<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 2000
REGISTRATION NO. 333-34216
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
FIRST BANCORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
NORTH CAROLINA 6022 56-1421916
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
341 North Main Street
Post office Box 508
TROY, NORTH CAROLINA 27371-0508
(910) 576-6171
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JAMES H. GARNER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST BANCORP
341 NORTH MAIN STREET
Post Office Box 508
TROY, NORTH CAROLINA 27371-0508
(910) 576-6171
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
-----------------
WITH COPIES TO:
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<S> <C> <C>
HENRY H. RALSTON JOHN F. BURNS EDWARD C. WINSLOW III
ROBINSON, BRADSHAW PRESIDENT AND CHIEF EXECUTIVE OFFICER BROOKS, PIERCE, MCLENDON,
& HINSON, P.A. FIRST SAVINGS BANCORP, INC. HUMPHREY & LEONARD, L.L.P.
101 NORTH TRYON STREET, POST OFFICE BOX 1657 2000 RENAISSANCE PLAZA
SUITE 1900 205 S.E. BROAD STREET 230 NORTH ELM STREET
CHARLOTTE, SOUTHERN PINES, POST OFFICE BOX 26000
NORTH CAROLINA 28246 NORTH CAROLINA 28388-1657 GREENSBORO,
(704) 377-2536 (910) 692-6222 NORTH CAROLINA 27420
(336) 373-8850
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the merger described in this Registration
Statement becomes effective.
<PAGE> 2
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for any
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==============================================================================================================
Title of Each Class of Proposed Proposed
Securities to be Maximum Maximum
Registered Amount to be Offering Price Aggregate Offering Amount of
Registered Per Unit Price Registration Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par
value 4,820,000 $12.125 $58,442,500 $15,428.82 (2)
==============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based on the average of the high and low
reported sales price on the Nasdaq National Market System on March 31,
2000.
(2) Such amount was paid in connection with the initial filing on April 6,
2000.
-----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), SHALL
DETERMINE.
================================================================================
<PAGE> 3
[FIRST 1 BANCORP LOGO] [FIRST SAVINGS BANCORP LOGO]
TO THE SHAREHOLDERS OF FIRST SAVINGS BANCORP, INC. AND FIRST BANCORP:
First Savings Bancorp, Inc. ("First Savings") and First Bancorp have entered
into a merger agreement dated December 15, 1999. This agreement, as amended,
calls for a merger of First Savings and First Bancorp and a merger of their
banking subsidiaries, First Savings Bank of Moore County and First Bank.
References to the merger in this joint proxy statement/prospectus refer to the
merger of First Savings into First Bancorp.
The merger cannot be completed unless it is approved by the shareholders of
First Savings and by the shareholders of First Bancorp. For that reason, you are
receiving this joint proxy statement/prospectus describing the terms of the
merger and other important information. We urge you to read it carefully.
Shareholders of First Savings and First Bancorp will be asked to vote upon and
approve the merger and related actions at shareholder meetings being called by
each company. A proxy that can be used to cast your vote accompanies this joint
proxy statement/prospectus.
Under the terms of the proposed merger, First Savings shareholders will receive
1.2468 shares of First Bancorp common stock for each share of First Savings
common stock. This exchange ratio is subject to adjustment in limited
circumstances as described in this joint proxy statement/prospectus. The
approximate maximum number of shares to be issued by First Bancorp pursuant to
the merger agreement based on such exchange ratio is 4,813,000. First Bancorp
common stock is traded on the Nasdaq National Market System under the symbol
"FBNC." Based on the closing price of First Bancorp common stock on May 15, 2000
of $15.69 and the 1.2468 exchange ratio, First Savings shareholders would
receive approximately $19.56 worth of First Bancorp common stock for each share
of First Savings common stock held. The actual value of the First Bancorp common
stock received by First Savings shareholders in the merger will depend on the
market value of First Bancorp common stock at the time of completion of the
merger.
YOUR VOTE IS VERY IMPORTANT. THE BOARD OF DIRECTORS OF EACH OF FIRST SAVINGS AND
FIRST BANCORP HAS APPROVED THE MERGER, AND YOUR BOARD STRONGLY URGES YOU TO VOTE
FOR THE MERGER.
BECAUSE FIRST SAVINGS SHAREHOLDERS WILL RECEIVE SHARES OF FIRST BANCORP COMMON
STOCK IN CONNECTION WITH THE MERGER, THEY SHOULD CONSIDER CAREFULLY THE RISK
FACTORS IDENTIFIED ON PAGE 15.
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED THE FIRST BANCORP COMMON STOCK TO BE ISSUED
UNDER THIS PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. THE SHARES OF FIRST BANCORP COMMON STOCK ARE NOT SAVINGS
OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION, AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
The date of this joint proxy statement/prospectus is May 16, 2000. It is first
being mailed on or about May 18, 2000.
<PAGE> 4
FIRST SAVINGS BANCORP, INC.
POST OFFICE BOX 1657
205 S.E. BROAD STREET
SOUTHERN PINES, NORTH CAROLINA 28388-1657
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 26, 2000
First Savings will hold a special meeting of shareholders at the
Holiday Inn, U.S. Highway 1 By-Pass, Southern Pines, North Carolina 28387, at
4:00 p.m., local time, on June 26, 2000 for the following purposes:
(1) Approval of Merger. To consider and vote on a proposal to approve
the merger agreement dated as of December 15, 1999 among First Bancorp, First
Bank, First Savings Bancorp, Inc. and First Savings Bank of Moore County, Inc.,
SSB and the related plan of merger, pursuant to which First Savings will merge
into First Bancorp, with First Bancorp being the surviving corporation. Under
the merger agreement and plan of merger, the First Savings shareholders will
receive 1.2468 shares of First Bancorp common stock for each share of First
Savings common stock they own as of the date the merger is completed (subject to
adjustment under certain limited circumstances).
(2) Other Business. To transact such other business as may properly
come before the special meeting, or any adjournments or postponements of such
meeting.
The merger is described more fully in the joint proxy
statement/prospectus attached to this notice.
Record holders of First Savings common stock at the close of business
on May 11, 2000 will receive notice of and may vote at the special meeting,
including any adjournments or postponements of such meeting.
Approval of the merger agreement at the special meeting will require
the affirmative vote of the holders of a majority of the outstanding shares of
First Savings common stock.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special meeting, please take the time to vote by completing and mailing the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, we will vote your proxy in favor of the merger.
If you do not either return your card or attend and vote in favor at the special
meeting, the effect will be a vote against the merger.
By Order of the Board of Directors
/s/ John F. Burns
-------------------------------------
John F. Burns
President and Chief Executive Officer
May 16, 2000
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR APPROVAL OF THE MERGER.
<PAGE> 5
FIRST BANCORP
341 NORTH MAIN STREET
TROY, NORTH CAROLINA 27371-0508
NOTICE OF SPECIAL AND ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 27, 2000
First Bancorp will hold a special and annual meeting of shareholders at
the main office of First Bancorp, 341 North Main Street, Troy, North Carolina
27371, at 3:00 p.m., local time, on June 27, 2000 for the following purposes:
(1) Approval of Merger. To consider and vote on a proposal to approve
the merger agreement dated as of December 15, 1999 among First Bancorp, First
Bank, First Savings Bancorp, Inc. and First Savings Bank of Moore County, Inc.,
SSB and the related plan of merger, pursuant to which First Savings will merge
into First Bancorp, with First Bancorp being the surviving corporation. Under
the merger agreement and plan of merger, the First Savings shareholders will
receive 1.2468 shares of common stock of First Bancorp common stock for each
share of common stock of First Savings they own as of the date of completion of
the merger (subject to adjustment under certain limited circumstances).
(2) Issuance of Shares. To approve the issuance of shares of First
Bancorp common stock in connection with the merger.
(3) Increase in Maximum Number of Directors. To amend the bylaws of
First Bancorp to increase the maximum number of directors of First Bancorp to 18
(and to change the method by which the number of directors is fixed).
(4) Election of Directors. To elect 18 directors to serve until the
next annual meeting of shareholders and until their successors are elected and
qualified.
(5) Ratification of Auditors. To ratify the appointment of KPMG LLP as
the independent auditors of First Bancorp for the fiscal year ending December
31, 2000.
(6) Other Business. To transact such other business as may properly
come before the special and annual meeting, or any adjournments or postponements
of such meeting.
The increase in the number of directors by seven and the election of
such additional directors, however, are conditional upon completion of the
merger.
Approval of the merger agreement and related plan of merger will
require the affirmative vote of the holders of a majority of the outstanding
shares of First Bancorp common stock. Approval of the issuance of the shares in
connection with the merger, the bylaw amendment to increase the maximum number
of directors and the ratification of First Bancorp's auditors for the fiscal
year ending December 31, 2000 will require the affirmative vote of a majority of
the shares of First Bancorp common stock voted at the meeting with respect to
these proposals, either in person or by proxy. First Bancorp shareholders may
demand that directors be elected by cumulative voting. Whether or not cumulative
voting is invoked by the First Bancorp shareholders, the nominees for director
that receive the highest number of votes at the meeting will be elected.
We describe the foregoing items of business more fully in the joint
proxy statement/prospectus attached to this notice.
Record holders of First Bancorp common stock at the close of business
on May 11, 2000 will receive notice of and may vote at the special and annual
meeting, including any adjournments or postponements of such meeting.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
special and annual meeting, please take the time to vote by completing and
mailing the enclosed proxy card. If you sign, date and mail your proxy card
<PAGE> 6
without indicating how you want to vote, we will vote your proxy in favor of the
merger and other matters listed above to be considered at the meeting. If you do
not either return your card or attend and vote in favor of such matters at the
meeting, the effect will be a vote against the merger.
By Order of the Board of Directors
/s/ James H. Garner
-------------------------------------
James H. Garner
President and Chief Executive Officer
May 16, 2000
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE MERGER, THE
ISSUANCE OF FIRST BANCORP COMMON STOCK IN CONNECTION WITH THE MERGER AND THE
OTHER MATTERS TO BE CONSIDERED AT THE SPECIAL AND ANNUAL MEETING.
<PAGE> 7
PLEASE NOTE
No one has been authorized to provide First Savings or First Bancorp
shareholders with any information other than the information included in this
document and the documents that are referred to herein. Shareholders of First
Savings and First Bancorp should not rely on other information as being
authorized by First Savings or First Bancorp.
This joint proxy statement/prospectus has been prepared as of May 16,
2000. There may be changes in the affairs of First Bancorp or First Savings
since that date that are not reflected in this document.
When used in this joint proxy statement/prospectus, the terms "First
Savings" and "First Bancorp" refer to First Savings Bancorp, Inc. and First
Bancorp, respectively, and, where the context requires, to First Savings and
First Bancorp and their respective subsidiaries.
ADDITIONAL INFORMATION
IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT FIRST BANCORP AND
FIRST SAVINGS IS CONTAINED IN DOCUMENTS THAT HAVE BEEN DELIVERED TOGETHER WITH
THIS DOCUMENT. THESE DOCUMENTS ARE DESCRIBED ON PAGE 86 UNDER "ADDITIONAL
INFORMATION," AND ARE ALSO INCORPORATED HEREIN BY REFERENCE. YOU CAN OBTAIN
ADDITIONAL, FREE COPIES OF THIS INFORMATION BY WRITING OR CALLING:
WILLIAM A. ROBERTS
FIRST SAVINGS BANCORP, INC.
POST OFFICE BOX 1657
205 S.E. BROAD STREET
SOUTHERN PINES, NORTH CAROLINA 28388-1657
TELEPHONE: (910) 692-6222
ANNA G. HOLLERS
FIRST BANCORP
POST OFFICE BOX 508
341 NORTH MAIN STREET
TROY, NORTH CAROLINA 27371-0508
TELEPHONE: (910) 576-6171
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST
THE INFORMATION BY JUNE 19, 2000.
<PAGE> 8
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements about First Bancorp
and First Savings on a combined basis following the merger. These statements can
be identified by use of words like "expect," "may," "could," "intend,"
"project," "estimate" or "anticipate." These forward-looking statements reflect
current views of First Bancorp and First Savings, but they are based on
assumptions and are subject to risks, uncertainties and other factors. These
factors include the following:
- competitive pressure in the banking industry may increase
significantly;
- changes in the interest rate environment may reduce margins;
- general economic conditions, either national or regional, may
be less favorable than expected, resulting in, among other
things, deterioration of asset quality;
- changes may occur in the regulatory environment;
- changes may occur in business conditions and inflation; and
- changes may occur in the securities markets.
Further information on specific factors that could affect the financial
results of First Bancorp after the merger is included in the discussion of "RISK
FACTORS" on page 15.
<PAGE> 9
SUMMARY TERM SHEET
First Bancorp has entered into a merger agreement with First Savings
Bancorp, Inc. ("First Savings"), dated December 15, 1999. All references to the
merger agreement are to the merger agreement, as amended, including, the
amendment and waiver to merger agreement dated March 24, 2000 and the second
amendment and waiver to merger agreement dated May 15, 2000. Upon completion of
the merger, First Savings shareholders will receive 1.2468 shares of First
Bancorp common stock for each share of First Savings common stock that they own.
This exchange ratio, however, may increase if the average price of First Bancorp
common stock is less than $16 during the 20-day trading period ending June 23,
2000 and certain other conditions are satisfied.
The current exchange ratio represents a value of $19.56 per share of
First Savings common stock based on the May 15, 2000 price of First Bancorp
common stock. The market price of First Bancorp common stock will, however,
fluctuate prior to completion of the merger.
Following the merger and assuming that the exchange ratio remains at
1.2468 and that no First Savings options are exercised, existing First Bancorp
shareholders initially will own approximately 51%, and the former First Savings
shareholders initially will own approximately 49%, of First Bancorp's
outstanding common stock.
FIRST SAVINGS SHAREHOLDERS
- - First Savings' board of directors is soliciting your proxy for use at
the meeting of First Savings shareholders to be held at the Holiday
Inn, U.S. Highway 1 By-Pass, Southern Pines, North Carolina 28387, at
4:00 p.m., local time, on June 26, 2000. At the special meeting you
will be asked to consider and approve the merger agreement and related
plan of merger.
- - First Savings' board of directors has approved the merger agreement and
plan of merger and believes that the merger is fair to, and in the best
interests of, First Savings shareholders.
- - First Savings strongly encourages you to vote "FOR" the merger.
- - Ferguson & Company, an investment banking firm located in Hurst, Texas,
has given its opinion to First Savings' board of directors that the
shares of First Bancorp common stock to be received by the First
Savings shareholders in connection with the merger is fair from a
financial point of view to First Savings shareholders.
FIRST BANCORP SHAREHOLDERS
- - First Bancorp's board of directors is soliciting your proxy for use at
the special and annual meeting of First Bancorp shareholders to be held
at the main office of First Bancorp, 341 North Main Street, Troy, North
Carolina 27371, at 3:00 p.m., local time on June 27, 2000. At the
meeting you will be asked to consider and approve the merger agreement
and related plan of merger and the issuance of shares of First Bancorp
common stock in connection with the merger. In addition, you will be
asked to consider and approve an increase in the number of First
Bancorp directors, to elect First Bancorp directors, and to ratify the
selection of First Bancorp's independent auditors.
- - First Bancorp's board of directors has approved the merger agreement
and such issuance of shares and believes that the merger is fair to,
and in the best interests of, First Bancorp and its shareholders.
- - First Bancorp strongly encourages you to vote "FOR" the merger and
issuance of shares.
- - Sterne, Agee & Leach, Inc., an investment banking firm located in
Atlanta, Georgia, has given its opinion to First Bancorp's board of
directors that the issuance of the shares of First Bancorp common stock
in connection with the merger is fair from a financial point of view to
First Bancorp and its shareholders.
First Bancorp common stock is listed on the Nasdaq National Market
under the symbol "FBNC." First Savings common stock is listed on the Nasdaq
National Market under the symbol "SOPN."
<PAGE> 10
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: If you are a First Savings shareholder, you are being asked
to:
- approve the merger agreement and the related plan of
merger pursuant to which First Savings will merge
into First Bancorp; and
- transact such other business as may properly come
before the meeting, or any adjournments or
postponements of such meeting.
First Savings' board of directors is not aware of any other
business to be considered at the meeting. As a result of the
merger you will become a shareholder of First Bancorp, and
First Bancorp will continue the business of First Savings
through First Bancorp's banking subsidiary, First Bank.
If you are a First Bancorp shareholder, you are being asked
to:
- approve the merger agreement and related plan of
merger;
- approve the issuance of shares of First Bancorp
common stock in connection with the merger;
- approve an amendment to the bylaws of First Bancorp
to increase the maximum number of directors of First
Bancorp to 18 (and to change the method for fixing
the number of directors);
- elect 18 directors to serve as such until the next
annual meeting of shareholders (seven of which will
be additional directors who currently are serving as
directors of First Savings);
- ratify KPMG LLP as the independent auditors of First
Bancorp for the fiscal year ending December 31, 2000;
and
- transact such other business as may properly come
before the meeting, or any adjournments or
postponements of the meeting.
First Bancorp's board of directors is not aware of any other
business to be considered at the meeting. The increase in the
maximum number of directors and the election of such
additional directors, however, are conditional upon the
completion of the merger.
Q: WHAT SHOULD I DO NOW?
A: Indicate on your proxy card how you want to vote, and sign,
date, and mail the proxy card in the enclosed envelope as soon
as possible, so that your shares will be voted at your
meeting.
If you sign, date, and send in your proxy and do not indicate
how you want to vote, your proxy will be voted in favor of the
matters considered at the meeting to which the proxy relates.
Failing to sign and send in your proxy or attend and vote in
person at your meeting will have the effect of a vote against
the merger.
Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares of stock only if you provide
instructions on how to vote. You should instruct your broker
how to vote your shares in accordance with the directions your
broker
<PAGE> 11
provides. Failure to provide instructions to your broker will
result in your shares not being voted, which will have the
effect of a vote against the merger, but will have no direct
effect on the issuance of shares of First Bancorp common stock
pursuant to the merger agreement, the bylaw amendment to
increase the number of directors on the First Bancorp board,
the election of directors, or ratification of First Bancorp's
appointment of its independent auditors for the fiscal year
ending December 31, 2000.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, First Bancorp will send
First Savings shareholders written instructions for exchanging
their stock certificates for First Bancorp stock certificates.
First Bancorp shareholders will NOT be exchanging their stock
certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask
any questions about the merger, you should contact:
If you are a First Bancorp shareholder:
Anna G. Hollers
First Bancorp
Post Office Box 508
341 North Main Street
Troy, North Carolina 27371-0508
Telephone: (910) 576-6171
If you are a First Savings shareholder:
John F. Burns
President and Chief Executive Officer
First Savings Bancorp, Inc.
Post Office Box 1657
205 S.E. Broad Street
Southern Pines, North Carolina 28388-1657
Telephone: (910) 692-6222
<PAGE> 12
TABLE OF CONTENTS
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SUMMARY ................................................................................................ 1
The Parties............................................................................................. 1
The Merger.............................................................................................. 1
What First Savings Shareholders Will Receive in the Merger.............................................. 2
Effect of the Merger on First Savings Options........................................................... 2
First Bancorp Dividend Policy Following the Merger...................................................... 2
Comparative Market Prices of First Savings and First Bancorp Common Stock............................... 2
No Dissenters' Rights................................................................................... 3
Expected Tax Treatment as a Result of the Merger........................................................ 3
Reasons for the Merger.................................................................................. 3
Fairness Opinion of Financial Advisors.................................................................. 3
Shareholder Meetings.................................................................................... 4
Required Shareholder Votes.............................................................................. 4
Voting Rights at the Shareholder Meetings............................................................... 5
Recommendations to Shareholders......................................................................... 6
Share Ownership of Management and Certain Shareholders.................................................. 6
Interests of Certain Persons in the Merger.............................................................. 6
Effective Time.......................................................................................... 7
Exchange of Stock Certificates.......................................................................... 7
Regulatory Approval and Other Conditions................................................................ 7
Waiver, Amendment and Termination....................................................................... 8
Accounting Treatment.................................................................................... 8
Certain Differences in Shareholders' Rights............................................................. 8
Stock Option Agreements................................................................................. 8
Management and Operations after the Merger.............................................................. 9
Selected Financial Data................................................................................. 9
Historical and Pro Forma Comparative Per Share Data..................................................... 12
Selected Pro Forma Financial Data....................................................................... 13
RISK FACTORS............................................................................................ 15
SHAREHOLDER MEETINGS.................................................................................... 16
Date, Place, Time and Purpose........................................................................... 16
Record Date, Voting Rights, Required Vote and Revocability of Proxies................................... 17
Solicitation of Proxies................................................................................. 19
No Dissenters' Rights................................................................................... 19
Recommendations......................................................................................... 19
DESCRIPTION OF TRANSACTION.............................................................................. 20
The Merger.............................................................................................. 20
What First Savings Shareholders Will Receive in the Merger.............................................. 20
Effect of the Merger on First Savings Options........................................................... 21
Background of the Merger................................................................................ 22
First Savings' Reasons for the Merger................................................................... 26
First Bancorp's Reasons for the Merger.................................................................. 27
Opinion of First Savings' Financial Advisor............................................................. 28
Opinion of First Bancorp's Financial Advisor............................................................ 31
Effective Time of the Merger............................................................................ 35
Exchange of First Savings Stock Certificates............................................................ 35
Conditions to Consummation of the Merger................................................................ 36
Regulatory Approval..................................................................................... 37
Waiver, Amendment and Termination....................................................................... 38
Conduct of Business Pending the Merger.................................................................. 39
Management and Operations after the Merger; Dividend Policy............................................. 40
Interests of Certain Persons in the Merger.............................................................. 40
</TABLE>
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<TABLE>
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Expected Tax Treatment as a Result of the Merger........................................................ 44
Accounting Treatment.................................................................................... 45
Expenses and Fees....................................................................................... 46
Resales of First Bancorp Common Stock................................................................... 46
Stock Option Agreements................................................................................. 47
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS.......................................................... 47
Anti-Takeover Provisions Generally...................................................................... 47
Authorized Capital Stock................................................................................ 48
Amendment of Charter and Bylaws......................................................................... 49
Election of Directors................................................................................... 49
Director Removal and Vacancies.......................................................................... 50
Limitations on Director Liability....................................................................... 50
Indemnification of Directors............................................................................ 51
Special Meetings of Shareholders........................................................................ 52
Shareholder Nominations and Proposals................................................................... 53
No Dissenters' Rights of Appraisal...................................................................... 53
Shareholder Votes Required for Certain Actions.......................................................... 53
Shareholders' Rights to Examine Books and Records....................................................... 54
Dividends............................................................................................... 54
COMPARATIVE MARKET PRICES AND DIVIDENDS................................................................. 55
BUSINESS OF FIRST SAVINGS............................................................................... 56
BUSINESS OF FIRST BANCORP............................................................................... 56
General................................................................................................. 56
Recent Developments..................................................................................... 57
PRO FORMA FINANCIAL INFORMATION......................................................................... 57
CERTAIN REGULATORY CONSIDERATIONS....................................................................... 65
DESCRIPTION OF FIRST BANCORP COMMON STOCK............................................................... 65
PRINCIPAL HOLDERS OF FIRST BANCORP VOTING SECURITIES.................................................... 67
FIRST BANCORP PROPOSAL TO AMEND FIRST BANCORP'S BYLAWS.................................................. 68
FIRST BANCORP PROPOSAL FOR ELECTION OF DIRECTORS........................................................ 69
Nominations for Director................................................................................ 70
Directors, Nominees and Executive Officers.............................................................. 71
Conditional Nominees and Executive Officers............................................................. 71
Board Committees, Attendance and Compensation........................................................... 75
Compensation of Executive Officers...................................................................... 77
Report of the Compensation Committee.................................................................... 77
Shareholder Return Performance.......................................................................... 83
FIRST BANCORP PROPOSAL FOR RATIFICATION OF INDEPENDENT AUDITORS......................................... 86
OTHER MATTERS........................................................................................... 87
SHAREHOLDER PROPOSALS................................................................................... 88
EXPERTS ................................................................................................ 88
OPINIONS ............................................................................................... 88
ADDITIONAL INFORMATION.................................................................................. 88
</TABLE>
Appendix A -- Merger Agreement, dated as of December 15, 1999, by and among
First Bancorp, First Bank, First Savings Bancorp, Inc. and
First Savings Bank of Moore County, Inc., SSB and related plan
of merger, as amended by the Amendment and Waiver to Merger
Agreement, dated as of March 24, 2000 and the Second Amendment
and Waiver to Merger Agreement, dated as of May 15, 2000
Appendix B -- Opinion of Ferguson & Company
Appendix C -- Opinion of Sterne, Agee & Leach, Inc.
ii
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SUMMARY
This summary highlights selected information from this joint proxy
statement/prospectus relating to the merger and may not include all of the
information that is important to you. To get a more complete description of the
proposed merger, you should carefully read this entire document and the
documents delivered with it. For more information about First Bancorp and First
Savings, see "ADDITIONAL INFORMATION" on page 88. We have included page
references in this summary to direct you to other places in this joint proxy
statement/prospectus where you can find more detailed information about the
topics summarized below.
THE PARTIES (SEE PAGE 56)
First Savings Bancorp, Inc.
Post Office Box 1657
205 S.E. Broad Street
Southern Pines, North Carolina 28388-1657
Telephone: (910) 692-6222
First Savings is a savings bank holding company headquartered in
Southern Pines, North Carolina. It conducts its operations through a subsidiary
savings bank, First Savings Bank of Moore County, Inc., SSB. First Savings,
through First Savings Bank of Moore County, is principally engaged in the
business of attracting deposits from the general public and using those deposits
and other funds to make real estate, consumer and commercial loans. As of June
30, 1999, approximately 85.1% of First Savings' net loan portfolio was composed
of one-to-four family residential real estate loans. First Savings' primary
market area is Moore County, North Carolina, where it conducts business in its
headquarters office in Southern Pines and in five other offices in the county.
In the fiscal year ended June 30, 1999 and other recent years, First Savings
Bank of Moore County accounted for substantially all of the consolidated net
income of First Savings.
As of March 31, 2000, First Savings had total consolidated assets of
approximately $327 million, total consolidated loans of approximately $230
million, total consolidated deposits of approximately $231 million, and total
consolidated shareholders' equity of approximately $64 million.
First Bancorp
Post Office Box 508
341 North Main Street
Troy, North Carolina 27371-0508
Telephone: (910) 576-6171
First Bancorp is a bank holding company headquartered in Troy, North
Carolina. It conducts its operations primarily through a subsidiary bank, First
Bank, from 36 North Carolina branches located within an 80-mile radius of Troy,
covering a geographical area from Maxton to the southeast, to High Point to the
north, to Lillington to the east, and to Kannapolis to the west. First Bancorp
provides a full range of banking services, including accepting demand and time
deposits, making secured and unsecured loans to individuals and businesses and
providing discount brokerage services and self-directed individual retirement
accounts. In 1999 and other recent years, First Bank accounted for substantially
all of the consolidated net income of First Bancorp.
As of March 31, 2000, First Bancorp had total consolidated assets of
approximately $591 million, total consolidated loans of approximately $443
million, total consolidated deposits of approximately $501 million, and total
consolidated shareholders' equity of approximately $45 million.
THE MERGER (SEE PAGE 20)
Pursuant to the merger agreement and related plan of merger, First
Savings will merge into First Bancorp, with First Bancorp being the surviving
corporation. After the merger, the combined company will conduct the business of
First Savings through its banking subsidiary, First Bank.
<PAGE> 15
As part of the proposed merger, the board of directors of First Bancorp
will be expanded to 18 members. It is expected that immediately after completion
of the merger, seven of First Bancorp's 18 directors will be former directors of
First Savings. It is also expected that immediately after completion of the
merger, certain executive officers of First Savings will be employed by First
Bancorp or its banking subsidiary, First Bank. See "- Management and Operations
After the Merger."
WHAT FIRST SAVINGS SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 20)
Upon completion of the merger, each First Savings shareholder will
receive 1.2468 shares of First Bancorp common stock for each share of First
Savings common stock held by such shareholder on the date the merger is
completed (subject to possible adjustment under limited circumstances, as
described in "DESCRIPTION OF TRANSACTION -- What First Savings Shareholders Will
Receive in the Merger").
Based on the closing price of First Bancorp common stock on May 15,
2000 of $15.69 per share, the First Savings shareholders will receive
approximately $19.56 worth of First Bancorp common stock for each share of First
Savings common stock held on the date the merger is completed. The market price
of First Bancorp stock may fluctuate between the date of this joint proxy
statement/prospectus and the date that the merger is completed. Such fluctuation
would change the value of the shares of First Bancorp common stock that the
First Savings shareholders will receive in the merger. The exchange ratio of
First Bancorp common stock for First Savings common stock could change in
limited circumstances as described in this joint proxy statement/prospectus. For
more information about what the First Savings shareholders will receive if the
merger is completed (including provisions regarding possible increases in the
exchange ratio), see "DESCRIPTION OF TRANSACTION -- What First Savings
Shareholders Will Receive in the Merger."
First Bancorp will not issue any fractional shares of its common stock
but, instead, will pay cash (without interest) for any fractional shares that
any First Savings shareholders would otherwise receive upon completion of the
merger. The cash payment will be an amount equal to the fraction of a share of
First Bancorp common stock that otherwise would be received in the merger
multiplied by the closing price of one share of First Bancorp common stock on
the Nasdaq National Market System on the last trading day before the merger is
completed.
EFFECT OF THE MERGER ON FIRST SAVINGS OPTIONS (SEE PAGE 21)
There are outstanding options to acquire First Savings common stock
under existing First Savings stock option plans. Upon completion of the merger,
First Bancorp will assume each outstanding option, which will be converted into
an option to purchase First Bancorp common stock. The number of shares of First
Bancorp common stock subject to such options and their exercise price will be
established based on the exchange ratio applicable to outstanding shares of
First Savings common stock in the merger.
FIRST BANCORP DIVIDEND POLICY FOLLOWING THE MERGER (SEE PAGE 40)
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.52 per share of First Bancorp common stock and expects that after
completion of the merger it will increase this quarterly dividend amount to an
annualized rate of $0.88 per share to more closely align the dividend policy of
the two separate companies. First Bancorp may, however, change this policy at
any time, based upon business conditions, its financial condition and operating
results, or other factors.
COMPARATIVE MARKET PRICES OF FIRST SAVINGS AND FIRST BANCORP COMMON STOCK (SEE
PAGE 55)
Shares of First Bancorp common stock are traded on the Nasdaq National
Market System under the symbol "FBNC." Shares of First Savings common stock are
traded on the Nasdaq National Market System under the symbol "SOPN."
The following table shows the reported closing sale prices per share
for First Savings common stock and First Bancorp common stock on (i) December
15, 1999, the last trading day before the public announcement of the execution
of the merger agreement, and (ii) May 15, 2000, the latest practicable date
prior to the mailing of this joint
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<PAGE> 16
proxy statement/prospectus. This table also shows in the column entitled
"Equivalent Price per First Savings Share" the value that First Savings
shareholders will receive in the merger for each share of First Savings common
stock.
<TABLE>
<CAPTION>
First Savings
Common First Bancorp Equivalent Price Per First
Stock Common Stock Savings Share (1)
------------- ------------- --------------------------
<S> <C> <C> <C>
December 15, 1999....................... $18.44 $17.00 $21.20
May 15, 2000............................ $16.25 $15.69 $19.56
</TABLE>
- -----------------
(1) The equivalent price per share of First Savings common stock at each
specified date represents the closing sales price of a share of First
Bancorp common stock on such date multiplied by an exchange ratio of
1.2468. See "COMPARATIVE MARKET PRICES AND DIVIDENDS." Such exchange
ratio, however, may increase if the average price of First Bancorp
common stock is less than $16 during the 20-day trading period ending
on June 23, 2000 and certain other conditions are satisfied. See
"DESCRIPTION OF TRANSACTION -- What First Savings Shareholders Will
Receive in the Merger."
We can make no assurance as to what the market price of the First
Bancorp common stock will be when the merger is completed or anytime thereafter.
First Savings shareholders should obtain current stock price quotations for
First Bancorp and First Savings common stock.
NO DISSENTERS' RIGHTS (SEE PAGE 53)
Neither First Savings shareholders nor First Bancorp shareholders have
dissenters' rights with respect to the merger or any of the other matters to be
considered at the shareholder meetings.
EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER (SEE PAGE 44)
It is expected that, for federal income tax purposes, First Savings
shareholders will not recognize any gain or loss upon the exchange of their
shares for shares of First Bancorp common stock. However, First Savings
shareholders will be required to recognize gain or loss upon the receipt of cash
in lieu of fractional shares. See "DESCRIPTION OF TRANSACTION -- What First
Savings Shareholders Will Receive in the Merger."
Because certain tax consequences of the merger may vary depending on
the particular circumstances of each shareholder and other factors, each
shareholder of First Savings should consult his or her own tax advisor to
determine the tax consequences of the merger under federal, state, local, and
foreign tax laws.
There should be no tax consequences to the First Bancorp shareholders
arising from the merger.
REASONS FOR THE MERGER (SEE PAGES 26 AND 27)
The boards of directors of First Savings and First Bancorp believe
that, among other things, the merger will result in a company with expanded
opportunities for profitable growth. In addition, they believe that the combined
resources and capital of First Savings and First Bancorp will improve their
ability to compete in the changing and competitive financial services industry.
FAIRNESS OPINION OF FINANCIAL ADVISORS (SEE PAGES 28 AND 31)
In deciding to approve the merger agreement, the board of directors of
First Savings considered an opinion from its financial advisor, Ferguson &
Company ("Ferguson"), that the exchange ratio is fair to the First Savings
shareholders from a financial point of view. An updated opinion, dated as of May
15, 2000, is attached to this joint proxy statement/prospectus as Appendix B. We
encourage all First Savings shareholders to read this opinion.
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<PAGE> 17
In deciding to approve the merger agreement, the board of directors of
First Bancorp considered an opinion from its financial advisor, Sterne, Agee &
Leach, Inc. ("Sterne Agee"), that the exchange ratio is fair to the First
Bancorp shareholders from a financial point of view. An updated opinion, dated
as of May 15, 2000, is attached to this joint proxy statement/prospectus as
Appendix C. We encourage all First Bancorp shareholders to read this opinion.
SHAREHOLDER MEETINGS (SEE PAGE 16)
FIRST SAVINGS. The special meeting of the First Savings shareholders
will be held at the Holiday Inn, U.S. Highway 1 By-Pass, Southern Pines, North
Carolina 28387, at 4:00 p.m., local time, on June 26, 2000. The shareholders
will be asked to:
- approve the merger agreement and related plan of merger; and
- transact such other business as may properly come before the
meeting, or any adjournments or postponements of such meeting.
First Savings' board of directors is not aware of any other business to
be considered at the meeting. A quorum of First Savings shareholders must be
present to hold the special meeting. A quorum is established when the holders of
a majority of the shares of First Savings common stock entitled to vote on a
matter are represented at the meeting, either in person or by proxy.
FIRST BANCORP. The special and annual meeting of the First Bancorp
shareholders will be held at the main office of First Bancorp, 341 North Main
Street, Troy, North Carolina 27371, at 3:00 p.m., local time, on June 27, 2000.
First Bancorp shareholders will be asked to:
- approve the merger agreement and related plan of merger;
- approve the issuance of shares of First Bancorp common stock
in connection with the merger;
- approve an amendment to the bylaws of First Bancorp to
increase the maximum number of directors on the First Bancorp
board of directors to 18 (and to change the method for fixing
the number of directors);
- elect 18 directors to serve as such until the next annual
meeting of shareholders and until their successors are duly
elected and qualified;
- ratify KPMG LLP as the independent auditors of First Bancorp
for the fiscal year ending December 31, 2000; and
- transact such other business as may properly come before the
meeting, or any adjournments or postponements of the meeting.
First Bancorp's board of directors is not aware of any other business
to be considered at the meeting. The increase in the number of directors by
seven and election of such additional directors are contingent on the completion
of the merger. A quorum of First Bancorp shareholders must be present to hold
the special and annual meeting. A quorum is established for each matter
considered when the holders of a majority of the shares of First Bancorp common
stock entitled to vote on such matter are represented at the meeting, either in
person or by proxy.
REQUIRED SHAREHOLDER VOTES (SEE PAGE 17)
FIRST SAVINGS. The approval of the merger agreement and related plan of
merger will require the affirmative vote of the holders of a majority of the
outstanding shares of First Savings common stock.
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<PAGE> 18
FIRST BANCORP. The approval of the merger agreement and related plan of
merger will require the affirmative vote of the holders of a majority of the
outstanding shares of First Bancorp common stock. The approval of the issuance
of shares in connection with the merger, the bylaw amendment to increase the
maximum number of directors on the First Bancorp board, and the ratification of
First Bancorp's appointment of its independent auditors will require the
affirmative vote of the holders of a majority of the shares of First Bancorp
common stock voted with respect to these proposals at the meeting, either in
person or by proxy. First Bancorp shareholders may demand that directors be
elected by cumulative voting. Whether or not cumulative voting is invoked by the
First Bancorp shareholders, the nominees for director that receive the highest
number of votes at the meeting will be elected. See "EFFECT OF THE MERGER ON
RIGHTS OF SHAREHOLDERS -- Election of Directors."
VOTING RIGHTS AT THE SHAREHOLDER MEETINGS (SEE PAGE 17)
FIRST SAVINGS. If you are a holder of shares of First Savings common
stock as of the close of business on May 11, 2000, the record date, you are
entitled to vote at the special meeting of the First Savings shareholders. On
such record date, 3,526,157 shares of First Savings common stock were
outstanding. You will be entitled to one vote for each share of First Savings
common stock owned as of the record date. You may vote either by attending the
meeting and voting your shares or by completing the enclosed proxy card and
mailing it to First Savings in the enclosed envelope.
First Savings is seeking your proxy to use at the special meeting of
its shareholders. We have prepared this joint proxy statement/prospectus to
assist you in deciding how to vote and whether or not to grant your proxy to us.
Please indicate on your proxy card how you want to vote. Sign, date and return
the proxy to us by mail as soon as possible so that your shares will be voted at
the meeting. If you sign, date and mail your proxy card without marking how you
want to vote, your proxy will be counted as a vote for the merger. Failure to
return your proxy card or to vote in person will have the effect of a vote
against the merger. If you sign a proxy, you may revoke it at any time prior to
the meeting or by attending and voting at the meeting. You cannot vote shares
held in "street name"; only your broker can vote these shares. If you do not
provide your broker with instructions on how to vote your shares, your broker
will not be permitted to vote them, and your shares will be treated as votes
against the merger.
FIRST BANCORP. If you are a holder of shares of First Bancorp common
stock as of the close of business on May 11, 2000, the record date, you are
entitled to vote at the special and annual meeting of the First Bancorp
shareholders. On such record date, 4,506,651 shares of First Bancorp common
stock were outstanding. You will be entitled to one vote for each share of First
Bancorp common stock owned as of the record date, unless the First Bancorp
shareholders properly invoke cumulative voting for the election of directors.
See "EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS -- Election of Directors."
You may vote either by attending the meeting and voting your shares or by
completing the enclosed proxy card and mailing it to us in the enclosed
envelope.
First Bancorp is seeking your proxy to use at the First Bancorp special
and annual meeting. We have prepared this joint proxy statement/prospectus to
assist you in deciding how to vote and whether or not to grant your proxy to us.
Please indicate on your proxy card how you want to vote. Sign, date and return
the proxy to us by mail as soon as possible so that your shares will be voted at
the meeting. If you sign, date and mail your proxy card without marking how you
want to vote, your proxy will be counted as a vote for the merger and the
issuance of shares of common stock in connection with the merger and the other
matters to be considered at such meeting. Failure to return your proxy card or
to vote at the meeting will have the effect of a vote against the merger. If you
sign a proxy, you may revoke it at any time prior to the meeting or by attending
and voting at the meeting. You cannot vote shares held in "street name"; only
your broker can vote these shares. If you do not provide your broker with
instructions on how to vote your shares, your broker will not be permitted to
vote them, and your shares will be treated as votes against the merger, but will
have no direct effect on the issuance of shares pursuant to the merger
agreement, the bylaw amendment to increase the maximum number of directors on
the First Bancorp board, the election of directors or ratification of First
Bancorp's appointment of its independent auditors for the fiscal year ending
December 31, 2000.
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<PAGE> 19
RECOMMENDATIONS TO SHAREHOLDERS (SEE PAGE 19)
FIRST SAVINGS. The First Savings board of directors has approved the
merger agreement and the plan of merger and believes that the proposed merger is
fair to the First Savings shareholders and is in their best interests. The First
Savings board recommends that the First Savings shareholders vote FOR approval
of the merger agreement and the related plan of merger.
FIRST BANCORP. The First Bancorp board of directors has approved the
merger agreement and the related plan of merger and the issuance of shares of
First Bancorp common stock in connection with the merger. The First Bancorp
board believes that the proposed merger is fair to the First Bancorp
shareholders and is in their best interests. The First Bancorp board recommends
that the First Bancorp shareholders vote FOR approval of the merger agreement
and the related plan of merger, the issuance of First Bancorp common stock in
connection with the merger, the bylaw amendment increasing the maximum number of
directors on the First Bancorp board to 18, the election of 18 directors to the
First Bancorp board and the ratification of First Bancorp's appointment of its
independent auditors for the fiscal year ending December 31, 2000.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (SEE PAGE 17)
FIRST SAVINGS. On its record date, First Savings directors and
executive officers, their immediate family members and entities they control
owned or had or shared voting power over 398,627, or approximately 11.3% of the
outstanding shares of First Savings common stock. This number does not include
stock that the First Savings directors and officers may acquire through
exercising outstanding stock options. On such record date, Lee C. McLaurin, an
executive officer of First Bancorp, owned 2,000 shares of First Savings common
stock, and First Bancorp Financial Services, Inc., a wholly owned subsidiary of
First Bancorp, owned 200 shares of First Savings common stock. On such record
date, neither First Bancorp or its subsidiaries nor First Savings or its
subsidiaries owned any other shares of First Savings common stock other than in
a fiduciary capacity for others or as a result of debts previously contracted.
FIRST BANCORP. On its record date, First Bancorp directors and
executive officers, their immediate family members and entities they control
owned 1,384,663, or approximately 30.7% of the outstanding shares of First
Bancorp common stock. This number does not include stock that the First Bancorp
directors and officers may acquire through exercising outstanding stock options.
On the record date, no officers or directors of First Savings owned any shares
of First Bancorp common stock. On the record date, neither First Bancorp or its
subsidiaries nor First Savings or its subsidiaries owned any shares of First
Bancorp common stock other than in a fiduciary capacity for others or as a
result of debts previously contracted.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (SEE PAGE 40)
The First Savings board of directors and certain executive officers may
have interests in the merger that are in addition to their general interests as
First Savings shareholders. The First Savings directors and certain members of
First Savings' management, along with other employees of First Savings, have
employment or severance agreements, stock options and other benefit plans and
other arrangements and may receive benefits from First Bancorp as a result of
the merger. As a result, their interests in and potential benefits from the
merger are different from those of the First Savings shareholders in general.
The First Savings board of directors was aware of these interests and considered
them in approving and recommending the merger.
In addition, certain officers of First Bancorp have employment and
severance arrangements, stock options and other benefit plans and other
arrangements that may provide them with interests in and benefits from the
merger that are different from those of First Bancorp shareholders in general.
The First Bancorp board of directors was aware of these interests and considered
them in approving and recommending the merger.
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<PAGE> 20
EFFECTIVE TIME (SEE PAGE 35)
Subject to the conditions to the obligations of First Savings and First
Bancorp to effect the merger, as provided in the merger agreement, the merger
will become effective at the time of the filing of the articles of merger with
the Secretary of State of the State of North Carolina.
If the shareholders of First Savings and First Bancorp approve the
merger and all required regulatory approvals are obtained in a timely manner, it
is currently anticipated that the merger will be completed on or about July 31,
2000.
First Savings and First Bancorp cannot assure you if or when the
necessary shareholder and regulatory approvals can be obtained or that the other
conditions precedent to the merger can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (SEE PAGE 35)
Promptly after the merger is completed, First Savings shareholders will
receive a letter from an exchange agent with instructions on how to surrender
their First Savings stock certificates in exchange for First Bancorp stock
certificates. First Savings shareholders should carefully review and complete
these materials and return them as instructed, together with their stock
certificates for First Savings common stock. First Savings shareholders should
not send their stock certificates to First Savings, First Bancorp or First
Bancorp's exchange agent until they receive these written instructions. The
exchange agent will automatically exchange the shares of First Savings
shareholders that do not have stock certificates because they hold their common
stock in the form of a book entry with First Savings' transfer agent. First
Bancorp will pay cash (without interest) to First Savings shareholders in lieu
of issuing any fractional shares of First Bancorp common stock.
First Bancorp shareholders will not exchange their shares of First
Bancorp common stock pursuant to the merger and should not send their stock
certificates to any person.
REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGES 36 AND 37)
Before the merger may be completed, First Bancorp is required to notify
and obtain approval from the Federal Reserve and other federal and state banking
regulators. First Bancorp has filed an application with the Federal Reserve for
this approval. We expect that First Bancorp will obtain this and all other
required approvals, but neither First Savings nor First Bancorp can make any
assurances that such regulatory approvals will be obtained or as to the timing
of receiving such approvals.
In addition to the required regulatory approvals, the merger can be
completed only if certain other conditions, including the following, are met or
waived (if permitted to be waived):
- First Savings and First Bancorp shareholders approve the
merger agreement and related plan of merger;
- First Savings and First Bancorp receive an opinion from an
acceptable tax advisor that the merger will qualify as a
tax-free reorganization;
- First Bancorp receives letters from its independent
accountants and First Savings' independent accountants
concerning the pooling-of-interests accounting treatment of
the merger (See "DESCRIPTION OF TRANSACTION -- Accounting
Treatment");
- First Savings and First Bancorp have complied in all material
respects with their covenants made in the merger agreement;
and
- neither First Savings nor First Bancorp has breached in any
material respect any of its representations made in the merger
agreement.
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<PAGE> 21
In addition to these conditions, the merger agreement, attached to this
joint proxy statement/prospectus as Appendix A, describes other conditions that
must be met before the merger may be completed.
WAIVER, AMENDMENT AND TERMINATION (SEE PAGE 38)
At any time before the merger is completed, First Savings and First
Bancorp may agree to terminate the merger agreement and not proceed with the
merger.
Additionally, either of First Savings or First Bancorp may terminate
the merger if the conditions for its completion of the merger have not been
satisfied or waived by September 30, 2000. However, First Savings or First
Bancorp may terminate the merger for this reason if and only if it has
materially complied with all of its obligations under the merger agreement. In
addition, First Savings may terminate the merger agreement if the trading price
of First Bancorp's common stock falls below certain levels, and First Bancorp
chooses not to increase the exchange ratio. See "DESCRIPTION OF TRANSACTION --
What First Savings Shareholders Will Receive in the Merger."
First Savings and First Bancorp also may terminate the merger if other
circumstances occur that are described in Article X of the merger agreement,
which is attached to this joint proxy statement/prospectus as Appendix A.
The merger agreement may be amended by the written agreement of First
Savings and First Bancorp. The parties may amend the merger agreement without
shareholder approval, even if First Savings shareholders already have approved
the merger. First Savings shareholders, however, must approve any amendments
that would modify, in a material respect, the type or amount of consideration
that they will receive in the merger.
ACCOUNTING TREATMENT (SEE PAGE 45)
First Bancorp intends to account for the merger as a
pooling-of-interests transaction for accounting and financial reporting
purposes, and First Bancorp and First Savings are not obligated to complete the
merger if this accounting treatment is not available. Pooling-of-interests is an
accounting method that assumes that each company's shareholders have combined
their ownership interests in such a manner that each group becomes an owner of
the combined, enlarged business. Under pooling-of-interests, the earnings of
each company are combined as though the combination had occurred at the
beginning of the earliest financial period presented, and the assets of the
acquired company are carried at their historical book values.
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS (SEE PAGE 47)
Upon completion of the merger and the exchange of the certificates
representing shares of First Savings common stock (as provided in the merger
agreement), all First Savings shareholders will become shareholders of First
Bancorp. The First Bancorp articles of incorporation and bylaws will govern
their rights as First Bancorp shareholders. Because of differences in the
articles of incorporation and bylaws of First Bancorp and First Savings, the
rights of First Savings shareholders prior to the merger will not be the same in
certain important ways as their rights as First Bancorp shareholders.
STOCK OPTION AGREEMENTS (SEE PAGE 47)
First Savings and First Bancorp have entered into option agreements
under which (a) First Savings granted First Bancorp an option to purchase up to
685,780 shares of First Savings common stock at $18.25 per share under certain
circumstances if the merger is not completed and a third party attempts to take
control of First Savings, and (b) First Bancorp granted First Savings an option
to purchase up to 855,142 shares of First Bancorp common stock at $17.75 per
share under certain circumstances if the merger is not completed and a third
party attempts to take control of First Bancorp. Under certain circumstances,
First Savings' successor would be obligated to repurchase the option granted by
First Savings if a third party acquires control of First Savings. Likewise,
under certain circumstances, First Bancorp's successor would be obligated to
repurchase the option granted by First Bancorp if a third party acquires control
of First Bancorp.
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<PAGE> 22
MANAGEMENT AND OPERATIONS AFTER THE MERGER (SEE PAGE 40)
First Bancorp has nominated all seven members of the current board of
First Savings who are currently under age 75 to be elected to the board of
directors of First Bancorp at the First Bancorp special and annual meeting to
serve as such until the next annual meeting of the First Bancorp shareholders.
There are three directors of First Savings who are over 75 and who are not
nominated for election to the First Bancorp board. Instead, these three
individuals will serve on a local advisory board of First Bancorp. In
recognition of the important role that these individuals will have in making the
proposed merger successful, First Bancorp will pay them the same board fees they
were receiving immediately prior to the merger through the scheduled end of
their respective board terms. Upon completion of the merger, First Bancorp, or
its banking subsidiary, First Bank, will employ as a Senior Vice President each
of the individuals serving as a Senior Vice President of First Savings or its
banking subsidiary, First Savings Bank of Moore County, immediately prior to
completion of the merger. Upon completion of the merger, First Bancorp also will
employ John F. Burns as an Executive Vice President of First Bank and William E.
Samuels, Jr. as an officer of First Bank, serving primarily in a consulting
capacity. Currently, Mr. Burns is the President and Chief Executive Officer of
First Savings and Mr. Samuels is the Chairman of the First Savings board of
directors. Subject to election to the First Bancorp board at the First Bancorp
special and annual meeting, after completion of the merger, both Mr. Burns and
Mr. Samuels will serve as directors of First Bancorp and First Bank, with Mr.
Samuels serving as Vice-Chairman of both boards. See "DESCRIPTION OF TRANSACTION
- -- Conduct of Business Pending the Merger", "-- Management and Operations after
the Merger; Dividend Policy" and "-- Interests of Certain Persons in the
Merger."
SELECTED FINANCIAL DATA
The following tables present for First Bancorp selected financial data
for the three-month periods ended March 31, 2000 and March 31, 1999 and for each
of the years in the five-year period ended December 31, 1999, and for First
Savings, selected financial data for the nine-month periods ended March 31, 2000
and March 31, 1999 and for each of the years in the five-year period ended June
30, 1999. The information is based on the consolidated financial statements
contained in reports First Bancorp and First Savings have filed with the
Securities and Exchange Commission, which documents have been delivered together
with this document and are incorporated by reference in this joint proxy
statement/prospectus. See "ADDITIONAL INFORMATION."
You should read the following tables in conjunction with the
consolidated financial statements of First Bancorp and First Savings described
above (and notes to them), recognizing that historical results are not
necessarily indicative of results to be expected for any future period. With
respect to First Bancorp, results for the three-month period ended March 31,
2000 are not necessarily indicative of results that may be expected for any
other interim period or for the year as a whole. In the opinion of the
management of First Bancorp, all adjustments (which include normal recurring
adjustments) necessary to arrive at a fair statement of interim results have
been included. With respect to First Savings, results for the nine-month period
ended March 31, 2000 are not necessarily indicative of results that may be
expected for any other interim period or for the year as a whole. In the opinion
of the management of First Savings, all adjustments (which include normal
recurring adjustments) necessary to arrive at a fair statement of interim
results have been included.
9
<PAGE> 23
FIRST BANCORP SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31, Years Ended December 31,
--------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income ........................ $ 10,978 $ 9,158 $ 39,294 $ 35,344 $ 29,197 $ 25,468 $ 23,106
Interest expense ....................... 4,607 3,712 15,810 14,356 11,123 9,916 8,953
--------- --------- --------- --------- --------- --------- ---------
Net interest income .................... 6,371 5,446 23,484 20,988 18,074 15,552 14,153
Provision for loan losses .............. 310 200 910 990 575 325 900
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for loan losses ............ 6,061 5,246 22,574 19,998 17,499 15,227 13,253
Noninterest income ..................... 1,382 1,308 5,121 4,656 4,150 4,446 3,777
Noninterest expense .................... 4,685 4,275 17,816 15,912 14,088 13,113 14,868
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes ............. 2,758 2,279 9,879 8,742 7,561 6,560 2,162
Income taxes ........................... 916 803 3,260 3,059 2,549 2,213 580
--------- --------- --------- --------- --------- --------- ---------
Net income ............................. $ 1,842 $ 1,476 $ 6,619 $ 5,683 $ 5,012 $ 4,347 $ 1,582
========= ========= ========= ========= ========= ========= =========
PER SHARE DATA(1)
Net income per share - basic ........... $ 0.41 $ 0.33 $ 1.46 $ 1.25 $ 1.11 $ 0.96 $ 0.35
Net income per share - diluted ......... 0.40 0.32 1.43 1.22 1.08 0.95 0.35
Cash dividends declared ................ 0.13 0.1133 0.45 0.40 0.35 0.29 0.23
Period end stated book value ........... 9.85 9.08 9.65 8.94 8.11 7.34 6.70
Period end tangible book value ......... 8.72 7.83 8.50 7.65 6.68 6.06 5.30
BALANCE SHEET DATA (AT PERIOD END)
Total assets ........................... $ 591,155 $ 505,862 $ 559,447 $ 491,838 $ 402,669 $ 335,450 $ 321,739
Loans .................................. 442,728 368,511 419,163 358,334 280,513 223,032 211,522
Allowance for loan losses .............. 6,313 5,671 6,078 5,504 4,779 4,726 4,587
Deposits ............................... 500,724 439,466 480,023 440,266 361,224 297,861 287,715
Borrowed funds ......................... 40,000 20,000 30,000 6,000 -- -- --
Total shareholders' equity ............. 44,547 41,036 43,942 40,494 36,765 33,232 30,277
PERFORMANCE RATIOS
Return on average assets(2) ............ 1.33% 1.22% 1.29% 1.28% 1.39% 1.33% 0.53%
Return on average equity(2) ............ 16.50% 14.51% 15.56% 14.59% 14.31% 13.63% 5.19%
Net interest income (taxable-
equivalent)/average earning
assets(2) ............................ 5.03% 4.97% 5.01% 5.24% 5.65% 5.45% 5.50%
Shareholders' equity to total
assets................................ 7.54% 8.11% 7.85% 8.23% 9.13% 9.91% 9.41%
CAPITAL RATIOS
Tier I risk-based capital .............. 9.32% 9.71% 9.66% 9.63% 10.85% 12.21% 11.15%
Total risk based capital ............... 10.44% 10.83% 10.78% 10.75% 11.95% 13.30% 12.25%
Leverage ............................... 7.38% 7.34% 7.30% 7.37% 7.93% 8.32% 7.82%
ASSET QUALITY RATIOS
Allowance/gross loans .................. 1.43% 1.54% 1.45% 1.54% 1.70% 2.12% 2.17%
Nonperforming loans/total loans ........ 0.15% 0.23% 0.20% 0.24% 0.46% 0.98% 0.61%
Nonperforming assets/total assets ...... 0.27% 0.27% 0.31% 0.28% 0.46% 0.82% 0.84%
Net charge-offs/average loans(2) ....... 0.07% 0.04% 0.09% 0.08% 0.21% 0.09% 0.79%
</TABLE>
- ---------------------
(1) All per share data reflects a 3-for-2 stock split declared in the third
quarter of 1999 and a 2-for-1 stock split declared in the third quarter
of 1996.
(2) March 31, 2000 and 1999 amounts have been annualized.
10
<PAGE> 24
FIRST SAVINGS SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
March 31, Years Ended June 30,
---------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income ..................... $ 17,480 $ 16,243 $ 21,765 $ 22,543 $ 20,058 $ 18,550 $ 17,438
Interest expense .................... 8,580 7,654 10,274 11,083 9,782 9,215 8,140
Net interest income ................. 8,900 8,589 11,491 11,460 10,276 9,335 9,298
Provision for loan losses ........... -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
provision for loan losses ......... 8,900 8,589 11,491 11,460 10,276 9,335 9,298
Noninterest income .................. 445 556 721 616 425 364 7
Noninterest expense ................. 2,981 3,029 4,066 3,758 4,637 3,693 3,584
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes .......... 6,364 6,116 8,146 8,318 6,064 6,006 5,721
Income taxes ........................ 2,287 2,250 2,985 3,060 2,155 2,085 1,948
--------- --------- --------- --------- --------- --------- ---------
Net income .......................... $ 4,077 $ 3,866 $ 5,161 $ 5,258 $ 3,909 $ 3,921 $ 3,773
========= ========= ========= ========= ========= ========= =========
PER SHARE DATA
Net income per share - basic ........ $ 1.17 $ 1.05 $ 1.42 $ 1.42 $ 1.05 $ 1.05 $ 1.01
Net income per share - diluted ...... 1.12 0.97 1.32 1.30 0.98 0.98 0.95
Cash dividends declared ............. 0.78 0.75 1.01 0.94 0.74 0.64 0.60
Period end stated book value ........ 18.09 18.41 18.33 18.73 18.26 17.85 17.50
Period end tangible book value ...... 18.09 18.41 18.33 18.73 18.26 17.85 17.50
BALANCE SHEET DATA (AT PERIOD END)
Total assets ........................ $ 327,335 $ 294,197 $ 313,233 $ 304,168 $ 294,217 $ 256,986 $ 251,787
Loans ............................... 230,361 206,617 209,274 208,690 192,842 178,040 160,386
Allowance for loan losses ........... 595 596 596 596 604 609 609
Deposits ............................ 230,668 226,147 226,651 211,925 204,317 187,424 183,080
Borrowed funds ...................... 30,500 -- 20,000 20,000 20,000 422 543
Total shareholders' equity .......... 63,697 65,726 64,228 69,521 67,195 66,811 65,511
PERFORMANCE RATIOS
Return on average assets (1) ........ 1.68% 1.74% 1.73% 1.76% 1.45% 1.53% 1.52%
Return on average equity (1) ........ 8.54% 7.51% 7.61% 7.68% 5.85% 5.86% 5.94%
Net interest income (taxable-
equivalent)/average earning
assets (1) ........................ 3.80% 3.98% 3.97% 3.92% 3.88% 3.74% 3.82%
Shareholders' equity to total
assets ............................ 19.46% 22.34% 20.50% 22.86% 22.84% 26.00% 26.02%
CAPITAL RATIOS
Tier I risk-based capital ........... 37.62% 43.53% 41.34% 48.25% 51.68% 60.02% 72.13%
Total risk based capital ............ 37.97% 43.93% 41.73% 48.67% 52.15% 60.57% 72.80%
Leverage ............................ 19.64% 22.57% 20.86% 23.05% 24.71% 26.13% 26.21%
ASSET QUALITY RATIOS
Allowance/gross loans ............... 0.26% 0.29% 0.29% 0.29% 0.31% 0.34% 0.38%
Nonperforming loans/total loans ..... 0.34% 0.23% 0.15% 0.26% 0.13% 0.08% 0.17%
Nonperforming assets/total assets ... 0.27% 0.18% 0.10% 0.18% 0.08% 0.05% 0.11%
Net charge-offs/average loans(1)..... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
- ---------------------
(1) March 31, 2000 and 1999 amounts have been annualized.
11
<PAGE> 25
Section 1.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows certain comparative per share data relating
to net income, cash dividends, and book value. The equivalent pro forma
information is based on an exchange ratio of shares of First Bancorp common
stock for shares of First Savings common stock in the merger of 1.2468. The pro
forma information gives effect to the merger as though it was completed as of
the end of the periods stated.
The pro forma and equivalent pro forma data is presented for your
information only. It does not necessarily indicate the results of operations or
combined financial position that would have resulted had First Bancorp and First
Savings completed the merger at the times indicated, and it does not necessarily
indicate future results of operations or the combined financial position of
First Bancorp after the merger.
You should read the information shown below in conjunction with the
historical consolidated financial statements of First Bancorp and First Savings
(and notes to them) and related financial information appearing elsewhere in
this joint proxy statement/prospectus and the documents delivered with it and
incorporated by reference in this document. See "-- Selected Financial Data"
above, and "ADDITIONAL INFORMATION."
FIRST BANCORP AND FIRST SAVINGS
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three Months
Ended Years Ended December 31,
March 31, ------------------------------
2000 1999 1998 1997
------------ -------- -------- --------
<S> <C> <C> <C> <C>
NET INCOME PER SHARE
First Bancorp - Historical
Basic ................................. $ 0.41 $ 1.46 $ 1.25 $ 1.11
Diluted ............................... 0.40 1.43 1.22 1.08
First Bancorp - Pro forma, combined
Basic ................................. 0.37 1.32 1.20 1.10
Diluted ............................... 0.36 1.27 1.13 1.05
First Savings - Historical (1)
Basic ................................. 0.40 1.47 1.43 1.36
Diluted ............................... 0.39 1.38 1.32 1.26
First Savings - Pro forma equivalent (2)
Basic ................................. 0.46 1.65 1.50 1.37
Diluted ............................... 0.45 1.58 1.41 1.31
CASH DIVIDENDS PER SHARE
First Bancorp - Historical ................. $ 0.13 $ 0.45 $ 0.40 $ 0.35
First Bancorp - Pro forma (3) .............. 0.17 0.64 0.60 0.51
First Savings - Historical ................. 0.26 1.03 1.00 0.84
First Savings - Pro forma equivalent (2) (3) 0.21 0.80 0.75 0.64
BOOK VALUE - AT PERIOD END
First Bancorp - Historical ................. $ 9.85 $ 9.65 $ 8.94 $ 8.11
First Bancorp - Pro forma .................. 11.87 12.09 12.02 11.51
First Savings - Historical ................. 18.09 18.29 18.75 18.51
First Savings - Pro forma equivalent (2) ... 14.80 15.07 14.99 14.35
</TABLE>
- ----------------------
(1) Converted from a fiscal year end of June 30 to First Bancorp's calendar
year end of December 31.
(2) The equivalent pro forma per share data for First Savings are computed
by multiplying First Bancorp's pro forma information by the exchange
ratio of 1.2468. Such exchange ratio, however, may increase if the
average
12
<PAGE> 26
price of First Bancorp common stock is less than $16 during the 20-day
trading period ending on June 23, 2000 and certain other conditions are
satisfied. See "DESCRIPTION OF TRANSACTION -- What First Savings
Shareholders Will Receive in the Merger."
(3) First Bancorp's pro forma cash dividend per share has been computed by
combining the historical cash dividends declared by First Bancorp and
First Savings, and dividing by the pro forma shares outstanding of
First Bancorp for the periods presented. Subsequent to the completion
of the merger, First Bancorp plans to more closely align the dividend
policy of the two separate companies. Accordingly, First Bancorp
expects the annualized dividend rate immediately after completion of
the merger to be $0.88 per share. This is the equivalent of $1.10 per
share of First Savings common stock, assuming an exchange ratio of
1.2468. See Note 2 above and "DESCRIPTION OF TRANSACTION -- Management
and Operations after the Merger; Dividend Policy."
SELECTED PRO FORMA FINANCIAL DATA
The following selected pro forma financial data for the three-month
periods ended March 31, 2000 and March 31, 1999 and for the five-year period
ended December 31, 1999 give effect to the merger as of the date or at the
beginning of the periods indicated, with the merger treated as a
pooling-of-interests for accounting purposes. The pro forma balance sheet data
at March 31, 2000 reflects preliminary estimates by First Bancorp of
merger-related charges to be incurred in connection with consummation of the
merger; however, the pro forma income statement does not reflect the estimated
merger-related charges. The selected pro forma financial data include historical
operating results of First Savings on a calendar-year basis rather than on a
June 30 fiscal-year basis as previously reported. Such calendar year financial
data for First Savings has not been audited. The selected pro forma financial
data are presented for informational purposes only and are not necessarily
indicative of the consolidated financial position or results of operations that
actually would have occurred if the merger had been consummated at the date or
at the beginning of the periods indicated or that may be obtained in the future.
The information shown below should be read with the historical
consolidated financial statements of First Bancorp and First Savings, including
their respective notes, delivered together with this joint proxy
statement/prospectus and incorporated by reference in this document, and the
unaudited pro forma financial information appearing elsewhere in this joint
proxy statement/prospectus.
13
<PAGE> 27
SELECTED PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31, Years Ended December 31,
---------------------- -------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Interest income ....................... $ 16,937 $ 14,414 $ 61,591 $ 57,612 $ 50,858 $ 44,444 $ 41,236
Interest expense ...................... 7,543 6,126 26,488 25,070 21,835 19,137 17,918
--------- --------- --------- --------- --------- --------- ---------
Net interest income ................... 9,394 8,288 35,103 32,542 29,023 25,307 23,318
Provision for loan losses ............. 310 200 910 990 575 325 900
--------- --------- --------- --------- --------- --------- ---------
Net interest income after
Provision for loan losses ...... 9,084 8,088 34,193 31,552 28,448 24,982 22,418
Noninterest income .................... 1,517 1,494 5,781 5,375 4,653 4,834 3,855
Noninterest expense ................... 5,666 5,308 21,886 19,822 17,631 17,952 18,493
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes ............ 4,935 4,274 18,088 17,105 15,470 11,864 7,780
Income taxes .......................... 1,697 1,537 6,234 6,132 5,448 4,046 2,503
--------- --------- --------- --------- --------- --------- ---------
Net income ............................ $ 3,238 $ 2,737 $ 11,854 $ 10,973 $ 10,022 $ 7,818 $ 5,277
========= ========= ========= ========= ========= ========= =========
PER SHARE DATA (1)
Net income per share -- basic ........ $ 0.37 $ 0.30 $ 1.32 $ 1.20 $ 1.10 $ 0.86 $ 0.57
Net income per share -- diluted ....... 0.36 0.29 1.27 1.13 1.05 0.82 0.56
Cash dividends declared (2) ........... 0.17 0.16 0.64 0.60 0.51 0.45 0.37
Period end stated book value .......... 11.87 11.90 12.09 12.02 11.51 10.93 10.61
Period end tangible book value ........ 11.29 11.27 11.50 11.38 10.80 10.29 9.92
BALANCE SHEET DATA (AT PERIOD END)
Total assets .......................... $ 918,490 $ 800,059 $ 889,531 $ 779,639 $ 703,485 $ 601,338 $ 579,647
Loans ................................. 673,089 575,128 643,224 567,224 481,525 408,241 381,833
Allowance for loan losses ............. 6,908 6,267 6,674 6,100 5,383 5,335 5,196
Deposits .............................. 731,392 665,613 712,139 656,148 571,132 494,560 473,212
Borrowed funds ........................ 70,500 20,000 62,500 6,000 20,000 -- --
Total shareholders' equity ............ 105,744 106,762 106,980 109,989 105,258 99,730 97,484
PERFORMANCE RATIOS
Return on average assets (3) .......... 1.47% 1.42% 1.44% 1.48% 1.55% 1.33% 0.96%
Return on average equity (3) .......... 12.01% 10.20% 11.00% 10.14% 9.79% 7.91% 5.52%
Net interest income (taxable-
equivalent)/average earning
assets (3) .......................... 4.57% 4.62% 4.57% 4.73% 4.88% 4.74% 4.68%
Shareholders' equity to total assets .. 11.51% 13.34% 12.03% 14.11% 14.96% 16.58% 16.82%
CAPITAL RATIOS
Tier I risk-based capital ............. 16.93% 19.59% 17.89% 20.53% 23.67% 27.36% 28.50%
Total risk based capital .............. 17.77% 20.41% 18.71% 21.35% 24.44% 28.13% 29.29%
Leverage .............................. 11.70% 13.06% 11.89% 13.63% 14.50% 15.78% 16.10%
ASSET QUALITY RATIOS
Allowance/gross loans ................. 1.03% 1.09% 1.04% 1.08% 1.12% 1.31% 1.36%
Nonperforming loans/total loans ....... 0.22% 0.24% 0.26% 0.34% 0.39% 0.59% 0.41%
Nonperforming assets/total assets ..... 0.27% 0.24% 0.29% 0.31% 0.35% 0.50% 0.51%
Net charge-offs/average loans(3) ...... 0.05% 0.02% 0.06% 0.05% 0.12% 0.05% 0.43%
</TABLE>
- ---------------------
(1) All per share data reflects a 3-for-2 stock split declared by First
Bancorp in the third quarter of 1999 and a 2-for-1 stock split declared
by First Bancorp in the third quarter of 1996.
(2) See note (3) on page 13.
(3) March 31, 2000 and March 31, 1999 amounts have been annualized.
14
<PAGE> 28
RISK FACTORS
Upon completion of the merger, First Savings shareholders will receive
shares of First Bancorp common stock in exchange for their shares of First
Savings common stock. First Savings shareholders should be aware of and consider
particular risks and uncertainties that are applicable to the merger.
The merger involves the combination of two bank holding companies and
their respective subsidiaries that have previously operated independently. A
successful combination of their operations will depend substantially on First
Bancorp's ability to consolidate operations, systems and procedures and to
eliminate redundancies and costs. First Bancorp may not be able to combine the
operations of First Savings without encountering difficulties, such as:
- the loss of key employees and customers;
- the disruption of operations and business;
- deposit attrition, customer loss or revenue loss;
- possible inconsistencies in standards, control procedures and
policies;
- unexpected problems with costs, operations, personnel,
technology or credit;
- failure to realize the cost savings anticipated from the
merger;
- problems with the assimilation of new operations, sites and
personnel, which could divert resources from regular banking
operations; and
- failure of regulatory authorities to approve the merger of the
banking subsidiaries of First Savings and First Bancorp.
Further, although First Bancorp anticipates cost savings as a result of
the merger to be meaningful, it may not be able to realize any of the potential
cost savings expected. Finally, any cost savings may be offset by losses in
revenues or other changes to earnings.
Additionally, there are risks and uncertainties relating to an
investment in First Bancorp common stock or to economic conditions generally
that should affect other financial institutions in similar ways. These aspects
are discussed under the heading "A WARNING ABOUT FORWARD-LOOKING STATEMENTS."
15
<PAGE> 29
SHAREHOLDER MEETINGS
DATE, PLACE, TIME AND PURPOSE
FIRST SAVINGS. First Savings is furnishing this joint proxy
statement/prospectus to the holders of First Savings common stock in connection
with a proxy solicitation by the First Savings board of directors, which will
use the proxies at a special meeting of First Savings shareholders to be held at
the Holiday Inn, U.S. Highway 1 By-Pass, Southern Pines, North Carolina, at 4:00
p.m., local time, on June 26, 2000.
At this meeting, holders of First Savings common stock will be asked
to:
- vote on a proposal to approve the merger agreement and related
plan of merger, which are attached to this joint proxy
statement/prospectus as Appendix A; and
- transact such other business as may properly come before the
special meeting, or any adjournments or postponements of such
meeting.
First Savings' board of directors is not aware of any other business to
be considered at the special meeting.
Under the merger agreement and plan of merger, the First Savings
shareholders will be entitled to receive 1.2468 shares of common stock of First
Bancorp common stock for each share of common stock of First Savings owned as of
the date of completion of the merger (subject to possible adjustment under
limited circumstances, as described in "DESCRIPTION OF TRANSACTION -- What First
Savings Shareholders Will Receive in the Merger").
FIRST BANCORP. First Bancorp is furnishing this joint proxy
statement/prospectus to the holders of First Bancorp common stock in connection
with a proxy solicitation by the First Bancorp board of directors, which will
use the proxies at a special and annual meeting of First Bancorp shareholders to
be held at the main office of First Bancorp, 341 North Main Street, Troy, North
Carolina 27371, at 3:00 p.m., local time, on June 27, 2000.
At this meeting, holders of First Bancorp common stock will be asked
to:
- approve the merger agreement and related plan of merger;
- approve the issuance of shares of First Bancorp common stock
in connection with the merger;
- approve an amendment to the bylaws of First Bancorp to
increase the maximum number of directors on the First Bancorp
board to 18 (and to change the method by which the number of
directors is fixed);
- elect 18 directors to serve as such until the next annual
meeting of shareholders and until their successors are elected
and qualified (seven of which will be additional directors who
currently are serving as directors of First Savings);
- ratify KPMG LLP as the independent auditors of First Bancorp
for the current fiscal year ending December 31, 2000; and
- transact such other business as may properly come before the
special and annual meeting, or any adjournments or
postponements of the meeting.
First Bancorp's board of directors is not aware of any other business
to be considered at the meeting. The increase in the maximum number of directors
and the election of such additional directors, however, are conditional upon the
completion of the merger.
16
<PAGE> 30
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE AND REVOCABILITY OF PROXIES
FIRST SAVINGS. The First Savings board of directors fixed the close of
business on May 11, 2000 as the record date for determining the First Savings
shareholders entitled to notice of and to vote at the special meeting of First
Savings shareholders. Only holders of First Savings common stock of record on
the books of First Savings at the close of business on May 11, 2000 have the
right to receive notice of and to vote at such special meeting. On the record
date, there were 3,526,157 shares of First Savings common stock issued and
outstanding held by approximately 944 holders of record. At the special meeting,
First Savings shareholders will have one vote for each share of First Savings
common stock owned on the record date.
A quorum of shareholders is required to hold the special meeting. A
quorum will exist when the holders of a majority of the outstanding shares of
First Savings common stock entitled to vote on a matter are present at the
meeting. To determine whether a quorum is present, First Savings will count all
shares of First Savings common stock present at the special meeting either in
person or by proxy, whether or not such shares are voted for any matter.
Approval of the merger agreement and related plan of merger will
require the affirmative vote of the holders of a majority of the outstanding
shares of First Savings common stock.
Brokers who hold shares in street name for customers who are the
beneficial owners of such shares may not give a proxy to vote those shares
without specific instructions from their customers. Any abstention, nonvoting
share or "broker non-vote" will have the same effect as a vote AGAINST approval
of the merger.
Properly executed proxies that First Savings receives before the vote
at the First Savings special meeting that are not revoked will be voted in
accordance with the instructions indicated on the proxies. If no instructions
are indicated, such proxies will be voted FOR the proposal to approve the merger
agreement and the related plan of merger, and the proxy holder may vote the
proxy in its discretion as to any other matter that may come properly before the
special meeting. If necessary, the proxy holder may vote in favor of a proposal
to adjourn the special meeting in order to permit further solicitation of
proxies if there are not sufficient votes to approve the proposal at the time of
the special meeting. No proxy holder, however, will vote a proxy in favor of a
proposal to adjourn the special meeting if that proxy instructed a vote against
approval of the merger.
A shareholder of First Savings who has given a proxy may revoke it at
any time prior to its exercise at the First Savings special meeting by (1)
giving written notice of revocation to the Corporate Secretary of First Savings,
(2) properly submitting to First Savings a duly executed proxy bearing a later
date, or (3) attending the First Savings special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of proxies should be sent to: First Savings Bancorp, Inc., Post
Office Box 1657, 205 S.E. Broad Street, Southern Pines, North Carolina
28388-1657, Attention: William A. Roberts, Corporate Secretary.
On the First Savings record date, First Savings' directors and
executive officers, including their immediate family members and affiliated
entities, owned or had or shared voting power over 398,627 shares or
approximately 11.3% of the outstanding shares of First Savings common stock, or
approximately 22.6% of the shares required to approve the merger. This number
does not include shares subject to options to purchase First Savings common
stock. It is expected that the directors and executive officers of First Savings
will vote their shares in favor of the merger.
On First Savings' record date, Lee C. McLaurin, an executive officer of
First Bancorp, owned 2,000 shares of First Savings common stock, and First
Bancorp Financial Services, Inc., a wholly owned subsidiary of First Bancorp,
owned 200 shares of First Savings common stock.
On such record date, neither First Bancorp or its subsidiaries nor
First Savings or its subsidiaries owned any other shares of First Savings common
stock other than in a fiduciary capacity for others or as a result of debts
previously contracted.
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FIRST BANCORP. First Bancorp's board of directors fixed the close of
business on May 11, 2000, as the First Bancorp record date for determining those
First Bancorp shareholders who are entitled to notice of and to vote at the
First Bancorp special and annual meeting. Only holders of First Bancorp common
stock of record on the books of First Bancorp at the close of business on May
11, 2000 have the right to receive notice of and to vote at the First Bancorp
special and annual meeting. On the First Bancorp record date, there were
4,506,651 shares of First Bancorp common stock issued and outstanding held by
approximately 1,023 holders of record.
At the First Bancorp special and annual meeting, First Bancorp
shareholders will have one vote for each share of First Bancorp common stock
owned on the First Bancorp record date, except that First Bancorp shareholders
may invoke cumulative voting for the election of directors. See "EFFECT OF THE
MERGER ON RIGHTS OF SHAREHOLDERS -- Election of Directors."
A quorum of shareholders is required to hold the special and annual
meeting. A quorum will exist when the holders of a majority of the outstanding
shares of First Bancorp common stock entitled to vote on a matter are present at
the meeting. To determine if a quorum is present, First Bancorp will count all
shares of First Bancorp common stock present at the special and annual meeting,
either in person or by proxy, whether or not such shares are voted for any
matter.
Approval of the merger agreement and related plan of merger will
require the affirmative vote of the holders of a majority of the outstanding
shares of First Bancorp common stock. Approval of the issuance of shares of
First Bancorp common stock in connection with the merger and the other matters
listed above to be considered at the special and annual meeting of First Bancorp
shareholders (other than election of directors) will require the affirmative
vote of the holders of a majority of the shares voted at the meeting with
respect to these matters, either in person or by proxy. First Bancorp
shareholders may demand that directors be elected by cumulative voting. Whether
or not cumulative voting is invoked by the First Bancorp shareholders, the
nominees for director that receive the highest number of votes at the meeting
will be elected. See "EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS -- Election
of Directors."
Brokers who hold shares in street name for customers who are the
beneficial owners of such shares may not give a proxy to vote those shares
without specific instructions from their customers. Any abstention, nonvoting
share or "broker non-vote" will have the same effect as a vote AGAINST approval
of the merger, but will have no direct effect on the issuance of shares pursuant
to the merger agreement, the bylaw amendment to increase the maximum number of
directors on the First Bancorp board, the election of directors or ratification
of First Bancorp's appointment of its independent auditors for the fiscal year
ending December 31, 2000.
Properly executed proxies that First Bancorp receives before the vote
at the First Bancorp special and annual meeting that are not revoked will be
voted in accordance with the instructions indicated on the proxies. If no
instructions are indicated, such proxies will be voted FOR the proposals to
approve the merger, the issuance of the shares of First Bancorp common stock in
connection with the merger, and the other matters listed above to be considered
at the special and annual meeting of First Bancorp shareholders. Additionally,
the proxy holder may vote the proxy in its discretion as to any other matter
that may come properly before the First Bancorp special and annual meeting. If
necessary, the proxy holder may vote in favor of a proposal to adjourn the First
Bancorp special and annual meeting in order to permit further solicitation of
proxies if there are not sufficient votes to approve the proposal at the time of
the First Bancorp special and annual meeting. No proxy holder, however, will
vote a proxy in favor of a proposal to adjourn the meeting if that proxy
instructed a vote against approval of the merger or the issuance of shares of
First Bancorp common stock in connection with the merger.
A First Bancorp shareholder who has given a proxy may revoke it at any
time prior to its exercise at the First Bancorp special and annual meeting by
(1) giving written notice of revocation to the Secretary of First Bancorp, (2)
properly submitting to First Bancorp a duly executed proxy bearing a later date,
or (3) attending the First Bancorp special and annual meeting and voting in
person. All written notices of revocation and other communications with respect
to revocation of proxies should be sent to: First Bancorp, Post Office Box 508,
341 North Main Street, Troy, North Carolina 27371-0508, Attention: Anna G.
Hollers, Secretary.
On the First Bancorp record date, First Bancorp's directors and
executive officers, including their immediate family members and affiliated
entities owned 1,384,663 shares or approximately 30.7% of the
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outstanding shares of First Bancorp common stock. This number does not include
shares subject to options to purchase First Bancorp common stock. It is expected
that the directors and executive officers of First Bancorp will vote their
shares in favor of the merger agreement and related plan of merger, the issuance
of additional shares of First Bancorp common stock in connection with the
merger, and the other matters listed above to be considered at the special and
annual meeting of First Bancorp shareholders.
On such record date, no officers or directors of First Savings owned
any shares of First Bancorp common stock. On such record date, neither First
Bancorp and its subsidiaries nor First Savings and its subsidiaries owned any
shares of First Bancorp common stock other than in a fiduciary capacity for
others with respect to which it has sole or shared voting power.
SOLICITATION OF PROXIES
Directors, officers, employees, and agents of First Savings and First
Bancorp may solicit proxies by mail, in person, or by telephone or telegraph.
They will receive no additional compensation for such services. First Savings
has also engaged Regan & Associates, Inc. to consult with First Savings and to
assist in the delivery of proxy materials and solicitation of proxy votes. For
these services, First Savings expects to pay Regan $6,250 if the merger is
approved by First Savings shareholders. If the merger is not approved by First
Savings shareholders, Regan will receive no payment other than reimbursement of
its expenses. First Bancorp also may hire a professional proxy solicitor who
will receive a fee for its services. First Savings and First Bancorp also may
make arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of their common stock held of record by such persons. Each of
First Savings and First Bancorp will reimburse any such brokers, custodians,
nominees, and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection with the services provided to it. Each of First Savings and
First Bancorp will pay its own expenses incurred in connection with the merger.
See "DESCRIPTION OF TRANSACTION - Expenses and Fees."
NO DISSENTERS' RIGHTS
Neither First Savings shareholders nor First Bancorp shareholders have
dissenters' rights with respect to the matters listed above to be considered at
their respective shareholder meetings.
RECOMMENDATIONS
FIRST SAVINGS. FIRST SAVINGS' BOARD OF DIRECTORS HAS APPROVED THE
MERGER AGREEMENT AND RELATED PLAN OF MERGER, AND IT BELIEVES THAT COMPLETION OF
THE MERGER IS IN THE BEST INTERESTS OF FIRST SAVINGS AND ITS SHAREHOLDERS. FIRST
SAVINGS' BOARD OF DIRECTORS RECOMMENDS THAT ITS SHAREHOLDERS VOTE FOR APPROVAL
OF THE MERGER AGREEMENT AND THE RELATED PLAN OF MERGER.
FIRST BANCORP. FIRST BANCORP'S BOARD OF DIRECTORS HAS APPROVED THE
MERGER AGREEMENT AND RELATED PLAN OF MERGER, THE ISSUANCE OF SHARES OF FIRST
BANCORP COMMON STOCK IN CONNECTION WITH THE MERGER, AND THE OTHER MATTERS LISTED
ABOVE TO BE CONSIDERED AT THE SPECIAL AND ANNUAL MEETING OF FIRST BANCORP
SHAREHOLDERS. THE FIRST BANCORP BOARD BELIEVES THAT COMPLETION OF THE MERGER IS
IN THE BEST INTERESTS OF FIRST BANCORP AND ITS SHAREHOLDERS. FIRST BANCORP'S
BOARD OF DIRECTORS RECOMMENDS THAT ITS SHAREHOLDERS VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AND THE RELATED PLAN OF MERGER, THE ISSUANCE OF SHARES OF FIRST
BANCORP COMMON STOCK IN CONNECTION WITH THE MERGER, THE BYLAW AMENDMENT TO
INCREASE THE MAXIMUM NUMBER OF DIRECTORS ON THE FIRST BANCORP BOARD TO 18, THE
ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS AND RATIFICATION OF FIRST
BANCORP'S APPOINTMENT OF KPMG LLP AS ITS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000.
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DESCRIPTION OF TRANSACTION
The following information describes material aspects of the merger.
This description is not a complete description of all the terms and conditions
of the merger agreement. This description is qualified in its entirety by the
Appendices attached to this joint proxy statement/prospectus, including the
merger agreement and related plan of merger, which are attached as Appendix A
and incorporated into this document by reference. You are urged to read the
Appendices in their entirety.
THE MERGER
First Savings will be acquired by and merged into First Bancorp, with
First Bancorp being the surviving corporation, which merger shall be completed
pursuant to the merger agreement and related plan of merger.
WHAT FIRST SAVINGS SHAREHOLDERS WILL RECEIVE IN THE MERGER
Upon completion of the merger, each First Savings shareholder will
receive 1.2468 shares of First Bancorp common stock for each share of First
Savings common stock held by such shareholder on the date the merger is
completed (subject to adjustment under limited circumstances, as described
below).
No fractional shares of First Bancorp common stock will be issued.
Instead, cash (without interest) will be paid in lieu of any fractional share to
which any First Savings shareholder would be entitled upon completion of the
merger in an amount equal to such shareholder's fractional interest multiplied
by the closing price of such common stock on the Nasdaq National Market System
on the last trading day preceding the effective date of the merger.
Under certain limited circumstances described below, the 1.2468
exchange ratio could be increased pursuant to certain provisions of the merger
agreement. Under no circumstances will the exchange ratio be less than 1.2468
shares of First Bancorp common stock for each share of First Savings common
stock. An adjustment will occur only if First Savings' board of directors
terminates the merger agreement pursuant to the provisions described below, and
if First Bancorp then chooses to avoid termination of the merger agreement by
increasing the exchange ratio as described below.
First Savings may terminate the merger agreement if its board of
directors determines to terminate and:
- the average closing price (as defined below) of First Bancorp
common stock is less than $16 for the 20-trading day period
(the "measurement period") ending on June 23, 2000; and
- the percentage (the "First Bancorp stock percentage change")
by which the average closing price of the First Bancorp common
stock during the measurement period is lower than $18 exceeds
by more than 11 percentage points the percentage (the "index
percentage change") by which the average closing price of the
SNL index (as defined below) during the measurement period is
lower than the average closing price of the SNL index on
December 14, 1999.
(Examples: If the average closing price of the SNL index has
declined by 5%, the average closing price of First Bancorp
common stock during the measurement period must be more than
16% lower than $18; if the average closing price of the SNL
index has declined by 10%, the average closing price of First
Bancorp common stock during the measurement period must be
more than 21% lower than $18);
provided, however, that:
- in such case, First Bancorp has the right to adjust the
exchange ratio of First Bancorp common stock for First Savings
common stock so that the product of the number of shares of
the First Bancorp common stock issued for each share of First
Savings common stock multiplied by the average closing
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price of First Bancorp common stock for the measurement period
will equal the lesser of (a) $19.9488 (i.e. $16 x 1.2468) and
(b) an amount equal to the product of $22.4424 (i.e. $18 x
1.2468), multiplied by the sum of (x) 100%, minus (y) the
index percentage change, minus (z) 11 percentage points, in
which case First Savings does not have the right to terminate
the merger agreement and the merger; or
- in the case that the average closing price of First Bancorp
common stock during the measurement period is below $14.69 per
share, but there is no termination right by First Savings
under the above provisions because the difference between the
First Bancorp stock percentage change and the index percentage
change is 11 percentage points or less, then First Savings
shall have the right to terminate the merger agreement and the
merger unless First Bancorp elects to adjust the exchange
ratio so that the product of the number of shares of First
Bancorp common stock issued for each such share of First
Savings common stock multiplied by the average closing price
of First Bancorp common stock during the measurement period
will equal $18.31549 (i.e. $14.69 x 1.2468).
For purposes of the adjustment provisions described above,
- "average closing price" means with respect to First Bancorp
common stock, the average of the daily closing sales price for
such stock on the Nasdaq National Market System during the
specified period and, with respect to the SNL index for a
specified day or during a specified period, the average of the
daily closing prices of the stocks contained in such SNL index
on the primary exchange or in the primary market on which each
such stock trades, all as reported by The Wall Street Journal;
and
- "SNL index" means the SNL Nationwide Bank Index ($500 million
to $1 billion), an index of stocks of banks or bank holding
companies with assets from $500 million to $1 billion
published by SNL Securities LP, a research and publishing
company located in Charlottesville, Virginia.
The actual market value of a share of First Bancorp common stock at the
effective time of the merger and at the time stock certificates for those shares
are delivered following surrender and exchange of stock certificates for shares
of First Savings common stock may be more or less than the average closing price
during the measurement period. First Savings shareholders are urged to obtain
current market prices for First Bancorp common stock.
The above description is adapted from the provisions contained in
Section 10.1(f) of the merger agreement, which is attached to this joint proxy
statement/prospectus as Appendix A.
EFFECT OF THE MERGER ON FIRST SAVINGS OPTIONS
First Savings' directors and several of its employees hold options to
purchase shares of First Savings common stock. All of these options were issued
in 1994, except for those options held by directors Virginia C. Brandt and
Felton J. Capel, who were granted options after they became directors in 1998.
When the merger becomes effective, each outstanding option or other right to
purchase First Savings common stock granted under First Savings' stock option
plans will become an option to purchase First Bancorp common stock. First
Bancorp will assume each option in accordance with the terms of First Savings'
stock option plans or other agreements that evidence the options and will
deliver First Bancorp common stock upon the exercise of each option. All First
Savings options not already exercisable have or will become vested,
non-forfeitable and exercisable as a result of the proposed merger and the
change-in-control provisions in the First Savings stock options plans.
After the merger becomes effective:
- First Bancorp and the compensation committee of its board of
directors will be substituted for First Savings and the
compensation committee of First Savings' board of directors
administering the First Savings stock option plans;
- each option assumed by First Bancorp may be exercised only for
shares of First Bancorp common stock;
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- the number of shares of First Bancorp common stock subject to
the converted First Savings options will be equal to the
number of shares of First Savings common stock subject to the
options immediately before the merger became effective
multiplied by the exchange ratio, rounded up to the next
highest share; and
- the per share exercise price under each converted First
Savings option will be adjusted by dividing the exercise price
immediately before the merger by the exchange ratio and
rounding down to the nearest cent.
Notwithstanding the above, each First Savings option that is an
"incentive stock option" will be adjusted as required by Section 424 of the
Internal Revenue Code of 1986, as amended, and the related regulations, so that
the conversion will not constitute a modification, extension or renewal of the
option, within the meaning of Section 424(h) of the Internal Revenue Code.
For information with respect to stock options held by First Savings'
management, see "-- Interests of Certain Persons in the Merger."
BACKGROUND OF THE MERGER
Since the conversion of First Savings Bank of Moore County from a
mutual to stock form of organization in 1994, First Savings has explored various
strategies to enhance shareholder value. As a result of the excess capital it
was required to raise in connection with the conversion, First Savings' board
has faced difficulties meeting shareholder expectations. Excess capital makes it
more difficult for a company to produce a competitive return on shareholder
equity. Since the time of the 1994 mutual to stock conversion, First Savings'
board has sought advice from Trident Securities ("Trident"), its financial
advisor, regarding, among other things, how best to utilize its equity. Trident
is an experienced advisor to banks and savings associations.
First Savings considered several alternatives, including share
repurchases, return of capital dividends and acquisitions. While share
repurchases have been made periodically, this strategy has not been pursued
aggressively due to the high trading price of First Savings common stock since
its initial public offering and the relative illiquidity of the stock in the
trading market. Tax laws have prevented First Savings from paying dividends
treated as nontaxable returns of capital. Likewise, First Savings was
unsuccessful in its attempts to acquire other financial institutions. Inquiries
resulted in a determination that most of First Savings' logical acquisition
targets would merge only with commercial banks possessing more diversified
product lines and offering merger consideration with greater liquidity, a higher
trading multiple and stronger growth prospects than First Savings.
First Savings explored the possible sale of the company in the spring
of 1998. At the time, First Savings requested Trident to contact six potential
acquirers to gauge their interest in acquiring First Savings. The process
yielded two interested parties and, ultimately, one party was selected with
which to pursue possible merger negotiations. Following weeks of negotiations,
the board, after careful evaluation of the offer, terminated discussions with
such party because its final offer was at or below First Savings' trading price
at that time.
First Savings' board continued to monitor the effectiveness of its
business strategy and the operating environment for thrifts and the financial
services sector as a whole. The board was concerned that remaining a traditional
thrift institution, making primarily single family mortgage loans which were
funded primarily by certificates of deposits, would not materially improve
shareholder value. First Savings had experienced relatively flat stock
performance since 1995 - a period during which the stocks of commercial banks in
general had experienced greater price appreciation. The board believed that in
order to increase shareholder value, First Savings would need to expand into new
areas and offer new products for which First Savings did not have significant
expertise. The board was concerned that such a shift would add risk to the
operations of First Savings and that profitability would likely be reduced in
the short term as new employees would be added and substantial marketing and
technology costs would be incurred with no assurance that such expansion would
be successful.
First Savings' board met on September 9, 1999 to discuss planning and
other issues. At the meeting, the board received a presentation from Trident.
Trident advised the board about strategies for enhancing shareholder
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values and about regional developments and events involving mergers and
acquisitions of community banks and thrifts. The board recognized that
significant consolidation has occurred among banking and thrift institutions in
recent years. Many thrift institutions have been acquired by larger financial
institutions. First Savings is the last remaining thrift institution
headquartered in Moore County, North Carolina. Also, the number of potential
acquisition partners has decreased. The board recognized that technological
changes would impose significant capital costs for First Savings to remain
competitive in the future. The board concluded that it should explore market
conditions and potential strategic partners for First Savings. As a means of
testing the market, the board directed Trident to again solicit indications of
interest from other companies about possible mergers or combinations involving
First Savings.
Following the September meeting, Trident analyzed companies that it
believed were likely to have an interest in and the ability to combine with or
acquire First Savings on terms favorable to First Savings shareholders. Based on
that analysis, Trident held discussions with eleven banking companies in four
states and offered to provide each of them information about First Savings.
Three of such companies subsequently expressed interest in possible combinations
and submitted indications of interest in the form of tentative proposals.
Trident met with the First Savings board of directors on October 28,
1999 to report the results of its inquiries. Trident reviewed with the board the
companies contacted and responses received. Trident advised the board that First
Bancorp and one other company had submitted tentative proposals and that a third
company had expressed its interest in making a proposal. Trident advised the
board that the two proposals received were potentially attractive to
shareholders from a financial point of view, although both proposals were
subject to conditions and neither was a final offer. Trident reviewed with the
board comparative pricing ratios from comparable merger transactions and other
relevant financial ratios and data. It also analyzed stock price appreciation
projections for First Savings, comparing projections based on the assumption
that the company remained independent with projections based on assumptions that
First Savings combined with companies that had expressed interest. After
considering these and other data, the board then directed Trident (i) to propose
that each company that had expressed interest conduct limited, off-site
examinations of First Savings' books and records and (ii) to request each
company to make its best financial proposal for consideration by the First
Savings board. No restrictions or requirements regarding terms and conditions
were placed on the prospective merger partners. Each was told that dividend
rates would be carefully considered.
Further discussions were conducted with each of the three companies.
Each submitted a final proposal. None of the three proposals constituted a
binding commitment. Among other things, each was conditioned on the satisfactory
completion of a thorough examination of First Savings' books and records and the
negotiation of a mutually satisfactory definitive agreement.
First Savings' board met on November 19, 1999 to consider the three
proposals. Each proposed an exchange of First Savings common stock for stock of
the combining company. First Bancorp's proposal provided for a fixed exchange
ratio, pursuant to which 1.2468 shares of First Bancorp common stock would be
exchanged for each share of First Savings common stock. Based on recent market
trading prices at the time, the First Savings board believed that the value of
First Bancorp's offer was no less than $24 per share of First Savings common
stock. A second offer provided for a fixed exchange ratio that, based on recent
market trading prices, was believed to have a value less than, but within $1.00,
of First Bancorp's proposal. A third offer proposed a fixed-price exchange ratio
with a dollar value of $24 per First Savings share. The fixed-price proposal was
subject to a condition that, at the time of closing, the acquirer's stock must
be trading within a range of 15% above or below its trading price at the time of
execution of the definitive agreement, or either party could terminate the
transaction.
Trident reviewed with the First Savings board the terms of each
proposal and comparative financial and pricing ratios for mergers and
acquisitions of savings banks and savings associations within recent periods.
The board also discussed the strengths and weaknesses of each company and the
relative advantages and disadvantages of the three proposals. For each company,
the board reviewed key financial performance ratios, historical financial
performance and trends, and comparative pricing ratios. Trident advised the
First Savings board that, in its view, based on projections from historical
returns, First Savings could likely produce greater values for its shareholders
by combining with any of the three acquirers than by continuing to operate as an
independent company.
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The board viewed the financial terms of the three offers as
substantially equivalent in terms of values on a current basis. Each proposed a
share-for-share exchange having a value of approximately $24 based on currently
reported trading prices. The board recognized that the values of the two
proposals that were not fixed-price proposals would change from time to time
depending on the trading prices of the stocks of the companies. The fixed-price
proposal was subject to the condition that at closing the acquirer's stock must
be trading within a range of 15% above or below its trading price at the time of
the execution of a definitive agreement. The board recognized that it could not
foresee trading prices. In the case of the fixed-price proposal, although
shareholders would be guaranteed receipt of shares having a trading value of
$24, assuming the trading price did not fluctuate outside the 15% range,
shareholders would not have the benefit of increases in trading values prior to
a closing. In the case of the fixed-exchange ratio proposals, the board
recognized that trading values may decline prior to the closing, but if they
increased, then First Savings shareholders would have the benefit of the
increase by receiving shares having a greater market value. First Bancorp's
proposal provided that, if the trading price of its shares fell below defined
levels, then it must either increase the number of shares or First Savings would
have the option of terminating the transaction. A fixed-exchange ratio also
established with greater certainty the expected dividend to First Savings
shareholders. See " -- What First Savings Shareholders Will Receive in the
Merger."
With Trident's advice, the board considered both the current values of
the three proposals and the possibility of price variations due to future
performance of the acquirer's stock price. The board understood that the stock
prices of all three companies were subject to change from time to time prior to
a merger, for reasons that could not be foreseen.
Trident advised the board that each of the three proposals was fair to
First Savings shareholders from a financial point of view. According to Trident,
none of the three was clearly superior to the others. Each proposal presented
advantages and disadvantages. After weighing and comparing each offer, the board
concluded that combining First Savings with First Bancorp best served the
interests of First Savings and its shareholders for the following reasons:
- The First Savings board believed that combining First Savings
with First Bancorp would create a strong new company
headquartered in the Sandhills region of North Carolina that
would be well positioned to increase shareholder value;
- The board perceived that First Savings has high levels of
capital and lower returns on shareholders equity, while First
Bancorp needs capital and has demonstrated strong historical
growth rates in assets, earnings and dividends. The board
concluded that a combined company could effectively leverage
the strengths of the two separate companies. Of the three
companies, the board believed that First Bancorp would bring
the greatest value to First Savings shareholders;
- The board believed that the combined companies would have the
necessary strategy and resources to create, by acquisitions
and otherwise, a significant new financial services company
uniquely positioned to capitalize on the growth of the South
Central region of North Carolina;
- The board believed that the combined companies would have the
largest market share in Moore County, which would give the new
entity a uniquely attractive banking franchise;
- First Savings shareholders would own almost half of the new
company and would have a significant voice in its future
policies and direction;
- The First Bancorp proposal anticipated little change in the
level of cash dividends to First Savings shareholders;
- Based on pro forma information, the board believed that the
potential benefits to the shareholders of the increase in net
income per share outweighed the decrease in book value per
share.
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- The board believed that First Bancorp's proposed fixed-share
exchange ratio with a floor on its share price provided limits
on the downside risk to First Savings shareholders, but no
limits on benefits to First Savings shareholders if First
Bancorp's share price increases prior to the closing;
- In relation to its peers, First Bancorp ranked near the top in
terms of return on equity, earnings growth, and dividend
growth, yet traded at that time at a lower earnings multiple.
In addition, First Bancorp's stock price had underperformed
its peers during the last twelve months. In the fall of 1999,
First Bancorp was trading well below its all time high trading
price of $28.00 (adjusted for its September 1999 stock split)
reached on March 20, 1998 and had just released record
earnings for the three and nine months ended September 30,
1999;
- By combining with First Bancorp, First Savings would convert
more quickly to a commercial bank and more quickly provide
expanded financial services and products to First Savings'
customers than it could do if it remained independent;
- The board believed that a combination of the companies would
result in minimal job losses, minimal impact on First Savings
customers, and a combination of two companies with compatible
community banking philosophies and similar records of customer
satisfaction;
- First Savings would place seven of its directors on the board
of First Bancorp, which, after the merger, would consist of 18
directors. This would provide First Savings shareholders
significant representation and influence on the operations of
First Bancorp; and
- Based on pro forma historical financial information, the
combined company would have total shareholders' equity of more
than $100 million and total assets of more than $875 million.
The board believed that the size of the combined company could
attract investors who previously would not have invested in
either company alone because of their smaller sizes.
After considering the three offers, the First Savings board of
directors concluded that First Bancorp's proposal was in the best interests of
First Savings shareholders. The board then directed First Savings management,
with Trident's assistance, to continue the discussions with First Bancorp, to
cause each party's books and records to be examined by the other, and to engage
counsel to assist with the preparation and negotiation of a definitive
agreement. The board decided not to pursue the other two proposals, and those
proposals are no longer open for consideration by First Savings.
During the first two weeks of December 1999, with assistance from
advisors, each party examined the other's books and records and conducted
interviews of the other's management. During this period, a draft of a
definitive agreement was prepared.
Upon notification that it was one of the parties with whom First
Savings might be interested in combining, First Bancorp informed First Savings
of its desire to retain McDonald Investments Inc. ("McDonald") as its financial
advisor. Trident is a division of McDonald. First Bancorp previously had
established relationships with both McDonald and Trident. In response to
questions about a potential conflict of interest arising from First Bancorp's
representation by McDonald, Trident explained that McDonald and Trident would
maintain a strict separation between activities of McDonald, whose offices are
in Ohio, and Trident, whose offices are in North Carolina and Georgia. Both
First Savings and First Bancorp were assured that no information would be shared
between McDonald and Trident. First Savings did not object, and First Bancorp
continued to retain McDonald as its financial advisor. However, in order to
remove any question of the transaction's fairness, both First Bancorp and First
Savings decided that each also would retain separate, independent advisors to
render a fairness opinion and otherwise advise their boards of directors before
the merger agreement was approved and executed. First Bancorp retained Sterne,
Agee & Leach, Inc. located in Atlanta, Georgia, and First Savings retained
Ferguson & Company, located in Hurst, Texas.
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First Savings' board of directors met on December 15, 1999 with
representatives of Trident, Ferguson and First Savings' legal counsel, which
advised the board about legal and fiduciary issues associated with the proposed
transaction.
The financial and legal advisors and management reported the results of
each company's examinations of the other's records and operations, which were
satisfactory. First Savings' legal counsel explained the terms of the
transaction. Trident and Ferguson made presentations to the board regarding the
financial aspects of the proposed transaction, the options to be granted by each
company to the other, and the fairness of the exchange ratio. The board
considered the effect of changes in the trading prices of the stocks of the
three companies that had made proposals. Although changes in trading prices of
First Bancorp's stock and bank stocks generally had occurred, after consulting
with Trident and Ferguson, the board concluded that the changes in the prices
did not justify changing the course set by the board at the November 19 meeting.
After receiving presentations from the advisors and after discussing the issues,
the First Savings board of directors approved the terms of the merger agreement,
the stock option agreement between First Savings and First Bancorp and related
agreements, without dissent.
Following public announcement of the agreement with First Bancorp,
there were several articles in certain publications that reported that the
publications had interviewed Stan Bradshaw, a local investor, and that he
represented a group that had made a $23 per share cash offer for First Savings.
First Savings did not receive any such cash offer, formal or otherwise. After
the public announcement, First Savings did receive communications from Mr.
Bradshaw, an individual investor and resident of Moore County. Mr. Bradshaw
advised First Savings that he represented a group of persons who were
considering making an offer that would provide for a $4 per share cash payment
and a balance per share to be paid in stock of a company yet to be organized.
First Savings, with the consent of First Bancorp, communicated its willingness
to consider such an offer and to permit Mr. Bradshaw to examine the books and
records of First Savings. Mr. Bradshaw elected not to pursue these discussions.
At a meeting held on February 10, 2000, the board reviewed the communications
received from Mr. Bradshaw and the advice of Ferguson. The board concluded that
it was in First Savings' best interests to continue to pursue a merger with
First Bancorp.
FIRST SAVINGS' REASONS FOR THE MERGER
First Savings' board of directors, with the assistance of its financial
and legal advisors, evaluated the financial, legal and market considerations
involved in its decision to recommend the merger to First Savings shareholders.
The board of directors believes that the transaction provided for in the
agreement with First Bancorp is in the best interests of First Savings and its
shareholders.
The terms of the merger, including the exchange ratio, are the result
of a comprehensive, competitive process by which First Savings solicited
proposals from all companies considered most likely to have an interest and the
ability to combine with First Savings on terms favorable to its shareholders.
Such terms are the result of arm's-length negotiations between representatives
of the two companies.
First Savings' board of directors considered the following material
factors in reaching its conclusion that the agreement with First Bancorp is in
the best interests of First Savings and its shareholders:
- the financial terms of the proposed merger;
- a review of the terms of the proposed transaction with outside
financial and legal advisors;
- information concerning the business, operations, earnings,
asset quality, and financial condition of First Bancorp and
information about the prospects of the combined companies;
- the fact that First Savings shareholders will not recognize
any gain or loss for federal income tax purposes on the
receipt of First Bancorp common stock in the merger;
- a comparison of the terms of the proposed merger with
comparable transactions of highly capitalized thrifts in North
Carolina, the southeastern United States and the United States
in general;
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- competitive factors and consolidation trends in the banking
industry, including the continued disappearance of potential
merger partners;
- the opinion of Ferguson that the exchange ratio to be received
in the merger is fair from a financial point of view to the
First Savings shareholders;
- alternatives to the merger, including continuing to operate
First Savings as an independent company, in light of economic
conditions, the competitive environment, and the board's
analysis of First Savings' financial conditions, past
performance and future prospects; and
- the effects of the transaction on First Savings and its
customers, communities and employees.
The board of directors also considered the separate agreements and
benefits proposed for employees, management and members of First Savings' board
of directors, including the employment arrangements proposed for William E.
Samuels, Jr., John F. Burns and Timothy S. Maples. The board concluded that
those arrangements are reasonable. See " -- Interests of Certain Persons in the
Merger."
Although the board of directors considered the foregoing factors
individually, the board did not collectively assign any specific or relative
weights to the factors considered and did not make any determination with
respect to any individual factor. The board collectively made its determination
with respect to the merger agreement based on the conclusion reached by its
members, in light of the factors that each of them considered appropriate, that
the merger agreement with First Bancorp is in the best interests of First
Savings shareholders.
FIRST BANCORP'S REASONS FOR THE MERGER
The First Bancorp board believes that the merger presents an important
opportunity for First Bancorp to increase shareholder value through growth by
merging with a profitable, well-managed financial institution in the attractive
market of Moore County that complements First Bancorp's existing presence in
that market. The First Bancorp board believes that the opportunities created by
the merger to increase First Bancorp's shareholder value more than offset risks
inherent in the merger.
In reaching its decision to approve the merger agreement, First
Bancorp's board of directors consulted with management of First Bancorp, as well
as its financial advisors regarding the financial aspects of the proposed
transaction and the fairness of the exchange ratio and its legal advisors
regarding the terms of the transaction. In reaching its decision to approve the
merger agreement, the First Bancorp board considered the following material
factors:
- The First Bancorp board's familiarity with and review of First
Savings' business, operations, financial condition, earnings
and prospects. In making this assessment, the First Bancorp
board took into account the results of First Bancorp's due
diligence review of First Savings.
- The business, operations, financial condition, earnings and
prospects of the combined entity that would result from the
merger of First Bancorp with First Savings.
- The belief of senior management of First Bancorp and the First
Bancorp board that First Bancorp and First Savings share a
common vision with respect to delivering financial performance
and shareholder value and operating a community banking
organization, and that their management and employees possess
complementary skills and expertise.
- The pro forma and prospective financial impact of the merger
upon First Bancorp.
- The structure of the proposed merger, the terms of the merger
agreement and the expectation that the merger will qualify as
a transaction that is tax-free for federal income tax purposes
and as a pooling-of-interests for accounting purposes.
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- The current and prospective economic and competitive
environments facing financial institutions, including First
Bancorp.
- The attractiveness of the First Savings franchise and the
market position of First Savings in the market in which it
operates.
- The opinion of Sterne Agee to the First Bancorp board that,
based on and subject to the considerations set forth in the
opinion, the exchange ratio is fair from a financial point of
view to First Bancorp shareholders. See "Opinion of First
Bancorp's Financial Advisor."
- The financial terms of the merger, including the relationship
of the value of the consideration issuable in the merger to
the market value, tangible book value and earnings per share
of First Savings common stock.
- The non-financial terms of the merger, including arrangements
relating to continued involvement of the management and
certain members of the board of directors of First Savings
with the combined company.
- The likelihood that the merger will be approved by applicable
regulatory authorities without undue conditions or delay.
This discussion of the information and factors considered by First
Bancorp's board of directors includes the material factors considered by the
First Bancorp board. The First Bancorp board did not assign any relative or
specific weights to these factors, and individual directors may have given
different weights to different factors. The First Bancorp board recommends that
the First Bancorp shareholders vote for approval of the merger and the issuance
of shares of First Bancorp common stock in connection with the merger.
OPINION OF FIRST SAVINGS' FINANCIAL ADVISOR
First Savings has retained Ferguson to render a fairness opinion with
respect to the merger. At a meeting of the First Savings board of directors held
on December 15, 1999, Ferguson delivered its opinion, which opinion was
subsequently updated in writing as of the date of this proxy
statement/prospectus, that, as of such dates and subject to the assumptions
described in such opinions, the consideration to be received by the holders of
First Savings common stock in the merger is fair to such shareholders from a
financial point of view. No limitations were imposed on Ferguson by First
Savings' board of directors with respect to the investigations made or the
procedures followed by it in rendering its opinion.
First Savings has agreed to pay Ferguson a general advisory fee of
$17,500 for delivery of its fairness opinion, plus all reasonable out-of-pocket
expenses incurred in connection with the services provided by Ferguson, and to
indemnify and hold harmless Ferguson to the full extent lawful from and against
certain liabilities, including certain liabilities under the federal securities
laws, in connection with this engagement.
A COPY OF FERGUSON'S UPDATED OPINION LETTER IS INCLUDED IN THIS
DOCUMENT AS APPENDIX B AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION
OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX B. FIRST SAVINGS SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS
ENTIRETY FOR A DESCRIPTION OF THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY FERGUSON IN
CONNECTION THEREWITH.
In connection with its written opinion as of the date of this joint
proxy statement/prospectus, Ferguson confirmed the appropriateness of its
reliance on the analyses used to render its December 15, 1999 opinion by
performing procedures to update certain of its analyses and by reviewing the
assumptions on which the analyses were based and the factors considered in
connection with them.
Ferguson's opinion in Appendix B, dated as of May 15, 2000, is based
solely upon the information available to Ferguson and the economic, market and
other circumstances as they existed as of such date. Events
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occurring after that date could materially affect the assumptions and
conclusions contained in Ferguson's opinion. Ferguson has not undertaken to
reaffirm or revise its opinion or otherwise comment on any events occurring
after the date of its opinion.
Ferguson's opinion is provided exclusively for the information and
benefit of the board of directors of First Savings and does not constitute a
recommendation to any First Savings shareholder as to how such shareholder
should vote at the special meeting with respect to the merger.
The summary below is not a complete description of the methodology used
in the analyses performed by Ferguson. It is, however, a summary of the salient
factors taken into consideration, from the perspective of evaluating the worth
of First Savings and comparing the offers received in the valuation process. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary descriptions. Ferguson believes that its analysis and the
summary set forth below must be considered as a whole and that selecting
portions of its analysis without considering all analyses, or selecting part of
the summary without considering all factors and analyses, would create an
incomplete view of the process underlying the analysis set forth in Ferguson's
presentations and opinion. The ranges of valuation resulting from any particular
analysis described below should not be taken to be Ferguson's view of the actual
value of First Savings. The fact that any specific analysis has been referred to
in the summary below is not meant to indicate that such analysis was given
greater weight than any other analysis.
Inherent in and essential to the opinion is the method of sale,
notably, competitive bidding. Competitive bids were received that were similar
in structure, but different in price, thereby requiring an interpretation as to
the best "value" being offered. The range of dollar-equivalent prices offered
can then be evaluated in light of other methods of valuing the offers. Other
considerations (giving no greater weight to any consideration), were: (1)
financial performance and factors impacting earnings; (2) discounted cash flow
analysis; (3) dividend payment history, capacity and earnings potential; (4)
pricing of similar transactions; (5) investment characteristics of the potential
acquirers; and (6) review of the merger agreement and its terms.
FINANCIAL PERFORMANCE AND FACTORS IMPACTING EARNINGS. In connection
with rendering its opinion, Ferguson reviewed publicly available information and
information provided by management regarding First Savings and each of the
potential acquirers. Ferguson's analysis of such methodology began with the
historic measurement of at least four analytic modules that help develop a
projective risk/opportunity profile for each institution. Each module is
potentially (but not always) complex: liquidity, capital adequacy, asset
quality, earnings power and in the case of a holding company, the cash flow
sources available for debt service and shareholder dividends. In reviewing each
area, Ferguson was attentive to peer comparisons as well as to regulatory
guidelines and standards. However, each institution was viewed as situationally
and strategically unique.
DISCOUNTED CASH FLOW ANALYSIS. Using discounted cash flow analysis,
Ferguson estimated the future dividend stream that First Savings could produce
over a ten-year period, assuming performance met projections (provided by
management, with the assistance of Ferguson) for such period, taking into
consideration regulatory capital levels. The terminal value of the institution
at the end of the period was estimated to be 150% of book value and 13.2 times
earnings. The book value multiple was consistent with the market value of other
thrifts of similar size, asset quality and earnings. The earnings multiple of
13.2 was also considered to be reasonable when compared to other thrifts of
similar size, asset quality and earnings. The cash flows and terminal
transaction values were then discounted at varying rates ranging from 10.5% to
12.5%, which reflect Ferguson's assumptions of rates of return required by the
bidding institutions.
DIVIDEND PAYMENT HISTORY, CAPACITY AND EARNINGS POTENTIAL. In
connection with its opinion, Ferguson prepared earnings estimates on each of the
potential acquirers for First Savings using publicly available information with
respect to such acquirers. Ferguson also reviewed the "marginal dilution" ((net
income acquired divided by shares issued to acquire) divided by pre-deal
earnings per share of the acquirer) which would result from each of the proposed
mergers. The results were that there was a dilution of earnings indicated in all
of the proposed mergers.
PRICING OF SIMILAR TRANSACTIONS. In preparing its opinion, Ferguson
analyzed five completed merger and acquisition transactions in North Carolina
where thrift institutions were purchased from January 1999 to December 1999. In
addition, Ferguson analyzed 53 transactions completed in the United States where
thrift institutions were acquired in this same time frame; 11 transactions
involving thrifts that were between $200 million and $600 million
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in total assets; 11 transactions in Georgia, North Carolina, South Carolina,
Tennessee, and Virginia; and seven transactions involving thrifts that had
capital accounts between 16% and 24% of total assets. In the five transactions
that have been concluded in North Carolina, the sales resulted in an average
price that was 127.0% of tangible book value. In that group, the median sales
price was 122.3% of tangible book value. In the 53 completed transactions in the
United States involving the purchase of thrifts, the average was 182.50% of
tangible book value, and the median sale was 173.75% of tangible book value. In
the seven transactions that involved thrifts with capital between 16% and 24% of
total assets, the sales resulted in an average price of 125.8% of tangible book
value and a median sales price of 124.6% of tangible book value. The transaction
between First Savings and First Bancorp is priced at 131.0% of tangible book
value (140.2% on a fully-diluted basis), based on First Bancorp's closing price
of $19.25 per share on November 17, 1999. Notably, the information revealed that
in all the transactions reviewed for all sales in the United States, the average
price in relation to the last twelve months earnings per share was 25.32 times
and the median was 23.93 times earnings per share. In the transactions for North
Carolina only, the average price times the last twelve months earnings per share
was 33.2 and the median was 25.9 times. In the group of thrifts with capital
between 16% and 24% of assets, the average price times the last twelve months
earnings per share was 24.1 times and the median was 23.4 times. The purchase of
First Savings by First Bancorp is priced at 17.52 times last twelve months
earnings per share, based on First Bancorp's November 17, 1999 closing price.
First Bancorp's stock closed at $17.75 per share on December 14, 1999.
This was the latest value available at the time the definitive merger agreement
was executed on December 15, 1999. Based on a price of $17.75 per share, the
acquisition of First Savings is priced at 16.15 times the last twelve months
earnings per share and 120.8% of tangible book value (128.6% on a fully-diluted
basis).
Since December 14, 1999, First Bancorp and the commercial banking
industry have experienced a general decline in value. First Bancorp closed at an
average of $16.25 during the month of February 2000. It closed at an average of
$16.35 during the five trading days ended February 14, 2000, $15.94 during the
five trading days ended February 25, 2000, and $15.33 during the five trading
days ending March 3, 2000. The SNL index of commercial banks with assets between
$500 million and $1 billion was 361.9 on November 17, 1999, 344.8 on December
14, 1999, and 298.1 on March 7, 2000.
INVESTMENT CHARACTERISTICS AND STOCK VALUATION COMPARATIVES. In
connection with preparing its opinion, Ferguson compared (1) the effects of the
proposed merger on the earnings per share of each of the bidding institutions;
(2) post-merger earnings per share enhancement of First Savings common stock,
from the standpoint of a First Savings shareholder; (3) post-merger dividend per
share enhancement of First Savings common stock, from the same standpoint; (4)
post-merger book value enhancement of First Savings common stock, also from the
same standpoint; (5) likely share price enhancement of First Savings common
stock; (6) return on equity; (7) return on assets; and (8) likely post-merger
dividend yield. This method gives the advantage to the shareholders of First
Savings in the exchange with First Bancorp, due to potentially higher earnings
growth, and stock value appreciation. Dividend yield for First Savings' shares
will increase slightly. On a pro forma basis, First Savings' tangible book value
per share at September 30, 1999 decreased by 22.4%, and earnings per share for
the 12 months ended September 30, 1999 increased by 12.5%.
COMPARISON OF DOLLAR-EQUIVALENT OFFERS. In reaching its opinion,
Ferguson compared the dollar-equivalent of each of the proposals received by
First Savings. The cash-equivalent value of each offer was calculated using the
per share value of the potential acquirer's stock and multiplying that by the
number of shares offered. One of the offers received was exactly the same as the
First Bancorp offer ($24.00 vs. $24.00). The third offer was valued at slightly
less than $24.00 per share. The board of directors concluded that First
Bancorp's offer was fair to First Savings shareholders from a financial point of
view. In addition to the liquidity of the stock offered and the analysis of the
investment characteristics and stock valuation comparatives, which are discussed
above, the stock provided additional opportunities for future growth and
profitability to First Savings shareholders.
Ferguson, as a customary part of its consulting business, is engaged in
the valuation of banks, thrifts and holding companies and their securities in
connection with mergers and acquisitions, stock purchase offers and other
purposes.
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OPINION OF FIRST BANCORP'S FINANCIAL ADVISOR
First Bancorp retained Sterne Agee to advise the First Bancorp board of
directors in connection with the merger. First Bancorp selected Sterne Agee to
serve as its financial advisor because Sterne Agee is a recognized regional
investment banking firm with expertise in financial institutions and because
Sterne Agee is independent of McDonald and Trident. See "DESCRIPTION OF
TRANSACTION -- Background of the Merger." As part of its investment banking
business, Sterne Agee is regularly involved in the valuation of financial
institutions and their securities. On December 15, 1999, Sterne Agee rendered an
oral opinion to the board of directors of First Bancorp that, as of such date,
subject to certain assumptions, factors and limitations, the consideration
proposed to be paid by First Bancorp pursuant to the merger agreement was fair,
from a financial point of view, to the shareholders of First Bancorp.
A COPY OF STERNE AGEE'S UPDATED OPINION LETTER IS INCLUDED IN THIS
DOCUMENT AS APPENDIX C AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION
OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX C. FIRST BANCORP SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS
ENTIRETY FOR A DESCRIPTION OF THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY STERNE AGEE IN
CONNECTION THEREWITH.
Sterne Agee's opinion is provided exclusively for the information and
benefit of the board of directors of First Bancorp and does not constitute a
recommendation to any First Bancorp shareholder as to how such shareholder
should vote at the special and annual meeting with respect to the merger or any
other matter related thereto.
In rendering its opinions, Sterne Agee reviewed, analyzed and relied
upon certain materials relating to the financial and operating condition of
First Savings and First Bancorp including, among other things, the following:
- the merger agreement and certain related documents;
- annual reports to shareholders for the three years ended June
30, 1999 for First Savings and December 31, 1998 for First
Bancorp;
- certain interim reports to shareholders of First Savings and
First Bancorp, including quarterly reports on Form 10-Q and
certain other communications;
- other financial information concerning the businesses and
operations of First Savings and First Bancorp furnished to
Sterne Agee by the respective companies for the purposes of
Sterne Agee's analysis, including certain internal financial
analyses and forecasts for First Savings and First Bancorp
prepared by the senior managements of the respective
companies;
- in the case of its updated opinion, this joint proxy
statement/prospectus;
- certain publicly available information concerning the
historical price, price to earnings and price to book as well
as the trading activity for the common stocks of First Savings
and First Bancorp; and
- certain publicly available information with respect to banking
companies and the types of terms of other transactions that
Sterne Agee considered relevant to its analysis.
Sterne Agee also held discussions with the senior managements of First
Savings and First Bancorp regarding their past, current and prospective
operations, financial condition, regulatory examinations, audits, and other
matters and considered such other financial factors as Sterne Agee deemed
appropriate under the circumstances including general economic, market and
financial conditions, its knowledge of similar transactions, and its experience
in securities valuation of financial institutions. Sterne Agee's opinion was
based upon conditions as they existed on the date of the opinion and the
information made available up to such date.
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In conducting its review and arriving at its opinion, Sterne Agee
relied upon and assumed, without independent verification, the accuracy and
completeness of all of the financial and other information provided to it or
publicly available. Sterne Agee relied upon the managements of First Savings and
First Bancorp as to the reasonableness and achievability of the financial and
operating budgets and forecasts (and the related assumptions and bases
underlying such forecasts) provided to Sterne Agee and assumed that such budgets
and forecasts reflected the best available estimates and judgments of such
management and that such budgets and forecasts will be realized in the amounts
and in the time periods estimated by such management. Sterne Agee also assumed,
without independent verification, that the aggregate allowances for loan losses
for First Savings and First Bancorp are adequate to cover such losses. Sterne
Agee did not make or obtain any evaluations or appraisals of the property of
First Savings or First Bancorp, nor did Sterne Agee examine any loan credit
files. Sterne Agee was informed by First Bancorp and assumed in rendering its
opinion that the merger would be accounted for as a pooling-of-interests under
generally accepted accounting principles.
The preparation of a fairness opinion involves various determinations
of the most appropriate and relevant methods of financial analysis and the
application of those methods to particular circumstances, and, therefore, such
an opinion is not readily susceptible to summary description. In arriving at
their fairness opinion, Sterne Agee did not attribute any particular weight to
any analysis or factor considered by them, but rather made qualitative judgments
about the significance and relevancy of each analysis and factor. None of the
analyses performed by Sterne Agee was assigned a greater significance by Sterne
Agee than any other and therefore you should not attribute any greater
importance upon one analysis versus another as a result of the order in which
they are discussed herein. Accordingly, Sterne Agee believes that their analyses
must be considered as a whole and that a review of selected portions of such
analyses and the factors considered therein, without considering all analyses
and factors, could create a misleading or incomplete view of the processes
underlying their opinion. In their analyses, Sterne Agee made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond First Bancorp's control.
Any estimates contained in Sterne Agee's analyses are not indicative of actual
values or predictive of future results or values that may be significantly more
or less favorable than such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies or
their securities actually may be sold.
The following is a brief summary of the material financial analyses
reviewed by Sterne Agee in connection with its opinion; it does not purport to
be a complete description of all analyses performed.
FINANCIAL PERFORMANCE OVERVIEW. Sterne Agee reviewed financial
performance ratios, stock trading history, income statement and balance sheet
information, per share financial results, and other information for both First
Savings and First Bancorp and the combined company before and after acquisition
adjustments, cost savings and revenue enhancements.
VALUATION MULTIPLES. Sterne Agee calculated the merger consideration to
be paid pursuant to the exchange ratio as a multiple of First Savings' stock
price the day before the public announcement of the merger agreement, December
15, 1999; as a multiple of latest twelve months earnings per share and estimated
earnings per share for the years ended December 31, 1999 and 2000; as a multiple
of book value and tangible book value as of September 30, 1999; and as a
percentage of assets as of September 30, 1999. Assuming a price per share of
First Bancorp common stock of $17.75 (closing price on December 14, 1999) and an
exchange ratio of 1.2468 shares of First Bancorp per share of First Savings
common stock, or $22.13 for each share of First Savings common stock held, such
amount would represent 122.10% of First Savings' stock price on December 14,
1999; 16.2 times latest 12 months earnings per share, 16.3 times estimated
earnings per share for the year ended December 31, 1999, and 14.3 times
estimated earnings per share for the year ended December 31, 2000; 1.21 times
book value and 1.21 times tangible book value as of September 30, 1999; and
25.82% of total assets on September 30, 1999.
SIMILAR ACTUAL TRANSACTIONS. Sterne Agee analyzed certain financial
data related to nine acquisitions of thrift institutions with assets of $45
million or more and which had ratios of equity-to-assets above 14%, from August
26, 1998, through December 14, 1999 (the "over-capitalized thrift
acquisitions"). The over-capitalized thrift acquisitions reviewed included the
following thrifts: Centura Banks/Scotland Savings Bank, Capital Bank/Home
Savings Bank of Siler City, CCB Financial/Stone Street Bancorp, Central
Bancompany/Fulton Bancorp, Union Financial Bancshares/SC Community Bancshares,
Century South Banks/Haywood Bancshares, North Fork
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Bancorp/JSB Financial, Exchange National Bancshares/CNS Bancorp, and Midland
States Bancorp/CSB Financial Group.
Sterne Agee calculated average valuation multiples for the
over-capitalized thrift acquisitions as follows: 1.36 times the acquiree's stock
price the day before the public announcement of the proposed acquisition; 25.1
times trailing twelve months earnings per share; 1.26 times prior quarter-end
book value; 1.27 times prior quarter-end tangible book value and 27.2% of
assets.
Sterne Agee also analyzed certain financial data related to 65
acquisitions of thrifts in the United States with assets of $25 million to $21.4
billion announced from August 13, 1998, to December 14, 1999 (the "U.
S. thrift acquisitions").
Sterne Agee calculated the average valuation multiples for the U.S.
thrift acquisitions as follows: 1.31 times the acquiree's stock price the day
before the public announcement of the proposed acquisition; 24.9 times trailing
twelve months earnings per share; 1.79 times prior quarter-end book value; 1.88
times prior quarter-end tangible book value and 23.2% of assets.
In calculating the average valuation multiples, Sterne Agee made
certain statistical adjustments to make the averages more meaningful for
comparison purposes.
CONTRIBUTION ANALYSIS. Sterne Agee analyzed the relative contribution
of First Savings and First Bancorp to certain balance sheet and income statement
items, including assets, deposits, common equity, latest twelve months net
income and estimated 2000 net income. Sterne Agee then compared the relative
contribution of such balance sheet and income statement items with the estimated
pro forma ownership of 49.8% for First Savings shareholders based on an exchange
ratio of 1.2468. The contribution analysis showed that First Savings would
contribute approximately 37.7% of the combined assets, 33.4% of the combined
deposits, 59.7% of the combined common equity, 45.1% of the combined latest
twelve months net income and 43.8% of the combined estimated 2000 net income
(before cost savings or revenue enhancements).
FINANCIAL IMPACT ANALYSIS. Sterne Agee reviewed pro forma income
statement and balance sheet and certain pro forma financial information
contained in analyses prepared by the management of First Savings and First
Bancorp. Such pro forma financial information was discussed with the management
of both First Savings and First Bancorp. The actual results achieved by First
Bancorp following the merger may vary from the projected results and the
variations may be material.
Sterne Agee calculated that the merger (excluding any cost savings,
revenue enhancements, and merger related charges) would result in dilution of
First Bancorp's latest twelve months earnings per share and estimated 2000
earnings per share of $0.14, or 10.3%, and $0.17, or 10.7%, respectively. The
calendar year 2000 estimates for First Bancorp and First Savings were based on
information from Zacks, the Institutional Brokers Estimate System, and
information supplied by the companies. Pro forma results for 2000 were then
adjusted to include estimated after-tax cost savings and revenue enhancements.
The resulting pro forma combined fully diluted earnings per share for 2000
(excluding merger related charges) were estimated to be $1.52. This represented
dilution to First Bancorp's estimated 2000 diluted earnings per share of
approximately $0.05, or 3.3%.
Sterne Agee also reviewed First Bancorp's pro forma combined book value
per share for September 30, 1999, of $11.83, which compares with the actual
September 30, 1999, book value of $9.46. The accretion represented by the pro
forma figure amounts to 25.1%.
MARKET SHARE ANALYSIS. Sterne Agee calculated the effect on First
Bancorp's deposit market share in Moore County, North Carolina that would result
from the merger. Based on FDIC deposit data as of June 30, 1999, Sterne Agee
calculated that First Bancorp's deposit market share in Moore County of 10.0%
would combine with First Savings' 22.3% share to represent a 32.3% share. The
same FDIC data show that First Bancorp would rank first in Moore County with
32.3% share, ahead of BB&T Corporation at 31.5%, Centura Banks, Inc. at 7.3%,
First Union Corporation at 6.7% and several other depository institution
competitors.
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<PAGE> 47
SELECTED PEER GROUP ANALYSIS. Sterne Agee compared the financial
performance and market performance of First Savings based on selected measures
of profitability, asset quality, capital adequacy, liquidity, efficiency, and
various measures of market performance, including price/earnings ratios,
price/book ratios, and dividend yields to those of a group of comparable
thrifts. For the purposes of the analysis, the financial data used by Sterne
Agee were for the latest twelve months ended September 30, 1999, and the market
data were as of December 14, 1999. The peer group thrifts were southern thrifts
headquartered in North Carolina, South Carolina, Virginia, Arkansas, Florida,
and Tennessee, with total assets ranging from approximately $166 million to $668
million and included the following companies: Bedford Bancshares, Cavalry
Bancorp, Cenit Bancorp, Cooperative Bancshares, FFLC Bancorp, First Federal
Bancshares of Arkansas, FirstSpartan Financial, SouthBanc Shares, South Street
Financial, Texarkana First Financial, and Virginia Capital Bancshares.
Sterne Agee's analysis showed the following concerning First Savings'
performance:
- that its return on equity of 7.84% compared with an average of
7.85% for the peer group;
- that its return on assets of 1.72% compared with an average of
1.26% for the peer group;
- that its net interest margin of 3.91% compared with an average
of 3.67% for the peer group;
- that its net chargeoffs to average loans were 0.00% compared
with an average of 0.04% for the peer group;
- that its ratio of loan loss reserve to total loans was 0.28%
compared with an average of 0.71% for the peer group;
- that its ratio of nonperforming assets to total loans and
other real estate owned was 0.15% compared with an average of
0.53% for the peer group;
- that its ratio of equity to assets of 19.63% compared with an
average of 14.53% for the peer group;
- that its ratio of loans to deposits of 92.71% compared with an
average of 106.69% for the peer group; and
- that its efficiency ratio of 33.28% compared with an average
of 55.85% for the peer group.
Sterne Agee's analysis further showed the following regarding First
Savings' market performance:
- that its price/earnings multiple based on the latest twelve
months earnings per share of $1.36 was 13.3 times, compared to
an average of 14.3 times for the peer group;
- that its price/book ratio based on September 30, 1999, book
value of $18.32 was 0.99 times, compared to an average of 1.16
times for the peer group; and
- that its dividend yield was 5.7%, compared to an average of
2.4% for the peer group
NET PRESENT VALUE ANALYSIS. Sterne Agee performed a discounted cash
flow analysis to determine a range of net present values per share of First
Savings. In its calculations, Sterne Agee used net income growth rates of 8.0%
to 12.0%, terminal price to earnings multiples from 9.0 to 11.0 times, and used
discount rates ranging from 10.0% to 15.0%. This analysis produced net present
values of First Savings' share price that ranged from $10.56 to $25.72.
In connection with its written opinion as of the date of this joint
proxy statement/prospectus, Sterne Agee confirmed the appropriateness of its
reliance on the analyses used to render its December 15, 1999 opinion by
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<PAGE> 48
performing procedures to update certain of its analyses and by reviewing the
assumptions on which the analyses were based and the factors considered in
connection with them.
Sterne Agee's opinion in Appendix C, dated as of May 15, 2000, is based
solely upon the information available to Sterne Agee and the economic, market,
and other circumstances as they existed as of such date. Events occurring after
that date could materially affect the assumptions and conclusions contained in
Sterne Agee's opinion. Sterne Agee has not undertaken to reaffirm or revise its
opinion or otherwise comment on any events occurring after the date of its
opinion.
Sterne Agee was retained by the board of directors of First Bancorp to
act as financial advisor with respect to the merger. First Bancorp and Sterne
Agee entered into a letter agreement relating to the services to be provided by
Sterne Agee in connection with the merger. First Bancorp has agreed to pay
Sterne Agee fees as follows: a nonrefundable retainer of $25,000 at the time of
execution of the letter agreement and $50,000 at the time of delivery of any
written opinion to the board of directors of First Bancorp. In addition, First
Bancorp agreed to reimburse Sterne Agee for out-of-pocket expenses incurred in
connection with its engagement and to indemnify Sterne Agee against certain
liabilities, including liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the merger, the merger will become effective on the date and at the time of the
filing of the articles of merger with the Secretary of State of the State of
North Carolina. First Savings and First Bancorp will use their reasonable
efforts to cause the effective time to occur as soon as practicable following
the last to occur of (a) the effective date (including any applicable waiting
period in respect thereof) of the last required consent of any regulatory
authority having authority over and approving or exempting the merger and (b)
the date on which the shareholders of First Savings and First Bancorp approve
the matters relating to the merger required to be approved by such shareholders.
First Savings and First Bancorp anticipate that the merger will become
effective on or about July 31, 2000. However, delays in the completion of the
merger could occur.
EXCHANGE OF FIRST SAVINGS STOCK CERTIFICATES
Promptly after the merger is completed, First Bancorp will cause the
exchange agent to mail to the former shareholders of First Savings a letter of
transmittal and instructions for the exchange of the certificates representing
shares of First Savings common stock for certificates representing shares of
First Bancorp common stock.
First Savings shareholders should not send in their stock certificates
until they receive a letter of transmittal and instructions.
After First Savings shareholders surrender to the exchange agent their
duly endorsed stock certificates for First Savings common stock, the exchange
agent will mail such shareholders stock certificates representing the number of
shares of First Bancorp common stock to which such shareholders are entitled, a
check for the amount (without interest) to be paid in lieu of any fractional
share and all undelivered dividends or distributions (without interest) in
respect of the shares of First Bancorp common stock, if any. First Bancorp is
not obligated to deliver the stock certificates or other consideration to any
former First Savings shareholder until such shareholder has properly surrendered
his or her First Savings common stock certificates.
Whenever a dividend or other distribution with a record date after the
date on which the merger is completed is declared by First Bancorp on First
Bancorp common stock, the declaration will include dividends or other
distributions on all shares of First Bancorp common stock that may be issued in
connection with the merger. First Bancorp, however, will not pay any dividend or
other distribution that is payable to any former First Savings shareholder that
has not surrendered his or her First Savings common stock certificates until the
shareholder properly surrenders his or her certificates. If any First Savings
shareholder's common stock certificate has been lost, stolen, or destroyed, the
exchange agent will issue the shares of First Bancorp common stock and any cash
in lieu of fractional shares and such dividends or distributions will be
delivered upon the shareholder's submission of an affidavit claiming the
certificate to be lost, stolen, or destroyed and the posting of a bond in such
amount as First
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<PAGE> 49
Bancorp may reasonably direct as indemnity against any claim that may be made
against First Bancorp with respect to the certificate.
At the time the merger becomes effective, the stock transfer books of
First Savings will be closed, and no transfer of shares of First Savings common
stock by any shareholder will be made or recognized. If certificates for shares
of First Savings common stock are presented for transfer after the merger
becomes effective, they will be canceled and exchanged for shares of First
Bancorp common stock, a check for the amount due in lieu of fractional shares,
if any, and any undelivered dividends or distributions on the First Bancorp
common stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
First Bancorp and First Savings are required to complete the merger
only after the satisfaction of various conditions. These conditions include:
- the holders of a majority of the outstanding shares of First
Savings common stock must approve the merger;
- the holders of a majority of the outstanding shares of First
Bancorp common stock must approve the merger and the issuance
of shares of First Bancorp common stock pursuant to the merger
agreement;
- First Bancorp shareholders must approve the amendment to First
Bancorp's bylaws increasing the maximum number of directors on
the board to 18;
- First Bancorp and First Savings must receive the required
regulatory approvals for their merger (but not for the merger
of their banking subsidiaries);
- First Bancorp and First Savings must receive a written opinion
of an acceptable tax advisor as to the tax-free nature of the
merger under the Internal Revenue Code of 1986, as amended;
- the shares of First Bancorp common stock to be issued in the
merger must be approved for listing on the Nasdaq National
Market System, subject to official notice of issuance;
- First Bancorp must receive a pooling letter from KPMG LLP
stating that KPMG LLP concurs with management's conclusion
that no conditions exist that would preclude the merger from
being accounted for as a pooling-of-interests;
- First Bancorp must have received a letter from Dixon Odom PLLC
to the effect that such accountants are not aware of any
matters relating to First Savings or its subsidiaries that
would cause the merger not to qualify for pooling-of-interests
accounting treatment;
- the representations and warranties of First Savings and First
Bancorp as set forth in the merger agreement must be accurate
in all material respects as of the date of completion of the
merger;
- First Savings and First Bancorp must have performed and
complied in all material respects with all covenants and
agreements made by them in the merger agreement;
- First Bancorp and First Savings must have received all other
consents that may be required to complete the merger or to
prevent any default under any contract or permit that would be
reasonably likely to have a material adverse effect on First
Savings or First Bancorp;
- there must not be any order or any action taken by any court,
governmental, or regulatory authority of competent
jurisdiction prohibiting or restricting the merger or making
it illegal;
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<PAGE> 50
- the registration statement filed with the Securities and
Exchange Commission covering the issuance of the shares of
First Bancorp common stock in connection with the merger must
have been declared effective, and no stop orders suspending
such effectiveness shall have been initiated;
- First Bancorp must have received all required state securities
or "Blue Sky" authorizations or permits;
- First Savings must have received a letter from Ferguson, dated
not more than five business days prior to the date of this
joint proxy statement/prospectus stating that the exchange
ratio is fair, from a financial point of view, to the First
Savings shareholders;
- First Bancorp must have received a letter from Sterne Agee,
dated not more than five business days prior to the date of
this joint proxy statement/prospectus, stating that the
exchange ratio is fair, from a financial point of view, to the
First Bancorp shareholders; and
- certain other conditions must be satisfied, including the
receipt of various certificates from the officers of First
Savings and First Bancorp.
We cannot assure you as to if or when all of the conditions to the
merger can or will be satisfied or waived by the party permitted to do so.
Except in limited circumstances, if all conditions for the merger have not been
satisfied or waived on or before September 30, 2000, the board of directors of
either First Savings or First Bancorp may terminate the merger agreement and
abandon the merger. See " -- Waiver, Amendment, and Termination."
REGULATORY APPROVAL
First Bancorp must receive certain regulatory approvals before the
merger can be completed. First Bancorp and First Savings have agreed to use
their reasonable best efforts to obtain all regulatory approvals required. It is
a condition to the completion of the merger that First Bancorp and First Savings
receive all necessary regulatory approvals to the merger of First Savings and
First Bancorp, without the imposition by any regulator of any condition that, in
the reasonable judgment of the board of directors of any of the parties to the
merger, would so materially adversely impact the financial or economic benefits
of the merger as to make consummation of the merger inadvisable.
The parties to the merger cannot assure you that these regulatory
approvals will be obtained, when they will be obtained, or, if obtained, that
there will not be litigation challenging these approvals. The parties to the
merger cannot assure you that the U.S. Department of Justice or the North
Carolina state attorney general will not attempt to challenge the merger on
antitrust grounds, or, if a challenge is made, the result of the challenge.
First Savings and First Bancorp are not aware of any material
governmental approvals or actions that are required to complete the merger,
except as described below. Should any other approval or action be required,
First Savings and First Bancorp contemplate that they would seek such approval
or action.
The merger is subject to approval by the Federal Reserve pursuant to
Section 3 of the Bank Holding Company Act of 1956, as amended. First Bancorp and
First Savings have filed the required application and notification with the
Federal Reserve for approval of the merger. Assuming Federal Reserve approval,
the parties may not consummate the merger until 30 days after that approval
(unless such waiting period is reduced by the regulatory authorities to as
little as 15 days). During that time, the Department of Justice may challenge
the merger on antitrust grounds.
The Federal Reserve is prohibited from approving any transaction under
the applicable statutes that:
- would result in a monopoly;
- would 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
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<PAGE> 51
- may have the effect in any part of the United States of
substantially lessening competition, tending to create a
monopoly or otherwise resulting in a restraint of trade,
unless the Federal Reserve finds that the public interest
created by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served
clearly outweighs the anticompetitive effects of the proposed
merger.
In reviewing a transaction under the Bank Holding Company Act, the
Federal Reserve also will consider the financial and managerial resources and
future prospects of the companies and their subsidiary banks and the convenience
and needs of the communities to be served.
As noted above, the merger may not be consummated until between 15 and
30 days after Federal Reserve approval, during which time the Department of
Justice may challenge the merger on antitrust grounds. The commencement of an
antitrust action by the Department of Justice would stay the effectiveness of
Federal Reserve approval of the merger, unless a court specifically orders
otherwise. In reviewing the merger, the Department of Justice could analyze the
merger's effect on competition differently from the Federal Reserve, and, thus,
it is possible that the Department of Justice could reach a different conclusion
than the Federal Reserve regarding the merger's competitive effects. Although
First Bancorp and First Savings believe there are substantial arguments to the
contrary, failure of the Department of Justice to object to the merger may not
prevent the filing of antitrust actions by private persons or state attorneys
general.
Additionally, the proposed merger of First Savings' subsidiary, First
Savings Bank of Moore County, into First Bank is also subject to the approval of
the Federal Reserve, the FDIC, the North Carolina Banking Commission and the
Administrator of the Savings Institutions Division of the North Carolina
Department of Commerce. Such agencies will apply similar standards to their
review of the bank merger as applied to the merger of the holding companies.
Obtaining these approvals is not a condition to the closing of the merger of
First Bancorp and First Savings. We cannot assure you that these approvals will
be obtained or that such approvals will be given without the imposition by a
regulatory authority of a condition that would materially adversely impact the
financial or economic benefits of the merger of the banking subsidiaries.
WAIVER, AMENDMENT AND TERMINATION
To the extent permitted by law, the parties to the merger agreement may
amend the agreement by a writing signed by each of the parties upon the approval
of the board of directors of each of the parties, whether before or after
shareholder approval of the merger. After shareholder approval, however, no
amendment may be made that modifies in any material respect the consideration to
be received by the First Savings shareholders without the further approval of
the shareholders of First Savings and First Bancorp.
In addition, before or at the time of completion of the merger, First
Savings or First Bancorp may waive any default in the performance of any term of
the merger agreement by any other party or may waive or extend the time for the
compliance or fulfillment by the other parties of any and all of their
obligations under the merger agreement. In addition, any party may waive any of
the conditions precedent to its obligations under the merger agreement, unless a
violation of any law or governmental regulation would result from the waiver. To
be effective, a waiver must be in writing and signed by an authorized officer of
the waiving party.
At any time before completion of the merger, the boards of directors of
First Bancorp and First Savings may agree in writing to terminate the merger
agreement. In addition, either First Savings' board of directors or First
Bancorp's board of directors may terminate the merger agreement in the following
circumstances:
- if the First Savings shareholders fail to approve the merger
agreement and related plan of merger at the First Savings
special meeting;
- if the First Bancorp shareholders fail to approve the merger
agreement and related plan of merger and the issuance of
shares of First Bancorp common stock in connection with the
merger at the First Bancorp special and annual meeting;
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<PAGE> 52
- if there is any law or regulation that makes completion of the
merger illegal or if any judgment, order, injunction or decree
prohibits First Savings or First Bancorp from completing the
merger or other transactions contemplated by the merger
agreement and such judgment, order, injunction or decree has
become final and non-appealable;
- if the merger is not consummated by September 30, 2000 and the
party seeking termination is in material compliance with all
of its obligations under the merger agreement and the
conditions to that party's obligation to consummate the merger
agreement have not been fulfilled or waived;
- if a condition to the obligation to complete the merger of the
party seeking termination has become incapable of fulfillment
(notwithstanding the efforts of the party seeking to
terminate); or
- if another party has materially breached any covenant,
agreement, representation or warranty in the merger agreement
and such breach has not been cured by 30 days after the date
on which written notice of such breach is given to the
breaching party.
First Savings' board of directors also may terminate the merger
agreement if the price of the First Bancorp common stock decreases below certain
price levels, and First Bancorp elects not to increase the exchange ratio as set
forth in the merger agreement. See " -- What First Savings Shareholders Will
Receive in the Merger."
If the merger is terminated, the merger agreement will become void and
have no effect, except that the confidentiality and expense provisions will
survive. Termination of the merger agreement will not relieve any breaching
party from liability for any uncured breach of a representation, warranty,
covenant, or agreement. The stock option agreements are governed by their own
terms as to their termination.
CONDUCT OF BUSINESS PENDING THE MERGER
The merger agreement requires First Savings and First Savings Bank of
Moore County to conduct business only in the usual, regular, and ordinary course
before the merger becomes effective and imposes certain specific limitations on
the operations of First Savings and its subsidiaries during this period. The
specific restrictions are listed in Article VII of the merger agreement, which
is attached as Appendix A to this joint proxy statement/prospectus. The merger
agreement specifically permits First Savings to declare and pay regular
quarterly dividends on First Savings common stock at the annual rate of $1.04
per share with record and payment dates conforming to past practices. The merger
agreement also permits the payment of any quarterly portion of such annual
dividend if necessary to prevent First Savings shareholders from failing to
receive a quarterly dividend from either First Savings or First Bancorp during a
particular calendar quarter (unless payment of such dividend could reasonably be
expected to prevent pooling-of-interests accounting treatment for the merger).
First Savings also has agreed that, except with respect to the merger
agreement and the transactions contemplated in the merger agreement, neither it
nor any of its representatives will directly or indirectly solicit or engage in
any negotiations concerning any proposal for the acquisition of First Savings.
First Savings or its representatives may, however, to the extent necessary to
comply with the fiduciary duties of First Savings' board of directors as advised
by its outside counsel, furnish any information concerning First Savings in
response to a request for information or access made in connection with an
acquisition proposal from a third party, negotiate with such party concerning
any written acquisition proposal, not recommend shareholder approval of the
merger and terminate the merger agreement, but only if neither First Savings nor
any of its representatives solicited or initiated such proposal. Unless the
merger agreement is terminated, the board of directors of First Savings must
notify First Bancorp immediately if any such acquisition proposal is made.
First Bancorp and First Savings also have agreed to use their
reasonable best efforts to obtain any consents that are necessary or desirable
for consummation of the merger.
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<PAGE> 53
MANAGEMENT AND OPERATIONS AFTER THE MERGER; DIVIDEND POLICY
The merger will not change the present management team or board of
directors of First Bancorp, except as follows. The number of directors on the
First Bancorp board will be increased to 18. First Bancorp has nominated the
seven directors on the First Savings board who are less than 75 years of age to
fill these additional director seats. In addition, First Bancorp will designate
these seven individuals to serve as directors of First Bank. The board of
directors of First Bancorp will amend the First Bancorp bylaws to exempt William
E. Samuels and Felton J. Capel (former First Savings directors) from mandatory
retirement from the First Bancorp board at age 72, in order to extend their time
of service until they are 75 years of age, at which time they will be permitted
to complete their current terms as directors of First Bancorp and First Bank. It
is expected that the remaining three directors of First Savings who are over age
75 will serve on local advisory boards of First Bancorp until the scheduled end
of their respective terms as directors of First Savings and that, in recognition
of the important role that these individuals will have in making the proposed
merger successful, First Bancorp will continue compensating such persons as if
they had continued to serve out their terms as directors of First Savings.
In addition, upon completion of the merger, John F. Burns, the current
President of First Savings, will serve as an Executive Vice President of First
Bank, and Mr. Samuels, the current Chairman of the First Savings board of
directors, will be employed by First Bancorp. Subject to election to the First
Bancorp board at the First Bancorp special and annual meeting, after completion
of the merger, both Mr. Burns and Mr. Samuels also will serve as directors of
First Bancorp and First Bank, with Mr. Samuels serving as Vice-Chairman of both
boards. In addition, each of the individuals serving as a Senior Vice President
of First Savings or its principal banking subsidiary, First Savings Bank of
Moore County, immediately prior to completion of the merger will be employed by
First Bancorp or First Bank as a Senior Vice President after completion of the
merger.
Information concerning the current management of First Bancorp and
First Savings is included in the documents delivered with this joint proxy
statement/prospectus and incorporated by reference herein. See "ADDITIONAL
INFORMATION." For additional information regarding the interests of certain
persons in the merger, see " -- Interests of Certain Persons in the Merger", and
for additional information on the persons nominated for election as a director
of First Bancorp at its special and annual shareholders meeting, see "FIRST
BANCORP PROPOSAL FOR ELECTION OF DIRECTORS."
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.52 per share of First Bancorp common stock. First Savings currently pays
quarterly dividends at an annualized rate of $1.04 per share. After the
completion of the merger, First Bancorp plans to more closely align the dividend
policy of the two separate companies and expects that it will increase its
dividend amount to an annualized rate of $0.88 per share, payable quarterly.
First Bancorp, however, may change this policy at any time, based upon business
conditions, its financial condition and earnings, or other factors.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of First Savings' management and First
Savings' board of directors may be deemed to have certain interests in the
merger that are in addition to their interests as shareholders of First Savings
generally. First Savings' board of directors was aware of these interests and
considered them, among other matters, in approving and recommending the merger
agreement. In addition, certain members of First Bancorp's management may be
deemed to have certain interests in the merger that are in addition to their
interests as shareholders of First Bancorp generally. First Bancorp's board of
directors was aware of these interests and considered them, among other matters,
in approving and recommending the merger agreement.
FIRST BANCORP EMPLOYMENT AGREEMENTS. Upon completion of the merger,
First Bancorp will enter into employment agreements with John F. Burns, William
E. Samuels, Jr. and Timothy S. Maples. The existing employment agreements
between First Savings and Mr. Samuels and Mr. Burns will be terminated, and
First Bancorp will make a payment to each of them as called for by provisions in
their current employment agreements related to a change in control. The amounts
to be paid are as follows:
<TABLE>
<S> <C>
John F. Burns $409,680
William E. Samuels $548,230
</TABLE>
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The employment agreement between First Bancorp and Mr. Burns will be
for an initial term of three years, at an initial annual salary of $150,000 per
year. The agreement with Mr. Maples will be for an initial term of two years, at
an initial annual salary no lower than his salary at First Savings at the time
of the merger. The employment agreement with Mr. Samuels will be for a period of
three years after the merger, at an annual salary of $50,000. Mr. Burns and Mr.
Maples will be eligible to participate in First Bancorp's employee benefit plans
available to executives. Mr. Burns will receive an initial grant of 10,000
options under the First Bancorp Stock Option Plan on the date of completion of
the merger. Neither Mr. Samuels nor Mr. Maples will receive any options on the
date of completion of the merger.
If First Bancorp terminates the employment of Mr. Burns or Mr. Maples
for any reason other than death, gross negligence, or certain other misconduct,
First Bancorp will be obligated to pay the terminated employee his base salary
for the remainder of the term of his employment agreement. In the case of
disability, these payments would be reduced by any payments from First Bancorp's
disability insurance plan and by any earnings that the employee receives from
alternative employment while disabled. If either of Mr. Burns or Mr. Maples
voluntarily terminates his employment, First Bancorp would have no further
obligations to the employee other than compensation and vested employee benefits
earned through the date of termination.
The terms of the employment contracts also provide that if there is a
change in control of First Bancorp during the term of the employment agreement
with Mr. Burns or Mr. Maples, and Mr. Burns' or Mr. Maples' employment is
terminated by the employee or by First Bancorp within 12 months after the change
in control, the vesting of certain employee benefits would be accelerated and
the employee would receive a severance payment. The amount of the severance
payment would be 2.9 times his base salary in the case of Mr. Burns, and one
times his base salary in the case of Mr. Maples.
Mr. Burns and Mr. Maples also will agree not to compete with First
Bancorp within a 50-mile radius of Southern Pines, North Carolina during the
term of the employment agreements and for a period of one year after termination
of employment if First Bancorp terminates employment with cause or if the
employee voluntarily terminates employment. If First Bancorp terminates
employment for any other reason, the restrictions on competition will last for
the remainder of the three-year term. Mr. Samuels will agree not to compete with
First Bancorp within a 50-mile radius of Southern Pines, North Carolina during
the term of his employment agreement and for a period of one year after
termination of employment.
FIRST SAVINGS BOARD OF DIRECTORS. In connection with the merger, the
seven existing members of the First Savings board of directors who are under age
75 will be nominated to serve on the First Bancorp board. In addition, First
Bancorp will designate these seven individuals to serve as directors of First
Bank, its bank subsidiary. The board of directors of First Bancorp has agreed,
conditional upon approval of the merger, to exempt Mr. Samuels and Mr. Capel
from mandatory retirement from the First Bancorp board at age 72 (as permitted
by the First Bancorp bylaws for directors added to the board in connection with
acquisitions), in order to extend their time of service until they are 75, at
which time they will be permitted to complete their current terms as directors
of First Bancorp and First Bank. It is expected that the other three directors
of First Savings who are over age 75 will serve on local advisory boards of
First Bancorp until the scheduled end of their respective terms as directors of
First Savings. In recognition of the important role that these individuals will
have in making the proposed merger successful, First Bancorp will continue
compensating such persons as if they had continued to serve out their terms as
directors of First Savings.
FIRST SAVINGS STOCK OPTIONS. The directors and executive officers of
First Savings hold options to purchase First Savings common stock. The options
issued to all directors except Virginia C. Brandt and Felton J. Capel and to all
executive officers were issued in 1994 pursuant to First Savings' stock option
plans adopted at that time. Ms. Brandt and Mr. Capel were granted options
pursuant to a stock option plan adopted after they became directors in 1998.
Upon completion of the merger, these options will be converted into options to
purchase First Bancorp common stock. See " -- Effect of the Merger on First
Savings Options." All First Savings options not already exercisable have or will
become vested, non-forfeitable and exercisable as a result of the proposed
merger and the change-in-control provisions in the stock option plans.
The following table sets forth, with respect to (1) each executive
officer, (2) a group consisting of all the executive officers, and (3) First
Savings' non-executive officer-directors as a group, the number of shares of
First
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<PAGE> 55
Savings common stock covered by outstanding First Savings options held by such
persons as of the First Savings record date.
<TABLE>
<CAPTION>
Number of
Shares
Underlying Weighted
Number of Shares Options Average
Underlying Currently Exercise Price Aggregate Value
Options Held(2) Exercisable(2) Per Option(2) of Options(1)
--------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
William E. Samuels 3,200 3,200 $10.00 $ 23,008
John F. Burns 17,000 17,000 10.00 122,230
Timothy S. Maples 12,750 12,750 10.00 91,674
Executive Officer Group (3 persons) 32,950 32,950 10.00 236,911
Non-Executive Officer-Director Group 176,904 176,904 11.13 1,072,038
( persons)
</TABLE>
- ----------------------
(1) Based on the closing price of First Savings common stock of $17.19 as
listed on the Nasdaq National Market System on May 11, 2000.
(2) The information in this table assumes that a notice will have been given
under the First Savings stock option plans as required in connection with
a change-in-control of First Savings.
FIRST SAVINGS SPECIAL TERMINATION AGREEMENTS. First Savings has entered
into special termination agreements with nine of its officers. First Savings has
not entered into special termination agreements with Mr. Samuels or Mr. Burns
because they are parties to employment agreements. Each of the special
termination agreements provides that, if the employment of the employee is
terminated in connection with, or within 24 months after, a "change in control"
as defined in the agreements, for reasons other than cause, the officer will be
entitled to either six months prior written notice of the proposed termination
or a severance benefit equal to not less than six months of the officer's then
existing salary. In addition, the agreements provide that within 24 months after
a "change in control", without the written consent of the officer, certain
described adverse changes, such as reductions in compensation, benefits,
required relocations and changes in responsibilities and status may not occur
without prior written notice to the officer, in which event the officer shall
have the right to delay implementation of the adverse change for a period of six
months. The consummation of the proposed merger between First Savings and First
Bancorp will constitute a "change in control" for purposes of the special
termination agreements.
ADDITIONAL BENEFITS. After completion of the merger, employees of First
Savings who become employees of First Bancorp or a subsidiary of First Bancorp
(other than any employee who is a party to an employment or change-of-control
agreement) and whose employment is terminated within one year without "cause" as
defined in the merger agreement will receive certain severance benefits based on
his or her service with First Bancorp and First Savings. The benefits will be
equal to the greater of two weeks' salary for each year of service or four
months' salary. Also, all employees of First Savings who become employees of
First Bancorp (including Mr. Burns, Mr. Samuels and Mr. Maples) will be entitled
to a one-time increase in salary in the amount of the additional cost to each
such employee of participating in First Bancorp's health insurance plan as
compared to the cost of participating in First Savings' health insurance plan
prior to the merger. The additional cost is expected to be no more than $268 per
employee per month for approximately 40 employees.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. After completion of
the merger, First Bancorp has agreed to indemnify the present and former
directors and officers of First Savings and its subsidiaries against certain
liabilities arising out of actions or omissions occurring at or prior to the
time the merger becomes effective (including the merger) to the fullest extent
permitted under North Carolina law and First Savings' articles of incorporation
and bylaws. First Bancorp also has agreed to maintain, for a period of at least
six years after completion of the merger, First Savings' existing directors' and
officers' liability insurance policy or a comparable policy.
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<PAGE> 56
FIRST BANCORP SEVERANCE AGREEMENTS. James H. Garner, Anna G. Hollers,
Teresa C. Nixon, Eric P. Credle, and David G. Grigg, along with five other
officers of First Bancorp, each have an employment agreement with First Bancorp
that contains a "change-of-control" provision. Each change-of-control agreement
provides that in the event of termination of employment by First Bancorp or the
employee for any reason or no reason (other than for gross negligence or other
misconduct as provided in such agreement) in connection with, or within 12
months after, any change of control of First Bancorp, the employee will be paid
a termination payment in cash in a lump sum amount based on the employee's
annual salary. Because the merger will result in more than 40% ownership of
First Bancorp by First Savings shareholders, the merger will constitute a change
of control of First Bancorp. Accordingly, if the employment of any of the
above-named employees is terminated by First Bancorp or the employee for any
reason or no reason within 12 months after the merger, the employee will be
entitled to the lump sum termination payment. See "FIRST BANCORP PROPOSAL FOR
ELECTION OF DIRECTORS -- Employment Contracts and Change in Control Agreements."
The following chart shows the estimated amount of the termination payment that
each First Bancorp executive officer would be entitled to in the event of a
qualifying termination of employment:
<TABLE>
<CAPTION>
Executive Officer Payment Amount
----------------- --------------
<S> <C>
James H. Garner $608,725
Anna G. Hollers $360,252
Teresa C. Nixon $352,773
Eric P. Credle $282,243
David G. Grigg $171,386
</TABLE>
FIRST BANCORP SERP AND STOCK OPTIONS. Under the First Bancorp
Supplemental Executive Retirement Plan, or SERP, participants ordinarily do not
become vested in accrued benefits until they retire either at age 65 or at an
"early retirement" age as permitted in the SERP. After a change in control, the
SERP provides that accrued benefits are vested upon a participant terminating
employment with First Bancorp, whether or not the participant is age 65 or
another permitted "early retirement" age. For a more detailed description of the
First Bancorp SERP, see "FIRST BANCORP PROPOSAL FOR ELECTION OF DIRECTORS --
Supplemental Executive Retirement Plan." For a description of the
change-in-control provisions of the SERP, see "FIRST BANCORP PROPOSAL FOR
ELECTION OF DIRECTORS -- Employment Contracts and Change in Control Agreements."
The options held by First Bancorp executives, as well as the First Bancorp SERP,
provide that the options and benefits under the SERP will become fully vested
upon a change in control of First Bancorp. Because the merger constitutes a
change in control of First Bancorp as defined in these benefit plans, these
benefits will become fully vested to the First Bancorp executive officers named
above upon completion of the merger. In addition, the stock options held by
other First Bancorp employees pursuant to First Bancorp's stock option plans
will become fully vested upon completion of the merger.
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<PAGE> 57
The following table sets forth with respect to (1) each executive
officer, (2) a group consisting of all the executive officers, and (3) First
Bancorp's non-executive officer-directors as a group, the number of shares of
First Bancorp common stock covered by outstanding First Bancorp options held by
such persons as of the First Bancorp record date.
<TABLE>
<CAPTION>
Number of Shares Weighted
Underlying Average
Number of Shares Options Exercise Price
Underlying Currently Per Aggregate Value
Options Held Exercisable Option of Options (1)
--------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
James H. Garner 26,560 26,560 $ 11.71 $ 107,302
Anna G. Hollers 25,500 18,000 10.10 144,075
Teresa C. Nixon 23,373 12,873 11.87 90,687
Eric P. Credle 9,000 3,000 18.31 0
David G. Grigg 6,000 6,000 7.08 52,020
Executive Officer Group (7 persons) 101,233 73,933 11.65 415,055
Non-Executive Officer Director Group (10
persons) 76,500 76,500 13.91 140,760
</TABLE>
- ----------------------
(1) Based on the closing price of First Bancorp common stock of $15.75 as
listed on the Nasdaq National Market System on May 11, 2000 and including
all options, whether or not currently exercisable.
EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER
The following is a summary of the material U.S. federal income tax
consequences of the merger to holders of First Savings common stock and does not
discuss any aspects of state, local, or foreign taxation. The discussion may not
apply to special situations, such as First Savings shareholders, if any, who
hold First Savings common stock other than as a capital asset, who received
First Savings common stock upon the exercise of employee stock options or
otherwise as compensation, who hold First Savings common stock as part of a
"straddle" or "conversion transaction," or who are insurance companies,
securities dealers, financial institutions or foreign persons. This summary is
based upon U.S. federal tax laws, regulations, rulings and decisions now in
effect and on proposed regulations, all of which are subject to change (possibly
with retroactive effect) by legislation, administrative action, or judicial
decision. No ruling has been or will be requested from the Internal Revenue
Service on any matter relating to the tax consequences of the merger.
Consummation of the merger is conditioned upon receipt by First Bancorp
and First Savings of an opinion of KPMG LLP, concerning the material federal
income tax consequences of the merger. As of the date of the filing of the
registration statement and based upon the assumption that the merger is
consummated in accordance with the merger agreement, and upon the factual
statements and factual representations made by First Savings and First Bancorp,
it is the opinion of KPMG LLP that:
- The merger will constitute a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code.
- No gain or loss will be recognized by (and no amount will be
included in the income of) First Savings, First Bancorp or
holders of First Savings common stock who exchange their First
Savings common stock solely for First Bancorp common stock
pursuant to the merger (except with respect to any cash
received in lieu of a fractional share interest in First
Bancorp common stock).
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<PAGE> 58
- The aggregate tax basis of the First Bancorp common stock
received by holders of First Savings common stock who exchange
all of their First Savings common stock solely for First
Bancorp common stock in the merger will be the same as the
aggregate tax basis of the First Savings common stock
surrendered in exchange for the First Bancorp common stock
(reduced by the basis allocable to a fractional share interest
in First Bancorp common stock for which cash is received).
- The holding period of the First Bancorp common stock received
by holders who exchange all of their First Savings common
stock solely for First Bancorp common stock in the merger will
include the holding period of the First Savings common stock
surrendered in exchange therefor, provided that such First
Savings common stock is held as a capital asset at the time
the merger is completed.
- The payment of cash to the holders of First Savings common
stock in lieu of fractional share interests of First Bancorp
common stock will be treated for U.S. federal income tax
purposes as if the fractional shares were distributed as part
of the exchange and then were redeemed by First Bancorp. These
cash payments will be treated as having been received as
distributions in full payment in exchange for the stock
redeemed, as provided in Section 302(a) of the Internal
Revenue Code.
As noted above, no ruling has been sought by the Internal Revenue
Service regarding the merger. The fact that no ruling has been sought should not
be construed as an indication that the Internal Revenue Service would
necessarily reach a different conclusion regarding the merger than set out in
this summary. The opinion of KPMG LLP referred to in this summary is not binding
upon the Internal Revenue Service, any other tax authority or any court, and no
assurance can be given that a position contrary to those expressed in this
summary will not be asserted by a tax authority and ultimately sustained by a
court of law.
Because certain tax consequences of the merger may vary depending upon
the particular circumstances of each First Savings shareholder and other
factors, each First Savings shareholder should consult his or her own tax
advisor to determine the particular tax consequences of the merger to such
holder (including the application and effect of state, local and foreign tax
laws).
Section 1.368-3 of the Treasury Regulations requires that each
shareholder that receives First Bancorp shares pursuant to the merger attach to
such shareholder's U.S. federal income tax return for the taxable year in which
the merger occurs, a complete statement of all facts pertinent to the
nonrecognition of gain or loss upon the merger. Shareholders should consult
their own tax advisors regarding these disclosure requirements.
The above paragraphs are a general guide only and are not exhaustive.
If you are in any doubt as to your taxation position in respect of these
proposals or are resident in a jurisdiction other than the U.S., you should
consult an appropriate professional advisor without delay.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
pooling-of-interests. First Bancorp and First Savings are not obligated to
consummate the merger if such accounting treatment is not available. Under the
pooling-of-interests method of accounting, the recorded amounts of the assets
and liabilities of First Savings will be carried forward at their previously
recorded amounts, and the current and prior consolidated financial statements of
First Bancorp will be restated for all periods as though First Savings and First
Bancorp has been combined at the beginning of the earliest period presented.
In order for the merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding First Savings
common stock must be exchanged for First Bancorp common stock with substantially
similar terms. There are certain other criteria that must be satisfied for the
merger to qualify as a pooling-of-interests. Some of the criteria cannot be
satisfied until after the merger becomes effective. In addition, it is a
condition to completion of the merger that KPMG LLP provide assurances to First
Bancorp that the merger will qualify for pooling-of-interests accounting
treatment. These assurances are expected to be in the form of a letter from KPMG
LLP stating that KPMG LLP concurs with management's conclusion that no
conditions exist that would preclude the merger from being accounted for as a
pooling-of-interests. Another condition to completion of
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<PAGE> 59
the merger is that Dixon Odom PLLC deliver a letter to First Bancorp to the
effect that such accountants are not aware of any matters relating to First
Savings or any of its subsidiaries that might cause the merger not to qualify
for such accounting treatment.
Certain restrictions will be imposed on the transferability of the
First Bancorp common stock received by affiliates of First Savings in the
merger. These conditions and restrictions will be imposed, among other things,
to ensure the availability of pooling-of-interests accounting treatment. For
information concerning these conditions and restrictions, see " -- Resales of
First Bancorp Common Stock."
EXPENSES AND FEES
The merger agreement provides that each of the parties will pay all of
its own expenses in connection with the transactions contemplated by the merger
agreement.
RESALES OF FIRST BANCORP COMMON STOCK
First Bancorp common stock to be issued to the First Savings
shareholders in connection with the merger will be registered under the
Securities Act of 1933. All shares of First Bancorp common stock received by
holders of First Savings common stock and all shares of First Bancorp common
stock issued and outstanding immediately prior to the completion of the merger
will be freely transferable upon consummation of the merger by those First
Savings shareholders not deemed to be "affiliates" of First Savings.
"Affiliates" generally are defined as persons or entities who control, are
controlled by, or are under common control with First Savings at the time of the
respective shareholder meetings (generally, executive officers, directors, and
10% or greater shareholders).
Rule 145 promulgated under the Securities Act restricts the sale of
First Bancorp common stock received in the merger by affiliates of First Savings
and certain of their family members and related interests. Under the rule,
during the one-year period following the consummation of the merger, affiliates
of First Savings may resell publicly the First Bancorp common stock received by
them in the merger within certain limitations as to the amount of First Bancorp
common stock sold in any three-month period and as to the manner of sale. After
the one-year period, affiliates of First Savings who are not affiliates of First
Bancorp may resell their shares without restriction. The ability of affiliates
to resell shares of First Bancorp common stock received in the merger under Rule
145 will be subject to First Bancorp having satisfied its Securities Exchange
Act of 1934 reporting requirements for specified periods prior to the time of
sale. Affiliates will receive additional information regarding the effect of
Rule 145 on their ability to resell First Bancorp common stock received in the
merger. Affiliates also would be permitted to resell First Bancorp common stock
received in the merger pursuant to an effective registration statement under the
Securities Act of 1933 or an available exemption from the Securities Act
registration requirements. This joint proxy statement/prospectus does not cover
any resales of First Bancorp common stock received by persons who may be deemed
to be affiliates of First Savings.
First Savings has agreed to use its reasonable efforts to cause each
person who may be deemed to be an affiliate of First Savings to execute and
deliver to First Bancorp not later than 30 days prior to the completion of the
merger, an agreement (each, an "affiliate agreement") providing that such
affiliate will not sell, pledge, transfer, or otherwise dispose of any First
Savings common stock held by such affiliate except as contemplated by the merger
agreement or the affiliate agreement, and will not sell, pledge, transfer or
otherwise dispose of any First Bancorp common stock received by such affiliate
upon consummation of the merger (a) except in compliance with the Securities Act
and the rules and regulations thereunder and (b) until such time as financial
results covering 30 days of combined operations of First Bancorp and First
Savings have been published. Shares of First Bancorp common stock issued to such
affiliates of First Savings in exchange for shares of First Savings common stock
will not be transferable until such time as financial results covering at least
30 days of combined operations of First Bancorp and First Savings have been
published, regardless of whether each such affiliate has provided an affiliate
agreement (and First Bancorp is entitled to place restrictive legends upon
certificates for shares of First Bancorp common stock issued to affiliates of
First Savings). Prior to publication of such results, First Bancorp will not
transfer on its books any shares of First Bancorp common stock received by an
affiliate of First Savings pursuant to the merger.
In addition, First Bancorp will use its reasonable efforts to prevent
each of its affiliates from selling, pledging, transferring or otherwise
disposing of First Bancorp common stock from the period beginning 30 days
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<PAGE> 60
prior to the completion of the merger until such time as financial results
covering 30 days of combined operations of First Bancorp and First Savings have
been published.
STOCK OPTION AGREEMENTS
At the same time as the merger agreement, and as a condition to the
parties entering into the merger agreement, First Savings and First Bancorp
entered into stock option agreements under which (a) First Savings granted First
Bancorp an option to purchase up to 685,780 shares (representing 19.9% of the
shares issued and outstanding before giving effect to the exercise of such
option) of First Savings common stock at a cash price per share equal to $18.125
and (b) First Bancorp granted First Savings an option to purchase up to 855,142
shares (representing 19.9% of the shares issued and outstanding before giving
effect to the exercise of such option) of First Bancorp common stock, at a cash
price per share equal to $17.75, under the circumstances described below,
subject to possible adjustment in certain circumstances. Under these stock
option agreements, neither First Savings' nor First Bancorp's total profit
resulting from the exercise of the options may exceed $2,500,000.
The purpose of the option agreements is to increase the likelihood that
the merger will be completed by making it more difficult and more expensive for
a third party to gain control of either First Savings or First Bancorp.
Accordingly, the options are exercisable only on the occurrence of certain
events that generally involve, in the case of either First Savings or First
Bancorp, the acquisition or attempted acquisition of the company, a significant
portion of its then outstanding common stock or all or a significant portion of
its assets. In addition, the stock option agreements provide that if a third
party obtains control of the company that issued the option, the holder of the
option may require the company that issued the option to repurchase the option
and all shares purchased pursuant to the option. The repurchase price for the
option and the shares would be equal to the amounts paid to purchase shares
pursuant to the option plus the lesser of (i) $2,500,000 and (ii) the sum of the
market value, as of the time of exercise, of the shares issued pursuant to the
portion of the option that has been exercised and the market value of the
option, to the extent not yet exercised.
The exercise of the options granted under the stock option agreements
may be subject to certain regulatory approvals, but First Bancorp and First
Savings disclaim beneficial ownership of the shares subject to such options
unless and until the options are actually exercised.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
In the merger, First Savings shareholders will exchange their shares of
First Savings common stock for shares of First Bancorp common stock. First
Savings is a North Carolina corporation governed by its articles of
incorporation and bylaws and North Carolina law. First Bancorp is a North
Carolina corporation governed by its articles of incorporation and bylaws and
North Carolina law. There are significant differences between the rights of
First Savings shareholders and First Bancorp shareholders. The following is a
summary and comparison of certain provisions of the articles of incorporation
and bylaws of First Savings and First Bancorp. This summary and comparison,
however, is not intended to be complete and is qualified it its entirety by
reference to the North Carolina Business Corporations Act (the "North Carolina
Act"), as well as First Bancorp's articles of incorporation and bylaws and First
Savings' articles of incorporation and bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
The articles of incorporation and bylaws of certain corporations
contain provisions designed to assist the board of directors in playing a role
if any group or person attempts to acquire control of the company, so that the
board of directors can protect the interests of the company and its shareholders
under the circumstances. These provisions may help the board of directors
determine that a sale of control is in the best interests of the shareholders or
may enhance the board's ability to maximize the value to be received by the
shareholders upon a sale of control of the company.
Anti-takeover provisions may, however, tend to discourage some takeover
bids. As a result, the corporation's shareholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand, defeating undesirable
acquisition offers can be a very
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<PAGE> 61
expensive and time-consuming process. To the extent that these provisions
discourage undesirable proposals, the company may be able to avoid expenditures
of time and money.
These anti-takeover provisions also may discourage open market
purchases by a company that may desire to acquire another corporation. Such open
market purchases may increase the market price of the target's common stock
temporarily and enable shareholders to sell their shares at a price higher than
that they might otherwise obtain. In addition, anti-takeover provisions may
decrease the market price of the target's common stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. Provisions such as a classified
board and removal of directors only for cause may make it more difficult and
time consuming for a potential acquirer to obtain control of the target company
by replacing the board of directors and management. Furthermore, these
provisions may make it more difficult for a corporation's shareholders to
replace the board of directors or management, even if a majority of the
shareholders believe that replacing the board or management is in the best
interests of the corporation. Because of these factors, these provisions may
tend to perpetuate the incumbent board of directors and management. Unlike First
Savings, First Bancorp does not have any anti-takeover protections arising from
the structure of its board of directors. As described below, First Bancorp has
authorized but unissued shares of common stock available for various uses, but
does not have any other anti-takeover protections such as the requirement of a
supermajority vote to approve certain business combinations. First Savings does
have such a protection.
AUTHORIZED CAPITAL STOCK
FIRST BANCORP. First Bancorp's articles of incorporation authorizes the
issuance of up to 12,500,000 shares of First Bancorp common stock, no par value
per share, of which 4,506,651 shares were outstanding as of May 11, 2000. There
are no other shares of capital stock of First Bancorp outstanding. First
Bancorp's board of directors may authorize the issuance of additional shares of
First Bancorp common stock without further action by First Bancorp shareholders,
unless such action is required in a particular case by applicable laws or
regulations or by any stock exchange upon which First Bancorp common stock may
be listed. The First Bancorp shareholders do not have the preemptive right to
purchase or subscribe to any unissued authorized shares of First Bancorp common
stock.
Subject to the payment of cash in lieu of fractional shares, First
Bancorp will issue up to an estimated maximum of 4,812,601 shares of First
Bancorp common stock in connection with the merger, including approximately
416,188 shares that are subject to assumed options. Based on the number of
shares of First Bancorp common stock outstanding on May 11, 2000, it is
anticipated that, immediately following the consummation of the merger, a total
of approximately 8,903,064 shares of First Bancorp common stock will be
outstanding, not including shares to be issued upon exercise of existing and
assumed First Bancorp stock options that will become fully vested upon
completion of the merger and not including shares of First Bancorp common stock
repurchased by First Bancorp. See "BUSINESS OF FIRST BANCORP -- Recent
Developments."
The authority to issue additional authorized shares of First Bancorp
common stock provides First Bancorp with the flexibility necessary to meet its
future needs without the delay resulting from seeking shareholder approval. The
authorized but unissued shares of First Bancorp common stock can be issued from
time to time for any corporate purpose, including, without limitation, stock
splits, stock dividends, employee benefit and compensation plans, acquisitions,
and public or private sales for cash as a means of raising capital. Such shares
could be used to dilute the stock ownership of persons seeking to obtain control
of First Bancorp. In addition, the sale of a substantial number of shares of
First Bancorp common stock to persons who have an understanding with First
Bancorp concerning the voting of such shares, or the distribution or declaration
of a dividend of shares of First Bancorp common stock (or the right to receive
First Bancorp common stock) to First Bancorp shareholders, may have the effect
of discouraging or increasing the cost of unsolicited attempts to acquire
control of First Bancorp.
FIRST SAVINGS. The authorized capital stock of First Savings consists
of (a) 20,000,000 shares of common stock, no par value per share, of which
3,526,157 were outstanding as of May 11, 2000, and (b) 5,000,000 shares of
preferred stock, no par value per share, none of which is issued and
outstanding. First Savings' board may issue, without any further action by the
First Savings shareholders, shares of First Savings preferred stock, in one or
more classes or series, with voting, conversion, dividend and liquidation rights
as the board of directors may determine. Among other potential uses, this
authorized but unissued preferred stock could be issued to dilute the stock
ownership of persons seeking to obtain control of First Savings or as part of a
shareholder rights plan. First Savings
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<PAGE> 62
thus could use the authorized but unissued preferred stock as a defensive
measure against unwanted takeover attempts. First Bancorp's articles of
incorporation do not authorize any preferred stock and thus do not provide its
shareholders with this form of protection against hostile takeovers.
AMENDMENT OF CHARTER AND BYLAWS
FIRST BANCORP. Under the North Carolina Act, most amendments to the
articles of incorporation must be proposed by the board of directors and
approved by a majority of shareholders entitled to vote. Neither First Bancorp
nor First Savings provides anything to the contrary in its articles of
incorporation.
Except as otherwise required in a bylaw adopted by the shareholders or
by the articles of incorporation or the North Carolina Act, a majority of the
board of directors of First Bancorp may amend or repeal its bylaws, except that
a bylaw adopted, amended or repealed by the shareholders may not be readopted,
amended or repealed by the board of directors unless the articles of
incorporation or a bylaw adopted by the shareholders authorizes the board of
directors to adopt, amend of repeal that particular bylaw or the bylaws
generally.
FIRST SAVINGS. As with First Bancorp, in general, a majority of the
directors of First Savings may amend or repeal the corporation's bylaws, except
that a bylaw adopted, amended or repealed by the shareholders may not be
readopted, amended or repealed by the board of directors unless the articles of
incorporation or a bylaw adopted by the shareholders authorizes the board of
directors to adopt, amend or repeal that particular bylaw or the bylaws
generally. Any repeal or amendment of Article VII of the First Savings bylaws
governing shareholder and board approval of business combinations, however, must
be approved by the holders of at least 75% of the outstanding voting stock of
First Savings, voting separately as a class; however, a simple majority vote
(rather than the 75% vote) is required for any amendment or repeal recommended
to the shareholders by at least 75% of the entire board (or 75% of the
continuing board of directors if an interested party is involved).
ELECTION OF DIRECTORS
FIRST BANCORP. The First Bancorp board of directors is comprised of
between three and 13 members, as fixed at or prior to each annual meeting by
shareholder resolution. One of the proposals at the special and annual meeting
of First Bancorp is to increase the maximum number of directors on the board to
18 and to fix the number of directors at 18. See "FIRST BANCORP PROPOSAL TO
AMEND FIRST BANCORP'S BYLAWS". At each annual meeting, directors are elected to
hold office until the next annual meeting of shareholders and until their
successors are duly elected and qualified. In general, each shareholder has one
vote for each share of common stock owned, and the persons receiving the highest
number of votes at a meeting at which a quorum is present are elected to the
board. However, the board of directors may also be elected by the use of
cumulative voting. The right to elect the board by cumulative voting may be
exercised only if: (1) the meeting notice or proxy statement accompanying the
notice states conspicuously that cumulative voting is authorized at the meeting;
or (2) a shareholder or proxy holder present at the meeting announces, before
the voting for directors starts, his or her intention to vote cumulatively. If
such an announcement is made, the meeting will be recessed for at least two, but
not more than seven days (or any other time period unanimously agreed upon).
Cumulative voting is advantageous to minority shareholders. Without cumulative
voting, the holders of a majority of the shares of First Bancorp common stock
could elect 100% of the directors. Cumulative voting permits minority
shareholders to concentrate their votes and obtain representation on the First
Bancorp board of directors. If cumulative voting is chosen pursuant to one of
the procedures described above, each shareholder is entitled to multiply the
number of votes he or she is entitled to cast by the number of directors for
whom he or she is entitled to vote and cast the product for a single candidate
or distribute the product among two or more candidates.
FIRST SAVINGS. The First Savings board must consist of at least five,
but not more than 15 members, with the exact number to be determined from time
to time by the board of directors. The First Savings bylaws provide that, at all
times when the total number of the members of the board of directors is nine or
more, the board of directors will be divided into three classes, with each class
being as nearly equal in number as possible. The directors in each class serve
three-year terms of office. The effect of First Savings having a classified
board of directors is that only approximately one-third of the members of First
Savings' board of directors are elected each year, which effectively requires
two annual meetings for the First Savings shareholders to change a majority of
the members of the board of directors. By potentially delaying the time within
which an acquirer could obtain working
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<PAGE> 63
control of First Savings' board of directors, this provision may discourage some
potential mergers, tender offers or hostile takeover attempts. First Savings
shareholders will not have this protection after the merger because First
Bancorp's board of directors is not classified.
The holders of First Savings common stock are entitled to one vote per
share held of record on all matters submitted to a shareholder vote. The First
Savings shareholders do not have the right to vote cumulatively in the election
of directors. As a result of the absence of cumulative voting, the majority of
votes represented at a meeting may elect all directors, and the remaining
minority shareholders may not elect any directors. The absence of cumulative
voting makes it more difficult for shareholders that hold a minority of the
outstanding shares of First Savings common stock to elect representatives of
their choice. Because First Bancorp has cumulative voting for directors,
minority shareholders will have a greater opportunity to obtain representation
on the board after completion of the merger.
DIRECTOR REMOVAL AND VACANCIES
FIRST BANCORP. First Bancorp's bylaws provide that at any shareholder
meeting for which the notice of meeting states that one purpose of the meeting
is the removal of any or all directors, one or more directors may be removed
with or without cause, by a majority vote of those shareholders entitled to
vote. However, unless the entire board is removed, an individual director cannot
be removed if the number of votes sufficient to elect him or her under
cumulative voting is voted against removal. If a director is elected by a voting
group of shareholders, only the shareholders of that voting group may
participate in the vote to remove him or her. In addition, the First Bancorp
bylaws provide that no individual may be elected to or may serve on the board at
any time after such individual's 72nd birthday, except that a director who is
elected prior to his or her 72nd birthday and reaches the age of 72 while
serving his or her term may serve until the next annual meeting of shareholders.
First Bancorp has agreed, conditional upon approval of the merger, to waive its
mandatory retirement rule for William E. Samuels and Felton J. Capel, former
directors of First Savings, until each reaches age 75, as permitted by its
bylaws for directors added to the board in connection with acquisitions.
Vacancies occurring on the First Bancorp board may be filled by the
shareholders at any annual or special meeting, the board of directors at any
regular or special meeting, the affirmative vote of a majority of the remaining
directors even though less than a quorum of the board, or by the sole director
remaining in office. If the vacant office was held by a director elected by a
voting group of shareholders, only the remaining director or directors elected
by that voting group or the shareholders of that voting group are entitled to
fill the vacancy. A director that is elected to fill a vacancy serves for the
unexpired term of his or her predecessor.
FIRST SAVINGS. The First Savings bylaws provide that at any shareholder
meeting for which the notice of meeting states that one purpose of the meeting
is the removal of one or more directors, the shareholders may remove a director
from office, with or without cause, if the number of votes for removal is
greater than the number of votes opposing removal. However, if the director is
elected by a voting group, only the shareholders of that voting group may
participate in the vote on removal.
Any vacancy occurring on the First Savings board may be filled by the
shareholders or the board of directors, whichever group acts first. If the
remaining directors do not constitute a quorum, the directors may fill the
vacancy by the affirmative vote of a majority of the remaining directors or the
sole remaining director. If the vacant office was held by a director elected by
a voting group of shareholders, only the remaining director or directors elected
by that voting group or the shareholders of that voting group are entitled to
fill the vacancy.
First Savings' bylaws prohibit persons age 75 and older from being
elected to the board. Directors must retire by the first annual meeting held
after they reach age 75 unless the director was an initial director of the
corporation.
LIMITATIONS ON DIRECTOR LIABILITY
FIRST BANCORP. The First Bancorp articles of incorporation provide
that, to the fullest extent permitted by the North Carolina Act, a director of
First Bancorp will not be personally liable to the corporation or its
shareholders
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<PAGE> 64
for monetary damages for breach of his or her duty as a director. The limitation
on monetary damages does not preclude other equitable remedies such as
injunctive relief or rescission. Further, such limitation may not be available
for violations of federal and state banking and securities laws.
FIRST SAVINGS. As with First Bancorp, the First Savings articles of
incorporation provide that, to the fullest extent permitted by the North
Carolina Act, a director of First Savings will not be personally liable to the
corporation or its shareholders for monetary damages for breach of any duty as a
director. The articles of incorporation also provide that the provision
regarding limitations on director liability may not be repealed or amended to
eliminate or reduce the protection granted with respect to any matter that
occurred prior to such amendment or repeal.
INDEMNIFICATION OF DIRECTORS
FIRST BANCORP. Under the North Carolina Act, a corporation may
indemnify any director against liability if the director:
- conducted himself or herself in good faith;
- reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that his or her
conduct was in the best interests of the corporation, and in
all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
- in the case of any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
Under the North Carolina Act, a corporation may not indemnify a
director:
- in connection with a proceeding by or in the right of the
corporation in which the director was held liable to the
corporation; or
- in connection with a proceeding in which the director was held
liable on the basis that personal benefit was improperly
received by him or her.
Unless limited by its articles of incorporation, a North Carolina
corporation must indemnify, against reasonable expenses incurred, a director who
is wholly successful, on the merits or otherwise, in defending any proceeding to
which the director was a party because of his or her status as a director of the
corporation. Expenses incurred by a director in defending a proceeding may be
paid by the corporation in advance of the final disposition of the proceeding if
the director furnishes the corporation a written undertaking to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation against such expenses. A director may apply for
court-ordered indemnification under certain circumstances.
Under the North Carolina Act, unless a corporation's articles of
incorporation provide otherwise,
- an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered
indemnification to the same extent as a director, and
- the corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same
extent as to a director.
In addition and separate from the statutory indemnification rights
discussed above, the North Carolina Act provides that a corporation may in its
articles of incorporation or bylaws or by contract or resolution indemnify or
agree to indemnify any one or more of its directors, officers, employees, or
agents against liability and expenses in any proceeding (including without
limitation a proceeding brought by or on behalf of the corporation itself)
arising out of their status as such or their activities in any of the foregoing
capacities. A corporation may not indemnify or agree to indemnify a person
against liability or expenses he or she may incur on account of his activities
that were at
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the time taken known or believed by him to be clearly in conflict with the best
interests of the corporation. A corporation may likewise and to the same extent
indemnify or agree to indemnify any person who, at the request of the
corporation, is or was serving as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise or as a trustee or administrator under
an employee benefit plan. Any such provision for indemnification also may
include provisions for recovery from the corporation of reasonable costs,
expenses, and attorneys' fees in connection with the enforcement of rights to
indemnification and may further include provisions establishing reasonable
procedures for determining and enforcing the rights granted therein.
First Bancorp's bylaws provide for the mandatory indemnification, to
the fullest extent permitted by law, of any person who at any time serves or has
served as a director, officer, employee or agent of First Bancorp, or, at the
request of First Bancorp, is or was serving as a director, officer, employee or
agent of another entity against:
- reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him or her in connection with any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and
whether or not brought on or on behalf of the corporation
seeking to hold him or her liable by reason of the fact that
he or she was acting in such capacity; and
- reasonable payments made by him or her in satisfaction of any
judgment, money decree, fine, penalty or settlement for which
he or she may have become liable in any such action, suit or
proceeding.
First Bancorp's board of directors must take all such action as may be
necessary and appropriate to authorize First Bancorp to fulfill its mandatory
indemnification obligations, including without limitation, to the extent needed,
making a good faith evaluation of the manner in which the claimant for indemnity
acted and of the reasonable amount of indemnity to such claimant and giving
notice to, and obtaining approval by, the shareholders of the corporation. First
Bancorp's bylaws do not provide for any additional, permissive indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling
First Bancorp pursuant to the foregoing provisions, First Bancorp has been
informed that, in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
FIRST SAVINGS. First Savings' bylaws provide for the same mandatory
indemnification described above for First Bancorp. However, mandatory
indemnification is available only for directors and officers of First Savings in
their capacity as such and directors and officers of First Savings who have, at
the request of First Savings, simultaneously served as a director, officer,
partner, trustee, employee of another entity, and not to employees or agents of
First Savings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling
First Savings pursuant to the foregoing provisions, First Savings has been
informed that, in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
SPECIAL MEETINGS OF SHAREHOLDERS
FIRST BANCORP. First Bancorp's bylaws provide that special meetings of
First Bancorp shareholders may be called by the president, the board of
directors or by a shareholder at the written request of the holders of at least
10% of the shares entitled to vote on the issues proposed to be considered at
the special meeting.
FIRST SAVINGS. First Savings' bylaws provide that special meetings of
First Savings shareholders may be called by the Chief Executive Officer,
president, chairman of the board, or the board of directors. Because shareholder
ability to call a special meeting is not specifically authorized in its articles
of incorporation or bylaws, under the North Carolina Act, so long as First
Savings is a public corporation (that is, has a class of stock registered under
the Securities Exchange Act of 1934), the First Savings shareholders are not
entitled to call a special meeting.
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SHAREHOLDER NOMINATIONS AND PROPOSALS
FIRST BANCORP. First Bancorp's bylaws provide that the nomination of
persons for election to the First Bancorp board of directors may be made at an
annual meeting of shareholders (a) by or at the direction of the board of
directors, or (b) by any shareholder of the corporation entitled to vote for the
election of directors who was a shareholder of record at the time of giving of
proper written notice to the secretary of the corporation and who complies with
the notice procedures set forth in the First Bancorp bylaws. Shareholders of
record entitled to vote at the annual meeting also may propose other business to
be brought before the annual meeting if they comply with the notice procedures
set forth in the First Bancorp bylaws.
FIRST SAVINGS. The First Savings bylaws provide that nomination of
persons for election to the First Savings board may be made at a meeting of the
shareholders (a) by the board of directors, or (b) by any holder of shares
entitled to be voted at the meeting for the election of directors. All
nominations by shareholders must be in writing and must comply with the notice
procedures set forth in the First Savings bylaws. Neither the articles of
incorporation nor bylaws of First Savings establish any notice procedures for
shareholder proposals of business to be brought before an annual meeting.
NO DISSENTERS' RIGHTS OF APPRAISAL
FIRST BANCORP. Under the North Carolina Act, shareholders generally are
entitled to dissent from, and obtain payment of the fair value of their shares
when certain fundamental changes in the corporation or the shareholders' rights
occur. However, dissenters' rights generally are not available to shareholders
of a corporation, like First Bancorp, with its common stock listed on the Nasdaq
National Market System, unless the governing documents of the corporation
issuing those shares provide otherwise, or, in the case of a merger or share
exchange, shareholders receive consideration other than cash or shares of stock
of another corporation listed on a national exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. First Bancorp's articles of
incorporation and bylaws do not provide for any dissenters' rights.
FIRST SAVINGS. As with First Bancorp, because First Savings is a North
Carolina corporation with its stock listed on the Nasdaq National Market System,
First Savings shareholders' rights to dissent are similarly limited.
SHAREHOLDER VOTES REQUIRED FOR CERTAIN ACTIONS
FIRST BANCORP. Neither the articles of incorporation nor bylaws of
First Bancorp address the voting requirements for different actions.
Accordingly, the provisions of the North Carolina Act will apply. In general, a
majority of outstanding shares or a majority of votes cast must approve an
action for it to be effective. However, approval of the merger will require the
affirmative vote of a majority of the shares entitled to be voted on the merger.
FIRST SAVINGS. First Savings is subject to the North Carolina Act.
However, its articles of incorporation provide that the affirmative vote of the
holders of at least 75% of the outstanding shares of First Savings common stock
is required to approve certain business combinations. This supermajority voting
requirement does not apply, however, if the transaction has been approved by at
least 75% of all of the directors of First Savings (or 75% of the continuing
directors of First Savings if the business combination is proposed by a related
person). The merger was approved by more than 75% of the First Savings board of
directors, making the supermajority provision inapplicable to it.
For purposes of the supermajority provision, a "business combination"
is any transaction in connection with a combination or merger of First Savings,
the acquisition of 10% or more of First Savings' voting stock or a purchase or
sale of a substantial portion (20%) of the assets of First Savings or any
subsidiary thereof, in each case, which requires (if applicable) the approval of
or notice to and absence of objection by (a) any federal or state regulatory
authority of banks, savings banks, savings and loan associations or their
holding companies, (b) the Federal Trade Commission or the Antitrust Division of
the United States Department of Justice or (c) the shareholders of First
Savings. A reorganization, acquisition, merger or purchase or sale of assets or
combination
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<PAGE> 67
initiated by the corporation upon the vote of at least 51% of the continuing
directors is not deemed a business combination.
First Savings' articles of incorporation further provide that the board
of directors, when evaluating the merits of any business combination, shall, in
connection with the exercise of its judgment in determining what is in the best
interests of the company and its shareholders, give due consideration to all
relevant factors, including, without limitation: (a) the social and economic
effects of acceptance of such offer on the depositors, borrowers, other
customers, employees and creditors of First Savings and its subsidiaries and on
the communities in which First Savings and its subsidiaries operate or are
located; (b) the ability of First Savings and its subsidiaries to fulfill the
objectives of a bank and/or savings bank and/or savings and loan association
holding company, and of commercial banking and/or savings bank and/or savings
and loan entities under applicable federal and state statutes and regulations;
(c) the business and financial condition and prospects and earnings prospects of
the person or persons proposing the business combination (including financial
obligations of such person or persons); (d) the competence, experience and
integrity of the person or persons proposing the business combination and its or
their management; and (e) the prospects for successful completion of the
proposed business combination.
Even though the constituency provision provides that the board has sole
discretion in making such determination, the provision may discourage or make
more difficult certain business combinations, and therefore, may adversely
affect the ability of the shareholders to benefit from certain transactions
opposed by First Savings' board of directors. The supermajority provisions of
First Savings' articles of incorporation may have the effect of delaying,
deferring or preventing a change in control of First Savings that some holders
of First Savings may deem to be in their best interests. First Bancorp does not
have any such supermajority approval requirements.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
FIRST BANCORP. The North Carolina Act gives a shareholder of a North
Carolina corporation the right to inspect and copy books and records of the
corporation during regular business hours if he or she gives the corporation
written notice of his or her demand at least five business days before the date
of the inspection. In order to inspect certain records, written demand must also
be made in good faith and for a proper purpose and must describe with reasonable
particularity the purpose of the request and the records the shareholder desires
to inspect.
FIRST SAVINGS. The First Savings shareholders have the right to inspect
and copy First Savings' books and records as set forth above.
DIVIDENDS
FIRST BANCORP. First Bancorp shareholders are entitled to receive such
dividends or distributions as the board of directors authorizes in its
discretion. First Bancorp's ability to pay dividends is subject to the
restrictions of North Carolina corporate law. A corporation generally may
authorize and make dividends so long as after making the dividend, the
corporation would be able to pay its debts as they become due in the ordinary
course of business and the corporation's total assets would not be less that the
sum of its total liabilities plus the amount that would be needed, if the
corporation were to be dissolved at the time of the dividend, to satisfy claims
of shareholders who have preferential rights superior to the rights of the
shareholders receiving the dividend.
There are various statutory limitations on the ability of First
Bancorp's banking subsidiaries to pay dividends to First Bancorp. See "CERTAIN
REGULATORY CONSIDERATIONS."
FIRST SAVINGS. The rights of First Savings shareholders to receive
dividends are substantially similar to those of First Bancorp shareholders.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
First Bancorp common stock is traded on the Nasdaq National Market
System under the symbol "FBNC." First Savings common stock is traded on the
Nasdaq National Market System under the symbol "SOPN." The following table sets
forth, for the indicated periods, the high and low closing sale prices for First
Bancorp and First Savings common stock as reported by the Nasdaq National Market
System and the cash dividends declared per share of First Bancorp common stock
and First Savings common stock for the indicated periods. The stock prices do
not include retail mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
First Bancorp First Savings
--------------------------------------- ------------------------------------------
Cash Cash
Price Range Dividends Price Range Dividends
----------------------- Declared ------------------------ Declared
High Low Per Share High Low Per Share
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter $ 17.83 $ 12.33 $ 0.0866 $ 20.25 $ 17.88 $ 0.20
Second Quarter 16.17 14.50 0.0866 24.50 19.38 0.20
Third Quarter 18.50 15.00 0.0866 23.88 20.00 0.22
Fourth Quarter 23.33 17.33 0.0866 25.50 22.00 0.22
1998
First Quarter 28.00 19.50 0.10 26.00 22.19 0.25
Second Quarter 24.67 20.67 0.10 25.75 22.25 0.25
Third Quarter 22.67 19.33 0.10 24.88 21.00 0.25
Fourth Quarter 22.00 16.00 0.10 23.75 20.88 0.25
1999
First Quarter 19.83 16.00 0.1133 22.50 21.50 0.25
Second Quarter 18.17 14.67 0.1133 22.19 19.13 0.26
Third Quarter 19.67 15.71 0.1133 21.50 19.57 0.26
Fourth Quarter 20.00 15.50 0.1133 20.38 17.63 0.26
2000
First Quarter 17.25 12.06 0.13 19.06 14.13 0.26
Second Quarter (through
May 15, 2000) 15.88 12.63 N/A 19.00 15.25 N/A
</TABLE>
On May 15, 2000, the last sale price of First Bancorp common stock as
reported on the Nasdaq National Market System was $15.69 per share, and the last
sale price of First Savings common stock as reported on the Nasdaq National
Market System was $16.25 per share. On December 15, 1999, the last business day
prior to the public announcement of the merger, the last sale price of First
Bancorp common stock as reported on the Nasdaq National Market System was $17.00
per share, and the last sale price of First Savings common stock as reported by
the Nasdaq National Market System was $18.44 per share.
The holders of First Bancorp common stock are entitled to receive
dividends when and if declared by First Bancorp's board of directors out of
funds legally available therefor. Although First Bancorp currently intends to
continue to pay quarterly cash dividends on the First Bancorp common stock,
there can be no assurance that First Bancorp's dividend policy will remain
unchanged after completion of the merger. The declaration and payment of
dividends after the merger will depend on business conditions, operating
results, capital and reserve requirements, and the First Bancorp board's
consideration of other relevant factors. The principal sources of funds for the
payment of dividends by First Bancorp are dividends from First Bank.
First Bancorp currently pays quarterly dividends at an annualized rate
of $0.52 per share of First Bancorp common stock and expects that after
completion of the merger it will increase this quarterly dividend amount to an
annualized rate of $0.88 per share to more closely align the dividend policy of
the two separate companies.
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First Bancorp and First Savings are each legal entities separate and
distinct from their subsidiaries and their revenues depend in significant part
on the payment of dividends from their respective subsidiary institutions. First
Bancorp's and First Savings' subsidiary depository institutions are subject to
certain legal restrictions on the amount of dividends they are permitted to pay.
See "CERTAIN REGULATORY CONSIDERATIONS."
BUSINESS OF FIRST SAVINGS
First Savings, a North Carolina corporation, is a savings bank holding
company registered with the Federal Reserve under the Bank Holding Company Act
of 1956, as amended. As of March 31, 2000, First Savings had total consolidated
assets of approximately $327 million, total consolidated loans of approximately
$230 million, total consolidated deposits of approximately $231 million, and
total consolidated shareholders' equity of approximately $64 million.
First Savings began operations in 1994 when it acquired all of the
capital stock of its one subsidiary, First Savings Bank of Moore County, Inc.,
SSB, a North Carolina savings bank that is headquartered in Southern Pines,
North Carolina. The principal activity of First Savings is the ownership and
operation of First Savings Bank of Moore County. First Savings Bank of Moore
County was organized in 1922 and has as its primary market area Moore County,
North Carolina, where it has three offices in Southern Pines and offices in
Pinehurst, Carthage and Seven Lakes.
First Savings Bank of Moore County offers a variety of deposit accounts
to the general public and uses those deposits and other funds to make real
estate, consumer and commercial loans. As of June 30, 1999, approximately 85.1%
of First Savings Bank of Moore County's net loan portfolio was composed of
one-to-four family residential real estate loans. First Savings Bank of Moore
County's revenues are derived primarily from interest on loans. The bank also
has earnings from investment securities, mortgage backed securities, interest
bearing deposit balances and other sources.
The principal executive offices of First Savings are located at 205
S.E. Broad Street, Southern Pines, North Carolina 28387, and its telephone
number is (910) 692-6222.
Additional information with respect to First Savings and its
subsidiaries is included elsewhere herein and in documents delivered with this
joint proxy statement/prospectus and incorporated by reference herein. See
"ADDITIONAL INFORMATION."
BUSINESS OF FIRST BANCORP
GENERAL
First Bancorp is a one-bank holding company. As of March 31, 2000,
First Bancorp had total consolidated assets of approximately $591 million, total
consolidated loans of approximately $443 million, total consolidated deposits of
approximately $501 million, and total consolidated shareholders' equity of
approximately $45 million.
The principal activity of First Bancorp is the ownership and operation
of First Bank, a state-chartered bank with its main office in Troy, North
Carolina. First Bancorp also owns and operates two nonbank subsidiaries,
Montgomery Data Services, Inc., a data processing company, and First Bancorp
Financial Services, Inc., which currently owns and operates various real estate
properties. First Bancorp also controls First Bank Insurance Services, Inc., a
provider of non-FDIC insured insurance and investment products and First Troy
Realty Corporation, a real estate investment trust.
First Bancorp was incorporated in North Carolina on December 8, 1983,
as Montgomery Bancorp, for the purpose of acquiring all of the outstanding
common stock of First Bank through stock-for-stock exchanges. On December 31,
1986, the holding company changed its name to First Bancorp to conform its name
to the name of the bank, which had changed its name from Bank of Montgomery to
First Bank in 1985.
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<PAGE> 70
First Bank was organized in North Carolina in 1934 and began banking
operations in 1935 as the Bank of Montgomery, named for the county in which it
operated. First Bank now operates in a 14-county area centered in Troy, North
Carolina. Troy, with a population of 3,400, is located in the center of
Montgomery County, approximately 60 miles east of Charlotte, 50 miles south of
Greensboro and 80 miles southwest of Raleigh. First Bank conducts business in
North Carolina from 36 branches located within an 80-mile radius of Troy,
covering a geographical area from Maxton to the southeast, to High Point to the
north, to Lillington to the east, and to Kannapolis to the west. Ranked by
assets, First Bank was the 16th largest bank in North Carolina as of December
31, 1999, according to the North Carolina Office of the Commissioner of Banks.
First Bank provides a full range of banking services, including the accepting of
demand and time deposits and the making of secured and unsecured loans to
individuals and businesses. In 1999, as in recent prior years, First Bank
accounted for substantially all of the consolidated net income of First Bancorp.
First Bancorp's principal executive offices are located at 341 North
Main Street, Troy, North Carolina 27371, and its telephone number is (910)
576-6171.
Additional information with respect to First Bancorp and its
subsidiaries is included in the documents delivered with this joint proxy
statement/prospectus and incorporated by reference herein. See "ADDITIONAL
INFORMATION."
RECENT DEVELOPMENTS
On April 13, 2000, First Bancorp announced first quarter of 2000
diluted earnings per share of $0.40, which were 25.0% higher than the $0.32
diluted earnings per share reported for the first quarter of 1999. In December
1998, First Bancorp's board of directors authorized First Bancorp to repurchase
up to 100,000 shares of its common stock from time to time, and through December
31, 1999, approximately 19,754 shares had been repurchased pursuant to this
authorization. During the first few months of 2000, banking industry stocks,
including the common stock of First Bancorp, continued a trend of declining
stock prices. First Bancorp determined that continuing its program of buying
back First Bancorp's stock at these market levels would enhance shareholder
value. Accordingly, between January 1, 2000 and May 12, 2000, First Bancorp
repurchased a total of 58,300 shares of its common stock at an average price of
$15.75 per share. During this same period, 13,310 shares were issued in
connection with stock option exercises, at an average exercise price of $7.36
per share. On May 12, 2000, First Bancorp announced that the board of directors
had withdrawn its authorization for share repurchases and suspended its share
repurchase program indefinitely.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed balance sheet
presents (i) the historical unaudited consolidated balance sheet of First
Bancorp and First Savings at March 31, 2000, and (ii) the unaudited pro forma
combined condensed balance sheet of First Bancorp at March 31, 2000, giving
effect to the merger, assuming the merger is accounted for as a
pooling-of-interests. The unaudited pro forma combined condensed balance sheet
should be read in conjunction with the historical consolidated financial
statements of First Bancorp and First Savings, including the respective notes
thereto, that are included in the documents delivered with this joint proxy
statement/prospectus and incorporated by reference herein, and the unaudited pro
forma financial information appearing elsewhere in this joint proxy
statement/prospectus. See "ADDITIONAL INFORMATION," "SUMMARY -- Historical and
Pro Forma Comparative Per Share Data" and "SUMMARY -- Selected Pro Forma
Financial Data." The effect of anticipated merger-related charges (estimated for
purposes of the pro forma financial statements at $2.5 million, net of taxes) to
be taken by First Bancorp in connection with the merger has been reflected in
the pro forma combined condensed balance sheet. The pro forma combined condensed
balance sheet is not necessarily indicative of the combined condensed financial
position that actually would have occurred if the merger had been consummated at
the date indicated or that may be obtained in the future.
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<PAGE> 71
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 2000
<TABLE>
<CAPTION>
First First Pro Forma Pro Forma
($ in thousands) Bancorp Savings Adjustments Combined
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash & due from banks, noninterest-bearing $ 18,201 $ 3,942 $ $ 22,143
Due from banks, interest-bearing 28,827 120 28,947
Federal funds sold 8,811 -- 8,811
--------- --------- ------ ---------
Total cash and cash equivalents 55,839 4,062 59,901
--------- --------- ------ ---------
Securities available for sale 57,114 54,122 111,236
Securities held to maturity 17,080 34,504 51,584
Presold mortgages in process of settlement 661 -- 661
Loans 442,728 230,361 673,089
Less: Allowance for loan losses (6,313) (595) (6,908)
--------- --------- ------ ---------
Net loans 436,415 229,766 666,181
--------- --------- ------ ---------
Premises and equipment 10,432 2,256 12,688
Accrued interest receivable 3,783 1,657 5,440
Intangible assets 5,104 -- 5,104
Other 4,727 968 5,695
--------- --------- ------ ---------
Total assets $ 591,155 $ 327,335 $ -- $ 918,490
========= ========= ====== =========
LIABILITIES
Deposits: Demand - noninterest-bearing $ 66,444 $ 4,914 $ $ 71,358
Savings, NOW, and money market 169,364 86,315 255,679
Time deposits of $100,000 or more 92,137 36,140 128,277
Other time deposits 172,779 103,299 276,078
--------- --------- ---------
Total deposits 500,724 230,668 731,392
Borrowings 40,000 30,500 70,500
Accrued interest payable 3,280 380 3,660
Other liabilities 2,604 2,090 2,500 7,194
--------- --------- ------ ---------
Total liabilities 546,608 263,638 2,500 812,746
--------- --------- ------ ---------
SHAREHOLDERS' EQUITY
Common stock, No par value, 12,500,000
shares authorized, pro forma shares
issued and outstanding of 8,911,475
as of March 31, 2000 18,473 32,633 51,106
Retained earnings 27,306 32,280 (2,500) 57,086
Accumulated other comprehensive loss (1,232) (1,216) (2,448)
--------- --------- ------ ---------
Total shareholders' equity 44,547 63,697 (2,500) 105,744
--------- --------- ------ ---------
Total liabilities and shareholders' equity $ 591,155 $ 327,335 $ -- $ 918,490
========= ========= ====== =========
</TABLE>
- -----------------------
See accompanying notes to pro forma combined condensed financial information.
58
<PAGE> 72
The following unaudited pro forma statements of income have been
prepared for the three-month periods ended March 31, 2000 and March 31, 1999 and
for each of the three years in the period ended December 31, 1999, and give
effect to the merger, assuming the merger is accounted for as a
pooling-of-interests. The unaudited pro forma combined condensed statements of
income should be read in conjunction with the historical consolidated financial
statements of First Bancorp and First Savings, including the respective notes
thereto, that are delivered with this joint proxy statement and incorporated by
reference herein, and the unaudited pro forma financial information, including
the notes thereto, appearing elsewhere in this joint proxy statement/prospectus.
See "ADDITIONAL INFORMATION," "SUMMARY -- Historical and Pro Forma Comparative
Per Share Data" and "SUMMARY -- Selected Pro Forma Financial Data." The effect
of anticipated merger-related charges (estimated for purposes of the pro forma
financial statements at $2.5 million, net of taxes) to be taken by First Bancorp
in connection with the merger has not been reflected in the pro forma combined
condensed statements of income, since the anticipated merger-related charges are
nonrecurring. The pro forma financial data does not give effect to anticipated
enhancements in revenue and reductions in expenses at First Savings in
connection with the merger. The pro forma combined condensed statements of
income are not necessarily indicative of the results that actually would have
occurred if the merger had been consummated at the dates indicated or that may
be obtained in the future.
59
<PAGE> 73
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Pro
First First Forma
Bancorp Savings Combined
($ in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 9,693 $ 4,478 $ 14,171
Interest on investment securities:
Taxable interest income 862 1,440 2,302
Tax-exempt interest income 214 16 230
Other, principally overnight investments 209 25 234
----------- ---------- -----------
Total interest income 10,978 5,959 16,937
----------- ---------- -----------
INTEREST EXPENSE
Savings, NOW and money market 839 663 1,502
Time deposits of $100,000 or more 1,234 493 1,727
Other time deposits 2,265 1,339 3,604
Borrowings 269 441 710
----------- ---------- -----------
Total interest expense 4,607 2,936 7,543
----------- ---------- -----------
Net interest income 6,371 3,023 9,394
Provision for loan losses 310 -- 310
----------- ---------- -----------
Net interest income after provision for loan losses 6,061 3,023 9,084
----------- ---------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 695 51 746
Fees from presold mortgage loans 86 3 89
Commissions from insurance sales 145 5 150
Other service charges, commissions and fees 446 76 522
Data processing fees 20 -- 20
Other losses, net (10) -- (10)
----------- ---------- -----------
Total noninterest income 1,382 135 1,517
----------- ---------- -----------
NONINTEREST EXPENSES
Salaries 2,141 384 2,525
Employee benefits 539 125 664
----------- ---------- -----------
Total personnel expense 2,680 509 3,189
Net occupancy expense 308 70 378
Equipment related expenses 289 11 300
Other operating expenses 1,408 391 1,799
----------- ---------- -----------
Total noninterest expenses 4,685 981 5,666
----------- ---------- -----------
Income before income taxes 2,758 2,177 4,935
Income taxes 916 781 1,697
----------- ---------- -----------
NET INCOME $ 1,842 $ 1,396 $ 3,238
=========== ========== ===========
Earnings per share:
Basic $ 0.41 $ 0.40 $ 0.37
Diluted 0.40 0.39 0.36
Weighted average common shares outstanding:
Basic 4,537,300 3,471,801 8,865,941
Diluted 4,612,265 3,598,109 9,098,387
</TABLE>
- -----------------------
See accompanying notes to pro forma combined condensed financial information.
60
<PAGE> 74
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Pro
First First Forma
Bancorp Savings Combined
($ in thousands, except per share data)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 7,919 $ 4,117 $ 12,036
Interest on investment securities:
Taxable interest income 798 953 1,751
Tax-exempt interest income 237 13 250
Other, principally overnight investments 204 173 377
---------- ---------- ----------
Total interest income 9,158 5,256 14,414
---------- ---------- ----------
INTEREST EXPENSE
Savings, NOW and money market 793 648 1,441
Time deposits of $100,000 or more 885 436 1,321
Other time deposits 1,999 1,330 3,329
Borrowings 35 -- 35
---------- ---------- ----------
Total interest expense 3,712 2,414 6,126
---------- ---------- ----------
Net interest income 5,446 2,842 8,288
Provision for loan losses 200 -- 200
---------- ---------- ----------
Net interest income after provision for loan losses 5,246 2,842 8,088
---------- ---------- ----------
NONINTEREST INCOME
Service charges on deposit accounts 664 38 702
Fees from presold mortgage loans 171 50 221
Commissions from insurance sales 87 -- 87
Other service charges, commissions and fees 371 98 469
Data processing fees 10 -- 10
Securities gains 5 -- 5
---------- ---------- ----------
Total noninterest income 1,308 186 1,494
---------- ---------- ----------
NONINTEREST EXPENSES
Salaries 1,866 401 2,267
Employee benefits 479 139 618
---------- ---------- ----------
Total personnel expense 2,345 540 2,885
Net occupancy expense 297 54 351
Equipment related expenses 255 14 269
Other operating expenses 1,378 425 1,803
---------- ---------- ----------
Total noninterest expenses 4,275 1,033 5,308
---------- ---------- ----------
Income before income taxes 2,279 1,995 4,274
Income taxes 803 734 1,537
---------- ---------- ----------
NET INCOME $ 1,476 $ 1,261 $ 2,737
========== ========== ==========
Earnings per share:
Basic $ 0.33 $ 0.35 $ 0.30
Diluted $ 0.32 $ 0.33 $ 0.29
Weighted average common shares outstanding:
Basic 4,523,076 3,613,559 9,028,461
Diluted 4,629,944 3,879,896 9,467,398
</TABLE>
- -----------------------
See accompanying notes to pro forma combined condensed financial information.
61
<PAGE> 75
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro
First First Forma
Bancorp Savings Combined
($ in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 34,120 $ 16,605 $ 50,725
Interest on investment securities:
Taxable interest income 3,271 5,310 8,581
Tax-exempt interest income 890 59 949
Other, principally overnight investments 1,013 323 1,336
----------- ---------- -----------
Total interest income 39,294 22,297 61,591
----------- ---------- -----------
INTEREST EXPENSE
Savings, NOW and money market 3,202 2,750 5,952
Time deposits of $100,000 or more 3,755 1,787 5,542
Other time deposits 8,230 5,383 13,613
Borrowings 623 758 1,381
----------- ---------- -----------
Total interest expense 15,810 10,678 26,488
----------- ---------- -----------
Net interest income 23,484 11,619 35,103
Provision for loan losses 910 -- 910
----------- ---------- -----------
Net interest income after provision for loan losses 22,574 11,619 34,193
----------- ---------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 2,835 158 2,993
Fees from presold mortgage loans 622 63 685
Commissions from insurance sales 264 23 287
Other service charges, commissions and fees 1,311 416 1,727
Data processing fees 50 -- 50
Loan sale gains 34 -- 34
Securities gains 20 -- 20
Other losses, net (15) -- (15)
----------- ---------- -----------
Total noninterest income 5,121 660 5,781
----------- ---------- -----------
NONINTEREST EXPENSES
Salaries 7,909 1,332 9,241
Employee benefits 1,837 631 2,468
----------- ---------- -----------
Total personnel expense 9,746 1,963 11,709
Net occupancy expense 1,165 252 1,417
Equipment related expenses 1,133 53 1,186
Other operating expenses 5,772 1,802 7,574
----------- ---------- -----------
Total noninterest expenses 17,816 4,070 21,886
----------- ---------- -----------
Income before income taxes 9,879 8,209 18,088
Income taxes 3,260 2,974 6,234
----------- ---------- -----------
NET INCOME $ 6,619 $ 5,235 $ 11,854
=========== ========== ===========
Earnings per share:
Basic $ 1.46 $ 1.47 $ 1.32
Diluted 1.43 1.38 1.27
Weighted average common shares outstanding:
Basic 4,528,132 3,560,145 8,966,921
Diluted 4,632,233 3,794,352 9,363,031
</TABLE>
- -----------------------
See accompanying notes to pro forma combined condensed financial information.
62
<PAGE> 76
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Pro
First First Forma
Bancorp Savings Combined
($ in thousands, except per share data)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 30,186 $ 16,650 $ 46,836
Interest on investment securities:
Taxable interest income 2,898 5,281 8,179
Tax-exempt interest income 1,035 51 1,086
Other, principally overnight investments 1,225 286 1,511
----------- ---------- -----------
Total interest income 35,344 22,268 57,612
----------- ---------- -----------
INTEREST EXPENSE
Savings, NOW and money market 3,305 2,585 5,890
Time deposits of $100,000 or more 3,063 1,718 4,781
Other time deposits 7,845 5,658 13,503
Borrowings 143 753 896
----------- ---------- -----------
Total interest expense 14,356 10,714 25,070
----------- ---------- -----------
Net interest income 20,988 11,554 32,542
Provision for loan losses 990 -- 990
----------- ---------- -----------
Net interest income after provision for loan losses 19,998 11,554 31,552
----------- ---------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 2,595 133 2,728
Fees from presold mortgage loans 537 159 696
Commissions from insurance sales 240 -- 240
Other service charges, commissions and fees 1,028 427 1,455
Data processing fees 5 -- 5
Loan sale gains 227 -- 227
Securities gains 29 -- 29
Other losses, net (5) -- (5)
----------- ---------- -----------
Total noninterest income 4,656 719 5,375
----------- ---------- -----------
NONINTEREST EXPENSES
Salaries 7,127 1,258 8,385
Employee benefits 1,563 729 2,292
----------- ---------- -----------
Total personnel expense 8,690 1,987 10,677
Net occupancy expense 1,017 184 1,201
Equipment related expenses 918 36 954
Other operating expenses 5,287 1,703 6,990
----------- ---------- -----------
Total noninterest expenses 15,912 3,910 19,822
----------- ---------- -----------
Income before income taxes 8,742 8,363 17,105
Income taxes 3,059 3,073 6,132
----------- ---------- -----------
NET INCOME $ 5,683 $ 5,290 $ 10,973
=========== ========== ===========
Earnings per share:
Basic $ 1.25 $ 1.43 $ 1.20
Diluted 1.22 1.32 1.13
Weighted average common shares outstanding:
Basic 4,531,092 3,703,923 9,149,143
Diluted 4,657,746 4,019,548 9,669,318
</TABLE>
- -----------------------
See accompanying notes to pro forma combined condensed financial information.
63
<PAGE> 77
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Pro
First First Forma
Bancorp Savings Combined
($ in thousands, except per share data)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 23,754 $ 15,616 $ 39,370
Interest on investment securities:
Taxable interest income 3,610 5,469 9,079
Tax-exempt interest income 1,189 60 1,249
Other, principally overnight investments 644 516 1,160
----------- ---------- -----------
Total interest income 29,197 21,661 50,858
----------- ---------- -----------
INTEREST EXPENSE
Savings, NOW and money market 2,820 2,518 5,338
Time deposits of $100,000 or more 2,004 1,538 3,542
Other time deposits 6,296 5,760 12,056
Borrowings 3 896 899
----------- ---------- -----------
Total interest expense 11,123 10,712 21,835
----------- ---------- -----------
Net interest income 18,074 10,949 29,023
Provision for loan losses 575 -- 575
----------- ---------- -----------
Net interest income after provision for loan losses 17,499 10,949 28,448
----------- ---------- -----------
NONINTEREST INCOME
Service charges on deposit accounts 2,413 116 2,529
Fees from presold mortgage loans 284 46 330
Commissions from insurance sales 278 -- 278
Other service charges, commissions and fees 769 325 1,094
Data processing fees 274 -- 274
Loan sale gains -- -- --
Securities gains (losses) (12) -- (12)
Other losses, net (24) 9 (15)
Other nonrecurring net gains 168 7 175
----------- ---------- -----------
Total noninterest income 4,150 503 4,653
----------- ---------- -----------
NONINTEREST EXPENSES
Salaries 6,225 1,308 7,533
Employee benefits 1,315 629 1,944
----------- ---------- -----------
Total personnel expense 7,540 1,937 9,477
Net occupancy expense 954 166 1,120
Equipment related expenses 858 39 897
Other operating expenses 4,736 1,401 6,137
----------- ---------- -----------
Total noninterest expenses 14,088 3,543 17,631
----------- ---------- -----------
Income before income taxes 7,561 7,909 15,470
Income taxes 2,549 2,899 5,448
----------- ---------- -----------
NET INCOME $ 5,012 $ 5,010 $ 10,022
=========== ========== ===========
Earnings per share:
Basic $ 1.11 $ 1.36 $ 1.10
Diluted 1.08 1.26 1.05
Weighted average common shares outstanding:
Basic 4,525,854 3,687,937 9,123,974
Diluted 4,628,892 3,977,698 9,588,286
</TABLE>
- ---------------------
See accompanying notes to pro forma combined condensed financial information.
64
<PAGE> 78
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The unaudited First Bancorp and First Savings pro forma combined
condensed financial information is based upon the following adjustments,
reflecting the consummation of the merger using the pooling-of-interests method
of accounting. Actual amounts may differ from those reflected in the unaudited
pro forma combined condensed financial information.
NOTE 1
In the opinion of management of First Bancorp and First Savings, all
adjustments necessary for a fair presentation of the financial position and
results for the period have been included. Adjustments, if any, are normal and
recurring in nature.
NOTE 2
First Bancorp and First Savings expect to recognize, in connection with
the transaction, merger-related charges of $2.8 million to $3.3 million to be
incurred in the second quarter of 2000. A liability of $3.0 million, or $2.5
million net of the related tax benefit, has been recorded in the unaudited pro
forma combined condensed balance sheet. These merger-related charges consist
primarily of professional fees and employment agreement payments.
NOTE 3
The merger of First Savings into First Bancorp is presented under the
pooling-of-interests method of accounting, with the issuance of First Bancorp
common stock for First Savings common stock at an exchange ratio of 1.2468
shares of First Bancorp common stock for each share of First Savings common
stock. Such exchange ratio, however, may increase if the price of the First
Bancorp common stock falls below certain levels before completion of the merger.
SEE "DESCRIPTION OF TRANSACTION -- What First Savings Shareholders Will Receive
in the Merger."
NOTE 4
First Bancorp expects to realize cost savings and revenue enhancements
from the merger that are not reflected in the pro forma combined condensed
financial information. Therefore, the pro forma combined condensed financial
information is not necessarily indicative of the results of future operations.
However, there can be no assurance that such anticipated cost savings and
revenue enhancements will be achieved.
CERTAIN REGULATORY CONSIDERATIONS
First Bancorp is a bank holding company registered with the Federal
Reserve under the Bank Holding Company Act of 1956, as amended. First Savings is
a savings bank holding company, also registered with the Federal Reserve under
the Bank Holding Company Act. As such, each of First Bancorp, First Savings and
their nonbank subsidiaries are subject to the supervision, examination, and
reporting requirements of the Bank Holding Company Act and the regulations of
the Federal Reserve. First Bancorp's and First Savings' banking subsidiaries are
also subject to supervision and examinations by federal and state banking
authorities. Set forth below is a brief summary of certain of the areas of
regulation. Additional information relating to First Savings is included in
First Savings' 1999 Annual Report on Form 10-K and to First Bancorp is included
in First Bancorp's 1999 Annual Report on Form 10-K. See "ADDITIONAL
INFORMATION."
The merger is subject to prior approval by the Federal Reserve pursuant
to Section 3 of the Bank Holding Company Act. First Bancorp and First Savings
have filed the required applications and notification with the Federal Reserve
for approval of the merger. Assuming Federal Reserve approval, the parties may
not consummate the merger until after termination of a waiting period between 15
and 30 days after that approval. During that time, the United States Department
of Justice may challenge the merger on antitrust grounds.
65
<PAGE> 79
The Federal Reserve is prohibited from approving any transaction under
the applicable statutes that:
- would result in a monopoly;
- would be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking
in any part of the United States; or
- may have the effect in any part of the United States of
substantially lessening competition, tending to create a
monopoly or otherwise resulting in a restraint of trade,
unless the Federal Reserve finds that the public interest
created by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served
clearly outweighs the anticompetitive effects of the proposed
merger.
In addition, in reviewing a transaction under the Bank Holding Company
Act, the Federal Reserve will consider the financial and managerial resources of
the companies and their subsidiary banks and the convenience and needs of the
communities to be served. Consideration of financial resources generally focuses
on capital adequacy, which is discussed below, and consideration of managerial
resources includes consideration of the competence, experience and integrity of
the officers, directors and principal shareholders of the companies and their
subsidiary banks. The analysis of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977, as amended.
Under the Community Reinvestment Act, the Federal Reserve must take
into account the record of performance of each of First Bancorp and First
Savings and their respective subsidiaries in meeting the credit needs of the
entire community, including the low- and moderate-income neighborhoods in which
they operate. Each of First Bancorp's and First Savings' subsidiary banks has a
satisfactory rating under the Community Reinvestment Act.
Additionally, the proposed merger of First Savings' subsidiary, First
Savings Bank of Moore County, into First Bank is subject to the approval of the
Federal Reserve, the FDIC, the North Carolina Banking Commission and the
Administrator of the Savings Institutions Division of the North Carolina
Department of Commerce. Such agencies will apply similar standards to their
review of the bank merger as applied by the Federal Reserve to the merger of the
holding companies. Obtaining these approvals is not a condition to the closing
of the merger of First Bancorp and First Savings. We cannot assure you that
these approvals will be obtained or that such approvals will be given without
the imposition by a regulatory authority of a condition that would materially
adversely impact the financial or economic benefits of the merger of the banking
subsidiaries.
First Bancorp and First Savings and their banking subsidiaries are
subject to certain federal and state laws and regulations relating to the
following areas as summarized below.
- Restrictions on the Payment of Dividends - First Bancorp and
First Savings are legal entities separate and distinct from
their banking and other subsidiaries, but depend principally
on dividends from their subsidiary depository institutions for
cash flow to pay dividends to their shareholders. There are
statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to First
Bancorp and First Savings as well as by First Bancorp and
First Savings to their shareholders. Additionally, the
subsidiary banks of First Bancorp and First Savings are
subject to dividend restrictions of the State of North
Carolina and to the regulations of the Federal Reserve. Under
such dividend restrictions, at December 31, 1999, First Bank
could declare aggregate dividends to First Bancorp of
approximately $29,302,000, and First Savings Bank of Moore
County could declare aggregate dividends to First Savings of
approximately $48,250,000. The payment of dividends by First
Bancorp and First Savings also may be affected or limited by
other factors, such as the requirement to maintain adequate
capital above regulatory guidelines.
- Capital Adequacy - First Bancorp and First Savings and their
banking subsidiaries are required by state and federal
regulators to comply with certain capital adequacy standards
related to various risk exposure and the leverage position of
financial institutions. Any bank or thrift that fails to meet
its
66
<PAGE> 80
capital guidelines may be subject to a variety of enforcement
remedies and certain other restrictions on its business. As of
December 31, 1999, First Bancorp, First Savings and their
banking subsidiaries were in compliance with all such capital
adequacy standards.
- Support of Subsidiary Institutions - Under Federal Reserve
policy, First Bancorp and First Savings are expected to act as
sources of financial strength for, and commit their resources
to support, First Bank and First Savings Bank of Moore County
and any other banking subsidiaries, even in times when First
Bancorp or First Savings might not be inclined to provide such
support.
- Prompt Corrective Action - Federal banking regulators are
required to audit First Bancorp, First Savings, First Bank,
First Savings Bank of Moore County and the other banking
subsidiaries to determine whether they are adequately
capitalized. If a banking institution is deemed by regulators
to be insufficiently capitalized, the regulators are required
to take certain actions designed to improve the capitalization
situation of the financial institution.
On November 12, 1999, the President signed into law the
Gramm-Leach-Bliley Act. This statute contains several provisions that may affect
how First Bancorp does business or the nature of the competition that it faces.
The act permits banks, insurance companies, and securities firms to affiliate
within a single corporate structure, now known as a financial holding company.
Using the financial holding company structure, insurance companies and
securities firms may acquire bank holding companies, such as First Bancorp, and
bank holding companies may acquire insurance companies and securities firms. A
bank holding company that wishes to become a financial holding company must
satisfy a number of conditions, including that all of the insured depository
institution subsidiaries of the bank holding company have at least a
"satisfactory" Community Reinvestment Act rating. In addition, a financial
holding company may not commence a new financial activity or acquire control of
a company engaged in such activities without satisfying this Community
Reinvestment Act requirement. As a result of this new act, First Bancorp may
face increased competition from more and larger financial institutions. The act
also may cause First Bancorp to consider whether to expand its securities or
insurance businesses. First Bancorp currently acts as a broker of non-FDIC
insured insurance and investment products through its subsidiary, First Bank
Insurance Services, Inc. The act allows increased activity in the insurance and
securities underwriting businesses to be conducted through a subsidiary of a
financial holding company and would involve both additional risk and regulatory
burdens. First Bancorp has not made any decisions on whether to expand its
securities or insurance operations.
The act does not significantly alter the regulatory regime under which
First Bancorp now operates. The Federal Reserve, First Bancorp's current federal
regulator at both the bank and holding company level, and the North Carolina
Banking Commission will remain First Bancorp's primary regulators. The nature of
the activities that First Bancorp may conduct in the bank or in a bank
subsidiary remains a matter of North Carolina law.
The act also contains several provisions respecting customer privacy.
The extent of First Bancorp's obligations in this regard will not be known until
the Federal Reserve and the other federal banking agencies issue rules or
regulations. However, First Bancorp will be required to disclose a privacy
policy to its customers on an annual basis. In addition, if First Bancorp
provides nonpublic personal information about customers to third parties for use
in the marketing of third party products, it must first disclose this fact to
its customers and provide them an opportunity to opt out of the arrangement. The
act does not limit the sharing of information among affiliates within the First
Bancorp family, although First Bancorp is aware that some members of Congress
are seeking to expand the law to cover interaffiliate sharing.
DESCRIPTION OF FIRST BANCORP COMMON STOCK
The First Bancorp articles of incorporation currently authorize the
issuance of 12,500,000 shares of First Bancorp common stock, no par value. As of
May 11, 2000, 4,506,651 shares of First Bancorp common stock were issued and
outstanding, and 512,969 shares were reserved for issuance under First Bancorp's
benefit plans. The capital stock of First Bancorp does not represent or
constitute a deposit account and is not insured by the FDIC, the Bank Insurance
Fund, the Savings Association Insurance Fund, or any governmental agency.
67
<PAGE> 81
Shares of First Bancorp common stock may be issued at such time or
times and for such consideration as the First Bancorp board of directors may
deem advisable, subject to such limitations as may be set forth in the laws of
the State of North Carolina, the First Bancorp articles of incorporation or
bylaws, or the rules of the Nasdaq National Market System.
The holders of First Bancorp common stock are entitled to receive, to
the extent permitted by law, only such dividends as may be declared from time to
time by the First Bancorp board of directors out of legally available funds. The
ability of First Bancorp to pay dividends is affected by the ability of its
subsidiary depository institution, First Bank, to pay dividends, which is
limited by applicable regulatory requirements and capital guidelines. On
December 31, 1999, under such requirements and guidelines, First Bancorp's
depository institution had $29,302,000 of funds legally available for the
payment of dividends. See "CERTAIN REGULATORY CONSIDERATIONS."
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets, or winding-up of First Bancorp, the holders of First
Bancorp common stock will be entitled to receive all of the remaining assets of
First Bancorp, of whatever kind, available for distribution to shareholders
ratably in proportion to the number of shares of First Bancorp common stock
held. The First Bancorp board may distribute in kind to the holders of First
Bancorp common stock such remaining assets of First Bancorp or may sell,
transfer, or otherwise dispose of all or any part of such remaining assets to
any other person or entity and receive payment therefor in cash, stock, or
obligations of such other person or entity, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of First Bancorp common stock. Neither the merger or consolidation of First
Bancorp into any other corporation, nor the merger of any other corporation into
First Bancorp, nor any purchase or redemption of shares of stock of First
Bancorp of any class, will be deemed to be a dissolution, liquidation, or
winding-up of First Bancorp for purposes of this paragraph.
Because First Bancorp is a holding company, its right and the rights of
its creditors and shareholders, including the holders of First Bancorp common
stock, to participate in the distribution of assets of a subsidiary on its
liquidation or recapitalization may be subject to prior claims of its
subsidiaries' creditors except to the extent that First Bancorp itself may be a
creditor having recognized claims against such subsidiaries.
In connection with the conversion by First Savings Bank of Moore County
from a mutual savings bank to a stock savings bank in 1994, a liquidation
account was established by First Savings Bank of Moore County for the benefit of
depositors of the bank as of April 30, 1993 who continued to maintain their
deposits at First Savings Bank of Moore County after such date. This liquidation
account will be assumed by First Bank in connection with the merger of First
Savings Bank of Moore County into First Bank and will entitle those depositors
to certain liquidation preferences in the unlikely event of a complete
liquidation of First Bank.
For a further description of First Bancorp common stock, see "EFFECT OF
THE MERGER ON RIGHTS OF SHAREHOLDERS."
PRINCIPAL HOLDERS OF FIRST BANCORP VOTING SECURITIES
The following table sets forth the number and percentage of outstanding
shares of First Bancorp's common stock beneficially owned by (i) each person
known by First Bancorp to own more than 5% of First Bancorp's common stock and
(ii) all officers and directors of First Bancorp as a group, as of May 11, 2000.
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<PAGE> 82
TABLE OF PRINCIPAL HOLDERS OF FIRST BANCORP COMMON STOCK
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned (1)
---------------------------
Name and Address Number of Percent
Title of Class of Beneficial Owner Shares of Class
- -------------------------- ------------------------------------------------ ------------- ----------
<S> <C> <C> <C>
Common Stock, no par value George R. Perkins, Jr. 416,607 (2) 9.24%
P.O. Box 525
Sanford, NC 27331
Common Stock, no par value John C. Willis 334,005 (3) 7.41%
626 E. Main Street
Troy, NC 27371
Common Stock, no par value All directors and executive officers as a group, 1,541,396 34.20%
May 11, 2000
</TABLE>
- ------------------------
(1) Unless otherwise indicated, each individual has sole voting and
investment power with respect to all shares beneficially owned by such
individual. Also included are shares subject to options (exercisable as
of May 11, 2000 or within 60 days after May 11, 2000) granted under
First Bancorp's stock option plan.
(2) Includes exercisable options to purchase 6,000 shares.
(3) Includes 199,650 shares held by his spouse and exercisable options to
purchase 9,000 shares.
FIRST BANCORP PROPOSAL TO AMEND FIRST BANCORP'S BYLAWS TO
INCREASE THE MAXIMUM NUMBER OF DIRECTORS ON THE BOARD TO EIGHTEEN AND TO
PERMIT THE BOARD TO FIX THE NUMBER OF DIRECTORS
Section 3.02 of First Bancorp's bylaws provides that the number of
directors on the board of directors of First Bancorp will be not less than three
nor more than 13, as fixed in a resolution adopted by the shareholders at or
prior to the annual meeting at which the directors will be elected. At a prior
annual meeting, the shareholders fixed the number of directors on the First
Bancorp board at 11.
Assuming that the merger between First Savings and First Bancorp is
approved by the First Bancorp and First Savings shareholders, First Bancorp
proposes to amend its bylaws to increase the maximum number of directors on the
First Bancorp board to 18. First Bancorp also proposes to change the bylaws so
that the number of directors who will constitute the entire board of directors
will be fixed by the board of directors, rather than by the shareholders as
currently provided by the First Bancorp bylaws. This change is being made to
provide flexibility in the number of directors and to allow more certainty about
the number of directors to be elected at any annual meeting.
The text of the proposed amendment is as follows:
Section 3.02 of the bylaws of First Bancorp is deleted in its
entirety and replaced by the following:
3.02. Number; Election; Term; Qualification. The number of
directors which shall constitute the entire board of directors shall
not be less than three (3) nor more than eighteen (18) as may be fixed
by resolution duly adopted by the board of directors at or prior to the
annual meeting at which such directors are to be elected; and, in the
absence of such a resolution, the number of directors shall be the
number elected at the preceding annual meeting.
At each annual meeting of shareholders, directors shall be
elected to hold office until the next annual meeting of shareholders
and until their successors are elected and qualified. Those
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<PAGE> 83
persons who receive the highest number of votes at a meeting at which a
quorum is present shall be deemed to have been elected. Directors may
be elected by a plurality of the votes cast at such annual meeting. No
director need be a shareholder, a resident of the State of North
Carolina, or a citizen of the United States.
In connection with the merger, seven of the ten existing members of the
First Savings board of directors will be nominated to serve on the First Bancorp
board. Thus, the amendment to increase the number of directors on the First
Bancorp board by seven members is being proposed as a result of the merger with
First Savings and is contingent upon approval of the merger. If the merger is
not approved by the First Bancorp and First Savings shareholders, the proposal
to amend First Bancorp's bylaws to increase the number of directors on the board
will be withdrawn. The seven new seats on the First Bancorp board that will be
created upon approval of the amendment will not be filled unless and until the
merger is completed.
The board of directors of First Bancorp has resolved that if the bylaw
amendment described above is approved, and if the merger is approved by the
shareholders of First Savings and First Bancorp, then the number of directors
comprising the entire board of directors of First Bancorp will be fixed at the
maximum number of 18. If the merger is not approved, then the bylaw amendment
will be withdrawn and the number of directors will remain at eleven.
If the merger and bylaw amendment are approved, seven of the ten
existing members of the First Savings board will be nominated to serve on the
First Bancorp board. Information about these seven nominees is included in
"FIRST BANCORP PROPOSAL FOR ELECTION OF DIRECTORS -- Conditional Nominees and
Executive Officers."
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF
FIRST BANCORP COMMON STOCK REPRESENTED AND VOTING AT THE MEETING (EITHER IN
PERSON OR BY PROXY) IS REQUIRED FOR APPROVAL OF THE PROPOSAL TO AMEND FIRST
BANCORP'S BYLAWS. THE BOARD OF DIRECTORS OF FIRST BANCORP RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THIS PROPOSAL. UNLESS INDICATED TO THE CONTRARY, PROXIES
WILL BE VOTED "FOR" THIS PROPOSAL.
FIRST BANCORP PROPOSAL FOR
ELECTION OF DIRECTORS
Subject to approval of the merger by First Bancorp's and First Savings'
shareholders, approval of the issuance of shares of First Bancorp common stock
in connection with the merger by First Bancorp shareholders, and approval of the
bylaw amendment increasing the maximum number of directors on the First Bancorp
board by First Bancorp shareholders, the number of directors on the First
Bancorp board of directors will have been fixed at 18 pursuant to First
Bancorp's bylaws.
In the absence of any instructions to the contrary, proxies will be
voted for the election of all 18 of the nominees listed in the tables below by
casting an equal number of votes for each such nominee. If, at or before the
time of the meeting, any of the nominees listed below becomes unavailable for
any reason, the proxy holders have the discretion to vote for a substitute
nominee or nominees. The First Bancorp board currently knows of no reason why
any nominee listed below is likely to become unavailable. First Bancorp's
articles of incorporation provide that if cumulative voting applies, each
shareholder is "entitled to multiply the number of votes he is entitled to cast
by the number of directors for whom he is entitled to vote and cast the product
for a single candidate or distribute the product among two or more candidates."
Cumulative voting procedures will not be followed at the special and annual
meeting unless a shareholder calls for cumulative voting as provided in First
Bancorp's articles of incorporation, by announcing at the meeting before the
voting for directors starts, his or her intention to vote cumulatively. If
cumulative voting is properly invoked by a First Bancorp shareholder, the proxy
holders may, in their discretion, vote the shares to which their proxies relate
on a basis other than equally for each of the nominees named below and for less
than all such nominees, but the proxy holders will cast their votes in a manner
that would tend to elect the greatest number of nominees (or any substitutes
therefor in the case of unavailability) as the number of votes cast by them
would permit.
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<PAGE> 84
NOMINATIONS FOR DIRECTOR
Nominees for election to the First Bancorp board of directors are
selected by the incumbent board prior to each annual meeting, and the nominees
listed below were selected in that manner. Nominations from the shareholders may
be made in accordance with First Bancorp's bylaws, which generally require
nominations to be made in writing within 60 to 90 days prior to the meeting at
which directors are to be elected and to include certain information about the
proposed nominee. A complete copy of the First Bancorp bylaw provision setting
forth the complete procedure for shareholder nominations of directors may be
obtained by written request to First Bancorp, Post Office Box 508, 341 North
Main Street, Troy, North Carolina 27371-0508, Attention: Anna G. Hollers,
Secretary.
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth certain information as of March 31, 2000
with respect to 11 of the 18 nominees for election to the First Bancorp board of
directors and the executive officers of First Bancorp. All of these persons may
be contacted at Post Office Box 508, 341 North Main Street, Troy, North Carolina
27371-0508. If First Bancorp shareholders do not approve the merger, the
issuance of First Bancorp common stock pursuant to the merger and the bylaw
amendment to increase the maximum number of directors on the First Bancorp board
or if First Savings shareholders do not approve the merger, the 11 nominated
directors listed will be the only nominees for directors. If all of the other
proposals are approved by First Bancorp shareholders and the proposed merger are
approved by the shareholders of First Savings, there will be seven additional
nominees for director and two additional executive officers of First Bancorp.
See "- Conditional Nominees and Executive Officers."
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<PAGE> 85
TABLE OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned (1)
--------------------------------------
Percent
of Class
Current Director (D), Director on a Pro
Nominee (N), or of Company Number of Percent Forma
Name (Age) Position with First Bancorp Since Shares of Class Basis (2)
---------- --------------------------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND NOMINEES
James H. Garner (70) President and Chief Executive 1995 47,490 (3) 1.05% 0.53%
Officer (D) (N)
Jack D. Briggs (60) (D) (N) 1983 49,916 (4) 1.11% 0.56%
David L. Burns (61) (D) (N) 1988 37,976 (5) 0.84% 0.43%
Jesse S. Capel (67) (D) (N) 1983 112,104 (6) 2.49% 1.26%
George R. Perkins, Jr. (60) (D) (N) 1996 416,607 (7) 9.24% 4.68%
G. T. Rabe, Jr. (75) (D) (N) 1987 11,793 (8) 0.26% 0.13%
Edward T. Taws (65) (D) (N) 1986 22,295 (9) 0.49% 0.25%
Frederick H. Taylor (60) (D) (N) 1983 200,218 (10) 4.44% 2.25%
Goldie H. Wallace (53) (D) (N) 1997 179,573 (11) 3.98% 2.02%
A. Jordan Washburn (63) (D) (N) 1995 17,262 (12) 0.38% 0.19%
John C. Willis (56) (D) (N) 1983 334,005 (13) 7.41% 3.75%
EXECUTIVE OFFICERS
James H. Garner (70) President and Chief 1995 47,490 (3) 1.05% 0.53%
Executive Officer
Anna G. Hollers (48) Executive Vice President n/a 43,582 (14) 0.97% 0.49%
and Secretary
Teresa C. Nixon (42) Executive Vice President n/a 19,919 (15) 0.44% 0.22%
and Compliance Officer,
First Bank
David G. Grigg (49) President of Montgomery n/a 20,206 (16) 0.45% 0.23%
Data Services, Inc.
Jerry M. Arnold (59) Senior Vice President n/a 8,981 (17) 0.20% 0.10%
of Operations, First Bank
Eric P. Credle (31) Senior Vice President and n/a 7,971 (18) 0.18% 0.09%
Chief Financial Officer
Lee C. McLaurin (37) Senior Vice President and n/a 11,498 (19) 0.26% 0.16%
Controller
</TABLE>
- ---------------------------
Notes:
(1) Unless otherwise indicated, each individual has sole voting and
investment power with respect to all shares beneficially owned by such
individual. The above table includes executive officers' reported
shares in First Bancorp's 401(k) defined contribution plan, which are
voted by the plan trustee and not by the shareholder for whom such
shares are listed. Also included are shares subject to options
(exercisable as of May 11, 2000 or within 60 days after May 11, 2000)
granted under First Bancorp's stock option plan.
(2) Represents such individual's percentage of beneficial ownership on a
pro forma basis assuming that the proposed merger of First Savings into
First Bancorp has been completed. Assumes that the combined
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<PAGE> 86
number of outstanding shares after completion of the proposed merger is
8,903,064, which includes 4,506,651 shares of First Bancorp common
stock outstanding as of May 11, 2000 and 4,396,413 shares of First
Bancorp common stock to be issued in connection with such merger (based
on the number of shares of First Savings common stock outstanding as of
May 11, 2000, and assuming a conversion ratio of 1.2468 shares of First
Bancorp common stock for each share of First Savings common stock).
(3) Includes 5,038 shares held in First Bancorp's 401(k) defined
contribution plan, 7,493 shares held jointly with his spouse and
exercisable options to purchase 26,560 shares.
(4) Includes 727 shares held as custodian for his daughter, 31,887 shares
held jointly with his spouse and exercisable options to purchase 7,500
shares.
(5) Includes 23,232 shares held by his business interests and exercisable
options to purchase 9,000 shares.
(6) Includes 37,104 shares held by Capel Inc. of which Mr. Capel is
principal owner and director and exercisable options to purchase 9,000
shares.
(7) Includes exercisable options to purchase 6,000 shares.
(8) Includes 1,995 shares held by his spouse and exercisable options to
purchase 9,000 shares.
(9) Includes 5,835 shares held by his spouse and exercisable options to
purchase 9,000 shares.
(10) Includes 77,739 shares held by Mr. Taylor's business interests, 69,381
shares held in trusts, 42,798 shares held by his spouse and exercisable
options to purchase 9,000 shares.
(11) Includes exercisable options to purchase 4,500 shares, 104,492 shares
held by her spouse and exercisable options held by her spouse to
purchase 7,500 shares.
(12) Includes exercisable options to purchase 4,500 shares.
(13) Includes 199,650 shares held by his spouse and exercisable options to
purchase 9,000 shares.
(14) Includes 861 shares held jointly with her daughters, 7,103 shares held
in First Bancorp's 401(k) defined contribution plan, 1,950 shares held
by her spouse and exercisable options to purchase 15,000 shares.
(15) Includes 4,780 shares held in First Bancorp's 401(k) defined
contribution plan and exercisable options to purchase 14,373 shares.
(16) Includes 156 shares held jointly with his daughters, 78 shares held
jointly with his son, 3,683 shares held in First Bancorp's 401(k)
defined contribution plan and exercisable options to purchase 6,000
shares.
(17) Includes 2,294 shares held in First Bancorp's 401(k) defined
contribution plan and exercisable options to purchase 6,000 shares.
(18) Includes 395 shares held in First Bancorp's 401(k) defined contribution
plan and exercisable options to purchase 3,300 shares.
(19) Includes 5,599 shares held in First Bancorp's 401(k) defined
contribution plan and exercisable options to purchase 1,500 shares.
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<PAGE> 87
DIRECTORS AND NOMINEES.
James H. Garner became President and Chief Executive Officer and a
director of First Bancorp and First Bank in 1995. Mr. Garner has been employed
by First Bank since 1969, serving as Executive Vice President from 1989 until
1995.
Jack D. Briggs is currently chairman of the First Bancorp board of
directors and has been a director of First Bancorp since 1983 and a director of
First Bank since 1976. Mr. Briggs is a funeral director and retail furniture
merchant and is President and owner of J. Briggs, Inc., Davidson Funeral Home,
Inc. and Carter Funeral Home, Inc.
David L. Burns is President of Z. V. Pate, Inc., a holding company for
agricultural, timber, restaurants and retail sales. Mr. Burns has been a
director of First Bancorp since 1988 and a director of First Bank since 1992.
Jesse S. Capel is Executive Director of Capel, Inc., a rug
manufacturer, importer and exporter. Mr. Capel has been a director of First
Bancorp since 1983 and a director of First Bank since 1959.
George R. Perkins, Jr. is President of Frontier Spinning Mills, LLC, a
yarn manufacturer, and has served in such capacity since 1996. Mr. Perkins has
been a director of First Bancorp and First Bank since 1996.
G. T. Rabe, Jr. is President of Albemarle Oil Co., a distributor of
petroleum products. Mr. Rabe has been a director of First Bancorp since 1987 and
a director of First Bank since 1992.
Edward T. Taws, Jr. is President of Fletcher Industries/Fletcher
International, a manufacturer of textile machinery. Mr. Taws has been a director
of First Bancorp since 1986 and a director of First Bank since 1992.
Frederick H. Taylor is President of Troy Lumber Company. Mr. Taylor has
been a director of First Bancorp since 1983 and a director of First Bank since
1978.
Goldie H. Wallace is a private investor in First Bancorp and other
business interests. Ms. Wallace has been a director of First Bancorp and First
Bank since 1997.
A. Jordan Washburn is a sales representative for Morrisette Paper
Company. Mr. Washburn has been a director of First Bancorp since 1995 and a
director of First Bank since 1994.
John C. Willis is a private investor in restaurant and real estate
interests. Mr. Willis has been a director of First Bancorp since 1983 and a
director of First Bank since 1980.
EXECUTIVE OFFICERS.
In addition to Mr. Garner, the executive officers of First Bancorp are
as follows:
Anna G. Hollers is Executive Vice President and Secretary of First
Bancorp and Executive Vice President and Secretary of First Bank. She has been
employed by First Bancorp since 1983 and by First Bank since 1972.
Teresa C. Nixon is Executive Vice President - Loan Administration and
Compliance of First Bank. She has been employed by First Bank since 1989.
David G. Grigg has served as President of Montgomery Data Services,
Inc. since its formation in 1984. He was employed by First Bank from 1972 until
1984.
Jerry M. Arnold is Senior Vice President - Operations of First Bank. He
has been employed by First Bank since 1986.
Eric P. Credle is Senior Vice President and Chief Financial Officer of
First Bancorp and First Bank. He has been employed by First Bancorp and First
Bank since 1997. He was previously a senior manager with KPMG LLP.
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<PAGE> 88
Lee C. McLaurin is Senior Vice President and Controller of First
Bancorp and First Bank. He has been employed by First Bancorp since 1987.
CONDITIONAL NOMINEES AND EXECUTIVE OFFICERS
If the merger is approved by the shareholders of First Bancorp and
First Savings and the issuance of shares of First Bancorp common stock and the
bylaw amendment to increase the number of First Bancorp directors are approved
by the First Bancorp shareholders, there will be seven additional nominees for
director and two additional executive officers of First Bancorp. The following
table sets forth certain information as of May 11, 2000 with respect to the
conditional seven additional nominees for director and two additional executive
officers of First Bancorp.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned (1)
----------------------
Percent of
Current Director (D), Director Class on a
Nominee (N), or Proposed of Company Number of Pro Forma
Name (Age) Position with First Bancorp Since Shares Basis (2)
- --------------------------- --------------------------- ---------- --------- ----------
<S> <C> <C> <C> <C>
DIRECTORS AND NOMINEES
Virginia C. Brandt (47) (N) n/a 13,091 (3) 0.15%
H. David Bruton, M.D. (64) (N) n/a 88,129 (4) 0.99%
John F. Burns (51) (N) n/a 164,134 (5) 1.84%
Felton J. Capel (72) (N) n/a 14,338 (3) 0.16%
Frank G. Hardister (64) (N) n/a 31,170 (6) 0.35%
Thomas F. Phillips (53) (N) n/a 68,576 (7) 0.77%
William E. Samuels (68) (N) n/a 203,246 (8) 2.28%
EXECUTIVE OFFICERS
John F. Burns (51) Executive Vice President n/a 164,134 (5) 1.84%
Timothy S. Maples (39) Senior Vice President n/a 24,820 (9) 0.28%
</TABLE>
- --------------------
(1) Unless otherwise indicated, each individual has sole voting and
investment power with respect to all shares beneficially owned by such
individual. These nominees currently are shareholders of First Savings.
The information in this table shows the number of shares that will be
owned by each individual, assuming that the merger is completed using
an exchange ratio of 1.2468 and includes shares subject to options
(exercisable on May 11, 2000 or within 60 days after May 11, 2000)
granted under existing First Savings stock option plans.
(2) Represents such individual's percentage of beneficial ownership on a
pro forma basis assuming that the proposed merger of First Savings into
First Bancorp has been completed. Assumes that the combined number of
outstanding shares after completion of the proposed merger is
8,903,064, which includes 4,506,651 shares of First Bancorp common
stock outstanding as of May 11, 2000 and 4,396,413 shares of First
Bancorp common stock to be issued in connection with such merger (based
on the number of shares of First Savings common stock outstanding as of
May 11, 2000, and assuming a conversion ratio of 1.2468 shares of First
Bancorp common stock for each share of First Savings common stock).
(3) Includes 12,468 shares that could be purchased pursuant to the exercise
of stock options.
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<PAGE> 89
(4) Includes 39,274 shares that could be purchased pursuant to the exercise
of stock options. Includes 4,738 shares with shared voting/investment
power.
(5) Includes 21,196 shares that could be purchased pursuant to the exercise
of stock options, which are vested and non-forfeitable. Also includes
84,761 allocated and unallocated shares held by First Savings Bank of
Moore County Employee Stock Ownership Plan. Mr. Burns is a trustee of
such Plan and has certain voting and investment power over such shares.
A total of 7,758 shares have been allocated to Mr. Burns under the
Plan. Also includes 5,785 other shares with shared voting/investment
power.
(6) Includes 4,439 shares that could be purchased pursuant to the exercise
of stock options.
(7) Includes 34,582 shares that could be purchased pursuant to the exercise
of stock options. Includes 1,435 shares with shared voting/investment
power.
(8) Includes 3,990 shares that could be purchase pursuant to the exercise
of stock options, which are vested and non-forfeitable. Also includes
84,761 allocated and unallocated shares held by First Savings Bank of
Moore County Employee Stock Ownership Plan. Mr. Samuels is a trustee of
such Plan and has certain voting and investment power over such shares.
A total of 9,946 shares have been allocated to Mr. Samuels under the
Plan. Also includes 22,442 other shares with shared voting/investment
power.
(9) Includes 15,897 shares that could be purchased pursuant to the exercise
of stock options. A total of 3,885 shares have been allocated to Mr.
Maples under the First Savings Bank of Moore County Employee Stock
Ownership Plan.
CONDITIONAL NOMINEES FOR DIRECTOR.
Virginia C. Brandt is a Certified Public Accountant with the firm
Holden, Brandt & Longfellow, P.C. She has been a director of First Savings since
1997.
H. David Bruton, M.D. is the Secretary of North Carolina's Department
of Health and Human Services. Until December 31, 1996, he was a practicing
physician with Sandhills Pediatric, Inc. He has been a director of First Savings
since 1979.
John F. Burns is currently the President and Chief Executive Officer of
First Savings and First Savings Bank of Moore County. He has been a director of
First Savings since 1995.
Felton J. Capel is the owner of Century Associates of N.C., a Southern
Pines distributor of cookware and other housewares. He has been a director of
First Savings since 1997.
Frank G. Hardister is president of Powell Funeral Home located in
Southern Pines, North Carolina. He has been a director of First Savings since
1990.
Thomas F. Phillips is an automobile dealer and owner of Phillips Motor
Company, located in Carthage, North Carolina. He has been a director of First
Savings since 1985.
William E. Samuels is chairman of the board of directors of First
Savings. He was the President and Chief Executive Officer of First Savings and
First Savings Bank of Moore County, until his retirement in 1998. He has been a
director of First Savings since 1977.
CONDITIONAL EXECUTIVE OFFICERS.
John F. Burns is currently the President and Chief Executive Officer of
First Savings and First Savings Bank of Moore County. He is also a director of
First Savings.
Timothy S. Maples is currently Senior Vice President, Chief Financial
Officer and Treasurer of First Savings and First Savings Bank of Moore County.
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<PAGE> 90
BOARD COMMITTEES, ATTENDANCE AND COMPENSATION
EXECUTIVE COMMITTEE. The Executive Committee is authorized, between
meetings of the board of directors, to perform all duties and exercise all
authority of the board of directors of First Bancorp, except those duties and
authorities exclusively reserved to the board of directors by First Bancorp's
bylaws or by statute. In 1999, the members of the Executive Committee were Mr.
Briggs, Mr. Burns, Mr. Capel, Mr. Garner, Mr. Taylor and Mr. Willis. The
Executive Committee held 14 meetings during 1999.
AUDIT COMMITTEE. The Audit Committee is responsible for reviewing and
presenting to the board of directors information regarding First Bancorp's
policies and procedures with respect to auditing, accounting, internal
accounting controls and financial reporting. The Audit Committee meets with and
reviews reports of First Bancorp's internal auditor and independent certified
public accountants and makes reports and recommendations to the board of
directors. The 1999 members of the Audit Committee were Mr. Briggs, Mr. Burns,
Mr. Capel, Ms. Wallace, and Mr. Willis. The Audit Committee held 7 meetings
during 1999.
COMPENSATION COMMITTEE. The Compensation Committee is responsible for
reviewing the compensation policies and benefit plans of First Bancorp and for
making recommendations regarding the compensation of its executive officers. The
Compensation Committee also administers First Bancorp's stock option plan. The
1999 members of the Committee were Mr. Briggs, Mr. Burns, Mr. Capel, Mr. Taws
and Mr. Washburn. The Compensation Committee held 3 meetings during 1999.
LONG RANGE PLANNING COMMITTEE. The role of the Long Range Planning
Committee is to act upon strategic matters that involve the allocation of First
Bancorp's resources and the growth and marketability of First Bancorp's products
and services. All members of First Bancorp's board of directors served on the
Long Range Planning Committee in 1999. The Long Range Planning Committee held 1
meeting during 1999.
ATTENDANCE. The First Bancorp board of directors held 17 meetings
during 1999. In 1999, all of the directors and nominees attended at least 75% of
the aggregate of the meetings of the board of directors and meetings of the
committees described above on which they served during the period they were
directors and members of such committees.
COMPENSATION OF DIRECTORS. Directors of First Bancorp receive
compensation of $400 per month during their terms of office, plus $200 for each
monthly meeting they attend. In addition, directors of First Bank receive $200
for each meeting they attend. Directors who serve on the Executive Committee,
Audit Committee, Compensation Committee or Long Range Planning Committee receive
$200 for each committee meeting attended. All of the directors of First Bancorp
are members of the First Bank board of directors.
Non-employee directors of First Bancorp also participate in First
Bancorp's stock option plan. The non-employee director portion of the stock
option plan provides that on June 1 of each year in the five-year period from
June 1, 1998 until June 1, 2003, each non-employee director of First Bancorp
will receive an option to acquire 1,500 shares of First Bancorp common stock
over a 10-year term at an exercise price equal to the average of the high and
low sales prices of such stock on the date of grant. At December 31, 1999, the
10 directors who were not employees of First Bancorp held aggregate options to
purchase 76,500 shares of First Bancorp common stock at exercise prices ranging
from $6.67 to $22.00.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE.
The following table sets forth the amount and form of compensation paid
by First Bancorp for the years ended December 31, 1999, 1998 and 1997 to (i) the
Chief Executive Officer of First Bancorp and (ii) First Bancorp's other
executive officers who earned in excess of $100,000 in salary and bonus during
1999.
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<PAGE> 91
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------ -------
(a), (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Name, Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Salary Bonus (1) sation Award (s) SARs Payouts sation (2)
and Year ($) ($) ($) ($) (# shares) ($) ($)
- -------------- ------ --------- ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
James H. Garner,
President and Chief
Executive Officer
1999 $ 182,500 $ 66,191 $ -- $ -- 12,000 $ -- $ 13,522
1998 170,000 56,831 -- -- -- -- 14,521
1997 160,000 50,119 -- -- -- -- 8,809
Anna G. Hollers,
Executive
Vice President
and Secretary
1999 $ 129,600 $ 37,000 $ -- $ -- 7,500 $ -- $ 7,089
1998 120,000 32,000 -- -- -- -- 7,515
1997 99,790 30,000 -- -- -- -- 3,969
Teresa C. Nixon,
Executive
Vice President and
Compliance Officer
1999 $ 125,600 $ 37,000 $ -- $ -- 7,500 $ -- $ 7,600
1998 116,000 32,000 -- -- -- -- 7,064
1997 98,500 30,000 -- -- -- -- 3,997
Eric P. Credle,
Senior Vice President
and Chief Financial
Officer
1999 $ 91,000 $ 27,000 $ -- $ -- 1,500 $ -- $ 4,228
1998 85,000 20,000 -- -- -- -- 243
1997 21,875 5,000 -- -- 7,500 -- --
David G. Grigg,
President,
Montgomery Data
Services, Inc.
1999 $ 85,000 $ 21,000 $ -- $ -- -- $ -- $ 5,261
1998 80,000 12,960 -- -- -- -- 5,076
1997 75,000 14,903 -- -- -- -- 4,562
</TABLE>
- -----------------------
Notes:
(1) Amounts shown represent actual incentive cash bonuses accrued during
the year indicated.
(2) Amounts shown include (a) First Bancorp contributions to First
Bancorp's 401(k) defined contribution plan that covers all First
Bancorp employees and (b) the value of certain split-dollar life
insurance plan premiums paid for the indicated executives, based on the
term insurance value of such payments as calculated under Internal
Revenue Code P.S. 58 rates or those of the insurer, if higher, as set
forth below.
78
<PAGE> 92
<TABLE>
<CAPTION>
Defined Split-Dollar
Contribution Insurance
Plan Plan
------------ ------------
<S> <C> <C> <C>
James H. Garner 1999 $ 8,716 $ 4,806
1998 10,104 4,417
1997 4,750 4,059
Anna G. Hollers 1999 $ 6,300 $ 789
1998 6,783 732
1997 3,291 678
Teresa C. Nixon 1999 $ 7,093 $ 507
1998 6,591 473
1997 3,555 442
Eric P. Credle 1999 $ 3,971 $ 257
1998 -- 243
1997 -- --
David G. Grigg 1999 $ 4,408 $ 853
1998 4,287 789
1997 3,830 732
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR.
The information set forth below reflects the stock options granted
during 1999 to the executive officers listed on the Summary Compensation Table.
No stock appreciation rights have been granted to the listed executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
- ----------------------------------------------------------------------------------- -----------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration 5% 10%
Name Granted (1) Fiscal Year ($/share) Date ($) ($)
- ----------------- ----------- ------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James H. Garner 12,000 16.67% $ 17.33 4/30/09 $ 130,800 $ 331,440
Anna G. Hollers 7,500 10.42% 17.33 4/30/09 81,750 207,150
Teresa C. Nixon 7,500 10.42% 17.33 4/30/09 81,750 207,150
Eric P. Credle 1,500 2.08% 17.33 4/30/09 16,350 41,430
David G. Grigg - - - - - -
</TABLE>
- ---------------------
(1) All options vest at the rate of 20% per year over five years, except
those granted to Mr. Garner, which were immediately vested and are
exercisable during the 10-year period beginning on the date of grant.
If the merger is completed, the options will become fully vested
because of the "change in control" provisions in
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<PAGE> 93
the governing documents. See "DESCRIPTION OF TRANSACTION -- Interests
of Certain Persons in the Merger."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES.
Set forth below is information concerning the exercise of stock options
during the year ending December 31, 1999 and the year-end value of unexercised
options by the executive officers listed on the Summary Compensation Table
above. No stock appreciation rights have been granted to the executive officers
listed.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year End (# shares) Fiscal Year End ($)
------------------------------- -------------------------------
Shares
Acquired
at Exercise Value
Name (# shares) Realized Exercisable Unexercisable(1) Exercisable Unexercisable(1)
- ----------------- ----------- -------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James H. Garner 5,440 $54,629 30,560 -- $ 174,780 $ --
Anna G. Hollers 4,500 43,502 18,000 7,500 169,506 --
Teresa C. Nixon 627 7,315 12,873 10,500 100,224 14,250
Eric P. Credle -- -- 3,000 6,000 -- --
David G. Grigg 1,500 14,501 6,000 -- 56,502 --
</TABLE>
- ------------------
(1) All options vest at the rate of 20% per year over five years, except those
granted to Mr. Garner, which were immediately vested and are exercisable
during the 10-year period beginning on the date of grant. If the merger is
completed, the options will become fully vested because of the "change in
control" provision in the governing documents. See "DESCRIPTION OF
TRANSACTION -- Interest of Certain Persons in the Merger."
RETIREMENT PLAN. The following table sets forth the estimated annual
pension benefits payable at normal retirement age of 65 to a participant in
First Bancorp's noncontributory defined benefit retirement plan.
TABLE OF ANNUAL BENEFITS PAYABLE ON RETIREMENT
UNDER THE RETIREMENT PLAN
<TABLE>
<CAPTION>
Final
Average Years of Service
Annual -----------------------------------------------------------------------------------
Compensation 15 20 25 30 35
------------ ---------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 7,100 $ 9,400 $ 11,800 $ 14,200 $ 16,500
75,000 12,300 16,400 20,500 24,700 28,800
100,000 17,600 23,400 29,300 35,200 41,000
125,000 22,800 30,400 38,000 45,700 53,300
150,000 28,100 37,400 46,800 56,200 65,500
175,000 30,200 40,200 50,300 60,400 70,400
200,000 30,200 40,200 50,300 60,400 70,400
</TABLE>
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<PAGE> 94
Final Average Annual Compensation is the average of the five highest
consecutive calendar years earnings out of the 10 calendar years of employment
preceding retirement. Benefits shown are estimated on the basis of "life
annuity" amounts, although participants in the retirement plan may choose from a
variety of benefit payment options. For executive officers, current annual
compensation for purposes of the retirement plan may be estimated as the sum of
the "Salary" and "Bonus" amounts in the Summary Compensation Table. First
Bancorp's executive officers appearing in the Summary Compensation Table who are
participants in the retirement plan and their respective credited years of
service are: Mr. Garner, 30 years; Ms. Hollers, 27 years; Ms. Nixon, 10 years;
Mr. Credle, 2 years and Mr. Grigg, 27 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The following table sets forth
the estimated annual pension benefits payable at normal retirement age of 65 to
executive officers, other than the Chief Executive Officer, in First Bancorp's
SERP.
TABLE OF ANNUAL BENEFITS PAYABLE ON RETIREMENT
UNDER THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<TABLE>
<CAPTION>
Final
Average Years of Service
Annual ----------------------------------------------------
Compensation 10 15 20 or more
----------------- ----------- ---------- ----------
<S> <C> <C> <C>
$ 50,000 $ 15,000 $ 22,500 $ 30,000
75,000 22,500 33,750 45,000
100,000 30,000 45,000 60,000
125,000 37,500 56,250 75,000
150,000 45,000 67,500 90,000
175,000 52,500 78,750 105,000
200,000 60,000 90,000 120,000
</TABLE>
Final Average Annual Compensation is the average of the five highest
consecutive calendar years earnings out of the 10 calendar years of employment
preceding retirement. Benefits shown are estimated on the basis of "life
annuity" amounts, although participants in the SERP may choose from a variety of
benefit payment options. For executive officers, current annual compensation for
purposes of the SERP may be estimated as the sum of the "Salary" and "Bonus"
amounts in the Summary Compensation Table. Benefits shown in the table are prior
to deductions for 50% of social security benefits and benefits paid under the
retirement plan. First Bancorp's executive officers, other than the Chief
Executive Officer, appearing in the Summary Compensation Table who are
participants in the SERP and their respective credited years of service are: Ms.
Hollers, 20 years (the maximum for participants other than the Chief Executive
Officer); Ms. Nixon, 11 years; Mr. Credle, 2 years and Mr. Grigg, 20 years.
Mr. Garner, First Bancorp's Chief Executive Officer, is also a
participant in the SERP. The provisions of the SERP applicable to him are the
same as those described above, except that his maximum benefit is 65% of Final
Average Annual Compensation compared to 60% for the other participants of the
SERP. Based on his years of service, Mr. Garner has already reached the maximum
benefit. Accordingly, his benefits under the SERP, prior to deductions for 50%
of social security benefits and benefits paid under the retirement plan, will be
determined by multiplying his Final Average Annual Compensation times 65%.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL AGREEMENTS. In 1998, in an
effort to conform to industry practices, First Bancorp entered into employment
agreements with 10 of its senior officers including each officer currently
serving as an executive officer. In 1999, First Bancorp entered into employment
agreements with two newly promoted senior officers.
The employment agreements have two to three year terms that extend
automatically for an additional year on each anniversary of the date of the
agreement, unless either party gives the other written notice on or prior to
such anniversary date that they do not want to extend the agreement. The initial
term for each officer listed in the
81
<PAGE> 95
Summary Compensation Table is three years. The employment agreements provide
that the officers are guaranteed minimum annual salaries equal to their current
annualized base salaries and that the officers will receive annual increases
that are at least as much as any percentage increase in the U.S. Consumer Price
Index during the preceding 12 months. The employment agreements also provide
that each officer will be entitled to such insurance, pension, profit-sharing
and other benefit plans as are or may become available generally to employees of
First Bancorp. The employment agreements provide that each officer is eligible
to participate in First Bancorp's SERP, split dollar life insurance plan and
stock option plan. The employment agreements also provide that each officer is
entitled to reasonable time for vacation, sick leave, bereavement leave, jury
duty and military obligations as are or may become available to employees of
First Bancorp in positions similar to those of the officer.
The employment agreements provide First Bancorp the right to terminate
each officer's employment with no further accrual of compensation or benefits
"for cause" if First Bancorp finds that the officer (i) demonstrated gross
negligence or willful misconduct in the execution of the officer's duties, (ii)
committed an act of dishonesty or moral turpitude or (iii) was convicted of a
felony or other serious crime.
In the event that First Bancorp terminates an officer for a reason
other than for cause, First Bancorp is obligated to pay the officer's base
salary for the remainder of the agreement term. In addition, each officer may
voluntarily terminate employment by providing at least 45 days written notice to
First Bancorp, in which case the officer's compensation, vested rights and
employee benefits will accrue through the date of termination of employment.
The employment agreements also contain noncompetition and
confidentiality covenants. The noncompetition covenants provide that that upon
termination of employment with First Bancorp, the officer may not engage
directly, or indirectly, in any activity or business that is in competition with
the business of First Bancorp within the restricted territory, during the
restricted period. The restricted territory is a 50-mile radius of each
officer's primary residence and/or work location. The restricted period upon
termination by First Bancorp "for cause" or voluntary employee termination is
one year and upon termination by First Bancorp other than "for cause" is the
remainder of the agreement term. The noncompetition covenant also prohibits
solicitation or recruitment of any employees of First Bancorp during the
restricted period and prohibits sales contacts or solicitation from any customer
of First Bancorp for any products or services offered by First Bancorp within
the restricted territory during the restricted period. The confidentiality
covenants prohibit the officer from disclosing any confidential business secrets
or other confidential information both during the term of the employment
agreement and for a period of two years following termination of the agreement.
The employment agreements also provide that if there is a "change in
control" of First Bancorp and the officer's employment is terminated by First
Bancorp or the officer for any reason, or no reason (other than "for cause"),
First Bancorp must pay the officer a severance payment equal to the officer's
base salary times a factor that ranges from 1 to 2.9. The multiple for Mr.
Garner, Ms. Hollers, Ms. Nixon and Mr. Credle is 2.9. The multiple for Mr. Grigg
is 2.0. Control means the power, directly or indirectly, to direct the
management or policies of First Bancorp or to vote 40% or more of any class of
voting securities of First Bancorp. Change in control is defined as a change in
control of First Bancorp except that any merger, consolidation or corporate
reorganization in which the owners of the capital stock entitled to vote in the
election of directors of First Bancorp prior to the combination own 61% or more
of the resulting entity's voting stock will not be considered a change in
control for the purpose of the employment agreements; provided that a change in
control will be deemed to have occurred if (i) any "person" (as that term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of First Bancorp, is or becomes the beneficial owner (as that term
is used in Section 13(d) of the Securities Exchange Act of 1934), directly or
indirectly, of 33% or more of the voting stock of First Bancorp or its
successors; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the board of directors of First Bancorp
or its successors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the board; provided, that any person who becomes a director
of First Bancorp after the beginning of such period whose election was approved
by a vote of at least 3/4 of the directors comprising the Incumbent Board will
be considered a member of the Incumbent Board; or (iii) there is a sale of all
or substantially all of the assets of First Bancorp. Notwithstanding the
foregoing, no change in control is deemed to occur as a result of any
transaction that results in the officer subject to the employment agreement in
question, or a group of persons including such officer, acquiring, directly or
indirectly, 33% or more of the combined voting power of First Bancorp's
outstanding securities. As presently structured, the proposed merger with
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<PAGE> 96
First Savings is expected to result in a "change in control" under the
employment agreements. See "DESCRIPTION OF TRANSACTION --Interests of Certain
Persons in the Merger."
In addition to the employment agreement change in control provisions
discussed above, all memorandums of options granted under First Bancorp's 1994
stock option plan were amended during 1998 to provide that in the event of a
change in control of First Bancorp, all options will become fully vested and
immediately exercisable. Also during 1998, First Bancorp's SERP was amended to
fully vest all participants in their accrued benefits in the event of a change
in control. As presently structured, the proposed merger with First Savings is
expected to result in a "change in control" under these benefit plans because
First Savings shareholders will own more than 40% of the common stock of First
Bancorp upon completion of the merger. See "DESCRIPTION OF TRANSACTION --
Interests of Certain Persons in the Merger."
REPORT OF THE COMPENSATION COMMITTEE
The fundamental philosophy of First Bancorp's compensation program is
to offer compensation arrangements that are (i) commensurate with individual
contributions to the performance of First Bancorp and (ii) competitive with
publicly owned financial institutions of similar size and performance.
Compensation is designed to attract and retain individuals possessing the
specialized talents required by First Bancorp to remain competitive in the
financial services industry.
In applying this philosophy, First Bancorp's Compensation Committee,
comprised entirely of non-employee directors, develops compensation
recommendations to be considered by the entire board of directors. The
Compensation Committee directly determines the recommendation regarding the
compensation of the Chief Executive Officer. In addition, the Committee also
sets forth recommendations involving (i) compensation policies, (ii) incentive
compensation, (iii) long-term equity participation and (iv) benefit plans. The
Compensation Committee delegates to the Chief Executive Officer the
responsibility to determine appropriate levels of salaries and incentive bonuses
for the other executive officers of First Bancorp. Additional consideration is
given by both the Compensation Committee (with regard to the Chief Executive
Officer) and the Chief Executive Officer (with regard to the other executive
officers) to the demonstration of the leadership skills needed to enable First
Bancorp to achieve the business objectives set forth by the board of directors.
Periodically, First Bancorp engages outside compensation consultants to evaluate
and provide recommendations regarding executive officer compensation.
The process of assessing the appropriateness of compensation
arrangements also involves the use of peer data to determine the extent to which
First Bancorp's compensation arrangements are competitive within both First
Bancorp's industry and geographical area. As a part of this assessment, the
Compensation Committee (with regard to the Chief Executive Officer) and the
Chief Executive Officer (with regard to the other executive officers) compares
First Bancorp's arrangements, both in whole and in part, with those of other
financial institutions of similar size and performance both within the state and
nationally. This peer group is a subset of the broader peer group to which First
Bancorp compares its total returns to shareholders. See "- Shareholder Return
Performance."
Annual compensation for First Bancorp's Chief Executive Officer and its
other executive officers primarily consists of four types of compensation, as
set forth below:
- base salary;
- annual incentive bonus (linked directly to corporate earnings
and individual performance);
- long-term equity participation (through the periodic issuance
of stock options under First Bancorp's stock option plan), in
an effort to more closely align the interests of the executive
officers with those of First Bancorp shareholders; and
- benefit plans for executive officers.
BASE SALARY. For First Bancorp's executive officers, including the
Chief Executive Officer, base salaries are targeted to approximate average
salaries for individuals in similar positions with similar levels of
responsibilities who are employed by other publicly owned banking organizations
of similar size and performance. First Bancorp
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<PAGE> 97
frequently participates in salary/compensation surveys and has access to other
published salary/compensation data. The results of such surveys are used by the
Compensation Committee (with regard to the Chief Executive Officer) and the
Chief Executive Officer (with regard to the other executive officers) in
developing the appropriate levels of base salaries for executive officers.
In 1997, the Compensation Committee adjusted the Chief Executive
Officer's salary and annual incentive bonus to provide for a higher portion of
total compensation coming from base salary, with less reliance on annual
incentive bonus in order to more closely align the Chief Executive Officer's
base salary with the salaries of his peers. Consistent with this philosophy, the
Committee adjusted the Chief Executive Officer's base salary, effective January
1, 2000, to $197,500.
The 1999 changes in base salary for other executive officers were in
the range of 5% to 9% increases in an effort to more closely align the executive
officers' base salaries with those of their peers.
ANNUAL INCENTIVE BONUS. For First Bancorp's executive officers,
including the Chief Executive Officer, annual incentive bonuses are directly and
indirectly linked to First Bancorp's earnings and to each executive officer's
individual performance as it relates to enabling First Bancorp to achieve its
performance goals.
For 1999, as in prior years, the Compensation Committee set the Chief
Executive Officer's annual incentive bonus as a percentage of the net income
earned by First Bancorp. For 1999, 1998 and 1997, the percentage was 1% of
consolidated net income. The 1997 percentage was a decrease from the 2% of net
income formula that was used in 1996. The decrease in percentage in 1997 was
effected in conjunction with an increase in base salary, as discussed above.
For the other executive officers, the 1999 annual incentive bonus was
based on a combination of (i) a percentage, as determined by the Chief Executive
Officer, of base salary related to First Bancorp's achievement of predetermined
earnings targets and (ii) additional amounts, at the discretion of the Chief
Executive Officer, related to each executive officer's individual contribution
to the overall achievement of company-wide earnings targets. Because of the
level of First Bancorp's earnings in 1999, the salary-based portion of the 1999
incentive bonus for all other executive officers ranged from 16% to 30% of the
respective base salaries.
LONG-TERM EQUITY PARTICIPATION. For First Bancorp's Chief Executive
Officer, executive officers and other key employees, stock options may be
granted each year at the discretion of the board of directors. Although no
formal system is employed in determining the number of options granted, both in
the aggregate or to any one individual, the board does consider First Bancorp's
current financial performance, each individual's level of responsibility and the
number of previously granted stock options. Options are not intended to be an
on-going component of annual compensation, but instead are typically granted to
attract and retain new employees, to recognize changes in responsibilities of
existing employees and to periodically reward exemplary performance. In 1999,
the board of directors of First Bancorp analyzed the financial performance of
First Bancorp in recent years, the contributions of various individuals to this
performance and the level of previous stock option grants to these individuals.
As a result, the First Bancorp board granted stock options to 23 officers of
First Bancorp during 1999.
BENEFIT PLANS FOR EXECUTIVE OFFICERS. In addition to the other methods
of compensating executive officers, First Bancorp provides executive officers
the same benefits that are afforded to all First Bancorp employees, including
matching contributions under First Bancorp's defined contribution plan,
retirement benefits under First Bancorp's pension plan and group health, life
and disability insurance. Also, executive officers participate in First
Bancorp's SERP and split-dollar life insurance plan.
EMPLOYMENT AGREEMENTS. Over the past two years, First Bancorp has
entered into employment agreements with each executive officer, as well as five
other senior officers. These agreements were determined to be in the best
interest of First Bancorp, among other reasons, (i) to better compete in the
retention of executive and senior officers with peer banks that have similar
agreements, (ii) to provide certain protections to First Bancorp, including
noncompetition and confidentiality covenants in the event that employment is
terminated, and (iii) to protect First Bancorp, through change in control
provisions, from loss of executive and senior officers as a result of any change
in control. See "FIRST BANCORP PROPOSAL FOR ELECTION OF DIRECTORS Compensation
of Executive Officers."
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<PAGE> 98
The above is a summary of current practice regarding Chief Executive
Officer and executive officer compensation matters considered by the
Compensation Committee. Because Chief Executive Officer and executive officer
salaries are not currently (or in the foreseeable future) expected to exceed
those limitations provided under Section 162(m) of the Internal Revenue Code,
the Compensation Committee has no specific policy that addresses the
deductibility for income tax purposes of "qualified compensation" under Section
162(m).
RESPECTFULLY SUBMITTED BY THE COMPENSATION COMMITTEE OF
THE FIRST BANCORP BOARD OF DIRECTORS:
Jack D. Briggs A. Johnson Washburn
Jesse S. Capel John C. Willis
Edward T. Taws, Jr.
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<PAGE> 99
SHAREHOLDER RETURN PERFORMANCE
The performance graph shown below compares First Bancorp's cumulative
total return to shareholders for the five-year period commencing December 31,
1994 and ending December 31, 1999, with cumulative total return of both the
Standard & Poor 500 Index (reflecting overall stock market performance) and two
indices of bank stocks constructed by SNL Securities, LP: (1) an index of banks
with between $500 million and $1 billion in assets, which reflects First
Bancorp's asset size from March 1999 through December 31, 1999 and (2) an index
comprised of banks with less than $500 million in assets which reflected First
Bancorp's asset size until March 1999. The graph and table assume that $100 was
invested on December 31, 1994 in First Bancorp's common stock and the three
indices described above and that all dividends were reinvested. All data was
provided by SNL Securities, LP.
First Bancorp
Comparison of Five-Year Total Return Performances (1)
Five Years Ending December 31, 1999
[COMPARISON GRAPH]
<TABLE>
<CAPTION>
Total Return Index Values (1)
December 31,
----------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
-------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
First Bancorp (2) $ 100.00 125.10 186.77 360.40 304.35 266.47
Index-S&P 500 (2) 100.00 137.58 169.03 225.44 289.79 350.50
Index - Banks between $500
million and $1 billion (2) 100.00 136.80 176.08 300.16 274.06 253.69
Index-Banks less than $500
million (2) 100.00 132.76 165.97 269.80 265.28 245.56
</TABLE>
- ---------------------
(1) Total return indices were provided from SNL Securities, LP and assume
initial investment of $100 on December 31, 1994, reinvestment of
dividends, and changes in market values. Total return index numerical
values used in this example are for illustrative purposes only.
(2) Source: SNL Securities LP, Charlottesville, VA.
You should recognize that corporations often use a number of other
performance benchmarks (in addition to shareholder return) to set various levels
of executive officer compensation. You should thus consider other relevant
performance indicators in assessing performance, such as growth in earnings per
share, growth in book value per share, growth in cash dividends per share, and
other performance measures such as return on assets and return on shareholders'
equity.
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<PAGE> 100
CERTAIN TRANSACTIONS. Certain of the directors, nominees, principal
shareholders and officers (and their associates) of First Bancorp have deposit
accounts and other transactions with First Bank, including loans. All loans or
other extensions of credit made by First Bank to directors, nominees, principal
shareholders and officers of First Bancorp and to associates of such persons
were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with independent third parties and did not involve more
than the normal risk of collectibility. At December 31, 1999, the aggregate
principal amount of loans to directors, nominees, principal shareholders and
officers of First Bancorp and to associates of such persons was approximately
$6,729,000. First Bancorp expects to continue to enter into transactions in the
ordinary course of business on similar terms with directors, nominees, principal
shareholders and officers (and their associates) of First Bancorp.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Under the
securities laws of the United States, First Bancorp's directors, its executive
officers, and any persons holding more than 10% of First Bancorp's common stock
are required to report their ownership of First Bancorp's common stock and any
changes in that ownership to the Securities and Exchange Commission and the
National Association of Securities Dealers Automated Quotation System. Specific
due dates for these reports have been established, and First Bancorp is required
to report in this joint proxy statement/prospectus any failure to file by these
dates during 1999. To First Bancorp's knowledge, all of these filing
requirements were satisfied by First Bancorp's directors and officers and 10%
shareholders during 1999, except that David L. Burns was delinquent in reporting
one purchase transaction.
THE NOMINEES WHO RECEIVE THE HIGHEST NUMBER OF VOTES CAST, UP TO THE
NUMBER OF DIRECTORS TO BE ELECTED, SHALL BE ELECTED AS DIRECTORS. THE FIRST
BANCORP BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO ELECT THE 18 NOMINEES DISCUSSED ABOVE AS DIRECTORS OF FIRST BANCORP. UNLESS
INDICATED TO THE CONTRARY, PROXIES WILL BE VOTED "FOR" THE 18 NOMINEES LISTED
ABOVE.
FIRST BANCORP PROPOSAL FOR
RATIFICATION OF INDEPENDENT AUDITORS
Your directors and management recommend that you ratify the appointment
of KPMG LLP to serve as the independent auditors for First Bancorp for the year
ending December 31, 2000. KPMG LLP has served as the independent auditors for
First Bancorp since April 1991 and has audited First Bancorp's financial
statements for each of the years in the three-year period ended December 31,
1999. If the appointment of KPMG LLP is not ratified by the shareholders, the
board of directors will reconsider the appointment of auditors for the current
fiscal year.
Representatives of KPMG LLP are expected to be present at the special
and annual meeting to respond to appropriate questions and will be given an
opportunity to make any statement they consider appropriate.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF FIRST
BANCORP COMMON STOCK REPRESENTED AND VOTING AT THE MEETING IS REQUIRED FOR
APPROVAL OF THIS PROPOSAL. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP TO SERVE AS THE
INDEPENDENT AUDITORS FOR FIRST BANCORP FOR THE YEAR ENDING DECEMBER 31, 2000.
UNLESS INDICATED TO THE CONTRARY, PROXIES WILL BE VOTED "FOR" THIS PROPOSAL.
OTHER MATTERS
As of the date of this joint proxy statement/prospectus, the First
Savings board of directors knows of no matters that will be presented for
consideration at the First Savings special meeting other than as described in
this joint proxy statement/prospectus, and the First Bancorp board of directors
knows of no matters that will be presented for consideration at the First
Bancorp special and annual meeting other than as described in this joint proxy
statement/prospectus. However, if any other matters shall properly come before
the First Savings special meeting or First Bancorp special and annual meeting or
any adjournment or postponement of the First Savings or First Bancorp meetings
and are voted on, the enclosed proxy will be deemed to confer discretionary
authority to the individuals named as proxies therein to vote the shares
represented by such proxy as to any such matters.
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SHAREHOLDER PROPOSALS
First Bancorp expects to hold its next annual meeting of shareholders
after the merger in April 2001. Under Securities and Exchange Commission rules,
proposals of First Bancorp shareholders intended to be presented at that meeting
must be received by First Bancorp at its principal executive offices no later
than January 16, 2001.
In the event the merger is not consummated, proposals of First Savings
shareholders intended to be presented at the 2000 annual meeting of First
Savings shareholders must be received by First Savings at its principal
executive offices no later than the date specified in First Savings 1999 Annual
Meeting Proxy Statement.
EXPERTS
The consolidated financial statements of First Bancorp and subsidiaries
as of December 31, 1999 and 1998 and for each of the years in the three-year
period ended December 31, 1999, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of First Savings and subsidiaries
as of June 30, 1999 and 1998 and for each of the years in the three-year period
ended June 30, 1999 have been incorporated herein by reference and in the
registration statement in reliance upon the report of Dixon Odom PLLC,
independent certified public accountants, incorporated by reference herein and
upon the authority of said firm as experts in accounting and auditing.
OPINIONS
Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina will pass
upon the legality of the shares of First Bancorp common stock to be issued in
the merger. Certain legal matters will be passed upon for First Savings by
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., Greensboro, North
Carolina.
Certain tax consequences of the transaction have been passed upon by
KPMG LLP.
ADDITIONAL INFORMATION
First Bancorp and First Savings file annual, quarterly and current
reports, proxy and information statements, and other information with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
You may read and copy this information at the Public Reference Section at the
Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information about issuers that file electronically with the Commission. The
address of that site is http://www.sec.gov. In addition, you can read and copy
this information at the regional offices of the Securities and Exchange
Commission at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
You can also inspect reports, proxy and information statements, and other
information about First Bancorp and First Savings at the offices of the Nasdaq
National Market System, at 1735 K Street, N.W., Washington, D.C. 20006.
First Bancorp filed a registration statement with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the First Bancorp common stock offered to the First Savings shareholders. The
registration statement contains additional information about First Bancorp and
the First Bancorp common stock. The Securities and Exchange Commission allows
First Bancorp to omit certain information included in the registration statement
from this joint proxy statement/prospectus. The registration statement may be
inspected and copied at the Commission's public reference facilities described
above.
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Important business and financial information about First Bancorp and
First Savings is included in documents that are delivered with this joint proxy
statement/prospectus and incorporated by reference herein.
First Bancorp's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000 and filed with the Securities and Exchange Commission by First
Bancorp are incorporated by reference into this joint proxy
statement/prospectus.
Copies of First Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 and its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000 are delivered with this joint proxy
statement/prospectus. In addition, a copy of First Bancorp's 1999 Annual Report
to Shareholders is delivered to First Bancorp shareholders with this joint proxy
statement/prospectus.
The following documents filed with the Securities and Exchange
Commission by First Savings are incorporated by reference into with this joint
proxy statement/prospectus:
(1) First Savings' Annual Report on Form 10-K for the fiscal year
ended June 30, 1999;
(2) First Savings' Quarterly Reports on Form 10-Q for the three
months ended September 30, 1999, December 31, 1999 and March
31, 2000; and
(3) First Savings' Current Report on Form 8-K dated December 21,
1999.
Copies of First Savings' Annual Report on Form 10-K for the fiscal year
ended June 30, 1999, its Annual Report to Shareholders for the fiscal year ended
June 30, 1999 and its Quarterly Report on Form 10-Q for the three-month period
ended March 31, 2000 are delivered with this joint proxy statement/prospectus.
First Bancorp and First Savings also incorporate by reference
additional documents filed by them pursuant to Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934 after the date of this joint proxy
statement/prospectus and prior to final adjournment of the First Savings special
meeting. Any statement contained in this joint proxy statement/prospectus or in
a document incorporated or deemed to be incorporated by reference in this joint
proxy statement/prospectus shall be deemed to be modified or superseded to the
extent that a statement contained herein or in any subsequently filed document
that also is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement.
You may obtain copies of the information incorporated by reference in
this joint proxy statement/prospectus upon written or oral request. The section
on "ADDITIONAL INFORMATION" at the beginning of this joint proxy
statement/prospectus contains information about how such requests should be
made.
All information contained in this joint proxy statement/prospectus,
delivered together with the joint proxy statement/prospectus or incorporated
herein by reference with respect to First Bancorp was supplied by First Bancorp,
and all information contained in this joint proxy statement/prospectus,
delivered together with the joint proxy statement/prospectus or incorporated
herein by reference with respect to First Savings was supplied by First Savings.
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APPENDIX A
MERGER AGREEMENT, AS AMENDED, AND PLAN OF MERGER
Execution Copy
MERGER AGREEMENT
AMONG
FIRST BANCORP,
FIRST BANK,
FIRST SAVINGS BANCORP, INC., AND
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB
Dated as of December 15, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINED TERMS
<S> <C>
1.1 Definitions............................................................................. 1
ARTICLE II
THE HOLDING COMPANY MERGER; CONVERSION
AND EXCHANGE OF COMPANY SHARES
2.1 The Holding Company Merger............................................................... 8
2.2 Company Shares........................................................................... 9
2.3 Merger Consideration..................................................................... 9
2.4 Closing Payment......................................................................... 10
2.5 Exchange Procedures..................................................................... 10
2.6 Conversion of Stock Options and Warrants................................................ 10
ARTICLE III
THE BANK MERGER; CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 The Bank Merger......................................................................... 11
3.2 Company Bank Shares..................................................................... 12
ARTICLE IV
THE CLOSING
4.1 Closing................................................................................. 13
4.2 Deliveries by the Company Parties....................................................... 13
4.3 Deliveries by the Buyer................................................................. 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1 Organization, Standing and Power........................................................ 13
5.2 Authority; No Conflicts................................................................. 14
5.3 Capital Stock; Subsidiaries............................................................. 14
5.4 SEC Filings; Company Financial Statements............................................... 15
5.5 Absence of Undisclosed Liabilities...................................................... 15
5.6 Absence of Certain Changes or Events.................................................... 16
5.7 Tax Matters............................................................................. 16
5.8 Assets.................................................................................. 17
5.9 Securities Portfolio and Investments.................................................... 17
5.10 Environmental Matters................................................................... 17
5.11 Compliance with Laws.................................................................... 18
5.12 Labor Relations......................................................................... 18
5.13 Employee Benefit Plans.................................................................. 19
</TABLE>
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<TABLE>
<S> <C>
5.14 Material Contracts...................................................................... 20
5.15 Legal Proceedings....................................................................... 21
5.16 Reports................................................................................. 21
5.17 Registration Statement; Joint Proxy Statement/Prospectus................................ 21
5.18 Accounting, Tax, and Regulatory Matters................................................. 21
5.19 State Takeover Laws..................................................................... 21
5.20 Charter Provisions...................................................................... 22
5.21 Records................................................................................. 22
5.22 Derivatives............................................................................. 22
5.23 Year 2000............................................................................... 22
5.24 Certain Regulated Businesses............................................................ 22
5.25 Commissions............................................................................. 22
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE BUYER BANK
6.1 Organization............................................................................ 22
6.2 Authority; No Conflicts................................................................. 23
6.3 Buyer's Stock; Subsidiaries............................................................. 23
6.4 SEC Filings; Buyer Financial Statements................................................. 24
6.5 Absence of Undisclosed Liabilities...................................................... 24
6.6 Absence of Certain Changes or Events.................................................... 25
6.7 Tax Matters............................................................................. 25
6.8 Assets.................................................................................. 26
6.9 Securities Portfolio and Investments.................................................... 26
6.10 Environmental Matters................................................................... 26
6.11 Compliance with Laws.................................................................... 27
6.12 Labor Relations......................................................................... 27
6.13 Employee Benefit Plans.................................................................. 28
6.14 Material Contracts...................................................................... 29
6.15 Legal Proceedings....................................................................... 30
6.16 Reports................................................................................. 30
6.17 Registration Statement; Joint Proxy Statement/Prospectus................................ 30
6.18 Accounting, Tax, and Regulatory Matters................................................. 31
6.19 Derivatives............................................................................. 31
6.20 Year 2000............................................................................... 31
6.21 Certain Regulated Businesses............................................................ 31
6.22 Commissions............................................................................. 31
ARTICLE VII
COVENANTS
7.1 Covenants of the Company Parties........................................................ 31
7.2 Covenants of the Buyer.................................................................. 34
7.3 Covenants of All Parties to the Agreement............................................... 38
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information................................................................... 39
8.2 Access to Premises...................................................................... 39
8.3 Environmental Survey.................................................................... 39
8.4 Confidentiality......................................................................... 40
</TABLE>
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<TABLE>
<S> <C>
8.5 Publicity............................................................................... 40
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions....................................................................... 40
9.2 Conditions to the Obligations of the Company Parties.................................... 42
9.3 Conditions to the Obligations of the Buyer.............................................. 43
ARTICLE X
TERMINATION
10.1 Termination............................................................................. 44
10.2 Procedure and Effect of Termination..................................................... 45
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses................................................................................ 45
11.2 Survival of Representations............................................................. 45
11.3 Amendment and Modification.............................................................. 46
11.4 Waiver of Compliance; Consents.......................................................... 46
11.5 Notices................................................................................. 46
11.6 Assignment.............................................................................. 47
11.7 Separable Provisions.................................................................... 47
11.8 Governing Law........................................................................... 47
11.9 Counterparts............................................................................ 47
11.10 Interpretation.......................................................................... 47
11.11 Entire Agreement........................................................................ 47
</TABLE>
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EXHIBITS
Exhibit A Form of Plan of Merger in respect of the Holding Company Merger
Exhibit B Form of Plan of Merger in respect of the Bank Merger
Exhibit C Form of Employment Agreement for John F. Burns
Exhibit D Form of Employment Agreement for Timothy S. Maples
Exhibit E Form of Employment Agreement for William E. Samuels, Jr.
Exhibit F Form of Affiliate Pooling Letter
Exhibit G Form of Company Option Agreement
Exhibit H Form of Buyer Option Agreement
COMPANY'S DISCLOSURE SCHEDULE
Section 5.2 Authority; No Conflicts
Section 5.3 Subsidiaries
Section 5.4 SEC Filings; Company Financial Statements
Section 5.5 Absence of Undisclosed Liabilities
Section 5.6 Absence of Certain Changes or Events
Section 5.7 Tax Matters
Section 5.9 Securities Portfolio and Investments
Section 5.11 Compliance with Laws
Section 5.13 Employee Benefit Plans
Section 5.14 Material Contracts
Section 5.18 Accounting, Tax and Regulatory Matters
Section 5.19 State Takeover Laws
Section 5.25 Commissions
Section 7.1(a) Ordinary Conduct of Business
Section 7.1(d) Affiliates
Section 7.2(f)(i)Employment and Change-of-Control Agreements
BUYER'S DISCLOSURE SCHEDULE
Section 6.3 Capital Stock Subsidiaries
Section 6.5 Absence of Undisclosed Liabilities
Section 6.8 Assets
Section 6.9 Securities Portfolio and Investments
Section 6.13 Employee Benefit Plans
Section 6.14 Material Contracts
Section 6.22 Commissions
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT"), dated as of the 15th day of
December, 1999, is by and among:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "BUYER");
FIRST BANK, a North Carolina bank and a wholly owned subsidiary of the
Buyer (the "BUYER BANK");
FIRST SAVINGS BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
savings bank holding company (the "COMPANY"); and
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB, a North Carolina stock
savings bank (the "COMPANY BANK").
BACKGROUND STATEMENT
The Buyer and the Company desire to effect a merger pursuant to which
the Company will merge into the Buyer, with the Buyer being the surviving
corporation (the "HOLDING COMPANY MERGER"); and the Buyer Bank and the Company
Bank desire to effect a merger pursuant to which the Company Bank will merge and
combine into the Buyer Bank, with the Buyer Bank being the surviving corporation
(the "BANK MERGER," and together with the Holding Company Merger, the
"MERGERS"). In consideration of the Mergers, the shareholders of the Company
will receive shares of common stock of the Buyer. It is intended that the
Mergers qualify as tax-free reorganizations under Section 368 of the Internal
Revenue Code and qualify for "pooling-of-interests" treatment under Generally
Accepted Accounting Principles.
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual representations,
warranties, covenants, agreements and conditions contained herein, the parties
hereto agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"AFFILIATE" means, with respect to any Person, each of the Persons that
directly or indirectly, through one or more intermediaries, owns or controls, or
is controlled by or under common control with, such Person. For the purpose of
this Agreement, "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise. Without
limiting the foregoing, as used with respect to the Company, the term
"AFFILIATES" includes its subsidiaries.
"AGREEMENT" means this Merger Agreement.
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"ASSETS" means all of the assets, properties, businesses and rights of
a Person of every kind, nature, character and description, whether real,
personal or mixed, tangible or intangible, accrued or contingent, whether or not
carried on any books and records of such Person, whether or not owned in such
Person's name and wherever located.
"AVERAGE CLOSING PRICE" has the meaning given to it in SECTION 10.1(f).
"BANK MERGER" has the meaning given to it in the Background Statement
hereof.
"BENEFIT PLANS" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stockownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including without limitation "employee benefit plans" as that term is defined in
Section 3(3) of ERISA maintained by, sponsored in whole or in part by, or
contributed to by, a Person or any of its subsidiaries for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
that shall be a legal holiday in the State of North Carolina.
"BUYER" has the meaning given to it in the introductory paragraph
hereof.
"BUYER BANK" has the meaning given to it in the introductory paragraph
hereof.
"BUYER CONTRACTS" has the meaning given to it in SECTION 6.14.
"BUYER ERISA AFFILIATE" has the meaning given to it in SECTION 6.13.
"BUYER FINANCIAL STATEMENTS" means, with respect to the Buyer and its
subsidiaries, the consolidated audited statements of income and stockholder's
equity and cash flows for the years ended December 31, 1998, 1997 and 1996 and
consolidated audited balance sheets as of December 31, 1998, 1997 and 1996, as
well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since December 31, 1998 and the consolidated interim balance sheet as of each
such quarter.
"BUYER SEC REPORTS" has the meaning given to it in SECTION 6.4.
"BUYER'S STOCK" means the common stock of First Bancorp, no par value
per share, as traded on the Nasdaq National Market System.
"BUYER'S STOCK PERCENTAGE CHANGE" has the meaning given to it in
SECTION 10.1(f).
"CAUSE" has the meaning given to it in SECTION 7.2(f).
"CLOSING" means the closing of the Mergers, as identified more
specifically in ARTICLE IV.
"CLOSING DATE" has the meaning given to it in SECTION 4.1.
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"CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed also to refer to any successor sections.
"COMPANY" has the meaning given to it in the introductory paragraph
hereof.
"COMPANY BANK" has the meaning given to it in the introductory
paragraph hereof.
"COMPANY BANK SHARES" has the meaning given to it in SECTION 3.2(a).
"COMPANY CONTRACTS" has the meaning given to it in SECTION 5.14.
"COMPANY FINANCIAL STATEMENTS" means, with respect to the Company and
its subsidiaries, the consolidated audited statements of income and
stockholder's equity and cash flows for the years ended June 30, 1999, 1998 and
1997 and consolidated audited balance sheets as of June 30, 1999, 1998 and 1997,
as well as the interim unaudited consolidated statements of income and
stockholders' equity and cash flows for each of the completed fiscal quarters
since June 30, 1999 and the consolidated interim balance sheet as of each such
quarter.
"COMPANY OPTIONS" has the meaning given to it in SECTION 2.6.
"COMPANY PARTIES" means the Company and the Company Bank.
"COMPANY SEC REPORTS" has the meaning given to it in SECTION 5.4.
"COMPANY SHARES" has the meaning given to it in SECTION 2.2(a).
"CONFIDENTIALITY AGREEMENTS" has the meaning given to it in SECTION
8.4.
"CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person given or granted with
respect to any Contract, Law, Order, or Permit.
"CONTRACT" means any agreement, warranty, indenture, mortgage,
guaranty, lease, license or other contract, agreement, arrangement, commitment
or understanding, written or oral, to which a Person is a party.
"DEFAULT" means (i) any breach or violation of or default under any
Contract, Order or Permit (including any noncompliance with restrictions on
assignment, where assignment is defined to include a change of control of any of
the parties to this agreement or any of their subsidiaries or the merger or
consolidation of any of them with another Person), (ii) any occurrence of any
event that with the passage of time or the giving of notice or both would
constitute such a breach or violation of or default under any Contract, Order or
Permit, or (iii) any occurrence of any event that with or without the passage of
time or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order or Permit.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed also to refer to any successor sections.
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"ERISA PLAN" means any Benefit Plan that is an "employee welfare
benefit plan," as that term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA.
"EFFECTIVE TIME" has the meaning given to it in SECTION 2.1(e) or
SECTION 3.1(e), as appropriate.
"EMPLOYMENT AGREEMENTS" means the Employment Agreement to be entered
into at or prior to Closing between the Company and each of John F. Burns,
Timothy S. Maples and William E. Samuels, Jr., substantially in the forms
attached hereto as EXHIBITS C, D and E, respectively.
"ENVIRONMENTAL ASSESSMENT" means any and all soil and groundwater
tests, surveys, environmental assessments and other inspections, tests and
inquiries conducted by the Buyer or any agent of the Buyer and related to the
Real Property of the Company or its subsidiaries.
"ENVIRONMENTAL LAWS" means any federal, state or local law, statute,
ordinance, rule, regulation, permit, directive, license, approval, guidance,
interpretation, order or other legal requirement relating to the protection of
human health or the environment, including but not limited to any requirement
pertaining to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, handling, reporting, licensing, permitting,
investigation or remediation of materials that are or may constitute a threat to
human health or the environment. Without limiting the foregoing, each of the
following is an Environmental Law: the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.)
("RCRA"), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Safe Drinking Water Act (42
U.S.C. Section 300 et seq.) and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.) ("OSHA"), as such laws and regulations have been or
are in the future amended or supplemented, and each similar federal, state or
local statute, and each rule and regulation promulgated under such federal,
state and local laws.
"ENVIRONMENTAL SURVEY" has the meaning given to it in SECTION 8.3.
"EXCHANGE AGENT" has the meaning given to it in SECTION 2.5.
"EXCHANGE RATIO" has the meaning given to it in SECTION 2.3(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles as recognized by the American Institute of
Certified Public Accountants, as in effect from time to time, consistently
applied and maintained on a consistent basis for a Person throughout the period
indicated and consistent with such Person's prior financial practice.
"GOVERNMENTAL AUTHORITY" means any nation, province or state, or any
political subdivision thereof, and any agency, department, natural person or
other entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, including Regulatory Authorities.
"HAZARDOUS MATERIAL" means any substance or material that either is or
contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law or is otherwise regulated under any Environmental Law, or the
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presence of which in some quantity requires investigation, notification or
remediation under any Environmental Law.
"HOLDING COMPANY MERGER" has the meaning given to it in the Background
Statement hereof.
"INTELLECTUAL PROPERTY" means (a) all inventions and discoveries
(whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (c) all copyrights and all
applications, registrations and renewals in connection therewith, (d) all
know-how, trade secrets, whether patentable or unpatentable and whether or not
reduced to practice (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production process and techniques,
technical data, designs, drawings, specifications, pricing and cost information
and business and marketing plans and proposals), (e) all computer software
(including data and related documentation) and (f) all other proprietary rights.
"JOINT PROXY STATEMENT/PROSPECTUS" has the meaning given to it in
SECTION 5.17.
"KNOWLEDGE OF THE BUYER PARTIES" means the actual personal knowledge of
any of the directors and officers of the Buyer and the Buyer Bank.
"KNOWLEDGE OF THE COMPANY PARTIES" means the actual personal knowledge
of any of the directors and officers of the Company and the Company Bank and any
of their subsidiaries.
"LAW" means any code, law, ordinance, rule, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, business or operations promulgated, interpreted or enforced by any
Governmental Authority.
"LIABILITY" means any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including costs
of investigation, collection and defense), claim, deficiency, guaranty or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured or otherwise.
"LIEN" means, whether contractual or statutory, any conditional sale
agreement, participation or repurchase agreement, assignment, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention
or other security arrangement, or any adverse right or interest, charge or claim
of any nature whatsoever of, on, or with respect to any property or property
interest, other than (i) Liens for current property Taxes not yet due and
payable, (ii) easements, restrictions of record and title exceptions that could
not reasonably be expected to have any Material Adverse Effect, and (iii)
pledges to secure deposits and other Liens incurred in the ordinary course of
the banking business.
"LITIGATION" means any action, arbitration, cause of action, complaint,
criminal prosecution, governmental investigation, hearing, or administrative or
other proceeding, but shall not include regular, periodic examinations of
depository institutions and their Affiliates by Regulatory Authorities.
"LOAN COLLATERAL" means all of the assets, properties, businesses and
rights of every kind, nature, character and description, whether real, personal,
or mixed, tangible or intangible, accrued or contingent,
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owned by whomever and wherever located, in which the Company or any of its
subsidiaries has taken a security interest with respect to, on which the Company
or any of it subsidiaries has placed a Lien with respect to, or which is
otherwise used to secure, any loan made by the Company or any of its
subsidiaries or any note, account, or other receivable payable to the Company or
any of its subsidiaries.
"MARKET VALUE" of the Buyer's Stock on any date shall be the closing
price of such stock on the Nasdaq National Market System (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative
source), or if such date is not a trading day, on the last trading day preceding
that date.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine materiality in
that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence that, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Party and its subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Mergers or the other transactions contemplated by
this Agreement, provided that "Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in market interest rates, real estate markets or other market
conditions applicable to banks or thrift institutions generally, (c) changes in
GAAP or regulatory accounting principles generally applicable to banks and their
holding companies, (d) actions and omissions of a Party (or any of its
subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, (e) the Mergers (and the
reasonable expenses incurred in connection therewith) and compliance with the
provisions of this Agreement on the operating performance of the Parties, and
(f) any divestiture of assets or deposits in the aggregate of $100 million or
less of the Buyer and the Company and their subsidiaries taken as a whole as
required by any Regulatory Authority or pursuant to applicable law.
"MEASUREMENT PERIOD" has the meaning given to it in SECTION 10.1(f).
"MERGER CONSIDERATION" has the meaning given to it in SECTION 2.3(a).
"MERGERS" has the meaning given to it in the Background Statement
hereof.
"NORTH CAROLINA ADMINISTRATOR" means the North Carolina Administrator,
Savings Institutions Division, North Carolina Department of Commerce.
"OPTION AGREEMENTS" means the Option Agreements dated as of the date
hereof between the Buyer and the Company substantially in the form of EXHIBITS G
and H.
"ORDER" means any administrative decision or award, decree, injunction,
judgment, order, quasi-judicial decision or award, ruling, or writ of any
federal, state, local, foreign or other court, arbitrator, mediator, tribunal,
administrative agency or Governmental Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its subsidiaries participates in the management
(including but not limited to participating in a fiduciary capacity) and, where
required by the context, said term means the owner or operator of such facility
or property, but only with respect to such facility or property.
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"PENSION PLAN" means any ERISA Plan that also is a "defined benefit
plan" (as defined in Section 414(j) of the Internal Revenue Code or Section
3(35) of ERISA).
"PERMIT" means any approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right given by a Governmental
Authority to which any Person is a party or that is or may be binding upon or
inure to the benefit of any Person or its securities, Assets or business.
"PERSON" means a corporation, a company, an association, a joint
venture, a partnership, an organization, a business, an individual, a trust, a
Governmental Authority or any other legal entity.
"REAL PROPERTY" means all of the land, buildings, premises, or other
real property in which a Person has ownership or possessory rights, whether by
title, lease or otherwise (including banking facilities and any foreclosed
properties). Notwithstanding the foregoing, "Real Property", as used with
respect to any of the Company and its subsidiaries, does not include any Loan
Collateral not yet foreclosed and conveyed to the Company or one of its
subsidiaries as of the date with respect to which the term "Real Property" is
being used.
"REGISTRATION STATEMENT" has the meaning given to it in SECTION 5.17.
"REGULATORY AUTHORITIES" means, collectively, the Federal Trade
Commission, the United States Department of Justice, the Federal Reserve Board,
the North Carolina Administrator, the North Carolina Commissioner of Banks, the
FDIC, the National Association of Securities Dealers and the SEC, and all other
regulatory agencies having jurisdiction over the Parties and their respective
subsidiaries.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" means the Securities and Exchange Commission.
"SNL INDEX" has the meaning given to it in SECTION 10.1(f).
"SECURITIES DOCUMENTS" means all forms, proxy statements, registration
statements, reports, schedules and other documents filed or required to be filed
by a Party or any of its subsidiaries with any Regulatory Authority pursuant to
the Securities Laws.
"SECURITIES LAWS" means the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisors Act of 1940, the Trust Indenture Act of 1939, each as amended, and the
rules and regulations of any Governmental Authority promulgated under each.
"SHAREHOLDER MEETINGS" has the meaning given to it in SECTION 5.17.
"STOCK ADJUSTMENT" has the meaning given to it in SECTION 2.3(c).
"SURVIVING BANK" has the meaning given to it in SECTION 3.1(a).
"SURVIVING HOLDING COMPANY" has the meaning given to it in SECTION
2.1(a).
"TAX" or "TAXES" means any and all taxes, charges, fees, levies or
other assessments (whether federal, state, local or foreign), including without
limitation income, gross receipts, excise, property,
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estate, sales, use, value added, transfer, license, payroll, franchise, ad
valorem, withholding, Social Security and unemployment taxes, as well as any
interest, penalties and other additions to such taxes, charges, fees, levies or
other assessments.
"TAXABLE PERIOD" shall mean any period prescribed by any Governmental
Authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is required
to be filed or Tax is required to be paid.
"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
ARTICLE II
THE HOLDING COMPANY MERGER;CONVERSION AND EXCHANGE OF COMPANY SHARES
2.1 The Holding Company Merger.
(a) The Merger. On the terms and subject to the conditions of this
Agreement, the Plan of Merger in respect of the Holding Company Merger, which
shall be substantially in the form attached hereto as EXHIBIT A, and North
Carolina Law, the Company shall merge into the Buyer, the separate existence of
the Company shall cease, and the Buyer shall be the surviving corporation (the
"SURVIVING HOLDING COMPANY").
(b) Governing Documents. The articles of incorporation of the
Buyer in effect at the Effective Time (as defined below) of the Holding Company
Merger shall be the articles of incorporation of the Surviving Holding Company
until further amended in accordance with applicable law. The bylaws of the Buyer
in effect at such Effective Time shall be the bylaws of the Surviving Holding
Company until further amended in accordance with applicable law.
(c) Directors and Officers. Subject to SECTION 7.2(d) and SECTION
7.2(e), from and after the Effective Time of the Holding Company Merger, until
successors or additional directors are duly elected or appointed in accordance
with applicable law, (i) the directors of the Buyer at such Effective Time shall
be the directors of the Surviving Holding Company, and (ii) the officers of the
Buyer at such Effective Time shall be the officers of the Surviving Holding
Company.
(d) Approval. The parties hereto shall take and cause to be taken
all action necessary to approve and authorize (i) this Agreement and the other
documents contemplated hereby (including without limitation the above-described
Plan of Merger) and (ii) the Holding Company Merger and the other transactions
contemplated hereby.
(e) Effective Time. The Holding Company Merger shall become
effective on the date and at the time of filing of the related Articles of
Merger, in the form required by and executed in accordance with the laws of
North Carolina, or at such other time specified therein. The date and time when
the Holding Company Merger shall become effective is herein referred to as the
"EFFECTIVE TIME" of the Holding Company Merger.
(f) Filing of Articles of Merger. At the Closing, the Buyer and
the Company shall cause the Articles of Merger (containing the above-referenced
Plan of Merger) in respect of the Holding Company Merger to be executed and
filed with the Secretary of State of North Carolina, to the extent required by
the laws of North Carolina, and shall take any and all other actions and do any
and all other things to cause the Holding Company Merger to become effective as
contemplated hereby.
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2.2 Company Shares.
(a) Each share of the Company's capital stock (the "COMPANY
SHARES"), no par value per share, issued and outstanding to Persons, except for
Company Shares held by the Buyer and its Affiliates immediately prior to the
Effective Time of the Holding Company Merger (other than shares held in a
fiduciary capacity or as a result of debts previously contracted), shall, by
virtue of the Holding Company Merger and without any action on the part of the
holders thereof, be canceled and converted at such Effective Time into the right
to receive the Merger Consideration (as defined below) in accordance with this
ARTICLE II.
(b) Each Company Share, by virtue of the Holding Company Merger
and without any action on the part of the holder thereof, shall at the Effective
Time of the Holding Company Merger no longer be outstanding, shall be canceled
and retired and shall cease to exist, and each holder of certificates
representing any such Company Shares shall thereafter cease to have any rights
with respect to such shares, except for the right to receive the Merger
Consideration.
(c) Notwithstanding anything contained in this SECTION 2.2 to the
contrary, any Company Shares held in the treasury of the Company immediately
prior to the Effective Time of the Holding Company Merger shall be canceled
without any conversion thereof, and no payment shall be made with respect
thereto.
(d) From and after the Effective Time of the Holding Company
Merger, there shall be no transfers on the stock transfer books of the Surviving
Holding Company of the Company Shares that were outstanding immediately prior to
the Effective Time of the Holding Company Merger. If, after such Effective Time,
certificates representing Company Shares are presented to the Surviving Holding
Company, they shall be canceled, and exchanged and converted into the Merger
Consideration as provided for herein.
2.3 Merger Consideration.
(a) Subject to SECTIONS 2.4 and 2.5, at the Effective Time of the
Holding Company Merger, the holders of Company Shares outstanding at such
Effective Time, other than the Buyer and its Affiliates, shall be entitled to
receive, and the Buyer shall pay or issue and deliver, a number of shares of the
Buyer's Stock (the "MERGER CONSIDERATION") representing 1.2468 shares of the
Buyer's Stock for each such Company Share, subject to adjustment in accordance
with SECTION 2.3(c) and SECTION 10.1(f) (the "EXCHANGE RATIO").
(b) No fractional shares of the Buyer's Stock shall be issued or
delivered in connection with the Holding Company Merger. In lieu of any such
fractional share, subject to SECTION 2.4, each holder of Company Shares who
would otherwise have been entitled to a fraction of a share of the Buyer's Stock
shall be entitled to receive cash (without interest) in an amount equal to such
fraction multiplied by the Market Value of one share of the Buyer's stock on the
trading day immediately prior to the Effective Time.
(c) In the event the Buyer changes the number of shares of the
Buyer's Stock issued and outstanding prior to the Effective Time of the Holding
Company Merger as a result of a stock split, stock dividend or similar
recapitalization with respect to such stock (each a "STOCK ADJUSTMENT") and the
record date therefor (in the case of a stock dividend) or the effective date
thereof (in the case of a stock split or similar recapitalization for which a
record date is not established) shall be prior to such Effective Time, the
Exchange Ratio shall be equitably adjusted to reflect such change.
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2.4 Closing Payment. At the Effective Time of the Holding Company
Merger or as soon thereafter as is reasonably practicable, the holders of the
Company Shares shall surrender the certificates representing such shares to the
Buyer and in exchange therefor, the Buyer shall issue and deliver to each such
holder certificates representing the number of shares of the Buyer's Stock to
which it is entitled hereunder and cash payments to which such holder is
entitled hereunder in respect of any fractional shares thereof. The Buyer shall
not be obligated to deliver any of such shares of the Buyer's Stock or cash
payments until such holder surrenders the certificates representing such
holder's Company Shares.
2.5 Exchange Procedures.
(a) Promptly after the Effective Time of the Holding Company
Merger, the Buyer shall cause the exchange agent selected by the Buyer (the
"EXCHANGE AGENT"), subject to the reasonable satisfaction of the Company, which
may be an Affiliate of the Buyer, to mail to the shareholders of the Company
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates representing shares of
the Company prior to such Effective Time shall pass, only upon proper delivery
of such certificates to the Exchange Agent). After such Effective Time, each
holder of Company Shares issued and outstanding at such Effective Time (other
than any of such shares held by the Buyer or any Affiliate thereof or canceled
pursuant to SECTION 2.2(c)) shall surrender the certificate or certificates
representing such shares to the Exchange Agent and shall promptly upon surrender
thereof receive in exchange therefor the number of shares of the Buyer's Stock
to which such holder is entitled hereunder, plus any cash payments to which such
holder is entitled hereunder in respect of rights to receive fractional shares.
The Buyer shall not be obligated to deliver any of such payments in cash or
stock until such holder surrenders the certificate(s) representing such holder's
Company Shares. The certificate(s) so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither the Buyer nor the Exchange Agent shall be liable to any
holder of Company Shares for any amounts paid or properly delivered in good
faith to a public official pursuant to any applicable abandoned property Law.
(b) To the extent permitted by applicable Law, former shareholders of
record of the Company shall be entitled to vote after the Effective Time of the
Holding Company Merger at any meeting of the Buyer's shareholders the number of
whole shares of the Buyer's Stock into which their respective Company Shares are
converted pursuant to the Holding Company Merger, regardless of whether such
holders have exchanged their certificates representing such Company Shares for
certificates representing the Buyer's Stock in accordance with the provisions of
this Agreement. Whenever a dividend or other distribution is declared by the
Buyer on the Buyer's Stock, the record date for which is at or after the
Effective Time of the Holding Company Merger, the declaration shall include
dividends or other distributions on all shares of the Buyer's Stock issuable
pursuant to this Agreement, but beginning at such Effective Time no dividend or
other distribution payable to the holders of record of the Buyer's Stock as of
any time subsequent to such Effective Time of the Holding Company Merger shall
be delivered to the holder of any certificate representing any of the Company
Shares issued and outstanding at such Effective Time until such holder
surrenders such certificate for exchange as provided in this SECTION 2.5.
However, upon surrender of such certificate(s), both the certificate(s)
representing the shares of the Buyer's Stock to which such holder is entitled
and any such undelivered dividends and other distributions (without any
interest) shall be delivered and paid with respect to each share represented by
such certificates.
2.6 Conversion of Stock Options and Warrants.
(a) At the Effective Time of the Holding Company Merger, each
option or other right to purchase Company Shares pursuant to stock options or
warrants ("COMPANY OPTIONS") granted by the Company under its Benefit Plans that
are outstanding at the Effective Time of the Holding Company
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Merger shall be converted into and become rights with respect to the Buyer's
Stock, and the Buyer shall assume each Company Option, in accordance with the
terms of the applicable Benefit Plan of the Company and the stock option or
warrant agreement by which such Company Option is evidenced, except that from
and after such Effective Time: (i) the Buyer and its compensation committee
shall be substituted for the Company and the compensation committee of its board
of directors (including if applicable, the entire Board of Directors of the
Company) administering such Benefit Plan or Plans of the Company; (ii) the
Company Options assumed by the Buyer may be exercised solely for shares of the
Buyer's Stock; (iii) the number of shares of the Buyer's Stock subject to such
converted Company Options shall be equal to the number of Company Shares subject
to such Company Options immediately prior to the Closing Date multiplied by the
Exchange Ratio, rounded to the next highest share; and (iv) the per-share
exercise price under each such converted Company Option shall be adjusted by
dividing the exercise price of the Company Option immediately prior to the
Closing Date by the Exchange Ratio, rounded down to the nearest cent.
(b) In addition, notwithstanding clauses (ii), (iii) and (iv) of
SECTION 2.6(a), each assumed Company Option that is an "incentive stock option"
shall be adjusted as required by Section 424 of the Internal Revenue Code, and
the regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code.
(c) As soon as practicable after the Effective Time of the
Holding Company Merger, the Buyer shall deliver to the participants in each
Benefit Plan of the Company who remain employed by the Buyer an appropriate
notice setting forth such participant's rights pursuant thereto, and the grants
pursuant to such Benefit Plan shall continue in effect on substantially the same
terms and conditions (subject to the adjustments required by the above
subsection (a) after giving effect to the Holding Company Merger), and the Buyer
shall comply with the terms of each Benefit Plan of the Company to ensure, to
the extent required by, and subject to the provisions of, such Benefit Plan,
that the Company Options that qualified as incentive stock options prior to the
Effective Time of the Holding Company Merger continue to qualify as incentive
stock options after such Effective Time. At or prior to the Effective Time of
the Holding Company Merger, and at all times thereafter, the Buyer shall have
reserved a sufficient number of shares of the Buyer's Stock for issuance upon
exercise of the Company Options assumed by it in accordance with this SECTION
2.6. The Buyer agrees to file as promptly as practicable, and in no event later
than 60 days, after the Effective Time, a registration statement on Form S-8
covering the shares of the Buyer's Stock issuable pursuant to such options.
(d) Following the Effective Time of the Holding Company Merger,
in the event of any Stock Adjustment by the Buyer, or any consolidation or
merger of the Buyer with or into any other entity, or the sale or transfer or
all or substantially all of the Buyer's assets, the rights of the holders of
outstanding Company Options shall be appropriately adjusted so that such holders
will be in the same position as if their options had been exercised immediately
before such corporate action or transaction.
ARTICLE III
THE BANK MERGER; CONVERSION AND EXCHANGE OF COMPANY BANK SHARES
3.1 The Bank Merger.
(a) The Merger. Immediately after the consummation of the Holding
Company Merger, on the terms and subject to the conditions of this Agreement,
the Plan of Merger in respect of the Bank Merger, which shall be substantially
in the form of EXHIBIT B, attached hereto, and applicable North
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Carolina Law, the Company Bank shall merge and combine into the Buyer Bank, the
separate existence of the Company Bank shall cease, and the Buyer Bank shall be
the surviving corporation (the "SURVIVING BANK").
(b) Governing Documents. The articles of incorporation of the
Buyer Bank in effect at the Effective Time (as defined below) of the Bank Merger
shall be the articles of incorporation of the Surviving Bank until further
amended in accordance with applicable law. The bylaws of the Buyer Bank in
effect at such Effective Time shall be the bylaws of the Surviving Bank until
further amended in accordance with applicable law.
(c) Directors and Officers. Subject to SECTION 7.2(d) and SECTION
7.2(e), from and after the Effective Time of the Bank Merger, until successors
are duly elected or appointed in accordance with applicable law, (i) the
directors of the Buyer Bank at such Effective Time shall be the directors of the
Surviving Bank, and (ii) the officers of the Buyer Bank at such Effective Time
shall be the officers of the Surviving Bank.
(d) Approval. The parties hereto shall take and cause to be taken
all action necessary to approve and authorize (i) this Agreement and other
documents contemplated hereby (including without limitation the above-described
Plan of Merger) and (ii) the Bank Merger and other transactions contemplated
hereby.
(e) Effective Time. The Bank Merger shall become effective on the
date and at the time of filing of the related Articles of Merger in the form
required by and executed in accordance with the laws of North Carolina, or at
such other time specified therein (which in any event shall be later than the
Effective Time of the Holding Company Merger). The date and time when the Bank
Merger shall become effective is herein referred to as the "EFFECTIVE TIME" of
the Bank Merger.
(f) Filing of Articles of Merger. At the Closing but after the
filing of the Articles of Merger in respect of the Holding Company Merger, the
Buyer Bank and the Company Bank shall cause the Articles of Merger (which shall
contain the above-referenced Plan of Merger) in respect of the Bank Merger to be
executed and filed with the North Carolina Administrator and the Secretary of
State of North Carolina, to the extent required by applicable North Carolina
Law, and shall take any and all other actions and do any and all other things to
cause the Bank Merger to become effective as contemplated hereby.
3.2 Company Bank Shares.
(a) Each share of the Company Bank's capital stock (the "COMPANY
BANK SHARES"), no par value per share, issued and outstanding to Persons
immediately prior to the Effective Time of the Bank Merger shall, by virtue of
the Bank Merger and without any action on the part of the holder thereof, be
canceled and retired and shall cease to exist, and each holder of certificates
representing any such shares shall thereafter cease to have any rights with
respect to such shares.
(b) From and after the Effective Time of the Bank Merger, there
shall be no transfers on the stock transfer books of the Surviving Bank of the
Company Bank Shares that were outstanding immediately prior to the Effective
Time of the Bank Merger. If, after the Effective Time of the Bank Merger,
certificates representing the Company Bank Shares are presented to the Surviving
Bank, they shall be canceled.
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ARTICLE IV
THE CLOSING
4.1 Closing. The Closing of the Mergers shall take place at the
offices of Robinson, Bradshaw & Hinson, P.A. in Charlotte, North Carolina as
soon as reasonably practical after all conditions to Closing have been met, or
on such other date or at such other location as the Buyer and the Company may
mutually agree (such date, the "CLOSING DATE"). At the Closing, the parties will
execute, deliver and file all documents necessary to effect the transactions
contemplated herein, including the Articles of Merger in respect of both
Mergers.
4.2 Deliveries by the Company Parties. At or by the Closing, the
Company shall have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and
other documents contemplated in SECTION 9.3;
(b) the Employment Agreements; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Buyer, or as may reasonably be requested by the
Buyer at or prior to the Closing.
4.3 Deliveries by the Buyer. At or by the Closing, the Buyer
shall have caused the following documents to be executed and delivered:
(a) the agreements, opinions, certificates, instruments and other
documents contemplated in SECTION 9.2;
(b) the Employment Agreements; and
(c) all other documents, certificates and instruments required
hereunder to be delivered to the Company, or as may reasonably be requested by
the Company at or prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Company's Disclosure Schedule, each of the
Company Parties jointly and severally represents and warrants to the Buyer that
the statements contained in this ARTICLE V are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date.
5.1 Organization, Standing and Power.
(a) The Company is a bank holding company registered with the
Board of Governors of the Federal Reserve System under the Bank Holding Company
Act of 1956, as amended, and the Company Bank is a stock savings bank under
North Carolina Law. The Company Bank is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations thereunder, and
subject to dollar limits under such Act, all deposits in the Company Bank are
fully insured by the FDIC.
(b) Each of the Company and its subsidiaries is either a bank or
a corporation, duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation or
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organization. Each of the Company and its subsidiaries has the corporate or
other applicable power and authority to carry on, in all Material respects, its
business as now conducted and to own, lease and operate its Assets. Each of the
Company and its subsidiaries is duly qualified or licensed to transact business
as a foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on the Company.
5.2 Authority; No Conflicts.
(a) Subject to required regulatory and shareholder approvals,
each of the Company Parties has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of each of the Company Parties' obligations under this Agreement and
the consummation of the transactions contemplated hereby, including the Mergers,
have been duly and validly authorized by all necessary corporate action (and by
Closing, all such shareholder action) in respect thereof on the part of each of
the Company Parties. This Agreement represents a legal, valid and binding
obligation of each of the Company Parties, enforceable against each of the
Company Parties in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the
Company Parties, nor the consummation by the Company Parties of the transactions
contemplated hereby, nor compliance by the Company Parties with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Company Parties' articles of incorporation, charter, bylaws or any other
similar governing document, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of the Company or any of its subsidiaries under, any Contract or Permit of
the Company or any of its subsidiaries, except as could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) subject to
obtaining the requisite Consents referred to in SECTION 9.1(b) of this
Agreement, violate any Law or Order applicable to the Company or any of its
subsidiaries or any of their Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws and banking Regulatory Authorities, no notice to, filing
with, or Consent of, any Governmental Authority is necessary for the
consummation by the Company and the Company Bank of the Mergers and the other
transactions contemplated in this Agreement.
5.3 Capital Stock; Subsidiaries.
(a) The authorized capital stock of the Company consists of (a)
20,000,000 shares of common stock, no par value per share, of which 3,446,680
shares are issued and outstanding as of the date of this Agreement, and (b)
5,000,000 shares of Preferred Stock, no par value per share, none of which is
issued and outstanding, and except for such 3,446,680 shares of common stock,
there are no shares of capital stock or other equity securities of the Company
outstanding. The authorized capital stock of the Company Bank consists of (i)
20,000,000 shares of common stock, no par value per share, of which 3,744,000
shares are issued and outstanding as of the date of this Agreement and are owned
and held by the Company, and (ii) 5,000,000 shares of preferred stock, no par
value per share, of which no shares are issued and outstanding as of the date of
this Agreement, and except for such 3,744,000 shares of common stock, there are
no shares of capital stock or other equity securities of the Company Bank
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outstanding. SECTION 5.3 of the Company's Disclosure Schedule lists all of the
Company's direct and indirect subsidiaries other than the Company Bank as of the
date of this Agreement. The Company or one of its subsidiaries owns all of the
issued and outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of
the Company and its subsidiaries are duly and validly issued and outstanding and
are fully paid and nonassessable. None of the outstanding shares of capital
stock of the Company or any of its subsidiaries has been issued in violation of
any preemptive rights of the current or past shareholders of such Persons.
Except as set forth on SECTION 5.3 of the Company's Disclosure Schedule, no
equity securities of any subsidiary of the Company are or may become required to
be issued (other than to the Company or any of its subsidiaries) by reason of
any Rights, and there are no Contracts by which any subsidiary of the Company is
bound to issue (other than the Company or subsidiary of the Company) additional
shares of its capital stock or Rights or by which the Company or any of its
subsidiaries is or may be bound to transfer any shares of the capital stock of
any subsidiary of the Company (other than to the Company or any of its
subsidiaries). There are no equity securities reserved for any of the foregoing
purposes, and there are no Contracts relating to the rights of the Company or
any of its subsidiaries to vote or to dispose of any shares of the capital stock
of any subsidiary of the Company.
5.4 SEC Filings; Company Financial Statements.
(a) The Company has filed and made available to the Buyer all
forms, reports, and documents required to be filed by the Company with the SEC
since December 31, 1995 (collectively, the "COMPANY SEC Reports"). The Company
SEC Reports (i) at the time filed, complied in all Material respects with the
applicable requirements of the Securities Laws, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Company SEC Reports or necessary in order to make the
statements in such Company SEC Reports, in light of the circumstances under
which they were made, not misleading. None of the Company's subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the Company Financial Statements (including, in each
case, any related notes) contained in the Company SEC Reports, including any
Company SEC Reports filed after the date of this Agreement until the Effective
Time, complied or will comply as to form in all Material respects with the
applicable published rules and regulations of the SEC with respect thereto, was
prepared or will be prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements, or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC), and fairly presented or will fairly present
the consolidated financial position of the Company and its subsidiaries as at
the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be Material in amount or effect (except as may
be indicated in such financial statements or notes thereto).
5.5 Absence of Undisclosed Liabilities. Neither the Company nor
any of its subsidiaries has any Liabilities that could reasonably be expected to
have a Material Adverse Effect on the Company, except Liabilities that are
accrued or reserved against in the consolidated balance sheets of the Company as
of June 30, 1999, included in the Company Financial Statements or reflected in
the notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to June 30, 1999. Neither the Company nor any of its
subsidiaries has incurred or paid any Liability since June 30, 1999, except for
(i) Liabilities incurred or paid in the ordinary course of business consistent
with past business practice and (ii) Liabilities that could not reasonably be
expected to have a Material Adverse Effect on the Company. No facts or
circumstances exist that could reasonably be expected to serve as the basis for
any other
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Liabilities of the Company or any of its subsidiaries, except as could
not reasonably be expected to have a Material Adverse Effect on the Company.
5.6 Absence of Certain Changes or Events. Since June 30, 1999,
(i) there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Company, and
(ii) each of the Company and its subsidiaries has conducted in all Material
respects its respective businesses in the ordinary and usual course (excluding
the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
5.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any
of Company and its subsidiaries have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before June 30, 1999, and, to the Knowledge of the Company Parties,
all Tax Returns filed are complete and accurate in all Material respects. All
Tax Returns for periods ending on or before the date of the most recent fiscal
year end immediately preceding the Effective Time will be timely filed or
requests for extensions will be timely filed. All Taxes shown on filed Tax
Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes that could reasonably be expected to have a
Material Adverse Effect on the Company, except to the extent reserved against in
the Company Financial Statements dated prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) None of the Company or its subsidiaries has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Material Taxes due or to become
due for any of the Company or its subsidiaries for the period or periods through
and including the date of the respective Company Financial Statements has been
made and is reflected on such Company Financial Statements.
(d) Each of the Company and its subsidiaries is in compliance
with, and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and omissions as could not reasonably be expected to
have a Material Adverse Effect on the Company.
(e) None of the Company and its subsidiaries has made any
payments, is obligated to make any payments, or is a party to any contract,
agreement, or other arrangement that could obligate it to make any payments that
would be disallowed as a deduction under Section 280G or 162(m) of the Internal
Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any of
the Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Company and its subsidiaries that
occurred during or after any Taxable Period in which any of the Company and its
subsidiaries has incurred a net operating loss that carries over to any Taxable
Period ending after June 30, 1999.
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(h) Neither the Company nor any of its subsidiaries has filed any
consent under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Buyer, which consent will
not be unreasonably withheld.
(j) Neither the Company nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
5.8 Assets. Each of the Company and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets, except for Liens to secure public deposits in the ordinary course of
business consistent with past practice. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company, all tangible
properties used in the businesses of the Company and its subsidiaries are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with each of their past practices. Except
as could not reasonably be expected to have a Material Adverse Effect on the
Company, all Material Assets held under leases or subleases by any of the
Company and its subsidiaries are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of specific performance, injunctive relief and other equitable
remedies is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. Each of the
Company and its subsidiaries currently maintain insurance in amounts, scope, and
coverage reasonably necessary for their operations. None of the Company or its
subsidiaries has received notice from any insurance carrier that (i) such
insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be increased in any Material respect. The Assets of the Company and its
subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
5.9 Securities Portfolio and Investments. All securities owned by the
Company or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for Liens to secure public
deposits in the ordinary course of business consistent with past practice and
those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Company. There are no voting trusts or other agreements or
undertakings to which the Company or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since June 30, 1999, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Company and its subsidiaries, taken as a whole.
5.10 Environmental Matters.
(a) To the Knowledge of the Company Parties, each of the Company and
its subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) To the Knowledge of the Company Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Company and its
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subsidiaries or any of its Participation Facilities has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant (i)
for alleged noncompliance (including by any predecessor) with any Environmental
Law or (ii) relating to the release into the environment of any Hazardous
Material, whether or not occurring at, on, under, or involving a site owned,
leased, or operated by the Company or any of its subsidiaries or any of its
Participation Facilities, except for such Litigation pending or threatened that
could not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) To the Knowledge of the Company Parties, there is no Litigation
pending, or threatened before any court, governmental agency or authority, or
other forum in which any of its Loan Collateral (or the Company or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that is could not reasonably be expected to have a Material Adverse Effect on
the Company.
(d) To the Knowledge of the Company Parties, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as could not reasonably be expected to have a Material Adverse Effect on
the Company.
(e) To the Knowledge of the Company Parties, during and prior to the
period of (i) any of the Company's or its subsidiaries' ownership or operation
of any of their respective current properties, (ii) any of the Company's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Company's or subsidiaries' holding of a security interest in
Loan Collateral, there have been no releases of Hazardous Material in, on,
under, or affecting (or potentially affecting) such properties, except such as
could not reasonably be expected to have a Material Adverse Effect on the
Company.
5.11 Compliance with Laws. Each of the Company and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Company, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Company. None of the Company
or its subsidiaries: (a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations that could not reasonably be expected to have a Material Adverse
Effect on the Company; and (b) has received any notification or communication
from any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any of the Company
and its subsidiaries is not in compliance with any of the Laws or Orders that
such governmental authority or Regulatory Authority enforces, except where such
noncompliance could not reasonably be expected to have a Material Adverse Effect
on the Company, (ii) threatening to revoke any Permits, except where the
revocation of which could not reasonably be expected to have a Material Adverse
Effect on the Company, or (iii) requiring the Company or any of its subsidiaries
(x) to enter into or consent to the issuance of a cease and desist order, formal
agreement, directive, commitment, or memorandum of understanding, or (y) to
adopt any board or directors resolution or similar undertaking that restricts
Materially the conduct of its business, or in any manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
5.12 Labor Relations. Neither the Company nor any of its subsidiaries
is the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National
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Labor Relations Act or comparable state Law) or seeking to compel it to bargain
with any labor organization as to wages or conditions of employment, nor is any
of them a party to or bound by any collective bargaining agreement, Contract, or
other agreement or understanding with a labor union or labor organization, nor
is there any strike or other labor dispute involving any of them, pending or
threatened, or to the Knowledge of the Company Parties, is there any activity
involving any of the Company's or its subsidiaries' employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
5.13 Employee Benefit Plans.
(a) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies in each case of all Material
Company Benefits Plans.
(b) All Company Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws, except
as could not reasonably be expected to have a Material Adverse Effect on the
Company.
(c) Neither the Company nor any of its subsidiaries has an "obligation
to contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3)and 3(37)(A)). Each "employee pension
benefit plan," as defined in Section 3(2) of ERISA, ever maintained by the
Company or its subsidiaries that was intended to qualify under Section 401(a) of
the Internal Revenue Code and with respect to which the Company or any of its
subsidiaries has any Liability, is disclosed as such in SECTION 5.13 of the
Company's Disclosure Schedule.
(d) The Company has made available to the Buyer prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Company Benefit
Plans (including insurance contracts), and all amendments thereto, (ii) with
respect to any such Company Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters, or Material advisory opinions issued by the Internal Revenue Service,
the United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1994, (iii) annual reports or returns, audited or
unaudited financial statements, actuarial valuations and reports, and summary
annual reports prepared for any Company Benefit Plan with respect to the most
recent plan year, and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(e) Each Company ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Company Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Company ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and the Company is
not aware of any circumstance that will or could reasonably be expected to
result in revocation of such exemption. With respect to each such Company
Benefit Plan, to the Knowledge of the Company Parties, no event has occurred
that will or could reasonably be expected to give rise to a loss of any intended
Tax consequences under the Internal Revenue Code or to any Tax under Section 511
of the Internal Revenue Code that could reasonably be expected to have a
Material Adverse Effect on the Company. There is no Material Litigation pending
or, to the Knowledge of the Company Parties, threatened relating to any Company
ERISA Plan.
(f) Neither the Company nor any of its subsidiaries has engaged in a
transaction with respect to any Company Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Company or any of its subsidiaries to a Material tax or penalty
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imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts that could reasonably be expected to have a Material Adverse
Effect on the Company. Neither the Company or any of its subsidiaries nor any
administrator or fiduciary of any Company Benefit Plan (or any agent of any of
the foregoing) has engaged in any transaction, or acted or failed to act in any
manner, that could subject the Company or any of its subsidiaries to any direct
or indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary, or other duty under ERISA, where such Liability that could
reasonably be expected to have a Material Adverse Effect on the Company. No oral
or written representation or communication with respect to any aspect of the
Company Benefit Plans has been made to employees of the Company or any of its
subsidiaries that is not in accordance with the written or otherwise preexisting
terms and provisions of such plans, except where any Liability with respect to
such representation or disclosure could not reasonably be expected to have a
Material Adverse Effect on the Company.
(g) Neither the Company nor any of its subsidiaries maintains or has
ever maintained a Company Pension Plan.
(h) Neither the Company nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Company
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Company or it subsidiaries from the Company or
any of its subsidiaries under any Company Benefit Plan or otherwise, (ii)
Materially increase any benefit otherwise payable under any Company Benefit
Plan, or (iii) result in any acceleration of the time of any Material payment or
vesting of any Material benefit.
5.14 Material Contracts. None of the Company or its subsidiaries, nor
any of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Company or its subsidiaries or the guarantee by
the Company or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Reserve or Federal Home Loan Bank advances of
depository institution subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), and (iii) any
other Contract or amendment thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement that has not been filed as an exhibit to the Company's Form 10-K filed
for the fiscal year ended June 30, 1999, or in another SEC Document and
identified to the Buyer (together with all Contracts referred to in SECTIONS 5.8
and 5.13(a) of this Agreement, the "COMPANY CONTRACTS"). With respect to each
Company Contract: (i) the Contract is in full force and effect; (ii) none of the
Company or its subsidiaries is in Default hereunder, other than Defaults that
could not reasonably be expected to have a Material Adverse Effect on the
Company; (iii) neither the Company nor any of its subsidiaries has repudiated or
waived any Material provision of any such Contract; and (iv) no other party to
any such Contract is, to the Knowledge of the Company Parties, in Default in any
respect, other than Defaults that could not reasonably be expected to have a
Material Adverse Effect on the Company, or has repudiated or waived any Material
provision thereunder. Except for Federal Reserve and Federal Home Loan Bank
advances, all of the indebtedness of the Company and its subsidiaries for money
borrowed (not including deposit Liabilities) is prepayable at any time without
penalty or premium.
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5.15 Legal Proceedings. There is no Litigation instituted or pending,
or, to the Knowledge of the Company Parties, threatened against the Company or
any of its subsidiaries, or against any Asset, employee benefit plan, interest,
or right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Company, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any the Company or its subsidiaries, except as could not
reasonably be expected to have a Material Adverse Effect on the Company. There
is no Litigation to which the Company or any of its subsidiaries is a party that
names the Company or any of its subsidiaries as a defendant or cross-defendant
and where the maximum exposure is estimated to be $25,000 or more.
5.16 Reports. Since December 31, 1995, or the date of organization if
later, each of the Company and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Company. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all Material respects with all applicable Laws,
except noncompliance that could not reasonably be expected to have a Material
Adverse Effect on the Company.
5.17 Registration Statement; Joint Proxy Statement/Prospectus. Subject
to the accuracy of the representations contained in SECTION 6.17, the
information supplied by the Company and its subsidiaries for inclusion in the
registration statement (the "REGISTRATION STATEMENT") covering the shares of the
Buyer's Stock to be issued pursuant to this Agreement shall not, at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a Material fact
or omit to state any Material fact required to be stated therein or necessary to
make the statements therein not misleading. The information supplied by the
Company and its subsidiaries for inclusion in the joint proxy
statement/prospectus to be sent to the shareholders of the Buyer and the Company
to consider the Holding Company Merger and the issuance of shares of the Buyer's
Stock in connection with the Holding Company Merger (the "SHAREHOLDER MEETINGS")
(such proxy statement/prospectus as amended or supplemented is referred to
herein as the "JOINT PROXY STATEMENT/PROSPECTUS") will not, on the date the
Joint Proxy Statement/Prospectus is first mailed to shareholders, at the time of
the Shareholder Meetings and at the Effective Time, contain any untrue statement
of a Material fact or omit to state any Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time any event relating to
the Company or its subsidiaries or any of their affiliates, officers or
directors should be discovered by the Company and its subsidiaries that should
be set forth in an amendment to the Registration Statement or a supplement to
the Joint Proxy Statement/Prospectus, the Company will promptly inform the
Buyer. Notwithstanding the foregoing, neither the Company nor any of its
subsidiaries makes any representation or warranty with respect to any
information supplied by the Buyer and its subsidiaries that is contained or
incorporated by reference in, or furnished in connection with the preparation
of, the Joint Proxy Statement/Prospectus.
5.18 Accounting, Tax, and Regulatory Matters. To the Knowledge of the
Company Parties, none of the Company or its subsidiaries or any Affiliate
thereof has taken or agreed to take any action, that could reasonably be
expected to (i) prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) Materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in SECTION 9.1(b) of this Agreement.
5.19 State Takeover Laws. Each of the Company and its subsidiaries has
taken all necessary action to exempt the transactions contemplated by this
Agreement from any applicable "moratorium,"
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"control share," "fair price," "business combination," or other anti-takeover
laws and regulations of the State of North Carolina.
5.20 Charter Provisions. Each of the Company and its subsidiaries has
taken all action so that the entering into of this Agreement and the
consummation of the Mergers and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation, Bylaws, or other governing instruments of
any of them or restrict or impair the ability of the Buyer or any of its
subsidiaries to vote, or otherwise to exercise the rights of a shareholder with
respect to, the capital stock of the Company or any of its subsidiaries that may
be directly or indirectly acquired or controlled by it.
5.21 Records. Complete and accurate copies of the articles of
incorporation or charter and bylaws of each of the Company and its subsidiaries
have been made available to the Buyer. The stock book of each such Person
contains in all Material respects complete and accurate records of the record
share ownership of the issued and outstanding shares of stock thereof.
5.22 Derivatives. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Company or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
5.23 Year 2000. The Company Parties have disclosed to the Buyer a
complete and accurate copy of their plan and previous actions taken, including
an estimate of the anticipated remaining associated costs, for implementing
modifications to the Company's and its subsidiaries' hardware, software, and
computer systems, chips, and microprocessors, to ensure proper execution and
accurate processing of all date-related data, whether from years in the same
century or in different centuries. Between the date of this Agreement and the
Effective Time, the Company Parties shall endeavor to continue its efforts to
implement such plan.
5.24 Certain Regulated Businesses. Neither the Company nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
5.25 Commissions. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Company, any of its
subsidiaries or any of the Company's shareholders.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE BUYER BANK
Except as set forth on the Buyer's Disclosure Schedule, each of the
Buyer and the Buyer Bank represents and warrants to the Company that the
statements contained in this ARTICLE VI are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date.
6.1 Organization.
(a) The Buyer is a bank holding company registered with the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956, as amended, and the Buyer Bank is a bank under North Carolina Law. The
Buyer Bank is an "insured institution" as defined in the Federal
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Deposit Insurance Act and applicable regulations thereunder, and subject to
dollar limits under such Act, all deposits in the Buyer Bank are fully insured
by the FDIC.
(b) Each of the Buyer and the Buyer Bank is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on, in all
Material respects, its businesses as now conducted and to own, lease and operate
its Assets. Each of the Buyer and the Buyer Bank is duly qualified or licensed
to transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets or
the nature or conduct of its business requires it to be so qualified or
licensed.
6.2 Authority; No Conflicts.
(a) Subject to required regulatory and shareholder approvals, each of
the Buyer and the Buyer Bank has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
and performance of its obligations under this Agreement and the other documents
contemplated hereby, and the consummation of the transactions contemplated
herein, including the Mergers, have been duly and validly authorized by all
necessary corporate action (and by Closing, all such shareholder action) in
respect thereof on the part of each of the Buyer and the Buyer Bank. This
Agreement represents a legal, valid, and binding obligation of each of the Buyer
and the Buyer Bank, enforceable against it in accordance with its terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting the enforcement
of creditors' rights generally and except that the availability of specific
performance, injunctive relief and other equitable remedies is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by the Buyer
or the Buyer Bank, nor the consummation by the Buyer and the Buyer Bank of the
transactions contemplated hereby, nor compliance by the Buyer or the Buyer Bank
with any of the provisions hereof will (i) conflict with or result in a breach
of any provision of the Buyer's or the Buyer Bank's articles of incorporation or
bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of the Buyer or
any of its subsidiaries under, any Contract or Permit of the Buyer or any of its
subsidiaries, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, or (iii) subject to obtaining the requisite
Consents referred to in SECTION 9.1(b) of this Agreement, violate any Law or
Order applicable to the Buyer or the Buyer Bank or any of their respective
Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws and banking Regulatory Authorities, no notice to, filing with,
or Consent of, any Governmental Authority is necessary for the consummation by
the Buyer and the Buyer Bank of the Mergers and the other transactions
contemplated in this Agreement.
6.3 Buyer's Stock; Subsidiaries.
(a) The authorized capital stock of the Buyer consists of 12,500,000
shares of common stock, no par value per share, of which 4,537,266 shares are
issued and outstanding as of the date of this Agreement, and except for such
shares, there are no shares of capital stock of the Buyer outstanding. The
authorized capital stock of the Buyer Bank consists of 2,500,000 shares of
common stock, $5.00 par value per share, of which 1,134,042 shares are issued
and outstanding as of the date of this Agreement, and except for such shares,
there are no shares of capital stock of the Buyer Bank outstanding. The Buyer
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owns all of the issued and outstanding shares of capital stock of the Buyer
Bank, and no shares of capital stock of the Buyer Bank are owned by any other
Person. SECTION 6.3 of the Buyer's Disclosure Schedule lists all of the Buyer's
direct and indirect subsidiaries other than the Buyer Bank as of the date of
this Agreement. The Buyer or one of its subsidiaries owns all of the issued and
outstanding shares of capital stock of each such subsidiary.
(b) All of the issued and outstanding shares of capital stock of the
Buyer and its subsidiaries are duly and validly issued and outstanding and are
fully paid and nonassessable. Shares of the Buyer's Stock to be issued hereunder
are duly authorized and, upon issuance, will be validly issued and outstanding
and fully paid and nonassessable, free and clear of any Liens, pledges or
encumbrances. None of the outstanding shares of capital stock of the Buyer or
any of its subsidiaries has been issued in violation of any preemptive rights of
the current or past shareholders of such Persons, and none of the shares of the
Buyer's Stock to be issued pursuant to this Agreement will be issued in
violation of any preemptive rights of the current or past shareholders of the
Buyer.
6.4 SEC Filings; Buyer Financial Statements.
(a) The Buyer has filed and made available to the Buyer all forms,
reports, and documents required to be filed by the Buyer with the SEC since
December 31, 1995 (collectively, the "BUYER SEC REPORTS"). The Buyer SEC Reports
(i) at the time filed, complied in all Material respects with the applicable
requirements of the Securities Laws, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a Material fact or omit to state a Material fact required to be stated in
such Buyer SEC Reports or necessary in order to make the statements in such
Buyer SEC Reports, in light of the circumstances under which they were made, not
misleading. None of the Buyer's subsidiaries is required to file any forms,
reports, or other documents with the SEC.
(b) Each of the Buyer Financial Statements (including, in each case,
any related notes) contained in the Buyer SEC Reports, including any Buyer SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of the Buyer and its subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments that
were not or are not expected to be Material in amount or effect (except as may
be indicated in such financial statements or notes thereto).
6.5 Absence of Undisclosed Liabilities. Neither the Buyer nor any of
its subsidiaries has any Liabilities that could reasonably be expected to have a
Material Adverse Effect on the Buyer, except Liabilities that are accrued or
reserved against in the consolidated balance sheets of the Buyer as of December
31, 1998, included in the Buyer Financial Statements or reflected in the notes
thereto and except for Liabilities incurred in the ordinary course of business
subsequent to December 31, 1998. Neither the Buyer nor any of its subsidiaries
has incurred or paid any Liability since December 31, 1998, except for (i)
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and (ii) Liabilities that could not reasonably be
expected to have a Material Adverse Effect on the Buyer. No facts or
circumstances exist that could reasonably be expected to serve as the basis for
any other Liabilities of the Buyer or any of its subsidiaries, except as could
not reasonably be expected to have a Material Adverse Effect on the Buyer.
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6.6 Absence of Certain Changes or Events. Since December 31, 1998, (i)
there have been no events, changes, or occurrences that have had, or could
reasonably be expected to have, a Material Adverse Effect on the Buyer, and (ii)
each of the Buyer and its subsidiaries has conducted in all Material respects
its respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement and the transactions
contemplated hereby).
6.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
Buyer and its subsidiaries have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1998, and, to the Knowledge of the Buyer Parties, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes that could reasonably be expected to have a Material
Adverse Effect on the Buyer, except to the extent reserved against in the Buyer
Financial Statements dated prior to the date of this Agreement. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the Buyer or its subsidiaries has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Material Taxes due or to become due for
any of the Buyer or its subsidiaries for the period or periods through and
including the date of the respective Buyer Financial Statements has been made
and is reflected on such Buyer Financial Statements.
(d) Each of the Buyer and its subsidiaries is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for any such
instances of noncompliance and omissions as could not reasonably be expected to
have a Material Adverse Effect on the Buyer.
(e) None of the Buyer and its subsidiaries has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Company and its subsidiaries.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Buyer and its subsidiaries that occurred
during or after any Taxable Period in which any of the Buyer and its
subsidiaries has incurred a net operating loss that carries over to any Taxable
Period ending after December 31, 1998.
(h) Neither the Buyer nor any of its subsidiaries has filed any consent
under Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
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(i) After the date of this Agreement, no Material election with respect
to Taxes will be made without the prior consent of the Company, which consent
will not be unreasonably withheld.
(j) Neither the Buyer nor any of its subsidiaries has or has had a
permanent establishment in any foreign country, as defined in any applicable tax
treaty or convention between the United States and such foreign country.
6.8 Assets. Each of the Buyer and its subsidiaries have good and
marketable title, free and clear of all Liens, to all of their respective
Assets. Except as could not reasonably be expected to have a Material Adverse
Effect on the Buyer, all tangible properties used in the businesses of the Buyer
and its subsidiaries are in good condition, reasonable wear and tear excepted,
and are usable in the ordinary course of business consistent with each of their
past practices. Except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer, all Material Assets held under leases or subleases
by any of the Buyer and its subsidiaries are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of specific performance, injunctive relief and
other equitable remedies is subject to the discretion of the court before which
any proceedings may be brought), and each such Contract is in full force and
effect. Each of the Buyer and its subsidiaries currently maintain insurance in
amounts, scope, and coverage reasonably necessary for their operations. None of
the Buyer or its subsidiaries has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be increased in any Material respect. The Assets of the Buyer and
its subsidiaries include all Assets required to operate in all Material respects
their businesses taken as a whole as presently conducted.
6.9 Securities Portfolio and Investments. All securities owned by the
Buyer or any of its subsidiaries (whether owned of record or beneficially) are
held free and clear of all Liens that would impair the ability of the owner
thereof to dispose freely of any such security and/or otherwise to realize the
benefits of ownership thereof at any time, except for Liens to secure public
deposits in the ordinary course of business consistent with past practice and
those Liens that could not reasonably be expected to have a Material Adverse
Effect on the Buyer. There are no voting trusts or other agreements or
undertakings to which the Buyer or any of its subsidiaries is a party with
respect to the voting of any such securities. Except for fluctuations in the
market values of United States Treasury and agency or municipal securities,
since December 31, 1998, there has been no significant deterioration or Material
adverse change in the quality, or any Material decrease in the value, of the
securities portfolio of the Buyer and its subsidiaries, taken as a whole.
6.10 Environmental Matters.
(a) To the Knowledge of the Buyer Parties, each of the Buyer and its
subsidiaries, its Participation Facilities, and its Loan Collateral are, and
have been, in compliance with all Environmental Laws, except those violations
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(b) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency, or authority, or
other forum in which any of the Buyer and its subsidiaries or any of its
Participation Facilities has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated
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by the Buyer or any of its subsidiaries or any of its Participation Facilities,
except for such Litigation pending or threatened that could not reasonably be
expected to have a Material Adverse Effect on the Buyer.
(c) To the Knowledge of the Buyer Parties, there is no Litigation
pending or threatened before any court, governmental agency or authority, or
other forum in which any of its Loan Collateral (or the Buyer or any of its
subsidiaries in respect of such Loan Collateral) has been or, with respect to
threatened Litigation, may reasonably be expected to be named as a defendant or
potentially responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving Loan Collateral, except for such Litigation pending or threatened
that could not reasonably be expected to have a Material Adverse Effect on the
Buyer.
(d) To the Knowledge of the Buyer Parties, there is no reasonable basis
for any Litigation of a type described in subsections (b) or (c), except such
could not reasonably be expected to have a Material Adverse Effect on the Buyer.
(e) To the Knowledge of the Buyer Parties, during and prior to the
period of (i) any of the Buyer's or its subsidiaries' ownership or operation of
any of their respective current properties, (ii) any of the Buyer's or its
subsidiaries' participation in the management of any Participation Facility, or
(iii) any of the Buyer's or subsidiaries' holding of a security interest in Loan
Collateral, there have been no releases of Hazardous Material in, on, under, or
affecting (or potentially affecting) such properties, except such as could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.11 Compliance with Laws. Each of the Buyer and its subsidiaries has
in effect all Permits necessary for it to own, lease, or operate its Material
Assets and to carry on, in all Material respects, its business as now conducted,
except for those Permits the absence of which could not reasonably be expected
to have a Material Adverse Effect on the Buyer, and there has occurred no
Default under any such Permit, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Buyer. None of the Buyer or
its subsidiaries: (a) is in violation of any Laws, Orders, or Permits applicable
to its business or employees conducting its business, except for violations that
could not reasonably be expected to have a Material Adverse Effect on the Buyer;
and (b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory Authority or
the staff thereof (i) asserting that any of the Buyer and its subsidiaries is
not in compliance with any of the Laws or Orders that such governmental
authority or Regulatory Authority enforces, except where such noncompliance
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
(ii) threatening to revoke any Permits, except where the revocation of which
could not reasonably be expected to have a Material Adverse Effect on the Buyer,
or (iii) requiring the Buyer or any of its subsidiaries (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any board
or directors resolution or similar undertaking that restricts Materially the
conduct of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
6.12 Labor Relations. Neither the Buyer nor any of its subsidiaries is
the subject of any Litigation asserting that it has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any of them a party to or bound by any
collective bargaining agreement, Contract, or other agreement or understanding
with a labor union or labor organization, nor is there any strike or other labor
dispute involving any of them, pending or threatened, or to the Knowledge of the
Buyer Parties, is there any activity involving any of the Buyer's or
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its subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
6.13 Employee Benefit Plans.
(a) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies in each case of all Material Buyer
Benefits Plans.
(b) All Buyer Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws, except as
could not reasonably be expected to have a Material Adverse Effect on the Buyer.
(c) Neither the Buyer nor any of its subsidiaries has an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(d) Each "employee pension benefit plan," as defined in Section 3(2) of
ERISA, ever maintained by the Buyer or its subsidiaries that was intended to
qualify under Section 401(a) of the Internal Revenue Code and with respect to
which the Buyer or any of its subsidiaries has any Liability, is disclosed as
such in SECTION 6.13 of the Buyer's Disclosure Schedule.
(e) The Buyer has made available to the Company prior to the execution
of this Agreement correct and complete copies of the following documents: (i)
all trust agreements or other funding arrangements for such Buyer Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such Buyer Benefit Plans or amendments, all determination letters,
Material rulings, Material opinion letters, Material information letters, or
Material advisory opinions issued by the Internal Revenue Service, the United
States Department of Labor, or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and summary annual
reports prepared for any Buyer Benefit Plan with respect to the most recent plan
year, and (iv) the most recent summary plan descriptions and any Material
modifications thereto.
(f) Each Buyer ERISA Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code has received a favorable
determination letter from the Internal Revenue Service, and, to the Knowledge of
the Buyer Parties, there is no circumstance that will or could reasonably be
expected to result in revocation of any such favorable determination letter.
Each trust created under any Buyer ERISA Plan has been determined to be exempt
from Tax under Section 501(a) of the Internal Revenue Code and to the Knowledge
of the Buyer, there is no circumstance that will or could reasonably be expected
to result in revocation of such exemption. With respect to each such Buyer
Benefit Plan, to the Knowledge of the Buyer Parties, no event has occurred that
will or could reasonably be expected to give rise to a loss of any intended Tax
consequences under the Internal Revenue Code or to any Tax under Section 511 of
the Internal Revenue Code that could reasonably be expected to have a Material
Adverse Effect on the Buyer. There is no Material Litigation pending or, to the
Knowledge of the Buyer Parties, threatened relating to any Buyer ERISA Plan.
(g) Neither the Buyer nor any of its subsidiaries has engaged in a
transaction with respect to any Buyer Benefit Plan that, assuming the Taxable
Period of such transaction expired as of the date of this Agreement, would
subject the Buyer or any of its subsidiaries to a Material tax or penalty
imposed by either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA in amounts that could reasonably be expected to have a Material Adverse
Effect on the Buyer. Neither the Buyer or any of its subsidiaries nor any
administrator or fiduciary of any Buyer Benefit Plan (or any agent of any of the
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foregoing) has engaged in any transaction, or acted or failed to act in any
manner, that could subject the Buyer or any of its subsidiaries to any direct or
indirect Liability (by indemnity or otherwise) for breach of any fiduciary,
co-fiduciary, or other duty under ERISA, where such Liability that could
reasonably be expected to have a Material Adverse Effect on the Buyer. No oral
or written representation or communication with respect to any aspect of the
Buyer Benefit Plans has been made to employees of the Buyer or any of its
subsidiaries that is not in accordance with the written or otherwise preexisting
terms and provisions of such plans, except where any Liability with respect to
such representation or disclosure could not reasonably be expected to have a
Material Adverse Effect on the Buyer.
(h) Since the date of the most recent actuarial valuation, there has
been (i) no Material change in the financial position or funded status of any
Buyer Pension Plan, (ii) no Material change in the actuarial assumptions with
respect to any Buyer Pension Plan, and (iii) no Material increase in benefits
under any Buyer Pension Plan as a result of plan amendments or changes in
applicable Law, except as could not reasonably be expected to have a Material
Adverse Effect on the Buyer. Neither any Buyer Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by the Buyer or its subsidiaries, or the
single-employer plan of any entity that is considered one employer with the
Buyer under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "BUYER ERISA AFFILIATE") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. All contributions with respect to
a Buyer Pension Plan or any single-employer plan of a Buyer ERISA Affiliate have
or will be timely made and there is no Lien or expected to be a Lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. Neither the Buyer nor any of its
subsidiaries has provided, or is required to provide, security to a Buyer
Pension Plan or to any single-employer plan of a Buyer ERISA Affiliate pursuant
to Section 401(a)(29) of the Internal Revenue Code. All premiums required to be
paid under ERISA Section 4006 have been timely paid by the Buyer, except to the
extent any failure that could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(i) No Liability under Title IV of ERISA has been or is expected to be
incurred by the Buyer or it subsidiaries with respect to any defined benefit
plan currently or formerly maintained by any of them or by any Company ERISA
Affiliate that has not been satisfied in full (other than Liability for Pension
Benefit Guaranty Corporation premiums which have been paid when due), except to
the extent any failure could not reasonably be expected to have a Material
Adverse Effect on the Buyer.
(j) Neither the Buyer nor any of its subsidiaries has any Material
obligation for retiree health and retiree life benefits under any of the Buyer
Benefit Plans other than with respect to benefit coverage mandated by applicable
Law.
(k) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any Material payment (including without limitation severance,
unemployment compensation, golden parachute, or otherwise) becoming due to any
director or any employee of the Buyer or it subsidiaries from the Buyer or any
of its subsidiaries under any Buyer Benefit Plan or otherwise, (ii) Materially
increase any benefit otherwise payable under any Buyer Benefit Plan, or (iii)
result in any acceleration of the time of any Material payment or vesting of any
Material benefit.
6.14 Material Contracts. None of the Buyer or its subsidiaries, nor any
of their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract, (ii) any Contract relating to
the borrowing of money by the Buyer or its subsidiaries or the guarantee by the
Buyer or its subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds,
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fully-secured repurchase agreements, and Federal Reserve or Federal Home Loan
Bank advances of depository institution subsidiaries, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), and (iii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by the Buyer with the
SEC as of the date of this Agreement that has not been filed as an exhibit to
the Buyer's Form 10-K filed for the fiscal year ended December 31, 1998, or in
another SEC Document and identified to the Company (together with all Contracts
referred to in SECTIONS 6.8 and 6.13 of this Agreement, the "BUYER CONTRACTS").
With respect to each Buyer Contract: (i) the Contract is in full force and
effect; (ii) none of the Buyer or its subsidiaries is in Default hereunder,
other than Defaults that could not reasonably be expected to have a Material
Adverse Effect on the Buyer; (iii) neither the Buyer nor any of its subsidiaries
has repudiated or waived any Material provision of any such Contract; and (iv)
no other party to any such Contract is, to the Knowledge of the Buyer Parties,
in Default in any respect, other than Defaults that could not reasonably be
expected to have a Material Adverse Effect on the Buyer, or has repudiated or
waived any Material provision thereunder. Except for Federal Reserve or Federal
Home Loan Bank advances, all of the indebtedness of the Buyer and its
subsidiaries for money borrowed (not including deposit Liabilities) is
prepayable at any time without penalty or premium.
6.15 Legal Proceedings. There is no Litigation instituted or pending,
or, to the Knowledge of the Buyer Parties, threatened against the Buyer or any
of its subsidiaries, or against any Asset, employee benefit plan, interest, or
right of any of them, except as could not reasonably be expected to have a
Material Adverse Effect on the Buyer, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any the Buyer or its subsidiaries, except as could not reasonably be expected to
have a Material Adverse Effect on the Buyer. There is no Litigation as of the
date of this Agreement to which the Buyer or any of its subsidiaries is a party
and that names the Buyer or any of its subsidiaries as a defendant or
cross-defendant and where the maximum exposure is estimated to be $25,000 or
more.
6.16 Reports. Since December 31, 1995, or the date of organization if
later, each of the Buyer and its subsidiaries has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Regulatory Authorities, except
failures to file that could not reasonably be expected to have a Material
Adverse Effect on the Buyer. As of their respective dates, each of such reports
and documents, including the financial statements, exhibits, and schedules
thereto, complied in all Material respects with all applicable Laws, except
noncompliance that could not reasonably be expected to have a Material Adverse
Effect on the Buyer.
6.17 Registration Statement; Joint Proxy Statement/Prospectus. Subject
to the accuracy of the representations contained in SECTION 5.17, the
information supplied by the Buyer and its subsidiaries for inclusion in the
Registration Statement shall not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC, contain any untrue statement of a Material fact or omit to state any
Material fact required to be stated therein or necessary to make the statements
therein not misleading. The information supplied by the Buyer and its
subsidiaries for inclusion in the Joint Proxy Statement/Prospectus will not, on
the date the Joint Proxy Statement/Prospectus is first mailed to shareholders,
at the time of the Shareholder Meetings and at the Effective Time, contain any
untrue statement of a Material fact or omit to state any Material fact necessary
to make the statements therein, in light of circumstances under which they were
made, not misleading. If at any time prior to the Effective Time any event
relating to the Buyer or the Buyer Bank or any of their affiliates, officers or
directors should be discovered by the Buyer or the Buyer Bank that should be set
forth in an amendment to the Registration Statement or a supplement to the Joint
Proxy Statement/Prospectus, the Buyer or the Buyer Bank will promptly inform the
Company. Notwithstanding the foregoing, neither the Buyer nor the Buyer Bank
makes any representation or warranty with respect to
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any information supplied by the Company and its subsidiaries that is contained
or incorporated by reference in, or furnished in connection with the preparation
of, the Joint Proxy Statement/Prospectus.
6.18 Accounting, Tax, and Regulatory Matters. To the Knowledge of the
Buyer Parties, none of the Buyer or its subsidiaries or any Affiliate thereof
has taken or agreed to take any action, that could reasonably be expected to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
Materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in SECTION 9.1(b) of this Agreement.
6.19 Derivatives. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for the account of the Buyer or it
subsidiaries or their customers were entered into (i) in accordance with prudent
business practices and all applicable Laws, and (ii) with counterparties
believed to be financially responsible.
6.20 Year 2000. The Buyer and the Buyer Bank have disclosed to the
Company a complete and accurate copy of their plan and previous actions taken,
including an estimate of the anticipated remaining associated costs, for
implementing modifications to the Buyer's and its subsidiaries' hardware,
software, and computer systems, chips, and microprocessors, to ensure proper
execution and accurate processing of all date-related data, whether from years
in the same century or in different centuries. Between the date of this
Agreement and the Effective Time, the Buyer and the Buyer Bank shall endeavor to
continue its efforts to implement such plan.
6.21 Certain Regulated Businesses. Neither the Buyer nor any of its
subsidiaries is an "investment company" as defined in the Investment Company Act
of 1940, as amended, nor is it a "public utility holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended.
6.22 Commissions. No broker, finder or other Person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated hereby by reason of any action taken by the Buyer, any of its
subsidiaries or any of the Buyer's shareholders.
ARTICLE VII
COVENANTS
7.1 Covenants of the Company Parties.
(a) Ordinary Conduct of Business. Except as otherwise expressly
permitted by this Agreement, the Company and the Company Bank will, and each
will cause their subsidiaries to, from the date of this Agreement to the
Closing, conduct its business in the ordinary course in substantially the same
manner as presently conducted and make reasonable commercial efforts consistent
with past practices to preserve its relationships with other Persons.
Additionally, except as otherwise contemplated by this Agreement or as set forth
on SECTION 7.1(a) of the Company's Disclosure Schedule, neither the Company nor
the Company Bank will, nor will either permit any of their other subsidiaries
to, do any of the following without the prior written consent of the Buyer:
(i) amend its governing documents;
(ii) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver any stock or stock options or other
equity equivalents of any class or any other of its securities (other
than the issuance of any Company Shares pursuant to the exercise of
options set
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forth on SECTION 5.3 of the Company's Disclosure Schedule), or amend
any of the terms of any securities outstanding as of the date hereof;
(iii) (A) split, combine or reclassify any shares of its
capital stock, (B) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (except for regular quarterly
cash dividends paid in accordance with past practice at the rate of
$1.04 per share per annum, including the payment of any quarterly
portion thereof as is necessary to prevent the Company's shareholders
from failing to receive a quarterly dividend from either the Company or
the Buyer during any particular calendar quarter; provided, however,
that no such dividend shall be paid to the extent that it would or
could reasonably be expected to prevent "pooling of interests"
accounting treatment for the Mergers), or (C) redeem or otherwise
acquire any of its securities (other than the acceptance of any Company
Shares as payment of the exercise price in connection with the exercise
of options set forth on SECTION 5.3 of the Company's Disclosure
Schedule);
(iv) (A) incur or assume any long-term debt or issue any debt
securities other than in the ordinary course of business consistent
with past practice or, except under existing lines of credit and in
amounts not Material to it, incur or assume any short-term debt other
than in the ordinary course of business, (B) other than in the ordinary
course of business consistent with past practice, assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, (C)
make any loans, advances or capital contributions to, or investments
in, any other Person, other than in the ordinary course and consistent
with past practice up to an amount per loan of $500,000, pledge or
otherwise encumber shares of its capital stock, or (E) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer
to exist any Lien thereupon, other than Liens permitted by the proviso
clause in the definition of Liens and Liens created or existing in the
ordinary course of business consistent with past practice;
(v) except as required by Law or as contemplated herein, adopt
or amend any Benefit Plan; provided, however, that prior to the Closing
Date, the Company Parties shall be entitled to pay to or for the
benefit of its employees the amounts accrued in accordance with past
practice pursuant to the First Savings Bank of Moore County, Inc., SSB
Employees Retirement Plan and its existing incentive bonus plan or
arrangement;
(vi) grant to any director or executive officer or employee
any stock options or increase in his or her compensation (except in the
ordinary course of business consistent with past practice) or pay or
agree to pay to any such person other than in the ordinary course of
business any bonus, severance or termination payment, specifically
including any such payment that becomes payable upon the termination of
such person by it after the Closing; provided; however, that the
Company and the Company Bank shall be permitted to: (A) allow the term
of the existing employment Contract with John F. Burns to be extended
for an additional year in accordance with the terms of such Contract,
(B) increase the annual salary of John F. Burns pursuant to such
Contract to an amount up to $140,000, and (C) pay additional
compensation of an aggregate amount up to $100,000 between the date
hereof and the Effective Time for the purpose of retaining key
employees;
(vii) enter into or amend any employment Contract;
(viii) acquire, sell, lease or dispose of any assets outside
the ordinary course of business, or any other assets that in the
aggregate are Material to it, or acquire any Person (or
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division thereof), any equity interest therein or the assets thereof
outside the ordinary course of business consistent with past practice;
(ix) change or modify any of the accounting principles or
practices used by it or revalue in any Material respect any of its
assets, including without limitation writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business or as required by GAAP or any Regulatory
Authority;
(x) (A) enter into, cancel or modify any Contract (other than
loans, advances, capital contributions or investments permitted by
subclause (iv)(C) of this SECTION 7.1) other than in the ordinary
course of business consistent with past practices, but not in any event
involving an amount in excess of $25,000; (B) authorize or make any
capital expenditure or expenditures that, individually or in the
aggregate, are in excess of $25,000; or (C) enter into or amend any
Contract with respect to any of the foregoing;
(xi) pay, discharge or satisfy, cancel, waive or modify any
claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business of liabilities
reflected or reserved against in or contemplated by the Company
Financial Statements, or incurred in the ordinary course of business
consistent with past practices;
(xii) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(xiii) take, or agree in writing or otherwise to take, any
action that would make any of the representations or warranties of the
Company Parties contained in this Agreement untrue or incorrect or
result in any of the conditions set forth in this Agreement not being
satisfied; or
(xiv) agree, whether in writing or otherwise, to do any of the
foregoing.
(b) Consents. The Company Parties will exercise their reasonable best
efforts to obtain such Consents as may be necessary or desirable for the
consummation of the transactions contemplated hereby from the appropriate
parties to any Contracts listed on the Company's Disclosure Schedule such that
such Contracts shall survive the Mergers and not be breached thereby.
(c) Acquisition Proposals. Any offer or proposal by any Person or group
concerning any tender or exchange offer, proposal for a merger, share exchange,
recapitalization, consolidation or other business combination involving the
Company or any of its subsidiaries or divisions of any of the foregoing, or any
proposal or offer to acquire in any manner, directly or indirectly, a
significant equity interest in, or a substantial portion of the assets of, the
Company or any of its subsidiaries, other than pursuant to the transactions
contemplated by this Agreement, is hereby defined as an "ACQUISITION PROPOSAL".
Neither the Company nor the Company Bank shall, nor shall it permit any of its
officers, directors, affiliates, representatives or agents to, directly or
indirectly, (a) take any action to solicit, initiate or encourage any
Acquisition Proposal, or (b) participate in any discussions or negotiations with
or encourage any effort or attempt by any other Person or take any other action
to facilitate an Acquisition Proposal. From and after the date hereof, the
Company and its subsidiaries and all officers, directors, employees of, and all
investment bankers, attorneys and other advisors and representatives of, the
Company and its subsidiaries shall cease doing any of the foregoing.
Notwithstanding the foregoing, the Company or any such Persons may, directly or
indirectly, subject to a confidentiality agreement containing customary terms,
furnish to any party information and access in response to a request for
information or access made incident to an Acquisition Proposal made after the
date hereof and may
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participate in discussions and negotiate with such party concerning any written
Acquisition Proposal made after the date hereof, not recommend shareholder
approval of the Merger and terminate this Agreement (provided that neither the
Company nor any such Person, after the date hereof, solicited, initiated or
encouraged such Acquisition Proposal), if the board of directors of the Company
or any such Person shall have determined based upon the written advice of
outside counsel reasonably acceptable to the Buyer (which shall in any event
include Brooks Pierce McLendon Humphrey & Leonard, L.L.P.) that failing to take
such action would violate the directors' fiduciary duties under applicable law.
Unless this Agreement has been terminated, the board of directors of the Company
shall notify the Buyer immediately if any Acquisition Proposal is made and shall
in such notice indicate in reasonable detail the identity of the offeror and the
terms and conditions of such Acquisition Proposal and shall keep the Buyer
promptly advised of all Material developments that could culminate in the board
of directors withdrawing, modifying or amending its recommendation of the Merger
and the other transactions contemplated by this Agreement. Unless this Agreement
has been terminated, neither the Company nor any of its subsidiaries shall waive
or modify any provisions contained in any confidentiality agreement entered into
relating to a possible acquisition (whether by merger, stock purchase, asset
purchase or otherwise) or recapitalization of the Company or any of its
subsidiaries.
(d) Agreement of Affiliates. The Company Parties have disclosed in
SECTION 7.1(d) of the Company's Disclosure Schedule each Person who they
reasonably believe would be considered an "affiliate" of the Company or the
Company Bank for purposes of Rule 145 under the Securities Act of 1933, as
amended. The Company Parties shall use their respective reasonable best efforts
to cause each such Person to deliver to the Buyer not later than 30 days prior
to the Closing Date, a written agreement, substantially in the form of EXHIBIT
F, providing that such Person will not sell, pledge, transfer or otherwise
dispose of the Company Shares held by such Person except as contemplated by such
agreement or this Agreement and will not sell, pledge, transfer or otherwise
dispose of the shares of the Buyer's Stock to be received by such Person upon
consummation of the Mergers except in compliance with applicable provisions of
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and until such time as financial results covering at
least 30 days of combined operations of the Buyer and the Company, and the Buyer
Bank and the Company Bank, have been published within the meaning of Section
201.01 of the SEC's Codification of Financial Reporting Policies. Irrespective
of whether each such affiliate has provided the written agreement referred to
above, no share of the Buyer' Stock received in connection with the Mergers will
be transferable by each such affiliate until such time as financial results
covering at least 30 days of combined operations of the Buyer and the Company,
and the Buyer Bank and the Company Bank, have been published within the meaning
of Section 201.01 of the SEC's Codification of Financial Reporting Policies. In
order to ensure compliance with the provisions of this SECTION 7.1(e), the Buyer
will place customary restrictive legends upon certificates of the Buyer's Stock
to be issued to each such affiliate.
(e) Shareholder Approval. Subject to SECTION 7.1(c), the Company will,
at the earliest practicable date, hold a meeting of its shareholders for the
purpose of approving the Mergers. In connection with such shareholder meeting,
subject to SECTION 7.1(c), the Company's board of directors will recommend to
the Company's shareholders such approvals.
7.2 Covenants of the Buyer.
(a) Reservation of Shares of the Buyer's Stock. The Buyer shall reserve
for issuance a sufficient number of shares of the Buyer's Stock to cover the
issuances of such stock required hereby, including shares necessary to satisfy
Company Options set forth on SECTION 5.3 of the Company's Disclosure Schedule.
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(b) Listing of Additional Shares. The Buyer will provide notice to the
Nasdaq Stock Market, as required by its rules (which in any event shall be at
least 15 days prior to Closing), of the issuance of the shares of the Buyer's
Stock pursuant to this Agreement and will pay any fees required in connection
with such notice, and will cause such shares to be eligible for quotation on the
Nasdaq National Market System.
(c) Shareholder Approval. The Buyer will, at the earliest practicable
date, hold a meeting of its shareholders for the purpose of (i) approving the
Mergers and the issuance of shares of the Buyer's Stock as the Merger
Consideration (in accordance with applicable corporate Law and Rule 4460 of the
Marketplace Rules of the Nasdaq Stock Market) and (ii) increasing the number of
directors of the Buyer by seven, from 11 to 18. In connection with the
shareholder meeting, the Buyer's board of directors will recommend to the
Buyer's shareholders such approvals (subject to any fiduciary or similar duties
of the members of the Buyer's board of directors).
(d) Directors. Immediately after the Effective Time of the Holding
Company Merger, the Buyer shall cause the seven members of the Company's
existing board of directors who currently are under the age of 75 to be elected
or appointed as members of the board of directors of the Buyer and the Buyer
Bank to serve as such until the next annual meeting of the shareholders of such
companies after such Effective Time, but conditional upon obtaining any
necessary regulatory approvals and upon the Buyer's shareholders approving the
increase in the size of the Buyer's board of directors pursuant to the
Prospectus/Joint Proxy Statement. Notwithstanding the foregoing, the Buyer shall
cause William E. Samuels, Jr. and Felton J. Capel to be exempted from any
mandatory retirement from serving on such boards until they become 75 years of
age, provided, however, that upon becoming 75 years of age, such directors will
be permitted to complete any remaining portion of their current terms as
directors. Additionally, as payment for serving on a local advisory board of the
Buyer (which the Buyer agrees to maintain during the time that such individuals
are entitled under this Section to receive payments for so serving), the Buyer
shall pay to each of the three directors of the Company that do not become
directors of the Buyer and the Buyer Bank the board fees now payable to such
directors for so long as each such individual serves on such local advisory
board, but in any event not past the scheduled end of their respective terms as
a director of the Company.
(e) Officers. Subject to SECTION 7.2(f), each of the individuals
serving as a Senior Vice President of the Company or the Company Bank
immediately prior to the Closing shall be employed by the Buyer or the Buyer
Bank as a Senior Vice President after the Closing. As it relates to the existing
employment agreements of William E. Samuels, Jr. and John F. Burns, Buyer
acknowledges that the Closing will result in a "Termination Event" as such term
is defined in the existing employment agreements, and thus the Buyer or one of
its subsidiaries shall pay to each such individual upon Closing the amounts
described in Paragraphs 10(c) and 10(g) of such agreements.
(f) Employees.
(i) Except as covered by the Employment Agreements, any and
all of the Company Parties' employees will be employed on an "at-will"
basis, and nothing in this Agreement shall be deemed to constitute an
employment agreement with any such person to obligate the Buyer or any
Affiliate thereof to employ any such person for any specific period of
time or in any specific position or to restrict the Buyer's or any of
its Affiliates' right to terminate the employment of any such person at
any time and for any reason satisfactory to it (subject to the payment
of severance as described below); provided, however, that, any employee
of the Company Parties who is party or subject to or covered by an
employment contract (including the existing employment agreements of
William E. Samuels, Jr. and John F. Burns with the Company or one of
its subsidiaries) or change-of-control severance agreement or plan with
the any of the
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Company Parties (as set forth on SECTION 7.2(f)(i) of the Company's
Disclosure Schedule) or the Buyer or any of its Affiliates shall not
receive the severance provided for below, but shall instead receive the
payment contemplated under such employee's employment contract or
change-of-control severance agreement with respect to termination of
employment. For purposes of these contracts and agreements, the Buyer
acknowledges that the transactions contemplated herein constitute a
"change-of-control."
(ii) Any of the Company Parties' employees (other than those
described in paragraph (i) above) terminated without Cause within one
year following the Closing Date shall be paid a lump sum of cash equal
to the greater of (A) two week's salary for each year of credited
service (including prior years of service to the Company or any of its
subsidiaries), and (B) his or her salary for four months. Such payment
shall be in lieu of any payment or other benefits provided by any
severance plan of the Company or any of its subsidiaries in effect
prior to the Closing Date. For purposes of this paragraph, "CAUSE" with
respect to any employee covered by this paragraph shall exist when the
Company finds that such employee shall have (A) demonstrated gross
negligence or willful misconduct in the execution of such employee's
duties, (B) committed an act of dishonesty or moral turpitude, or (C)
been convicted of a felony or other serious crime.
(iii) Such Company employees who continue employment with the
Buyer or any of its subsidiaries will be eligible for benefits
consistent with those of existing employees of the Buyer or such
subsidiary, with credit for past service with the Company for purposes
of participation, eligibility and vesting (including with respect to
any amounts to be contributed by the Buyer or one of its subsidiaries
or amounts that will vest under any Buyer Benefit Plan, but not
including the calculation of any other benefit accrual); provided,
however, that any such continuing employee will not be subject to any
exclusion or penalty for pre-existing conditions that were covered
under the Company's or any of its subsidiaries' medical plans as of the
Closing Date or any waiting period relating to coverage under the
Buyer's or any of its subsidiaries' medical plans.
(iv) The Buyer or one of its subsidiaries shall honor any and
all vacation accrued by the employees of the Company and any sick leave
up to 90 days, and any such employee who is not retained for employment
by the Buyer shall be paid for all accrued but unused vacation as of
the date of termination of employment.
(v) Notwithstanding the foregoing, the Buyer intends to enter
into the Employment Agreements at the Closing.
(vi) The Buyer or one of its subsidiaries shall make a
one-time increase to the salary compensation of each employee of the
Company or one of its subsidiaries that becomes an employee of the
Buyer or one of its subsidiaries after the Closing in order to
compensate each such individual for the higher cost of insurance
available from the Buyer and its subsidiaries immediately after the
Closing as compared to the cost of insurance available from the Company
and its subsidiaries immediately prior to the Closing.
(g) Directors and Officers Insurance and Indemnification.
(i) The Buyer shall maintain, or shall cause the Buyer Bank to
maintain, in effect for six years from the Closing Date, the current
directors' and officers' liability insurance policies maintained by the
Company; provided, however, that Buyer may substitute therefor policies
of at least the same coverage containing terms and conditions that are
not taken as a whole Materially
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less favorable to the insured with respect to matters occurring prior
to the Effective Time of the Holding Company Merger.
(ii) From and after the Effective Time, the Buyer shall, or
shall cause the Buyer Bank to, indemnify, defend and hold harmless each
person who is now, or who has been at any time before the date hereof
or who becomes before the Effective Time, an officer or director of the
Company or Company Bank (the "INDEMNIFIED PARTIES") against all losses,
claims, damages, costs, expenses (including reasonable attorneys'
fees), liabilities or judgments or amounts that are paid in settlement
(which settlement shall require the prior written consent of Buyer,
which consent shall not be unreasonably withheld) of or in connection
with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "CLAIM"), in which an
Indemnified Party is, or is threatened to be made, a party or witness
in whole or in part on or arising in whole or in part out of the fact
that such person is or was a director or officer of the Company Bank or
any of its subsidiaries (including service as a trustee, director or
officer of an employee benefit plan or trust or other entity at the
request of or in connection with such Person's position with the
Company or any of its subsidiaries) if such Claim pertains to any
matter or fact arising, existing or occurring before the Effective Time
(including without limitation the Mergers and the other transactions
contemplated hereby), regardless of whether such Claim is asserted or
claimed before, at or after the Effective Time (the "INDEMNIFIED
LIABILITIES"), to the fullest extent permitted by applicable Law in
effect as of the date hereof or as amended applicable to a time before
the Effective Time. Any Indemnified Party wishing to claim
indemnification under this SECTION 7.2(g)(ii), upon learning of any
Claim, shall notify the Buyer (but the failure so to so notify shall
not relieve the Buyer or the Buyer Bank from any liability that it may
have under this SECTION 7.2(g)(ii), except to the extent such failure
Materially prejudices the Buyer or its Affiliates). In the event of any
such Claim, whether arising before, on or after the Effective Time, (1)
the Buyer shall have the right to assume the defense thereof (in which
event the Indemnified Parties will cooperate in the defense of any such
matter) and upon such assumption, the Buyer shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection
with the defense therefor, except that if the Buyer elects not to
assume such defense, or counsel for the Indemnified Parties reasonably
advises the Indemnified Parties that there are or may be (whether or
not any have yet actually arisen) issues that raise conflicts of
interest between the Buyer and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them, and the
Buyer shall pay the reasonable fees and expenses of such counsel for
the Indemnified Parties, (2) the Buyer shall be obligated pursuant to
this paragraph to pay for only one firm of counsel for all Indemnified
Parties whose reasonable fees and expenses shall be paid promptly as
statements are received, (3) the Buyer shall not be liable for any
settlement effected without its prior written consent (which consent
shall not be unreasonably withheld), and (4) the Buyer shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law (it being acknowledged by the
parties hereto that in the event of any good faith dispute about the
lawfulness of such indemnification, the Buyer or the Buyer Bank may
place the amounts at issue in escrow pending the final and
nonapplicable determination of such dispute). The obligations of the
Buyer and the Buyer Bank pursuant to this SECTION 7.2(g) are intended
to be enforceable against the Buyer and the Buyer Bank directly by the
Indemnified Parties. The indemnification provided herein shall be in
addition to any indemnification rights that any Indemnified Parties may
have by Law, pursuant to the Articles of Incorporation or Bylaws of the
Company or any of its subsidiaries or pursuant to the terms of any
employee benefit plan or trust for which any Indemnified Party serves
as a fiduciary.
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(h) Future Dividends. Subject to applicable corporate approval
(including without limitation the approval of the Buyer's board of directors),
after the Effective Time, the Buyer shall increase its annual dividend to $0.76
per share, payable quarterly in accordance with the Buyer's customary dividend
payment practices.
7.3 Covenants of All Parties to the Agreement.
(a) Reorganization for Tax Purposes. Each of the parties hereto
undertakes and agrees to use its reasonable efforts to cause the Mergers to
qualify as "reorganizations" within the meaning of Section 368(a) of the Code
and that it will not intentionally take any action that would cause the Mergers
to fail to so qualify.
(b) Accounting Treatment. Each of the parties hereto undertakes and
agrees to use its reasonable efforts to cause the Mergers to qualify to be
treated as a "pooling-of-interests" under Generally Accepted Accounting
Principles and that it will not intentionally take any action that would cause
the Mergers to fail to so qualify.
(c) Notification. Each of the parties hereto agrees to notify promptly
the other parties hereto of any event, fact, or other circumstance arising after
the date hereof that would have caused any representation or warranty herein,
including, in the case of the Company Parties, any information on any schedule
hereto, to be untrue or misleading had such event, fact, or circumstance arisen
prior to the execution of this Agreement. The parties hereto will exercise their
reasonable best efforts to ensure that no such events, facts, or other
circumstances occur, come to pass, or become true.
(d) Consummation of Agreement. Subject to SECTION 7.1(c), the parties
hereto each agree to use their reasonable efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by them under this
Agreement so that the transactions contemplated hereby shall be consummated.
Except for events that are the subject of specific provisions of this Agreement,
if any event should occur, either within or outside the control of the Company
Parties, or the Buyer or the Buyer Bank, that would Materially delay or prevent
fulfillment of the conditions upon the obligations of any party hereto to
consummate the transactions contemplated by this Agreement, each party will
notify the others of any such event and, subject to SECTION 7.1(c), the parties
will use their reasonable, diligent and good faith efforts to cure or minimize
the same as expeditiously as possible. Subject to SECTION 7.1(c), each party
hereto shall use its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement and to assist in the procuring or providing of all documents that must
be procured or provided pursuant to the provisions hereof. Notwithstanding
anything to the contrary contained in this Agreement, but subject to SECTION
7.1(c), none of the parties hereto will take any action that would (i)
Materially affect or delay receipt of the approvals contemplated in SECTION
9.1(b) from the Regulatory Authorities, or (ii) Materially adversely affect or
delay its ability to perform its covenants and agreements made pursuant to this
Agreement.
(e) Corporate Action. Subject to the terms and conditions hereof
(including SECTION 7.1(c)), each of the parties hereto shall, and each of them
shall cause their subsidiaries to, take all corporate action (including the
recommendation of the Mergers by their respective boards of directors to their
respective shareholders), and use each of their reasonable best efforts to cause
all shareholder action to be taken, necessary to consummate and give effect to
the respective Mergers.
(f) Maintenance of Corporate Existence. Each of the parties hereto
shall, and each of them shall cause their Affiliates to, maintain in full force
and effect each their respective corporate or legal existences.
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(g) Applications and Reports. The Buyer shall prepare and file as soon
as reasonably practical after the date of this Agreement, and the Company
Parties shall cooperate in the preparation and, where appropriate, filing of,
all applications, reports and statements with all Regulatory Authorities having
jurisdiction over the transactions contemplated by this Agreement seeking the
requisite Consents necessary to consummate the transactions contemplated by this
Agreement.
(h) Registration Statement and Joint Proxy Statement/Prospectus. As
soon as reasonably practicable after the execution of the Agreement and after
the furnishing by the Company and the Company Bank of all information required
to be contained therein, the Buyer shall file with the SEC the Registration
Statement on Form S-4 (or on such other form as shall be appropriate), which
shall contain the Joint Proxy Statement/Prospectus. The Buyer and the Company
shall each use their reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to comply in all Material respects with the requirements of
the Securities Laws and the rules and regulations thereunder. The Buyer and the
Company shall each use all reasonable efforts to cause the Registration
Statement to become effective as soon thereafter as practicable. Subject to
SECTION 7.1(c), the Joint Proxy Statement/Prospectus shall include the
recommendation of the Boards of Directors of the Buyer and the Company in favor
of the Holding Company Merger.
(i) Option Agreement. Concurrently with or immediately after the
execution of this Agreement by the parties, the parties shall execute and
deliver the Option Agreements.
(j) Closing. Subject to the terms and conditions hereof (including
SECTION 7.1(c)), the parties hereto shall use their reasonable best efforts to
consummate the Closing within 30 days after all conditions to the Closing have
been satisfied.
ARTICLE VIII
DISCLOSURE OF ADDITIONAL INFORMATION
8.1 Access to Information. Prior to the Closing Date, the parties
hereto shall, and shall cause each of their subsidiaries to:
(a) give the other and its authorized representatives reasonable
access, during normal business hours and upon reasonable notice, to its books,
records, offices and other facilities and properties; and
(b) furnish the other with such financial and operating data and other
information with respect to its business, condition (financial or otherwise) and
properties, as it may reasonably request.
8.2 Access to Premises. Prior to Closing, the Company shall, and shall
cause its subsidiaries to, give the Buyer and its authorized representatives
reasonable access to all of the Company's and its subsidiaries' Real Property
for the purpose of inspecting such property.
8.3 Environmental Survey. At its option, the Buyer may cause to be
conducted Phase I environmental assessments of the Real Property of the Company
and its subsidiaries, whether owned or leased, or any portion thereof, together
with such other studies, testing and intrusive sampling and analyses as the
Company shall deem necessary or desirable (collectively, the "ENVIRONMENTAL
SURVEY"). The Company shall complete all such Phase I environmental assessments
within 60 days following the date of this Agreement and thereafter conduct and
complete any such additional studies, testing, sampling and analyses within 60
days following completion of all Phase I environmental assessments. Subject to
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the breach of any representation or warranty contained herein, the costs of the
Environmental Survey shall be paid by the Buyer.
8.4 Confidentiality. The parties acknowledge that each of the Buyer and
the Company have previously executed two separate agreements (the
"CONFIDENTIALITY AGREEMENTS") dated September 21, 1999 and December 8, 1999 in
contemplation of negotiations about the Mergers and agree that such agreements
shall continue in full force and effect in accordance with its terms.
8.5 Publicity. Without the prior consent of the other parties, no party
hereto shall issue any news release or other public announcement or disclosure,
or any general public announcement to its employees, suppliers or customers,
regarding this Agreement or the transactions contemplated hereby, except as may
be required by Law, but in which case the disclosing party shall provide the
other parties hereto with reasonable advance notice of the timing and substance
of any such disclosure.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Mutual Conditions. The respective obligations of each party hereto
to perform this Agreement and consummate the Mergers and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by all parties hereto pursuant to SECTION 11.4 of this Agreement:
(a) Adverse Proceedings. Neither the Company, the Company Bank, the
Buyer, the Buyer Bank, nor any shareholder of any of the foregoing shall be
subject to any order, decree or injunction of a court of competent jurisdiction
that enjoins or prohibits the consummation of this Agreement or the Mergers, and
no Governmental Authority shall have instituted a suit or proceeding that is
then pending and seeks to enjoin or prohibit the transactions contemplated
hereby. Any party who is subject to any such order, decree or injunction or the
subject of any such suit or proceeding shall take any reasonable steps within
that party's control to cause any such order, decree or injunction to be
modified so as to permit the Closing and to cause any such suit or proceeding to
be dismissed.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for consummation
of the Mergers shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No such
Consent obtained from any Regulatory Authority shall be conditioned or
restricted in a manner (including requirements relating to the raising of
additional capital or the disposition of Assets) not reasonably anticipated as
of the date of this Agreement that in the reasonable judgment of the Board of
Directors of the Buyer, the Buyer Bank, the Company or the Company Bank hereto
would so Materially adversely impact the economic or business assumptions of the
transactions contemplated by this Agreement that had such condition or
requirement been known, such party would not, in its reasonable judgment, have
entered into this Agreement. The parties agree that any divestiture of assets or
deposits in the aggregate of $100 million or less of the Buyer and the Company
and their subsidiaries taken as a whole required as a condition of any such
approval shall not enable any other party to terminate this Agreement because a
condition described in the paragraph shall not have been satisfied.
(c) Consents and Approvals. Each Party hereto shall have obtained any
and all Consents required for consummation of the Mergers or for the preventing
of any Default under any Contract or Permit of such Party, including any
Consents listed on the Company's Disclosure Schedule, except to the extent that
the failure to obtain such any such Consents would not, individually or in the
aggregate, result in a Material Adverse Effect on such Party.
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(d) Effectiveness of Registration Statement. The Registration Statement
filed with the SEC covering the shares of the Buyer's Stock to be issued
pursuant hereto shall have been declared effective by the SEC, and no stop order
suspending such effectiveness shall have been initiated or, to the Knowledge of
the Buyer Parties, threatened by the SEC.
(e) Approval. The Buyer's shareholders shall have approved this
Agreement and the Mergers in accordance with applicable corporate law and the
rules of the Nasdaq Stock Market or other applicable Law. The Company's and the
Company Bank's shareholders shall have approved this Agreement and the
respective Mergers in accordance with applicable corporate law.
(f) Tax Opinion. On the basis of facts, representations and assumptions
that shall be consistent with the state of facts existing at the Closing Date,
the Buyer and the Company shall have received an opinion of an acceptable tax
advisor reasonably acceptable in form and substance to each of them dated as of
the Closing Date, substantially to the effect that, for federal income tax
purposes: (i) the Mergers, when consummated in accordance with the terms hereof,
will each constitute a reorganization within the meaning of Section 368(a) of
the Code, (ii) no gain or loss will be recognized by the Buyer, the Buyer Bank,
the Company or the Company Bank by reason of the Mergers, (iii) the exchange or
cancellation of Company Shares or Company Bank Shares in the Mergers will not
give rise to recognition of gain or loss for federal income tax purposes to the
shareholders of the Company and the Company Bank, (iv) the basis of the Buyer's
Stock to be received by a shareholder of the Company will be the same as the
basis of the stock of the Company surrendered in connection with the Mergers,
and (v) the holding period of the shares of the Buyer's Stock to be received by
a shareholder of the Company will include the period during which the
shareholder held the Company Shares surrendered in connection with the Mergers,
provided that the Company Shares surrendered in connection with the Mergers are
held as a capital asset at the Effective Time of such Mergers. Each of the Buyer
and the Company shall provide a letter to the tax advisor setting forth the
facts, assumptions and representations on which such tax advisor may rely in
rendering its opinion.
(g) Accounting Assurances. The Buyer shall have received assurances
from KPMG LLP, in form and substance satisfactory to it, that the Mergers will
qualify to be treated as "pooling-of-interests" for accounting purposes. The
Buyer also shall have received a letter from Dixon Odom PLLC, in form and
substance satisfactory to it to the effect that such accountants are not aware
of any fact or circumstance related to the Company or any of its subsidiaries
that might cause the Mergers not to qualify for such treatment. Nothing shall
have come to the attention of the Buyer or the Company that any event has
occurred or that any condition or circumstance exists that makes it likely that
the Mergers may not so qualify.
(h) Blue Sky Approvals. The Buyer shall have received all state
securities or "Blue Sky" Permits or other authorizations or confirmations as to
the availability of exemptions from "Blue Sky" registration requirements as may
be necessary, and no stop orders or proceedings shall be pending, or the
Knowledge of the Buyer Parties or the Company Parties, threatened by a state
"Blue Sky" administrator to suspend the effectiveness of any registration
statement filed therewith with respect to the issuance of the Buyer's Stock in
the Holding Company Merger.
(i) Nasdaq Listing. As of the Effective Time, the Buyer shall have
satisfied all requirements in order for the shares of the Buyer's Stock to be
issued to shareholders of the Company in connection with the Holding Company
Merger and holders of stock options issued pursuant to the Company Benefit Plans
(when issued) to be listed on the Nasdaq National Market System as of the
Effective Time.
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9.2 Conditions to the Obligations of the Company Parties. The
obligation of the Company Parties to effect the transactions contemplated hereby
shall be further subject to the fulfillment of the following conditions, unless
waived by such parties pursuant to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Buyer and the Buyer Bank
contained in this Agreement shall be true and correct in all Material respects
as of the Closing Date as though made as of such date (except for
representations and warranties that are made as of a specific date). The Buyer
and the Buyer Bank shall have performed and complied in all Material respects
with all covenants and agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
(b) All documents required to have been executed and delivered by the
Buyer or the Buyer Bank, on behalf of itself or the Buyer Bank, to the Company
Parties at or prior to the Closing shall have been so executed and delivered,
whether or not such documents have been or will be executed and delivered by the
other parties contemplated thereby.
(c) The Company shall have received from Ferguson & Company a letter,
dated not more than five Business Days prior to the Joint Proxy
Statement/Prospectus, that the Merger Consideration is fair, from a financial
point of view, to the holders of the Company's Shares.
(d) The Company Parties shall have received an opinion of Robinson,
Bradshaw & Hinson, P.A., counsel to the Buyer, dated as of the Closing Date, in
form and substance reasonably acceptable to the Company Parties.
(e) As of the Closing Date, the Company Parties shall have received the
following documents with respect to the Buyer and the Buyer Bank:
(i) a true and complete copy of its articles of incorporation
and all amendments thereto, certified by the jurisdiction of its
incorporation as of a recent date;
(ii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iii) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation have not been
amended since the date of the certificate described in subsection (i)
above and that nothing has occurred since such date that would
adversely affect its existence;
(iv) a true and complete copy of the resolutions of its board
of directors and shareholders authorizing the execution, delivery and
performance of this Agreement, and all instruments and documents to be
delivered in connection herewith, and the transactions contemplated
hereby, certified by its Secretary or an Assistant Secretary; and
(v) a certificate from its Secretary or an Assistant Secretary
certifying the incumbency and signatures of its officers who will
execute documents at the Closing or who have executed this Agreement.
(f) The Exchange Agent shall have delivered to the Company a
certificate, dated as of the Closing Date, to the effect that the Exchange Agent
has received from the Buyer appropriate instructions and authorization for the
Exchange Agent to issue a sufficient number of shares of Buyer Stock in exchange
for all of the Company Shares and the Company Bank Shares.
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9.3 Conditions to the Obligations of the Buyer. The obligations of the
Buyer to effect the transactions contemplated hereby shall be further subject to
the fulfillment of the following conditions, unless waived by the Buyer pursuant
to SECTION 11.4 of this Agreement:
(a) All representations and warranties of the Company Parties contained
in this Agreement shall be true and correct in all Material respects as of the
Closing Date as though made as of such date (except for representations and
warranties that are made as of a specific date). The Company Parties shall have
performed and complied in all Material respects with all covenants and
agreements contained in this Agreement required to be performed and complied
with by them at or prior to the Closing.
(b) The Buyer shall have received from Sterne, Agee & Leach a letter,
dated not more than five Business Days prior to the Joint Proxy
Statement/Prospectus, that the Merger Consideration is fair, from a financial
point of view, to the holders of the Buyer's Stock.
(c) All documents required to have been executed and delivered by the
Company, the Company Bank or any third party to the Buyer or the Buyer Bank at
or prior to the Closing shall have been so executed and delivered, whether or
not such documents have been or will be executed and delivered by the other
parties contemplated thereby.
(d) The Buyer shall have received a legal opinion from Brooks, Pierce,
McLendon, Humphrey & Leonard, L.L.P., counsel to the Company Parties, dated as
of the Closing Date, in form and substance reasonably satisfactory to the Buyer.
(e) As of the Closing Date, the Buyer shall have received the following
documents with respect to each of the Company and its subsidiaries:
(i) a certificate of its corporate existence issued by the
jurisdiction of its incorporation as of a recent date and a certificate
of existence or authority as a foreign corporation issued as of a
recent date by each of the jurisdictions in which it is qualified to do
business as a foreign corporation;
(ii) a true and complete copy of its articles of incorporation
or charter and all amendments thereto, certified by the jurisdiction of
its incorporation as of a recent date;
(iii) a true and complete copy of its bylaws, certified by its
Secretary or an Assistant Secretary;
(iv) a certificate from its Secretary or an Assistant
Secretary certifying that its articles of incorporation or charter have
not been amended since the date of the certificate described in
subsection (ii) above, and that nothing has occurred since the date of
issuance of the certificate of existence specified in subsection (i)
above that would adversely affect its existence;
(v) with respect to the Company only, a true and complete copy
of the resolutions of its Board of Directors and shareholders
authorizing the execution, delivery and performance of this Agreement,
and all instruments and documents to be delivered in connection
herewith, and the transactions contemplated hereby, certified by its
Secretary or an Assistant Secretary; and
(vi) with respect to the Company only, a certificate from its
Secretary or an Assistant Secretary certifying the incumbency and
signatures of its officers who will execute documents at the Closing or
who have executed this Agreement.
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ARTICLE X
TERMINATION
10.1 Termination. The obligations of the parties hereunder may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing Date:
(a) By mutual written consent of the Company and the Buyer;
(b) By either the Buyer or the Company, if there shall be any law or
regulation that makes consummation of this Agreement illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the Company
or its shareholders, the Company Bank, the Buyer or its shareholders, or the
Buyer Bank from consummating this Agreement is entered and such judgment,
injunction, order or decree shall become final and non-appealable;
(c) By either the Buyer or the Company, if the conditions to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall not have been fulfilled or waived by June 30, 2000, and if the
party seeking termination is in Material compliance with all of its obligations
under this Agreement;
(d) By either the Buyer or the Company, if a condition to the
obligation to effect the transactions contemplated hereby of the party seeking
termination shall have become incapable of fulfillment (notwithstanding the
efforts of the party seeking to terminate as set forth in SECTION 7.3(d)), and
has not been waived;
(e) At any time on or prior to the Closing Date, by the Buyer in
writing, if the Company or the Company Bank has, or by the Company, if the Buyer
or the Buyer Bank has, in any Material respect, breached (i) any covenant or
agreement contained herein or (ii) any representation or warranty contained
herein, and in either case if such breach has not been cured by the earlier of
30 days after the date on which written notice of such breach is given to the
party committing such breach or the Closing Date.
(f) By the Company, if its board of directors determines to terminate
this Agreement (and the Mergers) and (i) the Average Closing Price of the
Buyer's Stock is less than $16 for the 20-trading day period (the "MEASUREMENT
PERIOD") ending three Business Days prior to the latest date to occur of (A) the
date on which the last approval from a Regulatory Authority in respect of the
Mergers is obtained or (B) the date on which the appropriate approvals in
respect of the Mergers of the shareholders of the Buyer or the Company are
obtained, and (ii) the percentage (the "BUYER'S STOCK PERCENTAGE CHANGE") by
which the Average Closing Price of the Buyer's Stock during the Measurement
Period is lower than $18 exceeds by more than 11 percentage points the
percentage (the "INDEX PERCENTAGE CHANGE") by which the Average Closing Price of
the SNL Index during the Measurement Period is lower than the Average Closing
Price of the SNL Index on December 14, 1999. (Examples: If the Average Closing
Price of the SNL Index has declined by 5%, the Average Closing Price of the
Buyer's Stock during the Measurement Period must be more than 16% lower than
$18; if the Average Closing Price of the SNL Index has declined by 10%, the
Average Closing Price of the Buyer's Stock during the Measurement Period must be
more than 21% lower than $18); provided, however, that in such case the Buyer
shall have the right to adjust the Exchange Ratio so that the product of the
number of shares of the Buyer's Stock issued for each Company Share multiplied
by the Average Closing Price of the Buyer's Stock for the Measurement Period
will equal the lesser of (x) $19.9488 (i.e. $16 x 1.2468) and (y) an amount
equal to the product of $22.4424 (i.e. $18 x 1.2468), multiplied by the sum of
(A) 100 percent, minus (B) the Index Percentage Change, minus (C) 11 percent, in
which case the Company shall not have the right to terminate this Agreement and
the Merger; provided, further, however, that in the case that the Average
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Closing Price of the Buyer's Stock during the Measurement Period is below $14.69
per share, but there is no termination right by the Company under the above
provisions because the difference between the Buyer's Stock Percentage Change
and the Index Percentage Change is 11 percent or less, then the Company shall
have the right to terminate this Agreement unless the Buyer elects to adjust the
Exchange Ratio so that the product of the number of shares of the Buyer's Stock
issued for each such Company Share multiplied by the Average Closing Price of
the Buyer's Stock during the Measurement Period will equal $18.31549 (i.e.
$14.69 x 1.2468).
For purposes of this subclause (f): "AVERAGE CLOSING PRICE" means with
respect to the Buyer's Stock, the average of the daily closing sales price
thereof on the Nasdaq National Market System during a specified period and, with
respect to the SNL Index for a specified day or during a specified period, the
average of the daily closing prices of the stocks contained in such SNL Index on
the primary exchange or in the primary market on which each such stock trades,
all as reported by The Wall Street Journal; and "SNL INDEX" means the SNL
Nationwide Bank Index ($500 million to $1 billion).
10.2 Procedure and Effect of Termination. In the event of a termination
contemplated hereby by any party pursuant to SECTION 10.1, the party seeking to
terminate this Agreement shall give prompt written notice thereof to the other
party, and the transactions contemplated hereby shall be abandoned, without
further action by any party hereto. In such event:
(a) The parties hereto shall continue to be bound by (i) their
obligations of confidentiality set forth in the Confidentiality Agreements, and
all copies of the information provided by the Company hereunder will be returned
to the Company or destroyed immediately upon its request therefor, (ii) the
provisions set forth in SECTION 8.4 relating to publicity and (iii) the
provisions set forth in SECTION 11.1 relating to expenses.
(b) All filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practicable, be withdrawn
from the Person to which made.
(c) The terminating party shall be entitled to seek any remedy to which
such party may be entitled at law or in equity for the violation or breach of
any agreement, covenant, representation or warranty contained in this Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Expenses. Whether or not the transactions contemplated hereby are
consummated, (i) the Buyer shall pay all costs and expenses incurred by it and
the Buyer Bank in connection with this Agreement and the Mergers and (ii) the
Company Bank shall pay all costs and expenses incurred by it and the Company in
connection with this Agreement and the Mergers.
11.2 Survival of Representations. The representations and warranties
made by the parties hereto will not survive the Closing, and no party shall make
or be entitled to make any claim based upon such representations and warranties
after the Closing Date. No warranty or representation shall be deemed to be
waived or otherwise diminished as a result of any due diligence investigation by
the party to whom the warranty or representation was made or as a result of any
actual or constructive knowledge by such party with respect to any facts,
circumstances or claims or by the actual or constructive knowledge of such
person that any warranty or representation is false at the time of signing or
Closing.
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11.3 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of all parties hereto.
11.4 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of the Buyer, on one hand, and the Company Parties,
on the other, to comply with any obligation, representation, warranty, covenant,
agreement or condition herein may be waived by the other party or parties only
by a written instrument signed by the party or parties granting such waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this SECTION 11.4.
11.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered by hand or by facsimile
transmission, one Business Day after sending by a reputable national over-night
courier service or three Business Days after mailing when mailed by registered
or certified mail (return receipt requested), postage prepaid, to the parties in
the manner provided below:
(a) Any notice to the Company Parties shall be delivered to the
following addresses:
First Savings Bancorp, Inc.
205 S.E. Broad Street, P.O. Box 1657
Southern Pines, North Carolina 28387
Attention: John F. Burns, Chief Executive Officer
Telephone: (910) 692-6222
Facsimile: (910) 692-7501
with a copy to:
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.
2000 Renaissance Plaza
230 North Elm Street
P.O. Box 26000
Greensboro, North Carolina 27420
Attention: Edward C. Winslow III
Telephone: (336) 373-8850
Facsimile: (336) 378-1001
(b) Any notice to the Buyer or the Buyer Bank shall be delivered
to the following addresses:
First Bancorp
341 North Main Street
P. O. Box 508
Troy, North Carolina 27371
Attention: James H. Garner
Telephone: (910) 576-2265
Facsimile: (910) 576-0662
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with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Attention: Henry H. Ralston
Telephone: (704) 377-2536
Facsimile: (704) 378-4000
Any party may change the address to which notice is to be given by notice given
in the manner set forth above.
11.6 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior written consent of the
other parties.
11.7 Separable Provisions. If any provision of this Agreement shall be
held invalid or unenforceable, the remainder nevertheless shall remain in full
force and effect.
11.8 Governing Law. The execution, interpretation and performance of
this Agreement shall be governed by the internal laws and judicial decisions of
the State of North Carolina.
11.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.11 Entire Agreement. This Agreement, including the agreements and
documents that are Schedules and Exhibits hereto, embodies the entire agreement
and understanding of the parties with respect of the subject matter of this
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the transactions contemplated hereby and
subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
FIRST SAVINGS BANCORP, INC.
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
COMPANY BANK:
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
BUYER:
FIRST BANCORP
By: /s/ James H. Garner
-------------------------------------------------
Name: James H. Garner
Title: President and CEO
BUYER BANK:
FIRST BANK
By: /s/ James H. Garner
-------------------------------------------------
Name: James H. Garner
Title: President and CEO
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EXHIBIT A
PLAN OF MERGER
OF
FIRST SAVINGS BANCORP, INC.
INTO
FIRST BANCORP
A. Corporations Participating in Merger.
First Savings Bancorp, Inc., a North Carolina corporation (the "Merging
Corporation"), will merge with and into First Bancorp a North Carolina
corporation, which will be the surviving corporation (the "Surviving
Corporation") of such merger.
B. Name of Surviving Corporation.
After the merger, the Surviving Corporation shall have the name "First
Bancorp"
C. Merger.
The merger of the Merging Corporation into the Surviving Corporation
shall be effected pursuant to the terms and conditions of this Plan. Upon the
merger becoming effective, the corporate existence of the Merging Corporation
will cease, and the corporate existence of the Surviving Corporation will
continue. The merger shall become effective on the date and at the time of
filing of the Articles of Merger containing this Plan with the North Carolina
Secretary of State or at such other time as may be specified in such Articles of
Merger. The time when the merger becomes effective is hereinafter referred to as
the "Effective Time."
D. Conversion and Exchange of Shares.
At the Effective Time, the outstanding shares of the common stock of
the corporations participating in the merger will be converted and exchanged as
follows:
1. Surviving Corporation.
(a) Each outstanding share of the common stock of the Merging
Corporation shall at the Effective Time no longer be outstanding and shall be
canceled and retired and shall cease to exist, and the holders of the
certificates representing such shares shall thereafter cease to have any rights
with respect to such shares except for the right to receive, in consideration
for the foregoing the issuance and delivery of 1.2468 shares of common stock of
the Surviving Corporation for each share of the common stock of the Merging
Corporation outstanding immediately prior to the merger (the "Exchange Ratio"),
provided, that such Exchange Ratio is subject to adjustment based upon the price
of such shares of stock of the Surviving Corporation at or close to the
Effective Time).
(b) In the event the Surviving Corporation changes the numbers of
shares of its common stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend or similar reorganization with respect
to such stock and the record date thereof (in the case of a stock dividend) or
the effective date thereof (in the case of a stock split or similar
recapitalization for which a
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record date is not established) shall be prior to such Effective Time, the
Exchange Ratio shall be equitable adjusted to reflect such change.
2. Fractional Shares. No fractional shares of the common stock of the
Surviving Corporation shall be delivered as consideration for the merger
described herein. In lieu of any such fractional share, upon tender of the
certificates representing shares of common stock of the Merging Corporation,
each holder of common stock of the Merging Corporation shall be entitled to
receive cash (without interest) in an amount equal to such fraction multiplied
by the Market Value of one share of the common stock of the Surviving
Corporation on the trading day immediately prior to the Effective Time. For
purposes of this Section 2, "Market Value" of the common stock of the Surviving
Corporation means the closing price of such stock on the Nasdaq Stock Market (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source), or if such closing date is not a trading day, on the last
trading day preceding that date.
3. Surrender of Share Certificates. Each holder of a certificate
representing shares to be converted or exchanged in the merger shall surrender
such certificate for cancellation and after the Effective Time and after such
surrender shall be entitled to receive in exchange therefor the consideration to
which it is entitled under this Plan. Until so surrendered, each outstanding
certificate that prior to the Effective Time represented shares of common stock
of the Merging Corporation shall be deemed for all purposes to evidence
ownership of the consideration to be issued and paid for the conversion or
exchange of such shares under this Plan.
4. No Further Transfers. From and after the Effective Time of the
merger, there shall be no further transfers on the stock transfer books of the
Surviving Corporation of the shares of the Merging Corporation that were
outstanding immediately prior to the Effective Time of the merger. If after such
Effective Time, certificates representing shares of the Merging Corporation are
presented to the Surviving Corporation, they shall be canceled, and exchanged
and converted into the merger consideration as provided for herein.
E. Abandonment.
After approval of this Plan by the shareholders of the Merging
Corporation and the Surviving Corporation, and at any time prior to the merger's
becoming effective, the board of directors of the Merging Corporation or the
Surviving Corporation may, in each of their discretion, abandon the merger.
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AMENDMENT AND WAIVER TO MERGER AGREEMENT
THIS AMENDMENT AND WAIVER TO MERGER AGREEMENT (this "Amendment and
Waiver"), dated as of March 24, 2000, is by and between:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "Buyer");
FIRST BANK, a North Carolina bank and a wholly owned subsidiary of the
Buyer (the "Buyer Bank");
FIRST SAVINGS BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
savings bank holding company (the "Company"); and
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB, a North Carolina stock
savings bank (the "Company Bank").
BACKGROUND STATEMENT
The parties to this Amendment and Waiver entered into a Merger
Agreement (the "Agreement") dated as of December 15, 1999 providing for the
merger of the Company into the Buyer, with the Buyer being the surviving
corporation (the "Holding Company Merger"), and the merger of the Company Bank
into the Buyer Bank, with the Buyer Bank being the surviving corporation (the
"Bank Merger").
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants herein
contained, the parties hereto, for themselves, their successors and assigns,
agree as follows:
ARTICLE I.
AMENDMENTS
1.1 THE BANK MERGER.
(a) Section 3.1(a) of the Agreement is hereby amended so that the
phrase "Immediately after the consummation of the Holding Company Merger" is
replaced with the phrase "As soon as reasonably practicable after the
consummation of the Holding Company Merger, as determined by the Buyer."
(b) Section 3.1(f) of the Agreement is hereby amended so that the
phrase "At the Closing but after the filing of the Articles of Merger in respect
of the Holding Company Merger" is replaced by the phrase "As soon as reasonably
practicable after the filing of the Articles of Merger in respect of the Holding
Company Merger, as determined by the Buyer."
(c) Section 3.1(g) is hereby added to the Agreement and shall read as
follows:
(g) Timing of the Bank Merger. Notwithstanding anything
to the contrary in this Agreement, the Bank Merger
shall be consummated as soon as reasonably
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practicable after the consummation of the Holding
Company Merger, as determined by the Buyer, subject
to satisfaction of all requirements of the Regulatory
Authorities.
1.2 FUTURE DIVIDENDS. Section 7.2(h) of the Agreement is hereby amended
so that the phrase "$0.76" is replaced with the phrase "$0.88."
ARTICLE II.
WAIVER
The parties hereto waive the condition to Closing (as defined in the
Agreement) set forth in Section 9.1(b) of the Agreement to the extent such
condition relates to the expiration of any required waiting periods for the
Merger of the Company Bank and the Buyer Bank; provided, however, that the
parties agree that such waiting period shall have expired prior to consummation
of the Bank Merger.
ARTICLE III.
MISCELLANEOUS
3.1 AMENDMENT AND MODIFICATION. This Amendment and Waiver may be
amended, modified or supplemented only by a written agreement executed by all
parties hereto.
3.2 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Amendment and Waiver, any failure of the Buyer and the Buyer Bank, on one
hand, and the Company and the Company Bank, on the other, to comply with any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived by the other party or parties only by a written instrument signed
by the party or parties granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Should this Amendment and
Waiver require or permit consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in Section 11.4 of the Agreement.
3.3 GOVERNING LAW. The execution, interpretation and performance of
this Amendment and Waiver shall be governed by the internal laws and judicial
decisions of the State of North Carolina.
3.4 COUNTERPARTS. This Amendment and Waiver may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.5 INTERPRETATION. The article and section headings contained in this
Amendment and Waiver are solely for the purpose of reference, are not part of
the agreement of the parties and shall not in any way affect the meaning or
interpretation of this Amendment and Waiver.
3.6 ENTIRE AGREEMENT. The Agreement, including the agreements and
documents that are Exhibits and Schedules thereto, together with this Amendment
and Waiver, (a) embody the entire agreement and understanding of the parties
with respect of the subject matter hereof and thereof and (b) supersede all
prior agreements and understandings between the parties with respect to the
subject matter hereof and thereof.
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IN WITNESS WHEREOF, the Company, the Company Bank, the Buyer and the
Buyer Bank have caused this Amendment and Waiver to be signed by their
respective duly authorized officers, as of the date first above written.
COMPANY:
FIRST SAVINGS BANCORP, INC.
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
COMPANY BANK:
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
BUYER:
FIRST BANCORP
By: /s/ Eric P. Credle
-------------------------------------------------
Name: Eric P. Credle
Title: Senior Vice President and CFO
BUYER BANK:
FIRST BANK
By: /s/ Eric P. Credle
-------------------------------------------------
Name: Eric P. Credle
Title: Senior Vice President and CFO
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SECOND AMENDMENT AND WAIVER TO MERGER AGREEMENT
THIS SECOND AMENDMENT AND WAIVER TO MERGER AGREEMENT (this "Second
Amendment and Waiver"), dated as of May 15, 2000, is by and between:
FIRST BANCORP, a North Carolina corporation and a holding company
registered with the Board of Governors of the Federal Reserve System under the
Bank Holding Company Act of 1956, as amended, and a North Carolina bank holding
company (the "Buyer");
FIRST BANK, a North Carolina bank and a wholly owned subsidiary of the
Buyer (the "Buyer Bank");
FIRST SAVINGS BANCORP, INC., a North Carolina corporation and a holding
company registered with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and a North Carolina
savings bank holding company (the "Company"); and
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB, a North Carolina stock
savings bank (the "Company Bank").
BACKGROUND STATEMENT
The parties to this Second Amendment and Waiver entered into a Merger
Agreement (the "Agreement") dated as of December 15, 1999 providing for the
merger of the Company into the Buyer, with the Buyer being the surviving
corporation (the "Holding Company Merger"), and the merger of the Company Bank
into the Buyer Bank, with the Buyer Bank being the surviving corporation (the
"Bank Merger"), as amended by an Amendment and Waiver to Merger Agreement dated
as of March 24, 2000 (the "First Amendment").
STATEMENT OF AGREEMENT
In consideration of the premises and the mutual covenants herein
contained, the parties hereto, for themselves, their successors and assigns,
agree as follows:
ARTICLE I.
AMENDMENTS
1.1 TERMINATION. Section 10.1(c) of the Agreement is hereby amended so
that the phrase "June 30, 2000" is replaced with the phrase "September 30,
2000."
1.2 MEASUREMENT PERIOD. Section 10.1(f) of the Agreement is hereby
amended by deleting the first sentence of such section and replacing it with the
following: "By the Company, if its board of directors determines to terminate
this Agreement (and the Mergers) and (i) the Average Closing Price of the
Buyer's Stock is less than $16 for the 20-trading day period (the "MEASUREMENT
PERIOD") ending June 23, 2000, and (ii) the percentage (the "BUYER'S STOCK
PERCENTAGE CHANGE") by which the Average Closing Price of the Buyer's Stock
during the Measurement Period is lower than $18 exceeds by more than 11
percentage points the percentage (the "INDEX PERCENTAGE CHANGE") by which the
Average Closing Price of the SNL Index during the Measurement Period is lower
than the Average Closing Price of the SNL Index on December 14, 1999."
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ARTICLE II.
WAIVER
The parties hereto waive the condition to Closing (as defined in the
Agreement) set forth in Section 9.1(b) of the Agreement to the extent such
condition relates to approval of, or non-objection to, the Bank Merger by any
Regulatory Authority.
ARTICLE III.
MISCELLANEOUS
3.1 AMENDMENT AND MODIFICATION. This Second Amendment and Waiver may be
amended, modified or supplemented only by a written agreement executed by all
parties hereto.
3.2 WAIVER OF COMPLIANCE; CONSENTS. Except as otherwise provided in
this Second Amendment and Waiver, any failure of the Buyer and the Buyer Bank,
on one hand, and the Company and the Company Bank, on the other, to comply with
any obligation, representation, warranty, covenant, agreement or condition
herein may be waived by the other party or parties only by a written instrument
signed by the party or parties granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Should this Second Amendment
and Waiver require or permit consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in Section 11.4 of the Agreement.
3.3 GOVERNING LAW. The execution, interpretation and performance of
this Second Amendment and Waiver shall be governed by the internal laws and
judicial decisions of the State of North Carolina.
3.4 COUNTERPARTS. This Second Amendment and Waiver may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.5 INTERPRETATION. The article and section headings contained in this
Second Amendment and Waiver are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Second Amendment and Waiver.
3.6 ENTIRE AGREEMENT. The Agreement, including the agreements and
documents that are Exhibits and Schedules thereto, together with the First
Amendment and this Second Amendment and Waiver, (a) embody the entire agreement
and understanding of the parties with respect of the subject matter hereof and
thereof and (b) supersede all prior agreements and understandings between the
parties with respect to the subject matter hereof and thereof.
(Signatures on following page)
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<PAGE> 163
IN WITNESS WHEREOF, the Company, the Company Bank, the Buyer and the
Buyer Bank have caused this Second Amendment and Waiver to be signed by their
respective duly authorized officers, as of the date first above written.
COMPANY:
FIRST SAVINGS BANCORP, INC.
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
COMPANY BANK:
FIRST SAVINGS BANK OF MOORE COUNTY, INC., SSB
By: /s/ John F. Burns
-------------------------------------------------
Name: John F. Burns
Title: President and CEO
BUYER:
FIRST BANCORP
By: /s/ Anna G. Hollers
-------------------------------------------------
Name: Anna G. Hollers
Title: Executive Vice President
BUYER BANK:
FIRST BANK
By: /s/ Anna G. Hollers
-------------------------------------------------
Name: Anna G. Hollers
Title: Executive Vice President
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APPENDIX B
FAIRNESS OPINION OF FERGUSON & COMPANY
[FERGUSON & COMPANY LETTERHEAD]
May 15, 2000
The Board of Directors
First Savings Bancorp, Inc.
205 Southeast Broad Street
Southern Pines, North Carolina 28387
Dear Directors:
First Savings Bancorp, Inc ("First Savings") has entered into a Merger
Agreement dated December 15, 1999, and subsequently amended ("Agreement") with
First Bancorp, Troy, North Carolina ("First Bancorp"). Each share of First
Savings Common Stock which is issued and outstanding at the effective time of
the merger will be converted into 1.2468 shares of First Bancorp Common Stock,
subject to adjustment as provided in the Agreement.
You have requested our opinion as to the fairness, from a financial
point of view, to the shareholders of First Savings of the consideration to be
paid to the shareholders of First Savings pursuant to the Agreement.
Ferguson & Company ("Ferguson"), as a customary part of its consulting
business, is engaged in the valuation of banks, thrifts and holding companies
and their securities in connection with mergers and acquisitions, stock purchase
offers and other purposes.
In the course of our review, we have studied the Agreement and certain
publicly available information relating to First Savings, First Bancorp and the
other institutions that submitted proposals for the acquisition of First
Savings. We have compared certain financial and securities data of First
Savings, First Bancorp and the other institutions submitting proposals with
other comparable companies whose securities are traded in the public market,
studied the pro forma effects of the proposed merger and reviewed the financial
terms of certain recent merger transactions comparable to the proposed merger.
Although we have no reason to believe that the financial and other
information contained in publicly available materials or in other materials on
which we have relied is not accurate, complete and fair, we have not
independently verified it and, for the purposes of this opinion, have assumed
the accuracy, completeness and fairness thereof. In addition, we have not made
an independent evaluation or appraisal of the assets of First Savings and the
institutions submitting acquisition proposals, including First Bancorp, nor have
we been furnished with such an appraisal.
We were not authorized to solicit, and did not solicit, any alternative
offers to those submitted by the institutions that submitted proposals relating
to the acquisition of First Savings. Though we evaluated the alternative
proposals received and considered by the Board of Directors, our opinion herein
is not an expression of any of the relative merits and detriments, or a
recommendation regarding the acceptance or rejection, of those proposals in
relation to the transaction described in the Agreement. Our opinion also is not
an expression that the transaction described in the Agreement will necessarily
provide the most value available to the shareholders of First Savings. Our
opinion is strictly limited to addressing the fairness to
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the shareholders of First Savings, from a financial point of view, of the
consideration to be received by them in the transaction described in the
Agreement.
Our opinion is based upon circumstances as of the date hereof,
including current conditions in the United States securities markets. Events
occurring after the date hereof, including, but not limited to, changes
affecting the United States securities markets and subsequent results of
operations of First Savings or First Bancorp, could materially affect the
assumptions used in preparing this opinion.
Based on the analysis described above (and other matters that were
considered relevant) and in reliance (without independent verification) on the
accuracy, completeness and fairness of the information reviewed by us, it is our
opinion that, from a financial point of view, as of the date hereof, the
consideration to be paid by First Bancorp to First Savings shareholders pursuant
to the Agreement is fair to the shareholders of First Savings.
Ferguson & Company
/s/ Robin Fussell
Robin Fussell
Principal
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<PAGE> 166
APPENDIX C
OPINION OF STERNE, AGEE & LEACH, INC.
[STERNE AGEE LETTERHEAD]
MAY 15, 2000
The Board of Directors
First Bancorp
341 North Main Street
Troy, North Carolina 27371
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the shareholders of First Bancorp
of the exchange ratio in the proposed merger of First Bancorp with First Savings
Bancorp, Inc. (the "Merger") pursuant to the Merger Agreement by and among First
Bancorp, First Bank, First Savings Bancorp, Inc., and First Savings Bank of
Moore County, Inc., SSB, dated as of December 15, 1999 (as amended, the "Merger
Agreement"). Under the terms of the Merger, First Bancorp will exchange 1.2468
of its common shares for each share of First Savings, subject to certain
adjustments (the "Exchange Ratio"). It is our understanding the Merger will be
accounted for as a pooling-of-interests under generally accepted accounting
principles.
Sterne, Agee & Leach, Inc. as part of its investment banking business
is regularly involved in the valuation of financial institutions and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. In
the ordinary course of our business as a broker-dealer, we may, from time to
time, purchase securities from, and sell securities to, First Bancorp. We have
also acted exclusively for the board of directors of First Bancorp in rendering
this fairness opinion, and for our services, including the rendering of this
opinion, First Bancorp has paid us a non-refundable retainer fee and will pay us
a further fee upon the issuance of this opinion. In addition, First Bancorp has
agreed to reimburse us for out-of-pocket expenses and indemnify us against
certain liabilities, including liabilities under federal and state securities
laws.
In connection with this opinion, we have reviewed, analyzed and relied
upon certain materials relating to the financial and operating condition of
First Savings and First Bancorp including, among other things, the Merger
Agreement; the annual reports to shareholders for the three years ended June 30,
1999, for First Savings and the three years ended December 31, 1998, for First
Bancorp; certain interim reports to shareholders of First Savings and First
Bancorp, including quarterly reports on Form 10-Q and certain other
communications; other financial information concerning the businesses and
operations of First Savings and First Bancorp furnished to us by the respective
companies to the purposes of our analysis, including certain internal financial
analyses and forecasts for First Savings and First Bancorp prepared by the
senior management of the respective companies; certain publicly available
information concerning the historical price, price to earnings, price to book as
well as the trading activity for the common stocks of First Savings and First
Bancorp; certain publicly available information with respect to banking
companies and the types of terms of other transactions that we considered
relevant to our analysis and the joint proxy statement/prospectus. We further
held discussions with senior management of First Savings and First Bancorp
regarding their past, current and prospective operations, financial condition,
regulatory examinations, audits, and other matters.
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In conducting its review and arriving at its opinion, we relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to us or publicly available, and we did not attempt to
verify such information independently. We relied upon the management of First
Savings and of First Bancorp as to the reasonableness and achievability of the
financial and operating budgets and forecasts and related assumptions provided
to us and assumed that such budgets and forecasts reflected the best available
estimates and judgments of such management and that such budgets and forecasts
will be realized in the amounts and in the time periods estimated by such
management. We also assumed, without independent verification, that the
aggregate allowances for loan losses for First Savings and First Bancorp are
adequate to cover such losses. We did not make or obtain any evaluations or
appraisals of the property of First Savings or First Bancorp, nor did we examine
any loan credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: the
historical and current financial position and results of operations of First
Bancorp and First Savings; the assets and liabilities of First Bancorp and First
Savings; and the nature and terms of certain other merger transactions involving
financial institutions. We have also taken into account our assessment of
general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is based upon
conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof.
The opinion expressed herein is provided for the benefit of the board
of directors and does not constitute a recommendation to any First Bancorp
shareholder regarding how such shareholder should vote at the First Bancorp
special meeting. Finally, we express no opinion as to the underlying business
decision of First Bancorp to effect the Merger, the availability or advisability
of any alternatives to the Merger, or the price at which First Bancorp's common
stock will trade subsequent to the Merger. This opinion, and any supporting
analysis or other material supplied by us, may not be quoted, referred to, or
used in any public filing or in any written document or for any other purposes
without the prior written approval of Sterne, Agee & Leach, Inc.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the Exchange Ratio in the Merger is fair, from a financial
point of view, to the common shareholders of First Bancorp.
Yours truly,
/s/ Sterne, Agee & Leach, Inc.
Sterne, Agee & Leach, Inc.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 55-2-02 of the North Carolina Business Corporation Act enables
a corporation in its articles of incorporation to eliminate or limit, with
certain exceptions, the personal liability of directors for monetary damages for
breach of their duties as directors. No such provision is effective to eliminate
or limit a director's liability for: (i) acts or omissions that the director at
the time of the breach knew or believed to be clearly in conflict with the best
interests of the corporation; (ii) improper distributions as described in
Section 55-8-33 of the North Carolina Act; (iii) any transaction from which the
director derived an improper personal benefit; or (iv) acts or omissions
occurring prior to the date the exculpatory provision became effective. First
Bancorp's articles of incorporation limit the personal liability of its
directors to the fullest extent permitted by the North Carolina Act.
Sections 55-8-50 through 55-8-58 of the North Carolina Act permit a
corporation to indemnify its directors, officers, employees or agents under
either or both a statutory or nonstatutory scheme of indemnification. Under the
statutory scheme, a corporation may, with certain exceptions, indemnify a
director, officer, employee or agent of the corporation who was, is, or is
threatened to be made, a party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative, or
investigative because of the fact that such person was or is a director,
officer, agent or employee of the corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. This indemnity may include the obligation to pay any
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan) or reasonable expenses incurred in
connection with a proceeding (including counsel fees), but no such
indemnification may be granted unless such director, officer, employee or agent
(i) conducted himself in good faith, (ii) reasonably believed (a) that any
action taken in his official capacity with the corporation was in the best
interests of the corporation or (b) that in all other cases his conduct was not
opposed to the corporation's best interests, and (iii) in the case of any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. Whether a director has met the requisite standard of conduct for the
type of indemnification set forth above is determined by the board of directors,
a committee of directors, special legal counsel or the shareholders in
accordance with Section 55-8-55 of the North Carolina Act. A corporation may not
indemnify a director under the statutory scheme in connection with a proceeding
by or in the right of the corporation in which a director was adjudged liable to
the corporation or in connection with any other proceeding in which a director
was adjudged liable on the basis of having received an improper personal
benefit.
In addition to, and notwithstanding the conditions of and limitations
on, the indemnification described above under the statutory scheme, Section
55-8-57 of the North Carolina Act permits a corporation to indemnify, or agree
to indemnify, any of its directors, officers, employees or agents against
liability and expenses (including attorneys' fees) in any proceeding (including
proceedings brought by or on behalf of the corporation) arising out of their
status as such or their activities in such capacities, except for any
liabilities or expenses incurred on account of activities that were, at the time
taken, known or believed by the person to be clearly in conflict with the best
interests of the corporation. First Bancorp's bylaws provide for indemnification
to the fullest extent permitted under the North Carolina Act, and First Bancorp
has separate indemnification agreements with various current and past directors
and officers.
Because of its agreements to indemnify, First Bancorp may indemnify its
directors, officers, employees and agents in accordance with either the
statutory or nonstatutory standard. Sections 55-8-52 and 55-8-56 of the North
Carolina Act require a corporation, unless its articles of incorporation provide
otherwise, to indemnify a director or officer who has been wholly successful, on
the merits or otherwise, in the defense of any proceeding to which such director
or officer was, or was threatened to be, made a party because he is or was a
director or officer of the corporation. Unless prohibited by the articles of
incorporation, a director or officer also may make application and obtain
court-ordered indemnification if the court determines that such director or
officer is fairly and reasonably entitled to such indemnification as provided in
Sections 55-8-54 and 55-8-56 of the North Carolina Act.
Additionally, Section 55-8-57 of the North Carolina Act authorizes a
corporation to purchase and maintain insurance on behalf of an individual who is
or was a director, officer, employee or agent of the corporation against certain
liabilities incurred by such a person, whether or not the corporation is
otherwise authorized by the North Carolina Act to indemnify that person. First
Bancorp has purchased and maintains such insurance.
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ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed herein or have been, as noted,
previously filed:
EXHIBIT NO. DESCRIPTION
2.1 Merger Agreement, dated as of December 15, 1999, by and
among First Bancorp, First Bank, First Savings Bancorp,
Inc. and First Savings Bank of Moore County, Inc., SSB
(included as Appendix A to the Joint Proxy
Statement/Prospectus included as part of this Registration
Statement).
2.2 First Amendment and Waiver to Merger Agreement dated as of
March 24, 2000 (included as Appendix A to the Joint Proxy
Statement/Prospectus included as part of this Registration
Statement).
2.3 Second Amendment and Waiver to Merger Agreement dated as
of May 15, 2000 (included as Appendix A to the Joint Proxy
Statement/Prospectus included as part of this Registration
Statement)
3.1 Articles of Incorporation and amendments thereto, filed as
Exhibit 3(a) to First Bancorp's Registration Statement
Number 33-12692, is incorporated herein by reference.
3.2 Amendment to Articles of Incorporation, adding a new
Article Nine, filed as Exhibit 3(e) to First Bancorp's
Annual Report on Form 10-K for the year ended December 31,
1988, is incorporated herein by reference.
3.3 Amendment to Articles of Incorporation, adding a new
Article X, filed as Exhibit 3.a.iii to First Bancorp's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1999, is incorporated herein by reference.
3.4 Amendments to Article IV of Articles of Incorporation,
filed as Exhibit 3.a.iv to First Bancorp's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999,
as incorporated herein by reference.
3.5 Bylaws and amendments thereto, filed as Exhibit 3(b) to
First Bancorp's Annual Report on Form 10-KSB for the year
ended December 31, 1994, is incorporated herein by
reference.
3.6* Amendment to Section 3.04 of Article Three of the Bylaws
of First Bancorp.
3.7* Amendment to Section 3.19 of Article Three of the Bylaws
of First Bancorp.
4.1 Form of Common Stock Certificate, filed as Exhibit 4 to
First Bancorp's Registration Statement Number 33-12692, is
incorporated herein by reference.
4.2 Articles IV and V of the Articles of Incorporation
(included in Exhibit 3.1)
5.1 Opinion of Robinson, Bradshaw & Hinson, P.A., regarding
legality of common stock.
8.1 Opinion of KPMG LLP regarding federal income tax
consequences.
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10.1 Data processing Agreement dated October 1, 1984 by and
between Bank of Montgomery (First Bank) and Montgomery
Data Services, Inc., filed as Exhibit 10(k) to First
Bancorp's Registration Statement Number 33-12692, is
incorporated herein by reference.
10.2 First Bank Salary and Incentive Plan, as amended, filed as
Exhibit 10(m) to First Bancorp's Registration Statement
Number 33-12692, is incorporated herein by reference.
10.3 First Bancorp Savings Plus and Profit Sharing Plan (401(k)
savings incentive plan and trust), as amended January 25,
1994 and July 19, 1994, filed as Exhibit 10(c) to First
Bancorp's Annual Report on Form 10-KSB for the year ended
December 31, 1994, is incorporated herein by reference.
10.4 Directors and Officers Liability Insurance Policy of First
Bancorp, dated July 16, 1991, filed as Exhibit 10(g) to
First Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1991, is incorporated herein by
reference.
10.5 Indemnification Agreement between First Bancorp and its
Directors and Officers, filed as Exhibit 10(t) to First
Bancorp's Registration Statement Number 33-12692, is
incorporated herein by reference.
10.6 First Bancorp Employees' Pension Plan, as amended on
August 16, 1994, filed as Exhibit 10(g) to First Bancorp's
Annual Report on Form 10-KSB for the year ended December
31, 1994, is incorporated herein by reference.
10.7 First Bancorp Senior Management Supplemental Executive
Retirement Plan dated May 31, 1993, filed as Exhibit 10(k)
to First Bancorp's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993, is incorporated herein by
reference.
10.8 First Bancorp Senior Management Split-Dollar Life
Insurance Agreements between First Bancorp and the
Executive Officers, as amended on December 22, 1994, filed
as Exhibit 10(i) to First Bancorp's Annual Report on Form
10-KSB for the year ended December 31, 1994, is
incorporated herein by reference.
10.9 First Bancorp 1994 Stock Option Plan filed as Exhibit
10(n) to First Bancorp's Quarterly Report on Form 10-QSB
for the quarter ended March 31, 1994, is incorporated
herein by reference.
10.10 Severance Agreement between First Bancorp and Patrick A.
Meisky dated December 29, 1995, filed as Exhibit 10(o) to
First Bancorp's Annual Report on Form 10-KSB for the year
ended December 31, 1995, is incorporated by reference.
10.11 Amendment to the First Bancorp Savings Plus and Profit
Sharing Plan (401(k) savings incentive plan and trust),
dated December 17, 1996, filed as Exhibit 10(m) to First
Bancorp's Annual Report on Form 10-KSB for the year ended
December 31, 1996, is incorporated herein by reference.
10.12 First Amendment to the First Bancorp Senior Management
Executive Retirement Plan dated April 21, 1998, filed as
Exhibit 10(o) to First Bancorp's Annual Report on Form
10-K for the year ended December 31, 1998, is incorporated
herein by reference.
10.13 Employment Agreement between First Bancorp and James H.
Garner dated August 17, 1998, filed as Exhibit 10(l) to
First Bancorp's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, is incorporated by
reference.
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10.14 Employment Agreement between First Bancorp and Anna G.
Hollers dated August 17, 1998, filed as Exhibit 10(m) to
First Bancorp's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, is incorporated by
reference.
10.15 Employment Agreement between First Bancorp and Teresa C.
Nixon dated August 17, 1998, filed as Exhibit 10(n) to
First Bancorp's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998, is incorporated by
reference.
10.16 Employment Agreement between First Bancorp and Eric P.
Credle dated August 17, 1998, filed as Exhibit 10.p to
First Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1998, is incorporated herein by
reference.
10.17 Amendments 1 and 2 to First Bancorp's 1994 Stock Option
Plan filed as Exhibit 10.q to First Bancorp's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999,
is incorporated by reference.
10.18 Employment Agreement between First Bancorp and David C.
Grigg dated August 17, 1998, filed as Exhibit 10.r to
First Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1999, is incorporated herein by
reference.
10.19 Stock Option Agreement, filed as Exhibit 99.3 to First
Bancorp's Current Report on Form 8-K dated December 21,
1999, is incorporated herein by reference.
10.20 Stock Option Agreement, filed as Exhibit 99.4 to First
Bancorp's Current Report on Form 8-K dated December 21,
1999, is incorporated herein by reference.
21.1 List of subsidiaries of First Bancorp, filed as Exhibit 21
to First Bancorp's Annual Report on Form 10-K for the year
ended December 31, 1994, is incorporated herein by
reference.
23.1 Consent of Robinson, Bradshaw & Hinson, P.A. (included in
Exhibit 5.1)
23.2 Consents of KPMG LLP
23.3 Consent of Dixon, Odom PLLC
23.4 Consent of Sterne, Agee & Leach, Inc.
23.5 Consent of Ferguson & Company
23.6* Consent of Virginia C. Brandt
23.7* Consent of H. David Bruton, M.D.
23.8* Consent of John F. Burns
23.9* Consent of Felton J. Capel
23.10* Consent of Frank G. Hardister
23.11* Consent of Thomas F. Phillips
23.12* Consent of William E. Samuels
23.13* Power of Attorney of Jack D. Briggs
II-4
<PAGE> 172
23.14* Power of Attorney of David L. Burns
23.15* Power of Attorney of Jesse S. Capel
23.16* Power of Attorney of George R. Perkins, Jr.
23.17* Power of Attorney of G.T. Rabe, Jr.
23.18* Power of Attorney of Edward T. Taws
23.19* Power of Attorney of Frederick H. Taylor
23.20* Power of Attorney of Goldie H. Wallace
23.21* Power of Attorney of A. Jordan Washburn
23.22* Power of Attorney of John C. Willis
23.23* Power of Attorney of James H. Garner
23.24* Power of Attorney of Eric P. Credle
99.1 First Bancorp Form of Proxy
99.2 First Savings Form of Proxy
- -------------------
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference into the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by person who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable Form.
(3) That every prospectus (i) that is filed pursuant to Paragraph (2)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933 and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the
II-5
<PAGE> 173
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(6) 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-6
<PAGE> 174
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Troy, North
Carolina, on May 16, 2000.
First Bancorp
(Registrant)
By: /s/ James H. Garner
--------------------
James H. Garner
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 16, 2000.
EXECUTIVE OFFICERS
/s/ James H. Garner
-------------------
James H. Garner
President and
Chief Executive Officer
/s/ Anna G. Hollers /s/ Eric P. Credle
- ----------------------------- ---------------------------
Anna G. Hollers Eric P. Credle
Executive Vice President Senior Vice President and
Chief Financial Officer
BOARD OF DIRECTORS
/s/ Jack D. Briggs * /s/ Edward T. Taws *
- ----------------------------- ---------------------------
Jack D. Briggs Edward T. Taws
Chairman of the Board Director
Director
/s/ David L. Burns * /s/ Frederick H. Taylor *
- ----------------------------- ---------------------------
David L. Burns Frederick H. Taylor
Director Director
/s/ Jesse S. Capel * /s/ Goldie H. Wallace *
- ----------------------------- ---------------------------
Jesse S. Capel Goldie H. Wallace
Director Director
/s/ George R. Perkins, Jr. * /s/ A. Jordan Washburn *
- ----------------------------- ---------------------------
George R. Perkins, Jr. A. Jordan Washburn
Director Director
/s/ G.T. Rabe, Jr. * /s/ John C. Willis *
- ----------------------------- ---------------------------
G.T. Rabe, Jr. John C. Willis
Director Director
* By: /s/ Anna G. Hollers
Anna G. Hollers
Executive Vice President
II-7
<PAGE> 1
EXHIBIT 5.1
[ROBINSON, BRADSHAW & HINSON, P.A. LETTERHEAD]
May 15, 2000
First Bancorp
341 North Main Street
P.O. Box 508
Troy, North Carolina 27371-0508
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We refer to the registration statement, as amended (the "Registration
Statement), of First Bancorp, a North Carolina corporation (hereinafter referred
to as the "Company"), filed with the Securities and Exchange Commission for the
purpose of registering under the Securities Act of 1933, as amended, 4,820,000
shares of the Company's common stock, no par value per share (the "Shares"), in
connection with the Company's proposed acquisition of First Savings Bancorp,
Inc., a North Carolina corporation. We have examined the Articles of
Incorporation and the Bylaws of the Company, minutes of applicable meetings of
the Board of Directors of the Company and other Company records, together with
applicable certificates of public officials and other documents that we have
deemed relevant.
Based upon the foregoing and subject to the conditions set forth below,
it is our opinion that the Shares, when sold as contemplated by the Registration
Statement, will be legally issued, fully paid and nonassessable. The opinions
expressed herein are conditional upon the Company's Articles of Incorporation
and Bylaws not being further amended prior to the issuance or sale of any
Shares. This opinion is limited to the laws of the State of North Carolina, and
we express no opinion with respect to the laws of any other state or
jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
ROBINSON, BRADSHAW & HINSON, P.A.
/s/ Henry H. Ralston
Henry H. Ralston
<PAGE> 1
EXHIBIT 8.1
[KPMG LETTERHEAD]
May 15, 2000
Board of Directors
First Savings Bancorp, Inc.
Post Office Box 1657
205 S.E. Broad Street
Southern Pines, North Carolina 28388-1657
Board of Directors
First Bancorp
341 North Main Street
Post Office Box 508
Troy, North Carolina 27371-0508
Gentlemen:
You have requested the opinion of KPMG LLP ("KPMG") regarding certain federal
and North Carolina income tax consequences resulting from certain proposed
transactions. In the first proposed transaction, First Savings Bancorp, Inc.
(the "Company"), a savings bank holding company, will merge with and into First
Bancorp (the "Buyer"), a bank holding company, (the "Holding Company Merger").
Pursuant to the Holding Company Merger, the separate existence of Company will
cease, and each outstanding share of Company Common Stock will be converted into
newly issued shares of Buyer Common Stock. In the second proposed transaction,
occurring as soon as reasonably practicable after the filing of the Articles of
Merger in respect of the Holding Company Merger, First Savings Bank of Moore
County, Inc., SSB, (the "Company Bank"), a wholly-owned savings bank subsidiary
of Company, will merge with and into First Bank ("Buyer Bank"), the wholly-owned
bank subsidiary of Buyer, (the "Bank Merger"), whereupon the separate existence
of Company Bank will cease (the "Bank Merger").
You have submitted for our consideration:
- - certain representations as to the proposed transaction;
- - a copy of the Merger Agreement, as amended and the related Plan of
Merger dated December 15, 1999 (collectively, the "Merger Agreement");
and,
- - a copy of the Form S-4 Registration Statement, as amended, filed with
the Securities and Exchange Commission ("SEC") on May 16, 2000 (the
Merger Agreement and the Form S-4 collectively being the "Documents").
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
description of the steps in the Documents.
FACTS AND REPRESENTATIONS
Buyer is a registered one-bank holding company organized under the laws of the
State of North Carolina. Buyer's authorized capital stock consists of one class.
It has authorized 12,500,000 shares of Common Stock, no par value, of which
4,506,651 shares were issued and outstanding at May 11, 2000 (the "Buyer Common
Stock"). Buyer Bank, a North Carolina corporation, is a wholly-owned bank
subsidiary of Buyer.
<PAGE> 2
Company is a registered savings bank holding company organized under the laws of
the State of North Carolina. Its authorized capital stock consists of two
classes. It has authorized 20,000,000 shares of Common Stock, no par value per
share, of which 3,526,157 shares were issued and outstanding at May 11, 2000
(the "Company Common Stock"). It also has 5,000,000 shares of Preferred Stock,
no par value per share, none of which were issued and outstanding at March 31,
2000. Company Bank, a North Carolina corporation, is a wholly-owned stock
savings bank subsidiary of Company.
For valid corporate business purposes, pursuant to the Merger Agreement and on
the "Effective Time" (as that term is defined in the Merger Agreement), Company
will merge with and into Buyer, with Buyer as the surviving entity. In the
Holding Company Merger, each share of Company Common Stock will be exchanged for
1.2468 shares of Buyer Common Stock. Under certain limited circumstances, the
1.2468 exchange ratio could be increased pursuant to certain provisions of the
Merger Agreement. Under no circumstances will the exchange ratio be less than
1.2468 shares of Buyer Common Stock for each share of Company Common Stock. An
adjustment will occur only if Company's Board of Directors terminates the Merger
Agreement. At that time, Buyer can choose to avoid termination of the Merger
Agreement by increasing the exchange ratio.
No fractional shares of Buyer Common Stock will be issued in connection with the
Holding Company Merger. Instead, each Company shareholder who would otherwise be
entitled to receive a fraction of a share of Buyer Common Stock shall receive
cash (without interest) in an amount equal to the fraction of a share of Buyer
Common Stock that otherwise would be received in the Holding Company Merger,
multiplied by the closing price of one share of Buyer Common Stock on the Nasdaq
National market System on the last trading day before the Holding Company Merger
is completed.
The Holding Company Merger has been approved by the Boards of Directors of
Company and Buyer and is subject to the receipt of regulatory approval from
appropriate parties, including the Board of Governors of the Federal Reserve
System. Additionally, the Bank Merger is also subject to the approval of the
Federal Reserve, the FDIC, the North Carolina Banking Commission, and the
Administrator of the Savings Institutions Division of the North Carolina
Department of Commerce.
In addition to the foregoing statement of facts, the following representations
have been made by Buyer and/or Company, as applicable, to KPMG in connection
with the Holding Company Merger. KPMG has not independently verified the
completeness and accuracy of any of the following representations. KPMG is
relying on these representations in rendering the opinion contained herein.
With respect to the Holding Company Merger:
(a) The fair market value of the Buyer Common Stock and other consideration
received by each shareholder of Company will be approximately equal to
the fair market value of the Company Common Stock surrendered in the
exchange.
(b) Neither Buyer, the Company, nor any subsidiary or related person has any
plan or intention to acquire any of Buyer shares issued in the Holding
Company Merger or to acquire any share of Company prior to the Holding
Company Merger.
For purposes of this representation, two persons are "related" if the
persons are corporations and either immediately before or immediately
after a transaction are members of the same "affiliated group."
"Affiliated group" for these purposes generally means two or more
corporations currently linked or which pursuant to a plan will be linked
with a common parent company through ownership changes comprising at
least 80 percent of the voting power of each corporation and 80 percent
of the value of each corporation's shares. In addition, "related person"
includes two or more corporations for whom a purchase of the stock of one
corporation by another corporation would be treated as a distribution in
redemption of the stock of the first corporation. This treatment as a
distribution in redemption occurs (a) when a person holding any amount of
shares in a parent corporation or, (b) when a person in control of each
of two corporations sells shares of one controlled corporation to the
other corporation. For these purposes, "control" means the ownership of
shares possessing at least
<PAGE> 3
50 percent of the value (or vote) of all classes of shares. Ownership of
shares is determined with reference to constructive ownership provisions
which attribute ownership between corporations and their five-percent or
more shareholders, partnerships and their partners, and trusts and their
beneficiaries, and between certain members of a family. In the case of an
acquisition by a partnership, each partner shall be treated as owning or
acquiring any stock owned or acquired, as the case may be, by the
partnership in accordance with that partner's interest in the
partnership.
(c) Buyer has no plan or intention to sell or otherwise dispose of any of the
assets of target acquired in the transaction, 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. (Unless
stated otherwise, all section references herein are to this Code.)
(d) The liabilities of Company assumed by Buyer and the liabilities to which
the transferred assets of Company are subject were incurred by Company in
the ordinary course of its business.
(e) Following the Holding Company Merger, Buyer will continue the historical
business of Company or use a significant portion of the historic business
assets of Company in a business.
(f) Buyer, Company, and the shareholders of Company will pay their respective
expenses, if any, incurred in connection with the Holding Company Merger.
(g) There is no intercorporate indebtedness existing between Buyer and
Company that was issued, acquired, or will be settled at a discount.
(h) No two parties to the Holding Company Merger are investment companies as
defined in SECTION 368(a)(2)(F)(iii) AND (iv).
(i) On the date of the Holding Company Merger, the fair market value of the
assets of Company will equal or exceed the sum of its liabilities
assumed, plus the amount of liabilities, if any, to which the assets are
subject.
(j) Company is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of SECTION 368(a)(3)(A).
(k) None of the compensation received by any shareholder-employees of Company
or Company Bank will be separate consideration for, or allocable to, any
of their shares of Company Common Stock; none of the shares of Buyer
Common Stock received by any shareholder-employee of Company or Company
Bank will be separate consideration for, or allocable to, any employment
agreement; and the compensation to be paid to any shareholder-employees
of Company or Company Bank will be for services actually rendered and
will be commensurate with amounts paid to third parties bargaining at
arm's length for similar services.
(l) The distribution of cash proceeds to Company shareholders in lieu of
fractional shares of Buyer will be made solely for the purpose of
avoiding the expense and inconvenience of issuing fractional shares and
does not represent separately bargained for consideration.
(m) The Holding Company Merger will qualify as a statutory merger under North
Carolina law.
With respect to the Bank Merger:
(n) In the Bank Merger, Company Bank will merge with and into Buyer Bank. At
the time of the Bank Merger, Buyer will be the sole shareholder of both
Company Bank and Buyer Bank. As the sole shareholder, Buyer will be
indifferent whether it receives actual shares of Buyer Bank Common Stock
in exchange for its stock in Company Bank and as a result of the Bank
Merger. For this
<PAGE> 4
reason, Buyer Bank will not actually issue its Common Stock in
consideration for the assets of Company Bank in the Bank Merger, such an
issuance being a meaningless gesture.
(o) Neither Buyer Bank, Company Bank, nor any subsidiary or related person
has any plan or intention to acquire any of Buyer Bank shares issued or
deemed issued in the Bank Merger or to acquire any share of Company Bank
prior to the Bank Merger.
For purposes of this representation, two persons are "related" if the
persons are corporations and either immediately before or immediately
after a transaction are members of the same "affiliated group."
"Affiliated group" for these purposes generally means two or more
corporations currently linked or which pursuant to a plan will be linked
with a common parent company through ownership changes comprising at
least 80 percent of the voting power of each corporation and 80 percent
of the value of each corporation's shares. In addition, "related person"
includes two or more corporations for whom a purchase of the stock of one
corporation by another corporation would be treated as a distribution in
redemption of the stock of the first corporation. This treatment as a
distribution in redemption of the stock of the first corporation. This
treatment as a distribution in redemption occurs (a) when a person
holding any amount of shares in a parent corporation or, (b) when a
person in control of each of two corporations sells shares of one
controlled corporation to the other corporation. For these purposes,
"control" means the ownership of shares possessing at least 50 percent of
the value (or vote) of all classes of shares. Ownership of shares is
determined with reference to constructive ownership provisions which
attribute ownership between corporations and their five-percent or more
shareholders, partnerships and their partners, and trusts and their
beneficiaries, and between certain members of a family. In the case of an
acquisition by a partnership, each partner shall be treated as owning or
acquiring any stock owned or acquired, as the case may be, by the
partnership in accordance with that partner's interest in the
partnership.
(p) Buyer Bank has no plan or intention to sell or otherwise dispose of any
of the assets of Company Bank acquired in the Bank Merger, except for
dispositions made in the ordinary course of business or transfers
described in SECTION 368(a)(2)(C).
(q) The liabilities of Company Bank assumed by Buyer Bank and the liabilities
to which the transferred assets of Company Bank are subject were incurred
by Company Bank in the ordinary course of business.
(r) Following the Bank Merger, Buyer Bank will continue the historical
business of Company Bank or use a significant portion of the historic
business assets of Company Bank in a business.
(s) Buyer Bank, Company Bank, and the shareholders of Company Bank will pay
their respective expenses, if any, incurred in connection with the Bank
Merger.
(t) There is no intercorporate indebtedness existing between Buyer Bank and
Company Bank that was issued, acquired, or will be settled at a discount.
(u) No two parties to the Bank Merger are investment companies as defined in
SECTION 368(a)(2)(F)(iii) AND (iv).
(v) On the date of the Bank Merger, the fair market value of the assets of
Company Bank transferred to Buyer Bank will equal or exceed the sum of
the liabilities assumed by Buyer Bank, plus the amount of liabilities, if
any, to which the transferred assets are subject.
(w) Company Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of SECTION 368(a)(3)(A).
<PAGE> 5
(x) The total adjusted tax basis of the assets of Company Bank transferred to
Buyer Bank will equal or exceed the sum of the liabilities assumed by
Buyer Bank, plus the amount of liabilities, if any, to which the
transferred assets are subject.
(y) The Bank Merger will qualify as a statutory merger under North Carolina
law.
OPINIONS
Based solely on the Documents, the above FACTS AND REPRESENTATIONS and subject
to the SCOPE OF THE OPINIONS below, it is the opinion of KPMG that:
Federal Income Tax Consequences:
(1) The Holding Company Merger will constitute a tax-free reorganization
within the meaning of SECTION 368(a).
(2) Company and Buyer will each be a party to the reorganization within the
meaning of SECTION 368(b).
(3) No gain or loss will be recognized by Buyer as a transferee of assets
and liabilities of Company, a party to the reorganization, in the
Holding Company Merger in exchange for stock. SECTION 1032; TREAS.
REG. SECTION 1.1032-2.
(4) No gain or loss will be recognized by a shareholder of Company upon the
receipt of solely Buyer Common Stock (including any fractional share
interests to which they may be entitled) in exchange for his or her
shares of Company Common Stock. SECTION 354(a)(1).
(5) The basis of a share of Buyer Common Stock received by a shareholder of
Company (including any fractional share interests to which they may be
entitled) will be the same as the basis in the Company Common Stock
surrendered in the exchange therefor. SECTION 358(a)(1).
(6) The holding period of a share of Buyer Common Stock received by the
shareholder of Company (including any fractional share interests to
which they may be entitled) will include the shareholder's holding
period of the Company Common Stock surrendered in exchange therefor,
provided that the Company Common Stock is held as a capital asset in
the hands of the shareholder of Company on the date of the Merger.
SECTION 1223(1).
(7) The payment of cash in lieu of fractional share interests of Buyer
Common Stock will be treated as if the fractional share interests of
Buyer Common Stock were distributed as part of the Holding Company
Merger to the Company shareholder and then redeemed by Buyer. The cash
payments will be treated as having been received as distributions in
full payment for the fractional share interests redeemed as provided in
SECTION 302(a). REV. RUL. 66-365, 1966-2 C.B. 116 and REV. PROC. 77-41,
1977-2 C.B. 574.
(8) No gain or loss will be recognized by Company upon the transfer of its
assets, subject to its liabilities, to Buyer in the Holding Company
Merger. SECTIONS 357(a) and 361(a).
(9) The basis of the assets of Company in the hands of Buyer will be the
same, in each instance, as the basis of such assets in the hands of
Company immediately prior to the Holding Company Merger. SECTION
362(b).
(10) The holding period of the assets of Company in the hands of Buyer will
include, in each instance, the period during which such assets were
held by Company immediately prior to the Holding Company Merger.
SECTION 1223(2).
<PAGE> 6
(11) For purposes of SECTION 381, Buyer will be the acquiring corporation.
TREAS. REG. SECTION 1.381(a)-1(b)(2). Thus, except as otherwise
provided in SECTIONS 382, 383, AND 384, Buyer will succeed to and take
into account the items of Company described in SECTION 381(c). SECTION
381(a) AND TREAS. REG. SECTION 1.381(a)-1.
(12) The Bank Merger will constitute a reorganization within the meaning of
SECTION 368(a) of the Code.
(13) Each of Buyer Bank and Company Bank will be a party to the
reorganization within the meaning of SECTION 368(b).
(14) No gain or loss will be recognized by Company Bank upon the transfer of
its assets, subject to its liabilities, to Buyer Bank in the Bank
Merger. SECTIONS 357(a) and 361(a).
(15) No gain or loss will be recognized by Buyer Bank upon the receipt of
the assets of Company Bank, subject to its liabilities, in constructive
exchange for its Common Stock, in the Bank Merger. SECTION 1032.
(16) The basis of the assets of Company Bank in the hands of Buyer Bank will
be the same, in each instance, as the basis of such assets in the hands
of Company Bank immediately prior to the Bank Merger. SECTION 362(b).
(17) The holding period of the assets of Company Bank in the hands of Buyer
Bank will include, in each instance, the period during which such
assets were held by Company Bank immediately prior to the Bank Merger.
SECTION 1223(2).
(18) No gain or loss will be recognized by Buyer upon the constructive
receipt of Buyer Bank Common Stock in exchange for its Company Bank
stock as a result of the Bank Merger. SECTION 354(a)(1).
(19) For purposes of SECTION 381, Buyer Bank will be the acquiring
corporation. TREAS. REG. SECTION 1.381(a)-1(b)(2). Thus, except as
otherwise provided in SECTIONS 382, 383, AND 384, Buyer Bank will
succeed to and take into account the items of Company described in
SECTION 381(c). SECTION 381(a) AND TREAS. REG. SECTION 1.381(a)-1.
North Carolina Income Tax Consequences:
It is our opinion that the State of North Carolina for income tax purposes will
treat the Holding Company Merger and the Bank Merger in the same manner as
treated by the Internal Revenue Service for federal income tax purposes. N.C.
GEN. STAT. SECTIONS 105-120.2, 105-130.3, 105-130.5, 105-134.1, 105-134.2,
105-134.5, 105-134.6, AND 105-134.7.
In certain circumstances, which do not apply based on the instant facts and
representations, North Carolina may apply a more stringent test in determining
the availability of certain net economic losses (equivalent to a net operating
loss) subsequent to a merger. BELLSOUTH TELECOMMUNICATIONS, INC. V. NORTH
CAROLINA DEPARTMENT OF REVENUE, 485 S.E.2d 333 (N.C. CT. APP. 1997), REVIEW
DENIED 492 S.E.2d 18 (N.C. SEPT. 4, 1997).
SCOPE OF THE OPINIONS
The opinions contained herein are based upon the facts, assumptions and
representations set forth in this letter, as well as the information contained
in the Documents. You represented to us that you have provided us with all facts
and circumstances that you know or have reason to know are pertinent to this
opinion letter. If any of these facts, assumptions or representations are not
entirely complete or accurate, it
<PAGE> 7
is imperative that we be informed immediately in writing because the
incompleteness or inaccuracy could cause us to change our opinions.
Our advice in this opinion letter is limited to the conclusions specifically set
forth herein under the heading OPINIONS. KPMG expresses no opinion with respect
to any other federal, state, local, or foreign tax or legal aspect of the
transactions described herein. No inference should be drawn on any matter not
specifically opined on above.
In rendering our opinions, we are relying upon the relevant provisions of the
Internal Revenue Code of 1986, as amended, the North Carolina Code, the
regulations thereunder, and judicial and administrative interpretations thereof,
all as in effect on the date of this letter. These authorities are subject to
change or modification retroactively and/or prospectively and any such changes
could affect the validity or correctness of our opinion. We will not update our
advice for subsequent changes or modifications to the law and regulations or to
the judicial and administrative interpretations thereof, unless you separately
engage us to do so in writing after such subsequent change or modification.
These opinions are not binding on the Internal Revenue Service, any other tax
authority, or any court, and no assurance can be given that a position contrary
to that expressed herein will not be asserted by a tax authority and ultimately
sustained by a court.
Sincerely,
\s\ KPMG LLP
- --------------------------------------------
KPMG LLP
<PAGE> 1
EXHIBIT 23.2
Consents of KPMG
Consent of Independent Auditors
The Board of Directors
First Bancorp
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the joint proxy
statement/prospectus.
/s/ KPMG LLP
- ----------------------------------
Raleigh, North Carolina
May 15, 2000
<PAGE> 2
Tax Advisors' Consent
The Board of Directors
First Bancorp
Board of Directors
First Bancorp
We consent to the inclusion of our tax opinion dated May 15, 2000, regarding the
federal and North Carolina income tax consequences of the Merger in 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 heading "Expected Tax Treatment As A Result Of The Merger" in
the Prospectus/Proxy Statement.
/s/ KPMG LLP
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Raleigh, North Carolina
May 15, 2000
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors
First Bancorp
Troy, North Carolina
We consent to the use in Pre-Effective Amendment No. 1 to the Registration
Statement of First Bancorp on Form S-4 of our report dated July 23, 1999 on the
consolidated financial statements of First Savings Bancorp, Inc. and Subsidiary
as of and for the years ended June 30, 1999 and 1998, and to the reference to
our firm under the reference "experts" in the Registration Statement.
/s/ Dixon Odom PLLC
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Sanford, North Carolina
May 15, 2000
<PAGE> 1
EXHIBIT 23.4
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 First Bancorp, included as Appendix C to
the Proxy Statement/Prospectus that is a part of this Registration Statement,
and to the references to such letter and to our firm in such Prospectus. By
giving such consent, we do not thereby admit that we are experts with respect to
any part of such Registration Statement within the meaning of the term "expert"
as used therein, or that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
/s/ Sterne, Agee & Leach, Inc.
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STERNE, AGEE & LEACH, INC.
Atlanta, Georgia
May 15, 2000
<PAGE> 1
EXHIBIT 23.5
Consent of Ferguson & Company
We hereby consent to the reference to our fairness opinion letter to
the Board of Directors of First Savings Bancorp, Inc. in the Proxy
Statement/Prospectus constituting part of this Registration Statement.
Ferguson & Company
/s/ Robin L. Fussell
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Robin L. Fussell
Principal
Hurst, Texas
May 15, 2000
<PAGE> 1
EXHIBIT 99.1
REVOCABLE
APPOINTMENT
OF PROXY
FIRST BANCORP
SPECIAL AND ANNUAL MEETING OF SHAREHOLDERS
to be held on June 27, 2000 at 3:00 P.M.
THIS APPOINTMENT OF PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints James H. Garner and Anna G.
Hollers, jointly and individually, as Proxies with full power of substitution to
act and vote for and on behalf of the undersigned, as designated below, all the
common shares of First Bancorp (the "Company") held of record by the undersigned
on May 11, 2000, at the special and annual meeting of shareholders to be held at
3:00 p.m. at the main office of the Company, 341 North Main Street, Troy, North
Carolina 27371 on June 27, 2000 or any postponement or adjournment thereof.
1. PROPOSAL TO APPROVE THE MERGER AGREEMENT AND PLAN OF MERGER WITH FIRST
SAVINGS BANCORP, INC.
/ / FOR / / AGAINST / / ABSTAIN
2. PROPOSAL TO ISSUE COMMON STOCK OF THE COMPANY IN CONNECTION WITH THE
MERGER WITH FIRST SAVINGS BANCORP, INC.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO AMEND THE COMPANY'S BYLAWS TO INCREASE THE MAXIMUM NUMBER
OF DIRECTORS ON THE BOARD TO 18 AND TO AUTHORIZE THE BOARD OF DIRECTORS
TO ESTABLISH THE NUMBER OF DIRECTORS ON THE BOARD, UP TO THE MAXIMUM
NUMBER
/ / FOR / / AGAINST / / ABSTAIN
4. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C>
/ / FOR all nominees listed below (11 nominees / / WITHHOLD / / FOR ALL
if Proposals 1, 2 and 3 are not approved; EXCEPT
18 nominees if Proposals 1, 2 and 3 are
approved)
(except as marked to the contrary below)
</TABLE>
11 Nominees: James H. Garner, Jack D. Briggs, David L. Burns,
Jesse S. Capel, George R. Perkins, Jr., G.T. Rabe, Jr.,
Edward T. Taws, Frederick H. Taylor, Goldie H. Wallace,
A. Jordan Washburn, John C. Willis
7 Conditional Nominees: Virginia C. Brandt, H. David Bruton, M.D.,
John F. Burns, Felton J. Capel,
Frank G. Hardister, Thomas F. Phillips,
William E. Samuels
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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5. PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' APPOINTMENT OF KPMG LLP AS
THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER
31, 2000
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
THE PROXIES WILL VOTE FOR THE ELECTION OF ALL DIRECTOR NOMINEES NAMED
HEREIN AND FOR ALL THE PROPOSALS UNLESS THE SHAREHOLDER DIRECTS OTHERWISE, IN
WHICH CASE THE PROXIES WILL VOTE AS DIRECTED.
The undersigned acknowledges receipt of the Notice of Special and
Annual Meeting and Joint Proxy Statement/Prospectus dated May 16, 2000, and
revokes all Appointments of Proxy heretofore given by the undersigned.
<PAGE> 2
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
DATED: , 2000
----------------------------
------------------------------------------
Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
<PAGE> 1
EXHIBIT 99.2
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
FIRST SAVINGS BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
JUNE 26, 2000 - 4:00 P.M.
The undersigned hereby appoints W. Harrell Johnson and Felton J. Capel, and
each of them, as Proxies, each with power to appoint his or her substitute , and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of common stock of First Savings Bancorp, Inc., that the undersigned is
entitled to vote at the Special Meeting of Shareholders to be held on June 26,
2000 or at any adjournments thereof. The affirmative vote of a majority of the
shares represented at the meeting may authorize the adjournment of the meeting;
provided, however, that no proxy that is voted against the Merger Agreement
among First Bancorp, First Bank, First Savings Bancorp, Inc. and First Savings
Bank of Moore County, Inc., SSB dated December 15, 1999, as amended by an
Amendment and Waiver Agreement dated March 24, 2000 and a Second Amendment and
Waiver Agreement dated May 15, 2000 (the "Agreement") will be voted in favor of
adjournment to solicit further proxies for such proposal.
1. Adoption of the Agreement and the related Plan of Merger pursuant to which
First Savings Bancorp, Inc. will merge into First Bancorp, with First
Bancorp being the surviving corporation.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1, THE ADOPTION OF THE
AGREEMENT AND RELATED PLAN OF MERGER.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE ABOVE SIGNED SHAREHOLDER, BUT IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ITEM 1. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF FIRST SAVINGS BANCORP,
INC.
Please be sure to sign and date this Proxy in the box below.
Date
Shareholder sign above Co-holder (if any) sign above
+ +
- --------------------------------------------------------------------------------
- DETACH ABOVE CARD, DATE, SIGN AND MAIL IN POSTAGE-PAID ENVELOPE PROVIDED. -
FIRST SAVINGS BANCORP, INC.
Please sign exactly as your name appears on this proxy. When shares are held by
joint tenants, both may sign, but only one signature is required. When signing
as attorney-in-fact, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, partnership or other entity, please sign
in full corporate, partnership or other entity name by president or other
authorized person. The above signed acknowledges receipt from First Savings
Bancorp, Inc. prior to the execution of this proxy, of the Notice of Special
Meeting and the related Proxy Statement/Prospectus.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
