or acquire a new subsidiary, or to conduct new activities through an
existing subsidiary, to notify the FDIC at least 30 days prior to the
establishment or acquisition of any subsidiary, or at least 30 days prior to
conducting any such new activity. Any such activities must be conducted in
accordance with the regulations and orders of the FDIC and the Administrator.
The Savings Banks derive their authority from, and are regulated by, the
Administrator. The Administrator has the right to promulgate rules and
regulations necessary for the supervision and regulation of savings banks under
his jurisdiction and for the protection of the public investing in such
institutions. The regulatory authority of the Administrator includes, but is not
limited to, (i) the establishment of reserve requirements, (ii) the regulation
of the payment of dividends, (iii) the regulation of incorporators,
shareholders, directors, officers and employees, (iv) the establishment of
permitted types of withdrawable accounts and types of contracts for savings
programs, loans and investments, and (v) regulation of the conduct and
management of savings banks, chartering and branching of institutions, mergers,
conversions and conflicts of interest. North Carolina law requires that each
savings bank maintain federal deposit insurance as a condition of doing
business.
The Administrator conducts regular annual examinations of savings banks as
well as other state-chartered savings institutions in North Carolina. The
purpose of such examinations is to assure that institutions are being operated
in compliance with applicable North Carolina law and regulations and in a safe
and sound manner. These examinations are usually conducted on a joint basis with
the FDIC. In addition, the Administrator is required to conduct an examination
of any institution when he has good reason to believe the standing and
responsibility of the institution is of doubtful character or when he otherwise
deems it prudent. The Administrator is empowered to order the revocation of the
license of an institution if he finds that it has violated or is in violation of
any North Carolina law or regulation and that revocation is necessary in order
to preserve the assets of the institution and protect the interest of its
depositors. The Administrator has the power to issue cease and desist orders if
any person or institution is engaging in, or has engaged in, any unsafe or
unsound practice or unfair and discriminatory practice in the conduct of its
business or in violation of any other law, rule or regulation.
A North Carolina savings bank must maintain net worth of 5% of total assets
and liquidity of 10% of total assets, as discussed above. Additionally, it is
required to maintain general valuation allowances and specific loss reserves in
the same amounts as required by the federal regulators.
A stock savings bank may not declare or pay a cash dividend on, or
repurchase any of, its capital stock if the effect of such transaction would be
to reduce the net worth of the institution to an amount which is less than the
minimum amount required by applicable federal and state regulations.
Accordingly, each of the Savings Banks is prohibited from making
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capital distributions, including the payment of dividends, if, after making such
distribution, it would become "undercapitalized" (as such term is defined in the
1991 Banking Law).
In addition, under North Carolina law, each of the Savings Banks is also
subject to the restriction that it is not permitted to declare or pay a cash
dividend on or repurchase any of its capital stock if the effect thereof would
be to cause its net worth to be reduced below the amount for the liquidation
account established in connection with its conversion from mutual to stock form.
Subject to limitations established by the Administrator, state savings
banks may make any loan or investment or engage in any activity which is
permitted to federally chartered savings institutions. In addition to such
lending authority, savings banks are authorized to invest funds, in excess of
loan demand, in certain statutorily permitted investments, including but not
limited to (i) obligations of the United States, or those guaranteed by it; (ii)
obligations of the State of North Carolina; (iii) bank demand or time deposits;
(iv) stock or obligations of the federal deposit insurance fund or a Federal
Home Loan Bank; (v) savings accounts of any savings and loan association as
approved by the board of directors; and (vi) stock or obligations of any agency
of the State of North Carolina or of the United States or of any corporation
doing business in North Carolina whose principal business is to make education
loans.
North Carolina law provides a procedure by which savings institutions may
consolidate or merge, subject to the approval of the Administrator. The approval
is conditioned upon findings by the Administrator that, among other things, such
merger or consolidation will promote the best interests of the members or
shareholders of the merging institutions. North Carolina law also provides for
simultaneous mergers and conversions and for supervisory mergers conducted by
the Administrator.
IMPACT OF THE 1991 BANKING LAW. Among other things, the 1991 Banking Law
provides increased funding for the BIF and the SAIF, and provides for expanded
regulation of depository institutions and their affiliates, including parent
holding companies.
The 1991 Banking Law provides authority for special assessments against
insured deposits and for the development of a general risk-based deposit
insurance assessment system which the FDIC implemented on a transitional basis
effective January 1, 1993. The BIF and SAIF funding provisions could result in
different assessment rates on deposits of BIF and SAIF institutions. No
assurance can be given at this time as to what levels of assessments against
insured deposits will be applied in the future.
The 1991 Banking Law provides the federal banking agencies with broad
powers to take corrective action to resolve the problems of insured depository
institutions. The extent of these powers will depend upon whether the
institutions in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized,"or "critically
undercapitalized." In September 1992, each of the federal banking agencies
issued final uniform regulations to be effective December 19, 1992, which define
such capital levels. Under the final regulations, an institution is considered
"well capitalized"if it has (i) a total risk-based capital ratio of 10% or
greater, (ii) a Tier I risk-based capital ratio of 6% or greater, (iii) a
leverage ratio of 5% or greater and (iv) is not subject to any order or written
directive to meet and maintain a specific capital level for any capital measure.
An "adequately capitalized" institution is defined as one that has (i) a total
risk-based capital ratio of 8% or greater, (ii) a Tier I risk-based capital
ratio of 4% or greater and (iii) a leverage ratio of 4% or greater (or 3% or
greater in the case of an institution with the highest examination rating). An
institution is considered (A) "undercapitalized" if it has (i) a total
risk-based capital ratio of less than 8%, (ii) a Tier I risk-based capital ratio
of less than 4% or (iii) a leverage ratio of less than 4% (or 3% in the case of
an institution with the highest examination rating; (B) "significantly
undercapitalized" if the institution has (i) a total risk-based capital ratio of
less than 6%, or (ii) a Tier I risk-based capital ratio of less than 3% or (iii)
a leverage ratio of less than 3% and (C) "critically undercapitalized" if the
institution has a ratio of tangible equity to total assets equal to or less than
2%.
The 1991 Banking Law also amended the prior law with respect to the
acceptance of brokered deposits by insured depository institutions to permit
only a "well capitalized" (as defined in the statute as significantly exceeding
each relevant minimum capital level) depository institution to accept brokered
deposits without prior regulatory approval. In June 1992, the FDIC issued final
regulations implementing these provisions regulating brokered deposits. Under
the regulations, "well-capitalized" banks may accept brokered deposits without
restrictions, "adequately capitalized" banks may accept brokered deposits with a
waiver from the FDIC (subject to certain restrictions on payment of rates),
while "under-capitalized" banks may not accept brokered deposits. The
regulations contemplate that the definitions of "well capitalized," "adequately
capitalized" and "under capitalized" are the same as the definitions adopted by
the agencies to implement the prompt corrective action provisions of the 1991
Banking Law (as described in the previous paragraph). CCBF and SCBC does not
believe that
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these regulations have had or will have a material adverse effect on the current
operations of their respective depository institution subsidiaries.
To facilitate the early identification of problems, the 1991 Banking Law
required the federal banking agencies to review and, under certain
circumstances, prescribe more stringent accounting and reporting requirements
than those required by generally accepted accounting principles. The FDIC issued
a final rule, effective July 2, 1993, implementing those provisions. The rule,
among other things, requires that management report on the institutions's
responsibility for preparing financial statements and establishing and
maintaining an internal control structure and procedures for financial reporting
and compliance with designated laws and regulations concerning safety and
soundness, and that independent auditors attest to and report separately on
assertions in management's reports concerning compliance with such laws and
regulations, using FDIC-approved audit procedures.
The 1991 Banking Law further requires the federal banking agencies to
develop regulations requiring disclosure of contingent assets and liabilities
and, to the extent feasible and practicable, supplemental disclosure of the
estimated fair market value of assets and liabilities. The 1991 Banking Law also
requires annual examinations of all insured depository institutions by the
appropriate federal banking agency, with some exceptions for small,
well-capitalized institutions and state chartered institutions examined by state
regulators. Moreover, the federal banking agencies are required to set
operational and managerial, asset quality, earnings and stock valuation
standards for insured depository institutions and depository institution holding
companies, as well as compensation standards for insured depository institutions
that prohibit excessive compensation, fees or benefits to officers, directors,
employees, and principal shareholders.
The foregoing necessarily is a general description of certain provisions of
the 1991 Banking Law and does not purport to be complete. Several of the
provisions of the 1991 Banking Law will be implemented through regulations
issued by the various federal banking agencies, only a portion of which have
been adopted in final form. The effect of the 1991 Banking Law on CCBF, SCBC and
their respective subsidiaries will not be fully ascertainable until after all of
the provisions are effective and after all of the regulations are adopted.
CAPITAL STOCK OF CCBF AND SCBC
The SCBC shareholders' current rights as shareholders are governed by
SCBC's Restated Articles of Incorporation (the "SCBC Articles") and Bylaws and
by the NCBCA. Upon consummation of the Merger, SCBC's shareholders (other than
those who exercise Dissenters' Rights) will become shareholders of CCBF and
their rights will be the same as all other CCBF shareholders and will be
governed by CCBF's Restated Articles of Incorporation (the "CCBF Articles") and
Bylaws, a Rights Agreement dated as of February 26, 1990 pertaining to the CCBF
Rights (the "CCBF Rights Agreement"), and by the NCBCA. Certain differences
exist between the current rights of SCBC's shareholders as holders of SCBC Stock
and their rights after the Effective Time as holders of CCBF Stock.
THE FOLLOWING IS ONLY A GENERAL SUMMARY OF CERTAIN MATERIAL DIFFERENCES IN
THE RIGHTS OF SCBC'S AND CCBF'S SHAREHOLDERS AND IS NOT INTENDED TO BE COMPLETE.
REFERENCE IS MADE TO THE ARTICLES, BYLAWS AND OTHER GOVERNING INSTRUMENTS OF
SCBC AND CCBF AND TO THE NCBCA FOR A MORE COMPLETE DESCRIPTION OF SUCH
DIFFERENCES. SCBC'S SHAREHOLDERS ALSO SHOULD CONSULT WITH THEIR OWN LEGAL
COUNSEL WITH RESPECT TO SPECIFIC DIFFERENCES AND CHANGES IN THEIR RIGHTS AS
SHAREHOLDERS WHICH WILL RESULT FROM THE MERGER.
AUTHORIZED CAPITAL STOCK
SCBC's authorized capital stock consists of 25,000,000 shares of no par
common stock, of which 11,775,867 shares were issued and outstanding at February
1, 1995, and (ii) 5,000,000 shares of no par serial preferred stock, of which
there were no shares issued and outstanding at February 1, 1995.
CCBF's authorized capital stock consists of 30,000,000 shares of $5.00 par
value common stock, of which 9,108,895 shares were issued and outstanding at
February 1, 1995, and (ii) 5,000,000 shares of serial preferred stock, of which
there were no shares issued and outstanding at February 1, 1995.
By amendment to their respective Articles which may be adopted without
shareholder approval, SCBC's and CCBF's Boards of Directors each may divide
shares of their respective authorized serial preferred stock into, and issue the
same in, one or more classes and in one or more series within each class, and
their Boards of Directors each are authorized to determine and fix the
designations, relative rights, preferences and limitations of shares in each
such class and series of preferred
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stock so established. Subject to applicable law and Nasdaq bylaws, shares of
each such class or series may be issued from time to time without shareholder
approval at such times, for such purposes and for such consideration as each
respective Board of Directors may deem advisable.
For use in connection with the "Rights Plan" (as described below), CCBF's
Board of Directors has established a series of preferred stock designated as its
Series A Junior Participating Preferred Stock ("Series A Preferred") consisting
of 200,000 shares and having certain special rights for purposes of dividends
and other distributions, voting, dissolution and liquidation, and in connection
with certain mergers of CCBF. No shares of Series A Preferred have been issued.
CCBF RIGHTS PLAN
The CCBF Rights Agreement provides for a plan (the "Rights Plan") pursuant
to which one CCBF Right was distributed during 1990 to CCBF's shareholders for
each of their shares of CCBF Stock. Also under the Rights Plan, after the date
of the CCBF Rights Agreement and before the earlier of the "Distribution Date"
(as defined below) or the date of redemption or expiration of the CCBF Rights,
each new share of CCBF Stock issued (including the shares into which SCBC Stock
will be converted in connection with the Merger) also has attached to it one
CCBF Right.
The CCBF Rights currently are not exercisable, but may become so in the
future on a date (the "Distribution Date") which is 20 business days after (i) a
public announcement that any person or group has become an "Acquiring Person" by
acquiring beneficial ownership of 15% or more of the outstanding CCBF Stock, or
(ii) the date of commencement by any person of, or the announcement by any
person of his intention to commence, a tender or exchange offer which would
result in his becoming an Acquiring Person. However, after the time any person
becomes an Acquiring Person, all CCBF Rights held by or transferred to such
person (or any associate or affiliate of such person) shall be void and of no
effect.
Until the Distribution Date, each CCBF Right will be evidenced by the
certificate evidencing the CCBF Stock to which it relates and may be transferred
only with such CCBF Stock, and the surrender for transfer of any CCBF Stock
certificate also will constitute the transfer of the CCBF Rights related
thereto. After the Distribution Date, separate certificates evidencing each CCBF
Right will be distributed to the record holders of the CCBF Stock to which such
Rights are attached, and each such CCBF Right may then be exercised to purchase
.01 of a share of Series A Preferred for a price of $100 (the "Purchase Price")
(all as adjusted from time to time as described in the CCBF Rights Agreement).
In the alternative (and subject to certain exceptions), after any person becomes
an Acquiring Person (i) each CCBF Right may be exercised to purchase the number
of shares of CCBF Stock equal to the result obtained by multiplying the then
current Purchase Price by the number of Series A Preferred interests covered by
the CCBF Right, and dividing that product by 50% of the market price of a share
of CCBF Stock, or, (ii) unless the Acquiring Person has become the beneficial
owner of more than 50% of the outstanding CCBF Stock, CCBF's Board of Directors
at its option may exchange one share of CCBF Stock, or a number of shares of
Series A Preferred having voting rights equivalent to one share of CCBF Stock,
for all or part of the outstanding CCBF Rights.
If CCBF is acquired in a merger or other business combination or if 50% of
its consolidated assets or earnings power is sold, each CCBF Right will entitle
the holder, other than the Acquiring Person, to purchase securities of the
surviving company having a market value equal to twice the exercise price of the
CCBF Right.
CCBF Rights will expire on February 26, 2000, and may be redeemed by CCBF
at any time prior to the acquisition by a person or group of 15% or more of the
outstanding CCBF Stock, at a price of $.01 per CCBF Right.
SPECIAL MEETINGS OF SHAREHOLDERS
Under SCBC's Bylaws, a special meeting of SCBC's shareholders may be called
only by the Chairman, Chief Executive Officer or President or by a majority of
the Board of Directors, and shareholders generally have no right to call a
special meeting or to require that a special meeting be called.
CCBF's Bylaws require that a special meeting of shareholders be held upon
the written request of the holders of a least 10% of all shares entitled to be
voted at such a meeting.
DIRECTORS
NUMBER OF DIRECTORS. The SCBC Articles provide that the number of SCBC's
directors be not less than nine nor more than 30. SCBC's Bylaws authorize SCBC's
Board of Directors to set and change the number of directors from time to time
within the minimum and maximum numbers. SCBC's directors are divided into three
classes and are elected to staggered three-year terms so that the terms of
approximately one-third of SCBC's directors expire each year.
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Under CCBF's Bylaws, its Board of Directors consists of not less than five
nor more than 30 directors, with the actual number of directors to be determined
from time to time by a majority of the votes which all shareholders are at the
time entitled to cast. However, CCBF's Bylaws are proposed to be amended to
authorize the Board of Directors to set and change the number of CCBF's
directors from time to time within the above minimum and maximum numbers. (See
"PROPOSAL TO AMEND CCBF'S BYLAWS".) CCBF's directors are elected to one-year
terms, and the terms of all CCBF's directors expire each year.
VACANCIES RESULTING FROM INCREASE IN NUMBER. SCBC's Bylaws provide that
vacancies existing on the Board of Directors resulting from an increase in the
number of directors may be filled by SCBC's Board of Directors.
CCBF's Bylaws provide that any such vacancy may be filled only by election
at a meeting of CCBF's shareholders. CCBF's Bylaws are proposed to be amended to
authorize the Board of Directors to appoint new directors to fill vacancies
resulting from an increase (within the above minimum and maximum numbers) by the
Board of Directors in the number of CCBF's directors. (See "PROPOSAL TO AMEND
CCBF'S BYLAWS".)
RELEASE FROM LIABILITY. The SCBC Articles generally provide that, with
certain exceptions, SCBC's directors shall not be personally liable for monetary
damages in an amount greater than $5,000 in any action by or in the right of the
corporation or otherwise for monetary damages for breach of their duties as
directors.
The CCBF Articles contain a similar provision that generally eliminates any
such personal liability on the part of CCBF's directors without regard to
amount.
NOMINATIONS. SCBC's Bylaws provide that a shareholder may nominate a person
for election as a director at a shareholders' meeting only if the shareholder
gives written notice of such nomination to SCBC's Secretary not less than 50 nor
more than 75 days prior to the meeting (or, in the case of a special meeting
held to elect directors, no later than the close of business on the tenth day
following the earlier of the date on which notice of the special meeting is
mailed or the date of public disclosure of such meeting). SCBC's Bylaws specify
information that must be contained in the shareholder's written notice and
provide that no person shall be eligible for election as a director (and that
such person's nomination may be disregarded) unless nominated in accordance with
the specified procedures.
CCBF's Bylaws do not contain similar provision restricting or conditioning
shareholder nominations.
CONSTITUENCIES
The SCBC Articles require that SCBC's Board of Directors, when evaluating
any offer of a person owning 10% or more of the outstanding shares of SCBC Stock
to make a tender or exchange offer for any equity security of SCBC, to merge or
consolidate SCBC with another corporation, or to purchase or otherwise acquire
all or substantially all the assets of SCBC, shall, in connection with the
exercise of its judgment in determining what is in the best interests of SCBC
and its shareholders, give due consideration to (i) the social and economic
effects of the acceptance of such offer on SCBC's depositors, borrowers, other
customers, and employees, and on the communities in which SCBC or any of its
subsidiaries operates or is located, and (ii) the ability of SCBC and its
subsidiaries to fulfill the objectives of a bank holding company and commercial
banking entities, respectively, under applicable federal and state statutes and
regulations.
No comparable provision exists in the CCBF Articles or in CCBF's Bylaws.
BUSINESS COMBINATIONS AND CHANGES IN CONTROL
CHARTER PROVISIONS. In general, the NCBCA requires that any merger, share
exchange, voluntary liquidation or transfer of substantially all the assets
(other than in the ordinary course of business) of a business corporation be
approved by the corporation's shareholders by a majority of the votes entitled
to be cast on the proposed transaction. However, the CCBF Articles contain two
"supermajority" provisions that, in the case of certain business combination
transactions, require a higher vote of CCBF's shareholders than otherwise would
be required by the NCBCA. The first such provision ("CCBF's 75% Vote
Requirement") provides that, except as described below, the affirmative vote of
the holders of not less than 75% of the outstanding shares of all classes of
CCBF's capital stock, voting together as a single class (unless class voting
rights are specifically permitted for any class), will be required to approve
any agreement, plan or arrangement providing for the merger or consolidation of
CCBF with any other corporation, or the sale, lease or exchange of all or
substantially all of CCBF's assets, which otherwise would require shareholder
approval under the NCBCA.
CCBF's second supermajority provision ("CCBF's 85% Vote Requirement")
requires that, in addition to CCBF's 75% Vote Requirement (and notwithstanding
the fact that no vote may be required, or that a lesser percentage may be
specified, by
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law or in any agreement with any securities exchange or otherwise), certain
"CCBF Business Combinations" with "Interested Shareholders" (as those terms are
defined below) require the affirmative vote of both (i) the holders of at least
85% of each class of outstanding shares of capital stock entitled to vote
generally in the election of directors (each voting separately as a class), and
(ii) a majority in interest of the holders of the issued and outstanding voting
stock of the corporation held by persons other than an Interested Shareholder or
an affiliate or associate of an Interested Shareholder. However, CCBF's 85% Vote
Requirement will not apply in the case of a CCBF Business Combination that has
been approved by a majority of CCBF's directors who are not affiliated with the
Interested Shareholder and who became directors before the Interested
Shareholder became such (the "CCBF Continuing Directors") or which satisfies the
"CCBF Fair Price Provisions" (as described below) also contained in the CCBF
Articles.
The term "CCBF Business Combination" generally includes: (i) any merger or
consolidation of CCBF or a subsidiary with an Interested Shareholder or an
affiliate or associate of an Interested Shareholder; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition to or with an
Interested Shareholder or an affiliate or associate of an Interested Shareholder
of all or substantially all, or as much as 10% of, the assets or businesses of
CCBF or any subsidiary; (iii) any purchase, exchange, lease or other acquisition
by CCBF or any subsidiary of all or substantially all, or as much as 10% of, the
assets or businesses of an Interested Shareholder or an affiliate or associate
of an Interested Shareholder; (iv) the issuance or transfer of any securities of
CCBF or any subsidiary to an Interested Shareholder or an affiliate or associate
of an Interested Shareholder for consideration having a value of more than $5
million; (v) the adoption of any plan proposed by or on behalf of an Interested
Shareholder or an affiliate or associate of an Interested Shareholder for the
liquidation or dissolution of CCBF; (vi) any recapitalization or
reclassification of securities, or any merger or consolidation of CCBF with any
of its subsidiaries, or any other transaction (whether or not involving an
Interested Shareholder) that would have the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class of
equity or convertible securities of CCBF or any subsidiary which is directly or
indirectly owned by an Interested Shareholder or an affiliate or associate or an
Interested Shareholder.
An "Interested Shareholder" for purposes of CCBF's 85% Vote Requirement
generally is any person who: (i) together with his or its affiliates,
beneficially owns, directly or indirectly, 20% or more of any class of CCBF's
outstanding voting stock, (ii) is an affiliate of CCBF and at any time within
the preceding two years beneficially owned, directly or indirectly, 20% or more
of any class of CCBF's outstanding voting stock, or (iii) is an assignee of or
has otherwise succeeded to any shares of any class of outstanding voting stock
which at any time within the preceding two years were beneficially owned by any
Interested Shareholder.
The SCBC Articles do not contain a supermajority provision similar to
CCBF's 75% Vote Requirement, but they do contain a provision similar to CCBF's
85% Vote Requirement which requires the affirmative vote of the holders of at
least 66.67% of the outstanding shares of SCBC's capital stock entitled to vote
in the election of directors, voting separately as a class ("SCBC's 66.67% Vote
Requirement"), to approve or authorize transactions in connection with a
combination, acquisition, merger or purchase or sale of a substantial portion
(20% or more) of the assets of SCBC (or any of its subsidiaries) with, by or
into a "Related Party" (as defined below) if such transaction also requires the
approval of, or notice to and absence of objection by, the Federal Reserve, the
FDIC, the Commission or the Federal Trade Commission, or Anti-Trust Division of
the United States Department of Justice (an "SCBC Business Combination").
However, SCBC's 66.67% Vote Requirement will not apply in the case of an SCBC
Business Combination that has been approved by two-thirds of SCBC's directors
who are not affiliated with the Related Party and who became directors before
the Related Party became such (the "SCBC Continuing Directors") or which
satisfies the "SCBC Fair Price Provisions" (as described below) also contained
in the SCBC Articles.
A "Related Party" for purposes of SCBC's 66.67% Vote Requirement generally
is any person who, together with his or its affiliates and associates,
beneficially owns, directly or indirectly, in the aggregate 10% or more of
SCBC's outstanding voting stock.
FAIR PRICE PROVISIONS. A provision of the CCBF Articles (the "CCBF Fair
Price Provision") provides that the CCBF 85% Vote Requirement will not apply in
the case of a CCBF Business Combination if: (i) the aggregate consideration to
be received per share of CCBF Stock by CCBF's shareholders is not less than the
higher of (A) the highest price per share paid by the Interested Shareholder for
CCBF Stock within two years preceding the announcement of the CCBF Business
Combination or the date the person became an Interested Shareholder or (B) the
fair market value per share of CCBF Stock on such announcement date or on the
date the person became an Interested Shareholder; (ii) the aggregate
consideration to be received by CCBF's shareholders per share of any other class
of CCBF's voting stock other than CCBF Stock is not less than the higher of (A)
the highest price per share paid by the Interested Shareholder for shares of
such other class of voting stock
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within two years preceding the announcement of the CCBF Business Combination or
the date the person became an Interested Shareholder, (B) the highest
preferential amount per share to which holders of shares of such other class are
entitled in the event of any liquidation, dissolution or winding up of CCBF, or
(C) the fair market value per share of such other class on such announcement
date or on the date the person became an Interested Shareholder; (iii) the
consideration to be received by CCBF's shareholders is in cash or in the same
form as the consideration paid by the Interested Shareholder in acquiring shares
already owned (provided, that if the Interested Shareholder has paid varying
forms of consideration, the form of consideration paid to CCBF's shareholders in
the CCBF Business Combination shall either be cash or the form used to acquire
the largest number of shares of such class of voting stock already owned); (iv)
except as approved by the CCBF Continuing Directors, after the Interested
Shareholder has become such and prior to consummation of the CCBF Business
Combination (A) there has been no failure to pay any regular quarterly dividend
on any outstanding preferred stock or reduction in the annual dividend rate on
CCBF Stock, and (B) the Interested Shareholder shall not have acquired
beneficial ownership of any additional shares of CCBF voting stock; (v) after
becoming an Interested Shareholder, such person shall not have received the
benefit of certain financial assistance or tax advantages; and (vi) a proxy
statement in conformity with the 1934 Act and regulations thereunder shall be
mailed to all CCBF shareholders.
A similar provision of the SCBC Articles (the "SCBC Fair Price Provision")
provides that the SCBC 66.67% Vote Requirement will not apply in the case of an
SCBC Business Combination if: (i) the aggregate consideration to be received per
share of SCBC Stock by SCBC's shareholders (other than the Related Party) is not
less than the highest price per share paid by such Related Party in acquiring
SCBC Stock it already owns; (ii) except to the extent an SCBC shareholder agrees
otherwise, the consideration to be received by SCBC's shareholders (other than
the Related Party) is in the same form and of the same kind as the consideration
paid by the Related Party in acquiring SCBC Stock it already owns (provided,
that if the Related Party has paid varying forms of consideration, the form of
consideration paid to SCBC's shareholders in the Business Combination shall
either be cash or the form used to acquire the largest number of shares of SCBC
Stock already owned); and (iii) a proxy statement in conformity with the 1934
Act and regulations thereunder shall be mailed to all SCBC shareholders and
shall contain (A) any recommendations of the SCBC Continuing Directors as to the
advisability or inadvisability of the SCBC Business Combination and (B) the
opinion of reputable financial advisors selected by the SCBC Continuing
Directors as to the fairness of the terms of the SCBC Business Combination from
the point of view of all SCBC shareholders (other than any Related Party).
NORTH CAROLINA SHAREHOLDER PROTECTION ACT. The North Carolina Shareholder
Protection Act (the "Shareholder Protection Act") generally requires that,
unless certain "fair price" and procedural requirements are satisfied, the
affirmative vote of 95% of a corporation's voting shares is required to approve
certain business combination transactions with another entity that is the
beneficial owner, directly or indirectly, of more than 20% of the corporation's
voting shares or which is an affiliate of the corporation and previously has
been a 20% beneficial holder of such shares. The Shareholder Protection Act is
applicable to both SCBC and CCBF.
CONTROL SHARE ACQUISITION ACT. The North Carolina Control Share Acquisition
Act (the "Control Share Act") generally provides that, except as provided below,
"Control Shares" will not have any voting rights. Control Shares are shares
acquired by a person under certain circumstances which, when added to other
shares owned, would give such person effective control over one-fifth, one-third
or a majority of all voting power in the election of the corporation's
directors. However, voting rights will be restored to Control Shares by
resolution approved by the affirmative vote of the holders of a majority of the
corporation's voting stock (other than shares held by the owner of the Control
Shares, officers of the corporation, and directors employed by the corporation).
If voting rights are granted to Control Shares which give the holder a majority
of all voting power in the election of the corporation's directors, then the
corporation's other stockholders may require the corporation to redeem their
shares at their fair value. The Control Share Act is applicable to both SCBC and
CCBF.
AMENDMENTS OF ARTICLES AND BYLAWS
ARTICLES. Subject to certain conditions, an amendment to the CCBF Articles
or SCBC Articles may be effected if the amendment is approved by the vote of the
holders of a majority of the SCBC Stock or CCBF Stock, respectively, present at
the shareholders meeting at which such amendment proposal is considered.
However, unless recommended to SCBC's shareholders by a vote of two-thirds of
the SCBC Continuing Directors (or, prior to the time an SCBC Business
Combination is proposed, two-thirds of SCBC's entire Board of Directors), the
affirmative vote of the holders of not less than 66.67% of SCBC's outstanding
voting stock, voting separately as a class, is required to amend or repeal, or
to adopt provisions having the effect of modifying or permitting circumvention
of, SCBC's 66.67% Vote Requirement or the SCBC Fair Price Provision.
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The affirmative vote of the holders of not less than 75% of the outstanding
shares of all classes of CCBF's capital stock, voting together as a single class
(unless class voting rights are specifically permitted for any class), is
required to amend or repeal provisions of CCBF's 75% Vote Requirement described
above. Also, unless recommended to CCBF's shareholders by a vote of
three-fourths of the CCBF Continuing Directors, the affirmative vote of both (i)
the holders of not less than 85% of CCBF's outstanding voting stock (each voting
separately as a class) and (ii) a majority in interest of the holders of
outstanding CCBF voting stock held by persons other than an Interested
Shareholder or any affiliate or associate of an Interested Shareholder, is
required to amend or repeal, or to adopt provisions inconsistent with, the
provisions of CCBF's 85% Vote Requirement and the CCBF Fair Price Provision.
BYLAWS. SCBC's Bylaws may be amended or repealed, and new Bylaws may be
adopted, only by the affirmative vote of 60% of all SCBC's directors in office
at the time such action is submitted to a vote of the SCBC Board of Directors.
CCBF's Bylaws may be amended or repealed, and new Bylaws may be adopted, by
the affirmative vote of a simple majority of CCBF's directors.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
Certain of the provisions of the SCBC Articles and CCBF Articles, and their
respective Bylaws, discussed above may have the effect of preventing,
discouraging or delaying a change in control of SCBC or CCBF not approved by
their respective Board of Directors, but pursuant to which their respective
shareholders might receive a substantial premium for their shares over current
market prices. As a result, shareholders who might desire to participate in such
a transaction may not have an opportunity to do so.
The authority of SCBC's and CCBF's respective Board to issue preferred
stock with such rights and privileges as it may deem appropriate may enable such
Board to prevent a change in control despite a shift in ownership of SCBC Stock
or CCBF Stock. In addition, such Board's power to issue additional shares of
SCBC Stock or CCBF Stock, as the case may be, may help delay or discourage a
change in control by increasing the number of shares needed to gain control.
The ability of SCBC's Board to expand the number of directors up to 30,
without shareholder approval, and to fill vacancies resulting from such an
increase, may allow the Board to prevent for a period of time a person or entity
owning a majority of the voting shares of SCBC from electing a majority of the
directors of SCBC's Board. The provisions of CCBF's Bylaws that will result from
the Bylaw Amendment would have the same effect. (See "PROPOSAL TO AMEND CCBF'S
BYLAWS".) Further, the overall effect of the classification of SCBC's Board may
be to delay a dissatisfied shareholder or anyone who obtains a majority interest
in SCBC's voting shares from electing his or its designees to a majority of the
seats on the SCBC Board.
The Fair Price Provisions of the SCBC Articles and CCBF Articles are
designed to discourage attempts to take over SCBC or CCBF in nonnegotiated
transactions utilizing two-tier pricing tactics (which typically involve the
accumulation of a substantial block of the target corporation's stock followed
by a merger or other reorganization of the acquired company on terms determined
by the purchaser). Therefore, due to the difficulties of complying with the
requirements of such provisions, they have an anti-takeover effect and generally
may discourage attempts to obtain control of SCBC or CCBF. As a result, holders
of SCBC Stock or CCBF Stock may be deprived of an opportunity to sell their
shares at a premium above the market price. In addition, the Fair Price
Provisions would give veto power to the holders of a minority of the shares of
SCBC's or CCBF's voting shares, and could give veto power to a minority of
SCBC's or CCBF's Board of Directors, with respect to a SCBC Business Combination
or a CCBF Business Combination, as applicable, which a majority of the
shareholders and directors may believe to be desirable and beneficial. In any
Business Combination not receiving the requisite approval of shareholders or of
directors, requirements regarding minimum price, while providing objective
pricing criteria, could be arbitrary and not indicative of value. The purpose of
the Fair Price Provisions is to encourage potential acquirors to engage in arm's
length negotiations with SCBC and CCBF before attempting a takeover transaction
in order to provide protection for SCBC and CCBF and their respective
shareholders and to insure that all shareholders receive a fair price for their
shares. These provisions also are intended to prevent an acquiror from obtaining
an initial control position and thereafter acquiring SCBC's or CCBF's remaining
shares for a lower price or with a less desirable form of consideration.
Similarly, CCBF's Rights Plan may have an anti-takeover effect. The Rights
Plan would enable CCBF's existing shareholders to purchase shares of Series A
Preferred at the stated Purchase Price or a number of shares of CCBF Stock at a
price equal to approximately 50% of the then current fair market value of such
stock. The effect of the Rights Plan may be to discourage an uninvited or
unfriendly attempt to acquire control of CCBF as the effect of purchases of
Series A Preferred or
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CCBF Stock likely would be to cause an Acquiring Person to suffer substantial
dilution of its voting power and significant deterioration in the value of its
shares.
The "constituencies" provision of the SCBC Articles could require the Board
to address the interests of persons other than SCBC's shareholders. Accordingly,
SCBC's Board might determine it should oppose certain transactions not in the
interests of those other constituencies which it might otherwise tend to approve
if only considering the shareholders' interests.
The cumulative impact of the applicability of the Shareholder Protection
Act and the Control Share Act is to render more difficult, or to discourage, a
merger, tender offer or proxy contest, or the assumption of control by the
holder of a large block of SCBC's or CCBF's voting securities, and would make
more difficult any attempt to remove incumbent management, even if any one or
more of the foregoing matters may be favorable to, or in the best interests, of
SCBC's or CCBF's shareholders.
Finally, the requirement that any amendment of the SCBC's Bylaws must be
approved by 60% of the directors in office at the time such amendment is
submitted to a vote of SCBC's Board allows a minority of SCBC's directors to
prevent a Bylaw modification that is favored by a majority of the directors.
Thus, if a person or entity were to acquire sufficient shares of SCBC Stock to
elect a majority, but not 60%, of SCBC's directors, such person's ability to
cause SCBC's Bylaws to be amended in a manner that would facilitate a change in
control action would be restricted.
INDEMNIFICATION
The NCBCA provides for indemnification by a corporation of its officers,
directors, employees and agents, and any person who is or was serving at the
corporation's request as a director, officer, employee or agent of another
entity or enterprise or as a trustee or administrator under an employee benefit
plan, against liability and expenses, including reasonable attorneys' fees, in
any proceeding (including without limitation a proceeding brought by or on
behalf of the corporation itself) arising out of their status as such or their
activities in any of the foregoing capacities.
PERMISSIBLE INDEMNIFICATION. Under the NCBCA, a corporation may, but is not
required to, indemnify any such person against liability and expenses incurred
in any such proceeding, provided such person conducted himself or herself in
good faith and (i) in the case of conduct in his or her official corporate
capacity, reasonably believed that his or her conduct was in the corporation's
best interests, and (ii) in all other cases, reasonably believed that his or her
conduct was at least not opposed to the corporation's best interests; and, in
the case of a criminal proceeding, where he or she had no reasonable cause to
believe his or her conduct was unlawful. However, a corporation may not
indemnify such person either in connection with a proceeding by or in the right
of the corporation in which such person was adjudged liable to the corporation,
or in connection with any other proceeding charging improper personal benefit to
such person (whether or not involving action in an official capacity) in which
such person was adjudged liable on the basis that personal benefit was
improperly received.
MANDATORY INDEMNIFICATION. Unless limited by the corporation's charter, the
NCBCA requires a corporation to indemnify a director or officer of the
corporation who is wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such person was a party because he or she is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding.
ADVANCE FOR EXPENSES. Expenses incurred by a director, officer, employee or
agent of the corporation in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding as authorized
by the board of directors in the specific case, or as authorized by the charter
or bylaws or by any applicable resolution or contract, upon receipt of an
undertaking by or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified by the
corporation against such expenses.
COURT-ORDERED INDEMNIFICATION. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court deems necessary, may
order indemnification if it determines either (i) that the director or officer
is entitled to mandatory indemnification as described above, in which case the
court also will order the corporation to pay the reasonable expenses incurred to
obtain the court-ordered indemnification, or (ii) that the director or officer
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such person met the requisite standard of conduct
or was adjudged liable to the corporation in connection with a proceeding by or
in the right of the corporation or on the basis that personal benefit was
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improperly received in connection with any other proceeding so charging (but if
adjudged so liable, indemnification is limited to reasonable expenses incurred).
VOLUNTARY INDEMNIFICATION. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, contract or resolution, indemnify or agree to indemnify
any one or more of its directors, officers, employees or agents against
liability and expenses in any proceeding (including any proceeding brought by or
on behalf of the corporation itself) arising out of their status as such or
their activities in any of the foregoing capacities. However, the corporation
may not indemnify or agree to indemnify a person against liability or expenses
he may incur on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws or in a contract
or resolution may include provisions for recovery from the corporation of
reasonable costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and enforcing such
rights.
PARTIES ENTITLED TO INDEMNIFICATION. The NCBCA defines "director" to
include ex-directors and the estate or personal representative of a director.
Unless its charter provides otherwise, a corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with public
policy, as may be provided in its charter or bylaws, by general or specific
action of its board of directors, or by contract.
INDEMNIFICATION BY CCBF AND SCBC. Subject to such restrictions as are
provided by federal securities law, CCBF's and SCBC's Bylaws provide for
indemnification of their respective directors and officers to the fullest extent
permitted by law, and require their respective Board of Directors to take all
actions necessary and appropriate to authorize such indemnification. In
addition, CCBF and SCBC each currently maintains directors' and officers'
liability insurance.
Insofar as indemnification for liabilities arising under the 1933 Act may
be permitted to directors, officers or persons controlling CCBF or SCBC pursuant
to the foregoing provisions, CCBF and SCBC have been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the 1933 Act and, therefore, is
unenforceable.
RELEASE OF DIRECTOR LIABILITY. As permitted by the NCBCA, the CCBF Articles
and SCBC Articles limit the personal liability of their respective directors in
any action by or in the right of the corporation or otherwise for monetary
damages for breach of their duties as directors. The SCBC Articles generally
provide that SCBC's directors shall not be liable for monetary damages in any
such action in an amount greater than $5,000. The CCBF Articles generally
eliminate any such liability on the part of CCBF's directors.
LEGAL MATTERS
The validity of the shares of CCBF Stock to be issued to SCBC's
shareholders in connection with the Merger will be passed upon for CCBF by Ward
and Smith, P.A., Raleigh, North Carolina. Ward and Smith, P.A. serves as special
counsel to CCBF with respect to the Merger. Certain legal matters will be passed
upon for SCBC by Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.,
Greensboro, North Carolina.
EXPERTS
The consolidated financial statements of CCBF as of December 31, 1993 and
1992, and for each of the years in the three-year period ended December 31,
1993, have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of SCBC as of December 31, 1993 and
1992, and for each of the years in the three-year period ended December 31,
1993, have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated balance sheets of First Federal as of December 31, 1993
and 1992, and the related consolidated statements of operations, stockholders'
equity and cash flows for the year ended December 31, 1993, included in SCBC's
Current Report on Form 8-K dated December 6, 1994, and incorporated by reference
herein, have been audited by Ernst & Young
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LLP, independent auditors, as set forth in their report thereon included therein
and incorporated by reference. Such financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
PROPOSAL TO AMEND CCBF'S BYLAWS
The Merger Agreement provides that six persons who are members of SCBC's
Board of Directors be appointed as directors of CCBF at the Effective Time.
Article III, Section 2, of CCBF's Bylaws currently provides that the Board of
Directors consist of not less than five nor more than 30 members, with the
actual number of directors to be determined from time to time by a majority of
the votes to which all CCBF's shareholders are at the time entitled. At CCBF's
1994 Annual Meeting the number of its directors was set at 18, and no vacancies
currently exist on CCBF's Board of Directors.
Under the NCBCA as amended effective during 1990, if a corporation's bylaws
provide for a minimum and maximum number of directors, then, within that range,
the corporation's shareholders or board of directors may set the actual number
of directors to be elected from time to time unless the corporation's charter or
a valid shareholder agreement denies that authority to the board of directors.
CCBF's Board of Directors believes that CCBF's Bylaws do not constitute a
shareholder agreement and, since the CCBF Articles do not provide otherwise,
that the Board of Directors has the authority under North Carolina law to
increase the number of CCBF's directors within the specified minimum and maximum
numbers without the approval of shareholders. However, Article III, Section 7,
of CCBF's Bylaws provides that any vacancy created by an increase in the
authorized number of directors may be filled only by the election at an annual
meeting or at a special meeting of shareholders called for that purpose.
In order to clarify the Board of Directors' authority and to remove the
inconsistent provisions of the Bylaws, CCBF's Board of Directors proposes that
the Bylaws be amended to specifically state that, within the current minimum and
maximum numbers of directors stated therein, the Board of Directors from time to
time may set and change the actual number of CCBF's directors, and to provide
that the Board of Directors may appoint new directors to fill vacancies
resulting from any such increase.
If the Bylaw Amendment is approved, CCBF's Board of Directors will be
authorized to increase or decrease the number of directors of CCBF from time to
time within the existing range of from five to 30 directors. Any such increase
will result in vacancies that may be filled by appointment by the Board or by
election by the shareholders. (However, a decrease by the Board in the number of
directors will not shorten any director's term.) While the Bylaw Amendment would
allow the CCBF Board to create vacancies through which persons could become
directors of CCBF by appointment and without the vote of shareholders, any
directors so appointed by the Board may serve only until the next meeting of
CCBF's shareholders at which directors are elected and at which time their
continued service will be subject to reelection as directors by CCBF's
shareholders. The Board of Directors believes the Bylaw Amendment will benefit
CCBF by giving it the ability to better control the size of its Board of
Directors and to respond to opportunities or situations in which it is necessary
or in the best interest of CCBF to create one or more additional directorships.
As proposed to be amended, Article III, Sections 2 and 6, of CCBF's Bylaws
would appear as follows:
Section 2. NUMBER, TERM AND QUALIFICATIONS: The number of directors
constituting the Board of Directors shall be not less than five (5) nor
more than thirty (30) as may be fixed or changed from time to time, within
the minimum and maximum, by the shareholders or by the Board of Directors.
Directors need not be residents of the State of North Carolina or
shareholders of the corporation.
Section 7. VACANCIES: A vacancy occurring in the Board of Directors,
including without limitation a vacancy resulting from an increase in the
number of directors or from the failure by the shareholders to elect the
full authorized number of directors, may be filled by the shareholders or
by the Board of Directors, whichever group shall act first. If the
directors remaining in office do not constitute a quorum, the directors may
fill the vacancy by the affirmative vote of a majority of the remaining
directors or by the sole remaining director..
If the Bylaw Amendment is approved at the CCBF Special Meeting, then, in
accordance with the terms of the Merger Agreement, CCBF's Board of Directors
intends to increase the number of directors of CCBF by up to six and, effective
at the Effective Time, to appoint the six directors of SCBC identified elsewhere
in this Prospectus/Joint Proxy Statement to serve as directors of CCBF. (See
"THE MERGER -- Directors and Officers".) As noted above, each person so
appointed may serve as a director of CCBF only until the next meeting of CCBF's
shareholders at which directors are elected following such appointment and at
which time his continued service will be subject to reelection as a director by
CCBF's shareholders.
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Adoption of the Bylaw Amendment, and the appointment of the six SCBC
directors as directors of CCBF, are conditions of SCBC's obligations under the
Merger Agreement. (See "THE MERGER -- Conditions to Merger".) Except as
described herein in connection with the Merger, the Board of Directors has no
current plans to change the number of directors of CCBF or to appoint any other
person as a director, but from time to time in the future it may do so.
CCBF'S BOARD OF DIRECTORS RECOMMENDS THAT CCBF SHAREHOLDERS VOTE "FOR" THE
BYLAW AMENDMENT.
OTHER MATTERS
SCBC's and CCBF's Boards of Directors do not intend to bring any matter
before their respective Special Meeting other than as specifically set forth in
this Prospectus/Joint Proxy Statement, and they know of no other business that
will be brought before their respective Special Meeting by any other person.
However, should other matters properly be presented for action at either of the
Special Meetings, the persons named in appointments of proxy to represent
shareholders at that Special Meeting, or their substitutes, will be authorized
to vote shares represented by those appointments of proxy according to their
best judgment on such matters.
PROPOSALS OF SHAREHOLDERS
If for any reason the Merger is not consummated, then a 1995 Annual Meeting
of SCBC's shareholders likely would be held during May 1995. In such event, any
proposal (other than nominations for directors) of a shareholder intended to be
presented at that meeting would have to have been received by SCBC at its main
office in Salisbury, North Carolina no later than November 28, 1994 to be
considered timely received for inclusion in the proxy statement and appointment
of proxy issued in connection with the meeting.
The 1995 Annual Meeting of shareholders of CCBF will be held on April 18,
1995. Any proposal (other than nominations for directors) of a CCBF shareholder
intended to be presented at that meeting would have to have been received by
CCBF at its main office in Durham, North Carolina no later than November 15,
1994 to be considered timely received for inclusion in the proxy statement and
appointment of proxy to be issued in connection with the meeting.
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APPENDIX A
AMENDED AND RESTATED
AGREEMENT OF COMBINATION
BY AND AMONG
CCB FINANCIAL CORPORATION,
NEW SECURITY CAPITAL
AND
SECURITY CAPITAL BANCORP
DATED AS OF DECEMBER 1, 1994
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
</TABLE>
ARTICLE I
DEFINITIONS
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
<TABLE>
<C> <S> <C>
2.1 Merger........................................................................................................ A-10
2.2 Directors..................................................................................................... A-10
2.3 Vice Chairmen and Committees of the Board of Directors........................................................ A-10
2.4 Officers...................................................................................................... A-10
2.5 Time and Place of Closing..................................................................................... A-11
2.6 Effective Time................................................................................................ A-11
2.7 Subsequent Actions............................................................................................ A-11
2.8 Performance of Obligations.................................................................................... A-11
</TABLE>
ARTICLE III
MANNER OF CONVERTING SHARES
<TABLE>
<C> <S> <C>
3.1 Conversion of Shares.......................................................................................... A-11
3.2 Conversion of Options......................................................................................... A-12
3.3 Anti-Dilution Provisions...................................................................................... A-12
3.4 Shares Held by CCB or SCBC.................................................................................... A-12
3.5 Fractional Shares............................................................................................. A-12
3.6 Transfers..................................................................................................... A-12
3.7 Dissenting Shareholders....................................................................................... A-12
</TABLE>
ARTICLE IV
EXCHANGE OF SHARES
<TABLE>
<C> <S> <C>
4.1 Exchange Procedures........................................................................................... A-13
4.2 Voting and Dividends.......................................................................................... A-13
</TABLE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SCBC
<TABLE>
<C> <S> <C>
5.1 Organization, Standing, and Authority......................................................................... A-14
5.2 Capital Stock................................................................................................. A-14
5.3 SCBC Subsidiaries............................................................................................. A-14
5.4 Authorization of Merger and Related Transactions.............................................................. A-14
5.5 Financial Statements.......................................................................................... A-15
5.6 Books and Corporate Records................................................................................... A-15
5.7 Absence of Undisclosed Liabilities............................................................................ A-15
5.8 Tax Matters................................................................................................... A-16
5.9 Allowance for Loan Losses..................................................................................... A-16
5.10 Properties.................................................................................................... A-16
5.11 Compliance with Laws.......................................................................................... A-16
5.12 Employee Benefit Plans........................................................................................ A-17
5.13 Commitments and Contracts..................................................................................... A-18
5.14 Material Contract Defaults.................................................................................... A-18
5.15 Legal Proceedings............................................................................................. A-18
5.16 Absence of Certain Changes or Events.......................................................................... A-18
5.17 Reports....................................................................................................... A-18
5.18 Insurance..................................................................................................... A-18
5.19 Labor......................................................................................................... A-19
</TABLE>
A-2
<PAGE>
<TABLE>
<C> <S> <C>
5.20 Material Interests of Certain Persons......................................................................... A-19
5.21 Registration Obligations...................................................................................... A-19
5.22 Environmental Matters......................................................................................... A-19
5.23 Accounting; Tax; Regulatory Matters........................................................................... A-20
5.24 Brokers and Finders........................................................................................... A-20
5.25 Statements True and Correct................................................................................... A-20
</TABLE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CCB AND NSC
<TABLE>
<C> <S> <C>
6.1 Organization, Standing, and Authority......................................................................... A-20
6.2 Capital Stock................................................................................................. A-20
6.3 CCB Subsidiaries.............................................................................................. A-21
6.4 Authorization of Merger and Related Transactions.............................................................. A-21
6.5 Financial Statements.......................................................................................... A-21
6.6 Books and Corporate Records................................................................................... A-22
6.7 Absence of Undisclosed Liabilities............................................................................ A-22
6.8 Tax Matters................................................................................................... A-22
6.9 Allowance for Loan Losses..................................................................................... A-22
6.10 Properties.................................................................................................... A-22
6.11 Compliance with Laws.......................................................................................... A-23
6.12 Employee Benefit Plans........................................................................................ A-23
6.13 Commitments and Contracts..................................................................................... A-24
6.14 Material Contract Defaults.................................................................................... A-24
6.15 Legal Proceedings............................................................................................. A-24
6.16 Absence of Certain Changes or Events.......................................................................... A-24
6.17 Reports....................................................................................................... A-24
6.18 Insurance..................................................................................................... A-25
6.19 Labor......................................................................................................... A-25
6.20 Material Interests of Certain Persons......................................................................... A-25
6.21 Environmental Matters......................................................................................... A-25
6.22 Accounting; Tax; Regulatory Matters........................................................................... A-25
6.23 Brokers and Finders........................................................................................... A-25
6.24 Capital Stock Issued in Merger................................................................................ A-26
6.25 Statements True and Correct................................................................................... A-26
</TABLE>
ARTICLE VII
CONDUCT PRIOR TO THE EFFECTIVE TIME
<TABLE>
<C> <S> <C>
7.1 Conduct of Business Prior to the Effective Time............................................................... A-26
7.2 Forbearances.................................................................................................. A-26
7.3 Access and Information; Confidentiality....................................................................... A-27
7.4 Current Information........................................................................................... A-27
7.5 Registration Statement; Regulatory Matters.................................................................... A-28
7.6 Shareholders' Approvals....................................................................................... A-28
7.7 Agreements of Affiliates...................................................................................... A-28
7.8 Delivery of Monthly Financial Statements; Asset Review........................................................ A-29
7.9 Accounting Treatment; Tax-Free Reorganization................................................................. A-29
7.10 Press Releases................................................................................................ A-29
7.11 Interim Financial Results..................................................................................... A-29
7.12 Miscellaneous Agreements and Consents......................................................................... A-29
</TABLE>
ARTICLE VIII
ADDITIONAL AGREEMENTS
<TABLE>
<C> <S> <C>
8.1 Indemnification and Insurance................................................................................. A-29
8.2 Employee Contracts and Employee and Director Benefits......................................................... A-30
8.3 Modification of Employee Benefits............................................................................. A-30
8.4 Branch Purchases.............................................................................................. A-30
8.5 Other Permissible Transactions................................................................................ A-31
8.6 Due Diligence Investigations.................................................................................. A-31
</TABLE>
A-3
<PAGE>
<TABLE>
<C> <S> <C>
8.7 Bank Conversions; Bank Mergers................................................................................ A-31
8.8 Repurchase of SCBC Common Stock............................................................................... A-31
</TABLE>
ARTICLE IX
CONDITIONS
<TABLE>
<C> <S> <C>
9.1 Conditions to Each Party's Obligation to Effect the Merger.................................................... A-31
9.2 Conditions to the Obligation of SCBC.......................................................................... A-32
9.3 Conditions to the Obligations of CCB and NSC.................................................................. A-33
</TABLE>
ARTICLE X
TERMINATION
<TABLE>
<C> <S> <C>
10.1 Termination................................................................................................... A-33
10.2 Effect of Termination......................................................................................... A-34
10.3 Expenses...................................................................................................... A-34
10.4 Wrongful Termination.......................................................................................... A-34
10.5 Termination Fee............................................................................................... A-35
</TABLE>
ARTICLE XI
GENERAL PROVISIONS
<TABLE>
<C> <S> <C>
11.1 Non-Survival of Representations, Warranties and Covenants Following the Effective Time........................ A-35
11.2 Entire Agreement.............................................................................................. A-35
11.3 Amendments.................................................................................................... A-35
11.4 Waivers....................................................................................................... A-35
11.5 No Assignment................................................................................................. A-35
11.6 Notices....................................................................................................... A-36
11.7 Severability.................................................................................................. A-36
11.8 Governing Law................................................................................................. A-36
11.9 Counterparts.................................................................................................. A-36
11.10 Captions...................................................................................................... A-36
</TABLE>
APPENDIX A Plan of Merger
AMENDED AND RESTATED
AGREEMENT OF COMBINATION
This AMENDED AND RESTATED AGREEMENT OF COMBINATION (this "Agreement") is
made and entered into as of December 1, 1994 by and among CCB Financial
Corporation, a North Carolina corporation ("CCB"), Security Capital Bancorp, a
North Carolina corporation ("SCBC") and, when and as provided hereinafter, New
Security Capital, Inc. ("NSC").
W I T N E S S E T H:
WHEREAS, each of CCB and SCBC is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHCA"); and
WHEREAS, immediately prior to the Effective Time, the Savings Bank
Subsidiaries of SCBC shall convert their charters to commercial bank charters
and become interim North Carolina commercial banks (the "Bank Conversions"); and
WHEREAS, immediately after the Effective Time, the SCBC Subsidiaries which
are commercial bank subsidiaries, including those resulting from the Bank
Conversions, will merge with and into Central Carolina Bank and Trust Company
("CCB Bank"), a CCB Subsidiary which is a commercial bank, with CCB Bank as the
surviving bank (the "Bank Mergers"); and
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WHEREAS, the respective Boards of Directors of CCB and SCBC have resolved
that the transactions described herein are in the best interests of the parties
and their respective shareholders and have approved this Agreement and
authorized the execution hereof; and
WHEREAS, as soon as practicable, the respective Boards of Directors and
shareholder of CCB Bank and the SCBC Subsidiaries which are to be parties to the
Bank Conversions and/or the Bank Mergers shall consider and act upon resolutions
to approve and authorize the execution and delivery of the agreements and other
documents necessary to consummate those transactions;
WHEREAS, CCB and SCBC desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated by this Agreement;
WHEREAS, CCB and SCBC entered into an Agreement of Combination, dated
November 4, 1994, desire to hereby amend and restate such original Agreement to
reflect certain agreed upon changes to the method by which they will combine,
and desire to have NSC, a to-be-formed subsidiary of CCB, to become a party to
this Agreement and for NSC to merge with and into SCBC, with SCBC as the
surviving corporation (the "Surviving Corporation") and a wholly-owned
subsidiary of CCB (the "Merger"); and
WHEREAS, upon its due formation as a business corporation under the NCBCA
(as hereafter defined), NSC shall become a party hereto by its execution hereof
and shall be deemed for all purposes to have been a party from the date of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
"Administrator" shall mean the Administrator of the Savings Institution
Division of the North Carolina Department of Commerce.
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the 1934 Act.
"Agreement" shall mean this Amended and Restated Agreement of Combination.
"Allowance" shall have the meaning set forth in Section 5.9 of this
Agreement.
"Articles of Merger" shall have the meaning set forth in Section 2.6 of
this Agreement.
"Authorizations" shall have the meaning set forth in Section 5.1 of this
Agreement.
"Bank Conversions" shall have the meaning set forth in the preamble to this
Agreement.
"Bank Mergers" shall have the meaning set forth in the preamble to this
Agreement.
"BHCA" shall have the meaning set forth in the preamble to this Agreement.
"Branch Purchase" shall have the meaning set forth in Section 8.4 of this
Agreement.
"CCB" shall have the meaning set forth in the preamble to this Agreement.
"CCB Bank" shall have the meaning set forth in the preamble to this
Agreement.
"CCB Bylaw Approval" shall have the meaning set forth in Section 2.2 of
this Agreement.
"CCB Common Stock" shall have the meaning set forth in Section 3.1 of this
Agreement.
"CCB Financial Statements" shall mean (i) the audited consolidated balance
sheets (including related notes, schedules, if any, and independent auditors'
reports) of CCB as of December 31, 1994, 1993 and 1992 and the related audited
consolidated statements of income, shareholders' equity and cash flows
(including related notes, schedules, if any, and independent auditors' reports)
for each of the periods ended December 31, 1994, 1993 and 1992, as have been
Previously Disclosed (or, in the case of the period ended December 31, 1994, as
will be disclosed to SCBC prior to the Effective Time) and (ii) CCB's unaudited
consolidated balance sheets (including related notes and schedules, if any) as
of September 30, 1994 and the related unaudited consolidated statements of
income, shareholders' equity and cash flows for the periods ended March 31,
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and June 30 and September 30, 1994 as have been Previously Disclosed and, with
respect to interim periods ended subsequent to December 31, 1994 as will be
provided to SCBC prior to the Effective Time.
"CCB Subsidiaries shall mean any or all of CCB Bank, CCB Savings Bank of
Lenoir, Inc., SSB, Graham Savings Bank, Inc., SSB, Central Carolina
Bank -- Georgia and, upon its formation under the NCBCA, NSC, all of which are
subsidiaries of CCB, and CCB Investment and Insurance Service Corporation,
Southland Associates, Inc., CCBDE, Inc. and 1st Home Mortgage Acceptance
Corporation, all of which are subsidiaries of CCB Bank.
"CCB LTIP" shall mean the CCB Financial Corporation Long Term Incentive
Plan as exists on the date of this Agreement.
"CCB Rights" shall have the meaning set forth in Section 3.1 of this
Agreement.
"CCB Rights Plan" shall have the meaning set forth in Section 3.1 of this
Agreement.
"CCB Stock Price" shall mean the average of the closing sale price of CCB
Common Stock quoted on the NMS (as reported by THE WALL STREET JOURNAL or, if
not reported thereby, any other authoritative source) over the number of
consecutive trading days specified in the context in which the defined term is
used.
"CERCLA" shall have the meaning set forth in Section 5.22(e) of this
Agreement.
"Closing" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Commission" shall mean the North Carolina Banking Commission.
"Commissioner" shall mean the North Carolina Commissioner of Banks.
"Costs" shall have the meaning set forth in Section 10.3 of this Agreement.
"Due Diligence Period" shall have the meaning set forth in Section 8.6 of
this Agreement.
"Effective Time" shall mean the time and date specified pursuant to Section
2.6 hereof as the effective time of the Merger.
"Employee Benefit Plan" shall mean any (i) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (ii) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (iii) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan, (iv)
Employee Welfare Benefit Plan or material fringe benefit plan or program, or (v)
stock option, stock purchase, stock appreciation, stock or cash bonus, or
similar plan or arrangement.
"Employee Pension Benefit Plan" shall have the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" shall have the meaning set forth in ERISA
Section 3(1).
"Environmental Agency" shall have the meaning set forth in Section 5.22(f)
of this Agreement.
"Environmental Costs" shall have the meaning set forth in Section 10.1(c)
of this Agreement.
"Environmental Law" shall have the meaning set forth in Section 5.22(d) of
this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Agent" shall have the meaning set forth in Section 3.6 of this
Agreement.
"Exchange Ratio" shall have the meaning set forth in Section 3.1 of this
Agreement.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Federal Reserve" shall mean the Federal Reserve Bank of Richmond acting
under delegated authority from the Federal Reserve Board, or any successor
thereto.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System, or any successor thereto.
"Fiduciary" shall have the meaning set forth in ERISA Section 3(21).
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"GAAP" shall mean generally accepted accounting principles in effect in the
United States from time to time, as applied by the entity in respect of which
the term is used consistently with its past practices.
"Hazardous Materials" shall have the meaning set forth in Section 5.22(e)
of this Agreement.
"HSR Act" shall have the meaning set forth in Section 5.4(c).
"IRS" shall mean the Internal Revenue Service.
"Indemnifiable Losses" shall mean any and all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, penalties, fines, costs, amounts
paid in settlement or compromise, liabilities, obligations, expenses, fees
(including attorneys' fees awarded to third parties), court costs, and
reasonable attorneys', accountants', expert witnesses', consultants', and
accountants' fees and expenses incurred by an Indemnified Party as a result or
by reason of the Indemnifying Party's breach of its obligations under this
Agreement or violation of law, except to the extent that such otherwise
Indemnifiable Losses as a result or by reason of the Indemnified Party's breach
of its obligations under this Agreement or violation of law.
"Indemnified Party" shall mean any Person entitled to indemnification under
this Agreement.
"Indemnifying Party" shall mean any Person required to provide
indemnification under this Agreement.
"Knowledge," when used in the phrase "to the knowledge" or a similar
phrase, shall mean the actual knowledge of the senior executive officers
(including, without limitation, the senior executive officers responsible for
Tax matters) of CCB or SCBC, as applicable, after reasonable inquiry of the
other executive officers and the directors CCB or SCBC, as applicable, and the
Persons responsible for the day-to-day operations of the CCB Subsidiaries or the
SCBC Subsidiaries, as applicable.
"Lien" shall mean any lien, claim, encumbrance, security interest,
assessment, mortgage, deed of trust, equity or other similar or like charge.
"Material Adverse Event" shall mean any event, matter, item or circumstance
(other than as a result of changes (a) in banking or other financial institution
laws or regulations of general applicability or interpretations thereof by the
courts or governmental entities, (b) in GAAP, or (c) in interest rates) that in
and of itself, or when combined with all similar events, matters, items or
circumstances, reasonably could be expected to have, now or in the future, a
material adverse effect on the business, financial condition, operations,
results of operations or prospects of CCB and the CCB Subsidiaries, taken as a
consolidated whole (unless otherwise indicated herein), or SCBC and the SCBC
Subsidiaries, taken as a consolidated whole (unless otherwise indicated herein),
as the case may be, but when used in respect of SCBC and the SCBC Subsidiaries,
shall not include those changes which would reasonably be expected to occur as a
reasonable consequence of the Merger, including, without limitation, the
consequences of employee resignations and employee relations difficulties.
"Merger" shall have the meaning set forth in the preamble to this
Agreement.
"Multiemployer Plan" shall have the meaning set forth in ERISA Section
3(37).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NCBCA" shall mean the North Carolina Business Corporation Act.
"NMS" shall have the meaning set forth in Section 3.5.
"NSC" shall have the meaning set forth in the preamble to this Agreement.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Ordinary Course of Business" shall mean the ordinary course of business of
the entity respecting which this term is used, conducted in the same manner as
theretofore conducted during the two year period preceding the date of this
Agreement and consistent with the entity's past policies, practices, and methods
(including with respect to quantity and frequency) in effect during such two
year period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PCBs" shall have the meaning set forth in Section 5.22(b) of this
Agreement.
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"Person" shall mean an individual, a partnership, a corporation, a
commercial bank, an industrial bank, a savings association, a savings bank, a
limited liability company, an association, a joint stock company, a trust, a
business trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Plan of Merger" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Previously Disclosed" shall mean, as to SCBC, all information disclosed in
a letter delivered by SCBC to CCB, and, as to CCB, all information disclosed in
a letter delivered by CCB to SCBC, in each case making such disclosure
specifically referring to this Agreement and arranged in paragraphs
corresponding to the Sections, subsections and items of this Agreement
applicable thereto, which letters shall be delivered at or before 5:00 o'clock,
p.m., on the 15th calendar day following the date of this Agreement. Information
shall be deemed Previously Disclosed for the purpose of a given Section,
subsection or item only to the extent a specific reference thereto is made in
connection with disclosure of such information at the time of such delivery.
"Prohibited Transaction" shall have the meaning set forth in ERISA Section
406 and Tax Code Section 4975.
"Proposed Acquisition" shall have the meaning set forth in Section 8.5 of
this Agreement.
"RCRA" shall have the meaning set forth in Section 5.22(e) of this
Agreement.
"Regulatory Agreement" shall have the meaning set forth in Section 5.11(b)
of this Agreement.
"Regulatory Approvals" shall have the meaning set forth in Section 2.6 of
this Agreement.
"Regulatory Authorities" shall have the meaning set forth in Section
5.11(b) of this Agreement.
"Reportable Event" shall have the meaning set forth in ERISA Section 4043.
"Rights" shall mean warrants, options, rights (whether stock appreciation
rights, conversion rights, exchange rights, profit participation rights, or
otherwise), convertible securities and other arrangements or commitments which
obligate a Person to issue, otherwise cause to become outstanding, sell,
transfer, pledge, or otherwise dispose of any of its capital stock or other
ownership interests, or any voting rights thereof or therein.
"Savings Bank Subsidiaries" shall mean OMNIBANK, Inc., A State Savings
Bank, Citizens Savings, Inc., SSB, and Home Savings Bank, Inc., SSB, all of
which are SCBC Subsidiaries.
"Savings Commission" shall mean the Savings Institutions Commission of the
North Carolina Department of Commerce.
"SCBC" shall have the meaning set forth in the preamble to this Agreement.
"SCBC Benefit Plans" shall have the meaning set forth in Section 5.12(a) of
this Agreement.
"SCBC Common Stock" shall have the meaning set forth in Section 3.1 of this
Agreement.
"SCBC Deferred Compensation Plans" shall mean (i) the SCBC Management Plan
and the SCBC Directors Plan, (ii) the deferred compensation plans maintained
with respect to current and former directors of Citizens Savings, Inc., SSB, and
Home Savings, Inc., SSB, and (iii) certain deferred compensation agreements, and
related agreements, maintained for former officers and/or directors of SCBC or
an SCBC Subsidiary.
"SCBC Directors Plan" means the Security Capital Bancorp/Security Bank and
Trust Company Directors' Deferred Compensation Plan and all trusts created in
connection therewith.
"SCBC Dissenting Shareholders" shall have the meaning set forth in Section
3.7 of this Agreement.
"SCBC ESOP" means the Security Capital Bancorp Employee Stock Ownership
Plan.
"SCBC Financial Statements" shall mean (i) the audited consolidated balance
sheets (including related notes, schedules, if any, and independent auditors'
reports) of SCBC as of December 31, 1994, 1993 and 1992 and the related audited
consolidated statements of income, stockholders' equity and cash flows
(including related notes, schedules, if any, and independent auditors' reports)
for each of the periods ended December 31, 1994, 1993 and 1992, as have been
Previously Disclosed (or, in the case of the period ended December 31, 1994, as
will be disclosed to CCB prior to the Effective Time) and (ii) SCBC's unaudited
consolidated balance sheets (including related notes and schedules, if any) as
of September 30, 1994 and the related unaudited consolidated statements of
income, stockholders' equity and cash flows for the periods ended March 31,
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and June 30 and September 30, 1994 as have been Previously Disclosed and, with
respect to interim periods ended subsequent to December 31, 1994 as will be
provided to CCB prior to the Effective Time.
"SCBC LTIP" shall mean the Security Capital Bancorp Stock Ownership and
Long-Term Incentive Compensation Plan as it exists as of the date hereof.
"SCBC Management Plan" means the Security Capital Bancorp Senior
Management's Deferred Compensation Plan and all trusts created in connection
therewith.
"SCBC Options Plans" shall mean the SCBC LTIP and all stock option plans
and other plans providing for options to acquire SCBC Common Stock or any
predecessor of SCBC, or any SCBC Subsidiary or predecessor thereof, adopted or
assumed by SCBC.
"SCBC Pension Plan" means the Security Capital Bancorp Employees' Pension
Plan.
"SCBC Profit Sharing Plan" means the Security Capital Bancorp Employees'
Incentive Profit Sharing and Savings Plan.
"SCBC Stock Options" shall mean all options outstanding as of the date of
the execution of this Agreement under any SCBC Options Plan.
"SCBC Subsidiaries" shall mean any and all of SC Bank, OMNIBANK, Inc., A
State Savings Bank, Citizens Savings, Inc., SSB, Home Savings Bank, Inc., SSB,
and Estates Development Corporation, all of which are subsidiaries of SCBC; and,
First Security Credit Corporation, Security Capital Mortgage Corporation, First
Security Equity Corporation, Northbound, Ltd., Carolina Financial Services
Corporation, University Financial Services Corporation, Inc., NC Financial
Services Corporation, and First Residential Mortgage Group, Inc., all of which
are subsidiaries of SC Bank; provided, however, that it is presently anticipated
that SC Bank will purchase the assets and assume the liabilities of Northbound,
Ltd., Carolina Financial Services Corporation, University Financial Services
Corporation, Inc., NC Financial Services Corporation, and First Residential
Mortgage Group, Inc., and that such SCBC Subsidiaries will be dissolved and
liquidated, prior to the Effective Time.
"SC Bank" shall mean Security Capital Bank.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Document" shall mean any registration statement, document, report,
notice or other filing filed by CCB or SCBC, as applicable, with the SEC
pursuant to the 1933 Act or the 1934 Act.
"Securities Laws" shall have the meaning set forth in Section 5.4(c) of
this Agreement.
"Shareholders' Meetings" shall have the meaning set forth in Section 7.6 of
this Agreement.
"Significant Contract" shall mean, with respect to CCB and any CCB
Subsidiary, or SCBC and any SCBC Subsidiary, as applicable, (a) any note, bond,
mortgage or other instrument which evidences or secures indebtedness of such
Person (other than a deposit) with a balance outstanding of $50,000 or more,
which cannot be redeemed or prepaid at the option of such Person for an amount
which, when added to the outstanding principal balance, would be less than
$50,000, (b) any agreement, arrangement, commitment, contract or other
instrument, except a lease of real or personal property, to which such Person is
a party or by which they are bound, if (i) such agreement, arrangement,
commitment, contract or instrument was not made in the Ordinary Course of
Business by such Person, or (ii) the performance or nonperformance of such
agreement, arrangement, commitment, contract or instrument could either (X)
increase the liabilities or decrease the assets of the Person, or (Y) decrease
the income or increase the expenses of such Person, in each case by $50,000 or
more over the remaining term of the obligation, exclusive of all optional
renewal periods and extensions of the term; provided, however, that any such
agreement, arrangement, commitment, contract or other instrument shall not be
deemed to be a Significant Contract in the event such Person has the contractual
right to terminate the agreement, arrangement, commitment, contract or other
instrument in question on 30 days' notice or less, without incurring a penalty
or premium in excess of $50,000. It is understood that Significant Contacts do
not include loans or commitments to fund loans or to extend credit.
"Significant Lease" shall mean, with respect to CCB and any CCB Subsidiary,
or SCBC and any SCBC Subsidiary, (a) any lease of real or personal property, or
any sublease of real property, by such Person, as lessee, pursuant to which such
Person reasonably anticipates the payment of aggregate rent, Taxes, insurance,
utilities (if applicable) and other charges in excess of $50,000 over the
remaining term of the lease, exclusive of all optional renewal periods and
optional extensions of the term (provided, however, that any such lease shall
not be deemed a Significant Lease in the event that such Person has the
contractual right to terminate the lease in question on 30 days' notice or less,
without incurring a penalty or premium in
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excess of $50,000); or (b) any lease of real or personal property, or any
sublease of real property, by such Person, as lessor, pursuant to which such
Person reasonably anticipates the collection of aggregate rent in excess of
$50,000 over the remaining term of the lease, exclusive of all optional renewal
periods and extensions of the term (provided, however, that any such lease shall
not be deemed a Significant Lease in the event that such Person has the
contractual right to terminate the lease in question on 30 days' notice or less,
without incurring a penalty or premium in excess of $50,000).
"Subsequent Merger" shall have the meaning set forth in Section 2.7 of this
Agreement.
"Surviving Corporation" shall have the meaning set forth in the preamble to
this Agreement.
"Tax" or "Taxes" shall mean any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, withholding, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Tax Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax or taxes of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended.
"Tax Return" shall mean any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Other terms used herein are defined elsewhere in this Agreement.
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time NSC shall be merged with and into SCBC in accordance with the
provisions of Article 11 of the NCBCA and with the effect provided in Section
55-11-06 of the NCBCA. The separate corporate existence of NSC shall thereupon
cease, and SCBC shall be the Surviving Corporation.
2.2 DIRECTORS. At the Effective Time and subject to any required approval
of an amendment by CCB's shareholders at the CCB Shareholders' Meeting to CCB's
Bylaws to authorize CCB's Board of Directors to establish the total number of
directors constituting such Board at a level sufficient for CCB to fulfill its
obligations under this Section 2.2 (the "CCB Bylaw Approval"), Miles J. Smith,
Jr. and David B. Jordan, and four other members of SCBC's Board of Directors
mutually agreeable to SCBC and CCB, shall be appointed to serve as directors of
CCB until the next meeting of shareholders at which the members of the Board of
Directors of CCB are subject to re-election or until their successors are
elected and qualified. Further, subject to the CCB Bylaw Approval, such persons
shall be nominated and recommended for election as directors at such meeting of
shareholders of CCB to serve until their successors are elected and qualified.
Such persons shall also be appointed to serve as directors of CCB Bank until the
next meeting of the shareholder of CCB Bank at which members of the Board of
Directors of CCB Bank are subject to re-election or until their successors are
elected or qualified, and at such meeting of the shareholder of CCB Bank they
shall be nominated and elected as directors of CCB Bank.
Immediately prior to and as of the Effective Time, all directors of SCBC
shall resign as directors of SCBC, except Miles J. Smith, Jr. and David B.
Jordan, and four persons selected by CCB shall be appointed as directors of the
Surviving Corporation.
2.3 VICE CHAIRMEN AND COMMITTEES OF THE BOARD OF DIRECTORS.
(a) At the Effective Time, the Chairman of the Board of Directors of CCB
and CCB Bank shall be W.L. Burns, Jr., and the Vice Chairman of the Board of
Directors of CCB and CCB Bank shall be David B. Jordan, each of whom shall serve
in such capacities until his successor shall have been duly appointed in
accordance with the Bylaws of CCB and CCB Bank.
(b) At the Effective Time, the Boards of Directors of CCB and CCB Bank
shall appoint David B. Jordan to their Executive Committees, who shall serve
until his successor shall have been duly appointed in accordance with the
respective Bylaws of CCB and CCB Bank.
2.4 OFFICERS. At the Effective Time, the Boards of Directors of CCB and CCB
Bank shall appoint Ralph A. Barnhardt and Lloyd G. Gurley as Executive
Vice-Presidents of CCB and CCB Bank, each of whom shall serve in such capacities
until
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his successor shall have been duly appointed in accordance with the Bylaws of
CCB and CCB Bank. At and after the Effective Time, Ernest C. Roessler shall
continue to serve as the President and Chief Executive Officer of CCB and CCB
Bank.
2.5 TIME AND PLACE OF CLOSING. The closing of the Bank Conversions, the
Merger, the Bank Mergers and the other transactions (other than the Branch
Purchase) contemplated hereby (the "Closing") will take place at the principal
offices of CCB in Durham, North Carolina at 11:00 o'clock, a.m., on the date
that the Effective Time occurs, or at such other prior time, and at such place,
as may be mutually agreed upon by CCB and SCBC (the "Closing Date").
2.6 EFFECTIVE TIME. The Merger shall become effective on the date and at
the time (the "Effective Time") on which Articles of Merger containing a Plan of
Merger in substantially the form of Appendix A hereto (the "Plan of Merger") and
the other provisions required by, and executed in accordance with, Section
55-11-05 of the NCBCA (the "Articles of Merger") shall have been accepted for
filing by the Secretary of State of the State of North Carolina (or such later
date and time as may be specified in the Articles of Merger). Unless otherwise
mutually agreed upon by CCB and SCBC, subject to the terms and conditions
hereof, the Effective Time shall occur on the first business day following the
last to occur of (i) the date that is 30 days after the date of the later to
occur of the order of the Federal Reserve Board approving the Merger pursuant to
the BHCA and the last to be granted of the orders of the FDIC approving the Bank
Conversions and Bank Mergers, (ii) the effective date of the last required
order, approval, or exemption of the FDIC, the Commission, the Commissioner, the
Savings Commission, the Administrator, or any other federal or state regulatory
agency approving or exempting the Bank Conversions, the Merger and/or the Bank
Mergers (the "Regulatory Approvals"), (iii) the expiration of all required
waiting periods after the filing of notices with, or the receipt of Regulatory
Approvals from, all federal or state regulatory agencies required for
consummation of the Bank Conversions, the Merger and the Bank Mergers, and (iv)
the later of the dates on which the shareholders of CCB and SCBC approve this
Agreement and the transactions contemplated hereby, to the extent such approvals
are required under the NCBCA, other North Carolina laws or the rules,
regulations or bylaws of the NASD.
2.7 SUBSEQUENT ACTIONS. As soon as reasonably practicable following the
Effective Time, the Surviving Corporation shall be merged with and into CCB in
accordance with the provisions of Article 11 of the NCBCA and with the effect
provided in Section 55-11-06 of the NCBCA (the "Subsequent Merger"). CCB shall
be the surviving corporation of the Subsequent Merger. If, at any time after the
Effective Time, CCB shall consider or be advised that any corporate or
regulatory filings, regulatory approvals, deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record, or otherwise, in the Surviving Corporation its
right, title or interest in, to or under any of the rights, properties or assets
of either SCBC or NSC acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger, or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, and file, if required in the name and on
behalf of each of SCBC and NSC or otherwise, all such corporate or regulatory
filings, deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of each of SCBC and NSC or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation, or otherwise to carry out this
Agreement.
2.8 PERFORMANCE OF OBLIGATIONS. The parties hereto intend and agree that
CCB shall perform, or cause to be performed, all obligations of the Surviving
Corporation described or set forth in this Agreement and that, upon and after
the Subsequent Merger, CCB shall succeed to, and shall perform, all such
obligations.
ARTICLE III
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article III, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, each of the shares of common stock, no par value per
share, of SCBC (the "SCBC Common Stock") issued and outstanding immediately
prior to the Effective Time (excluding shares held by CCB, SCBC, any CCB
Subsidiary or any SCBC Subsidiary, in each case other than in a fiduciary
capacity or as a result of debts previously contracted, and excluding shares
held by SCBC Dissenting Shareholders) shall be converted into and become .50 of
a share of the common stock, $5.00 par value per share, of CCB (the "CCB Common
Stock") and .50 of a preferred share purchase right (a "CCB Rights") as
described in CCB's Shareholder Rights Plan, adopted February 26, 1990 (the "CCB
Rights Plan") (the "Exchange Ratio"). Each of the shares of CCB Common Stock
(and the attached CCB Rights) and any shares of any CCB Subsidiary or SCBC
Subsidiary outstanding immediately prior to the Effective Time shall continue to
be issued and outstanding, and shall not be converted, exchanged or altered in
any manner as a result of the Merger; except as otherwise provided in the Plan
of Merger with respect to shares of the common stock of NSC.
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3.2. CONVERSION OF OPTIONS. At the Effective Time, all Rights with respect
to SCBC Stock Options granted under SCBC Options Plans, whether or not then
exercisable, shall be converted into and become Rights with respect to CCB
Common Stock, and CCB shall assume all obligations of SCBC with respect to each
SCBC Stock Option, in accordance with the terms of the respective SCBC Options
Plan under which it was issued and the stock option agreement by which it may be
evidenced. From and after the Effective Time, (i) each SCBC Stock Option shall
be assumed by CCB and may be exercised solely for shares of CCB Common Stock
(which shall have attached thereto CCB Rights), (ii) the number of shares of CCB
Common Stock (with attached CCB Rights) subject to each SCBC Stock Option shall
be equal to the number of shares of SCBC Common Stock subject to such SCBC Stock
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iii) the per share exercise price under each such Stock Option shall be
adjusted by dividing the per share exercise price under each such option by the
Exchange Ratio and rounding down to the nearest cent; PROVIDED, HOWEVER, that
the number of shares of CCB Common Stock (with attached CCB Rights) subject to
each SCBC Stock Option and the per share exercise price shall be subject to
further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction declared or effected by CCB
subsequent to the Effective Time. It is intended that the foregoing adjustments
and assumption shall be undertaken in a manner that will constitute a
"modification" within the meaning of, and that is otherwise consistent with, Tax
Code Section 424(a) as to any stock option which is an "incentive stock option"
(as defined in Section 422 of the Tax Code).
3.3 ANTI-DILUTION PROVISIONS. Except for the issuance of CCB Common Stock
pursuant to the exercise, grant or award of Rights under the CCB LTIP or the
issuance of SCBC Common Stock pursuant to the exercise of SCBC Stock Options and
except as Previously Disclosed by CCB under the last proviso of Section 7.2(c)
below, in the event that CCB or SCBC changes the number of shares of CCB Common
Stock or SCBC Common Stock, respectively, issued and outstanding between the
date hereof and the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.4 SHARES HELD BY CCB OR SCBC. Each of the shares of SCBC Common Stock
held by CCB or any CCB Subsidiary or SCBC or any SCBC Subsidiary, other than
shares held by CCB or any CCB Subsidiary or SCBC or any SCBC Subsidiary in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor; except as otherwise provided in the Plan of Merger with
respect to shares of the common stock of NSC.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of SCBC Common Stock converted pursuant to the
Merger or of SCBC Stock Options, who would otherwise have been entitled to
receive a fraction of a share of CCB Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of the
CCB Common Stock multiplied by the market value of one share of CCB Common Stock
at the Effective Time, in the case of shares of SCBC Common Stock converted
pursuant to the Merger, or the date of exercise, in the case of SCBC Stock
Options. The market value of one share of CCB Common Stock at the Effective Time
or the date of exercise, as the case may be, shall be the closing sales price of
CCB Common Stock as quoted on the National Market System of the Nasdaq Stock
Market, Inc. ("NMS") (as reported by THE WALL STREET JOURNAL or, if not reported
thereby, any other authoritative source) on the last trading day preceding the
Effective Time or the date of exercise, as the case may be. No such holder will
be entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional share.
3.6 TRANSFERS. At the Effective Time, the stock transfer books of SCBC
shall be closed as to holders of SCBC Common Stock immediately prior to the
Effective Time and no transfer of SCBC Common Stock by any such holder shall
thereafter be made or recognized. If, after the Effective Time, certificates are
properly presented in accordance with Article IV of this Agreement to the
Registrar and Transfer Company, acting as the exchange agent for CCB Common
Stock (the "Exchange Agent"), such certificates shall be canceled and exchanged
for certificates representing the number of whole shares of CCB Common Stock,
and a check representing the amount of cash for fractional shares, if any, into
which the SCBC Common Stock represented thereby was converted in the Merger. Any
other provision of this Agreement notwithstanding, none of CCB, SCBC, NSC, the
Exchange Agent or any Affiliate of the foregoing shall be liable to a holder of
SCBC Common Stock for any amount paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property, escheat, or
similar law.
3.7 DISSENTING SHAREHOLDERS. Notwithstanding any other provision of this
Agreement, shares of SCBC Common Stock held by holders who did not vote in favor
of the Merger and who otherwise perfect dissenters' rights under Section
55-13-01 ET SEQ. of the NCBCA ("SCBC Dissenting Shareholders") shall not be
converted into or become shares of CCB Common Stock, but such shares of SCBC
Common Stock shall represent only the right to receive the "fair value" of such
shares as provided in the NCBCA. If any such holder shall have failed to perfect
or shall have effectively withdrawn or lost such
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dissenters' rights, such shares of SCBC Common Stock shall thereupon be deemed
to have been converted and become shares of CCB Common Stock in accordance with
the Exchange Ratio as of the Effective Time without any interest thereon. SCBC
shall give CCB prompt notice of any purported exercise of dissenters' rights and
CCB shall have the right to participate in all negotiations and proceedings with
respect to any such demands. SCBC shall not, except with the prior written
consent of CCB, voluntarily make any payment with respect to, or settle or offer
or agree to settle, any such demand for payment.
ARTICLE IV
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, CCB shall cause
the Exchange Agent to mail appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of SCBC Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent) to the
former shareholders of SCBC. After the Effective Time, each holder of shares of
SCBC Common Stock issued and outstanding at the Effective Time (other than
shares to be canceled pursuant to Sections 3.4 or 3.7 of this Agreement) shall
surrender the certificate or certificates theretofore representing such shares,
together with such transmittal materials properly executed, to the Exchange
Agent and promptly upon surrender shall receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
declared but unpaid dividends in respect of such shares. The certificate or
certificates of SCBC Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. To the extent provided by Section 3.5 of this
Agreement, each holder of shares of SCBC Common Stock issued and outstanding at
the Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
CCB Common Stock of which such holder would otherwise be entitled. CCB shall not
be obligated to deliver the consideration to which any former holder of SCBC
Common Stock is entitled as a result of the Merger until such holder surrenders
his certificate or certificates representing shares of SCBC Common Stock for
exchange as provided in this Article IV. In addition, certificates surrendered
for exchange by any person constituting an "affiliate" of SCBC for purposes of
Rule 145(c) under the 1933 Act shall not be exchanged for certificates
representing whole shares of CCB Common Stock until CCB has received a written
agreement from such person as provided in Section 7.7. In the event any
certificate shall have been lost, stolen or destroyed, upon receipt of
appropriate evidence as to such loss, theft or destruction and to ownership of
such certificate by the person claiming such certificate to be lost, stolen or
destroyed and the receipt by the Exchange Agent of appropriate and customary
indemnification, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed certificate shares of CCB Common Stock (with attached CCB Rights)
and a check representing cash in lieu of fractional shares and/or declared but
unpaid dividends deliverable in respect thereof. If any certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and the person requesting such exchange shall affix any requisite stock transfer
tax stamps to the certificate surrendered, shall provide funds for their
purchase or for any transfer or other taxes required by reason of the delivery
of such certificate or check or shall establish to the satisfaction of the
Exchange Agent that such taxes have been paid or are not payable.
4.2 VOTING AND DIVIDENDS. Former shareholders of record of SCBC shall be
entitled to vote after the Effective Time at any meeting of shareholders of CCB
the number of whole shares of CCB Common Stock into which their respective
shares of SCBC Common Stock are converted, regardless of whether such holders
have exchanged their certificates representing SCBC Common Stock for
certificates representing CCB Common Stock in accordance with the provisions of
this Agreement. Until surrendered for exchange in accordance with the provisions
of Section 4.1 of this Agreement, each certificate theretofore representing
shares of SCBC Common Stock (other than shares to be canceled pursuant to
Section 3.4 or 3.7 of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive shares of CCB Common Stock
(with attached CCB Rights), and cash in lieu of fractional shares as set forth
in this Agreement. Whenever a dividend or other distribution is declared by CCB
on the CCB Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
shares issuable pursuant to this Agreement, but beginning on the 91st day after
the date on which the Effective Time shall occur, no dividend or other
distribution payable to the holders of record of CCB Common Stock at or as of
any time after the Effective Time shall be paid to the holder of any certificate
representing shares of SCBC Common Stock issued and outstanding at the Effective
Time until such holder physically surrenders such certificate for exchange as
provided in Section 4.1 of this Agreement, promptly after which time all such
dividends or distributions shall be paid (without interest).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SCBC
SCBC represents and warrants to CCB as follows:
5.1 ORGANIZATION, STANDING, AND AUTHORITY. SCBC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, and is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where both its
ownership or leasing of property or the conduct of its business requires it to
be so qualified and the failure to do so would constitute a Material Adverse
Event. SCBC has all requisite corporate power and authority to carry on its
business as now conducted and to own, lease and operate its assets, properties
and business, and to execute, deliver and perform its obligations under this
Agreement. SCBC is duly registered as a bank holding company under the BHCA.
Except as Previously Disclosed, SCBC has in effect all federal, state, local and
foreign governmental, regulatory and other authorizations, permits and licenses
(collectively, "Authorizations") necessary for it to own or lease its properties
and assets and to carry on its business as now conducted.
5.2 CAPITAL STOCK.
(a) The authorized capital stock of SCBC consists of (i) 25,000,000 shares
of SCBC Common Stock, of which 11,771,649 shares were issued and outstanding on
October 31, 1994, and (ii) 5,000,000 shares of serial preferred stock, no par
value per share, none of which were issued and outstanding on such date. All of
the issued and outstanding shares of SCBC Common Stock are duly and validly
issued and outstanding and are fully paid and nonassessable. None of the
outstanding shares of SCBC Common Stock has been issued in violation of any
preemptive rights. Except as contemplated by this Agreement and except for the
SCBC Stock Options, there are no other shares of capital stock or other equity
securities of SCBC outstanding and no Rights relating to the capital stock of
SCBC. There are currently outstanding SCBC Stock Options to acquire 389,275
shares of SCBC Common Stock.
(b) The SCBC Common Stock is duly registered under the 1934 Act. The SCBC
Common Stock is not subject to any restrictions as to transfer thereof
(exclusive of restrictions respecting shares of SCBC Common Stock held by its
directors, officers or other "affiliates" imposed in accordance with the
Securities Laws). To the knowledge of SCBC and except as Previously Disclosed,
as of the date hereof, no Person is a beneficial owner of, or has a Right to own
beneficially, five percent (5%) or more of the SCBC Common Stock. For purposes
of this Section 5.2, the term "beneficial owner" shall have the meaning provided
in Rule 13d-3 of the rules and regulations of the SEC as in effect on the date
hereof, except that the terms shall not include ownership of any of the SCBC
Common Stock held by SCBC or any SCBC Subsidiary as trustee or in some other
fiduciary or custodial capacity.
5.3 SCBC SUBSIDIARIES.
(a) Each of SCBC's Subsidiaries (i) is duly organized, validly existing and
in good standing under the laws of North Carolina, (ii) is duly qualified to do
business and is in good standing in all jurisdictions (whether federal, state,
local or foreign) where both its ownership or leasing of property or the conduct
of its business requires it to be so qualified and the failure to do so would
constitute a Material Adverse Effect, and (iii) has all requisite corporate
power and authority to, and has in effect all Authorizations necessary for it
to, carry on its business as now conducted and to own, lease and operate its
assets, properties and business. Other than the SCBC Subsidiaries or as
Previously Disclosed, SCBC neither owns nor controls five percent (5%) or more
of the outstanding equity securities, either directly or indirectly, of any
corporation, bank, savings bank, savings association or other Person.
(b) SCBC is the direct, record and beneficial owner of 100% of the
outstanding shares of capital stock of each of the SCBC Subsidiaries which are
its direct subsidiaries, and SC Bank is the direct, record and beneficial owner
of 100% of the outstanding shares of capital stock of each of the SCBC
Subsidiaries which are direct subsidiaries of SC Bank. All of the shares of
capital stock of each of the SCBC Subsidiaries are fully paid and nonassessable
(except, with respect to SC Bank, as otherwise provided under N.C. Gen. Stat.
(section mark)53-42) and are owned by SCBC or SC Bank free and clear of any
Liens. No equity securities of any SCBC Subsidiary are or may become required to
be issued (other than to SCBC or SC Bank) under any Rights.
5.4. AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement by SCBC and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
SCBC, SC Bank and the Savings Bank Subsidiaries, respectively, subject to the
approval of their respective shareholders to the extent
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required by applicable law. This Agreement, subject to requisite shareholder
approvals and Regulatory Approvals, represents a valid and legally binding
obligation of SCBC, enforceable against SCBC in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by SCBC, nor the
consummation by SCBC, SC Bank or the Savings Bank Subsidiaries of the
transactions contemplated hereby to which they are parties, nor compliance by
SCBC with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of the respective Articles of Incorporation (or
Charters) or Bylaws of SCBC, SC Bank or the Savings Bank Subsidiaries, (ii)
constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
Lien upon, any property or assets of SCBC or any SCBC Subsidiaries or pursuant
to any Significant Contract or Significant Lease, or (iii) subject to receipt of
all requisite shareholder approvals and Regulatory Approvals, violate any order,
writ, injunction, decree, statute, rule or regulation applicable to SCBC or any
SCBC Subsidiary or any of their properties or assets.
(c) Other than (i) in connection or compliance with the provisions of
applicable state securities laws, the 1933 Act, the 1934 Act, and the rules and
regulations of the SEC and any state securities or "Blue Sky" administrators
promulgated thereunder (collectively, the "Securities Laws"), and the rules and
regulations of the NASD, (ii) consents, authorizations, approvals or exemptions
required from the Federal Reserve Board, the Federal Reserve, the FDIC, the
Commission, the Commissioner, the Savings Commission or the Administrator, and
(iii) notices to or filings with the IRS or the PBGC with respect to any
employee benefit plans, or under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), no notice to, filing with,
authorization of, exemption by, or consent or approval of any public body or
authority is necessary for the consummation of the Bank Conversions by the
Savings Bank Subsidiaries, the Merger by SCBC, the Bank Mergers by SC Bank and
the Savings Bank Subsidiaries, and the other transactions contemplated in this
Agreement.
5.5 FINANCIAL STATEMENTS. SCBC (i) has delivered (or will deliver, when
issued) to CCB copies of the SCBC Financial Statements. The SCBC Financial
Statements (as of the dates thereof and for the periods covered thereby) (i) are
or will be in accordance with the books and records of SCBC and the SCBC
Subsidiaries, which are or will be complete and accurate in all material
respects and which have been or will have been maintained in accordance with
good business practices, (ii) present or will present fairly in all material
respects the consolidated financial position and the consolidated results of
operations, changes in stockholders' equity and cash flows of SCBC and the SCBC
Subsidiaries as of the dates and for the periods indicated, in accordance with
GAAP, subject in the case of interim financial statements to normal recurring
year-end adjustments, and (iii) with respect to the SCBC Financial Statements as
of and for the years ended or ending December 31, 1992, December 31, 1993 and
December 31, 1994, have been and will be audited by independent certified public
accountants.
5.6 BOOKS AND CORPORATE RECORDS.
(a) Except as Previously Disclosed, the books of account of SCBC and the
SCBC Subsidiaries have been maintained in substantial compliance with all
applicable legal and accounting requirements and in such manner as to reflect
accurately their respective items of income and expense and all of their
respective assets, liabilities and stockholders' equity. To the knowledge of
SCBC, SCBC and the SCBC Subsidiaries have filed all material reports and returns
required by any law or regulation to be filed and have duly paid or accrued on
their books of account all Taxes and charges due pursuant to such reports and
returns, or assessed against them, including, without limitation, all such
reports, statements and assessments which SCBC or any SCBC Subsidiary is
required to have filed or paid pursuant to all bank holding company, state
commercial bank and state savings bank laws and regulations, none of which
reports, statements or assessments has been the subject of any material
objection by the regulatory agent with which filed.
(b) The respective minute books of SCBC and each SCBC Subsidiary accurately
reflect in all material respects the corporate actions which their respective
shareholders and board of directors, and all committees thereof, have taken
during the time periods covered by such minute books. Such minute books have
been or will be made available to CCB and its representatives, except for the
minutes of SCBC's Board of Directors meetings on October 27, 1994 and November
4, 1994, and any subsequent meetings of SCBC's Board of Directors or committees
thereof relating to the negotiation or approval of the Merger or this Agreement.
5.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed or
reflected in any SEC Document filed by SCBC since January 1, 1992 and prior to
the date hereof, neither SCBC nor any SCBC Subsidiary has any obligations or
liabilities (contingent or otherwise) that would constitute, individually or in
the aggregate, a Material Adverse Event. Except as Previously Disclosed or
reflected in any SEC Document filed by SCBC since January 1, 1992, neither SCBC
nor any SCBC Subsidiary has incurred or paid any obligation or liability which
would constitute a Material Adverse Event.
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5.8 TAX MATTERS.
(a) Except as Previously Disclosed, all Tax Returns required to be filed by
or on behalf of SCBC or any SCBC Subsidiary have been timely filed, or requests
for extensions have been timely filed and granted and have not expired, for
periods ending on or before December 31, 1993, and all such Tax Returns filed
are complete and accurate in all material respects. Except as Previously
Disclosed or reflected in any SEC Document filed by SCBC since January 1, 1992
and prior to the date hereof, all Taxes shown on filed Tax Returns have been
paid. Except as Previously Disclosed or reflected in any SEC Document filed by
SCBC since January 1, 1992 and prior to the date hereof, there is no audit
examination, deficiency or refund litigation or matter in controversy with
respect to any Taxes that would constitute a Material Adverse Event. All Taxes
due from SCBC and the SCBC Subsidiaries with respect to completed and settled
examinations or concluded Tax litigation have been paid.
(b) Except as Previously Disclosed, neither SCBC nor any SCBC Subsidiary
has executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect.
(c) In the opinion of SCBC's management, adequate provision for any Taxes
due or to become due from SCBC or any SCBC Subsidiary for any period or periods
through and including September 30, 1994, has been made and is reflected on the
September 30, 1994 consolidated financial statements included in the SCBC
Financial Statements.
(d) Deferred Taxes of SCBC and the SCBC Subsidiaries have been provided for
in the SCBC Financial Statements in accordance with GAAP, subject in the case of
interim financial statements to normal recurring year-end adjustments.
5.9 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statements of financial condition of SCBC
and the SCBC Subsidiaries as of September 30, 1994 included in the SCBC
Financial Statements was, and the Allowance shown on the consolidated statements
of financial condition of SCBC and the SCBC Subsidiaries as of dates subsequent
to the execution of this Agreement included in the SCBC Financial Statements
will be, in each case as of the dates thereof, in the opinion of management of
SCBC, adequate to provide for losses relating to or inherent in the loan
portfolios of SCBC and the SCBC Subsidiaries.
5.10 PROPERTIES. Except as Previously Disclosed, SCBC and the SCBC
Subsidiaries have good and marketable title to all their material properties and
assets, whether tangible or intangible, real, personal or mixed, including, but
not limited to, all material properties and assets reflected in the consolidated
balance sheet of SCBC and the SCBC Subsidiaries as of September 30, 1994
included in the SCBC Financial Statements or reflected in the notes thereto, and
all properties and assets purchased by SCBC and the SCBC Subsidiaries since such
date, except for such properties and assets which have been sold or otherwise
disposed of in the Ordinary Course of Business, are in each case free and clear
of all Liens, except for (a) Liens Previously Disclosed, (b) zoning ordinances,
easements of record, permits and other restrictions or limitations on the use of
real property which do not materially detract from the value of, or impair the
use of, such property by SCBC or any of the SCBC Subsidiaries in the operation
of its business, (c) Liens for current Taxes on property not yet due, and (d)
Liens which do not materially affect the operation of the business of SCBC and
the SCBC Subsidiaries on a consolidated basis. SCBC has Previously Disclosed all
material properties and assets which have been purchased or disposed of by SCBC
or any SCBC Subsidiary since September 30, 1994. SCBC has Previously Disclosed
all business locations of SCBC and the SCBC Subsidiaries, including whether such
locations are owned or leased and a statement of when such locations were first
occupied by SCBC or the SCBC Subsidiary.
5.11 COMPLIANCE WITH LAWS.
(a) To the knowledge of SCBC and except as Previously Disclosed, each of
SCBC and the SCBC Subsidiaries is in compliance in all material respects with
all laws, regulations, rules, ordinances, reporting and licensing requirements
and orders applicable to its business or to its employees conducting its
business, with any Regulatory Agreements and with its internal policies and
procedures.
(b) Except as Previously Disclosed, neither SCBC nor any SCBC Subsidiary
has received any notification or communication from, or consented to or entered
into any memorandum, agreement or order with, any agency or department of any
federal, state or local government, including the Federal Reserve Board, the
Federal Reserve, the FDIC, the Commission, the Commissioner, the Savings
Commission, the Administrator, the SEC or the NASD, or the staffs thereof
(collectively, the "Regulatory Authorities"), (i) asserting that SCBC or any
SCBC Subsidiary is not in substantial compliance with any of the statutes,
regulations, rules or ordinances which such Regulatory Authority has promulgated
or enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any Authorization, (iii) requiring or threatening to
require SCBC or any SCBC Subsidiary, or indicating that SCBC or any SCBC
Subsidiary may be required, to enter into a cease and
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desist order, agreement or memorandum of understanding or any other agreement
restricting or limiting or purporting to restrict or limit in any manner the
operations of SCBC or any SCBC Subsidiary, including, without limitation, any
restriction on the payment of dividends, or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit in any manner the
operations of SCBC or any SCBC Subsidiary, including, without limitation, any
restriction on the payment of dividends (any such notification, communication,
memorandum, agreement or order described in this sentence herein referred to as
a "Regulatory Agreement"). True and correct copies of all Regulatory Agreements,
if any, have been or will be delivered to CCB by SCBC.
5.12 EMPLOYEE BENEFIT PLANS.
(a) SCBC has Previously Disclosed to CCB, and will deliver to CCB true and
complete copies of, the SCBC Deferred Compensation Plans, the SCBC Options
Plans, the SCBC Profit Sharing Plan, the SCBC Pension Plan, the SCBC ESOP and
all material pension, retirement, profit-sharing, long term incentive
compensation, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
material written employee programs, arrangements or agreements, whether arrived
at through collective bargaining or otherwise, all material medical (including
post-retirement medical), vision, dental or other health plans, all life
insurance plans and all other material employee benefit plans or fringe benefit
plans, including, without limitation, all Employee Benefit Plans, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
SCBC or any SCBC Subsidiary or any Affiliate thereof for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "SCBC Benefit Plans"). Any of the SCBC Benefit
Plans which is an Employee Pension Benefit Plan is referred to herein as an
"SCBC ERISA Plan."
(b) Each such SCBC Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all respects with the
applicable requirements of ERISA and the Tax Code, except where the failure to
comply would not constitute a Material Adverse Event.
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions) have
been filed or distributed appropriately with respect to each such SCBC Benefit
Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Tax
Code Section 4980B have been met with respect to each such SCBC Benefit Plan
which is an Employee Welfare Benefit Plan.
(d) All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to each such SCBC
Benefit Plan which is an SCBC ERISA Plan and all contributions for any period
ending at or before the Effective Time which are not yet due have been paid to
each such SCBC ERISA Plan or accrued by SCBC and the SCBC Subsidiaries in the
Ordinary Course of Business. All premiums or other payments for all periods
ending on or before the Effective Time have been paid with respect to each such
SCBC Benefit Plan which is an Employee Welfare Benefit Plan.
(e) Each such SCBC Benefit Plan which is a SCBC ERISA Plan and which is
intended to be a "qualified plan" meets the requirements of a "qualified plan"
under Tax Code Section 401(a) and, except as Previously Disclosed, has received,
since December 31, 1989, a favorable determination letter from the IRS.
(f) With respect to each SCBC Benefit Plan that SCBC or any SCBC Subsidiary
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
(i) No such SCBC Benefit Plan which is a SCBC ERISA Plan has been the
subject of a Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate any such SCBC
ERISA Plan has been instituted or, to the knowledge of SCBC, threatened.
(ii) There have been no Prohibited Transactions with respect to any
such SCBC Benefit Plan. No Fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such SCBC Benefit Plan.
No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such SCBC Benefit
Plan (other than routine claims for benefits) is pending or, to the
knowledge of SCBC, threatened.
(g) Neither SCBC nor any SCBC Subsidiary contributes to, ever has
contributed to, or ever has been required to contribute to any Multiemployer
Plan or has any liability (including withdrawal liability) under any
Multiemployer Plan.
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(h) Except as Previously Disclosed, neither SCBC nor any SCBC Subsidiary
maintains any defined benefit plans. Neither SCBC nor any SCBC Subsidiary has
incurred, and to the knowledge of SCBC, neither SCBC or any SCBC Subsidiary has
any reason to expect that any of them will incur, any liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of ERISA
(including any withdrawal liability) or under the Tax Code with respect to any
such SCBC Benefit Plan which is a SCBC ERISA Plan and that is maintained or ever
has been maintained by SCBC or any SCBC Subsidiary.
5.13 COMMITMENTS AND CONTRACTS. Except as Previously Disclosed, neither
SCBC nor any SCBC Subsidiary is a party or subject to any of the following
(whether written or oral, express or implied):
(a) any employment contract or understanding (including any understandings
or obligations with respect to severance or termination pay liabilities or
fringe benefits) with any present or former officer, director, employee,
including in any such Person's capacity as a consultant;
(b) any labor contract or agreement with any labor union;
(c) any contract, agreement or arrangement which limits the ability of SCBC
or any SCBC Subsidiary to compete in any line of business or which involves any
restriction of the geographic area in which SCBC or such SCBC Subsidiary may
carry on its business (other than as may be required by law or applicable
Regulatory Authorities); (d) any Significant Contract or Significant Lease; or
(e) any other contract which would be required to be disclosed as an exhibit to
an SEC Document of SCBC and which has not been so disclosed.
5.14 MATERIAL CONTRACT DEFAULTS. Neither SCBC nor any SCBC Subsidiary is,
or has received any notice or has any knowledge that any other party is, in
default in any respect under any Significant Contract or Significant Lease to
which SCBC or such SCBC Subsidiary is a party or by which SCBC or such SCBC
Subsidiary or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not constitute,
individually or in the aggregate, a Material Adverse Event and there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a default.
5.15 LEGAL PROCEEDINGS. Except as Previously Disclosed, there are no
actions, suits or proceedings instituted or pending or, to the knowledge of
SCBC, threatened against SCBC or any SCBC Subsidiary, or against any property,
asset, interest or right of any of them, that if decided adversely to SCBC or
such SCBC Subsidiary, individually or in the aggregate, would constitute a
Material Adverse Event or that might reasonably be expected to threaten or
significantly impede the consummation of the transactions contemplated by this
Agreement. Neither SCBC nor any SCBC Subsidiary is subject to any judgment,
order, writ, injunction, decree or ruling, that, individually or in the
aggregate, constitutes a Material Adverse Event or that might reasonably be
expected to threaten or significantly impede the consummation of the
transactions contemplated by this Agreement.
5.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1992, except
(i) as disclosed in any SEC Document filed by SCBC since January 1, 1992 and
prior to the date hereof, or (ii) as Previously Disclosed, neither SCBC nor any
SCBC Subsidiary has (A) failed to operate in the Ordinary Course of Business,
(B) suffered any change that would constitute a Material Adverse Event, (C)
incurred any material liabilities (direct, contingent or otherwise) or engaged
in any material transaction or entered into any material agreement outside of
the Ordinary Course of Business, (D) increased the salaries, compensation or
general benefits payable to its employees other than in the Ordinary Course of
Business, (E) suffered any loss, destruction or damage to any of its properties
or assets that would constitute a Material Adverse Event, or (F) made a material
acquisition or disposition of any assets or entered into any Significant
Contract or Significant Lease other than in the Ordinary Course of Business.
5.17 REPORTS. Since January 1, 1992, SCBC and each SCBC Subsidiary has
filed all reports and statements, together with all amendments required to be
made with respect thereto, that it was required to file with Regulatory
Authorities. Copies of each such reports and documents have been delivered or
will be made available to CCB. As of their respective dates, each of such
reports and documents complied in all material respects with all of the
statutes, rules and regulations enforced or promulgated by the respective
Regulatory Authority and no such report contained any information that was false
or misleading with respect to any material fact or omitted to state any material
fact necessary in order to make the statements therein not misleading.
5.18 INSURANCE. SCBC and each SCBC Subsidiary is presently insured, and
during each of the past five (5) calendar years has been insured, for reasonable
amounts against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of
fire, theft, liability and other insurance
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maintained with respect to the assets or businesses of SCBC and the SCBC
Subsidiaries provide adequate coverage against loss, and the fidelity bonds in
effect as to which SCBC or any SCBC Subsidiary is a named insured are sufficient
for their purpose.
5.19 LABOR. No work stoppage involving SCBC or any SCBC Subsidiary is
pending or, to the knowledge of SCBC, threatened. Neither SCBC nor any SCBC
Subsidiary is involved in, or, to the knowledge of SCBC, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding that would constitute a Material Adverse Event. SCBC and each SCBC
Subsidiary has, to the knowledge of SCBC, complied in all material respects with
all laws relating to the employment of labor, including, without limitation, any
provisions thereof relating to wages, and no person has, to the knowledge of
SCBC, asserted that SCBC or any SCBC Subsidiary is liable in any material amount
for any arrears or wages or any taxes or penalties for failure to comply with
any of the foregoing. Except as Previously Disclosed, there is no material
action, suit or proceeding by any Person pending or, to the knowledge of SCBC,
threatened, against SCBC or any SCBC Subsidiary (or any of the employees
thereof), involving employment discrimination, sexual harassment, wrongful
discharge or similar claims. Employees of SCBC and the SCBC Subsidiaries are not
represented by any labor union, and, to the knowledge of SCBC, no labor union is
attempting to organize employees of SCBC or any SCBC Subsidiary.
5.20 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in SCBC's
Proxy Statement for its 1994 Annual Meeting of Shareholders or as Previously
Disclosed, no officer or director of SCBC, or any "associate " (as such term is
defined in Rule 14a-1 under the 1934 Act) of any such officer or director, has
any material interest in any Significant Contract or Significant Lease or any
property (real or personal), tangible or intangible, used in or pertaining to
the business of SCBC or any SCBC Subsidiary.
5.21 REGISTRATION OBLIGATION. Except as Previously Disclosed, neither SCBC
nor any SCBC Subsidiary is under any obligation, contingent or otherwise, which
will survive the Merger or the Subsequent Merger by reason of any agreement to
register any of its securities or Rights relating thereto under the 1933 Act;
provided, however, that SCBC intends to file a Registration Statement on Form
S-8 with respect to options granted under, and shares of SCBC Common Stock
issuable pursuant to, the SCBC LTIP prior to the Effective Time.
5.22 ENVIRONMENTAL MATTERS.
(a) Except as Previously Disclosed, neither SCBC nor any SCBC Subsidiary,
nor any properties owned or operated by SCBC or any SCBC Subsidiary has been or
is in violation of or liable under any Environmental Law. There are no actions,
suits or proceedings, demands, claims, notices or investigations (including,
without limitation, notices, demand letter or requests for information from any
Environmental Agency) instituted, pending or threatened relating to the
liability of any properties owned or operated by SCBC or any SCBC Subsidiary
under any Environmental Law.
(b) Except as Previously Disclosed, (i) no Hazardous Materials have been
generated, treated, stored or disposed of at, or transported to or from, any
properties owned or operated by SCBC or any SCBC Subsidiary at any time, except
in compliance with the Environmental Laws, (ii) no friable asbestos containing
material is in use, or is or has been stored or disposed of on or upon any
properties owned or operated by SCBC or any SCBC Subsidiary, (iii) no
polychlorinated biphenyls ("PCBs") are located on or in any properties owned or
operated by SCBC or any SCBC Subsidiary in any form or device, including,
without limitation, in the form of electrical transformers, fluorescent light
fixtures with ballasts, or cooling oils, except in compliance with the
Environmental Laws, and (iv) no underground storage tanks are located on any
properties owned or operated by SCBC or any SCBC Subsidiary or were located on
any properties owned or operated by SCBC or any SCBC Subsidiary and subsequently
removed or filled. The representations in Sections 5.22(a) and (b) shall also
apply to any properties in which any SCBC Subsidiary has a security interest.
(c) All representations in this Section 5.22 (i) are to the knowledge of
SCBC without independent investigation and (ii) shall not apply to the extent
that, in the opinion of SCBC's management, the results of such actions, suits,
proceedings, demands, claims, notices or investigations, or the presence of such
Hazardous Materials, substances or items on such properties, would not
constitute a Material Adverse Event.
(d) "Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Environmental Agency relating to (i) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, disposal of any substance presently listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material containing any
such substance as a component.
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(e) "Hazardous Materials" means solid waste (as that term is defined under
the Resource Conservation and Recovery Act, 42 U.S.C.A. (section mark)6901 ET
SEQ. ("RCRA"), and the regulations adopted pursuant to RCRA), hazardous waste
(as that term is defined under RCRA, and the regulations adopted pursuant to
RCRA), hazardous substances (as that term is defined in the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A.
(section mark)9601 ET SEQ. ("CERCLA"), and the regulations adopted pursuant to
CERCLA), and other pollutants, including, without limitation, any solid, liquid,
gaseous or thermal irritant or contaminant, such as smoke, vapor, soot, fumes,
acids, alkalis or chemicals.
(f) "Environmental Agency" means the United States Environmental Protection
Agency, the North Carolina Department of Environment, Health and Natural
Resources or any other federal, state or local agency responsible for regulating
or enforcing laws, rules, regulations and ordinances relating to (i) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plan and animal life or any other natural
resource), and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of any substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by
type or by quantity, including any material containing any such substance as a
component.
5.23 ACCOUNTING; TAX; REGULATORY MATTERS. Neither SCBC nor any SCBC
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent (or, together with other events,
would be reasonably likely to prevent) the Merger from qualifying (A), except as
Previously Disclosed, for pooling-of-interests accounting treatment or (B) as a
Tax-free reorganization within the meaning of Tax Code Section 368, or (ii)
significantly impede or delay receipt of any Regulatory Approval.
5.24 BROKERS AND FINDERS. Except for The Robinson-Humphrey Company, Inc.
("Robinson Humphrey"), neither SCBC nor any SCBC Subsidiary nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and no broker or finder has acted directly or
indirectly for SCBC or any SCBC Subsidiary in connection with this Agreement or
the transactions contemplated hereby.
5.25 STATEMENTS TRUE AND CORRECT. The representations and warranties of
SCBC in this Agreement and the information which is deemed to be Previously
Disclosed by SCBC for the purpose of this Agreement are true and accurate in all
material respects.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CCB AND NSC
CCB and NSC represent and warrant to SCBC as follows:
6.1 ORGANIZATION, STANDING AND AUTHORITY. CCB is a corporation duly
organized, validly existing and in good standing under the laws of the State of
North Carolina, and is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where both its
ownership or leasing of property or the conduct of its business requires it to
be so qualified and the failure to do so would constitute a Material Adverse
Event. CCB has all requisite corporate power and authority to carry on its
business as now conducted and to own, lease and operate its assets, properties
and business, and to execute, deliver and perform its obligations under this
Agreement. CCB is duly registered as a bank holding company under the BHCA.
Except as Previously Disclosed, CCB has in effect all Authorizations necessary
for it to own or lease its properties and assets and to carry on its business as
now conducted.
6.2 CAPITAL STOCK.
(a) The authorized capital stock of CCB consists (i) 30,000,000 shares of
CCB Common Stock, of which 9,516,379 shares were issued and outstanding as of
September 30, 1994, and (ii) 5,000,000 shares of serial preferred stock, none of
which were issued and outstanding on such date. All of the issued and
outstanding shares of CCB Common Stock are duly and validly issued and
outstanding and are fully paid and nonassessable. None of the outstanding shares
of CCB Common Stock has been issued in violation of any preemptive rights.
Except as Previously Disclosed or set forth herein, there are no other shares of
capital stock or other equity securities of CCB outstanding or Rights relating
to the capital stock of CCB.
(b) The CCB Common Stock is duly registered under the 1934 Act. The CCB
Common Stock is not subject to any restrictions as to the transfer thereof
(exclusive of restrictions respecting CCB Common Stock held by its directors,
officers or other Affiliates in accordance with the Securities Laws). To the
knowledge of CCB and except as Previously Disclosed, as
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of the date hereof, no Person is a beneficial owner of, or has a Right to own
beneficially, five percent (5%) or more of the CCB Common Stock. For purposes of
this Section 6.2, the term "beneficial owner" shall have the meaning provided in
Rule 13d-3 of the rules and regulations of the SEC as in effect on the date
hereof except that the term shall not include ownership of any of the CCB Common
Stock held by CCB or any CCB Subsidiary as trustee or in some other fiduciary or
custodial capacity.
6.3. CCB SUBSIDIARIES.
(a) Each of CCB's Subsidiaries (i) is duly organized, validly existing and
in good standing under the laws of the state of its incorporation, (ii) is duly
qualified to do business and is in good standing in all jurisdictions (whether
federal, state, local or foreign) where both its ownership or leasing of
property or the conduct of its business requires it to be so qualified and the
failure to do so would constitute a Material Adverse Event, and (iii) has all
requisite corporate power and authority to, and, except as Previously Disclosed,
has in effect all Authorizations necessary for it to, carry on its business as
now conducted and to own, lease and operate its assets, properties and business.
NSC shall be duly organized prior to the Effective Time and shall be in full
compliance with representations and warranties in this Agreement relevant to
NSC. Other than the CCB Subsidiaries, CCB neither owns nor controls five percent
(5%) or more of the outstanding equity securities, either directly or indirectly
of any corporation, bank, savings bank, savings association or other Person.
(b) CCB is the direct, record and beneficial owner of 100% of the
outstanding shares of the capital stock of each of the CCB Subsidiaries which
are its direct subsidiaries, and CCB Bank is the direct, record and beneficial
owner of 100% of the outstanding shares of capital stock of each of the CCB
Subsidiaries which are its direct subsidiaries. All of the shares of capital
stock of each of the CCB Subsidiaries are fully paid and nonassessable (except,
with respect to CCB Bank, as otherwise provided under N.C. Gen. Stat.
(section mark)53-42) and are owned by CCB or CCB Bank free and clear of any
Lien. No equity securities of any CCB Subsidiary are or may become required to
be issued (other than to CCB or CCB Bank) under any Rights.
6.4 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement by CCB and NSC and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
CCB, CCB Bank and NSC, subject to the approval of their respective shareholders
to the extent required by applicable law. This Agreement, subject to requisite
shareholder approvals and Regulatory Approvals, represents a valid and legally
binding obligation of CCB and NSC, enforceable against CCB and NSC in accordance
with its terms.
(b) Neither the execution and delivery of this Agreement by CCB or NSC, nor
the consummation by CCB, CCB Bank or NSC of the transactions contemplated hereby
to which they are a party, nor compliance by CCB or NSC with any of the
provisions hereof will (i) conflict with or result in a breach of any provision
of CCB's Amended and Restated Articles of Incorporation or Bylaws, CCB Bank's
Articles of Incorporation or Bylaws or NSC's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any Lien upon, any property or assets of any of CCB or any CCB
Subsidiary or pursuant to any Significant Contract or Significant Lease, or
(iii) subject to receipt of all requisite shareholder approvals and Regulatory
Approvals, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to CCB or any CCB Subsidiary or any of their properties or
assets.
(c) Other than (i) in connection or compliance with the provisions of
applicable Securities Laws and the rules and regulations of the NASD, (ii)
consents, authorizations, approvals or exemptions required from the Federal
Reserve Board, the Federal Reserve, the FDIC, the Commission, the Commissioner,
the Savings Commission or the Administrator, and (iii) notices to or filings
with the IRS or the PBGC with respect to any employee benefit plans, or under
the HSR Act, no notice to, filing with, authorization of, exemption by, or
consent or approval of any public body or authority is necessary for the
consummation of the Merger by CCB and NSC, the Bank Mergers by CCB Bank, and the
other transactions contemplated in this Agreement.
6.5 FINANCIAL STATEMENTS. CCB (i) has delivered (or will deliver, when
issued) the CCB Financial Statements to SCBC. Except as Previously Disclosed,
the CCB Financial Statements (as of the dates thereof and for the periods
covered thereby) (i) are or will be in accordance with the books and records of
CCB and the CCB Subsidiaries, which are or will be complete and accurate in all
material respects and which have been or will have been maintained in accordance
with good business practices, (ii) present or will present fairly in all
material respects the consolidated financial position and the consolidated
results of operations, changes in shareholders' equity and cash flows of CCB and
the CCB Subsidiaries as of the dates and for the periods indicated, in
accordance with GAAP, subject in the case of interim financial statements to
normal recurring year-
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end adjustments, and (iii) with respect to the CCB Financial Statements as of
and for the years ended or ending December 31, 1992, December 31, 1993 and
December 31, 1994, have been and will be audited by independent certified public
accountants.
6.6 BOOKS AND CORPORATE RECORDS.
(a) The books of account of CCB and the CCB Subsidiaries have been
maintained in substantial compliance with all applicable legal and accounting
requirements and in such manner as to reflect accurately their respective items
of income and expense and all of their respective assets, liabilities and
shareholders' equity. To the knowledge of CCB, CCB and the CCB Subsidiaries have
filed all material reports and returns required by any law or regulation to be
filed and have duly paid or accrued on their books of account all Taxes and
charges due pursuant to such reports and returns, or assessed against them,
including, without limitation, all such reports, statements and assessments
which CCB or any CCB Subsidiary is required to have filed or paid pursuant to
all holding company, state commercial bank and state savings bank laws and
regulations, none of which reports, statements or assessments has been the
subject of any material objection by the regulatory agent with which filed.
(b) Except as Previously Disclosed, the respective minute books of CCB and
each CCB Subsidiary accurately reflect in all material respects the corporate
actions which their shareholders and board of directors, and all committees
thereof, have taken during the time periods covered by such minute books. Such
minute books have been or will be made available to SCBC and its
representatives, except for the minutes of CCB's Board of Directors meetings on
November 4, 1994 and any subsequent meetings of CCB's Board of Directors or
committees thereof relating to the negotiation or approval of the Merger or this
Agreement.
6.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed or
reflected in any SEC Document filed by CCB since January 1, 1992 and prior to
the date hereof, neither CCB nor any CCB Subsidiary has any obligations or
liabilities (contingent or otherwise) that would constitute, individually or in
the aggregate, a Material Adverse Event. Except as Previously Disclosed or
reflected in any SEC Document filed by CCB since January 1, 1992 and prior to
the date hereof, since January 1, 1992, neither CCB nor any CCB Subsidiary has
incurred or paid any obligation or liability which would constitute a Material
Adverse Event.
6.8 TAX MATTERS.
(a) Except as Previously Disclosed, all Tax Returns required to be filed by
or on behalf of CCB or any CCB Subsidiary have been timely filed, or requests
for extensions have been timely filed and granted and have not expired, for
periods ending on or before December 31, 1993, and all such Tax Returns filed
are complete and accurate in all respects. Except as Previously Disclosed or
reflected in any SEC Document filed by CCB since January 1, 1992 and prior to
the date hereof, all Taxes shown on filed Tax Returns have been paid. Except as
Previously Disclosed or reflected in any SEC Document filed by CCB since January
1, 1992 and prior to the date hereof, there is no audit examination, deficiency
or refund litigation or matter in controversy with respect to any Taxes that
would constitute a Material Adverse Event. All Taxes due from CCB and the CCB
Subsidiaries with respect to completed and settled examination or concluded Tax
litigation have been paid.
(b) Except as Previously Disclosed, neither CCB nor any CCB Subsidiary has
executed an extension or waiver of any statute of limitations on the assessment
or collection of any Tax due that is currently in effect.
(c) In the opinion of CCB's management, adequate provision for any Taxes
due or to become due from CCB or any CCB Subsidiary for any period or periods
through and including September 30, 1994, has been made and is reflected on the
September 30, 1994 consolidated financial statements included in the CCB
Financial Statements.
(d) Deferred Taxes of CCB and the CCB Subsidiaries have been provided for
in the CCB Financial Statements in accordance with GAAP, subject in the case of
interim financial statements to normal recurring year-end adjustments.
6.9 ALLOWANCE FOR LOAN LOSSES. The Allowance shown on the consolidated
balance sheets of CCB and the CCB Subsidiaries as of September 30, 1994 included
in the CCB Financial Statements was, and the Allowance shown on the consolidated
balance sheets of CCB and the CCB Subsidiaries as of the dates subsequent to the
execution of this Agreement included in the CCB Financial Statements will be, in
each case as of the dates thereof, in the opinion of management of CCB adequate
to provide for losses relating to or inherent in the loan portfolios of CCB and
the CCB Subsidiaries.
6.10 PROPERTIES. Except as Previously Disclosed, CCB and the CCB
Subsidiaries have good and marketable title to all their material properties and
assets, whether tangible or intangible, real, personal or mixed, including, but
not limited to, all material properties and assets reflected in the consolidated
balance sheet of CCB and the CCB Subsidiaries as of September
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30, 1994 included in the CCB Financial Statements or reflected in the notes
thereto, and all properties and assets purchased by CCB and the CCB Subsidiaries
since such date, except for such properties and assets which have been sold or
otherwise disposed of in the Ordinary Course of Business, are in each case free
and clear of all Liens, except for Liens Previously Disclosed, (b) zoning
ordinances, easements of record, permits and other restrictions or limitations
on the use of real property which do not materially detract from the value of,
or impair the use of, such property by CCB or any of the CCB Subsidiaries in the
operation of its business, (c) Liens for current Taxes on property not yet due,
and (d) Liens which do not materially affect the operation of the business of
CCB and the CCB Subsidiaries on a consolidated basis. CCB has Previously
Disclosed all material properties and assets which have been purchased or
disposed of by CCB or any CCB Subsidiary since September 30, 1994.
6.11 COMPLIANCE WITH LAWS.
(a) To the knowledge of CCB and except as Previously Disclosed, each of CCB
and the CCB Subsidiaries is in compliance in all material respects with all
laws, regulations, rules, ordinances, reporting and licensing requirements and
orders applicable to its business or to its employees conducting its business,
with any Regulatory Agreement (substituting CCB and the CCB Subsidiaries for
SCBC and the SCBC Subsidiaries within the definition of such term) and with its
internal policies and procedures.
(b) Except as Previously Disclosed, neither CCB nor any CCB Subsidiary has
received, consented to or entered into any Regulatory Agreement (substituting
CCB and the CCB Subsidiaries for SCBC and the SCBC Subsidiaries within the
definition of such term). True and complete copies of all such Regulatory
Agreements, if any, have been or will be delivered to SCBC by CCB.
6.12 EMPLOYEE BENEFIT PLANS.
(a) CCB has Previously Disclosed to SCBC, and will deliver to SCBC true and
complete copies of, the CCB LTIP and all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
material written employee programs, arrangements or agreements, whether arrived
at through collective bargaining or otherwise, all material medical (including
post-retirement medical), vision, dental or other health plans, all life
insurance plans and all other material employee benefit plans or fringe benefit
plans, including, without limitation, all Employee Benefit Plans currently
adopted, maintained by, sponsored in whole or in part by or contributed to by
CCB or any CCB Subsidiary or any Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "CCB Benefit Plans"). Any of the CCB Benefit
Plans which is an Employee Pension Benefit Plan is referred to herein as an "CCB
ERISA Plan."
(b) Each such CCB Benefit Plan (and each related trust, insurance contract,
or fund) complies in form and in operation in all respects with the applicable
requirements of ERISA and the Tax Code, except where the failure to comply would
not constitute a Material Adverse Event.
(c) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports, PBGC-1's, and Summary Plan Descriptions) have
been filed or distributed appropriately with respect to each such CCB Benefit
Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Tax
Code Section 4980B have been met with respect to each such CCB Benefit Plan
which is an Employee Welfare Benefit Plan.
(d) All contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to each such CCB
Benefit Plan which is a CCB ERISA Plan and all contributions for any period
ending at or before the Effective Time which are not yet due have been paid to
each such CCB ERISA Plan or accrued by CCB and the CCB Subsidiaries in the
Ordinary Course of Business. All premiums or other payments for all periods
ending on or before the Effective Time have been paid with respect to each such
CCB Benefit Plan which is an Employee Welfare Benefit Plan.
(e) Each such CCB Benefit Plan which is a CCB ERISA Plan and which is
intended to be a "qualified plan" meets the requirements of a "qualified plan"
under Tax Code Section 401(a) and, except as Previously Disclosed, has received,
since December 31, 1989, a favorable determination letter from the IRS.
(f) With respect to each CCB Benefit Plan that CCB or any CCB Subsidiary
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute:
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(i) No such CCB Benefit Plan which is a CCB ERISA Plan has been the
subject of a Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate any such CCB
ERISA Plan has been instituted or, to the knowledge of CCB, threatened.
(ii) There have been no Prohibited Transactions with respect to any
such CCB Benefit Plan. No Fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such CCB Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such CCB Benefit Plan
(other than routine claims for benefits) is pending or, to the knowledge of
CCB, threatened.
(g) Neither CCB nor any CCB Subsidiary contributes to, ever has contributed
to, or ever has been required to contribute to any Multiemployer Plan or has any
liability (including withdrawal liability) under any Multiemployer Plan.
(h) Except as Previously Disclosed, neither CCB nor any CCB Subsidiary
maintains any defined benefit plans. Neither CCB nor any CCB Subsidiary has
incurred, and to the knowledge of CCB, neither CCB or any CCB Subsidiary has any
reason to expect that any of them will incur, any liability to the PBGC (other
than PBGC premium payments) or otherwise under Title IV of ERISA (including any
withdrawal liability) or under the Tax Code with respect to any such CCB Benefit
Plan which is a CCB ERISA Plan and that is maintained or ever has been
maintained by CCB or any CCB Subsidiary.
6.13 COMMITMENTS AND CONTRACTS. Except as Previously Disclosed, neither CCB
nor any CCB Subsidiary is a party or subject to any of the following (whether
written or oral, express or implied):
(a) any labor contract or agreement with any labor union;
(b) any contract, agreement or arrangement which limits the ability of CCB
or any CCB Subsidiary to compete in any line of business or which involve any
restriction of the geographical area in which CCB or such CCB Subsidiary may
carry on its business (other than as may be required by law or applicable
Regulatory Authorities); or
(c) any other contract which would be required to be disclosed as an
exhibit to an SEC Document of CCB and which has not been so disclosed.
6.14 MATERIAL CONTRACT DEFAULTS. Neither CCB nor any CCB Subsidiary is, or
has received any notice or has any knowledge that any other party is, in default
in any respect under any Significant Contract or Significant Lease to which CCB
or any CCB Subsidiary is a party or by which CCB or any CCB Subsidiary or the
assets, business or operations thereof may be bound or affected or under which
it or its respective assets, business or operations receives benefits, except
for those defaults which would not constitute a Material Adverse Event, and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a default.
6.15 LEGAL PROCEEDINGS. Except as Previously Disclosed, there are no
actions, suits, or proceedings instituted or pending or, to the knowledge of
CCB, threatened against CCB or any CCB Subsidiary, or against any property,
asset, interest or right of any of them, that, individually or in the aggregate,
would constitute a Material Adverse Event or that might reasonably be expected
to threaten or significantly impede the consummation of the transactions
contemplated by this Agreement. Neither CCB nor any CCB Subsidiary is subject to
any judgment, order, writ, injunction, decree, or ruling that, individually or
in the aggregate, might reasonably be expected to threaten or significantly
impede the consummation of the transactions contemplated by this Agreement.
6.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 1, 1992, except
(i) as disclosed in any SEC Document filed by CCB since January 1, 1992 and
prior to the date hereof or (ii) as Previously Disclosed, neither CCB nor any
CCB Subsidiary has (A) failed to operate in the Ordinary Course of Business, (B)
suffered any change that would constitute a Material Adverse Event, (C) incurred
any material liabilities (direct, contingent or otherwise) or engaged in any
material transaction or entered into any material agreement outside of the
Ordinary Course of Business, (D) increased the salaries, compensation or general
benefits payable to its employees other than in the Ordinary Course of Business,
(E) suffered a material loss, destruction or damage to any of its properties or
assets, that would constitute a Material Adverse Event, or (F) made a material
acquisition or disposition of any assets or entered into any Significant
Contract or Significant Lease other than in the Ordinary Course of Business.
6.17 REPORTS. Since January 1, 1992, CCB and each CCB Subsidiary has filed
all reports and statements, together with all amendments required to be made
with respect thereto, that it was required to file with Regulatory Authorities.
Copies of such reports and documents have been or will be delivered or made
available to SCBC. As of their respective dates, each of such reports and
documents described in clause (i) of the preceding sentence, including the
financial statements, exhibits and
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schedules thereto, complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the respective Regulatory
Authority and no such report contained any information that was false or
misleading with respect to any material fact or omitted to state any material
fact necessary in order to make the statements therein not misleading.
6.18 INSURANCE. CCB and each CCB Subsidiary is presently insured, and
during each of the past five (5) calendar years has been insured, for reasonable
amounts against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of
fire, theft, liability and other insurance maintained with respect to the assets
or business of CCB and the CCB Subsidiaries provide adequate coverage against
loss, and the fidelity bonds in effect as to which CCB or any CCB Subsidiary is
a named insured are sufficient for their purpose.
6.19 LABOR. No work stoppage involving CCB or any CCB Subsidiary is pending
or, to the knowledge of CCB's management, threatened. Neither CCB nor any CCB
Subsidiary is involved in, or, to the knowledge of CCB, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding that would constitute a Material Adverse Event. CCB and each CCB
Subsidiary has, to the knowledge of CCB, complied in all material respects with
all laws relating to the employment of labor, including, without limitation, any
provisions thereof relating to wages, and no person has, to the knowledge of
CCB, asserted that CCB or any CCB Subsidiary is liable in any material amount
for any arrears or wages or any taxes or penalties for failure to comply with
any of the foregoing. There is no material action, suit or proceeding by any
person pending or, to the knowledge of CCB, threatened, against CCB or any CCB
Subsidiary (or any of the employees thereof), involving employment
discrimination, sexual harassment, wrongful discharge or similar claims.
Employees of CCB and the CCB Subsidiaries are not represented by any labor
union, and, to the knowledge of CCB, no labor union is attempting to organize
employees of CCB or any CCB Subsidiary.
6.20 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in CCB's
Proxy Statement for its 1994 Annual Meeting of Shareholders or as Previously
Disclosed, no officer or director of CCB, or any "associate" (as such term is
defined in Rule 14a-1 under the 1934 Act) of any such officer or director, has
any material interest in any Significant Contract or Significant Lease or any
property (real or personal), tangible or intangible, used in or pertaining to
the business of CCB or any CCB Subsidiary.
6.21 ENVIRONMENTAL MATTERS.
(a) Except as Previously Disclosed, neither CCB or any CCB Subsidiary, nor
any properties owned or operated by CCB or any CCB Subsidiary has been or is in
violation of or liable under any Environmental Law. There are no actions, suits
or proceedings, or demands, claims, notices or investigations (including,
without limitation, notices, demand letters or requests for information from any
Environmental Agency) instituted, pending or threatened relating to the
liability of any properties owned or operated by CCB or any CCB Subsidiary under
any Environmental Law.
(b) Except as Previously Disclosed, (i) no Hazardous Materials have been
generated, treated, stored or disposed of at, or transported to or from, any
properties owned or operated by CCB or any CCB Subsidiary at any time, except in
compliance with the Environmental Laws, (ii) no friable asbestos containing
material is in use, or is or has been stored or disposed of on or upon any
properties owned or operated by CCB or any CCB Subsidiary, (iii) no PCBs are
located on or in any properties owned or operated by CCB or any CCB Subsidiary
in any form or device, including, without limitation, in the form of electrical
transformers, fluorescent light fixtures with ballasts, or cooling oils, except
in compliance with the Environmental Laws, and (iv) no underground storage tanks
are located on any properties owned or operated by CCB or any CCB Subsidiary or
were located on any properties owned or operated by CCB or any CCB Subsidiary
and subsequently removed or filled. The representations in Section 6.21(a) and
(b) shall also apply to any properties in which any CCB Subsidiary has a
security interest.
(c) All representations in this Section 6.21 (i) are to the knowledge of
CCB, without independent investigation, and (ii) shall not apply to the extent
that, in the opinion of CCB's management, the results of such actions, suits,
proceedings, demands, claims, notices or investigations, or the presence of such
Hazardous Materials, substances or items on such properties would not constitute
a Material Adverse Event.
6.22 ACCOUNTING; TAX; REGULATORY MATTERS. Neither CCB nor any CCB
Subsidiary has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the Merger from qualifying (A) for
pooling-of-interests accounting treatment or (B) as a Tax-free reorganization
within the meaning of Tax Code Section 368, or (ii) significantly impede or
delay receipt of any Regulatory Approval.
6.23 BROKERS AND FINDERS. Except for Wheat, First Securities, Inc. (
"Wheat") and as Previously Disclosed, neither CCB nor any CCB Subsidiary nor any
of their respective officers, directors or employees has employed any broker or
finder or
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incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for CCB or any CCB Subsidiary in connection with this Agreement or
the transactions contemplated hereby.
6.24 CAPITAL STOCK ISSUED IN MERGER. At the Effective Time, CCB Common
Stock (and the attached CCB Rights) issued pursuant to the Merger will be duly
authorized, validly issued, fully paid (except as provided in the CCB Rights
Plan) and nonassessable and not subject to preemptive rights, or any Rights
(other than the CCB Rights), created by CCB or any CCB Subsidiary, and such CCB
Common Stock will be approved or qualified for quotation on the NMS.
6.25 STATEMENTS TRUE AND CORRECT. The representations and warranties of CCB
and NSC in this Agreement and the information which is deemed to be Previously
Disclosed by CCB for the purposes of this Agreement are true and accurate in all
material respects.
ARTICLE VII
CONDUCT PRIOR TO THE EFFECTIVE TIME
7.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the period from
the date of the execution of this Agreement to the Effective Time, each of CCB
and SCBC shall, and shall cause each of the CCB Subsidiaries or the SCBC
Subsidiaries, as applicable, to, (i) conduct its business in the Ordinary Course
of Business (except that SCBC shall account for investment securities purchased
during such period as being held "for sale," to the extent such treatment is not
inconsistent with GAAP), (ii) use its best efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees, and
(iii) except as required by law or regulation, take no action which would
adversely affect or delay the ability of CCB, CCB Bank, NSC, SCBC, SC Bank or
the Savings Bank Subsidiaries to obtain any Regulatory Approval or to perform
its covenants and agreements under this Agreement or the agreements referenced
or contemplated herein.
7.2 FORBEARANCES. During the period from the date of the execution of this
Agreement to the Effective Time, except as Previously Disclosed by CCB or SCBC
to the other that it intends to take such action, and except as required by law
or regulation, neither CCB nor SCBC shall, or permit any of their respective CCB
Subsidiaries and SCBC Subsidiaries to, without the prior written consent of the
other:
(a) other than in the Ordinary Course of Business, incur any indebtedness
for borrowed money (other than short-term indebtedness incurred to refinance
short-term indebtedness and indebtedness of CCB, any CCB Subsidiary, SCBC or any
SCBC Subsidiary (it being understood and agreed that incurrence of indebtedness
in the Ordinary Course of Business shall include, without limitation, the
creation of deposit liabilities, purchases of federal funds, sales of
certificates of deposits and entering into repurchase agreements), assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other Person, or make any loan or advance;
(b) adjust, split, combine or reclassify any of its capital stock or sell,
grant or issue any shares of its capital stock or any Rights with respect to its
capital stock (other than the issuance of CCB Rights attached to shares of CCB
Common Stock issued as permitted under this Agreement); provided, however, that
CCB may sell, issue or grant shares of CCB Common Stock or Rights thereto
pursuant to the terms of the CCB LTIP as existing on the date hereof and SCBC
may issue shares of SCBC Common Stock pursuant to the exercise of SCBC Stock
Options granted under the SCBC Options Plan at any time prior to the date of the
execution of this Agreement;
(c) make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire any shares of its
capital stock; provided, however, that the CCB Subsidiaries and the SCBC
Subsidiaries may declare and pay cash dividends to their parent corporations and
CCB and SCBC, as the case may be, may declare and pay regular quarterly cash
dividends at such times as may be in accordance with their ordinary and
customary practices and in an annual amount no more than the total cash
dividends paid by CCB or SCBC, as the case may be, during the twelve-month
period ended September 30, 1994; further provided, however, that if SCBC
determines in good faith that the Effective Time will occur on a date such that,
taking into consideration the anticipated quarterly dividend payment date of
CCB, the holders of shares of SCBC Common Stock prior to the Effective Time will
not be eligible to receive dividends declared by CCB for the quarter in which
the Effective Time occurs, then SCBC may accelerate its quarterly dividend
payment date to such quarter to insure the payment of dividends to holders of
shares of SCBC Common Stock, it being the intention of the parties hereto that
holders of SCBC Common Stock shall not fail to receive one dividend, or receive
two dividends, for any single calendar quarter with respect to their shares of
SCBC Common Stock and any shares of CCB Common Stock any such
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holder receives in exchange therefor in the Merger; and further provided, that
CCB may purchase and redeem shares of CCB Common Stock as Previously Disclosed
to SCBC;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets to any Person other than CCB, a CCB Subsidiary, SCBC, or a
SCBC Subsidiary, or cancel, release or assign any indebtedness to any such
prohibited Person or any claims held by any such prohibited Person, except in
the Ordinary Course of Business;
(e) except as Previously Disclosed by SCBC to CCB, or by CCB to SCBC, or in
the Ordinary Course of Business, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any Person other than CCB, SCBC, a CCB
Subsidiary or a SCBC Subsidiary;
(f) enter into or terminate, or (except as otherwise provided in Section
8.2) make any change in, any Significant Contract or Significant Lease, other
than renewals of contracts and leases without material adverse changes of terms;
(g) increase in any manner the compensation or fringe benefits of any of
its employees or pay any pension or retirement allowance not required by any
existing plan or agreement to any such employees, or become a party to, amend
(except as otherwise provided in Section 8.2) or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee, other than in the Ordinary
Course of Business;
(h) subject to the provisions of Section 8.5, solicit, encourage or
authorize any Person to solicit from any third party any inquiries or proposals
relating to the disposition of business or assets by, or the acquisition of the
voting securities of, or the merger of, in the case of CCB, it, NSC, CCB Bank or
any other CCB Subsidiary that is a financial institution, or in the case of
SCBC, it, SC Bank or any Savings Bank Subsidiary, to or with any Person other
than as provided by this Agreement, or subject to the fiduciary obligations of
its Board of Directors, provide any Person with information or assistance or
negotiate with any Person in furtherance of such inquiries or to obtain such a
proposal (and each party shall promptly notify the other of all of the relevant
details relating to all inquiries and proposals which it may receive relating to
any of such matters);
(i) settle any claim, action or proceeding against it involving money
damages, except in the Ordinary Course of Business or pursuant to agreements
Previously Disclosed to the other party;
(j) take any action that would prevent or impede the Merger from qualifying
(i) for pooling-of-interests accounting treatment or (ii) as a Tax-free
reorganization within the meaning of Tax Code Section 368;
(k) amend its Articles of Incorporation (or Charter) or Bylaws; provided,
however, that CCB shall exercise its best efforts to acquire the CCB Bylaw
Approval and to effect the amendments of CCB's Bylaws contemplated thereby; or
(l) agree to, or make any commitment to, take any of the actions prohibited
by this Section 7.2.
7.3. ACCESS AND INFORMATION; CONFIDENTIALITY.
(a) During the Due Diligence Period and thereafter, CCB (and each CCB
Subsidiary) and SCBC (and each SCBC Subsidiary) shall each afford to the other
party, and to the other party's accountants, counsel, financial advisors and
other representatives, full access during normal business hours, to all of their
respective properties, books, contracts, commitments and records and, during
such period, each shall furnish promptly to the other party (i) a copy of each
SEC Document filed by it, and (ii) all other information concerning its
business, properties and personnel as such other party may reasonably request,
including, without limitation, reports of condition (including call reports)
filed with any Regulatory Authority.
(b) Each party hereto shall, and shall cause its Affiliates, advisors and
representatives to, (i) hold confidential all information obtained in connection
with any transaction contemplated hereby with respect to the other party which
is not otherwise public knowledge, (ii) in the event of the termination of this
Agreement return all documents (including copies thereof) obtained hereunder
from the other party, and (iii) use its best efforts to cause all information
obtained pursuant to this Agreement or in connection with the negotiation hereof
to be treated as confidential and not use, or knowingly permit others to use,
any such information unless such information becomes generally available to the
public through no fault of such party. Each party hereto acknowledges and agrees
that a breach of any of their respective obligations under this Section 7.3(b)
would cause the other irreparable harm for which there is no adequate remedy at
law, and that, accordingly, each is entitled to injunctive and other equitable
relief for the enforcement thereof, in addition to damages or any other relief
available at law, and to recover its reasonable attorneys' fees and expenses
incurred in such enforcement.
7.4 CURRENT INFORMATION. During the period from the date of the execution
of this Agreement to the Effective Time, each of CCB and SCBC shall, and each
shall cause its representatives to, confer on a regular and request basis with
representatives of the other. Each of CCB and SCBC shall promptly notify the
other of (i) any material change in its business, operations or
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prospects, (ii) any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority or
Environmental Agency, (iii) the institution or the threat of material litigation
involving such party, or (iv) any event or condition that might be reasonably
expected to cause any of such party's representations or warranties set forth
herein not to be true and correct in all material respects as of the Effective
Time; and in each case shall keep the other fully informed with respect thereto.
7.5 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) None of the information supplied or to be supplied by CCB or NSC, on
the one hand, or SCBC, on the other hand, for inclusion in the registration
statement on Form S-4, or other appropriate form, to be filed by CCB with the
SEC under the 1933 Act for the registration of the offering of the shares of CCB
Common Stock and CCB Rights to be issued in Merger (the "Registration
Statement"), the joint proxy statement to be used by CCB and SCBC to solicit any
required approval of their respective shareholders as contemplated by this
Agreement (the "Joint Proxy Statement") or any other document to be filed with
any Regulatory Authority in connection with the transactions contemplated hereby
will contain when filed, or, in the case of the Joint Proxy Statement, when it
is first mailed to the shareholders of CCB and SCBC, any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements are made, not misleading, or, in the case of the Registration
Statement, when it becomes effective under the 1933 Act, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading, or, in the case of a
Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Shareholders' Meetings, including any adjournments thereof, be false
or misleading with respect to any material fact or omit to state any material
fact necessary to correct any statement or remedy any omission in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meetings.
(b) CCB shall (i) with the assistance of SCBC, prepare and file with the
SEC as soon as practicable the Registration Statement and the Joint Proxy
Statement, (ii) use its best efforts to cause the Registration Statement to
become effective under the 1933 Act, and (iii) take any action required to be
taken under any applicable state securities or "Blue Sky" laws in connection
therewith. SCBC and the SCBC Subsidiaries shall furnish CCB with all information
concerning SCBC, the SCBC Subsidiaries and the holders of SCBC Common Stock as
CCB may reasonably request in connection with the foregoing.
(c) CCB, NSC and SCBC shall cooperate and use their respective best efforts
(i) as soon as practicable to prepare all documentation, to effect all filings
and to obtain all Regulatory Approvals and all other permits, consents,
approvals and authorizations of all third parties, Regulatory Authorities and
other governmental authorities necessary to consummate the Bank Conversions, the
Merger, the Bank Mergers and the other transactions contemplated by this
Agreement, and (ii) to cause the Bank Conversions, the Merger, the Bank Mergers
and the other transactions contemplated by this Agreement to be consummated as
soon as reasonably practicable. CCB, NSC and SCBC shall advise one another
concerning all filings to be made by it and all other consents, approvals and
authorizations required to be obtained by it, and shall promptly furnish the
other with copies of all such filings and all correspondence, orders and other
communications in connection with all such filings, consents, approvals and
authorizations and all Regulatory Approvals.
7.6 SHAREHOLDERS' APPROVALS. Each of CCB and SCBC shall cause a duly called
and noticed meeting of its shareholders to be held as soon as practicable for
the purpose of voting upon the Merger and related matters (including the Plan of
Merger), and each shall use its best efforts to cause such meetings to occur on
the same date (the "Shareholders' Meetings"). NSC shall cause a duly called and
noticed meeting of its shareholder to be held as soon as practicable for the
purpose of voting upon the Merger and related matters (including the Plan of
Merger). In connection with the Shareholders' Meetings, CCB and SCBC shall
prepare the Joint Proxy Statement and mail it to their respective shareholders.
The Board of Directors of each of CCB and SCBC shall submit for approval of
their respective shareholders the matters to be voted upon at the Shareholders'
Meetings, and shall, subject to their respective fiduciary obligations,
recommend approval of such matters and use their respective best efforts
(including, without limitation, soliciting proxies for such approvals) to obtain
such shareholder approvals.
7.7 AGREEMENTS OF AFFILIATES. SCBC shall, within thirty (30) days after the
date of the execution of this Agreement, deliver to CCB a letter identifying all
Persons whom SCBC believes will be, at the time the Merger is submitted to a
vote of the shareholders of SCBC, "affiliates" of SCBC for purposes of Rule 145
under the 1933 Act. SCBC shall use its best efforts to cause each Person who is
identified as an "affiliate" in the letter referred to above to deliver to CCB
at least 30 days prior to the Effective Time a written agreement providing that
each such Person will not offer, sell, pledge, transfer or otherwise dispose of
any shares of CCB Common Stock except in compliance with the applicable
provisions of the 1933 Act and the rules and regulations of the SEC thereunder
until such time as financial results covering at least 30 days of combined
operations of CCB and SCBC shall have been published, and will otherwise comply
with the holding period requirements set forth
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in SEC Accounting Series Release Nos. 130 and 135 and in SEC Staff Accounting
Bulletin No. 65. Prior to the Effective Time, SCBC shall amend and supplement
such letter and use its best efforts to cause each additional Person who is
identified as an "affiliate" to execute a written agreement as set forth in this
Section 7.7.
7.8 DELIVERY OF MONTHLY FINANCIAL STATEMENTS. Within fifteen (15) days
after the end of each calendar month occurring after the date of this Agreement
and prior to the Effective Time, CCB and SCBC shall each deliver to the other
its unaudited monthly consolidated financial statements normally generated by it
for such month, in each case certified by its Chief Financial Officer. Such
financial statements shall fairly present in all material respects the financial
condition and results of operations of CCB and the CCB Subsidiaries or SCBC and
the SCBC Subsidiaries, as applicable, on a consolidated basis on the dates and
for the periods indicated in accordance with GAAP, subject to normal and
recurring year-end audit adjustments and accruals.
7.9 ACCOUNTING TREATMENT; TAX-FREE REORGANIZATION. Each of CCB, NSC and
SCBC undertakes and agrees to use its best efforts to cause the Merger to
qualify for pooling-of-interests accounting treatment and as a Tax-free
reorganization under Tax Code Section 368.
7.10 PRESS RELEASES. CCB and SCBC shall promptly consult with each other as
to the form and substance, and prior to the release or issuance, of any press
release or other public disclosure materially related to this Agreement, the
Merger or any other transaction contemplated hereby. CCB and SCBC agree not to
release or issue any such press release or other public disclosure without the
approval of the other unless required by law.
7.11 INTERIM FINANCIAL RESULTS. CCB agrees that, on or before the 50th day
following the date on which the Effective Time shall occur, it shall publish and
distribute publicly interim consolidated financial statements reflecting at
least 30 days of the combined, consolidated results of operation of CCB and the
Surviving Corporation.
7.12 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as expeditiously as reasonably practicable, including, without
limitation, using its best efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby. CCB and SCBC shall use, and
shall cause each of the CCB Subsidiaries and the SCBC Subsidiaries, as
applicable, to use their best efforts to obtain all Regulatory Approvals and all
other consents, approvals and authorizations of third parties and Regulatory
Authorities necessary or, in the reasonable opinion of CCB and SCBC, desirable
for the consummation of the transactions contemplated by this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 INDEMNIFICATION AND INSURANCE.
(a) CCB agrees to indemnify, defend and hold harmless SCBC and each of the
present and former officers, directors, employees and agents of SCBC and the
SCBC Subsidiaries from and against all Indemnifiable Losses. SCBC agrees to
indemnify, defend and hold harmless CCB and each of the present and former
officers, directors, employees and agents of CCB and the CCB Subsidiaries from
and against all Indemnifiable Losses.
(b) In addition to the provisions of Section 8.1(a), after the Effective
Time, CCB and the Surviving Corporation shall indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of
SCBC and the SCBC Subsidiaries from and against all Indemnifiable Losses arising
from or related to matters occurring at or prior to the Effective Time and,
further, to indemnify such present and former officers, directors, employees and
agents of SCBC and the SCBC Subsidiaries to the full extent then permitted under
the NCBCA and by SCBC's Amended and Restated Articles of Incorporation and
Bylaws as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any action or suit.
(c) CCB shall maintain a policy or policies of directors' and officers'
liability insurance (the "D&O Insurance") covering Persons who are currently
covered by SCBC's existing D&O Insurance, or shall otherwise continue D&O
Insurance coverage for such Persons for a period of at least three (3) years
after the Effective Time, which coverage shall have terms at least as favorable
as those of SCBC's existing D&O Insurance in effect on the date hereof.
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(d) If CCB or the Surviving Corporation or any of their respective
successors or assigns (i) shall consolidate with or merge into any other Person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) shall transfer all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provision shall be made so that such successors and assigns shall assume the
obligations set forth in this Section 8.1.
8.2 EMPLOYEE CONTRACTS AND EMPLOYEE AND DIRECTOR BENEFITS. Following the
Effective Time and continuing after the Subsequent Merger, CCB and the Surviving
Corporation each and together will continue to honor, and will assume and
perform in accordance with their terms, all Previously Disclosed employment,
severance, deferred compensation, split dollar insurance, salary continuation,
consulting and other compensation contracts between SCBC or any SCBC Subsidiary
and any current or former director, officer or employee thereof (including, but
not limited to, the SCBC Options Plans, the SCBC LTIP and the SCBC Deferred
Compensation Plans), and all provisions for vested benefits or other vested
amounts earned or accrued through the Effective Time under any SCBC Benefit
Plan; provided, however, that CCB and the Surviving Corporation need not honor,
in connection with the Merger, those provisions of those certain employment
agreements between SCBC (and certain of the SCBC Subsidiaries) and certain of
the employees of SCBC and those SCBC Subsidiaries relating to benefits payable
upon a "change in control" of SCBC and/or SC Bank which have been Previously
Disclosed, which provisions have been waived by such employees to facilitate,
and solely in connection with, the consummation of the Merger and the Bank
Mergers; provided further, however, that the employment agreements between
certain SCBC's senior executive officers and SCBC (and certain SCBC
Subsidiaries) shall be amended prior to the Effective Time, with such amended
agreements to be effective as of the Effective Time, as mutually agreed by CCB,
SCBC and such senior executive officers. CCB and the Surviving Corporation each
and together will continue to pay the premiums on, and will perform, those
Previously Disclosed split dollar insurance policies in effect as of the date
hereof for (A) certain employees of SCBC and/or one or more of the SCBC
Subsidiaries until the earlier of (i) the death of the insured, and (ii) the
termination for cause of such employee's employment by CCB or any CCB
Subsidiary, and (B) certain former officers of SCBC in accordance with the terms
of the Previously Disclosed agreements between such former officers and SCBC
and/or certain of the SCBC Subsidiaries.
8.3 MODIFICATION OF EMPLOYEE BENEFITS. Except as otherwise provided in
Section 8.2 or this Section 8.3, the SCBC Benefit Plans will be reviewed and
appropriate amendments, consolidations or terminations will be made thereto at
or after the Effective Time; provided, however, that the employees of SCBC and
the SCBC Subsidiaries (i) shall be eligible to receive group hospitalization,
medical, life, disability and similar benefits on the same basis and under the
same terms available to the present employees of CCB and the CCB Subsidiaries,
(ii) in the event an SCBC Benefit Plan is terminated, shall become fully vested,
with each participating SCBC employee having the right or option either to
receive the benefits to which he or she is entitled as a result of such
termination or to have such benefits "rolled" into the appropriate CCB Benefit
Plan, on the same basis and applying the eligibility standards as would apply to
the employees of CCB and the CCB Subsidiaries as if such employee's prior
service to SCBC or an SCBC Subsidiary had been performed on behalf of CCB and
the CCB Subsidiaries for qualification, participation and vesting, but not for
funding, purposes, and (iii) in the event an SCBC Benefit Plan is merged into a
CCB Benefit Plan, shall be entitled to participate in such CCB Benefit Plan on
the same basis and applying the same eligibility standards as would apply to
employees of CCB and the CCB Subsidiaries. CCB and SCBC agree that the overall
level of benefits offered or provided to the employees of SCBC and the SCBC
Subsidiaries under the CCB Benefit Plans will be no less than that offered or
provided to the present employees of CCB and the CCB Subsidiaries, and that for
purposes of qualification, participation and vesting, the employees of SCBC and
the SCBC Subsidiaries shall receive credit for their periods of service to SCBC
and the SCBC Subsidiaries. The SCBC Deferred Compensation Plans will be
continued (and, if deemed appropriate and practical by CCB's Board of Directors,
merged with comparable plans of CCB) after the Effective Time; provided,
however, that no existing rights or benefits of the Persons who have deferred or
who are deferring compensation under any SCBC Deferred Compensation Plan will be
eliminated, reduced or adversely affected in any manner; and, provided further,
that SCBC Directors Plan will continue in effect, but no further deferrals of
directors' fees shall be made thereunder, after the Effective Time, and that the
SCBC Management Plan shall remain in effect and further deferrals of
compensation may be made thereunder after the Effective Time.
8.4 BRANCH PURCHASE. CCB acknowledges and agrees that SCBC and SC Bank
currently intend to purchase three branch offices of First Union National Bank
of North Carolina ("FUNB"), and certain related assets, and anticipate entering
into a purchase and assumption agreement and other agreements with FUNB with
respect thereto after the date of the execution of this Agreement (the "Branch
Purchase"). The material terms and conditions of the Branch Purchase have been
or will be Previously Disclosed by SCBC to CCB. SCBC shall exercise its best
efforts to cause the Branch Purchase to be consummated immediately prior to the
Effective Time.
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8.5 OTHER PERMISSIBLE TRANSACTIONS. Notwithstanding the provisions of
Section 7.2(h), CCB and SCBC agree that CCB may offer to acquire, enter into
agreements to acquire and acquire financial institution holding companies and
their subsidiaries and/or financial institutions and their subsidiaries (each a
"Proposed Acquisition") prior to the Effective Time, subject to the satisfaction
of the following conditions with respect to each Proposed Acquisition: (a) CCB
shall advise SCBC's management of the material terms and conditions of CCB's
offer respecting such Proposed Acquisition, and each modification by CCB
thereto; (b) CCB shall provide SCBC's management with copies of the letter of
intent and definitive acquisition agreement proposed to be entered into in
connection with such Proposed Acquisition; (c) SCBC's management shall consult
with the Executive Committee of SCBC's Board of Directors, and SCBC's management
and such Executive Committee shall consult with SCBC's financial and legal
advisors respecting the information provided under Section 8.5(a) and (b); and
(d) such Executive Committee shall conclude in its reasonable judgment,
exercised in good faith, that such Proposed Acquisition would not (i)
significantly delay or impede the consummation of the Bank Conversions, the
Merger and the Bank Mergers; (ii) create a reasonable likelihood that any
Regulatory Approval would not be obtained; or (iii) be reasonably likely to
diminish the economic benefits intended to be obtained by SCBC for its
shareholders pursuant to the consummation of the Merger and the other provisions
contemplated herein.
8.6 DUE DILIGENCE INVESTIGATIONS. Beginning on November 5, 1995 and
continuing until 5:00 o'clock, p.m., on December 19, 1995 (the "Due Diligence
Period"), CCB (and its representatives and advisors) may conduct such
investigation, review and analyses (including environmental studies) of the
business, operations, assets, personnel and other relevant characteristics of
SCBC and the SCBC Subsidiaries, and SCBC (and its representatives and advisors)
may conduct like investigation, review and analyses of CCB and the CCB
Subsidiaries, in each case to the degree they deem advisable and in a reasonable
manner, taking into consideration employee morale and the need to conduct
undisrupted business operations.
8.7 BANK CONVERSIONS; BANK MERGERS. As soon as reasonably practicable after
the date of the execution of this Agreement, SCBC shall cause the Savings Bank
Subsidiaries to undertake all actions necessary to effect the Bank Conversions,
and CCB and SCBC shall, and shall cause CCB Bank and SC Bank and the Savings
Bank Subsidiaries, respectively, to, take all actions necessary to effect the
Bank Mergers, including the execution and delivery of an Agreement and Plan of
Merger, acceptable to CCB and SCBC, by CCB Bank, SC Bank and the Savings Bank
Subsidiaries.
8.8 REPURCHASES OF SCBC COMMON STOCK. In the event that (a) SCBC
repurchases outstanding shares of SCBC Common Stock in open market or privately
negotiated transactions at the request of CCB during the period from the date
hereof to the date, if any, on which this Agreement is terminated, and (b) the
Merger is not consummated, then CCB shall pay to SCBC, within five (5) days of
SCBC's written demand for payment, the following sum (if a positive amount): (i)
the aggregate purchase price, including brokerage commissions and transfer
taxes, paid by SCBC for all shares repurchased by SCBC, less (ii) the average
closing sales price for a share of SCBC Common Stock on the NMS (as reported by
THE WALL STREET JOURNAL or, if not reported thereby, any other authoritative
source) over the ten (10) consecutive trading days following the date on which
such termination of this Agreement is disclosed to the general public,
multiplied by the number of shares of SCBC Common Stock repurchased by SCBC.
ARTICLE IX
CONDITIONS
9.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each of CCB, NSC and SCBC to effect the Merger and the
other transactions contemplated hereby shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following conditions:
(a) The shareholders of each of CCB, NSC and SCBC shall have approved all
matters relating to this Agreement and the Merger required to be approved by
such shareholders by the votes required under the NCBCA.
(b) The Bank Conversions, the Merger, the Bank Mergers and the other
transactions contemplated hereby shall have received all Regulatory Approvals,
including all required approvals by the Federal Reserve Board, Federal Reserve,
the FDIC, the Commission, the Commissioner, the Savings Commissions, the
Administrator and any other Regulatory Authority whose approval is required for
consummation of the transactions contemplated hereby, and no such Regulatory
Approvals or other required approval shall have imposed any condition or
requirement which would so materially adversely impact the economic benefits of
the transactions contemplated by this Agreement as to render inadvisable in the
reasonable opinion of the Board of Directors of either CCB or SCBC the
consummation of the Merger.
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(c) The Registration Statement shall have been declared effective by the
SEC and CCB and SCBC shall have received all state securities or "Blue Sky" law
permits or other authorizations, or confirmations as to the availability of an
exemption from registration requirements, as may be necessary to issue CCB
Common Stock and CCB Rights pursuant to the terms of this Agreement. Neither the
Registration Statement nor any such permit, authorization or confirmation shall
be subject to any stop order, threatened stop order, rescission or withdrawal by
the SEC or any state securities or "Blue Sky" authority with competent
jurisdiction.
(d) Neither CCB, NSC nor SCBC shall be subject to any order, decree or
injunction of a court of competent jurisdiction or any Regulatory Authority
which enjoins or prohibits the consummation of the Bank Conversions, the Merger
or the Bank Mergers or which would constitute a Material Adverse Event as to CCB
and the CCB Subsidiaries or SCBC and the SCBC Subsidiaries. No suit, action or
other proceeding shall be pending or threatened by any Regulatory Authority or
other governmental body or agency which seeks to restrain or prohibit the Bank
Conversions, the Merger or the Bank Mergers or to obtain any substantial
monetary or other relief in connection with this Agreement unless in the
reasonable opinion of counsel to the party wishing to proceed (which opinion
shall be satisfactory in substance to the other party in its reasonable
judgment), such suit, action or proceeding is likely to be resolved in such a
way as to not deprive any party hereto of any of the material benefits to be
derived from the consummation of the Merger or in such a way which would not
constitute a Material Adverse Event as to the party subject thereto.
(e) The aggregate number of shares of SCBC Common Stock with respect to
which dissenter's rights have been perfected under Section 55-13-01 ET SEQ. of
the NCBCA shall not total an amount which, when added to all other shares of CCB
Common Stock and SCBC Common Stock deemed to have been repurchased or otherwise
"tainted" for pooling-of-interests accounting treatment purposes, would result
in the Merger not qualifying for pooling-of-interests accounting treatment.
(f) Each of CCB and SCBC shall have received an opinion of KPMG Peat
Marwick, L.L.P., satisfactory in form and substance to each of CCB and SCBC,
that the Merger will qualify for pooling-of-interests accounting treatment.
(g) The shares of CCB Common Stock issuable pursuant to the Merger shall
have been approved or qualified for quotation on the NMS.
(h) CCB and SCBC shall have received an opinion of KPMG Peat Marwick,
L.L.P., satisfactory in form and substance to each of CCB and SCBC, to the
effect that the Merger will constitute a Tax-free reorganization within the
meaning of Tax Code Section 368 and that no gain or loss will be recognized by
the shareholders of SCBC to the extent that they receive CCB Common Stock (and
attached CCB Rights) solely in exchange for their SCBC Common Stock in the
Merger.
9.2 CONDITIONS TO THE OBLIGATION OF SCBC. The obligation of SCBC to effect
the Bank Conversions, the Merger, the Bank Mergers and the other transactions
contemplated hereby shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
CCB and NSC set forth in Article VI hereof shall be true and correct in all
material respects as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as of a
specified date) and SCBC shall have received a certificate signed by the Chief
Executive Officer and the Senior Vice-President/Controller of CCB, and the
President and Secretary of NSC, to that effect.
(b) PERFORMANCE OF OBLIGATIONS. CCB and NSC shall have performed in all
material respects all obligations and covenants required to be performed by them
under this Agreement prior to the Effective Time, and SCBC shall have received a
certificate signed by the Chief Executive Officer and the Senior Vice
President/Controller of CCB, and the President and Secretary of NSC, to that
effect.
(c) LEGAL OPINION. SCBC shall have received from Ward and Smith, P.A.,
counsel to CCB and NSC, an opinion as to such matters as SCBC or its counsel may
reasonably request. In rendering the foregoing opinion, such counsel may relay
as to questions of fact and of good standing upon the representation and
warranties of CCB and NSC contained in this Agreement or upon the certificate of
appropriate officers of CCB and NSC or of public officials.
(d) FAIRNESS OPINION. SCBC shall have received the opinion of Robinson
Humphrey, dated prior to the date on which the Registration Statement shall
become effective under the 1933 Act and confirmed at or immediately prior to the
Closing Date, to the effect that the Exchange Ratio is fair, from a financial
point of view, to SCBC and its shareholders.
(e) CCB COMMON STOCK PRICE. The CCB Stock Price over the ten (10)
consecutive trading days preceding the date on which the Effective Time is to
occur shall not be less than $36.00.
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(f) CCB BYLAW APPROVAL. The CCB Bylaw Approval shall have been received
from CCB's shareholders at the CCB Shareholders' Meeting.
9.3 CONDITIONS TO THE OBLIGATIONS OF CCB AND NSC. The obligations of CCB
and NSC to effect the Merger, the Bank Mergers and the other transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
SCBC set forth in Article V hereof shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time (as
though made on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as of a
specified date) and CCB and NSC shall have received a certificate signed by the
Chief Executive Officer and the Chief Financial Officer of SCBC to that effect.
(b) PERFORMANCE OF OBLIGATIONS. SCBC shall have performed in all material
respects all obligations and covenants required to be performed by it under this
Agreement prior to the Effective Time, and CCB and NSC shall have received a
certificate signed by the Chief Executive Officer and the Chief Financial
Officer of SCBC to that effect.
(c) LEGAL OPINION. CCB and NSC shall have received from Brooks, Pierce,
McLendon, Humphrey & Leonard, L.L.P., counsel to SCBC, an opinion as to such
matters as CCB or its counsel may reasonably request. In rendering the foregoing
opinion, such counsel may rely as to questions of fact and of good standing upon
the representation and warranties of SCBC contained in this Agreement or upon
the certificate of appropriate officers of SCBC or of public officials.
(d) FAIRNESS OPINION. CCB shall have received the opinion of Wheat, dated
prior to the date on which the Registration Statement shall become effective and
confirmed at or immediately prior to the Closing Date, to the effect that the
terms of the Merger are fair, from a financial point of view, to CCB and its
shareholders.
(e) AFFILIATES LETTERS. SCBC shall have delivered to CCB the written
agreements of its "affiliates" described in Section 7.7.
ARTICLE X
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement, the Bank Conversions, the
Merger, the Bank Mergers and the other transactions contemplated hereby by the
shareholders of CCB, NSC or SCBC, or all of them, this Agreement may be
terminated and such transactions abandoned at any time prior to the Effective
Time.
(a) by mutual consent of the Boards of Directors of CCB and NSC and the
Board of Directors of SCBC;
(b) by the Boards of Directors of CCB and NSC by notice given to SCBC at
any time prior to the expiration of the Due Diligence Period of (i) a matter or
matters pertaining to SCBC and the SCBC Subsidiaries, not known to CCB as of the
date of the execution of this Agreement, but Previously Disclosed hereunder by
SCBC to CCB or discovered by CCB in its investigation, review and analysis of
SCBC and the SCBC Subsidiaries during the Due Diligence Period, and (ii) their
opinion, based on their reasonable judgment exercised in good faith, that such
matter or matters, or the reasonably expected adverse consequences of such
matter or matters to SCBC, would so substantially and adversely impact the
economic or business benefits of the Merger to CCB as to render inadvisable the
consummation of the Merger;
(c) by the Boards of Directors of CCB and NSC by notice given to SCBC at
any time prior to the expiration of the Due Diligence Period (i) that
environmental studies of SCBC's assets by CCB during the Due Diligence Period
indicate violations of Environmental Laws on the premises of such SCBC assets,
(ii) that, based on generally accepted cost projection standards, the total
projected cost of curing all such indicated violations and all related
remediation required by applicable Environmental Laws and Environmental Agencies
(the "Environmental Costs") exceeds $2,000,000, and (iii) containing therein a
listing of (A) the relevant assets of SCBC, (B) the violations indicated, and
(C) a detailed estimate of the Environmental Costs of each such indicated
violation; provided, however, that SCBC shall have a period of 45 days after
receipt of such notice to provide to CCB (A) a detailed report or reports of one
or more environmental consulting firms reasonably acceptable to CCB that the
Environmental Costs will not total in excess of $2,000,000 or (B) a fixed price
contract between SCBC and one or more firms specializing in environmental
remediation, such firms being reasonably acceptable to CCB, having a total
payment obligation for SCBC of less than $2,000,000, and in either such event
the notice of termination given by CCB's and NSC's Boards of Directors shall be
deemed void and without effect.
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(d) by the Board of Directors of SCBC by notice given to CCB and NSC at any
time prior to the expiration of the Due Diligence Period of (i) a matter or
matters pertaining to CCB and the CCB Subsidiaries, not known to SCBC as of the
date of the execution of this Agreement, but Previously Disclosed hereunder by
CCB or SCBC or discovered by SCBC in its investigation, review and analysis of
CCB and the CCB Subsidiaries during the Due Diligence Period, and (ii) its
opinion, based on its reasonable judgment exercised in good faith, that such
matter or matters, or the reasonably expected adverse consequences of such
matter or matters to CCB, would so substantially and adversely impact the
economic or business benefits of the Merger to SCBC or its shareholders as to
render inadvisable the consummation of the Merger;
(e) upon notice to the other party or parties, by the Boards of Directors
of CCB and NSC or the Board of Directors of SCBC (provided that the terminating
party or parties are not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if the Effective Time
shall not have occurred on or before September 30, 1995;
(f) upon notice to the other party or parties, by the Boards of Directors
of CCB and NSC or the Board of Directors of SCBC if any Regulatory Authority has
denied approval of the Bank Conversions, the Merger and/or the Bank Mergers, or
any Regulatory Approval (or any condition to the receipt of a Regulatory
Approval) or an order, judgment or decree from any Regulatory Authority or any
court having competent jurisdiction has imposed any condition or requirement
which would so substantially and adversely impact the economic or business
benefits of the Merger to CCB or to SCBC and its shareholders, as applicable, as
to render inadvisable in the reasonable opinion, exercised in good faith, of the
Boards of Directors of CCB and NSC or the Board of Directors of SCBC, as
applicable, the consummation of the Merger, and such denial or imposition has
become final and nonappealable;
(g) upon notice to the other party or parties, by the Boards of Directors
of CCB and NSC or the Board of Directors of SCBC in the event of a material
breach by the other party or parties of any representation, warranty, covenant
or other agreement contained herein, which breach is not cured after 30 days'
written notice thereof is given to the party or parties committing such breach;
(h) upon notice to the other party or parties, by the Boards of Directors
of CCB and NSC or the Board of Directors of SCBC if there has occurred a suit or
other proceeding by any Regulatory Authority or other governmental body or
agency to restrain or prohibit the Bank Conversions, the Merger and/or the Bank
Mergers or a suit by a shareholder of CCB or SCBC seeking to restrain such
transactions or to obtain money damages should such transactions be consummated
(unless counsel for the party wishing to proceed with such transactions renders
an opinion that such a suit is likely to be resolved in a way which would not
deprive any party of the material benefits of the Merger or in a way which would
not result in substantial money damages to one or more directors of such party
which would not be covered by insurance);
(i) upon notice to the other party or parties, by the Boards of Directors
of CCB and NSC or the Board of Directors of SCBC if there has occurred a
declaration of war by the United States of America or a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States of America or the State of North Carolina;
(j) by the Board of Directors of SCBC by notice given to CCB and NSC, if
the CCB Bylaw Approval shall not have been received from CCB's shareholders on
or before April 19, 1995; or
(k) by the Board of Directors of SCBC by notice given to CCB and NSC, if
the CCB Stock Price over a period of 30 consecutive trading days shall be less
than $36.00.
10.2 EFFECT OF TERMINATION. In the event of the termination and abandonment
of this Agreement pursuant to Section 10.1, this Agreement shall become void and
have no effect, except that (i) the provisions of Section 7.3(b), Section 8.1,
Section 10.3 and Section 10.4 (insofar as it applies to a termination under
Section 10.1(g)) shall survive any such termination and abandonment, and (ii) no
party shall be relieved or released from any liability arising out of a willful
or grossly negligent breach of any provision of this Agreement.
10.3 EXPENSES. Unless this Agreement is terminated as described in Section
10.4, each party hereto shall bear its own expenses incident to preparing,
entering into and carrying out this Agreement and the transactions contemplated
thereby, including filing fees, financial advisor, legal, accounting and
investment banking fees and expenses (the "Costs").
10.4 WRONGFUL TERMINATION. Notwithstanding the provisions of Sections 10.2
and 10.3, and except as otherwise provided in Section 10.5, if the Merger fails
to be consummated because of the wrongful termination of this Agreement or a
willful or grossly negligent breach by CCB or NSC, on the one hand, or by SCBC,
on the other hand, of any representation, warranty, covenant, undertaking, term,
agreement or restriction contained herein, then the party or parties wrongfully
terminating or breaching this Agreement shall (i) reimburse the other party or
parties for all of such other party's or parties' Costs, and (ii) pay the other
party or parties $2,000,000 as liquidated damages in full compensation of all
other harm suffered by such
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party or parties as a result hereof. A termination of this Agreement under the
provisions of Section 10.1, other than a termination under Section 10.1(g),
shall not cause application of this Section 10.4.
10.5 TERMINATION FEE. If (a) this Agreement is terminated because SCBC has
entered theretofore into a letter of intent or an agreement with a Person other
than CCB or any CCB Subsidiary that provides for such Person to acquire SCBC or
any SCBC Subsidiary, merge with or into SCBC or any SCBC Subsidiary, or purchase
all or substantially all of the assets of SCBC or any SCBC Subsidiary or (b)
prior to termination of this Agreement SCBC or any SCBC Subsidiary engages in
negotiations relating to any such transaction and a letter of intent or
agreement with respect thereto is entered into within six months following the
termination of this Agreement, and CCB has not consented in writing to such
negotiations by SCBC pursuant to Section 7.2(h) hereof, then SCBC shall pay to
CCB a termination fee of $6,200,000. If (x) this Agreement is terminated because
CCB has entered theretofore into a letter of intent or an agreement with any
Person that provides for such Person to acquire CCB or any CCB Subsidiary, merge
with or into CCB or any CCB Subsidiary, or purchase all or substantially all of
the assets of CCB or any CCB Subsidiary or (y) prior to termination of this
Agreement CCB or any CCB Subsidiary engages in negotiations relating to any such
transaction and a letter of intent or agreement with respect thereto is entered
into within six (6) months following the termination of this Agreement, and SCBC
has not consented in writing to such negotiations pursuant to Section 7.2(h)
hereof, then CCB shall pay to SCBC a termination fee of $6,200,000.
ARTICLE XI
GENERAL PROVISIONS
11.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS FOLLOWING
THE EFFECTIVE TIME. Except for Article III and Sections 7.11, 8.1, 8.2 and 8.3,
none of the respective representations, warranties, obligations, covenants and
agreements of the parties hereto shall survive the Effective Time.
11.2 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement contains the entire agreement between the parties hereto with respect
to the transactions contemplated hereunder and thereunder, and such agreements
supersede all prior arrangements or understandings with respect thereto, written
or oral. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors. Other
than the provisions of Article III and Sections 7.11, 8.1, 8.2 and 8.3, nothing
in this Agreement, expressed or implied, is intended to confer upon any Person,
other than CCB, the CCB Subsidiaries, SCBC, the SCBC Subsidiaries, and the
Surviving Corporation and their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.3 AMENDMENTS. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by each of CCB, NSC and SCBC upon the
approval of the Board of Directors of each of CCB, NSC and SCBC; provided,
however, that the provisions hereof relating to the manner or basis in which
shares of SCBC Common Stock will be exchanged for CCB Common Stock shall not be
amended after the Shareholders' Meetings or the NSC shareholder meeting without
any requisite approval of the holders of the CCB Common Stock and SCBC Common
Stock entitled to vote thereon and the approval of NSC's shareholder.
11.4 WAIVERS. Prior to or at the Effective Time, each of CCB, NSC and SCBC
shall have the right to waive any default in the performance of any term of this
Agreement by the other, to waive or extend the time for the compliance or
fulfillment by the other of any and all of the other's obligations under this
Agreement and to waive any or all of the conditions precedent to its obligations
under this Agreement, except any condition which, if not satisfied, would result
in the violation of any law or applicable governmental regulation.
11.5 NO ASSIGNMENT. None of the parties hereto may assign any of its rights
or delegate any of its obligations under this Agreement to any other Person. Any
such purported assignment or delegation that is made without the prior written
consent of the other parties to this Agreement shall be void and of no effect.
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11.6 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, or by registered or certified mail, postage prepaid, to
the Persons at the addresses set forth below (or at such other address as may be
provided hereunder):
If to CCB or NSC:
Ernest C. Roessler
President and Chief Executive Officer
CCB Financial Corporation
Post Office Box 931
Durham, North Carolina 27702
With a required copy to:
Anthony Gaeta, Jr., Esq.
Ward and Smith, P.A.
Fayetteville Street Mall
Two Hannover Square
Suite 2400
Raleigh, North Carolina 27601
If to SCBC:
David B. Jordan
Vice Chairman and Chief Executive Officer
Security Capital Bancorp
Post Office Box 1387
Salisbury, North Carolina 28145-1387
With a required copy to:
Robert A. Singer, Esq.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
Post Office Box 26000
Greensboro, North Carolina 27420-6000
or to such other Person as any party shall specify by notice in writing to each
of the other party. All such notices or other communications shall be deemed to
have been delivered (i) upon receipt when delivery is made by hand, (ii) on the
third business day after deposit in the United States mail when delivery is made
by registered or certified mail, and (iii) upon transmission, when evidenced by
a sender transmission completed confirmation, when made by facsimile
transmission.
11.7 SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a Regulatory Authority or court of
competent jurisdiction to be invalid, void, unenforceable or against public or
regulatory policy, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be effected, impaired or invalidated.
11.8 GOVERNING LAW. This Agreement shall in all respects be governed by and
construed in accordance with the laws of the State of North Carolina.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
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IN WITNESS WHEREOF, CCB, NSC and SCBC have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
CCB FINANCIAL CORPORATION
By:
ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
NEW SECURITY CAPITAL, INC.
By:
ERNEST C. ROESSLER, PRESIDENT
SECURITY CAPITAL BANCORP
By:
DAVID B. JORDAN, VICE CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
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APPENDIX A
PLAN OF MERGER
OF
NEW SECURITY CAPITAL, INC.
WITH AND INTO
SECURITY CAPITAL BANCORP
I. CORPORATIONS PARTICIPATING IN THE MERGER.
New Security Capital, Inc., a North Carolina corporation ("NSC" or the
"Merging Corporation"), shall merge with and into Security Capital Bancorp, a
North Carolina corporation ("SCBC" or the "Surviving Corporation"), pursuant to
the provisions of, and with the effect provided under, Section 55-11-06 of the
North Carolina General Statutes.
II. NAME OF SURVIVING CORPORATION.
Upon the effectiveness of the merger (the "Effective Time"), the name of
the Surviving Corporation shall be "Security Capital Bancorp."
III. TERMS AND CONDITIONS OF THE MERGER.
1. Subject to the terms and conditions of the Amended and Restated
Agreement of Combination, dated as of December 1, 1994, by and between CCB
Financial Corporation ("CCB"), the Merging Corporation and SCBC (the "Agreement
of Combination"), and except insofar as the same may be continued by law or in
order to carry out the purposes of this Plan of Merger and the Agreement of
Combination, and except as continued in and merged into the Surviving
Corporation, the separate existence of the Merging Corporation shall cease as of
the Effective Time. The Surviving Corporation, upon the merger and without any
order or other action on the part of any court or otherwise, shall hold and
enjoy all rights of property, franchises and interest, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates,
assignee and receiver, and in every other fiduciary capacity, in the same manner
and to the same extent as such rights, franchises and interests were held or
enjoyed by the Merging Corporation at the time of the merger. The Surviving
Corporation shall be responsible and liable for all liabilities of every kind
and description of the Merging Corporation, existing immediately prior to the
Effective Time, to the extent provided by law.
2. The Amended and Restated Articles of Incorporation of SCBC in effect
immediately prior to the Effective Time shall continue in full force and effect
until amended in accordance with applicable laws.
3. The Bylaws of SCBC in effect immediately prior to the Effective Time
shall continue in full force and effect until amended in accordance with
applicable laws.
IV. EFFECTIVENESS OF THE MERGER.
The merger shall be effective on the date and at the time set forth in the
Articles of Merger setting forth, among other things, this Plan of Merger, if
required, that are filed with, and accepted for filing by, the Secretary of
State of North Carolina as required under Section 55-11-05 of the North Carolina
General Statutes.
V. CONVERSION AND EXCHANGE OF SHARES.
As of the Effective Time, the outstanding shares of the corporations
participating in the merger will be converted and exchanged as follows:
1. Each of the shares of common stock of NSC outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one (1) share of
the common stock of the Surviving Corporation.
2. Each of the shares of common stock of SCBC outstanding immediately prior
to the Effective Time (excluding shares held, other than in a fiduciary capacity
or as a result of debts previously contracted, by CCB, SCBC, the Merging
Corporation or any of their subsidiaries and shares held by shareholders of the
Surviving Corporation who have perfected dissenters' rights under Article 13 of
Chapter 55 of the North Carolina General Statutes) shall be converted into and
exchanged for .50 of a share of the common stock of CCB and .50 of a preferred
share purchased right as described in CCB's Shareholder Rights Plan, adopted
February 26, 1990 (a "CCB Right") (the "Exchange Ratio");
3. Any shares of any of the subsidiaries of the Merging Corporation or of
SCBC outstanding immediately prior to the Effective Time shall continue to be
issued and outstanding, and shall not be converted, exchanged or altered in any
manner as a result of the merger.
4. As of the Effective Time, all rights with respect to options to purchase
shares of common stock of SCBC granted or assumed by SCBC (the "SCBC Stock
Options") pursuant to stock option plans or other plans or agreements of SCBC
(the
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"SCBC Option Plans"), which are outstanding as of the Effective Time in
compliance with the Agreement of Combination, whether or not then exercisable,
shall be converted into and become rights with respect to the common stock of
CCB (with attached CCB Rights), and CCB shall assume all obligations of SCBC
with respect to each SCBC Stock Option, in accordance with the terms of the
respective SCBC Option Plan under which it was issued and the stock option
agreement by which it may be evidenced. From and after the Effective Time, (i)
each SCBC Stock Option assumed by CCB may be exercised solely for shares of the
common stock of CCB (with attached CCB Rights), (ii) the number of shares of the
common stock of CCB (with attached CCB Rights) subject to each SCBC Stock Option
shall be equal to the number of shares of common stock of SCBC subject to such
SCBC Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, and (iii) the per share exercise price under each such SCBC
Stock Option shall be adjusted by dividing the per share exercise price under
each such option by the Exchange Ratio and rounding to the nearest cent;
PROVIDED, HOWEVER, that the number of shares of common stock of CCB (with
attached CCB Rights) subject to each SCBC Stock Option and the per share
exercise price shall be subject to further adjustment as appropriate to reflect
any stock split, stock dividend, recapitalization or other similar transaction
subsequent to the Effective Time.
5. Each holder of shares of common stock of SCBC converted pursuant to the
merger, or of SCBC Stock Options, who would otherwise have been entitled to
receive a fraction of a share of the common stock of CCB (after taking into
account all certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of a
share of the common stock of CCB multiplied by the market value of one share of
the common stock of CCB as of the Effective Time, in the case of shares
converted pursuant to the merger, or the date of exercise, in the case of SCBC
Stock Options. The market value of one share of the common stock of CCB at the
Effective Time or the date of exercise, as the case may be, shall be the closing
sales price of the common stock of CCB as quoted on the National Market System
of the Nasdaq Stock Market, Inc. (as reported by THE WALL STREET JOURNAL or, if
not reported thereby, any other authoritative source) on the last business day
preceding the Effective Time or the date of exercise, as the case may be. No
such holder will be entitled to dividends, voting rights or any other rights as
a shareholder in respect of any fractional share.
6. From and after the Effective Time, each holder of any of the shares of
the common stock of SCBC to be converted as above provided shall be entitled,
upon presentation and surrender to CCB of the certificates representing such
shares, to receive in exchange therefor certificates representing the number of
whole shares of the common stock of CCB (with attached CCB Rights), and a check
representing the amount of cash for fractional shares, if any, into which such
shares shall have been converted. The surrendered shares shall be canceled.
Until so surrendered, each outstanding certificate which prior to the Effective
Time represented common stock of SCBC shall be deemed for all corporate purposes
to evidence ownership of the number of shares of the common stock of CCB (with
attached CCB Rights) into which the same shall have been converted; PROVIDED,
HOWEVER, beginning on the 91st day after the date on which the Effective Time
shall occur, no dividend or other distribution payable to the holders or record
of the common stock of CCB at or as of any time after the Effective Time shall
be paid to the holder of any certificate representing shares of common stock of
SCBC issued and outstanding as of the Effective Time until such holder
physically surrenders such certificate for exchange, promptly after which time
all such dividends or distributions shall be paid (without interest). In the
event any certificate representing shares to be converted pursuant to the merger
shall have been lost, stolen or destroyed, upon receipt of appropriate
indemnification therefor, certificates representing the common stock of CCB
(with attached CCB Rights) will be issued in exchange therefor as described
above along with a check representing cash in lieu of fractional shares, if any,
and/or declared but unpaid dividends deliverable in respect thereof.
7. Shares of common stock of SCBC held by holders who did not vote in favor
of the merger and who otherwise perfect dissenters' rights under Article 13 of
Chapter 55 of the North Carolina General Statutes shall not be converted into or
become shares of the common stock of CCB, but such shares of common stock of
SCBC shall represent only the right to receive the "fair value" of such shares
as provided in such Article 13. If any such holder shall have failed to perfect
or shall have effectively withdrawn or lost such dissenters' rights, such shares
of common stock of SCBC shall thereupon be deemed to have been converted and
become shares of the common stock of CCB in accordance with the Exchange Ratio
as of the Effective Time without any interest thereon.
8. Shares of common stock of SCBC held immediately prior to the Effective
Time by CCB, SCBC, the Merging Corporation or any of their subsidiaries, other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be canceled as of the Effective Time.
VI. ABANDONMENT.
This Plan of Merger may be terminated and the merger abandoned at any time
prior to the Effective Time upon termination of the Agreement of Combination by
SCBC or by CCB and the Merging Corporation.
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APPENDIX B
EXCERPT FROM NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13.
DISSENTERS' RIGHTS.
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
(SECTION MARK) 55-13-01. DEFINITIONS.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and
in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate currently
paid by the corporation on its principal bank loans, if any, but not less
than the rate provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(SECTION MARK) 55-13-02. RIGHT TO DISSENT.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party unless (i) approval by the shareholders of that corporation is not
required under G.S. 55-11-03(g) or (ii) such shares are then redeemable by
the corporation at a price not greater than the cash to be received in
exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, including a sale in dissolution, but not including a
sale pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed in
cash to the shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (i)
alters or abolishes a preferential right of the shares; (ii) creates,
alters, or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of
the shares; (iii) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (iv) excludes or limits
the right of the shares to vote on any matter, or to cumulate votes; (v)
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
G.S. 55-6-04; or (vi) changes the corporation into a nonprofit corporation
or cooperative organization;
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(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
(SECTION MARK) 55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the
beneficial shareholder.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(SECTION MARK) 55-13-20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is
taken without a vote of shareholders, the corporation shall no later than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this section,
such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
(SECTION MARK) 55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to demand
payment for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his shares under this Article.
(SECTION MARK) 55-13-22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
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(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
(SECTION MARK) 55-13-23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22 must
demand payment and deposit his share certificates in accordance with the terms
of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his share under this Article.
(SECTION MARK) 55-13-24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(SECTION MARK) 55-13-25. OFFER OF PAYMENT.
(a) As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenter who complied
with G.S. 55-13-23 the amount the corporation estimates to be the fair value of
his shares, plus interest accrued to the date of payment, and shall pay this
amount to each dissenter who agrees in writing to accept it in full satisfaction
of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet as of the
end of a fiscal year ending not more than 16 months before the date of
offer of payment, an income statement for that year, a statement of cash
flows for that year, and the latest available interim financial statements,
if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
(SECTION MARK) 55-13-26. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
(SECTION MARK) 55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
CORPORATION'S OFFER OR FAILURE TO PERFORM.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate or reject the corporation's offer under G.S. 55-13-25 and demand
payment of the fair value of his shares and interest due, if:
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(1) The dissenter believes that the amount offered under G.S. 55-13-25
is less than the fair value of his shares or that the interest due is
incorrectly calculated;
(2) The corporation fails to make payment to a dissenter who accepts
the corporation's offer under G.S. 55-13-25 within 30 days after the
dissenter's acceptance; or
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation offered payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
PART 3. JUDICIAL APPRAISAL OF SHARES.
(SECTION MARK) 55-13-30. COURT ACTION.
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the date of his payment
demand under G.S. 55-13-28 and petition the court to determine the fair value of
the shares and accrued interest. Upon service upon it of the petition filed with
the court, the corporation shall pay to the dissenter the amount offered by the
corporation under G.S. 55-13-25.
(a1) If the dissenter does not commence the proceeding within the 60-day
period, the dissenter shall have an additional 30 days to either (i) accept in
writing the amount offered by the corporation under G.S. 55-13-25, upon which
the corporation shall pay such amount to the dissenter in full satisfaction of
his demand, or (ii) withdraw his demand for payment and resume the status of a
nondissenting shareholder. A dissenter who takes no action within such 30-day
period shall be deemed to have withdrawn his dissent and demand for payment.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether or
not residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The parties are entitled to the same discovery
rights as parties in other civil proceedings. However, in a proceeding by a
dissenter in a public corporation, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
(SECTION MARK) 55-13-31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, and shall assess
the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either
or any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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APPENDIX C
November 4, 1994
Board of Directors
Security Capital Bancorp
507 West Innes Street
Salisbury, North Carolina 28145-1387
Gentlemen:
In connection with the proposed acquisition of Security Capital Bancorp
("SCBC") by CCB Financial Corporation, Inc. ("CCBF") (the "Merger"), you have
asked us to render an opinion as to whether the financial terms of the Merger,
as provided in the Agreement of Combination dated as of November 4, 1994 among
such parties (the "Merger Agreement"), are fair, from a financial point of view,
to the stockholders of SCBC. Under the terms of the Merger, holders of all
outstanding shares of SCBC stock will receive consideration equal to 0.50 CCBF
shares for each SCBC share.
Our firm, as part of its investment banking business, is frequently
involved in the valuation of securities as related to public underwritings,
private placements, mergers, acquisitions, recapitalizations and other purposes.
In connection with our study for rendering this opinion, we have reviewed
the Merger Agreement, SCBC's financial results for fiscal years 1989 through
1993 and for the quarter ended September 30, 1994, and certain documents and
information we deem relevant to our analysis. We have also held discussions with
senior management of SCBC for the purpose of reviewing the historical and
current operations of, and outlook for SCBC, industry trends, the terms of the
proposed Merger, and related matters.
We have also studied published financial data concerning certain other
publicly traded banks which we deem comparable to SCBC as well as certain
financial data relating to acquisitions of other banks that we deem relevant or
comparable. In addition, we have reviewed other published information, performed
certain financial analyses and considered other factors and information which we
deem relevant.
We have reviewed similar information and data relating to CCBF including
its historical financial statements, from fiscal 1989 up through and including
the quarter ended September 30, 1994.
In rendering this opinion, we have relied upon the accuracy of the Merger
Agreement, the financial information listed above, and other information
furnished to us by SCBC and CCBF. We have not separately verified this
information nor have we made an independent evaluation of any of the assets or
liabilities of SCBC and CCBF.
Based upon the foregoing and upon current market and economic conditions,
we are of the opinion that, from a financial point of view, the terms of the
Merger as provided in the Merger Agreement are fair to the stockholders of SCBC.
Very truly yours,
/s/ THE ROBINSON-HUMPHREY COMPANY,
INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
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APPENDIX D
January 30, 1995
Board of Directors
CCB Financial Corporation
111 Corcoran Street
Durham, North Carolina 27701
Members of the Board:
CCB Financial Corporation ("CCBF") and Security Capital Bancorp ("SCBC")
have entered into an Amended and Restated Agreement of Combination, dated as of
December 1, 1994 (the "Merger Agreement"), pursuant to which CCBF will acquire
SCBC by means of the merger (the "Merger") of a wholly-owned subsidiary of CCBF
into SCBC, and the conversion of each of the outstanding shares of the no par
value common stock of SCBC ("SCBC Stock") into .50 of a share of the $5.00 par
value common stock of CCBF ( "CCBF Stock"), together with .50 of a Series A
Preferred Stock purchase right ("CCBF Right"). The exchange ratio of .50 of a
share of CCBF Stock and .50 of a CCBF Right for each share of SCBC Stock is
referred to herein as the "Exchange Ratio."
Wheat, First Securities, Inc. ("Wheat") as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. In the ordinary course of our business as a broker-dealer, we
may, from time to time, have a long or short position in, and buy or sell, debt
or equity securities of CCBF or SCBC for our own account or for the accounts of
our customers. We have acted as financial advisor to CCBF in connection with,
and have participated in certain of the negotiations leading to, the Merger
Agreement. Wheat will receive a fee from CCBF for rendering this opinion. In
addition, Wheat has acted as financial advisor to CCBF in connection with
another merger transaction and has acted as managing underwriter in public
offerings of CCBF equity and debt securities and has received fees from CCBF for
its services in each of these transactions.
You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the holders of CCBF Stock.
In arriving at the opinion set forth below, we have conducted discussions
with members of senior management of CCBF and SCBC concerning their businesses
and prospects and have reviewed certain publicly available business and
financial information and certain other information prepared or provided to us
in connection with the Merger, including, among other things, the following:
(1) CCBF's Annual Reports to Shareholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years ended December
31, 1993;
(2) SCBC's Annual Reports to Stockholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years ended December
31, 1993;
(3) CCBF's Quarterly Reports on Form 10-Q and related financial
information for the three months ended March 31, 1994, for the six months
ended June 30, 1994 and for the nine months ended September 30, 1994;
(4) SCBC's Quarterly Reports on Form 10-Q and related financial
information for the three months ended March 31, 1994, for the six months
ended June 30, 1994 and for the nine months ended September 30, 1994;
(5) Certain publicly available information with respect to historical
market prices and trading activity for CCBF Stock and SCBC Stock and for
certain publicly traded financial institutions which Wheat deemed relevant;
(6) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and acquisitions
which Wheat deemed relevant;
(7) The Merger Agreement;
(8) The Registration Statement on Form S-4 of CCBF, including the
Prospectus/Joint Proxy Statement;
D-1
<PAGE>
(9) Other financial information concerning the businesses and
operations of CCBF and SCBC, including certain audited financial
information and certain internal financial analyses and forecasts for CCBF
and SCBC prepared by the senior management of each entity; and
(10) Such financial studies, analyses, inquiries and other matters as
we deemed necessary.
In preparing our opinion, we have relied on and assumed the accuracy and
completeness of all information provided to us or publicly available, including
the representations and warranties of CCBF and SCBC included in the Merger
Agreement, and we have not assumed any responsibility for the independent
verification of such information. We have relied upon the managements of CCBF
and SCBC as to the reasonableness and achievability of their financial and
operational forecasts and projections, and the assumptions and bases therefor,
provided to us, and we have assumed that such forecasts and projections reflect
the best currently available estimates and judgements of such managements and
that such forecasts and projections will be realized in the amounts and in the
time periods currently estimated by such managements. We also assumed, without
independent verification, that the aggregate allowances for loan losses and
other contingencies for CCBF and SCBC are adequate to cover such losses. Wheat
did not review any individual credit files of CCBF or SCBC, nor did it make an
independent evaluation or appraisal of the assets or liabilities of CCBF or
SCBC. We also assumed that, in the course of obtaining the necessary regulatory
approvals for the Merger, no conditions will be imposed that will have a
material adverse effect on the contemplated benefits of the Merger, on a pro
forma basis, to CCBF. Our opinion is necessarily based upon market, economic and
other conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof. Wheat's opinion is
directed only to the fairness, from a financial point of view, of the Exchange
Ratio to the shareholders of CCBF Stock and does not address any other aspect of
the Merger and does not constitute a recommendation to any shareholder of CCBF
as to how such shareholder should vote with respect to the Merger. Wheat's
opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for CCBF, nor does it address
the effect of any other business combination in which CCBF might engage.
It is understood that this opinion may be included in its entirety in the
Prospectus/Joint Proxy Statement. This opinion may not, however, be summarized,
excerpted from or otherwise publicly referred to without our prior written
consent.
On the basis of and subject to the foregoing, we are of the opinion that as
of the date hereof the Exchange Ratio is fair, from a financial point of view,
to the holders of CCBF Stock.
Very truly yours,
/s/ WHEAT, FIRST SECURITIES, INC.
WHEAT, FIRST SECURITIES, INC.
D-2
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The NCBCA provides for indemnification by a corporation of its officers,
directors, employees and agents, and any person who is or was serving at the
corporation's request as a director, officer, employee or agent of another
entity or enterprise or as a trustee or administrator under an employee benefit
plan, against liability and expenses, including reasonable attorneys' fees, in
any proceeding (including without limitation a proceeding brought by or on
behalf of the corporation itself) arising out of their status as such or their
activities in any of the foregoing capacities.
PERMISSIBLE INDEMNIFICATION. Under the NCBCA, a corporation may, but is not
required to, indemnify any such person against liability and expenses incurred
in any such proceeding, provided such person conducted himself or herself in
good faith and (i) in the case of conduct in his or her official corporate
capacity, reasonably believed that his or her conduct was in the corporation's
best interests, and (ii) in all other cases, reasonably believed that his or her
conduct was at least not opposed to the corporation's best interests; and, in
the case of a criminal proceeding, where he or she had no reasonable cause to
believe his or her conduct was unlawful. However, a corporation may not
indemnify such person either in connection with a proceeding by or in the right
of the corporation in which such person was adjudged liable to the corporation,
or in connection with any other proceeding charging improper personal benefit to
such person (whether or not involving action in an official capacity) in which
such person was adjudged liable on the basis that personal benefit was
improperly received.
MANDATORY INDEMNIFICATION. Unless limited by the corporation's charter, the
NCBCA requires a corporation to indemnify a director or officer of the
corporation who is wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such person was a party because he or she is or was a
director or officer of the corporation against reasonable expenses incurred in
connection with the proceeding.
ADVANCE FOR EXPENSES. Expenses incurred by a director, officer, employee or
agent of the corporation in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding as authorized
by the board of directors in the specific case, or as authorized by the charter
or bylaws or by any applicable resolution or contract, upon receipt of an
undertaking by or on behalf of such person to repay amounts advanced unless it
ultimately is determined that such person is entitled to be indemnified by the
corporation against such expenses.
COURT-ORDERED INDEMNIFICATION. Unless otherwise provided in the
corporation's charter, a director or officer of the corporation who is a party
to a proceeding may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court deems necessary, may
order indemnification if it determines either (i) that the director or officer
is entitled to mandatory indemnification as described above, in which case the
court also will order the corporation to pay the reasonable expenses incurred to
obtain the court-ordered indemnification, or (ii) that the director or officer
is fairly and reasonably entitled to indemnification in view of all the relevant
circumstances, whether or not such person met the requisite standard of conduct
or was adjudged liable to the corporation in connection with a proceeding by or
in the right of the corporation or on the basis that personal benefit was
improperly received in connection with any other proceeding so charging (but if
adjudged so liable, indemnification is limited to reasonable expenses incurred).
VOLUNTARY INDEMNIFICATION. In addition to and separate and apart from
"permissible" and "mandatory" indemnification described above, a corporation
may, by charter, bylaw, contract or resolution, indemnify or agree to indemnify
any one or more of its directors, officers, employees or agents against
liability and expenses in any proceeding (including any proceeding brought by or
on behalf of the corporation itself) arising out of their status as such or
their activities in any of the foregoing capacities. However, the corporation
may not indemnify or agree to indemnify a person against liability or expenses
he may incur on account of activities which were at the time taken known or
believed by such person to be clearly in conflict with the best interests of the
corporation. Any provision in a corporation's charter or bylaws or in a contract
or resolution may include provisions for recovery from the corporation of
reasonable costs, expenses and attorneys' fees in connection with the
enforcement of rights to indemnification granted therein and may further include
provisions establishing reasonable procedures for determining and enforcing such
rights.
PARTIES ENTITLED TO INDEMNIFICATION. The NCBCA defines "director" to
include ex-directors and the estate or personal representative of a director.
Unless its charter provides otherwise, a corporation may indemnify and advance
expenses to an officer, employee or agent of the corporation to the same extent
as to a director and also may indemnify and advance expenses to an officer,
employee or agent who is not a director to the extent, consistent with public
policy, as may be provided in its charter or bylaws, by general or specific
action of its board of directors, or by contract.
II-1
<PAGE>
INDEMNIFICATION BY REGISTRANT. Subject to such restrictions on
indemnification as are imposed under Federal securities laws, Registrant's
Bylaws provide for indemnification of its directors, officers, employees and
agents to the fullest extent permitted by law, and require its Board of
Directors to take all actions necessary and appropriate to authorize such
indemnification.
Under the NCBCA, a corporation also may purchase insurance on behalf of any
person who is or was a director or officer against any liability arising out of
his status as such. Registrant currently maintains a directors' and officers'
liability insurance policy.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits and financial statement schedules are filed as part
of this Registration Statement or incorporated herein by reference.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER
PURSUANT TO
ITEM 601 OF
REGULATION S-K DESCRIPTION OF EXHIBIT
<C> <S>
2 Amended and Restated Agreement of Combination among CCB Financial Corporation, Security Capital
Bancorp and New Security Capital, Inc. (included as and incorporated from Appendix A of the
Prospectus/Joint Proxy Statement filed as part of this Registration Statement)
5 Opinion and Consent of Ward and Smith, P.A., as to legality of shares being registered
8 Opinion of KPMG Peat Marwick LLP, as to tax matters
10.1 Form of amended employment agreement with David B. Jordan
10.2 Form of amended employment agreement with Ralph A. Barnhardt
10.3 Form of amended employment agreement with Lloyd G. Gurley
10.4 Letter agreement with Pressley A. Ridgill
23.1 Consent of Ward and Smith, P.A. (included in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Ernst & Young LLP
23.6 Consent of The Robinson-Humphrey Company, Inc.
23.7 Consent of Wheat, First Securities, Inc.
23.8 Consent of Miles J. Smith, Jr.
23.9 Cosent of David B. Jordan
23.10 Consent of John M. Barnhardt
23.11 Consent of Jimmy K. Stegall
23.12 Consent of James L. Williamson
23.13 Consent of J.G. Rutledge, III
24* Powers of Attorney
99.1 Form of appointment of proxy to be used in connection with the Special Meeting of Shareholders of CCB
Financial Corporation
99.2 Form of appointment of proxy to be used in connection with the Special Meeting of Shareholders of
Security Capital Bancorp
</TABLE>
* Previously filed.
(b) Financial Statement Schedules.
All financial statement schedules are omitted as substantially all the
required information is contained in the Registrant's consolidated financial
statements which are incorporated herein by reference or is not applicable.
ITEM 22. UNDERTAKINGS
(a) RULE 415 OFFERING. Include the following if the securities are
registered pursuant to Rule 415 under the Securities Act:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registrant statement:
II-2
<PAGE>
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3
((section mark)239.13 of this chapter), Form S-8 ((section mark)239.16b of
this chapter) or Form F-3 ((section mark) 239.33 of this chapter), and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "1933 Act"),
each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus/Joint Proxy
Statement pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Durham, State of North Carolina, on January 30, 1995.
CCB FINANCIAL CORPORATION
By: /s/ ERNEST C. ROESSLER
ERNEST C. ROESSLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-4 has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ ERNEST C. ROESSLER President, Chief Executive Officer and January 30, 1995
Director (principal executive officer)
ERNEST C. ROESSLER
/s/ W. HAROLD PARKER, JR. Senior Vice President and Controller January 30, 1995
(principal financial and accounting
W. HAROLD PARKER, JR. officer)
* W. L. BURNS, JR. Chairman of the Board of Directors January 30, 1995
W. L. BURNS, JR.
Director January , 1995
J. HARPER BEALL, III
* JAMES B. BRAME, JR. Director January 30, 1995
JAMES B. BRAME, JR.
* TIMOTHY B. BURNETT Director January 30, 1995
TIMOTHY B. BURNETT
* ARTHUR W. CLARK Director January 30, 1995
ARTHUR W. CLARK
* KINSLEY VAN R. DEY, JR. Director January 30, 1995
KINSLEY VAN R. DEY, JR.
* MRS. FRANCES HILL FOX Director January 30, 1995
MRS. FRANCES HILL FOX
Director January , 1995
T. E. HAIGLER, JR.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
* EDWARD S. HOLMES Director January 30, 1995
EDWARD S. HOLMES
<S> <C> <C>
Director January , 1995
OWEN G. KENAN
* EUGENE J. MCDONALD Director January 30, 1995
EUGENE J. MCDONALD
* HAMILTON W. MCKAY, JR., M.D. Director January 30, 1995
HAMILTON W. MCKAY, JR., M.D.
* ERIC B. MUNSON Director January 30, 1995
ERIC B. MUNSON
* JOHN B. STEDMAN Director January 30, 1995
JOHN B. STEDMAN
* H. ALLEN TATE, JR. Director January 30, 1995
H. ALLEN TATE, JR.
* DR. PHAIL WYNN, JR. Director January 30, 1995
DR. PHAIL WYNN, JR.
* By /s/ W. HAROLD PARKER, JR. January 30, 1995
W. HAROLD PARKER, JR.
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER
PURSUANT TO
ITEM 601 OF
REGULATION SEQUENTIAL
S-K DESCRIPTION OF EXHIBIT PAGE NO.
<C> <S> <C>
2 Amended and Restated Agreement of Combination among CCB Financial
Corporation, Security Capital Bancorp and New Security Capital, Inc.
(included as and incorporated from Appendix A of the Prospectus/Joint
Proxy Statement filed as part of this Registration Statement)
5 Opinion and Consent of Ward and Smith, P.A., as to legality of shares
being registered
8 Opinion of KPMG Peat Marwick LLP, as to tax matters
10.1 Form of amended employment agreement with David B. Jordan
10.2 Form of amended employment agreement with Ralph A. Barnhardt
10.3 Form of amended employment agreement with Lloyd G. Gurley
10.4 Letter employment agreement with Pressley A. Ridgill
23.1 Consent of Ward and Smith, P.A. (included in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of Ernst & Young LLP
23.6 Consent of The Robinson-Humphrey Company, Inc.
23.7 Consent of Wheat, First Securities, Inc.
23.8 Consent of Miles J. Smith, Jr.
23.9 Consent of David B. Jordan
23.10 Consent of John M. Barnhardt
23.11 Consent of Jimmy K. Stegall
23.12 Consent of James L. Williamson
23.13 Consent of J.G. Rutledge, III
24 * Powers of Attorney
99.1 Form of appointment of proxy to be used in connection with the Special
Meeting of Shareholders of CCB Financial Corporation
99.2 Form of appointment of proxy to be used in connection with the Special
Meeting of Shareholders of Security Capital Bancorp
</TABLE>
* Previously filed.
<PAGE>
EXHIBIT 5
January 30, 1995
Board of Directors
CCB Financial Corporation
111 Corcoran Street
Durham, North Carolina 27701
RE: CCB Financial Corporation
Registration Statement on Form S-4
(Registration No. 33-57005
Our File 93R0034(Q)
Lady and Gentlemen:
We have acted as counsel to CCB Financial Corporation ("CCBF") in
connection with an Agreement of Combination dated November 4, 1994, which was
amended and restated as of December 1, 1994 (the "Agreement") to combine CCBF
and Security Capital Bancorp ("SCBC") by merging a newly formed subsidiary of
CCBF into SCBC (the "Merger") and, through a series of transactions, merging
SCBC's financial institution subsidiaries into CCBF's principal banking
subsidiary, Central Carolina Bank and Trust Company ("CCB"). CCBF has filed with
the Securities and Exchange Commission a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") covering shares of CCBF's common stock, $5.00 par value, and
related Series A Junior Participating Perferred Stock purchase rights
(collectively, the "Common Stock") to be issued to the shareholders of SCBC in
connection with the Merger.
In our capacity as counsel, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of (i) the Restated Charter and
Bylaws of CCBF, (ii) the corporate resolutions and other records of actions
taken by the Board of Directors of CCBF pertaining to the Agreement, (iii) the
Agreement, (iv) the Registration Statement, (v) the relevant provisions of the
Securities Act, as amended, the Bank Holding Company Act of 1956, as amended,
the Federal Deposit Insurance Act, as amended, and the regulations promulgated
under all of the aforementioned statutes, (vii) the relevant provisions of
Chapters 53 and 55 of the North Carolina General Statutes, and (vi) such other
documents, records, certificates, papers and legal matters as we have considered
necessary as the basis for the opinions given herein. In addition, we have made
reasonable inquiries of the officers of CCBF as to all relevant matters. In all
examinations of documents, we have assumed the genuineness of all original
documents and all signatures and the conformity to original documents of all
copies submitted to us as certified, confirmed or photostatic copies.
On the basis of such examination (and subject to the Registration Statement
becoming and remaining effective, approval of the Agreement by the shareholders
of CCBF and SCBC, receipt of all required regulatory approvals, and consummation
of the Merger and related transactions on the terms and in the manner described
in the Agreement), we are of the opinion that the shares of Common Stock to be
issued to the shareholders of SCBC, upon the issuance thereof in accordance with
the terms and conditions of the agreement, will be legally issued, fully paid
and nonassessable.
We hereby expressly disclaim any duty or responsibility to update this
opinion or the information upon which it is based after the date hereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the section
entitled "Legal Matters" in the Prospectus/Joint Proxy Statement contained in
the Registration Statement.
Yours very truly,
/s/ WARD AND SMITH, P.A.
WARD AND SMITH, P.A.
<PAGE>
EXHIBIT 8
December 20, 1994
Board of Directors
Security Capital Bancorp
Post Office Box 1387
Salisbury, North Carolina 28145-1387
Board of Directors
CCB Financial Corporation
111 Corcoran Street
Durham, North Carolina 27701
Gentlemen:
You have requested our opinion as to the federal and North Carolina income
tax consequences resulting from a plan pursuant to which New Security Capital,
Inc. ("NSC"), a wholly-owned subsidiary of CCB Financial Corporation ("CCBF")
established solely to effect the acquisition of Security Capital Bancorp
("SCBC") by CCBF, will be merged with and into SCBC, whereupon the separate
existence of NSC will cease (the "Interim Merger"). Pursuant to the Interim
Merger, each outstanding share of SCBC common stock held by SCBC shareholders
will be converted into newly issued shares of CCBF common stock. Immediately
following the Interim Merger, SCBC will be merged with and into CCBF, whereupon
the separate existence of SCBC will cease (the "Security Merger"). The Interim
Merger and the Security Merger will collectively be referred to herein as the
"Holding Company Merger". Immediately following the Holding Company Merger,
Security Capital Bank ("SCB"), the wholly-owned commercial bank subsidiary of
SCBC, will merge with and into Central Carolina Bank and Trust Company ("CCB"),
the wholly-owned commercial bank subsidiary of CCBF, whereupon the separate
existence of SCB will cease (the "Bank Merger").
You have submitted for our consideration certain representations as to the
proposed transaction, a copy of the Amended and Restated Agreement of
Combination dated as of December 1, 1994 (the "Merger Agreement") and a copy of
the Form S-4 Registration Statement to be filed with the Securities and Exchange
Commission on or about December 20, 1994. We have not reviewed the legal
documents necessary to effectuate the steps to be undertaken and we assume that
all steps will be effectuated under state and federal law and will be consistent
with the legal documentation and with the list of steps submitted to us.
FACTS
CCBF is a registered bank holding company organized under the laws of the
State of North Carolina. CCBF's authorized capital stock consists of two
classes, represented by 30,000,000 shares of Common Stock, $5.00 par value, of
which 9,516,379 shares were issued and outstanding at September 30, 1994 (the
"CCBF Stock") and 5,000,000 shares of Serial Preferred Stock, no par value per
share, none of which are issued and outstanding at September 30, 1994. NSC, a
North Carolina corporation, is a wholly-owned subsidiary of CCBF established
solely to effect the Holding Company Merger. CCB, a North Carolina corporation,
is a wholly-owned commercial bank subsidiary of CCBF.
Pursuant to a plan (the "Rights Plan") evidenced by a Rights Agreement
dated as of February 26, 1990, one CCBF Right, as defined in the Rights Plan,
was distributed during 1990 to CCBF's shareholders for each share of CCBF Stock.
The rights expire on February 26, 2000, and may be redeemed by CCBF at any time
prior to an acquisition by a person or group of 15% or more of the outstanding
CCBF Stock, at a price of $.01 per CCBF Right. The objective of the Rights Plan
is to discourage a third party attempt to acquire control of CCBF without
approval of its Board of Directors. The Rights Agreement provides that the
rights are not to interfere with any merger or business combination approved by
the Board of Directors and shareholders.
SCBC is a registered bank holding company organized under the laws of the
State of North Carolina. Its authorized capital stock consists of two classes,
represented by 25,000,000 shares of Common Stock, no par value per share, of
which 11,769,399 shares were issued and outstanding at September 30, 1994 (the
"SCBC Stock") and 5,000,000 shares of Preferred Stock, no par value per share,
none of which were issued and outstanding at September 30, 1994. SCB, a North
Carolina corporation, is a wholly-owned commercial bank subsidiary of SCBC. In a
series of transactions to be completed prior to the Holding Company Merger,
OMNIBANK, Inc., A State Savings Bank, Citizens Savings, Inc., SSB and Home
Savings Bank,
<PAGE>
Board of Directors
December 20, 1994
Page 2
Inc., SSB, three savings bank subsidiaries of SCBC, will be consolidated into
SCB, with SCB as the surviving entity (the "Bank Conversions").
For valid business purposes, pursuant to the Merger Agreement, NSC will be
merged with and into SCBC, with SCBC as the surviving entity. Upon consummation
of the Interim Merger, each share of SCBC Stock (excluding any shares held by
dissenting shareholders) will be converted into and become, and thereafter may
be exchanged for, .50 of a share (the "Exchange Ratio") of CCBF Stock. Each
share of CCBF Stock issued (including the shares into which SCBC Stock will be
converted in connection with the Holding Company Merger) will include a CCBF
Right identical to the existing Rights associated with issued and outstanding
CCBF Stock pursuant to the Rights Plan previously discussed. As used herein, the
term CCBF Stock will refer to the common stock of CCBF, inclusive of the CCBF
Right. If there is a change in the number of outstanding shares of CCBF Stock or
SCBC Stock prior to the Effective Time (other than pursuant to CCBF's long term
incentive plan, certain incentive or option plans maintained by SCBC, or
pursuant to repurchases of CCBF Stock by CCBF as contemplated in the Merger
Agreement), then appropriate and proportionate adjustments will be made in the
Exchange Ratio.
Under North Carolina law, shareholders of SCBC will have dissenters' rights
in connection with the Holding Company Merger. Shareholders who properly
exercise their dissenters' rights will be entitled to receive the fair value of
their shares from SCBC in accordance with Sections 55-13-01 through 55-13-31 of
the North Carolina General Statutes. A record holder of SCBC Stock may assert
dissenters' rights as to fewer than all shares registered in his or her name
only if he or she dissents with respect to all shares beneficially owned by any
one person and notifies SCBC in writing of the name and address of each person
on whose behalf he or she asserts dissenters' rights.
No fractional shares of CCBF Stock will be issued in connection with the
Holding Company Merger. Instead, each SCBC shareholder who otherwise would be
entitled to receive a fraction of a share of CCBF Stock shall receive cash
(without interest) in an amount equal to that fraction multiplied by the "Market
Value" of one whole share of CCBF Stock at the Effective Time. Market Value
shall be equal to the closing price of CCBF Stock on the Nasdaq National Market
on the last trading day preceding the Effective Time. No SCBC shareholder will
be entitled to any dividend or other distribution or any voting or other rights
as a shareholder with respect to any fractional share of CCBF Stock.
The Holding Company Merger has been approved by the Boards of Directors of
CCBF and SCBC and is subject to the receipt of regulatory approval from
appropriate parties, including the North Carolina Commissioner of Banks (the
"Commissioner"), the North Carolina State Banking Commission (the "Banking
Commission"), the Board of Governors of the Federal Reserve System and the
Federal Deposit Insurance Corporation ("FDIC"). The Bank Merger is subject to
the approval of the FDIC, the Commissioner and the Banking Commission.
The Merger Agreement contemplates that CCBF may purchase shares of CCBF
Stock (the "Stock Repurchase Program") and/or SCBC Stock prior to the Effective
Time, subject to the limitations that such purchases will be effected in
compliance with applicable securities laws and regulations, including public
disclosures in advance of the commencement of such stock purchase program, and
that such purchases will not be of a type or in an aggregate amount as would
cause the Holding Company Merger not to qualify as a tax-free reorganization
under the Internal Revenue Code or not to be properly accounted for under
generally accepted accounting principles as a pooling-of-interests. If so
requested by CCBF, SCBC also may repurchase shares of SCBC Stock prior to the
Effective Time. Any such repurchases would also be subject to the limitations on
CCBF's stock purchases described above.
Immediately after the Interim Merger, SCBC will be merged with and into
CCBF in the Security Merger, whereupon the separate existence of SCBC will
cease. Immediately following the Security Merger, SCB will be merged with and
into CCB in the Bank Merger, whereupon the separate existence of SCB will cease.
In connection with the Bank Merger, new shares of CCB common stock will be
issued to CCBF in exchange for the shares of SCB common stock surrendered in the
exchange.
In addition to the foregoing statement of facts, the following
representations have been made:
(a) The fair market value of CCBF Stock received by the shareholders
of SCBC will be approximately equal to the fair market value of the SCBC
Stock surrendered in the exchange.
(b) There is no plan or intention by the shareholders of SCBC to sell,
exchange or otherwise dispose of any of the CCBF Stock received in the
Holding Company Merger.
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Board of Directors
December 20, 1994
Page 3
(c) CCBF will acquire at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets held
by SCBC immediately prior to the Holding Company Merger. For purposes of
this representation, amounts used by SCBC to pay its reorganization
expenses, amounts paid by SCBC to shareholders who exercise their statutory
dissenters' rights, and all redemptions and distributions (except for
regular, normal dividends) made by SCBC immediately preceding the Holding
Company Merger will be included as assets of SCBC held immediately prior to
the Holding Company Merger.
(d) CCBF has no plan or intention to reacquire any of the CCBF Stock
issued in the Holding Company Merger.
(e) CCBF has no plan or intention to sell or otherwise dispose of any
of the assets of SCBC acquired in the Holding Company Merger, except for
dispositions made in the ordinary course of business or transfers described
in Section 368(a)(2)(C) of the Internal Revenue Code of 1986, as amended
(the "Code").
(f) Prior to the Holding Company Merger, CCBF will be in control of
NSC within the meaning of Section 368(c).
(g) Following the Holding Company Merger, CCBF will continue the
historical business of SCBC or use a significant portion of the historic
business assets of SCBC in a business.
(h) CCBF, SCBC and the shareholders of SCBC will pay their respective
expenses, if any, incurred in connection with the Holding Company Merger.
(i) There is no intercorporate indebtedness existing between CCBF and
SCBC that was issued, acquired, or will be settled at a discount.
(j) No two parties to the transaction are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv).
(k) SCBC is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.
(l) The payment of cash in lieu of fractional shares of CCBF Stock is
not separately bargained for consideration, rather it is merely to save the
expense and inconvenience of issuing and transferring fractional share
interests. The total cash consideration in lieu of fractional shares will
be less than one percent of the total consideration paid in the transaction
and no SCBC shareholder will receive cash for more than one share of CCBF
Stock.
(m) None of the compensation received by any shareholder-employees of
SCBC or SCB will be separate consideration for, or allocable to, any of
their shares of SCBC Stock; none of the shares of CCBF Stock received by
any shareholder-employee of SCBC or SCB will be separate consideration for,
or allocable to, any employment agreement; and the compensation to be paid
to any shareholder-employees of SCBC or SCB will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services.
(n) CCBF does not own, nor has it owned during the past five years,
any shares of the stock of SCBC. Furthermore, CCBF does not expect to own,
at the time of the Interim Merger, any shares of the stock of SCBC.
(o) The total number of CCBF shares acquired pursuant to the Stock
Repurchase Program, including, but not limited to, shares of its own stock
repurchased by CCBF and shares of SCBC stock repurchased by SCBC (including
shares repurchased from shareholders exercising their statutory dissenters'
rights), will not exceed 10% of the number of shares of CCBF Stock to be
issued in the Holding Company Merger. For purposes of this limitation,
shares of SCBC Stock purchased or repurchased shall be treated as the
equivalent number of shares of CCBF Stock using the Exchange Ratio.
(p) No cash or other property will be provided, directly or
indirectly, by CCBF, CCB or any affiliate to SCBC before or after the
Holding Company Merger for use in connection with shares of SCBC Stock
repurchased by SCBC, or payments to SCBC shareholders properly exercising
dissenters' rights.
(q) The total liabilities of SCBC (excluding the liabilities of SCB
and its other subsidiaries) are less than 1% of the fair market value of
the assets of SCBC, and were incurred by SCBC in the ordinary course of
business.
(r) The Interim Merger and the Security Merger will each qualify as
statutory mergers under North Carolina law.
(s) The fair market value of CCB common stock received by CCBF will be
approximately equal to the fair market value of SCB common stock
surrendered in the Bank Merger.
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Board of Directors
December 20, 1994
Page 4
(t) There is no plan or intention by CCBF to sell, exchange or
otherwise dispose of any of the CCB common stock received in the Bank
Merger.
(u) CCB has no plan or intention to reacquire any of its common stock
issued in the Bank Merger.
(v) CCB has no plan or intention to sell or otherwise dispose of any
of the assets of SCB acquired in the Bank Merger, except for dispositions
made in the ordinary course of business or transfers described in Section
368(a)(2)(C).
(w) The liabilities of SCB assumed by CCB and the liabilities to which
the transferred assets of SCB are subject were incurred by SCB in the
ordinary course of business.
(x) Following the Bank Merger, CCB will continue the historical
business of SCB or use a significant portion of the historic business
assets of SCB in a business.
(y) CCB and SCB will pay their respective expenses, if any, incurred
in connection with the Bank Merger.
(z) There is no intercorporate indebtedness existing between CCB and
SCB that was issued, acquired, or will be settled at a discount.
(aa) No two parties to the Bank Merger are investment companies as
defined in Section 368(a)(2)(F)(iii) and (iv).
(bb) The fair market value of the assets of SCB transferred to CCB
will equal or exceed the sum of the liabilities assumed by CCB, plus the
amount of liabilities, if any, to which the transferred assets are subject.
(cc) Neither CCB nor SCB is under the jurisdiction of a court in a
Title 11 or similar case with the meaning of Section 368(a)(3)(A) of the
Code.
(dd) The total adjusted basis of the assets of SCB transferred to CCB
will equal or exceed the sum of the liabilities assumed by CCB, plus the
amount of liabilities, if any, to which the transferred assets are subject.
(ee) The Bank Merger will qualify as a statutory merger under North
Carolina law.
OPINION
FEDERAL INCOME TAX CONSEQUENCES
Based solely on the above facts and representations, it is our opinion
that:
(1) The Holding Company Merger will constitute one or more tax-free
reorganizations within the meaning of Section 368(a) of the Code.
(2) Each of NSC, SCBC and CCBF will be a party to the reorganization within
the meaning of Section 368(b).
(3) No gain or loss will be recognized by SCBC upon the transfer of its
assets, subject to its liabilities, to CCBF in the Holding Company
Merger. Sections 357(a) and 361(b).
(4) No gain or loss will be recognized by CCBF upon the receipt of the
assets of SCBC, subject to SCBC's liabilities in the Holding Company
Merger. Section 1032(a).
(5) The basis of the assets of SCBC in the hands of CCBF will be the same
as the basis of such assets in the hands of SCBC immediately prior to
the Holding Company Merger. Section 362(b).
(6) The holding period of the assets of SCBC in the hands of CCBF will
include the period during which such assets were held by SCBC
immediately prior to the Holding Company Merger. Section 1223(2).
(7) No gain or loss will be recognized by the shareholders of SCBC upon
receipt of solely CCBF Stock (including any fractional share interests
to which they may be entitled) in exchange for their holdings of SCBC
Stock. Section 354(a)(1).
(8) The basis of the CCBF Stock to be received by the shareholders of SCBC
(and any fractional share interests to which they may be entitled) will
be the same as the basis in the SCBC Stock surrendered in the exchange.
Section 358(a)(1).
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Board of Directors
December 20, 1994
Page 5
(9) The holding period of the CCBF Stock received by the shareholders of
SCBC (and any fractional share interests to which they may be entitled)
will include such shareholders' holding period of the SCBC Stock prior
to the exchange, provided that the SCBC Stock is held as a capital
asset in the hands of the shareholders of SCBC on the date of the
exchange. Section 1223(1).
(10) The tax attributes enumerated in Section 381(c), including any
earnings and profits or a deficit of earnings and profits, will be
taken into account by CCBF following the Holding Company Merger.
(11) The payment of cash in lieu of fractional share interests of CCBF
Stock will be treated as if the fractional shares of CCBF Stock were
distributed as part of the exchange to the SCBC shareholders and then
redeemed by CCBF. The cash payments will be treated as having been
received as distributions in full payment for the stock redeemed as
provided in Section 302(a) of the Code. Rev. Rul. 66-365, 1966-2 C.B.
116 and Rev. Proc. 77-41, 1977-2 C.B. 574.
(12) Where an SCBC shareholder elects to receive cash by exercising
statutory dissenter's rights, such cash will be treated as having been
received by the shareholder as a distribution in redemption of his or
her SCBC Stock subject to the provisions and limitations of Section
302 of the Code.
(13) The Bank Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code.
(14) Each of CCB and SCB will be a party to the reorganization within the
meaning of Section 368(b).
(15) No gain or loss will be recognized by SCB upon the transfer of its
assets, subject to its liabilities, to CCB in the Bank Merger.
Sections 357(a) and 361(a).
(16) No gain or loss will be recognized by CCB upon the receipt of the
assets of SCB, subject to its liabilities in the Bank Merger. Section
1032(a).
(17) The basis of the assets of SCB in the hands of CCB will be the same as
the basis of such assets in the hands of SCB immediately prior to the
Bank Merger. Section 362(b).
(18) The holding period of the assets of SCB in the hands of CCB will
include the period during which such assets were held by SCB
immediately prior to the Bank Merger. Section 1223(2).
(19) No gain or loss will be recognized by CCBF upon the receipt of CCB
stock in exchange for its holdings of SCB stock as a result of the
Bank Merger. Section 354(a)(1).
(20) The tax attributes enumerated in Section 381(c), including any
earnings and profits or a deficit of earnings and profits, will be
taken into account by CCB following the Bank Merger.
NORTH CAROLINA INCOME TAX CONSEQUENCES
It is our opinion that the State of North Carolina will, for North Carolina
income tax purposes, treat the Holding Company Merger and the Bank Merger in an
identical manner as they are treated by the Internal Revenue Service for federal
income tax purposes. N.C.G.S. 105-130.2, 105-130.3, 105-130.5, 105-134.1,
105-134.2, 105-134.5, 105-134.6, 105-134.7 and 105-228.23.
THE BANK CONVERSIONS
Nothing in the foregoing opinion is to be construed either explicitly or
implicitly as opining on the federal or North Carolina income tax consequences
of the Bank Conversions.
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Board of Directors
December 20, 1994
Page 6
The opinions expressed above are rendered only with respect to the specific
matters discussed herein, and we express no opinion with respect to any other
federal or state income tax or legal aspect of the Holding Company Merger or the
Bank Merger. If any of the above-stated facts, circumstances, or assumptions are
not entirely complete or accurate, it is imperative that we be informed
immediately, as the inaccuracy or incompleteness could have a material effect on
our conclusions. In rendering our opinion, we are relying upon the relevant
provisions of the Internal Revenue Code of 1986, as amended, the regulations
thereunder, and judicial and administrative interpretations thereof, which are
subject to change or modification by subsequent legislative, regulatory,
administrative, or judicial decisions. Any such changes could also have an
effect on the validity of our opinion.
Sincerely,
KPMG PEAT MARWICK LLP
/s/ SHELDON M. FOX
SHELDON M. FOX, PARTNER
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed effective as
of , 1995 (the "Agreement"), by and among CCB Financial Corporation,
a North Carolina corporation ("CCBF"), Central Carolina Bank and Trust Company,
a wholly-owned subsidiary of CCBF ("CCB"), and David B. Jordan, a resident of
Salisbury, Rowan County, North Carolina (the "Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements with
Security Capital Bancorp ("SCBC") and various of its subsidiaries (the "Prior
Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with SCBC as
the surviving corporation (the "Merger"); and
WHEREAS, through a series of transactions, the financial institution
subsidiaries of SCBC have merged into CCB (the "Bank Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations of SCBC
and its subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined that, upon
the consummation of the Merger and the Bank Mergers, the allocation of
responsibilities among the senior management officers of CCBF and CCB should be
revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the Prior
Agreements in a single agreement among them in order to set forth the terms and
conditions of the Officer's continued employment upon the consummation of the
Merger and the Bank Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, IT IS AGREED as follows:
1. EMPLOYMENT; CONSULTING; AND DIRECTORSHIP.
(a) EMPLOYMENT. The Officer shall be employed by CCBF and CCB upon the
terms and conditions set forth herein and in continuation of his employment by
SCBC and certain of its subsidiaries. He shall serve in an executive capacity as
Vice-Chairman of the Boards of Directors of CCBF and CCB. In the event that the
Officer shall not be a member of either such Board at any time during the Term
(as defined below), he shall be appointed Senior Executive Vice President
- -Special Projects and Acquisitions of the applicable company and shall hold such
office for such period or periods of the Term that he is not a member and Vice
Chairman of the Board of Directors of such company.
The Officer shall actively promote the business, and shall perform such
duties on behalf, of CCBF, CCB and the other subsidiaries of CCBF as are
customarily performed by persons employed in the banking industry who have such
executive positions, such duties and responsibilities shall be those set forth
in Appendix A which is incorporated herein by reference. At his election, the
Officer may maintain his principal residence and place of business in Salisbury,
North Carolina throughout the Term (as defined below). He shall perform his
duties primarily from the main office of CCB in Salisbury, North Carolina and
secondarily from the principal offices of CCBF, and in each case shall be
provided with such office, working facilities and staff as are necessary for the
Officer to perform his obligations under this Agreement.
(b) DIRECTORSHIP. It is the agreement of the parties hereto that the
Officer shall be appointed to the Boards of Directors of CCBF (the "Board") and
CCB (the "Bank Board") upon the consummation of the Merger, shall be nominated
for election to such Boards at the first shareholders meetings of such companies
at which directors are elected following the Merger, and shall continue to be
nominated for election to such Boards, when and as necessary to remain a
director of such companies, throughout the Term of this Agreement. The Officer
shall be a member of the Executive Committee of each of the Boards of Directors
of CCBF and CCB at all times that he is a member of such Board.
2. EMPLOYMENT COMPENSATION.
(a) PRE-ELECTION DATE COMPENSATION. Subject to the provisions of Section
2(b), CCBF and CCB shall pay the Officer during the Term as compensation for the
services rendered by the Officer to CCBF and CCB an initial base salary per
annum
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equal to his total annualized base salary from SCBC and its subsidiaries in
effect immediately prior to the Merger (the "Base Salary"), payable in cash (in
as equal installments as possible) not less frequently than monthly; provided,
however, that the amount of the Base Salary shall be reviewed by the Executive
Committee of the Board not less often than annually for the purpose of
considering such increases therein as are appropriate to reflect the duties,
responsibilities and performance of the Officer. In reviewing the Officer's
salary, the Board shall consider the employee compensation policies established
by the Compensation Committee of the Board for application to the employees of
CCBF and its subsidiaries, the duties and responsibilities of the Officer, and
the overall performance of the Officer, CCBF and CCB, as well as increases in
the cost of living, and may also consider the appropriateness of performance or
merit increases. Neither participation in, or receipt of payment from, any
incentive compensation, deferred compensation, incentive bonus, discretionary
bonus, pension, life insurance, group life insurance, health benefit, medical
coverage, disability coverage, dental insurance, stock option, restricted stock,
stock appreciation rights, incentive compensation unit, profit sharing, employee
stock ownership, pension, retirement, or other employee welfare or benefit plans
of CCBF or CCB (collectively "Benefit Plans"), nor receipt of any fringe
benefits from CCBF or CCB granted to the Officer ("Fringe Benefits") shall
reduce, or be deemed an offset against, the Base Salary payable to the Officer.
(b) POST-ELECTION DATE COMPENSATION. At any time on or after the Officer's
sixtieth (60th) birthday, he may elect to reduce the number of his business
hours to be expended in furtherance of his duties and responsibilities under
this Agreement to such amount as he shall determine, but, except as provided in
the following proviso, in no event to less than one thousand (1,000) hours per
calendar year (the date on which he gives notice to CCBF and CCB of such
election shall be the "Election Date"); provided, further, that he may designate
a lesser number of hours per year should he elect to forego the right to
participate in Benefit Plans requiring a minimum of one thousand (1,000) hours
of service per calendar year to qualify for participation.
On the first anniversary of the Election Date, the Officer's Base Salary
shall be reduced to $150,000 per annum (the "Reduced Base Salary"), payable in
cash (in as equal installments as possible) not less frequently than monthly;
provided, however, that the amount of such Reduced Base Salary shall be reviewed
by the Executive Committee of the Board not less often than annually for the
purpose of considering such increases therein as are deemed appropriate. Neither
participation in, or receipt of payments from, any Benefit Plan, nor receipt of
any Fringe Benefit shall reduce, or be deemed an offset against, such Reduced
Base Salary payable to the Officer.
(c) ALLOCATION OF COMPENSATION. The portion of the Officer's Base Salary or
Reduced Base Salary, as applicable, allocable to, and to be paid by, each of
CCBF and CCB shall be determined from time to time by the Board. In making such
allocations, the Board shall consider the portion of the Officer's time spent in
fulfilling his respective duties to CCBF and CCB, appropriate tax and accounting
principles, and such other factors as it shall deem relevant.
3. PARTICIPATION IN BENEFIT PLANS; FRINGE BENEFITS. During the Term, the
Officer shall be entitled to participate in all Benefit Plans, including the
"CCB Financial Corporation Long-Term Incentive Plan" (the "LTIP") and any other
executive incentive compensation plan for key employees of CCBF and/or CCB, as
the same may be amended, modified or terminated from time to time by the Board
or the Bank Board, as applicable, on the same basis as the other senior
executive officers of CCBF and CCB; provided, however, that on and after the
Election Date, the Officer shall no longer be eligible to receive additional
annual incentive bonuses under CCBF's Management Performance Incentive Plan (the
"Incentive Plan") or to receive additional grants or awards of options,
performance units or restricted stock under the LTIP, but previously granted or
awarded bonuses, options, performance units and/or restricted stock awards shall
continue in existence and shall accrue, vest and be distributed to the Officer
pursuant to applicable terms established upon their grant or award. With respect
to the Incentive Plan, during the Term and until the Election Date, the Officer
shall have a target bonus of at least 15% of Base Salary. In addition to, and
not in lieu of, any other provisions hereof, CCBF shall annually pay to the
Officer an allowance equal to three percent (3%) of his Base Salary or Reduced
Base Salary, as applicable, for such calendar year (with such allowance for 1995
being prorated for the number of days in 1995 during which this Agreement is in
effect). Such allowance shall be payable in cash (in as equal installments as
possible) not less frequently than monthly.
During the Term, the Officer shall also be entitled to receive any Fringe
Benefits which are now or may be or become applicable to the executive employees
of CCBF and/or CCB, including the payment of reasonable expenses for attending
(i) annual and periodic meetings of trade associations and (ii) continuing
education courses necessary for the Officer to maintain professional
certifications, and any other Fringe Benefits which are commensurate with the
duties and responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such customary Fringe Benefits,
including such vacation and sick leave, as are consistent with the normal
practices and established policies of CCBF and CCB. CCBF or CCB, as applicable,
shall reimburse the Officer for all out-of-pocket reasonable and necessary
business
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expenses which the Officer may incur during the Term in connection with the
Officer's services on behalf of CCBF or CCB, as applicable, or any activities
the Officer is requested to undertake on behalf of any of the subsidiaries of
CCBF.
During the Term, CCBF or CCB shall provide a car (of such make, model and
year as is commensurate with the Officer's senior executive status) owned by it
to the Officer for the Officer's use (with the Officer reimbursing CCBF or CCB,
as applicable, for the proportionate operational costs attributable to the
Officer's personal use of the car), shall pay fifty percent (50%) of the
periodic dues and assessments for all country clubs and similar organizations of
which the Officer is a member immediately prior to the Merger and which SCBC
currently pays or reimburses (or otherwise compensates) to the Officer
(including future increases thereof), and shall pay fifty percent (50%) of all
initiation fees, periodic dues and assessments of all such organizations that
CCBF and/or CCB request the Officer to join after the Merger.
4. LOYALTY; NONCOMPETITION; CONFIDENTIALITY.
(A) FULL EFFORTS. During the Term, but subject to Section 2(b) and the
provisions of Appendix A, the Officer shall devote his full efforts and entire
business time to the performance of the Officer's duties and responsibilities
under this Agreement.
(b) NONCOMPETITION. In consideration of employment of the Officer under the
Prior Agreements and the continuation of such employment by CCBF and CCB
hereunder, during the Term, and for a period of two (2) years after the
termination of this Agreement, the Officer agrees that he will not, within any
county in which CCBF, CCB, or any other financial institution subsidiary of
CCBF, or any subsidiary of CCB or such other financial institution subsidiary,
maintains offices, directly or indirectly, own, manage, operate, join, control
or participate in the management, operation or control of, or be employed by or
connected in any manner with, any Person (as defined in Section 6(i)) which
competes with CCBF, CCB or any of the other direct or indirect subsidiaries of
CCBF, without the prior written consent of CCBF; provided, however, that the
provisions of this Section 4(b) shall not apply prospectively in the event this
Agreement is terminated by CCBF and CCB without Cause (as is defined in Section
6(e) hereof). Notwithstanding the foregoing, the Officer shall be free, without
such consent, to purchase or hold as an investment or otherwise up to five
percent (5%) of the outstanding stock or other securities of any Person which
has its securities listed on any national securities exchange or which has
transactions in its securities quoted on The Nasdaq Stock Market or other
over-the-counter market or inter-dealer quotation system.
(c) CONFIDENTIALITY. The Officer will hold in strict confidence, during the
Term and at all times thereafter, all knowledge or information of a confidential
or proprietary nature with respect to the business of CCBF, CCB and/or the other
direct or indirect subsidiaries of CCBF received by the Officer during the Term,
and, except in the performance of his duties, will not disclose or make use of
such information without the prior written consent of CCBF.
(d) INJUNCTIVE RELIEF. The Officer acknowledges that it would not be
possible to ascertain the amount of monetary damages suffered in the event of a
breach by the Officer of the provisions of this Section 4. Accordingly, the
Officer agrees that, in the event of a breach of this Section, injunctive relief
enforcing the terms of this Section is an appropriate remedy.
5. EMPLOYMENT STANDARDS. Subject to Section 2(b) and the provisions of
Appendix A, the Officer shall perform his duties and responsibilities as an
employee of CCBF and CCB during the Term in accordance with the standards
imposed by applicable financial institution statutes, regulations and rules or
by applicable financial institution regulatory agencies, such reasonable
standards expected of employees with comparable positions in comparable
organizations, and CCBF's and CCB's policies and procedures, and such other
standards and guidelines as may be established from time to time by the Board or
the Bank Board, as applicable.
6. TERM AND TERMINATION.
(a) TERM. Notwithstanding the provisions of the Prior Agreements, the term
hereof (the "Term") shall be deemed to have commenced on , 1995 (the
"Commencement Date") and, unless earlier terminated as provided herein or
modified as provided in the last sentence of this Section 6(a), shall continue
through March 15, 2001 (the "Expiration Date"); provided, however, that upon the
termination of this Agreement for any reason, all provisions hereof requiring
actions or the fulfillment of obligations by the Officer, CCBF and/or CCB after
the effectiveness of such termination shall remain binding upon, or enforceable
by, the Officer, CCBF and/or CCB, as the case may be.
(b) TERMINATION BY DEATH. Subject to the remaining provisions of this
Section 6(b), this Agreement shall be terminated upon the death of the Officer.
If the Officer's death shall occur during the Term but prior to the Election
Date, (i) the Officer's estate shall be entitled to receive all compensation and
benefits payable to, or accruable or vested for the benefit of, the Officer
under this Agreement through the end of the second calendar month following the
calendar month in which the Officer's death shall have occurred, and (ii) an
amount equal to three (3) times the Reduced Base Salary the Officer would have
received yearly during the remainder of the Term had the Election Date occurred
on the date of his death shall be
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payable to the Officer's spouse (or, if she predeceases him, to his estate) in
three (3) equal annual installments beginning on the first day of the third
calendar month in which the Officer's death shall have occurred. If the
Officer's death shall occur during the Term but on or after the Election Date,
an amount equal to the Reduced Base Salary that would have been paid to the
Officer during the remainder of the Term had he not died shall be paid each year
to the Officer's spouse (or, if she predeceases him, to his estate) as and when
provided in Section 2(b).
(c) TERMINATION BY TOTAL DISABILITY. This Agreement shall be terminated
upon the Total Disability (as defined below) of the Officer during the Term. In
the event of his Total Disability, the Officer shall receive all compensation
and benefits payable to, or accruable or vested for the benefit of, the Officer
under this Agreement through the date of the determination of his Total
Disability and for a period of ninety (90) days thereafter. The Officer shall be
deemed to have suffered Total Disability upon the determination of his total
permanent disability by the United States Social Security Administration or
CCBF's receipt of a certification to such effect by the Officer's regular
physician, in each case such total permanent disability meaning the Officer's
loss of ability to perform at least the majority of his then applicable duties
hereunder.
(d) TERMINATION BY OFFICER. This Agreement may be terminated at any time by
the Officer upon sixty (60) days prior written notice to CCBF and CCB. Unless
the provisions of Sections 6(g)(ii) or 6(h) are applicable and the Officer
elects to apply those provisions, upon such termination, the Officer shall be
entitled to receive the compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through the
effective date of such termination.
(e) TERMINATION FOR CAUSE. Subject to confirmation by the Bank Board, the
Board may terminate this Agreement for Cause, in which event the Officer shall
have no right to receive, or to have accrued or vested for his benefit,
compensation or other benefits hereunder for any period after such termination.
Termination for Cause shall mean termination of this Agreement because of the
Officer's (i) breach of fiduciary duty involving personal profit, (ii)
intentional and material failure to perform stated duties (after written notice
thereof and a reasonable opportunity to cure such failure), (iii) willful and
material violation of any law (other than traffic violations or other similar
misdemeanor offenses), rule, regulation or final cease-and-desist order, or (iv)
a material and continuing breach of any provision of this Agreement (after
written notice thereof and a reasonable opportunity to cure such breach).
(f) TERMINATION WITHOUT CAUSE. Subject to confirmation by the Bank Board,
the Board may terminate this Agreement without Cause at any time upon sixty (60)
days prior written notice to the Officer; provided, however, that in the event
of such termination, unless the provisions of Sections 6(g) or 6(h) are
applicable and the Officer elects to apply those provisions, the Officer shall
be entitled to receive all compensation and fees payable to, or accruable or
vested for the benefit of, the Officer under this Agreement as and when due and
payable (or, at the election of the Officer, in a lump sum payable within ten
(10) days of the date of termination), and shall be entitled to continue to
participate in all Benefit Plans described in Section 3 not specifically
requiring for participation therein one thousand (1,000) hours of service per
calendar year) through the Expiration Date.
(g) UNAPPROVED CHANGE IN CONTROL TERMINATION. In the event of (i) the
termination of this Agreement without Cause, or (ii) the voluntary termination
of this Agreement by the Officer, in each case in connection with, or within one
(1) year after, any Change In Control which has not been approved in advance by
a formal resolution of two-thirds ( 2/3) of the Continuing Members of the Board
(excluding the Officer), which shall be deemed a termination without Cause, the
Officer shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times the
Officer's then applicable "base amount" (as such term is defined in
Internal Revenue Code Section 280); and
(B) until the Expiration Date, to continue to participate in all
Benefit Plans described in Section 3 not requiring for participation
therein one thousand (1,000) hours of service per calendar year.
The Officer shall be paid the applicable lump sum described in item (A) of
this Section 6(g) within ten (10) days of the date of such termination.
Notwithstanding the foregoing, the Officer, at his sole option, may elect to
reduce the payments and/or benefits otherwise receivable pursuant to item (A)
and/or (B) of this Section 6(g) to the extent the Officer in his sole discretion
may determine, in order to avoid classification of such payment and/or benefits
as "parachute payments" within the meaning of Internal Revenue Code Section 280G
or for any other or no reason.
(h) APPROVED CHANGE IN CONTROL TERMINATION. Upon ten (10) days prior
written notice, the Officer may declare this Agreement to have been terminated
without Cause by CCBF and CCB, upon the occurrence of any of the following
events, which have not been consented to in advance by the Officer in writing,
following a Change In Control, whether or not approved in advance by a formal
resolution of at least two-thirds ( 2/3) of the Continuing Members of the Board
(excluding the
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Officer): (i) if the Officer is required to move his personal residence or
perform his principal executive functions more than twenty (20) miles from the
city limits of Salisbury, North Carolina; (ii) if in the organizational
structure of CCBF (or its successor pursuant to the Change In Control), the
Officer in his executive officer capacity would be subject to the supervision
of, or required to report to, any Persons other than the President and Chief
Executive Officer of CCBF and/or the Board; (iii) if CCBF and/or CCB should fail
to maintain Benefit Plans providing at least the same level of benefits afforded
the Officer as of the date of the Change In Control; (iv) if the Officer would
be assigned duties and responsibilities other than those described in Section
1(a); or (v) if the Officer's responsibilities or authority in the executive
capacity described in Section 1(a) have in any way been diminished.
Upon such termination, the Officer shall be entitled to receive the lump
sum payment and to continue to participate in the Benefit Plans, when and as
provided in Section 6(f) or, at his election, when and as provided in Section
6(g), but shall also have the right to reduce such payment and/or benefits as
stated in Section 6(g).
(i) DEFINITIONS. For purposes of this Agreement, a Change in Control shall
mean: (i) the merger of CCBF with any other corporation as a result of which the
holders of CCBF's voting securities outstanding immediately prior to such event
would receive or retain less than fifty percent (50%) of the outstanding voting
securities of the resulting or surviving corporation of such merger; (ii) the
acquisition of more than twenty percent (20%) of the outstanding voting
securities of CCBF (calculated on a fully diluted basis) by any Person; (iii)
the ownership of fifty percent (50%) or more of the outstanding voting
securities of CCB by any Person other than CCBF; (iv) the sale of more than
fifty percent (50%) in value of the assets of CCBF; or (v) the sale of more than
fifty percent (50%) in value of the assets of CCB to any Person other than CCBF.
For purposes of this Agreement, a Person shall mean: (i) an individual or a
corporation, partnership (limited or general), trust, limited liability company,
business trust, association (mutual or stock, and including a mutual holding
company), joint venture, pool, syndicate, unincorporated organization or any
other form of entity; and (ii) any Affiliate of any individual or entity listed
in item (i). Affiliate shall mean any Person who controls, is under common
control with, or is controlled by the Person to whom reference is being made;
and for the purposes of the definition of Affiliate, control shall be deemed to
exist in a Person who beneficially owns ten percent (10%) or more of the
outstanding equity interests (or options, warrants or other rights to acquire
such equity interests) of another Person.
For purposes of this Agreement, the Continuing Members of the Board shall
mean those individuals elected to the Board prior to, and continuing to serve
thereon at, the time a Change In Control shall occur.
(j) JOINT TERMINATION. Any termination of this Agreement under this Section
6 shall be a termination of the Officer's employment by CCBF and CCB; i.e., the
Officer's employment by both CCBF and CCB must be terminated, and not with
respect to one and not the other.
(k) DAMAGES. In addition to the provisions of Sections 6(f), 6(g)(i) and
6(h), in the event this Agreement is terminated without Cause on or prior to the
Officer's sixtieth (60th) birthday, the Officer shall be entitled to receive as
additional damages a lump sum amount calculated by:
(A) Determining the difference (the "Difference") in the monthly early
retirement benefit between: (i) the monthly early retirement benefit of the
Officer, or his spouse (if applicable), would have received under the
provisions of the "Security Capital Bancorp Employees' Pension Plan" (the
"SCBC Pension Plan") had the Officer remained an employee of SCBC until the
Officer had attained his 60th birthday and died or retired from employment
on or after the first day of the calendar month following his 60th
birthday; and (ii) the monthly early retirement benefit the Officer, or his
spouse (if applicable), is entitled to receive as of his date of
termination of employment (if prior to his attainment of the age of 60)
under the CCB Financial Corporation Pension Plan, assuming payment of his
early retirement monthly benefit would start on the first day of the
calendar month following his date of termination of employment; and
(B) Determining the present value of the Difference based on the
actuarial assumptions for lump sum payments as defined in the SCBC Pension
Plan.
(l) RESOLUTION OF DISPUTES. In the event any dispute shall arise between
the Officer, on the one hand, and CCBF and CCB, on the other, as to the terms or
interpretation of, or calculations made under, this Agreement, including this
Section 6, whether instituted by formal legal proceedings or otherwise,
including any action taken by the Officer to enforce any term of this Agreement
or in defending against any action taken by CCBF and/or CCB, CCBF shall
reimburse the Officer for all of his costs and expenses, including reasonable
attorneys' fees, in the event the Officer prevails in any such action.
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7. ASSUMPTION OF PRIOR AGREEMENT; SUCCESSORS AND ASSIGNS.
(a) ASSUMPTION OF PRIOR AGREEMENTS. CCBF and CCB, jointly and severally,
assume all rights and obligations of SCBC and its subsidiaries under the Prior
Agreements, and the Officer consents to such assumption; provided, however, that
such assumption and consent shall not relieve SCBC of such obligations.
(b) ASSUMPTION OF PRIOR AGREEMENTS; CCBF AND CCB. This Agreement shall
inure to the benefit of, and be binding upon, any corporate or other successor
of CCBF, including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock or all or
substantially all of the assets of CCBF, as applicable. This Agreement also
shall inure to the benefit of, and be binding upon, any corporate or other
successor of CCB, including any Person who shall acquire, directly or
indirectly, by merger, share exchange, purchase or otherwise, the outstanding
stock or all or substantially all of the assets of CCB, as applicable.
(c) THE OFFICER. Because CCBF and CCB are contracting for the unique and
personal skills of the Officer, the Officer shall be precluded from assigning or
delegating his rights or duties hereunder; provided, however, that the Officer's
spouse and/or estate are expressly intended to have such rights upon and
following the Officer's death as are specifically provided to each of them
herein.
8. MODIFICATION; WAIVER; AMENDMENTS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, signed by the Officer and signed on behalf of CCBF and CCB
by such officers thereof as may be specifically designated by the Board and the
Bank Board, respectively. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No amendments or additions to this Agreement shall
be binding unless in writing and signed by all parties hereto, except as herein
otherwise provided.
9. APPLICABLE LAW. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the State of North Carolina.
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Employment and Consulting Agreement to be effective as of the day and year first
hereinabove written.
<TABLE>
<S> <C>
CCB FINANCIAL CORPORATION
ATTEST:
By:
RICHARD W. EVERY, SECRETARY ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
CENTRAL CAROLINA BANK AND
TRUST COMPANY
ATTEST:
By:
RICHARD W. EVERY, SECRETARY ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
DAVID B. JORDAN
</TABLE>
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APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each case
with the title of "Vice Chairman -- Special Projects and Acquisitions." He shall
report to the President and Chief Executive Officer of CCBF.
His duties and responsibilities prior to the Election Date shall be:
1. To coordinate the integration of SCBC and its subsidiaries into
CCBF and its subsidiaries, and, in connection therewith, to exercise
oversight authority to effect economies of scale and scope, to effect
appropriate management placement and succession activities, and to effect
common operations systems for the merged financial institution
subsidiaries;
2. As a member of the Boards and the Bank Board, to serve as a member
of the Executive Committees of such Boards, assist in familiarizing the
members of such Boards who were members of the SCBC Board of Directors with
the policies and guidelines of CCBF and CCB, and facilitate the
presentation of the collective views, as and when appropriate, of such
former members of the SCBC Board;
3. To actively participate in communicating with key customers of
SCBC's financial institution subsidiaries with the goals of maintaining
with them banking relationships and broadening such relationships;
4. To actively participate in identifying prospective new members of
the Board and the Bank Board residing in SCBC's former market areas, as and
when appropriate;
5. To assist the Chairman of the Board and the Bank Board in
identifying merger and acquisition candidates in North Carolina and in
soliciting their agreements to effect such transactions;
6. To participate actively in the North Carolina Alliance of Community
Financial Institutions, the North Carolina Bankers Association and other
similar groups and to represent CCBF and CCB in such groups; and
7. To direct or assist in the executive management of appropriate
special projects designated by the President and Chief Executive Officer of
CCBF.
Subject to Section 2(b), the Officer's duties and responsibilities on and
after the Election Date shall be those set forth in items (2) through (7) above
and such other matters as he and the President and Chief Executive Officer of
CCBF may designate by agreement.
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EXHIBIT 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed effective as
of , 1995 (the "Agreement"), by and among CCB Financial
Corporation, a North Carolina corporation ("CCBF"), Central Carolina Bank and
Trust Company, a wholly-owned subsidiary of CCBF ("CCB"), and Ralph A.
Barnhardt, a resident of Concord, Cabarrus County, North Carolina (the
"Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements with
Security Capital Bancorp ("SCBC") and various of its subsidiaries (the "Prior
Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with SCBC as
the surviving corporation (the "Merger"); and
WHEREAS, through a series of transactions, the financial institution
subsidiaries of SCBC have merged into CCB (the "Bank Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations of SCBC
and its subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined that, upon
the consummation of the Merger and the Bank Mergers, the allocation of
responsibilities among the senior management officers of CCBF and CCB should be
revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the Prior
Agreements in a single agreement among them in order to set forth the terms and
conditions of the Officer's continued employment upon the consummation of the
Merger and the Bank Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, IT IS AGREED as follows:
1. EMPLOYMENT. The Officer shall be employed by CCBF and CCB upon the terms
and conditions set forth herein and in continuation of his employment by SCBC
and certain of its subsidiaries. He shall serve as an Executive Vice President
of CCBF and CCB.
The Officer shall actively promote the business, and shall perform such
duties on behalf, of CCBF, CCB and the other subsidiaries of CCBF as are
customarily performed by persons employed in the banking industry who have such
executive positions, such duties and responsibilities shall be those set forth
in Appendix A which is incorporated herein by reference. At his election, the
Officer may maintain his principal residence and place of business in Concord,
North Carolina throughout the Term (as defined below). He shall be provided with
such office, working facilities and staff at the offices of CCB in Concord,
North Carolina as are necessary for the Officer to perform his obligations under
this Agreement.
2. COMPENSATION.
(a) PRE-ADJUSTMENT DATE COMPENSATION. Subject to the provisions of Section
2(b), CCBF and CCB shall pay the Officer during the Employment Term as
compensation for the services rendered by the Officer to CCBF and CCB an initial
base salary per annum equal to his total annualized base salary from SCBC and
its subsidiaries in effect immediately prior to the Merger (the "Base Salary"),
payable in cash (in as equal installments as possible) not less frequently than
monthly; provided, however, that the amount of the Base Salary shall be reviewed
by the Executive Committee of the Board of Directors of CCBF (the "Board") not
less often than annually for the purpose of considering such increases therein
as are appropriate to reflect the duties, responsibilities and performance of
the Officer. In reviewing the Officer's salary, the Board shall consider the
employee compensation policies established by the Compensation Committee of the
Board for application to the employees of CCBF and its subsidiaries, the duties
and responsibilities of the Officer, and the overall performance of the Officer,
CCBF and CCB, as well as increases in the cost of living, and may also consider
the appropriateness of performance or merit increases. Neither participation in,
or receipt of payment from, any incentive compensation, deferred compensation,
incentive bonus, discretionary bonus, pension, life insurance, group life
insurance, health benefit, medical coverage, disability coverage, dental
insurance, stock option, restricted stock, stock appreciation rights, incentive
compensation unit, profit sharing,
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employee stock ownership, pension, retirement, or other employee welfare or
benefit plans of CCBF or CCB (collectively "Benefit Plans"), nor receipt of any
fringe benefits from CCBF or CCB granted to the Officer ("Fringe Benefits")
shall reduce, or be deemed an offset against, the Base Salary payable to the
Officer.
(b) POST-ADJUSTMENT DATE COMPENSATION. On and after the Adjustment Date (as
defined below), the Officer's annual base compensation for services rendered
shall be his Base Salary as of December 31, 1995 per annum (the "Adjusted Base
Salary"), payable in cash (in as equal installments as possible) not less
frequently than monthly; provided, however, that the amount of the Adjusted Base
Salary shall be reviewed by the Executive Committee of the Board not less often
than annually for the purpose of considering such increases therein as are
deemed appropriate. Neither participation in, or receipt of payments from, any
Benefit Plan, nor receipt of any Fringe Benefit shall reduce, or be deemed an
offset against, the Adjusted Base Salary payable to the Officer.
(c) ALLOCATION OF COMPENSATION. The portion of the Officer's Base Salary or
Adjusted Base Salary, as applicable, allocable to, and to be paid by, each of
CCBF and CCB shall be determined from time to time by the Board. In making such
allocations, the Board shall consider the portion of the Officer's time spent in
fulfilling his respective duties to CCBF and CCB, appropriate tax and accounting
principles, and such other factors as it shall deem relevant.
3. PARTICIPATION IN BENEFIT PLANS; Fringe Benefits. During the Term, the
Officer shall be entitled to participate in all Benefit Plans, including the
"CCB Financial Corporation Long-Term Incentive Plan" (the "LTIP") and any other
executive incentive compensation plan for key employees of CCBF and/or CCB, as
the same may be amended, modified or terminated from time to time by the Board
or the Bank Board, as applicable, on the same basis as the other senior
executive officers of CCBF and CCB; provided, however, that at and after the
Adjustment Date, the Officer shall no longer be eligible to receive additional
annual incentive bonuses under CCBF's Management Performance Incentive Plan (the
"Incentive Plan") or to receive additional grants or awards of options,
performance units or restricted stock under the LTIP, but previously granted or
awarded bonuses, options, performance units and/or restricted stock awards shall
continue in existence and shall accrue, vest and be distributed to the Officer
pursuant to applicable terms established upon their grant or award. With respect
to the Incentive Plan, during the Term until the Adjustment Date, the Officer
shall have a target bonus of at least 15% of Base Salary. In addition to, and
not in lieu of, any other provisions hereof, CCBF shall annually pay to the
Officer an allowance equal to three percent (3%) of his Base Salary or Adjusted
Base Salary, as applicable, for such calendar year (with such allowance for 1995
being prorated for the number of days in 1995 during which this Agreement is in
effect). Such allowance shall be payable in cash (in as equal installments as
possible) not less frequently than monthly.
During the Term, the Officer shall also be entitled to receive any Fringe
Benefits which are now or may be or become applicable to the executive employees
of CCBF and/or CCB, including the payment of reasonable expenses for attending
(i) annual and periodic meetings of trade associations and (ii) continuing
education courses necessary for the Officer to maintain professional
certifications, and any other Fringe Benefits which are commensurate with the
duties and responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such customary Fringe Benefits,
including such vacation and sick leave, as are consistent with the normal
practices and established policies of CCBF and CCB. CCBF or CCB, as applicable,
shall reimburse the Officer for all out-of-pocket reasonable and necessary
business expenses which the Officer may incur during the Term in connection with
the Officer's services on behalf of CCBF or CCB, as applicable, or any
activities the Officer is requested to undertake on behalf of any of the
subsidiaries of CCBF.
During the Term, CCBF or CCB shall provide a car (of such make, model and
year as is commensurate with the Officer's senior executive status) owned by it
to the Officer for the Officer's use (with the Officer reimbursing CCBF or CCB,
as applicable, for the proportionate operational costs attributable to the
Officer's personal use of the car), shall pay fifty percent (50%) of the
periodic dues and assessments for all country clubs and similar organizations of
which the Officer is a member immediately prior to the Merger and which SCBC
currently pays or reimburses (or otherwise compensates) to the Officer
(including future increases thereof), and shall pay fifty percent (50%) of all
initiation fees, periodic dues and assessments of all such organizations that
CCBF and/or CCB request the Officer to join after the Merger.
4. LOYALTY; NONCOMPETITION; CONFIDENTIALITY.
(a) FULL EFFORTS. During the Term, but subject to the provisions of
Appendix A, the Officer shall devote his full efforts and entire business time
to the performance of the Officer's duties and responsibilities under this
Agreement.
(b) NONCOMPETITION. In consideration of employment of the Officer under the
Prior Agreements and the continuation of such employment by CCBF and CCB
hereunder, during the Term, and for a period of two (2) years after the
termination of this Agreement, the Officer agrees that he will not, within any
county in which CCBF, CCB, or any other financial institution subsidiary of
CCBF, or any subsidiary of CCB or such other financial institution subsidiary,
maintains offices, directly or
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indirectly, own, manage, operate, join, control or participate in the
management, operation or control of, or be employed by or connected in any
manner with, any Person (as defined in Section 6(i)) which competes with CCBF,
CCB or any of the other direct or indirect subsidiaries of CCBF, without the
prior written consent of CCBF; provided, however, that the provisions of this
Section 4(b) shall not apply prospectively in the event this Agreement is
terminated by CCBF and CCB without Cause (as is defined in Section 6(e) hereof).
Notwithstanding the foregoing, the Officer shall be free, without such consent,
to purchase or hold as an investment or otherwise up to five percent (5%) of the
outstanding stock or other securities of any Person which has its securities
listed on any national securities exchange or which has transactions in its
securities quoted on The Nasdaq Stock Market or other over-the-counter market or
inter-dealer quotation system.
(c) CONFIDENTIALITY. The Officer will hold in strict confidence, during the
Term and at all times thereafter, all knowledge or information of a confidential
or proprietary nature with respect to the business of CCBF, CCB and/or the other
direct or indirect subsidiaries of CCBF received by the Officer during the Term,
and, except in the performance of his duties, will not disclose or make use of
such information without the prior written consent of CCBF.
(d) INJUNCTIVE RELIEF. The Officer acknowledges that it would not be
possible to ascertain the amount of monetary damages suffered in the event of a
breach by the Officer of the provisions of this Section 4. Accordingly, the
Officer agrees that, in the event of a breach of this Section, injunctive relief
enforcing the terms of this Section is an appropriate remedy.
5. EMPLOYMENT STANDARDS. Subject to the provisions of Appendix A, the
Officer shall perform his duties and responsibilities as an employee of CCBF and
CCB during the Term in accordance with the standards imposed by applicable
financial institution statutes, regulations and rules or by applicable financial
institution regulatory agencies, such reasonable standards expected of employees
with comparable positions in comparable organizations, and CCBF's and CCB's
policies and procedures, and such other standards and guidelines as may be
established from time to time by the Board or the Board of Directors of CCB (the
"Bank Board"), as applicable.
6. TERM AND TERMINATION.
(a) TERM. Notwithstanding the provisions of the Prior Agreements, the term
hereof (the "Term") shall be deemed to have commenced on
, 1995 (the "Commencement Date") and, unless earlier
terminated as provided herein or modified as provided in the last sentence of
this Section 6(a), shall continue through March 15, 1998 (the "Expiration
Date"); provided, however, that upon the termination of this Agreement for any
reason, all provisions hereof requiring actions or the fulfillment of
obligations by the Officer, CCBF and/or CCB after the effectiveness of such
termination shall remain binding upon, or enforceable by, the Officer, CCBF
and/or CCB, as the case may be. The "Adjustment Date" shall be January 1, 1996.
(b) TERMINATION BY DEATH. Subject to the remaining provisions of this
Section 6(b), this Agreement shall be terminated upon the death of the Officer.
If the Officer's death shall occur during the Term but before the Adjustment
Date, the Officer's estate shall be entitled to receive all compensation and
benefits payable to, or accruable or vested for the benefit of, the Officer
under this Agreement through the end of the second calendar month following the
calendar month in which the Officer's death shall have occurred. If the
Officer's death shall occur during the Term but after the Adjustment Date, the
Officer's estate shall be entitled to receive all compensation and benefits
payable to, or accruable or vested for the benefit of, the Officer through the
end of the month in which such death shall occur.
(c) TERMINATION BY TOTAL DISABILITY. This Agreement shall be terminated
upon the Total Disability (as defined below) of the Officer during the Term. In
the event of his Total Disability, the Officer shall receive all compensation
and benefits payable to, or accruable or vested for the benefit of, the Officer
under this Agreement through the date of the determination of his Total
Disability and for a period of ninety (90) days thereafter. The Officer shall be
deemed to have suffered Total Disability upon the determination of his total
permanent disability by the United States Social Security Administration or
CCBF's receipt of a certification to such effect by the Officer's regular
physician, in each case such total permanent disability meaning the Officer's
loss of ability to perform at least the majority of his then applicable duties
hereunder.
(d) TERMINATION BY OFFICER. This Agreement may be terminated at any time by
the Officer upon sixty (60) days prior written notice to CCBF and CCB. Unless
the provisions of Sections 6(g)(ii) or 6(h) are applicable and the Officer
elects to apply those provisions, upon such termination, the Officer shall be
entitled to receive the compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through the
effective date of such termination.
(e) TERMINATION FOR CAUSE. Subject to confirmation by the Bank Board, the
Board may terminate this Agreement for Cause, in which event the Officer shall
have no right to receive, or to have accrued or vested for his benefit,
compensation or
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other benefits hereunder for any period after such termination. Termination for
Cause shall mean termination of this Agreement because of the Officer's (i)
breach of fiduciary duty involving personal profit, (ii) intentional and
material failure to perform stated duties (after written notice thereof and a
reasonable opportunity to cure such failure), (iii) willful and material
violation of any law (other than traffic violations or other similar misdemeanor
offenses), rule, regulation or final cease-and-desist order, or (iv) a material
and continuing breach of any provision of this Agreement (after written notice
thereof and a reasonable opportunity to cure such breach).
(f) TERMINATION WITHOUT CAUSE. Subject to confirmation by the Bank Board,
the Board may terminate this Agreement without Cause at any time upon sixty (60)
days prior written notice to the Officer; provided, however, that in the event
of such termination, unless the provisions of Sections 6(g) or 6(h) are
applicable and the Officer elects to apply those provisions, the Officer shall
be entitled to receive all compensation and fees payable to, or accruable or
vested for the benefit of, the Officer under this Agreement as and when due and
payable (or, at the election of the Officer, in a lump sum payable within ten
(10) days of the date of termination), and shall be entitled to continue to
participate in all Benefit Plans described in Section 3 not specifically
requiring for participation therein one thousand (1,000) hours of service per
calendar year, through the Expiration Date.
(g) UNAPPROVED CHANGE IN CONTROL TERMINATION. In the event of (i) the
termination of this Agreement without Cause, or (ii) the voluntary termination
of this Agreement by the Officer, in each case in connection with, or within one
(1) year after, any Change In Control which has not been approved in advance by
a formal resolution of two-thirds (2/3) of the Continuing Members of the Board
(excluding the Officer), which shall be deemed a termination without Cause, the
Officer shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times the
Officer's then applicable "base amount" (as such term is defined in
Internal Revenue Code Section 280); and
(B) until the Expiration Date, to continue to participate in all
Benefit Plans described in Section 3 not requiring for participation
therein one thousand (1,000) hours of service per calendar year.
The Officer shall be paid the applicable lump sum described in item (A) of
this Section 6(g) within ten (10) days of the date of such termination.
Notwithstanding the foregoing, the Officer, at his sole option, may elect to
reduce the payments and/or benefits otherwise receivable pursuant to item (A)
and/or (B) of this Section 6(g) to the extent the Officer in his sole discretion
may determine, in order to avoid classification of such payment and/or benefits
as "parachute payments" within the meaning of Internal Revenue Code Section 280G
or for any other or no reason.
(h) APPROVED CHANGE IN CONTROL TERMINATION. Upon ten (10) days prior
written notice, the Officer may declare this Agreement to have been terminated
without Cause by CCBF and CCB, upon the occurrence of any of the following
events, which have not been consented to in advance by the Officer in writing,
following a Change In Control, whether or not approved in advance by a formal
resolution of at least two-thirds ( 2/3) of the Continuing Members of the Board
(excluding the Officer): (i) if the Officer is required to move his personal
residence or perform his principal executive functions more than twenty (20)
miles from the city limits of Concord, North Carolina; (ii) if in the
organizational structure of CCBF (or its successor pursuant to the Change In
Control), the Officer would be subject to the supervision of, or required to
report to, any Persons other than the President and Chief Executive Officer of
CCBF and/or the Board; (iii) if CCBF and/or CCB should fail to maintain Benefit
Plans providing at least the same level of benefits afforded the Officer as of
the date of the Change In Control; (iv) if the Officer would be assigned duties
and responsibilities other than those described in Section 1(a); or (v) if the
Officer's responsibilities or authority in the executive capacity described in
Section 1(a) have in any way been diminished.
Upon such termination, the Officer shall be entitled to receive the lump
sum payment and to continue to participate in the Benefit Plans, when and as
provided in Section 6(f) or, at his election, when and as provided in Section
6(g), but shall also have the right to reduce such payment and/or benefits as
stated in Section 6(g).
(i) DEFINITIONS. For purposes of this Agreement, a Change in Control shall
mean: (i) the merger of CCBF with any other corporation as a result of which the
holders of CCBF's voting securities outstanding immediately prior to such event
would receive or retain less than fifty percent (50%) of the outstanding voting
securities of the resulting or surviving corporation of such merger; (ii) the
acquisition of more than twenty percent (20%) of the outstanding voting
securities of CCBF (calculated on a fully diluted basis) by any Person; (iii)
the ownership of fifty percent (50%) or more of the outstanding voting
securities of CCB by any Person other than CCBF; (iv) the sale of more than
fifty percent (50%) in value of the assets of CCBF; or (v) the sale of more than
fifty percent (50%) in value of the assets of CCB to any Person other than CCBF.
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For purposes of this Agreement, a Person shall mean: (i) an individual or a
corporation, partnership (limited or general), trust, limited liability company,
business trust, association (mutual or stock, and including a mutual holding
company), joint venture, pool, syndicate, unincorporated organization or any
other form of entity; and (ii) any Affiliate of any individual or entity listed
in item (i). Affiliate shall mean any Person who controls, is under common
control with, or is controlled by the Person to whom reference is being made;
and for the purposes of the definition of Affiliate, control shall be deemed to
exist in a Person who beneficially owns ten percent (10%) or more of the
outstanding equity interests (or options, warrants or other rights to acquire
such equity interests) of another Person.
For purposes of this Agreement, the Continuing Members of the Board shall
mean those individuals elected to the Board prior to, and continuing to serve
thereon at, the time a Change In Control shall occur.
(j) JOINT TERMINATION. Any termination of this Agreement under this Section
6 shall be a termination of the Officer's employment by CCBF and CCB; i.e., the
Officer's employment by both CCBF and CCB must be terminated, and not with
respect to one and not the other.
(k) DAMAGES. In addition to the provisions of Sections 6(f), 6(g)(i) and
6(h), in the event this Agreement is terminated without Cause on or prior to the
Officer's sixtieth (60th) birthday, the Officer shall be entitled to receive as
additional damages a lump sum amount calculated by:
(A) Determining the difference (the "Difference") in the monthly early
retirement benefit between: (i) the monthly early retirement benefit of the
Officer, or his spouse (if applicable), would have received under the
provisions of the "Security Capital Bancorp Employees' Pension Plan" (the
"SCBC Pension Plan") had the Officer remained an employee of SCBC until the
Officer had attained his 60th birthday and died or retired from employment
on or after the first day of the calendar month following his 60th
birthday; and (ii) the monthly early retirement benefit the Officer, or his
spouse (if applicable), is entitled to receive as of his date of
termination of employment (if prior to his attainment of the age of 60)
under the CCB Financial Corporation Pension Plan, assuming payment of his
early retirement monthly benefit would start on the first day of the
calendar month following his date of termination of employment; and
(B) Determining the present value of the Difference based on the
actuarial assumptions for lump sum payments as defined in the SCBC Pension
Plan.
(l) RESOLUTION OF DISPUTES. In the event any dispute shall arise between
the Officer, on the one hand, and CCBF and CCB, on the other, as to the terms or
interpretation of, or calculations made under, this Agreement, including this
Section 6, whether instituted by formal legal proceedings or otherwise,
including any action taken by the Officer to enforce any term of this Agreement
or in defending against any action taken by CCBF and/or CCB, CCBF shall
reimburse the Officer for all of his costs and expenses, including reasonable
attorneys' fees, in the event the Officer prevails in any such action.
7. ASSUMPTION OF PRIOR AGREEMENT; SUCCESSORS AND ASSIGNS.
(A) ASSUMPTION OF PRIOR AGREEMENTS. CCBF and CCB, jointly and severally,
assume all rights and obligations of SCBC and its subsidiaries under the Prior
Agreements, and the Officer consents to such assumption; provided, however, that
such assumption and consent shall not relieve SCBC of such obligations.
(b) ASSUMPTION OF PRIOR AGREEMENTS; CCBF AND CCB. This Agreement shall
inure to the benefit of, and be binding upon, any corporate or other successor
of CCBF, including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock or all or
substantially all of the assets of CCBF, as applicable. This Agreement also
shall inure to the benefit of, and be binding upon, any corporate or other
successor of CCB, including any Person who shall acquire, directly or
indirectly, by merger, share exchange, purchase or otherwise, the outstanding
stock or all or substantially all of the assets of CCB, as applicable.
(c) THE OFFICER. Because CCBF and CCB are contracting for the unique and
personal skills of the Officer, the Officer shall be precluded from assigning or
delegating his rights or duties hereunder; provided, however, that the Officer's
estate is expressly intended to have such rights upon and following the
Officer's death as are specifically provided to it herein.
8. MODIFICATION; WAIVER; AMENDMENTS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, signed by the Officer and signed on behalf of CCBF and CCB
by such officers thereof as may be specifically designated by the Board and the
Bank Board, respectively. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions
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at the same or at any prior or subsequent time. No amendments or additions to
this Agreement shall be binding unless in writing and signed by all parties
hereto, except as herein otherwise provided.
9. APPLICABLE LAW. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the State of North Carolina. 10. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Employment and Consulting Agreement to be effective as of the day and year first
hereinabove written.
<TABLE>
<S> <C>
CCB FINANCIAL CORPORATION
ATTEST:
By:
ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
RICHARD W. EVERY, SECRETARY
[CORPORATE SEAL] CENTRAL CAROLINA BANK AND TRUST COMPANY
ATTEST:
By:
ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
RICHARD W. EVERY, SECRETARY
[CORPORATE SEAL]
RALPH A. BARNHARDT
</TABLE>
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APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each case
with the title of "Executive Vice President." He shall report to the President
and Chief Executive Officer of CCBF with regard to his activities as an officer
of CCBF, and he shall report to the Executive Vice President -- Banking Group of
CCB with regard to his activities as an officer of CCB.
His duties and responsibilities prior to the Adjustment Date shall be:
1. To assist in the integration of SCBC and its subsidiaries into CCBF
and its subsidiaries;
2. To actively participate in communicating with key customers of
SCBC's financial institution subsidiaries with the goals of maintaining
with them banking relationships and broadening such relationships;
3. To assist in representing CCBF and CCB in the activities of the
North Carolina Alliance of Community Financial Institution and similar
groups; and
4. To assist in effecting appropriate management placement and
succession activities.
After the Adjustment Date, the Officer shall continue to perform such
duties and responsibilities, but shall not be obligated to provide such services
for more than twenty (20) hours per week or one thousand (1,000) hours per
calendar year.
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EXHIBIT 10.3
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, to be deemed effective as
of , 1995 (the "Agreement"), by and among CCB Financial Corporation, a
North Carolina corporation ("CCBF"), Central Carolina Bank and Trust Company, a
wholly-owned subsidiary of CCBF ("CCB"), and Lloyd G. Gurley, a resident of
Salisbury, Rowan County, North Carolina (the "Officer");
W I T N E S S E T H:
WHEREAS, the Officer previously entered into employment agreements with
Security Capital Bancorp ("SCBC") and various of its subsidiaries (the "Prior
Agreements"); and
WHEREAS, SCBC has this day merged with a subsidiary of CCBF, with SCBC as
the surviving corporation (the "Merger"); and
WHEREAS, through a series of transactions, the financial institution
subsidiaries of SCBC have merged into CCB (the "Bank Mergers"); and
WHEREAS, CCBF and CCB desire to assume all rights and obligations of SCBC
and its subsidiaries under the Prior Agreements, and the Officer consents to
such assumption; and
WHEREAS, the Boards of Directors of CCBF and CCB have determined that, upon
the consummation of the Merger and the Bank Mergers, the allocation of
responsibilities among the senior management officers of CCBF and CCB should be
revised; and
WHEREAS, CCBF, CCB and the Officer desire to amend and restate the Prior
Agreements in a single agreement among them in order to set forth the terms and
conditions of the Officer's continued employment upon the consummation of the
Merger and the Bank Mergers, by CCBF and CCB.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, IT IS AGREED AS FOLLOWS:
1. EMPLOYMENT.
(a) EMPLOYMENT. The Officer shall be employed by CCBF and CCB upon the
terms and conditions set forth herein and in continuation of his employment by
SCBC and certain of its subsidiaries. He shall serve in an executive capacity as
an Executive Vice President of CCBF and as an Executive Vice President and
Regional Executive of CCB.
The Officer shall actively promote the business, and shall perform such
duties on behalf, of CCBF, CCB and the other subsidiaries of CCBF as shall from
time to time be prescribed by the Board of Directors of CCBF (the "Board") and
as are customarily performed by persons employed in the banking industry who
have such executive positions, and with respect to his duties on behalf of CCB,
as confirmed by CCB's Board of Directors (the "Bank Board"). The Officer's
primary duties and responsibilities shall be those set forth in Appendix A which
is incorporated herein by reference. Except as provided in Section 1(b), the
Officer may maintain his principal residence and place of business in Salisbury,
North Carolina throughout the Term (as defined below). He shall be provided with
such office, working facilities and staff at the offices of CCB in Salisbury,
North Carolina as are necessary for the Officer to perform his obligations under
this Agreement.
(b) CERTAIN TERMINATIONS; CHANGE IN DUTIES; LOCATION. The parties hereto
agree that they shall consider whether the Officer shall be transferred to
CCBF's principal office and assigned duties other than those described herein.
In the event such a transfer is proposed by CCBF and CCB, and the Officer agrees
thereto, the parties hereto agree as follows: (i) the Officer and his spouse
shall exercise reasonable efforts to obtain offers to purchase their residence
in Salisbury, North Carolina; and (ii) in the event that no written purchase
offers are received within forty-five (45) days of such residence being placed
on the market or that no written offer is received during such period, in each
case which would result in the Officer and his spouse receiving net sales
proceeds equal to the greater of (A) the total land and construction costs of
the residence expended by the Officer and his spouse (as evidenced by
appropriate documentation) or (B) the fair market value of the residence (as
determined by an independent appraisal), then CCB shall purchase the residence
from the Officer and his spouse for the greater of the amounts described in the
preceding items (ii)(A) and (ii)(B). Further, in the event this Agreement is
terminated under Sections 6(f), (g) or (h), the foregoing provisions shall
become operative as of the date of termination.
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2. COMPENSATION.
(a) EMPLOYMENT COMPENSATION. CCBF and CCB shall pay the Officer during the
Term as compensation for the services rendered by the Officer to CCBF and CCB an
initial base salary per annum equal to his total annualized base salary from
SCBC and its subsidiaries in effect immediately prior to the Merger (the "Base
Salary"), payable in cash (in as equal installments as possible) not less
frequently than monthly; provided, however, that the amount of the Base Salary
shall be reviewed by the Executive Committee of the Board not less often than
annually for the purpose of considering such increases therein as are
appropriate to reflect the duties, responsibilities and performance of the
Officer. In reviewing the Officer's salary, the Board shall consider the
employee compensation policies established by the Compensation Committee of the
Board for application to the employees of CCBF and its subsidiaries, the duties
and responsibilities of the Officer, and the overall performance of the Officer,
CCBF and CCB, as well as increases in the cost of living, and may also consider
the appropriateness of performance or merit increases. Neither participation in,
or receipt of payment from, any incentive compensation, deferred compensation,
incentive bonus, discretionary bonus, pension, life insurance, group life
insurance, health benefit, medical coverage, disability coverage, dental
insurance, stock option, restricted stock, stock appreciation rights, incentive
compensation unit, profit sharing, employee stock ownership, pension,
retirement, or other employee welfare or benefit plans of CCBF or CCB
(collectively "Benefit Plans"), nor receipt of any fringe benefits from CCBF or
CCB granted to the Officer ("Fringe Benefits") shall reduce, or be deemed an
offset against, the Base Salary payable to the Officer.
(b) ALLOCATION OF COMPENSATION. The portion of the Officer's Base Salary
allocable to, and to be paid by, each of CCBF and CCB shall be determined from
time to time by the Board. In making such allocations, the Board shall consider
the portion of the Officer's time spent in fulfilling his respective duties to
CCBF and CCB, appropriate tax and accounting principles, and such other factors
as it shall deem relevant.
3. PARTICIPATION IN BENEFIT PLANS; FRINGE BENEFITS. During the Term, the
Officer shall be entitled to participate in all Benefit Plans, including the
"CCB Financial Corporation Long-Term Incentive Plan" (the "LTIP") and any other
executive incentive compensation plan for key employees of CCBF and/or CCB, as
the same may be amended, modified or terminated from time to time by the Board
or the Bank Board, as applicable, on the same basis as the other senior
executive officers of CCBF and CCB. With respect to CCBF's Management
Performance Incentive Plan, the Officer shall have a target bonus of at least
15% of Base Salary. In addition to, and not in lieu of, any other provisions
hereof, CCBF shall annually pay to the Officer, an allowance equal to three
percent (3%) of his Base Salary for such calendar year (with such allowance for
1995 being prorated for the number of days this Agreement is in effect). Such
allowance shall be payable in cash (in as equal installments as possible) not
less frequently than monthly.
During the Term, the Officer shall also be entitled to receive any Fringe
Benefits which are now or may be or become applicable to the executive employees
of CCBF and/or CCB, including the payment of reasonable expenses for attending
(i) annual and periodic meetings of trade associations and (ii) continuing
education courses necessary for the Officer to maintain professional
certifications, and any other Fringe Benefits which are commensurate with the
duties and responsibilities to be performed by the Officer under this Agreement.
Additionally, the Officer shall be entitled to such customary Fringe Benefits,
including such vacation and sick leave, as are consistent with the normal
practices and established policies of CCBF and CCB. CCBF or CCB, as applicable,
shall reimburse the Officer for all out-of-pocket reasonable and necessary
business expenses which the Officer may incur during the Term in connection with
the Officer's services on behalf of CCBF or CCB, as applicable, or any
activities the Officer is requested to undertake on behalf of any of the
subsidiaries of CCBF.
During the Term, CCBF or CCB shall provide a car (of such make, model and
year as is commensurate with the Officer's senior executive status) owned by it
to the Officer for the Officer's use (with the Officer reimbursing CCBF or CCB,
as applicable, for the proportionate operational costs attributable to the
Officer's personal use of the car), shall pay fifty percent (50%) of the
periodic dues and assessments for all country clubs and similar organizations of
which the Officer is a member immediately prior to the Merger and which SCBC
currently pays or reimburses to the Officer (including future increases
thereof), and shall pay fifty percent (50%) of all initiation fees, periodic
dues and assessments of all such organizations that CCBF and/or CCB request the
Officer to join after the Merger.
4. LOYALTY; NONCOMPETITION; CONFIDENTIALITY.
(a) FULL EFFORTS. During the Term, the Officer shall devote his full
efforts and entire business time to the performance of the Officer's duties and
responsibilities under this Agreement.
(b) NONCOMPETITION. In consideration of employment of the Officer under the
Prior Agreements and the continuation of such employment by CCBF and CCB
hereunder, during the Term, and for a period of two (2) years after the
termination of this Agreement, the Officer agrees that he will not, within any
county in which CCBF, CCB, or any other financial institution
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subsidiary of CCBF, or any subsidiary of CCB or such other financial institution
subsidiary, maintains offices, directly or indirectly, own, manage, operate,
join, control or participate in the management, operation or control of, or be
employed by or connected in any manner with, any Person (as defined in Section
6(i)) which competes with CCBF, CCB or any of the other direct or indirect
subsidiaries of CCBF, without the prior written consent of CCBF; provided,
however, that the provisions of this Section 4(b) shall not apply prospectively
in the event this Agreement is terminated by CCBF and CCB without Cause (as is
defined in Section 6(e) hereof). Notwithstanding the foregoing, the Officer
shall be free, without such consent, to purchase or hold as an investment or
otherwise up to five percent (5%) of the outstanding stock or other securities
of any Person which has its securities listed on any national securities
exchange or which has transactions in its securities quoted on The Nasdaq Stock
Market or other over-the-counter market or inter-dealer quotation system.
(c) CONFIDENTIALITY. The Officer will hold in strict confidence, during the
Term and at all times thereafter, all knowledge or information of a confidential
or proprietary nature with respect to the business of CCBF, CCB and/or the other
direct or indirect subsidiaries of CCBF received by the Officer during the Term,
and, except in the performance of his duties, will not disclose or make use of
such information without the prior written consent of CCBF.
(d) INJUNCTIVE RELIEF. The Officer acknowledges that it would not be
possible to ascertain the amount of monetary damages suffered in the event of a
breach by the Officer of the provisions of this Section 4. Accordingly, the
Officer agrees that, in the event of a breach of this Section, injunctive relief
enforcing the terms of this Section is an appropriate remedy.
5. EMPLOYMENT STANDARDS. The Officer shall perform his duties and
responsibilities as an employee of CCBF and CCB during the Term in accordance
with the standards imposed by applicable financial institution statutes,
regulations and rules or by applicable financial institution regulatory
agencies, such reasonable standards expected of employees with comparable
positions in comparable organizations, and CCBF's and CCB's policies and
procedures, and such other standards and guidelines as may be established from
time to time by the Board or the Bank Board, as applicable.
6. TERM AND TERMINATION.
(a) TERM. Notwithstanding the provisions of the Prior Agreements, the term
hereof (the "Term") shall be deemed to have commenced on , 1995 (the
"Commencement Date") and, unless earlier terminated as provided herein, shall
continue through the fifth anniversary of the Commencement Date (the "Expiration
Date"); provided, however, that upon the termination of this Agreement for any
reason, all provisions hereof requiring actions or the fulfillment of
obligations by the Officer, CCBF and/or CCB after the effectiveness of such
termination shall remain binding upon, or enforceable by, the Officer, CCBF
and/or CCB, as the case may be.
(b) TERMINATION BY DEATH. This Agreement shall be terminated upon the death
of the Officer. Upon the Officer's death, the Officer's estate shall be entitled
to receive all compensation and benefits payable to, or accruable or vested for
the benefit of, the Officer under this Agreement through the end of the second
calendar month following the calendar month in which the Officer's death shall
have occurred.
(c) TERMINATION BY TOTAL DISABILITY. This Agreement shall be terminated
upon the Total Disability (as defined below) of the Officer during the Term. In
the event of his Total Disability, the Officer shall receive all compensation
and benefits payable to, or accruable or vested for the benefit of, the Officer
under this Agreement through the date of the determination of his Total
Disability and for a period of ninety (90) days thereafter. The Officer shall be
deemed to have suffered Total Disability upon the determination of his total
permanent disability by the United States Social Security Administration or
CCBF's receipt of a certification to such effect by the Officer's regular
physician, in each case such total permanent disability meaning the Officer's
loss of ability to perform at least the majority of his then applicable duties
hereunder.
(d) TERMINATION BY OFFICER. This Agreement may be terminated at any time by
the Officer upon sixty (60) days prior written notice to CCBF and CCB. Unless
the provisions of Sections 6(g)(ii) or 6(h) are applicable and the Officer
elects to apply those provisions, upon such termination, the Officer shall be
entitled to receive the compensation and benefits payable to, or accruable or
vested for the benefit of, the Officer under this Agreement through the
effective date of such termination.
(e) TERMINATION FOR CAUSE. Subject to confirmation by the Bank Board, the
Board may terminate this Agreement for Cause, in which event the Officer shall
have no right to receive, or to have accrued or vested for his benefit,
compensation or other benefits hereunder for any period after such termination.
Termination for Cause shall mean termination of this Agreement because of the
Officer's (A) breach of fiduciary duty involving personal profit, (B)
intentional and material failure to perform stated duties (after written notice
thereof and a reasonable opportunity to cure such failure), (C) willful and
material violation of any law (other than traffic violations or other similar
misdemeanor offenses), rule, regulation or final cease-and-
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desist order, or (D) a material and continuing breach of any provision of this
Agreement (after written notice thereof and a reasonable opportunity to cure
such breach).
(f) TERMINATION WITHOUT CAUSE. Subject to confirmation by the Bank Board,
the Board may terminate this Agreement without Cause at any time upon sixty (60)
days prior written notice to the Officer; provided, however, that in the event
of such termination, unless the provisions of Sections 6(g) or 6(h) are
applicable and the Officer elects to apply those provisions, the Officer shall
be entitled to receive all compensation and fees payable to, or accruable or
vested for the benefit of, the Officer under this Agreement as and when due and
payable (or, at the election of the Officer, in a lump sum payable within ten
(10) days of the date of termination), and shall be entitled to continue to
participate in all Benefit Plans described in Section 3 not specifically
requiring for participation therein one thousand (1,000 hours of service per
calendar year), through the Expiration Date.
(g) UNAPPROVED CHANGE IN CONTROL TERMINATION. In the event of (i) the
termination of this Agreement without Cause, or (ii) the voluntary termination
of this Agreement by the Officer, in each case in connection with, or within one
(1) year after, any Change In Control which has not been approved in advance by
a formal resolution of two-thirds (2/3) of the Continuing Members of the Board
(excluding the Officer), which shall be deemed a termination without Cause, the
Officer shall be entitled at his election:
(A) to receive a lump sum payment in cash equal to 2.99 times the
Officer's then applicable "base amount" (as such term is defined in
Internal Revenue Code Section 280);
(B) until the Expiration Date, to continue to participate in all
Benefit Plans described in Section 3 not requiring for participation
therein one thousand (1,000) hours of service per calendar year); and
(C) to immediate vesting of full participation rights and to
immediately begin participation in, CCBF's defined contribution retiree
health and life insurance plan (whether or not the Officer shall then have
ten (10) years of service under such plan).
The Officer shall be paid the lump sum described in item (A) of this
Section 6(g) within ten (10) days of the date of such termination.
Notwithstanding the foregoing, the Officer, at his sole option, may elect to
reduce the payments and/or benefits otherwise receivable pursuant to item (A)
and/or (B) of this Section 6(g) to the extent the Officer in his sole discretion
may determine, in order to avoid classification of such payment and/or benefits
as "parachute payments" within the meaning of Internal Revenue Code Section 280G
or for any other or no reason.
(h) APPROVED CHANGE IN CONTROL TERMINATION. Upon ten (10) days prior
written notice, the Officer may declare this Agreement to have been terminated
without Cause by CCBF and CCB, upon the occurrence of any of the following
events, which have not been consented to in advance by the Officer in writing,
following a Change In Control, whether or not approved in advance by a formal
resolution of at least two-thirds ( 2/3) of the Continuing Members of the Board
(excluding the Officer): (i) if the Officer is required to move his personal
residence or perform his principal executive functions more than twenty (20)
miles from the city limits of Salisbury, North Carolina; (ii) if in the
organizational structure of CCBF (or its successor pursuant to the Change In
Control), the Officer would be subject to the supervision of, or required to
report to, any Persons other than the President and Chief Executive Officer of
CCBF and/or the Board; (iii) if CCBF and/or CCB should fail to maintain Benefit
Plans providing at least the same level of benefits afforded the Officer as of
the date of the Change In Control; (iv) if the Officer would be assigned duties
and responsibilities other than those described in Section 1(a); or (v) if the
Officer's responsibilities or authority in the executive capacity described in
Section 1(a) have in any way been diminished.
Upon such termination, the Officer shall be entitled to receive the lump
sum payment and to continue to participate in the Benefit Plans, when and as
provided in Section 6(f) or, at his election, when and as provided in Section
6(g), but shall also have the right to reduce such payment and/or benefits as
stated in Section 6(g).
(i) DEFINITIONS. For purposes of this Agreement, a Change in Control shall
mean: (i) the merger of CCBF with any other corporation as a result of which the
holders of CCBF's voting securities outstanding immediately prior to such event
would receive or retain less than fifty percent (50%) of the outstanding voting
securities of the resulting or surviving corporation of such merger; (ii) the
acquisition of more than twenty percent (20%) of the outstanding voting
securities of CCBF (calculated on a fully diluted basis) by any Person; (iii)
the ownership of fifty percent (50%) or more of the outstanding voting
securities of CCB by any Person other than CCBF; (iv) the sale of more than
fifty percent (50%) in value of the assets of CCBF; or (v) the sale of more than
fifty percent (50%) in value of the assets of CCB to any Person other than CCBF.
4
<PAGE>
For purposes of this Agreement, a Person shall mean: (i) an individual or a
corporation, partnership (limited or general), trust, limited liability company,
business trust, association (mutual or stock, and including a mutual holding
company), joint venture, pool, syndicate, unincorporated organization or any
other form of entity; and (ii) any Affiliate of any individual or entity listed
in item (i). Affiliate shall mean any Person who controls, is under common
control with, or is controlled by the Person to whom reference is being made;
and for the purposes of the definition of Affiliate, control shall be deemed to
exist in a Person who beneficially owns ten percent (10%) or more of the
outstanding equity interests (or options, warrants or other rights to acquire
such equity interests) of another Person.
For purposes of this Agreement, the Continuing Members of the Board shall
mean those individuals elected to the Board prior to, and continuing to serve
thereon at, the time a Change In Control shall occur.
(j) JOINT TERMINATION. Any termination of this Agreement under this Section
6 occurring during the Employment Term shall be a termination of the Officer's
employment by CCBF and CCB; i.e., the Officer's employment by both CCBF and CCB
must be terminated, and not with respect to one and not the other.
(k) DAMAGES. In addition to the provisions of Sections 6(f), 6(g)(i) and
6(h), in the event this Agreement is terminated without Cause on or prior to the
Officer's completion of five (5) years of vested service or such other period of
service necessary for the Officer to be one hundred percent (100%) vested in his
"accrued benefits" under the CCB Financial Corporation Pension Plan (the
"Pension Plan"), the Officer shall be entitled to receive as additional damages
a lump sum calculated by
(A) Determining the amount of "accrued benefits" of the Officer under
the Pension Plan that will be forfeited in such circumstances; and
(B) Determining the present value of the amount described in item (A)
based on the actuarial assumptions for lump sum payment contained in the
Pension Plan.
(l) RESOLUTION OF DISPUTES. In the event any dispute shall arise between
the Officer, on the one hand, and CCBF and CCB, on the other, as to the terms or
interpretation of, or calculations made under, this Agreement, including this
Section 6, whether instituted by formal legal proceedings or otherwise,
including any action taken by the Officer to enforce any term of this Agreement
or in defending against any action taken by CCBF and/or CCB, CCBF shall
reimburse the Officer for all of his costs and expenses, including reasonable
attorneys' fees, in the event the Officer prevails in any such action.
7. ASSUMPTION OF PRIOR AGREEMENT; SUCCESSORS AND ASSIGNS.
(A) ASSUMPTION OF PRIOR AGREEMENTS. CCBF and CCB, jointly and severally,
assume all rights and obligations of SCBC and its subsidiaries under the Prior
Agreements, and the Officer consents to such assumption; provided, however, that
such assumption and consent shall not relieve SCBC of such obligations.
(b) ASSUMPTION OF PRIOR AGREEMENTS; CCBF AND CCB. This Agreement shall
inure to the benefit of, and be binding upon, any corporate or other successor
of CCBF, including any Person who shall acquire, directly or indirectly, by
merger, share exchange, purchase or otherwise, the outstanding stock or all or
substantially all of the assets of CCBF, as applicable. This Agreement also
shall inure to the benefit of, and be binding upon, any corporate or other
successor of CCB, including any Person who shall acquire, directly or
indirectly, by merger, share exchange, purchase or otherwise, the outstanding
stock or all or substantially all of the assets of CCB, as applicable.
(c) THE OFFICER. Because CCBF and CCB are contracting for the unique and
personal skills of the Officer, the Officer shall be precluded from assigning or
delegating his rights or duties hereunder; provided, however, that the Officer's
estate is expressly intended to have such rights upon and following the
Officer's death as are specifically provided to it herein.
8. MODIFICATION; WAIVER; AMENDMENTS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing, signed by the Officer and signed on behalf of CCBF and CCB
by such officers thereof as may be specifically designated by the Board and the
Bank Board, respectively. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of any similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No amendments or additions to this Agreement shall
be binding unless in writing and signed by all parties hereto, except as herein
otherwise provided.
9. APPLICABLE LAW. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the State of North Carolina.
5
<PAGE>
10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Employment Agreement to be effective as of the day and year first hereinabove
written.
<TABLE>
<S> <C>
CCB FINANCIAL CORPORATION
ATTEST:
By:
RICHARD W. EVERY, SECRETARY ERNEST C. ROESSLER, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
CENTRAL CAROLINA BANK AND
TRUST COMPANY
ATTEST:
By:
RICHARD W. EVERY, SECRETARY Ernest C. Roessler, President and
Chief Executive Officer
[CORPORATE SEAL]
LLOYD G. GURLEY
</TABLE>
6
<PAGE>
APPENDIX A
The Officer shall be an executive officer of CCBF and CCB, in each case
with the title "Executive Vice President -- Regional Executive." He shall report
to the President and Chief Executive Officer of CCBF with regard to his
activities as an officer of CCBF, and he shall report to the Executive Vice
President -- Banking Group of CCB with regard to his activities as an officer of
CCB.
His duties and responsibilities shall be:
1. To assist in the integration of SCBC and its subsidiaries into CCBF
and its subsidiaries; and
2. To exercise executive oversight and to manage the operations of the
offices of CCB located in the North Carolina counties of Rowan, Cabarrus,
Cleveland, Union, Stanley, Montgomery, Anson and Richmond.
7
<PAGE>
[Security Capital Bancorp letterhead]
EXHIBIT 10.4
January 27, 1995
Mr. Pressley A. Ridgill
Senior Vice President and
Chief Financial Officer
Security Capital Bancorp
Post Office Box 1387
Salisbury, North Carolina 28145-1387
Dear Pressley:
This letter confirms the terms of our discussions concerning the payment
you are to receive in the event you remain in the employ of Security Capital
Bancorp ("SCBC") and its subsidiaries through the date of the effectiveness of
the merger of New Security, Inc., a subsidiary of CCB Financial Corporation
("CCBF"), with and into SCBC and of the merger of Security Capital Bank (the
"Bank") with and into Central Carolina Bank and Trust Co. ("CCB"), and in the
employ of CCBF and/or CCB for a transition period of approximately four weeks
thereafter, but do not accept on-going employment by CCBF and/or CCB after such
transition period. At the end of your employment, CCBF and/or CCB will pay to
you the sum of $250,000 by check or other negotiable instrument. This payment is
composed of the severance payment due to you under your employment agreement
with OMNIBANK, Inc. SSB, and a payment to induce you to agree to remain in the
employ of SCBC and CCBF (and/or CCB) described herein, and will be in lieu of
any salary, bonuses, incentive compensation or other compensation payable to you
under your employment agreement with OMNIBANK, or otherwise payable to you by
SCBC, the Bank, any other subsidiary of SCBC, CCBF, CCB, or any other subsidiary
of CCBF, in each instance other than your salary for the transition period. By
accepting the severance portion of such payment, you will have waived and
released any right you have or may have under your employment agreement or
otherwise to receive compensation by reason of the change in control of SCBC or
any of its subsidiaries or the aforesaid mergers. Similarly, by this agreement,
SCBC and CCBF, on their own behalf and on behalf of their subsidiaries, waive
all non-competition provisions of your employment agreement.
<PAGE>
Mr. Pressley A. Ridgill
January 27, 1995
Page 2
If the above accurately reflects your understanding of our discussions,
please acknowledge your acceptance of this agreement by signing below.
Sincerely yours,
/s/ DAVID B. JORDAN
VICE CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
Accepted:
/s/ PRESSLEY A. RIDGILL
PRESSLEY A. RIDGILL
Date
Confirmed:
CCB Financial Corporation
By: /s/ ERNEST C. ROESSLER
ERNEST C. ROESSLER,
PRESIDENT AND CHIEF FINANCIAL
OFFICER
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
THE BOARD OF DIRECTORS
SECURITY CAPITAL BANCORP
We consent to the use of our report dated January 28, 1994 included in
Security Capital Bancorp's Form 10-K for the year ended December 31, 1993
incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the Joint Proxy Statement/Prospectus for the merger with
CCB Financial Corporation.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Charlotte, North Carolina
January 30, 1995
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
THE BOARD OF DIRECTORS
CCB FINANCIAL CORPORATION
We consent to the use of our report dated January 18, 1994 included in CCB
Financial Corporation's Form 10-K for the year ended December 31, 1993
incorporated herein by reference and to the reference to our firm under the
heading "Experts" in the Joint Proxy Statement/Prospectus for the acquisition of
Security Capital Bancorp.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Raleigh, North Carolina
January 30, 1995
<PAGE>
EXHIBIT 23.4
TAX ADVISORS' CONSENT
Board of Directors
Security Capital Bancorp
Board of Directors
CCB Financial Corporation
We consent to the inclusion of our tax opinion dated December 20, 1994,
regarding the federal and North Carolina income tax consequences of the Merger,
in Exhibit No. 8 of the Form S-4 Registration Statement to be filed with the
Securities and Exchange Commission and to the quotation or summarization of our
tax opinion and the references to our firm under the headings
"SUMMARY -- Certain Income Tax Consequences", and "THE MERGER -- Certain Income
Tax Consequences" in the Prospectus/Proxy Statement.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Raleigh, North Carolina
January 30, 1995
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in this
Registration Statement and related Prospectus of CCB Financial Corporation and
to the incorporation by references therein of our report dated February 3, 1994,
with respect to the consolidated financial statements of First Federal Savings
and Loan Association of Charlotte included in Security Capital Bancorp's Current
Report on Form 8-K dated December 6, 1994 filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Winston-Salem, North Carolina
January 27, 1995
<PAGE>
EXHIBIT 23.6
CONSENT OF THE ROBINSON-HUMPHREY COMPANY, INC.
We consent to the inclusion in this Registration Statement on Form S-4 of
our opinion, dated November 4, 1994, set forth as Appendix C to the
Prospectus/Joint Proxy Statement and to the summarization thereof and references
to our firm in the Prospectus/Joint Proxy Statement under the captions
"SUMMARY -- The Merger" and "THE MERGER -- SCBC Fairness Opinion." In giving
such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
/s/ THE ROBINSON-HUMPHREY COMPANY,
INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
Atlanta, Georgia
December 15, 1994
<PAGE>
EXHIBIT 23.7
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this registration statement on Form S-4 of
our letter to the Board of Directors of CCB Financial Corporation included as
Appendix D to the Joint Proxy Statement-Prospectus that is a part of this
Registration Statement, and to the references to such letters and to our firm in
such Joint Proxy Statement-Prospectus. In giving such consent we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
/s/ WHEAT, FIRST SECURITIES, INC.
WHEAT, FIRST SECURITIES, INC.
Richmond, Virginia
January 26, 1995
<PAGE>
EXHIBIT 23.8
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ MILES J. SMITH, JR.
MILES J. SMITH, JR.
</TABLE>
<PAGE>
EXHIBIT 23.9
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ DAVID B. JORDAN
DAVID B. JORDAN
</TABLE>
<PAGE>
EXHIBIT 23.10
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ JOHN M. BARNHARDT
JOHN M. BARNHARDT
</TABLE>
<PAGE>
EXHIBIT 23.11
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ JIMMY K. STEGALL
JIMMY K. STEGALL
</TABLE>
<PAGE>
EXHIBIT 23.12
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ JAMES L. WILLIAMSON
JAMES L. WILLIAMSON
</TABLE>
<PAGE>
EXHIBIT 23.13
CONSENT OF APPOINTEE/NOMINEE
The undersigned hereby consents to be named as an appointee to the Board of
Directors of CCB Financial Corporation and Central Carolina Bank and Trust Co.
and as a nominee for election to such Boards of Directors, all as described in
the Prospectus Joint Proxy Statement included in the Registration Statement on
Form S-4 (No. 33-57005) of CCB Financial Corporation.
<TABLE>
<S> <C>
January 24, 1995 /s/ J. G. RUTLEDGE, III
J. G. RUTLEDGE, III
</TABLE>
<PAGE>
EXHIBIT 99.1
CCB FINANCIAL CORPORATION
111 Corcoran Street
Durham, North Carolina 27701
REVOCABLE APPOINTMENT OF PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard W. Every, W. Harold Parker, Jr., and
Manuel L. Rojas (the "Proxies"), or any of them, as proxies, with full power of
substitution, to represent and vote, as directed below, all shares of the common
stock of CCB Financial Corporation ("CCBF") held of record by the undersigned on
February 1, 1995, at the Special Meeting of Shareholders of CCBF (the "CCBF
Special Meeting") to be held at the George Watts Hill Alumni Center, Stadium
Drive at Ridge Road on the campus of the University of North Carolina at Chapel
Hill, Chapel Hill, North Carolina, at 11:00 a.m., E.S.T., on March 16, 1995, and
at any adjournments thereof. The undersigned hereby directs that the shares
represented by this appointment of proxy be voted as follows on the proposals
listed below:
1. PROPOSAL TO APPROVE MERGER. Proposal to approve the Amended and Restated
Agreement of Combination, dated as of December 1, 1994, and the related
plan of merger (collectively, the "Merger Agreement"), among CCBF,
Security Capital Bancorp ("SCBC") and New Security Capital, Inc. ("NSC"),
and to approve the transactions described therein, including without
limitation the issuance of up to a maximum of 6,080,462 shares of CCBF's
$5.00 par value common stock to effect the combination of SCBC and CCBF
through the merger of NSC into SCBC with the result that SCBC will become
a wholly-owned subsidiary of CCBF.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. PROPOSAL TO APPROVE BYLAW AMENDMENT. Proposal to approve an amendment to
Article III, Sections 2 and 7, of CCBF's Bylaws to provide that, within
the specific minimum and maximum numbers, CCBF's Board of Directors from
time to time may set and change the actual number of directors of CCBF
and may appoint directors to fill vacancies created by any such
increases.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. OTHER BUSINESS. On such other matters as properly may come before the
CCBF Special Meeting, the Proxies are authorized to vote the shares
represented by this appointment of proxy in accordance with their best
judgment.
PLEASE MARK, SIGN AND DATE THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE AND
PROMPTLY RETURN IT USING THE ENCLOSED ENVELOPE.
<PAGE>
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, THE PROXIES WILL VOTE THE SHARES
REPRESENTED BY THIS APPOINTMENT OF PROXY FOR PROPOSALS 1 AND 2. SHOULD OTHER
MATTERS PROPERLY COME BEFORE THE CCBF SPECIAL MEETING, THE PROXIES WILL BE
AUTHORIZED TO VOTE THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY IN
ACCORDANCE WITH THEIR BEST JUDGMENT. THIS APPOINTMENT OF PROXY MAY BE REVOKED BY
THE HOLDER OF THE SHARES TO WHICH IT RELATES AT ANY TIME BEFORE IT IS EXERCISED
BY FILING WITH THE SECRETARY OF CCBF A WRITTEN INSTRUMENT REVOKING IT OR A DULY
EXECUTED APPOINTMENT OF PROXY BEARING A LATER DATE OR BY ATTENDING THE CCBF
SPECIAL MEETING AND ANNOUNCING HIS OR HER INTENTION TO VOTE IN PERSON.
By signing this proxy, the undersigned hereby acknowledges receipt of the
Notice of Special Meeting, dated February , 1995, and the accompanying
Prospectus/Joint Proxy Statement of CCBF and SCBC.
Dated: , 1995
Signature of Owner of Shares
Signature of Joint Owner of Shares
(if any)
INSTRUCTION: Please sign above
exactly as your name appears on
this appointment of proxy. Joint
owners of shares should both sign.
Fiduciaries or other persons
signing in a representative
capacity should indicate the
authorized capacity in which they
are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT AT THE CCBF SPECIAL MEETING,
PLEASE SEND IN YOUR APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND. EVEN
IF YOU SEND IN YOUR APPOINTMENT OF PROXY, YOU WILL BE ABLE TO VOTE IN PERSON AT
THE CCBF SPECIAL MEETING IF YOU SO DESIRE.
<PAGE>
EXHIBIT 99.2
SECURITY CAPITAL BANCORP
507 West Innes Street
Salisbury, North Carolina 28144
REVOCABLE APPOINTMENT OF PROXY
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Miles J. Smith, Jr. and E. K. Prewitt, Jr.
(the "Proxies"), or either of them, as proxies, with full power of substitution,
and hereby authorizes them to represent and vote, as directed below, all shares
of the common stock of Security Capital Bancorp ("SCBC") held of record by the
undersigned on February 1, 1995, at the Special Meeting of Shareholders of SCBC
(the "SCBC Special Meeting") to be held at SCBC's principal offices at 507 West
Innes Street, Salisbury, North Carolina, at 11:00 a.m., E.S.T., on March 16,
1995, and at any adjournments thereof. The undersigned hereby directs that the
shares represented by this appointment of proxy be voted as follows on the
proposals listed below:
1. PROPOSAL TO APPROVE MERGER. Proposal to approve the Amended and Restated
Agreement of Combination, dated as of December 1, 1994, and the related
plan of merger (collectively, the "Merger Agreement"), among SCBC, CCB
Financial Corporation ("CCBF") and New Security Capital, Inc. ("NSC"),
and to approve the transactions described therein, including without
limitation the merger of NSC into SCBC with the result that SCBC will
become a wholly-owned subsidiary of CCBF and all outstanding shares of
SCBC's no par common stock will be converted into shares of CCBF's $5.00
par value common stock.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. OTHER BUSINESS. On such other matters as properly may come before the
SCBC Special Meeting, the Proxies are authorized to vote the shares
represented by this appointment of proxy in accordance with their best
judgment.
PLEASE MARK, SIGN AND DATE THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE AND
PROMPTLY RETURN IT USING THE ENCLOSED ENVELOPE.
<PAGE>
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, THE PROXIES WILL VOTE THE SHARES
REPRESENTED BY THIS APPOINTMENT OF PROXY FOR PROPOSAL 1. SHOULD OTHER MATTERS
PROPERLY COME BEFORE THE SCBC SPECIAL MEETING, THE PROXIES WILL BE AUTHORIZED TO
VOTE THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY IN ACCORDANCE WITH
THEIR BEST JUDGMENT. THIS APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF
THE SHARES TO WHICH IT RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH
THE SECRETARY OF SCBC A WRITTEN INSTRUMENT REVOKING IT OR A DULY EXECUTED
APPOINTMENT OF PROXY BEARING A LATER DATE OR BY ATTENDING THE SCBC SPECIAL
MEETING AND ANNOUNCING HIS OR HER INTENTION TO VOTE IN PERSON.
By signing this proxy, the undersigned hereby acknowledges receipt of the
Notice of Special Meeting, dated February , 1995, and the accompanying
Prospectus/Joint Proxy Statement of SCBC and CCBF.
Dated: , 1995
Signature of Owner of Shares
Signature of Joint Owner of Shares
(if any)
Instruction: Please sign above
exactly as your name appears on
this appointment of proxy. Joint
owners of shares should both sign.
Fiduciaries or other persons
signing in a representative
capacity should indicate the
authorized capacity in which they
are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT AT THE SCBC SPECIAL MEETING,
PLEASE SEND IN YOUR APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND. EVEN
IF YOU SEND IN YOUR APPOINTMENT OF PROXY, YOU WILL BE ABLE TO VOTE IN PERSON AT
THE SCBC SPECIAL MEETING IF YOU SO DESIRE.
