As filed with the Securities and Exchange Commission on July 2, 1996
Registration No. 333-4949
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NUMBER ONE
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CENTURA BANKS, INC.
(Exact Name of Registrant as Specified in its Charter)
North Carolina 6712 56-1688522
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Classification Identification No.)
Incorporation or Code Number)
Organization)
134 North Church Street
Rocky Mount, North Carolina 27804
(919) 977-4400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
JOSEPH A. SMITH, JR.
General Counsel and ALEXANDER M. DONALDSON
Corporate Secretary Moore & Van Allen, PLLC
CENTURA BANKS, INC. with copy to: One Hannover Square, Suite 1700
134 North Church Street Fayetteville Street Mall
Rocky Mount, North Carolina 27804 Raleigh, North Carolina 27601
(919) 977-4400 (919) 828-4481
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after the merger (the "Merger") described in this
Registration Statement becomes effective.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. |_|
This registration statement covers additional shares of the common stock of the
Registrant which may be issued to prevent dilution resulting from a stock split,
stock dividend or similar transaction involving the common stock of the
Registrant, pursuant to Rule 416.
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 which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), shall
determine.
CENTURA BANKS, INC.
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K Showing the
Location in the Proxy Statement-Prospectus of the Responses to the Items of Part
I of Form S-4
<TABLE>
<CAPTION>
Item
Number Caption Caption Or Location In Proxy Statement-Prospectus
<S> <C>
A. Information About The Transaction
1. Forepart of Registration Statement Outside Front Cover of Proxy Statement;
and Outside Front Cover Page of Facing Page of Registration Statement;
Prospectus Cross-Reference Sheet
2. Inside Front and Outside Back Cover Available Information; Documents
of Prospectus Incorporated by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Summary; Comparative Market Prices and
Fixed Charges and Other Information Dividends; Comparative Per Share Data
4. Terms of the Transaction Summary; Description of Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Centura
Capital Stock
5. Pro Forma Financial Information Documents Incorporated by Reference; Pro
Forma Combined Condensed Financial
Information and Capitalization
6. Material Contacts with the Company Summary; Description of Transaction
Being Acquired
7. Additional Information Required for Not applicable
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interest of Named Experts and Counsel Opinions
9. Disclosure of Commission Position on Not applicable
Indemnification for Securities Act
Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Available Information; Documents Incorporated by R
Registrants Reference; Summary; Information About Centura
11. Incorporation of Certain Information Documents Incorporated by Reference
by Reference
12. Information with Respect to S-2 or Not Applicable
S-3 Registrants
13. Incorporation of Certain Information Not Applicable
by Reference
14. Information with Respect to Not Applicable
Registrants Other Than S-2 or S-3
Registrants
C. Information About the Company Being
Acquired
l5. Information with Respect to S-3 Not Applicable
Companies
16. Information with Respect to S-2 or Available Information; Documents
S-3 Companies Incorporated by Reference; Summary;
Information About First Community
17. Information with Respect to Companies Not Applicable
Other Than S-2 or S-3 Companies
D. Voting and Management Information
18. Information if Proxies, Consents, or Documents Incorporated by Reference;
Authorizations are to be Solicited Summary; Special Meeting of First
Community Stockholders; Description of
Transaction; Information About First
Community; Information About Centura;
Description of Centura Capital Stock
19. Information if Proxies, Consents, or Not Applicable
Authorizations are not to be
Solicited or in an Exchange Offer
</TABLE>
LETTERHEAD OF FIRST COMMUNITY
July 8,1996
To the Stockholders of
First Community Bank:
You are cordially invited to attend a Special Meeting of the Stockholders
(the "Special Meeting") of First Community Bank ("First Community") to be held
at the Gaston County Public Library, 1555 East Garrison Boulevard, Gastonia,
North Carolina, 28054, at 11:00 A.M., local time, on Wednesday, August 7, 1996,
notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Reorganization and Merger, dated as
of April 4, 1996 (the "Agreement"), which provides for the merger (the "Merger")
of First Community with and into Centura Bank, with Centura Bank the surviving
corporation resulting from the Merger. Upon consummation of the Merger, each
share of First Community common stock issued and outstanding will be exchanged
for 0.96 of a share of Centura Banks, Inc. common stock (subject to possible
adjustment as described in the accompanying Proxy Statement/Prospectus), with
cash being paid in lieu of issuing fractional shares.
Enclosed are the (i) Notice of Special Meeting, (ii) Proxy
Statement/Prospectus, (iii) Proxy for the Special Meeting, (iv) First
Community's Annual Report to Stockholders for the year ended December 31, 1995,
and (v) First Community's Quarterly Report on Form F-4 for the three months
ended March 31, 1996. The Proxy Statement/Prospectus describes in more detail
the Agreement and the proposed Merger, including a description of the conditions
to consummation of the Merger and the effects of the Merger on the rights of
First Community stockholders. Please read these materials carefully and consider
thoughtfully the information set forth in them.
The Board of Directors has unanimously approved the Agreement and
consummation of the Merger contemplated thereby, and unanimously recommends that
you vote FOR approval of the Agreement.
It is important to understand that approval of the Agreement will require
the affirmative vote of two-thirds of the votes entitled to be cast at the
Special Meeting by the holders of the issued and outstanding shares of First
Community common stock. Accordingly, whether or not you plan to attend the
Special Meeting, you are urged to complete, sign, and return promptly the
enclosed proxy card. If you attend the Special Meeting, you may vote in person
if you wish, even if you previously have returned your proxy card. The proposed
Merger with Centura is a significant step for First Community and your vote on
this matter is of great importance.
On behalf of the Board of Directors, I urge you to vote FOR approval of the
Agreement by marking the enclosed proxy card "FOR" item one.
We look forward to seeing you at the Special Meeting.
Sincerely,
DONALD R. LINEBERGER
Chairman and Chief Executive Officer
FIRST COMMUNITY BANK
100 EAST GARRISON BOULEVARD
Gastonia, North Carolina 28052
(704) 868-4251
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held at 11:00 a.m. on August 7, 1996
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the
"Special Meeting") of First Community Bank ("First Community") will be held at
the Gaston County Public Library, 1555 East Garrison Boulevard, Gastonia,
North Carolina, 28054, on Wednesday, August 7, 1996, at 11:00 A.M., local
time, for the following purposes:
1. Merger. To consider and vote upon a proposal to approve an Agreement and
Plan of Reorganization and Merger, dated as of April 4, 1996 (the "Agreement"),
by and among First Community, Centura Bank and Centura Banks, Inc., a North
Carolina corporation ("Centura"), pursuant to which (i) First Community will
merge (the "Merger") with and into Centura Bank, (ii) each share of the $4.16
2/3 par value common stock of First Community ("First Community Common Stock")
issued and outstanding at the effective time of the Merger will be exchanged for
0.96 of a share of the no par value common stock of Centura, subject to possible
adjustment, and cash in lieu of any fractional share, and (iii) Centura will
assume the obligations of First Community under various stock plans and programs
and adopt substitute plans where appropriate, all as more fully described in the
accompanying Proxy Statement/Prospectus. A copy of the Agreement is set forth in
Appendix A to the accompanying Proxy Statement/Prospectus and is hereby
incorporated by reference herein.
2. Other Business. To transact such other business as may come properly
before the Special Meeting or any adjournments or postponements of the Special
Meeting.
Notice of Appraisal Rights. If Proposal 1 above is approved and the Merger
contemplated thereby is consummated, each holder of shares of First Community
Common Stock would have the right to demand appraisal of such holder's shares of
First Community Common Stock and would be entitled to the rights and remedies of
Article 13 of the North Carolina Business Corporation Act ("NCBCA"). The right
of any such stockholder to any such rights and remedies is contingent upon
consummation of the Merger. In addition, the right of any such stockholder to
such rights and remedies is contingent upon strict compliance with the
requirements set forth in Article 13 of the NCBCA, the full text of which is
attached as Appendix B to the accompanying Proxy Statement/Prospectus. For a
summary of the requirements of Article 13 of the NCBCA, see "DESCRIPTION OF THE
TRANSACTION - Dissenters' Rights" in the accompanying Proxy
Statement/Prospectus.
Only stockholders of record at the close of business on June 28, 1996, will
be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. Approval of the Agreement requires the
affirmative vote of two-thirds of the votes entitled to be cast at the Special
Meeting by holders of the issued and outstanding shares of First Community
Common Stock.
THE BOARD OF DIRECTORS OF FIRST COMMUNITY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
Robert S. Pearson
President
Gastonia, North Carolina
July 8, 1996
Whether or not you plan to attend the Special Meeting, please complete,
date, and sign the enclosed form of proxy and return it promptly in the
enclosed postage paid return envelope in order to ensure that your
shares will be represented at the Special Meeting.
PROSPECTUS
[CENTURA BANKS, INC. LOGO]
An Estimated 838,553 Shares
Common Stock, no par value
PROXY STATEMENT
For Special Meeting of Stockholders of
FIRST COMMUNITY BANK
This Prospectus of Centura Banks, Inc., a bank holding company organized
and existing under the laws of the State of North Carolina ("Centura"), relates
to up to 838,553 shares of common stock, no par value, of Centura ("Centura
Common Stock"), including shares to be subject to assumed options and grants,
which are issuable to the stockholders of First Community Bank, a bank
corporation organized and existing under the laws of the State of North Carolina
("First Community"), upon consummation of the proposed merger (the "Merger")
described herein by which First Community will merge with and into Centura Bank,
a wholly-owned subsidiary of Centura, pursuant to the terms of the Agreement and
Plan of Reorganization and Merger, dated as of April 4, 1996 (the "Agreement"),
by and among First Community, Centura Bank and Centura. The full text of the
Agreement is attached as Appendix A hereto.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock par value
$4.16 2/3 per share, of First Community ("First Community Common Stock") will be
converted into and exchanged for 0.96 of a share of Centura Common Stock,
subject to certain possible adjustments described herein. In the event that the
"Average Closing Price" (defined in the Agreement as the average of the daily
last sale prices of Centura Common Stock quoted on the NYSE - Composite
Transactions List (as reported by the Wall Street Journal or, if not reported
thereby, another authoritative source as selected by Centura) for the ten
consecutive full trading days on which such shares are traded on the NYSE ending
at the close of trading on the trading day immediately preceding the Special
Meeting (the "Determination Date") is less than $31.50, the parties shall
calculate (i) the quotient obtained by dividing the Average Closing Price by
$35.00 (the "Centura Ratio") and (ii) the quotient obtained by dividing the
average of the "Index Price" (as defined below) for the ten full trading days
immediately preceding the Determination Date by the Index Price on March 20,
1996 (the "Index Ratio"). If the Index Ratio is greater than the Centura Ratio,
then the Exchange Rate shall be the quotient derived by dividing the product of
$33.60 multiplied by the Index Ratio by the Average Closing Price (rounded up to
two decimal places). If the Index Ratio is less than the Centura Ratio, then the
Exchange Rate shall be 0.96. The "Index Price" is the weighted average of the
closing prices of the companies composing the NYSE Bank Stock Index compiled by
SNL Securities. The SNL NYSE Bank Stock Index was chosen as the reference point
for the market for bank stocks in general because Centura Stock is traded on the
NYSE and, as such, the Index would more accurately reflect banks and bank
holding companies comparable to Centura in size and liquidity. In addition, the
Index is one of three indices against which Centura measures the performance of
Centura Stock in Centura's proxy materials. In the event that the Average
Closing Price is greater than $38.50, then the Exchange Rate shall be the
quotient derived by dividing the product of $33.60 multiplied by the Index
Rate by the Average Closing Price (rounded up to two decimal places). The
Exchange Rate could be greater or less than 0.96, depending on the Average
Closing Price, the Centura Ratio and the Index Ratio. The Average Closing
Price was $ 37.00 on June 28, 1996. Therefore, no adjustment to
the Exchange Rate would be necessary as of that date. See "DESCRIPTION OF
TRANSACTION--Possible Adjustment of Exchange Rate".
This Prospectus also serves as a Proxy Statement of First Community, and is
being furnished to the stockholders of First Community in connection with the
solicitation of proxies by the Board of Directors of First Community for use at
its special meeting of stockholders (including any adjournment or postponement
thereof, the "Special Meeting"), to be held on August 7, 1996, to consider and
vote upon the Agreement. This Proxy Statement/Prospectus ("Proxy Statement") and
related materials enclosed herewith are being mailed to stockholders of First
Community on or about July 9, 1996.
Each holder of shares of First Community Common Stock has the right to
dissent from the Merger and to demand appraisal and payment of the fair value of
such holder's shares of First Community Common Stock if the Merger is approved
and consummated. The right of any such stockholder to such rights and remedies
is contingent upon strict compliance with the requirements set forth in Article
13 of the North Carolina Business Corporation Act ("NCBCA"), the full text of
which is attached as Appendix B hereto. A stockholder of First Community who
wishes to dissent from the Merger must not vote any shares of First Community
Common Stock in favor of the Merger. See "DESCRIPTION OF TRANSACTION--
Dissenters' Rights."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS, OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
The date of this Proxy Statement is July 8, 1996.
AVAILABLE INFORMATION
Centura is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, is
required to file reports, proxy and information statements, and other
information with the Securities and Exchange Commission (the "SEC"). Copies of
such reports, proxy and information statements, and other information can be
obtained, at prescribed rates, from the SEC by addressing written requests for
such copies to the Public Reference Section at the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy
and information statements, and other information can be inspected at the public
reference facilities referred to above and at the regional offices of the SEC at
7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
shares of Centura Common Stock are listed on the New York Stock Exchange (the
"NYSE"), and reports, proxy and information statements, and other information
concerning Centura also may be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
First Community also is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Federal Deposit Insurance Corporation ("FDIC"). Such
reports, proxy statements and other information filed by First Community may be
obtained from the FDIC at prescribed rates by written requests for such copies
to the FDIC, Registration and Disclosure Section, 550 17th Street, N.W., Room
F-643, Washington, D.C. 20429. In addition, such documents are exhibits to the
Registration Statement and may be inspected and copied at the public reference
facilities maintained by the SEC at the addresses set forth above.
This Proxy Statement constitutes part of the Registration Statement on Form
S-4 of Centura (including any exhibits and amendments thereto, the "Registration
Statement") filed with the SEC under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities offered hereby. This Proxy
Statement does not include all of the information in the Registration Statement,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. For further information about Centura and the securities
offered hereby, reference is made to the Registration Statement. The
Registration Statement may be inspected and copied, at prescribed rates, at the
SEC's public reference facilities at the addresses set forth above.
All information contained in this Proxy Statement or incorporated herein by
reference with respect to Centura was supplied by Centura and all information
contained in this Proxy Statement or incorporated herein by reference with
respect to First Community was supplied by First Community.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this Proxy
Statement, and, if given or made, such information or representation should not
be relied upon as having been authorized. This Proxy Statement does not
constitute an offer to sell, or a solicitation of an offer to purchase, the
securities offered by this Proxy Statement in any jurisdiction to or from any
person to whom it is unlawful to make such an offer or solicitation in such
jurisdiction. Neither the delivery of this Proxy Statement nor any distribution
of the securities being offered pursuant to this Proxy Statement shall, under
any circumstances, create an implication that there has been no change in the
affairs of Centura or First Community or the information set forth or
incorporated by reference herein since the date of this Proxy Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by Centura pursuant
to the Exchange Act are hereby incorporated by reference herein:
(a) Centura's Annual Report on Form 10-K for the year ended December
31, 1995, (provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k), or (l) of
Regulation S-K of the SEC shall not be deemed to be incorporated
herein and is not part of the Registration Statement);
(b) Centura's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1996;
(c) Centura's Current Reports on Form 8-K dated January 8, February
28, March 12, March 20, April 3, April 16, April 18, May 17,
May 24, June 14, and July 2, 1996; and
(d) The description of Centura Common Stock contained in Centura's
Registration Statement on Form 8-A filed October 9, 1990, under
the Exchange Act and any other amendment or report filed for the
purpose of updating such description.
The following documents previously filed with the FDIC by First Community
pursuant to the Exchange Act are hereby incorporated by reference herein:
(a) First Community's Annual Report on Form F-2 for the fiscal year
ended December 31, 1995;
(b) First Community's Quarterly Report on Form F-4 for the quarterly
period ended March 31, 1996;
(c) First Community's Current Report on Form F-3, dated March 26,
1996.
All documents filed by Centura pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
final adjournment of the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein or in any subsequently filed document which also is, or is
deemed to be, incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.
Centura will provide without charge, upon the written or oral request of
any person including any beneficial owner, to whom this Proxy Statement is
delivered a copy of any and all information (excluding certain exhibits)
relating to Centura that has been incorporated by reference in the Registration
Statement. Such requests should be directed to Frank L. Pattillo, Chief
Financial Officer, Centura Banks, Inc., 134 North Church Street, Rocky Mount,
North Carolina 27804 (telephone (919) 977-4400). First Community will provide
without charge, upon the written or oral request of any person, including any
beneficial owner, to whom this Proxy Statement is delivered, a copy of any and
all information (excluding certain exhibits) relating to First Community that
has been incorporated by reference in the Registration Statement of which this
Proxy Statement is a part. Such requests should be directed to Will Weill, III,
Secretary, First Community Bank, 100 East Garrison Boulevard, Gastonia, North
Carolina 28052 (telephone (704) 868-4251). In order to ensure timely delivery of
the documents, any request should be made by July 26, 1996.
FIRST COMMUNITY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995, AND FIRST COMMUNITY'S QUARTERLY REPORT ON FORM F-4 FOR THE
FISCAL QUARTER ENDED MARCH 31, 1996, ACCOMPANY THIS PROXY STATEMENT.
SUMMARY..........................................................
The Parties....................................................
Meeting of Stockholders........................................
The Merger.....................................................
Comparative Per Share Data.....................................
Selected Financial Data........................................
SPECIAL MEETING OF FIRST
COMMUNITY STOCKHOLDERS...........................................
Date, Place, Time, and Purpose.................................
Record Dates, Voting Rights, Required Votes, and
Revocability of Proxies........................................
Solicitation of Proxies........................................
Recommendation.................................................
DESCRIPTION OF TRANSACTION.......................................
General........................................................
Possible Adjustment of Exchange Rate...........................
Effect of the Merger on Stock Options..........................
Background of and Reasons for the Merger.......................
Opinion of First Community's Financial Advisor.................
Effective Time of the Merger...................................
Distribution of Centura Stock Certificates.....................
Conditions to Consummation of the Merger.......................
Regulatory Approvals...........................................
Waiver, Amendment, and Termination.............................
Dissenters' Rights.............................................
Conduct of Business Pending the Merger.........................
Management and Operations After the Merger.....................
Interests of Certain Persons in the Merger.....................
Certain Federal Income Tax Consequences........................
Accounting Treatment...........................................
Expenses and Fees..............................................
Resales of Centura Common Stock................................
EFFECT OF THE MERGER ON RIGHTS
OF STOCKHOLDERS..................................................
Anti-Takeover Provisions Generally.............................
Authorized Capital Stock.......................................
Amendment of Articles of Incorporation and Bylaws..............
Classified Board of Directors and Absence of
Cumulative Voting..............................................
Removal of Directors...........................................
Limitations on Director Liability..............................
Indemnification................................................
Special Meeting of Stockholders................................
Constituency and Stakeholder Provisions........................
Actions by Stockholders Without a Meeting......................
Stockholder Nominations and Proposals..........................
Fair Price Provision...........................................
Business Combinations..........................................
Dissenters' Rights of Appraisal................................
Stockholders' Rights to Examine Books and Records..............
Dividends......................................................
INFORMATION ABOUT FIRST
COMMUNITY........................................................
General........................................................
Security Ownership of Management...............................
INFORMATION ABOUT CENTURA........................................
General........................................................
Recent Developments............................................
Stock Ownership of Management..................................
CERTAIN REGULATORY
CONSIDERATIONS...................................................
General........................................................
Community Reinvestment.........................................
Payment of Dividends...........................................
Capital Adequacy...............................................
Support of Subsidiary Banks....................................
Prompt Corrective Action.......................................
FDIC Insurance Assessments.....................................
Safety and Soundness Standards.................................
Depositor Preference...........................................
DESCRIPTION OF CENTURA
CAPITAL STOCK....................................................
OTHER MATTERS....................................................
EXPERTS..........................................................
OPINIONS.........................................................
APPENDIX A.....................................................
APPENDIX B.....................................................
APPENDIX C.....................................................
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement and the documents incorporated herein by reference. This summary is
not intended to be a complete description of the matters covered in this Proxy
Statement and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy Statement.
Stockholders are urged to read carefully the entire Proxy Statement, including
the Appendices. As used in this Proxy Statement, the terms "Centura" and "First
Community" refer to those entities, respectively, and, where the context
requires, to Centura and its subsidiaries.
The Parties
First Community. First Community is a North Carolina bank corporation that
operates five banking offices in the Gastonia, North Carolina area and offers a
broad range of banking and banking-related services. As of March 31, 1996, First
Community had total assets of approximately $125 million, total deposits of
approximately $105 million, and total stockholders' equity of approximately $12
million. The principal executive offices of First Community are located at 100
East Garrison Boulevard , Gastonia, North Carolina 28052, and its telephone
number at such address is (704) 868-4251. Additional information with respect to
First Community is included in documents incorporated by reference in this Proxy
Statement. See "AVAILABLE INFORMATION," "DOCUMENTS INCORPORATED BY REFERENCE"
and "INFORMATION ABOUT FIRST COMMUNITY."
Centura. Centura, a North Carolina corporation, is a bank holding company
registered with the Federal Reserve under the Bank Holding Company Act (the "BHC
Act"). Centura owns all of the outstanding shares of Centura Bank, a North
Carolina bank corporation. Centura, through Centura Bank and its subsidiaries,
offers a full range of financial services through 154 offices located in 94
communities throughout North Carolina and through a variety of alternative
delivery channels. As of March 31, 1996, Centura had total consolidated assets
of approximately $5.5 billion, total consolidated deposits of approximately $4.2
billion, and total consolidated stockholders' equity of approximately $410
million.
During the first quarter of 1996, Centura completed a merger with of one
financial institution and announced its agreement to (i) merge with FirstSouth
Bank, a bank headquartered in Burlington, North Carolina, and (ii) acquire $77
million in North Carolina deposits from a Virginia-based institution (the
"Recent Acquisitions"). Information with respect to the Recent Acquisitions is
included under "INFORMATION ABOUT CENTURA --Recent Developments" and in certain
of the documents incorporated by reference in this Proxy Statement. See
"DOCUMENTS INCORPORATED BY REFERENCE."
The principal executive offices of Centura and Centura Bank are located at
134 North Church Street, Rocky Mount, North Carolina 27804, and its telephone
number at such address is (919) 977-4400. Additional information with respect to
Centura and its subsidiary is included in documents incorporated by reference in
this Proxy Statement. See "AVAILABLE INFORMATION," "DOCUMENTS INCORPORATED BY
REFERENCE" and "INFORMATION ABOUT CENTURA."
Meeting of Stockholders
This Proxy Statement is being furnished to the holders of First Community
Common Stock in connection with the solicitation by the First Community Board of
Directors of proxies for use at the Special Meeting at which First Community
stockholders will be asked to vote upon (i) a proposal to approve the Agreement
and (ii) such other business as may properly come before the meeting. The
Special Meeting will be held at the Gaston County Public Library, 1555 East
Garrison Avenue, Gastonia, North Carolina 28054, at 11:00 A.M. local time, on
Wednesday, August 7, 1996. See "SPECIAL MEETING OF FIRST COMMUNITY
STOCKHOLDERS --Date, Place, Time, and Purpose."
First Community's Board of Directors has fixed the close of business on
June 28, 1996, as the record date (the "First Community Record Date") for
determination of the stockholders entitled to notice of and to vote at the
Special Meeting. Only holders of record of shares of First Community Common
Stock on the First Community Record Date will be entitled to notice of and to
vote at the Special Meeting. Each share of First Community Common Stock is
entitled to one vote. Stockholders who execute proxies retain the right to
revoke them at any time prior to being voted at the Special Meeting. On the
First Community Record Date, there were 781,493 shares of First Community Common
Stock issued and outstanding. See "SPECIAL MEETING OF FIRST COMMUNITY
STOCKHOLDERS --Record Dates, Voting Rights, Required Votes, and Revocability of
Proxies.
Approval of the Agreement requires the affirmative vote of two-thirds of
the votes entitled to be cast at the Special Meeting by the holders of the
issued and outstanding shares of First Community Common Stock. Directors and
executive officers of First Community and their affiliates were entitled to vote
151,386 shares or approximately 19% of the outstanding shares of First Community
Common Stock. See "SPECIAL MEETING OF STOCKHOLDERS --Record Dates, Voting
Rights, Required Votes, and Revocability of Proxies."
The Merger
General. The Agreement provides for the acquisition of First Community by
Centura pursuant to the merger of First Community with and into Centura Bank. At
the Effective Time, each share of First Community Common Stock then issued and
outstanding will be converted into and exchanged for 0.96 of a share of Centura
Common Stock, subject to possible adjustment as described below (the "Exchange
Rate"). The Exchange Rate is subject to adjustment in the circumstances
described in the following two paragraphs.
In the event that the "Average Closing Price" (defined in the Agreement as
the average of the daily last sale prices of Centura Common Stock quoted on the
NYSE - Composite Transactions List (as reported by The Wall Street Journal or,
if not reported thereby, another authoritative source as selected by Centura)
for the ten consecutive full trading days on which such shares are traded on the
NYSE ending at the close of trading on the trading day immediately preceding the
Special Meeting (the "Determination Date") is less than $31.50, the parties
shall calculate (i) the quotient obtained by dividing the Average Closing Price
by $35.00 (the "Centura Ratio") and (ii) the quotient obtained by dividing the
average of the "Index Price" (defined below) for the 10 full trading days
immediately preceding the Determination Date by the Index Price on March 20,
1996 (the "Index Ratio"). If the Index Ratio is greater than the Centura Ratio,
then the Exchange Rate shall be the quotient derived by dividing the product of
$33.60 (the equivalent per share price of First Community Common Stock under the
Exchange Rate at the time the Merger was first publicly announced) multiplied by
the Index Ratio by the Average Closing Price (rounded up to two decimal places).
If the Index Ratio is less than the Centura Ratio, then the Exchange Rate shall
be 0.96. The "Index Price" is the weighted average of the closing prices of the
companies composing the NYSE Bank Stock Index compiled by SNL Securities. The
SNL NYSE Bank Stock Index was chosen as the reference point for the market for
bank stocks in general because Centura Stock is traded on the NYSE and, as such,
the Index would more accurately reflect banks and bank holding companies
comparable to Centura in size and liquidity. In addition, the Index is one of
three indices against which Centura measures the performance of Centura Stock
in Centura's proxy materials.
In the event that the Average Closing Price is greater than $38.50, then
the Exchange Rate shall be the quotient derived by dividing the product of
$33.60 multiplied by the Index Ratio by the Average Closing Price (rounded up to
two decimal places).
The Exchange Rate could be greater or less than 0.96, depending on the
Average Closing Price, the Centura Ratio and the Index Ratio. The Average
Closing Price was $ 37.00 on June 28 , 1996, and therefore no adjustment
to the Exchange Rate would be required if such date had been the Determination
Date.
There is no "floor" or "ceiling" to the Exchange Rate and, therefore, the
Exchange Rate could adjust significantly above or below 0.96 with the result
that the dollar value to First Community shareholders could adjust significantly
above or below the per share equivalent price of First Community Stock
contemplated by the parties at the execution of the Agreement ($33.60). See
"DESCRIPTION OF TRANSACTION--Adjustment of Exchange Ratio."
In the event the Exchange Rate were adjusted and the adjustment caused the
dollar value per share to be received by First Community shareholders to be
materially different than $33.60, First Community would resolicit its
shareholders if the adjusted value could be supported by the Fairness Opinion.
A condition precedent to the closing of the Merger is the receipt by First
Community of an update to the Fairness Opinion. If on the Determination Date
the Exchange Rate and the resultant dollar value have decreased to the point
where Scott & Stringfellow could not confirm that the Exchange Rate, as
adjusted, was still fair to the shareholders of First Community, from a
financial viewpoint, then First Community can either terminate the Merger or
renegotiate the Exchange Rate with Centura. If the Exchange Rate were
renegotiated, First Community would resolicit its shareholders and obtain from
Scott & Stringfellow a new fairness opinion or an update to the existing
Fairness Opinion.
No fractional shares of Centura Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any First Community stockholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of Centura Common
Stock multiplied by the market value of one share of Centura Common Stock at the
Effective Time. The market value of one share of Centura Common Stock at the
Effective Time shall be the Average Closing Price . See "DESCRIPTION OF
TRANSACTION --General."
The Agreement also contemplates that at the Effective Time, each option
acquire shares of First Community Common Stock pursuant to stock options ("First
Community Options") granted by First Community under the First Community Stock
Plans, as that term is defined in the Agreement, which are outstanding at the
Effective Time, whether or not exercisable, will be converted into and become
rights with respect to Centura Common Stock on a basis adjusted to reflect the
Exchange Rate. See "DESCRIPTION OF TRANSACTION --Effect of the Merger on Stock
Options."
Centura's Board has approved the repurchase in the open market of shares of
Centura Common Stock equal in number to up to all of the shares to be issued in
connection with the Merger and up to 9.9% (approximately 101,000 shares) of the
shares of Centura Common Stock to be issued in the merger with FirstSouth Bank.
See "INFORMATION ABOUT CENTURA - Recent Developments." Under rules promulgated
by the SEC under the Exchange Act, Centura will not be permitted to purchase
shares of Centura Common Stock in the open market during the period commencing
two business days prior to the mailing of this Proxy Statement and ending
immediately following the Special Meeting.
As of the First Community Record Date, First Community had 781,493 shares
of First Community Common Stock issued and outstanding and 92,000 additional
shares of First Community Common Stock subject to options issued and outstanding
under the First Community Stock Plans. Assuming an Exchange Rate of 0.96 of a
share of Centura Common Stock for each share of First Community Common Stock, it
is anticipated that upon consummation of the Merger, Centura would issue
approximately 838,553 shares of Centura Common Stock, including shares
subject to assumed options or grants. Accordingly, Centura would then have
issued and outstanding approximately 23,713,603 shares of Centura Common
Stock based on the number of shares of Centura Common Stock issued and
outstanding on March 31, 1996, and excluding the effect of any shares
repurchased by Centura since such time.
Reasons for the Merger and Recommendation of the Board of Directors of
First Community. The Board of Directors of First Community believes that the
Agreement and the Merger are in the best interests of First Community and its
stockholders. The First Community directors unanimously recommend that First
Community stockholders vote FOR approval of the Agreement. The Board of
Directors of First Community believes that the Merger will result in a company
with expanded opportunities for profitable growth and that the combined
resources and capital of First Community and Centura will provide an enhanced
ability to compete in the changing and competitive financial services industry.
See "DESCRIPTION OF TRANSACTION --Background of and Reasons for the Merger."
In unanimously approving the Agreement, First Community's directors
considered, among other things, First Community's and Centura's financial
condition, the financial terms and the income tax consequences of the Merger,
the likelihood of the Merger being approved by regulatory authorities without
undue conditions or delay, legal advice concerning the proposed Merger, the
views of Scott & Stringfellow, Inc. ("Scott & Stringfellow") as to the fairness
of the Exchange Rate, from a financial point of view, to the stockholders of
First Community, and in general the fairness of the terms of the Merger to First
Community stockholders. See "DESCRIPTION OF TRANSACTION --Background of and
Reasons for the Merger."
Opinion of Financial Advisor. Scott & Stringfellow has rendered an opinion
to First Community that, based on and subject to the procedures, matters, and
limitations described in its opinion and such other matters as it considered
relevant, as of the date of its opinion, the Exchange Rate is fair, from a
financial point of view, to the stockholders of First Community. The opinion of
Scott & Stringfellow dated as of the date of this Proxy Statement is attached as
Appendix C to this Proxy Statement. First Community stockholders are urged to
read the opinion in its entirety for a description of the procedures followed,
matters considered, and limitations on the reviews undertaken in connection
therewith. See "DESCRIPTION OF TRANSACTION -- Opinion of First Community's
Financial Advisor."
Effective Time. Subject to the conditions to the obligations of the parties
to effect the Merger, the Effective Time will occur on the date and at the time
that the Articles of Merger become effective with the North Carolina Secretary
of State. Unless otherwise agreed upon by First Community and Centura and
subject to the conditions to the obligations of the parties to effect the
Merger, the parties will use their reasonable efforts to cause the Effective
Time to occur as soon as practicable following the last to occur of (i) the
effective date (including the expiration of any applicable waiting period) of
the last consent of any regulatory authority required for the Merger and (ii)
the date on which the stockholders of First Community approve the matters
relating to the Agreement required to be approved by such stockholders by
applicable law. See "DESCRIPTION OF TRANSACTION --Effective Time of the Merger,"
"--Conditions to Consummation of the Merger," and "--Waiver, Amendment, and
Termination."
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that the other conditions precedent to the Merger
can or will be satisfied. First Community and Centura anticipate that all
conditions to the consummation of the Merger will be satisfied so that the
Merger can be consummated during the third quarter of 1996. However, delays in
the consummation of the Merger could occur.
Exchange of Stock Certificates. Promptly after the Effective Time, Centura
will cause Registrar and Transfer Company, Cranford, New Jersey, acting in its
capacity as exchange agent for Centura (the "Exchange Agent"), to mail to each
holder of record of a certificate or certificates (collectively, the
"Certificates") which, immediately prior to the Effective Time, represented
outstanding shares of First Community Common Stock, a letter of transmittal and
instructions for use in effecting the surrender and cancellation of the
Certificates in exchange for certificates representing shares of Centura Common
Stock. Cash will be paid to the holders of First Community Common Stock in lieu
of the issuance of any fractional shares of Centura Common Stock. In no event
will the holder of any surrendered Certificate(s) be entitled to receive
interest on any cash to be paid to such holder, and in no event will First
Community, Centura, or the Exchange Agent be liable to any holder of First
Community Common Stock for any Centura Common Stock or dividends thereon or cash
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat, or similar law.
Regulatory Approvals and Other Conditions. The Merger is subject to
approval by the Federal Reserve and the North Carolina Commissioner of Banks
(the "Commissioner"). Applications have been filed with each of these agencies
for the requisite approvals. There can be no assurance that such regulatory
approval will be obtained or as to the timing of any such approvals. There also
can be no assurance that any such approval will not impose conditions that are
deemed by First Community or Centura to materially adversely impact the economic
or business assumptions of the transactions contemplated by this Agreement.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of First Community stockholders,
receipt of an opinion of counsel as to the tax-free nature of certain aspects of
the Merger, and certain other conditions. See "DESCRIPTION OF TRANSACTION
- --Regulatory Approvals" and "--Conditions to Consummation of the Merger."
Waiver, Amendment, and Termination. The Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time by mutual action of the
Boards of Directors of First Community and Centura, or by the action of the
Board of Directors of either company under certain circumstances, including (i)
if the Merger is not consummated by December 31, 1996, unless the failure to
consummate by such time is due to a breach of the Agreement by the party seeking
to terminate or (ii) in certain circumstances, by either of the parties in the
event that the other defaults in the performance of its representations,
warranties and agreements contained in the Agreement. If for any reason the
Merger is not consummated, First Community shall continue to operate as a bank
under its present management. To the extent permitted by law, the Agreement may
be amended upon the written agreement of Centura and First Community without the
approval of stockholders; provided, however, that the provisions of the
Agreement relating to the manner or basis in which shares of Centura Common
Stock will be exchanged for First Community Common Stock may not be amended
after the Special Meeting without the requisite approval of the holders of the
issued and outstanding shares of First Community Common Stock entitled to vote
thereon. See "DESCRIPTION OF TRANSACTION --Possible Adjustment of Exchange Rate"
and "--Waiver, Amendment, and Termination."
Dissenters' Rights. Pursuant to Article 13 of the NCBCA, the holders of
First Community Common Stock have dissenters' rights with respect to the Merger.
Any First Community stockholder who does not vote in favor of the proposal to
approve the Agreement and the Merger contemplated thereby and who complies with
certain requirements of the applicable provisions of the NCBCA may have the
right to an appraisal and payment for such person's shares of First Community
Common Stock.
To perfect dissenters' rights of appraisal, a holder of First Community
Common Stock must strictly comply with the applicable statutory provisions, a
copy of which provisions is attached to this Proxy Statement as Appendix B. Any
holder of First Community Common Stock who returns a signed proxy but who fails
to provide voting instructions with respect to the proposal to approve the
Agreement will be deemed to have voted in favor of such proposal and will not be
entitled to assert dissenters' rights of appraisal. See "DESCRIPTION OF
TRANSACTION --Dissenters' Rights."
Interests of Certain Persons in the Merger. Certain members of First
Community's management and Board of Directors have interests in the Merger in
addition to their interests as stockholders of First Community generally. Those
interests relate to, among other things, employment agreements with Centura and
provisions in the Agreement regarding indemnification and eligibility for
certain Centura employee benefits. See "DESCRIPTION OF TRANSACTION --Interests
of Certain Persons in the Merger."
Certain Federal Income Tax Consequences of the Merger. It is intended that
the Merger will be treated as a reorganization within the meaning of Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"). Consummation of
the Merger is conditioned upon receipt by First Community and Centura of an
opinion of Poyner & Spruill, L.L.P., substantially to this effect. Accordingly,
no gain or loss will be recognized by a First Community stockholder upon the
exchange of such stockholder's First Community Common Stock solely for shares of
Centura Common Stock. Subject to the provisions and limitations of Section
302(a) of the Code, gain or loss will be recognized with respect to cash
received in lieu of fractional shares. Gain recognition, if any, will not be in
excess of the amount of cash received. Tax consequences of the Merger for
individual taxpayers can vary, however, and all First Community stockholders are
urged to consult their own tax advisors to determine the effect of the Merger on
them under federal, state, local and foreign tax laws. For a further discussion
of the federal income tax consequences of the Merger, See "DESCRIPTION OF
TRANSACTION --Certain Federal Income Tax Consequences."
Accounting Treatment. It is intended that the Merger will be accounted for
as a purchase for accounting and financial reporting purposes. See "DESCRIPTION
OF TRANSACTION --Accounting Treatment."
Certain Differences in Stockholders' Rights. At the Effective Time, First
Community stockholders, whose rights are governed by First Community's Articles
of Incorporation and Bylaws will automatically become Centura stockholders, and
their rights as Centura stockholders will be determined by Centura's Restated
Articles of Incorporation and Bylaws and by the NCBCA.
The rights of Centura stockholders differ from the rights of First
Community stockholders in certain important respects, some of which constitute
additional anti-takeover provisions provided for in Centura's governing
documents. See "EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS."
Conduct of Business Pending the Merger. Each party has agreed in the
Agreement to, among other things, operate its business only in the ordinary
course and to take no action that would adversely affect its ability to perform
its covenants and agreements under the Agreement. In addition, First Community
has agreed not to take certain actions relating to the operation of First
Community pending consummation of the Merger without the prior written consent
of Centura, except as otherwise permitted by the Agreement. See "DESCRIPTION OF
TRANSACTION --Conduct of Business Pending the Merger," for a description of
these limitations on the conduct of First Community's business.
Comparative Market Prices of Common Stock
Shares of Centura Common Stock are traded on the NYSE under the symbol
"CBC." There is no established public market in which shares of First Community
Common Stock are regularly traded. Rather, buyers and sellers of First Community
Common Stock are matched by Jackson & Smith Investment Securities, a Gastonia
brokerage firm, or by First Community, as an accommodation. The following table
sets forth the reported closing prices per share for Centura Common Stock,
the last bid quotation for First Community Common Stock and the equivalent
per share prices (as explained below) for First Community Common Stock (as
reported by Jackson & Smith Investment Securities) on March 19, 1996, the
last full business day preceding the public announcement of the intention
of the parties to effect the Merger, and on June 28, 1996, the latest
practicable date prior to the mailing of this Proxy Statement.
<TABLE>
<CAPTION>
First Community Common
Market Price Per Share at: Stock Centura Common Stock Equivalent Per Share Price
<S> <C>
March 19, 1996 $18.50 $35.00 $33.60
June 28, 1996 $30.00 $36.75 $35.28
</TABLE>
The equivalent per share price of a share of First Community Common Stock at
each specified date represents the closing sale price of a share of Centura
Common Stock on such date multiplied by the Exchange Rate of 0.96. See
"COMPARATIVE MARKET PRICES AND DIVIDENDS."
There can be no assurance as to what the market price of the Centura Common
Stock will be if and when the Merger is consummated.
Comparative Per Share Data
The following table sets forth certain comparative per share data
relating to net income, cash dividends, and book value on (i) an historical
basis for Centura and First Community; (ii) a pro forma combined basis per share
of Centura Common Stock, giving effect to the Merger; and (iii) a equivalent pro
forma basis per share of First Community Common Stock, giving effect to the
Merger. The First Community and Centura pro forma combined information and the
First Community pro forma equivalent information give effect to the Merger,
assuming that the Merger had been effected for the periods presented, on a
purchase accounting basis and reflects the Exchange Ratio of 0.96 of a share of
Centura Common Stock for each share of First Community Common Stock. See
"DESCRIPTION OF TRANSACTION --Accounting Treatment." The pro forma data are
presented for information purposes only and are not necessarily indicative of
the results of operations or combined financial position that would have
resulted had the Merger been consummated at the dates or during the periods
indicated, nor are they necessarily indicative of future results of operations
or combined financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical consolidated financial statements
of Centura and First Community, including the respective notes thereto. See
"DOCUMENTS INCORPORATED BY REFERENCE." "--Selected Financial Data," and
"INFORMATION ABOUT CENTURA --Recent Developments."
<TABLE>
<CAPTION>
As of or for the As of or for the
Three Months Ended Year Ended
March 31, 1996 December 31, 1995
<S> <C>
NET INCOME PER COMMON SHARE
Centura Historical (1)
Primary $ 0.68 $ 2.54
Fully Diluted 0.68 2.54
First Community Historical
Primary 0.45 1.73
Fully Diluted 0.43 1.70
Centura and First Community Pro Forma
Combined (2) 2.55
Primary 0.68
Fully Diluted 0.68 2.54
First Community Pro Forma Equivalent (3)
Primary 0.65 2.45
Fully Diluted 0.65 2.44
CASH DIVIDENDS PAID PER COMMON SHARE
Centura Historical (1) $ 0.25 $ 0.85
First Community Historical 0.06 0.20
Centura and First Community Pro
Forma Combined (4) 0.25 0.85
First Community Pro Forma Equivalent (5) 0.24 0.82
BOOK VALUE PER COMMON SHARE
Centura Historical (1) $17.93 $17.69
First Community Historical 15.48 15.16
Centura and First Community Pro Forma 17.93 17.69
Combined (2) 17.21 16.98
First Community Pro Forma Equivalent(3)
</TABLE>
(1) Centura's historical 1995 information has been restated to reflect the
merger with First Commercial Holding Corporation, that was consummated on
February 27, 1996, and was accounted for as a pooling-of-interests.
(2) Assumes Centura will fully exercise its plan to repurchase shares of its
common stock in the open market equal to up to 100 % of the shares issued
to effect the Merger.
(3) Represents the Centura and First Community pro forma combined information
multiplied by the Exchange Rate of 0.96 of a share of Centura Common Stock
for each share of First Community Common Stock.
(4) Represents historical dividends paid per share by Centura as it is assumed
that Centura will not change its dividend policy as a result of the Merger.
(5) Represents historical dividends paid per share by Centura multiplied by the
Exchange Ratio of 0.96 of a share of Centura Common Stock for each share of
First Community Common Stock.
The foregoing combined and equivalent pro forma per share data reflects
an Exchange Rate of 0.96. The First Community pro forma Merger equivalent data
would change if the Exchange Rate were adjusted as described under "DESCRIPTION
OF TRANSACTION --Possible Adjustment of Exchange Rate."
Selected Financial Data
The following tables present certain selected historical financial
information for Centura and First Community. The data should be read in
conjunction with the historical financial statements, including the respective
notes thereto, and other financial information concerning Centura and First
Community incorporated by reference in or accompanying this Proxy Statement.
Interim unaudited data for the three months ended March 31, 1996 and 1995, of
Centura and First Community reflect, in the opinion of the respective management
of Centura and First Community, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. Results
for the three months ended March 31, 1996, are not necessarily indicative of
results which may be expected for any other interim period or for the year as a
whole. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
The historical Centura financial information has been restated to reflect the
merger with First Commercial Holding Corporation that was consummated on
February 27, 1996, and accounted for as a pooling-of-interests.
<TABLE>
<CAPTION>
As of and For the
Three Months Ended
March 31,
---------------------------
1996 1995
---- ----
<S> <C>
SUMMARY OF OPERATIONS
(in thousands, except per share)
Interest income $ 107,394 86,317
Interest expense 51,227 36,073
Net interest income 56,167 50,244
Provision for loan loss (PFLL) 2,000 1,819
Net interest income after PFLL 54,167 48,425
Noninterest income 18,941 13,624
Noninterest expense 47,758 39,098
Income before income taxes 25,350 22,951
Income taxes 9,382 8,364
Net income $ 15,968 14,587
Cash dividends paid $ 5,740 3,862
PER COMMON SHARE
Net income - primary $ 0.68 0.65
Net income - fully diluted 0.68 0.65
Book value 17.93 16.24
SELECTED AVERAGE BALANCES
(in millions)
Assets $ 5,464 4,399
Earning assets 5,070 4,060
Loans 3,628 3,115
Investment securities 1,418 930
Core deposits 3,741 3,222
Total deposits 4,197 3,516
Shareholders' equity 412 344
SELECTED PERIOD-END BALANCES
(in millions)
Assets $ 5,546 4,579
Earning assets 5,127 4,207
Loans 3,686 3,235
Investment securities 1,426 948
Core deposits 3,755 3,308
Total deposits 4,168 3,606
Shareholders' equity 410 366
SELECTED RATIOS
Dividend payout ratio 35.95% 26.48%
Return on average assets (1) 1.18 1.34
Return on average equity (1) 15.58 7.18
Average equity to average assets 7.54 7.83
Average loans to average deposits 86.45 88.61
(1) data for the three months ended March 31, 1996 and 1995 is annualized.
</TABLE>
<TABLE>
<CAPTION>
CENTURA BANKS, INC.
SELECTED FINANCIAL DATA
As of and For the
Year Ended
December 31,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C>
SUMMARY OF OPERATIONS
(in thousands, except per share)
Interest income $ 394,831 305,123 264,188 256,068 271,814
Interest expense 181,593 114,578 103,553 114,786 149,260
Net interest income 213,238 190,545 160,635 141,282 122,554
Provision for loan loss (PFLL) 7,709 7,005 8,841 16,908 22,094
Net interest income after PFLL 205,529 183,540 151,794 124,374 100,460
Noninterest income 60,703 50,115 52,459 44,057 32,740
Noninterest expense 173,184 152,355 138,938 123,342 117,383
Income before income taxes 93,048 81,300 65,315 45,089 15,817
Income taxes 33,334 29,161 22,166 14,659 4,019
Net income $ 59,714 52,139 43,149 30,430 11,798
Cash dividends paid $ 23,581 15,411 12,452 9,862 8,878
PER COMMON SHARE
Net income - primary $ 2.54 2.31 2.09 1.57 0.64
Net income - fully diluted 2.54 2.30 2.05 1.54 0.64
Book value 17.69 15.42 14.58 11.46 10.62
SHARES
Outstanding 23,126,200 22,068,447 22,275,970 19,190,927 19,094,777
Weighted average-primary 23,548,920 22,614,210 20,696,145 19,405,339 18,500,557
Weighted average-fully diluted 23,595,644 22,678,421 21,203,238 20,323,570 18,500,557
SELECTED AVERAGE BALANCES
(in millions)
Assets $ 4,916 4,243 3,729 3,289 3,003
Earning assets 4,539 3,919 3,441 3,015 2,740
Loans 3,460 2,836 2,500 2,248 2,100
Investment securities 1,053 1,057 887 697 609
Core deposits 3,528 3,337 2,964 2,636 2,362
Total deposits 3,898 3,604 3,247 2,892 2,651
Shareholders' equity 393 333 275 231 212
SELECTED PERIOD-END BALANCES
(in millions)
Assets $ 5,503 4,403 4,304 3,447 3,147
Earning assets 5,043 4,013 3,913 3,116 2,848
Loans 3,710 3,063 2,679 2,329 2,119
Investment securities 1,293 937 1,181 716 683
Core deposits 3,818 3,319 3,460 2,761 2,535
Total deposits 4,292 3,607 3,754 3,022 2,801
Shareholders' equity 409 340 325 241 219
SELECTED RATIOS
Dividend payout ratio 39.49% 29.56% 28.84% 32.08% 75.25%
Return on average assets (1) 1.21 1.23 1.16 0.93 0.39
Return on average equity (1) 15.18 15.67 15.70 13.20 5.56
Average equity to average assets 8.00 7.84 7.37 7.01 7.06
Average loans to average deposits 88.76 78.69 76.99 77.73 79.19
</TABLE>
(1) data for the three months ended March 31, 1996 and 1995 is annualized.
<TABLE>
<CAPTION>
FIRST COMMUNITY BANK
SELECTED FINANCIAL DATA
As of and For the
Three Months Ended
March 31,
----------------------------------
1996 1995
---- ----
<S> <C>
SUMMARY OF OPERATIONS
(in thousands, except per share)
Interest income $ 2,395 2,073
Interest expense 1,089 870
Net interest income 1,306 1,203
Provision for loan loss (PFLL) 89 45
Net interest income after PFLL 1,217 1,158
Noninterest income 221 191
Noninterest expense 949 863
Income before income taxes 489 486
Income taxes 139 151
Net income 350 335
Cash dividends paid 47 38
PER COMMON SHARE
Net income - primary 0.45 0.44
Net income - fully diluted 0.43 0.42
Book value 15.48 13.63
SELECTED AVERAGE BALANCES
(in millions)
Assets $ 119 100
Earning assets 113 96
Loans 80 65
Total deposits 100 85
Shareholders' equity 12 10
SELECTED PERIOD-END BALANCES
(in millions)
Assets $ 125 105
Earning assets 118 99
Loans, gross 82 67
Investment securities 29 28
Core deposits 99 85
Total deposits 105 90
Shareholders' equity 12 10
SELECTED RATIOS
Dividend payout ratio 13.43% 11.34%
Return on average assets (1) 1.18 1.35
Return on average equity (1) 11.73 13.31
Average equity to average assets 10.09 10.18
Average loans to average deposits 80.01 77.13
(1) data for the three months ended March 31, 1996 and 1995 is annualized.
</TABLE>
<TABLE>
<CAPTION>
As of and For the
Year Ended
December 31,
------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C>
SUMMARY OF OPERATIONS
(in thousands, except per share)
Interest income $ 9,178 6,873 5,635 5,311 5,227
Interest expense 4,059 2,709 2,291 2,295 2,872
Net interest income 5,119 4,164 3,344 3,016 2,355
Provision for loan loss (PFLL) 577 251 271 201 409
Net interest income after PFLL 4,542 3,913 3,073 2,815 1,946
Noninterest income 762 609 783 625 487
Noninterest expense 3,418 2,996 2,390 2,139 1,812
Income before income taxes 1,886 1,526 1,466 1,301 621
Income taxes 542 475 513 420 191
Net income $ 1,344 1,051 953 881 430
Cash dividends paid $ 161 129 93 -
-
PER COMMON SHARE
Net income - primary $ 1.73 1.38 1.28 1.20 0.61
Net income - fully diluted 1.70 1.38 1.28 1.20 0.61
Book value 15.16 12.97 12.52 11.43 10.17
SELECTED AVERAGE BALANCES
(in millions)
Assets 109 93 79 67 59
Earning assets 104 89 76 64 55
Loans 72 59 54 46 40
Total deposits 93 80 68 58 50
Shareholders' equity 11 10 9 8 7
SELECTED PERIOD-END BALANCES
(in millions)
Assets $ 118 99 89 76 63
Earning assets 111 93 85 72 60
Loans, gross 64 59 50 43
78
Investment securities 28 20 17 14
28
Core deposits 80 70 59 50
93
Total deposits 85 76 66 55
99
Shareholders' equity 10 9 8 7
12
SELECTED RATIOS
Dividend payout ratio 11.98% 12.27% 9.76% -- --
Return on average assets (1) 1.23 1.13 1.20 1.31 0.75
Return on average equity (1) 12.30 10.90 11.09 11.60 6.28
Average equity to average assets 9.98 10.32 11.83 12.34 12.98
Average loans to average deposits 77.78 75.03 79.52 80.28 79.19
</TABLE>
(1) data for the three months ended March 31, 1996 and 1995 is annualized.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION AND CAPITALIZATION.
The following unaudited pro forma combined condensed balance sheet (the "pro
forma balance sheet") as of March 31, 1996, and the unaudited pro forma combined
condensed income statements for the three months ended March 31, 1996, and for
the year ended December 31, 1995, give effect to the affiliation with Centura of
First Community, presented under the purchase method of accounting, which
requires that all assets and liabilities be adjusted to their estimated fair
value as of the date of the acquisition. The pro forma balance sheet also
details the pro forma capitalization of Centura, giving effect to the
transaction. In connection with the acquisition of First Community, management
anticipates that it will acquire up to 100 percent of the shares to be exchanged
in the combination, as approved by Centura's board of directors. The pro forma
financial information presented herein gives effect to the possible purchase by
Centura of these shares. Pro forma adjustments to the balance sheet are computed
as if the transaction occurred at March 31, 1996, while pro forma adjustments to
the income statements presented are computed as if the transaction were
consummated at January 1, 1995. The above pro forma information does not include
the effects of the Recent Acquisitions. Information with respect to the Recent
Acquisitions is included under "BUSINESS OF CENTURA--Recent Developments" and in
certain of the documents incorporated by reference in this Proxy Statement (see
"DOCUMENTS INCORPORATED BY REFERENCE").
<TABLE>
<CAPTION>
CENTURA BANKS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
As of March 31, 1996
(in thousands, except share and per share data)
First Historical
Historical First Community Pro forma
Centura Community Adjustments Combined
---------------------------------------------------------------------------------
<S> <C>
(1,2) (1) (3)
ASSETS
Cash and due from banks $ 226,617 4,121 (750) 202,105
(27,883)
Investment securities:
Available for sale 1,144,158 13,781 1,157,939
Held to maturity 282,030 14,862 296,892
Other interest-earning assets 3,814 6,800 10,614
Loans 3,686,316 82,304 3,768,620
Less allowance for loan losses 54,825 1,351 56,176
---------------------------------------------------------------------------
Net loans 3,631,491 80,953 - 3,712,444
Bank premises and equipment 85,353 2,579 87,932
Other assets 172,736 2,118 16,570 191,424
===========================================================================
Total assets $ 5,546,199 125,214 (12,063) 5,659,350
===========================================================================
LIABILITIES
Deposits:
Demand, noninterest-bearing 593,897 14,326 608,223
Interest-bearing 3,573,777 90,669 3,664,446
---------------------------------------------------------------------------
Total deposits 4,167,674 104,995 4,272,669
Borrowed funds 638,222 7,313 645,535
Long-term debt 253,342 - 253,342
Other liabilities 76,725 843 77,568
---------------------------------------------------------------------------
Total liabilities 5,135,963 113,151 - 5,249,114
SHAREHOLDERS' EQUITY
Common stock 172,986 3,248 (3,248) 172,986
27,883
(27,883)
Additional paid in capital - 4,283 (4,283) -
Common stock acquired by ESOP (503) - - (503)
Unrealized securities losses, net (2,844) (92) 92 (2,844)
Retained earnings 240,597 4,624 (4,624) 240,597
---------------------------------------------------------------------------
Total shareholders' equity 410,236 12,063 (12,063) 410,236
---------------------------------------------------------------------------
===========================================================================
Total liabilities and shareholders' equity $ 5,546,199 125,214 (12,063) 5,659,350
===========================================================================
Outstanding common shares 22,875,050 779,493 22,875,050
Book value per share $ 17.93 15.48 17.93
</TABLE>
- -------------------------------------------------------------------------------
(1) In the opinion of management of the respective companies included
above, all adjustments considered necessary for a fair presentation of
the financial position and results for the period presented have been
included. Adjustments, if any, are normal and recurring in nature.
(2) Centura's historical information has been restated for the First
Commercial Holding Corp. merger that was consummated February 27, 1996
and was accounted for as a pooling-of-interests.
(3) a) Pro forma adjustments have been computed assuming the transaction
was consummated at March 31, 1996. The pro forma adjustments also
include the assumption that, simultaneously with the acquisition,
Centura will repurchase 100% of the shares to be issued in connection
with the acquisition and that there is no price differential between
the stock issued and repurchased. Such repurchase program will not in
actuality occur simultaneously with the consummation of the acquisition
and may result in less than a 100% repurchase. It is assumed that
Centura will utilize liquid assets currently available to Centura to
fund the repurchase of shares. Centura is authorized to repurchase up
to 100% under separate action approved by Centura's board of directors.
b) The purchase method of accounting requires that all assets and
liabilities be adjusted to their fair value as of the date of
acquisition. The estimated fair values of FCB's assets and liabilities
are not expected to be materially different from their recorded
carrying values; therefore, no pro forma valuation adjustments have
been made. The calculations of the estimated fair value of the net
assets acquired and cost associated with this transaction are:
<TABLE>
<S> <C> In 000s
Value for outstanding FCB shares = .96 ER * 779,493 FCB shares * $34.875 price $ 26,097
(where ER is exchange ratio; price is Centura's closing price on 3/20/96, the date acquisition was announced)
Value for outstanding FCB options = (.96 ER*94,000 FCB options)*($34.875-($14.48/.96)) 1,786
(where the converted exercise price is $14.48/.96 (weighted average exercise price of FCB options/ER))
Estimate for direct merger expenses 750
----------
Estimate of Cost 28,633
----------
Less estimate for fair value of net assets acquired 12,063
==========
Estimate of goodwill (i.e. excess of cost over fair value) $ 16,570
==========
</TABLE>
CENTURA BANKS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
For the Three Months Ended March 31, 1996
(in thousands, except shares and per share)
<TABLE>
<CAPTION>
First Historical
Historical First Community Pro forma
Centura Community Adjustments Combined
--------------------------------------------------------------------------------------
<S> <C>
(1,2) (1) (3,4)
Interest income $ 107,394 2,395 109,789
Interest expense 51,227 1,089 52,316
-----------------------------------------------------------------------------------
Net interest income 56,167 1,306 - 57,473
Provision for loan losses (PFLL) 2,000 89 2,089
-----------------------------------------------------------------------------------
Net interest income after PFLL 54,167 1,217 - 55,384
Noninterest income 18,941 221 19,162
Noninterest expense 47,758 949 276 48,983
-----------------------------------------------------------------------------------
Income before income taxes 25,350 489 (276) 25,563
Income taxes 9,382 139 - 9,521
===================================================================================
Net income $ 15,968 350 (276) 16,042
===================================================================================
Earnings per common share:
Primary $ 0.68 0.45 0.68
Fully diluted 0.68 0.43 0.68
Average common shares:
Primary 23,434,371 774,275 23,434,371
Fully diluted 23,446,960 788,590 23,446,960s
</TABLE>
- ------------------------------------------------------------------------------
(1) In the opinion of management of the respective companies included
above, all adjustments considered necessary for a fair presentation of
the financial position and results for the period presented have been
included. Adjustments, if any, are normal and recurring in nature.
(2) Centura's historical information has been restated for the First
Commercial Holding Corp. merger that was consummated February 27, 1996
and was accounted for as a pooling-of-interests.
(3) Pro forma adjustments have been computed assuming that the transaction
presented was completed January 1, 1995.
(4) First Community ("FCB"):
a) The pro forma adjustments assume that, simultaneously with the
acquisiton, Centura repurchased or completed its repurchase of 100% of
the shares to be issued in connection with the FCB acquisition and that
there was no price differential between the stock issued and the stock
repurchased. b) Amortization of goodwill of $16,570,000 is over a
15-year period (the period estimated to be benefited) using
straight-line method ($1,105,000/year). Such amortization is not
deductible for tax purposes; thus, no adjustment is made for tax
benefit of this expense. c) Pro forma share and per share data are
computed assuming the issuance of the shares noted above at an exchange
ratio of .96, less an equivalent number of shares repurchased
simultaneously upon consummation.
<TABLE>
<CAPTION>
CENTURA BANKS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
For the Year Ended December 31, 1995
(in thousands, except shares and per share)
Historical First
Historical First Community Pro forma
Centura Community Adjustments Combined
-------------------------------------------------------------------------------
<S> <C>
(1,2) (1) (3,4)
Interest income $ 394,831 9,178 404,009
Interest expense 181,593 4,059 185,652
---------------------------------------------------------------------------------
Net interest income 213,238 5,119 - 218,357
Provision for loan losses (PFLL) 7,709 577 8,286
---------------------------------------------------------------------------------
Net interest income after PFLL 205,529 4,542 - 210,071
Noninterest income 60,703 762 61,465
Noninterest expense 173,184 3,418 1,105 177,707
---------------------------------------------------------------------------------
Income before income taxes 93,048 1,886 (1,105) 93,829
Income taxes 33,334 542 - 33,876
=================================================================================
Net income $ 59,714 1,344 (1,105) 59,953
=================================================================================
Earnings per common share:
Primary $ 2.54 1.73 2.55
Fully diluted 2.54 1.70 2.54
Average common shares:
Primary 23,548,920 774,741 23,548,920
Fully diluted 23,595,644 788,590 23,595,644
</TABLE>
- -----------------------------------------
(1) In the opinion of management of the respective companies included above,
all adjustments considered necessary for a fair presentation of the
financial position and results for the period presented have been included.
Adjustments, if any, are normal and recurring in nature.
(2) Centura's historical 1995 information has been restated for the First
Commercial Holding Corp. merger that was consummated February 27, 1996 and
was accounted for as a pooling-of-interests.
(3) Pro forma adjustments have been computed assuming that the transaction
presented was completed January 1, 1995.
(4) First Community ("FCB"):
a) The pro forma adjustments assume that, simultaneously with the
acquisition, Centura repurchased or completed its repurchase of 100% of the
shares to be issued in connection with the FCB acquisition and that there
was no price differential between the stock issued and the stock
repurchased. b) Amortization of goodwill of $16,570,000 is over a 15-year
period (the period estimated to be benefited) using a straight-line method
($1,105,000/year). Such amortization is not deductible for tax purposes;
thus, no adjustment is made for tax benefit of this expense. c) Pro forma
share and per share data are computed assuming the issuance of the shares
noted above at an exchange ratio of .96, less an equivalent number of
shares repurchased simultaneously upon consummation.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Centura Common Stock is traded on the NYSE under the symbol "CBC."
There is no established public market in which shares of First Community Common
Stock are traded regularly. Rather, buyers and sellers of First Community Common
Stock are matched by a local brokerage firm, or by First Community, as an
accommodation. The following table sets forth, for the indicated periods, (i)
the high and low closing prices for Centura Common Stock as reported on the
NYSE-Composite Transactions List, (ii) the high and low bid quotations of First
Community Common Stock, as reported by Jackson & Smith Investment Securities,
and (iii) the cash dividends declared per share of Centura Common Stock and
First Community Common Stock for the periods indicated.
<TABLE>
<CAPTION>
CENTURA FIRST COMMUNITY
Cash Dividends Paid Cash Dividends Paid
Price Range Per Share Price Range Per share
High Low High Low
<S> <C>
1994
First Quarter $20.500 $18.625 $ 0.18 $16.75 $15.00 $0.04
Second Quarter 21.750 18.000 0.18 16.00 15.00 0.04
Third Quarter 25.000 21.750 0.19 15.00 14.75 0.04
Fourth Quarter 24.375 21.000 0.19 15.50 14.50 0.05
1995
First Quarter $25.375 $22.500 $ 0.19 $15.50 14.50 $0.05
Second Quarter 27.875 25.000 0.20 15.50 14.50 0.05
Third Quarter 33.375 27.250 0.23 17.00 16.00 0.05
Fourth Quarter 35.500 33.125 0.23 18.50 16.00 0.06
1996
First Quarter $36.750 $33.875 $ 0.25 $31.00 $17.50 $0.06
Second Quarter 37.50 36.00 0.25(1) 31.00 30.00 0.06(2)
</TABLE>
(1) Declared by the Centura Board of Directors on April 17, 1996, and
payable on June 14, 1996, to stockholders of record on May 31, 1996.
(2) Declared by First Community's Board on June 18, 1996, payable on
July 15, 1996, to shareholders of record on June 28, 1996.
On June 28, 1996, the closing price of Centura Common Stock as reported
on the NYSE-Composite Transactions List and the average of the high and low bid
quotations of First Community Common Stock (as reported by Jackson & Smith
Investment Securities) were $36.75 and $30.00, respectively. On March 19, 1996,
the last business day prior to public announcement of the proposed Merger, the
closing price of Centura Common Stock as reported on the NYSE-Composite
Transactions List and the closing bid price of First Community Common Stock were
$35.00 and $18.50, respectively.
The holders of Centura Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds legally available
therefor. Although Centura currently intends to continue to pay quarterly cash
dividends on the Centura Common Stock, there can be no assurance that Centura's
dividend policy will remain unchanged after completion of the Merger. The
declaration and payment of dividends thereafter will depend upon business
conditions, operating results, capital and reserve requirements, and the Board
of Directors' consideration of other relevant factors. The Agreement prohibits
First Community from paying dividends on First Community Common Stock during the
pendency of the Merger other than pursuant to its prior practice with regard to
dividends.
Centura and First Community are each legal entities separate and
distinct from their subsidiaries and their revenues depend in significant part
on the payment of dividends from their subsidiary depository institutions.
Centura's and First Community's subsidiary depository institutions are subject
to certain legal restrictions on the amount of dividends they are permitted to
pay. See "CERTAIN REGULATORY CONSIDERATIONS --Payment of Dividends."
SPECIAL MEETING OF FIRST COMMUNITY STOCKHOLDERS
Date, Place, Time, and Purpose
This Proxy Statement is being furnished to the holders of First
Community Common Stock in connection with the solicitation by the First
Community Board of Directors of proxies for use at the Special Meeting at which
First Community stockholders will be asked to vote upon a proposal to approve
the Agreement and the Merger contemplated thereby. The Special Meeting will be
held at the Gaston County Public Library, 1555 East Garrison Boulevard,
Gastonia, North Carolina 28054, at 11:00 A.M., local time, on Wednesday, August
7, 1996. See "DESCRIPTION OF TRANSACTION."
Record Dates, Voting Rights, Required Votes, and Revocability of Proxies
The close of business on June 28, 1996, has been fixed as the First
Community Record Date for determining holders of outstanding shares of First
Community Common Stock entitled to notice of and to vote at the Special Meeting.
Only holders of First Community Common Stock of record on the books of First
Community at the close of business on the First Community Record Date are
entitled to notice of and to vote at the Special Meeting. As of the First
Community Record Date, there were 781,493 shares of First Community Common Stock
issued and outstanding and held by approximately 790 holders of record.
Holders of First Community Common Stock are entitled to one vote on
each matter considered and voted upon at the Special Meeting for each share of
First Community Common Stock held of record as of the First Community Record
Date. To hold a vote on any proposal, a quorum must be assembled, which is a
majority of the shares of First Community Common Stock issued and outstanding
and entitled to vote, present in person or represented by proxy. In determining
whether a quorum exists at the Special Meeting for purposes of all matters to be
voted on, all votes "for" or "against," as well as all abstentions, with respect
to the proposal receiving the most such votes, will be counted. The vote
required for the approval of the Agreement and the Merger is two-thirds of the
shares of First Community Common Stock entitled to be cast at the Special
Meeting by holders of the issued and outstanding shares of First Community
Common Stock. Consequently, with respect to the proposal to approve the
Agreement, abstentions and broker non-votes will be counted as part of the base
number of votes to be used in determining if the proposal has received the
requisite number of base votes for approval. Thus, an abstention and a broker
non-vote will have the same effect as a vote against such proposal.
Shares of First Community Common Stock represented by properly executed
proxies, if such proxies are received in time and 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 approval of the Agreement and the
Merger contemplated thereby and, in the discretion of the proxy holder, as to
any other matter which 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 in the event
there are not sufficient votes to approve the foregoing proposal at the time of
the Special Meeting.
Failure both to return the proxy card and to vote in person at the
Special Meeting will have the effect of a vote cast against approval of the
Agreement.
A First Community stockholder who has given a proxy may revoke it at
any time prior to its exercise at the Special Meeting by (i) giving written
notice of revocation to the Secretary of First Community, (ii) properly
submitting to First Community a duly executed proxy bearing a later date or
(iii) attending the Special Meeting and voting in person. All written notices of
revocation and other communications with respect to revocation of proxies should
be addressed as follows: First Community Bank, 100 East Garrison Boulevard,
Gastonia, North Carolina 28052; Attention: Will Weill, III , Secretary.
As of March 31, 1996, the directors and executive officers of First
Community and their affiliates were entitled to vote 151,386 shares (or
approximately 19% of the issued and outstanding shares) of First Community
Common Stock.
Solicitation of Proxies
Proxies may be solicited by the directors, officers, and employees of
First Community by mail, in person, or by telephone or telegraph. Such persons
will receive no additional compensation for such services. First Community 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 First Community Common Stock held of record by such
persons. Any such brokers, custodians, nominees, and fiduciaries will be
reimbursed for the reasonable out-of-pocket expenses incurred by them for such
services. All expenses associated with the solicitation of proxies, other
expenses associated with the Special Meeting, and expenses related to the
printing and mailing of this Proxy Statement, will be shared by Centura and
First Community as provided in the Agreement. See "DESCRIPTION OF THE
TRANSACTION --Expenses and Fees."
Recommendation
The Board of Directors of First Community has unanimously approved the
Agreement and the Merger contemplated thereby, believes that the proposal to
approve the Agreement is in the best interests of First Community and its
stockholders, and unanimously recommends that the First Community stockholders
vote FOR approval of the proposal to approve the Agreement and the Merger
contemplated thereby.
DESCRIPTION OF TRANSACTION
The following information describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement, which is attached
as Appendix A to this Proxy Statement and incorporated herein by reference. All
stockholders are urged to read the Appendices in their entirety.
General
The Agreement provides for the acquisition of First Community by
Centura pursuant to the merger of First Community with and into Centura Bank. At
the Effective Time, each share of First Community Common Stock then issued and
outstanding (excluding shares held by First Community, Centura, or Centura's
subsidiaries, in each case other than shares held in a fiduciary capacity or in
satisfaction of debts previously contracted, and excluding shares held by
stockholders who perfect their statutory rights of appraisal) will be converted
into and exchanged for 0.96 of a share of Centura Common Stock, subject to
possible adjustment as described below (the "Exchange Rate").
No fractional shares of Centura Common Stock will be issued. Rather,
cash (without interest) will be paid in lieu of any fractional share interest to
which any First Community stockholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of Centura Common
Stock multiplied by the market value of one share of Centura Common Stock at the
Effective Time. The market value of one share of Centura Common Stock at the
Effective Time shall be the Average Closing Price (as defined below).
Centura's Board has approved the repurchase in the open market of
shares of Centura Common Stock equal in number to up to all of the shares to be
issued in connection with the Merger and up to 9.9% (approximately 101,000
shares) of the shares of Centura Common Stock to be issued in the merger with
FirstSouth Bank. See "INFORMATION ABOUT CENTURA - Recent Developments." Under
rules promulgated by the SEC under the Exchange Act, Centura will not be
permitted to purchase shares of Centura Common Stock in the open market during
the period commencing two business days prior to the mailing of this Proxy
Statement and ending immediately following the Special Meeting.
As of the First Community Record Date, First Community had 781,493 shares
of First Community Common Stock issued and outstanding and 92,000 additional
shares of First Community Common Stock subject to First Community Options.
Taking into the account the Exchange Ratio of 0.96 of a share of Centura Common
Stock for each share of First Community Common Stock, it is anticipated that
upon consummation of the Merger, Centura would issue approximately 838,553
shares of Centura Common Stock, excluding shares subject to assumed options of
grants. Accordingly, Centura would then have issued and outstanding
approximately 23,713,603 shares of Centura Common Stock based on the number
of shares of Centura Common Stock issued and outstanding on March 31, 1996, and
excluding the effect of any shares repurchased by Centura since such time.
Possible Adjustment of Exchange Rate
The Exchange Rate is subject to adjustment in the following
circumstances:
In the event that the "Average Closing Price" (defined in the Agreement
as the average of the daily last sale prices of Centura Common Stock quoted on
the NYSE - Composite Transactions List (as reported by The Wall Street Journal
or, if not reported thereby, another authoritative source as selected by
Centura) for the ten consecutive full trading days on which such shares are
traded on the NYSE ending at the close of trading on the trading day immediately
preceding the Special Meeting (the "Determination Date") is less than $31.50,
the parties shall calculate (i) the quotient obtained by dividing the Average
Closing Price by $35.00 (the "Centura Ratio") and (ii) the quotient obtained by
dividing the average of the "Index Price" (defined below) for the ten full
trading days immediately preceding the Determination Date by the Index Price on
March 20, 1996 (the "Index Ratio"). If the Index Ratio is greater than the
Centura Ratio, then the Exchange Rate shall be the quotient derived by dividing
the product of $33.60 (the equivalent per share price of First Community Common
Stock under the Exchange Rate at the time the Merger was first publicly
announced) multiplied by the Index Ratio by the Average Closing Price (rounded
up to two decimal places). If the Index Ratio is less than the Centura Ratio,
then the Exchange Rate shall be 0.96. The "Index Price" is the weighted average
of the closing prices of the companies composing the NYSE Bank Stock Index
compiled by SNL Securities. The SNL NYSE Bank Stock Index was chosen as the
reference point for the market for bank stocks in general because Centura Stock
is traded on the NYSE and, as such, the Index would more accurately reflect
banks and bank holding companies comparable to Centura in size and liquidity. In
addition, the Index is one of three indices against which Centura measures the
performance of Centura Stock in Centura's proxy materials.
In the event that the Average Closing Price is greater than $38.50,
then the Exchange Rate shall be the quotient derived by dividing the product of
$33.60 multiplied by the Index Ratio by the Average Closing Price (rounded up to
two decimal places).
The operation of the adjustment mechanism can be illustrated by the
scenarios set forth below. (For purposes of the numerical examples, the Exchange
Rate is 0.96 and the Index Price on the Commencement Date is $100.)
(a) The first scenario occurs if the Average Closing Price is not more than
$38.50 and not less than $31.50. Under this scenario, regardless of any
comparison between the Centura Ratio and the Index Ratio, there would
be no adjustment of the Exchange Rate, even though the consideration to
be received by First Community stockholders could have increased from a
pro forma $33.60 per share to a pro forma $36.96 per share or fallen as
low as a pro forma $30.24 per share.
(b) The second scenario occurs if the Average Closing Price declines to
less than $31.50, but the Index Ratio declines by more than the Centura
Ratio. Under this scenario, the Exchange Rate would not be adjusted,
even though the consideration received by First Community stockholders
would have fallen.
For example, if the Average Closing Price were $28.00 and the average
Index Price for the 10 trading days preceding the Determination Date
were 78, the Index Ratio (0.78) would have declined more than the
Centura Ratio (0.80) and, accordingly, there would be no adjustment in
the Exchange Rate, even though the value of the consideration received
by First Community shareholders would have declined from pro forma
$33.60 per share to pro forma $26.88.
(c) The third scenario arises where the Average Closing Price declines
below $31.50 and the Centura Ratio is below the Index Ratio. Under this
scenario, the Exchange Rate would be adjusted by multiplying $33.60 by
the Index Ratio and dividing the product by the Average Closing Price.
This adjustment can have varying results, based on the relative market
performance of Centura Common Stock and the stocks comprising the SNL
NYSE Bank Stock Index, as illustrated by the examples below.
For example, if the Average Closing Price were $28.00, and the ending
average of the Index Price for the 10 trading days preceding the
Determination Date were $98.00, the Centura Ratio (0.80) would be below
the Index Ratio (0.98). The Exchange Rate would be adjusted by
multiplying $33.60 by the Index Ratio (0.98) and dividing the product
thereof by the Average Closing Price. Based upon the assumed $28.00
Average Closing Price, the adjusted Exchange Rate (1.18) would
represent a value to the First Community stockholders of pro forma
$32.93 per share.
If the Average Closing Price were $28.00, and the ending average Index
Price were $105, the Centura Ratio (0.80) would be below the Index
Ratio (1.05). The Exchange Rate would be adjusted by multiplying $33.60
by the Index Ratio (1.05) and dividing the product thereof by the
Average Closing Price. Based upon the assumed $28.00 Average Closing
Price, the adjusted Exchange Rate (1.26) would represent a value to the
First Community stockholders of pro forma $35.28 per share.
(d) The fourth scenario occurs if the Average Closing Price exceeds $38.50
. Under this scenario, the Exchange Rate would be adjusted by
multiplying $33.60 by the Index Ratio and dividing the product thereof
by the Average Closing Price. This adjustment can have varying results,
based on the relative market performance of Centura Common Stock and
the stocks comprising the SNL NYSE Bank Stock Index, as illustrated by
the examples below.
For example, if the Average Closing Price were $42.00 per share (a 20%
increase from the price used to establish the Exchange Rate) and the
Index Price for the 10 trading days preceding the Determination Date
were $120, then the Index Ratio would be 1.2 and, based upon an Average
Closing Price of $42.00 per share, there would be no change in the
Exchange Rate, which would remain 0.96 and represent a value to First
Community stockholders of $40.32. In the alternative, assuming an
Average Closing Price of $42.00: (a) if the Index Ratio were 1.3, the
adjusted Exchange Rate (1.04) would represent a value to First
Community shareholders of $43.68, or (b) if the Index Ratio were 1.0,
the adjusted Exchange Rate (0.80) would represent a value to First
Community shareholders of $33.60.
There is no "floor" or "ceiling" to the Exchange Rate and, therefore,
the Exchange Rate could adjust significantly above or below 0.96 with
the result that the dollar value to First Community shareholders could
adjust significantly above or below the per share equivalent price of
First Community Stock contemplated by the parties at the execution of
the Agreement ($33.60). See "DESCRIPTION OF TRANSACTION--Adjustment of
Exchange Ratio." In the event the Exchange Rate were ajusted and the
adjustment caused the dollar value per share to be received by First
Community shareholders to be materially different than $33.60, First
Community would resolicit its shareholders if the adjusted value could
be supported by the Fairness Opinion. A condition precedent to the
closing of the Merger is the receipt by First Community of an update
to the Fairness Opinion. If on the Determination Date the
Exchange Rate and the resultant dollar value have decreased to the
point where Scott & Stringfellow could not confirm that the
Exchange Rate, as adjusted, was still fair to the shareholders of
First Community, from a financial viewpoint, then First Community
can either terminate the Merger or renegotiate the Exchange Rate with
Centura. If the Exchange Rate were renegotiated, First Community
would resolicit its shareholders and obtain from Scott &
Stringfellow a new fairness opinion or an update to the existing
Fairness Opinion.
The Average Closing Price was $37.00 on June 28, 1996, and
therefore no adjustment to the Exchange Rate would be required if such date had
been the Determination Date.
First Community stockholders should be aware that the actual market
value of a share of Centura Common Stock at the Effective Time and at the time
certificates for those shares are delivered following surrender and exchange of
certificates for shares of First Community Common Stock may be more or less than
the Average Closing Price. First Community stockholders are urged to obtain
information on the trading value of Centura Common Stock that is more recent
than that provided in this Proxy Statement. See "COMPARATIVE MARKET PRICES AND
DIVIDENDS."
Effect of the Merger on Stock Options
The Agreement contemplates that at the Effective Time, each First
Community Option granted by First Community under the First Community Stock
Plans, as that term is defined in the Agreement, which is outstanding at the
Effective Time, whether or not exercisable, will be converted into and become an
option with respect to Centura Common Stock, and Centura will assume each First
Community Option, in accordance with the terms of the First Community Stock Plan
and stock option agreement by which it is evidenced, except that from and after
the Effective Time (i) Centura and its Compensation Committee will be
substituted for First Community and the Committee of First Community's Board of
Directors (including, if applicable, the entire Board of Directors of First
Community) administering such First Community Stock Plan, (ii) each First
Community Option assumed by Centura may be exercised solely for shares of
Centura Common Stock, (iii) the number of shares of Centura Common Stock subject
to such First Community Option will be equal to the number of shares of First
Community Common Stock subject to such First Community Option immediately prior
to the Effective Time multiplied by the Exchange Rate, and (iv) the per share
exercise price under each such First Community Option will be adjusted by
dividing the per share exercise price under each such First Community Option by
the Exchange Rate and rounding up to the nearest cent. Notwithstanding the
provisions of clause (iii) of the preceding sentence, Centura will not be
obligated to issue any fraction of a share of Centura Common Stock upon exercise
of First Community Options and any fraction of a share of Centura Common Stock
that otherwise would be subject to a converted First Community Option will
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the market value of one share of Centura
Common Stock and the per share exercise price of such Option. The market value
of one share of Centura Common Stock will be the closing price of such common
stock on the NYSE-Composite Transaction List (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source selected by
Centura) on the last trading day preceding the Effective Time. In addition,
notwithstanding any other term in the Agreement, each First Community Right
which is an "incentive stock option" will be adjusted as required by Section 424
of the 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 Code.
In addition, Centura has agreed that the First Community Stock Option
Plan and the stock option agreements issued thereunder shall be amended at or
prior to the Effective Time to ensure that the payment of taxes provided for
thereunder shall not exceed the amount owed in respect of options exercised
thereunder in respect of all outstanding options as of the Effective Time, in
consideration of which Centura shall pay to the holders of such options the
amount of such tax payment promptly after the Effective Time.
Background of and Reasons for the Merger
Background and First Community's Reasons for the Merger. Since its
organization in 1987, First Community has operated as a community-oriented "home
town" commercial bank serving Gastonia, North Carolina. The community-oriented
banking philosophy of First Community generally has allowed it to compete
effectively and profitably with the other banking institutions in its local
market. During the last several years, however, competition has dramatically
increased with other types of financial institutions offering services
traditionally offered only by banks. This increased competition has created an
increase in public demand for a broader range of consumer services from
community banking institutions. Providing such services and products to
customers requires significant amounts of technology, in terms of equipment and
software. Additionally, since 1991, the federal banking agencies have imposed
many additional regulations on banks. The increased regulatory oversight has
burdened First Community due to its small size relative to many of its
competitors.
The increase in competition has been accelerated in the last few years
through the consolidation in the banking industry in North Carolina whereby many
smaller financial institutions have been acquired by larger state-wide or
regional banks. Given the rapid increase in technology and the greater size of
many of First Community's competitors, First Community would have to expend
significant amounts of capital to invest in the equipment and software necessary
to remain competitive.
First Community recognized that remaining an independent institution
may not best serve the long-term interests of First Community, its shareholders,
customers and employees. In recent years, throughout North Carolina, many
community financial institutions had been acquired by state-wide banks.
Additionally, the increased competition to provide cost-effective services and
products is a challenge to First Community which has fewer resources than many
of its competitors in its market area. Further, First Community Common Stock is
lightly traded, and, therefore, First Community's shareholders have limited
ability to sell their First Community Common Stock.
Given First Community's attractive franchise in Gastonia, various bank
holding companies in the recent past had indicated casual interest in acquiring
First Community to expand their operations into the Gastonia market.
Consequently, First Community determined that it would be wise to determine what
type of value the marketplace would place upon First Community if First
Community chose to consider being acquired, and proceeded to engage in general
discussions with several bank holding companies. After those general
discussions, Centura presented such a level of interest, potential value added
services, and market and customer "fit" that First Community deemed it
appropriate to pursue further discussions with Centura. Although no specific
proposal had been presented to First Community, First Community determined it
would be wise to engage a financial advisor and hired the investment banking
firm of Scott & Stringfellow to estimate the value of First Community and advise
First Community on the value of three bank holding companies with whom First
Community had communicated.
On March 19, 1996, the Board of Directors of First Community met with
the Chairman, President, and Chief Financial Officer of Centura, at which
meeting Centura formally proposed the terms of the Merger. The Board of
Directors of First Community believed that Centura's proposal was an attractive
offer and that First Community could not create greater shareholder value from
independent operations in the foreseeable future. Scott & Stringfellow gave the
Board of Directors a written analysis of the estimated value of First Community
and the potential values of the suggested proposals. The Board of Directors of
First Community also believe that the Merger would give shareholders of First
Community the opportunity for growth in a widely-traded stock, improved cash
dividend level and ownership in a company with a good history of earnings and
cash dividends. Further, Centura's commitment to electronic banking was
important to the Board of Directors for the additional services and benefits
electronic banking can offer First Communty's customers. Additionally, the Board
of Directors considered it important to recognize the contribution of First
Community's employees to the profitability of First Community as it
is to a great extent the employees who are responsible for the
satisfaction and loyalty of First Community's customers, without which First
Community could not have prospered. As the acquisition would be a new
market for Centura, the Merger would offer the best opportunity to retain as
many of First Community's existing branches and employees as possible as
opposed to an acquisition by a bank with existing branches and personnel in
First Community's market area which might consolidate overlapping branches and
eliminate duplicative employees. Considering all of the factors discussed above,
the Board of Directors of First Community determined it to be in the best
interest of First Community and its shareholders, customers, employees, and
communities to agree to be acquired by Centura. On March 19, 1996, First
Community's Board of Directors approved a letter of intent with Centura. On
April 4, 1996, the Board of Directors of First Community met to consider the
Agreement and the Merger, at which meeting Scott & Stringfellow gave the Board
of Directors its written opinion that the Centura proposal was fair, from a
financial viewpoint, to First Community's shareholders. At the April 4 meeting,
the Board of Directors of First Community approved the Agreement which, in turn
was approved by Centura's and Centura Bank's Boards of Directors on April 17,
1996.
For a discussion of the ownership of First Community Stock by the Board
of Directors and executive officers of First Community, see "INFORMATION ABOUT
FIRST COMMUNITY--Security Ownership of Management."
First Community's Board of Directors unanimously recommends that First
Community stockholders vote FOR approval of the Agreement and the Merger
contemplated thereby.
Centura's Reasons for the Merger. Although Centura currently is located
throughout North Carolina, it is not located or has a limited presence in
Gastonia and the other markets served by First Community. Accordingly, the
Merger is consistent with Centura's goal to leverage upon its existing market
presence and to expand into markets not previously served by it though
acquisitions, which expansion Centura believes will increase shareholder value.
In approving the Agreement and the Merger, the Centura Board considered a number
of additional factors concerning the benefits of the Merger. Without assigning
any relative or specific weights to the factors, the Centura Board of Directors
considered the following additional material factors:
(a) the information presented to the directors by the management of
Centura concerning the business, operations, earnings, asset quality, and
financial condition of First Community, including the composition of the earning
assets portfolio of First Community;
(b) the financial terms of the Merger, including the relationship of
the value of the consideration usable in the Merger to the market value,
tangible book value, and earnings per share of First Community Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of
the Merger as a tax-free exchange of First Community Common Stock for Centura
Common Stock for federal income tax purposes;
(d) the likelihood of the Merger being approved by applicable
regulatory authorities without undue conditions or delay;
(e) the opportunity for reducing the noninterest expense of the
operations of First Community and the ability of the operations of First
Community after the Effective Time to contribute to the earnings of Centura
through its existing products and services and additional services offered by
Centura;
(f) the attractiveness of the First Community franchise, the market
position of First Community in each of the markets in which it operates, and the
compatibility of the franchise of First Community with the operations of Centura
in the Gastonia, North Carolina area; and
(g) the compatibility of the community bank orientation of the
operations of First Community to that of Centura.
The Executive Committee of the Board of Directors of Centura determined
that the Merger was in the best interest of Centura and its stockholders and
approved the Agreement on March 20, 1996. The Agreement and the transactions
contemplated thereby were subsequently ratified and approved by the Boards of
Directors of Centura and Centura Bank on April 17, 1996.
Opinion of First Community's Financial Advisor
General
The Board of Directors of First Community retained the investment
banking firm of Scott & Stringfellow to evaluate the terms of the Merger, and
Scott & Stringfellow has rendered its opinion to the First Community Board of
Directors that the terms of the Merger are fair from a financial point of view
to the First Community stockholders. In developing its opinion, Scott &
Stringfellow reviewed and analyzed: (1) the Agreement; (2) First Community's
audited financial statements for the three years ended December 31, 1995; (3)
First Community's unaudited financial statements for the quarters ended March
31, 1995 and 1996, and other internal information relating to First Community
prepared by First Community management; (4) information regarding the trading
markets for First Community Common Stock and Centura Common Stock and the price
ranges within which the respective stocks have traded; (5) the relationship of
prices paid to relevant financial data such as net worth, earnings, deposits,
and assets in certain bank and bank holding company mergers and acquisitions in
North Carolina in recent years; (6) Centura's annual reports to stockholders and
its financial statements for the three years ended December 31, 1995; and (7)
Centura's unaudited financial statements for the quarters ended March 31, 1995
and 1996 and other internal information relating to Centura prepared by
Centura's management. Scott & Stringfellow has discussed with members of First
Community's and Centura's management the background of the Merger, the reasons
and basis for the Merger, and the business and future prospects of First
Community and Centura individually and as a combined entity. No instructions or
limitations were given or imposed by First Community in connection with the
scope of or the examination or investigations made by Scott & Stringfellow in
arriving at is findings. Finally, Scott & Stringfellow has conducted such other
studies, analysis and investigations, particularly of the banking industry, and
considered such other information as it deemed appropriate, the material portion
of which is described below. A copy of Scott & Stringfellow's opinion, which
sets forth the assumptions made, matters considered and qualifications made on
the review undertaken is attached as Appendix C hereto and should be read in its
entirety.
Scott & Stringfellow evaluated the financial terms of the Merger using
standard valuation methods, including discounted cash flow analysis, market
comparable analysis, comparable acquisition analysis, and dilution analysis.
Discounted Cash Flow Analysis. Scott & Stringfellow performed a
discounted cash flow analysis under various projections to estimate the fair
market value of First Community Common Stock. Among other things, Scott &
Stringfellow considered a range of asset and earnings growth for First Community
Bank of between 7% and 16% and required equity capital level of 8.00% of assets.
A range of discount rates from 10.38% to 12.38% were applied to the cash flows
resulting from the projections during the first five years and the residual
values. The residual values were estimated by capitalizing the projected final
year earnings by the discount rates, less the projected long-term growth rate of
First Community's earnings. The discount rate, growth rates and capital levels
were chosen based on what Scott & Stringfellow, in its judgment, considered to
be appropriate taking into account, among other things, First Community's past
and current financial performance and condition, the general level of inflation,
rates of return for fixed income and equity securities in the marketplace
generally and particularly in the banking industry. The discounted cash flow
analysis indicated a reference range of $22.28 to $28.18 per share for First
Community Common Stock. These values compare to the value of $35.40 per share of
consideration for each share of First Community Common Stock. Accordingly, the
present value of First Community Common Stock was calculated at less than the
value of the consideration to be received from Centura pursuant to the
Agreement.
Comparable Acquisition Analysis. Scott & Stringfellow compared the
relationship of prices paid to relevant financial data such as tangible net
worth, assets, deposits and earnings in 14 bank and bank holding company mergers
and acquisitions in North Carolina since January 1, 1992, representing all such
transactions known to Scott & Stringfellow to have occurred during this period
involving banks and bank holding companies, with the proposed Merger and found
the consideration to be received from Centura to be within the relevant pricing
ranges acceptable for such recent transactions. Specifically, based upon the
most recent transactions either closed or announced in North Carolina since
January 1, 1992, other than the Merger, the average price to tangible book value
in these transactions was 2.22 times, compared with 2.34 times for the Merger,
the average price to earnings ratio was 22.23 times, compared to 21.91 times for
the Merger, the average premium to deposits was 22.6%, compared with 23.2% for
the Merger, and the average premium to assets was 19.8%, compared with 27.4% for
the Merger. For purposes of computing the information with respect to the
Merger, $35.40 per share of consideration for each share of First Community
Common Stock was used.
Analysis of Centura and Comparable Bank Group. Scott & Stringfellow
analyzed the performance and financial condition of Centura relative to the
Comparable Bank Group, which includes the following financial institutions: CCB
Financial Corporation, Central Fidelity Banks, Inc., Crestar Financial
Corporation, F&M National Corporation, First Bancorp, First Citizens BancShares,
Inc., First Virginia Banks, Inc., Jefferson Bankshares, Inc., Signet Banking
Corporation, Triangle Bancorp, Inc., and United Carolina Bancshares. Among the
financial information compared was information relating to equity to assets,
loans to deposits, net interest margin, non-performing assets, total assets,
non-performing assets and efficiency ratio, as well as a comparison of common
stock liquidity. Additional information compared for the 12-month period ended
December 31, 1995, was (i) price to tangible book value ratio which was 2.36x
for Centura, compared to an average of 1.75x for the Comparable Bank Group, (ii)
price to earnings ratio which was 13.9x for Centura, compared to an average of
13.3x for the Comparable Bank Group, (iii) return on assets which was 1.22% for
Centura, compared to an average of 1.14% for the Comparable Bank Group, and (iv)
return on equity which was 15.44% for Centura, compared to an average of 13.01%
for the Comparable Bank Group. Overall, in the opinion of Scott & Stringfellow,
Centura's operating performance, financial condition, and liquidity for its
Common Stock were comparable to the Comparable Bank Group average and Centura's
market value was reasonable when compared to the Comparable Bank Group.
Accordingly, First Community stockholders shall receive Centura Common Stock
that is reasonably valued when compared to the Comparable Bank Group.
Dilution Analysis. Based upon publicly available financial information
on First Community and Centura, Scott & Stringfellow considered the effect of
the Merger on the book value, earnings, and market value of First Community and
Centura. The immediate effect on Centura -- assuming cost savings of $900,000 --
was to decrease earnings by $0.00 per share or 0.000% and to dilute book value
by $0.08 or 0.43%. The effect on First Community under the same assumptions is
to increase earnings $0.83 per share or 48.47%, to increase book value by $2.17
per share or 14.31%, to increase dividends by $0.72 or 300.00% and to increase
the market value of First Community of $18.00 per share to $35.40 per share.
This dilution analysis does not take into account the longer term benefits for
the combined companies resulting from the combination. Scott & Stringfellow
concluded from this analysis that the transaction would have a significant
positive effect on First Community and the First Community stockholders in that
historical dividends per share, net income per share and book value per share of
Centura Common Stock to be received by the First Community stockholders, after
giving effect to the Exchange Rate, would represent a substantial increase in
the historical dividends per share, net income per share, and book value per
share of First Community Common Stock, although there can be no assurance that
pro forma amounts are indicative of future results. See "Comparative Per Share
Information."
The summary set forth above includes the material factors considered,
but does not purport to be a complete description of the presentation by Scott &
Stringfellow to the First Community Board or of the analyses performed by Scott
& Stringfellow. The preparation of a fairness opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to partial analysis
or summary description. Accordingly, notwithstanding the separate factors
summarized above, Scott & Stringfellow believes that its analysis must be
considered as a whole and that selecting portions of its analyses and the
factors considered by it, without considering all analyses an factors, would
create an incomplete view of the process underlying the preparation of its
opinion. As a whole, these various analyses, contributed to Scott &
Stringfellow's opinion that the terms of the Merger Agreement are fair from a
financial point of view to First Community stockholders.
Scott & Stringfellow is a full service investment banking and brokerage
firm headquartered in Richmond, Virginia, that provides a broad array of
services to corporations, financial institutions and state and local
governments. The Financial Institutions Group of Scott & Stringfellow actively
works with financial institutions in Maryland, North Carolina, Virginia and the
District of Columbia, and West Virginia on these and other matters. As part of
its investment banking practice, it is continually engaged in the valuation of
financial institutions and their securities in connection with mergers and
acquisitions, negotiated underwritings, and secondary distribution of listed an
unlisted securities. Scott & Stringfellow was selected by the First Community
Board based upon its expertise and reputation in providing valuation and merger
and acquisition and advisory services to financial institutions.
Compensation of Scott & Stringfellow
Pursuant to an engagement letter dated April 4, 1996, between First
Community and Scott & Stringfellow, First Community agreed to pay Scott &
Stringfellow a $20,000 fairness opinion fee. First Community has also agreed to
indemnify and hold harmless Scott & Stringfellow and its officers and employees
against certain liabilities in connection with its services under the engagement
letter, except for liabilities resulting from the negligence of Scott &
Stringfellow.
A written opinion to the First Community Board of Directors reflecting
Scott & Stringfellow's opinion has been delivered and dated as of the date of
this Proxy Statement to the effect that, as of such date, the Exchange Rate is
fair, from a financial point of view, to the stockholders of First Community.
The full text of Scott & Stringfellow's opinion as of the date of this
Proxy Statement, which sets forth certain assumptions made, matters considered,
and limitations on review undertaken is attached as Appendix C to this Proxy
Statement, is incorporated herein by reference, and should be read in its
entirety in connection with this Proxy Statement. The summary of the opinion of
Scott & Stringfellow set forth in this Proxy Statement is qualified in its
entirety by reference to the opinion. Scott & Stringfellow's opinion is directed
only to the fairness, from a financial point of view, of the Exchange Rate to
the stockholders of First Community and does not constitute a recommendation to
any stockholder of First Community or Centura as to how such stockholder should
vote on the Agreement or the Merger contemplated thereby.
Effective Time of the Merger
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time will occur on the date and at the time that the
Articles of Merger relating to the Merger become effective with the North
Carolina Secretary of State. Unless otherwise agreed upon by Centura and First
Community, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties will use their reasonable efforts to cause the
Effective Time to occur as soon as practical following the last to occur of (i)
the effective date (including the expiration of any applicable waiting period)
of the last consent of any regulatory authority required for the Merger and (ii)
the date on which the stockholders of First Community approve the matters
relating to this Agreement required to be approved by such stockholders by
applicable law.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. First Community and Centura anticipate that all
conditions to consummation of the Merger will be satisfied so that the Merger
can be consummated during the third quarter of 1996.
However, delays in the consummation of the Merger could occur.
The Board of Directors of either First Community or Centura generally
may terminate the Agreement if the Merger is not consummated by December 31,
1996, unless the failure to consummate by that date is the result of a breach of
the Agreement by the party seeking termination. See "--Conditions to
Consummation of the Merger" and "--Waiver, Amendment, and Termination."
Distribution of Centura Stock Certificates
Promptly after the Effective Time, Centura will cause Registrar and
Transfer Company, acting in its capacity as Exchange Agent, to mail a letter of
transmittal, together with instructions for the exchange of the Certificates
representing shares of First Community Common Stock for certificates
representing shares of Centura Common Stock, to the former stockholders of First
Community.
First Community stockholders should NOT send in their certificates
until they receive the letter of transmittal and instructions.
Upon surrender to the Exchange Agent of certificates for First
Community Common Stock, together with a properly completed letter of
transmittal, there will be issued and mailed to each holder of First Community
Common Stock surrendering such items a certificate or certificates representing
the number of shares of Centura Common Stock to which such holder is entitled,
if any, and a check for the amount to be paid in lieu of any fractional share
(without interest), together with all undelivered dividends or distributions in
respect of such shares (without interest thereon). After the Effective Time, to
the extent permitted by law, First Community stockholders of record as of the
Effective Time will be entitled to vote at any meeting of Centura stockholders
the number of whole shares of Centura Common Stock into which their shares of
First Community Common Stock have been converted, regardless of whether such
stockholders have surrendered their First Community Common Stock certificates.
Whenever a dividend or other distribution is declared by Centura on Centura
Common Stock, the record date for which is at or after the Effective Time, the
declaration will include dividends or other distributions on all shares issuable
pursuant to the Agreement, but, beginning 30 days after the Effective Time, no
dividend or other distribution payable after the Effective Time with respect to
Centura Common Stock will be paid to the holder of any unsurrendered First
Community Common Stock certificate until the holder duly surrenders such
certificate. Upon surrender of such First Community Common Stock certificate,
however, both the Centura Common Stock certificate, together with all
undelivered dividends or other distributions (without interest) and any
undeliverd cash payments to be paid in lieu of fractional shares (without
interest), will be delivered and paid with respect to each share represented by
such certificate.
After the Effective Time, there will be no transfers of shares of First
Community Common Stock on First Community's stock transfer books. If
Certificates representing shares of First Community Common Stock are presented
for transfer after the Effective Time, they will be canceled and exchanged for
the shares of Centura Common Stock and a check for the amount due in lieu of
fractional shares and undelivered dividends, if any, deliverable in respect
thereof.
Conditions to Consummation of the Merger
Consummation of the Merger is subject to various conditions, including
(i) receipt of the approval of the Agreement by the stockholders of First
Community as required by the NCBCA, (ii) receipt of certain regulatory approvals
required for consummation of the Merger, (iii) receipt of a favorable opinion of
Poyner & Spruill that the transaction is described under Section 368 of the
Internal Revenue Code, (iv) receipt of approval of the shares of Centura Common
Stock issuable pursuant to the Merger for listing on the NYSE, subject to
official notice of issuance, (v) the Registration Statement being declared
effective and all necessary SEC and state approvals relating to the issuance or
trading of the shares of Centura Common stock issuable pursuant to the Merger
shall have been received, (vi) the accuracy, as of the date of the Agreement and
as of the Effective Time, of the representations and warranties of First
Community and Centura as set forth in the Agreement, (vii) the performance of
all agreements and the compliance with all covenants of First Community and
Centura as set forth in the Agreement, (viii) receipt of all consents required
for consummation of the Merger or for the preventing of any default under any
contract or permit which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a material adverse effect; (ix) the absence of
any law or order or any action taken by any court, governmental, or regulatory
authority prohibiting, restricting, or making illegal the consummation of the
transaction; (x) receipt of the fairness opinion of Scott & Stringfellow; and
(xi) satisfaction of certain other conditions, including the receipt of
agreements of affiliates of First Community, certain legal opinions and various
certificates from the officers of First Community and Centura. See "-Regulatory
Approvals" and "--Waiver, Amendment, and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event the Merger is not effected on or before
December 31, 1996, the Agreement may be terminated and the Merger abandoned by a
vote of a majority of the Board of Directors of either First Community or
Centura. See "--Waiver, Amendment, and Termination."
Regulatory Approvals
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Application for the approvals described below have been
submitted to the appropriate regulatory agencies. There can be no assurance that
such regulatory approvals will be obtained or as to the timing of any such
approvals. There also can be no assurance that any such approvals will not
impose conditions or be restricted in a manner (including requirements relating
to the raising of additional capital or the disposition of assets) which in the
reasonable judgment of the Board of Directors of either Centura or First
Community would so materially adversely impact the economic or business benefits
of the transactions contemplated by the Agreement that, had such condition or
requirement been known, such party would not in its reasonable judgment have
entered into the Agreement.
First Community and Centura are not aware of any material governmental
approvals or actions that are required for consummation of the Merger, except as
described below. Should any other approval or action be required, it presently
is contemplated that such approval or action would be sought.
The Merger will require the prior approval of the Federal Reserve,
pursuant to Section 3 of the BHC Act. In evaluating the Merger, the Federal
Reserve must consider, among other factors, the financial and managerial
resources and future prospects of Centura, Centura Bank and First Community and
the convenience and needs of the communities to be served. The relevant statutes
prohibit the Federal Reserve from approving the Merger if (i) it would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any part of the United
States or (ii) its effect in any section of the country may be to substantially
lessen competition or to tend to create a monopoly, or if it would be a
restraint of trade in any other manner, unless the Federal Reserve finds that
any anticompetitive effects are outweighed clearly by the public interest and
the probable effect of the transaction in meeting the convenience and needs of
the communities to be served. The Merger may not be consummated until 30 days
(which the Federal Reserve may reduce to 15 days) following the date of the
Federal Reserve approval, during which time the United States Department of
Justice may challenge the transaction on antitrust grounds. The commencement of
any antitrust action would stay the effectiveness of the approval of the
agencies, unless a court of competent jurisdiction specifically orders
otherwise.
The Merger also is subject to the approval of the Commissioner and the
North Carolina State Banking Commission. In its evaluations, this state agency
will take into account considerations similar to those applied by the Federal
Reserve.
Waiver, Amendment, and Termination
To the extent permitted by applicable law, First Community and Centura,
with the approval of their respective Boards of Directors, may amend the
Agreement by written agreement at any time before or after approval of the
Agreement by the First Community stockholders; provided, however, that after the
Special Meeting, no amendment may alter the manner or basis in which shares of
First Community Common Stock will be exchanged for Centura Common Stock without
the requisite approval of the holders of the issued and outstanding shares of
First Community Common Stock entitled to vote thereon. In addition, prior to or
at the Effective Time, either First Community or Centura, or both, acting
through their respective Boards of Directors or chief executive officers or
other authorized officers may waive any default in the performance of any term
of the Agreement by the other party, may waive or extend the time for the
compliance or fulfillment by the other party of any and all of its obligations
under the Agreement, and may waive any of the conditions precedent to the
obligations of such party under the Agreement, except any condition that, if not
satisfied, would result in the violation of any applicable law or governmental
regulation. No such waiver will be effective unless written and unless executed
by a duly authorized officer of First Community or Centura, as the case may be.
The Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time (i) by the mutual consent of the Boards of Directors
of First Community and Centura; (ii) by the Board of Directors of First
Community or Centura (a) in the event of any inaccuracy of any representation or
warranty of the other party contained in the Agreement which cannot be or has
not been cured within 30 days after giving written notice to the breaching party
of such inaccuracy and which inaccuracy would provide the terminating party the
ability to refuse to consummate the Merger under the applicable standards set
forth in the Agreement (provided that the terminating party is not then in
breach of any representation or warranty contained in the Agreement under the
applicable standards set forth in the Agreement or in material breach of any
covenant or other agreement contained in the Agreement), (b) in the event of a
mutual breach by the other party of any covenant or agreement contained in the
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach, (c) if the Merger is
not consummated by December 31, 1996, provided that the failure to consummate is
not due to the breach by the party electing to terminate, (d) if (1) any
approval of any regulatory authority required for consummation of the Merger and
the other transactions contemplated by the Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the stockholders of First Community fail
to vote their approval of the matters submitted for the approval by such
stockholders at the Special Meeting, or (e) if any of the conditions precedent
to the obligations of such party to consummate the Merger have not been
satisfied, fulfilled, or waived by the appropriate party by December 31, 1996
(provided that the terminating party is not then in breach of any representation
or warranty contained in the Agreement under the applicable standards set forth
in the Agreement or in material breach of any covenant or other agreement
contained in the Agreement).
Additionally, the Agreement may be terminated and the Merger abandoned
prior to the Effective Time by Centura if Centura believes the amount of
expenses or liability which First Community could incur or for which First
Community could become responsible or liable on account of any and all
remediation, corrective action or monetary damages resulting from environmental
violations exceeds an aggregate of $750,000.
If the Merger is terminated as described above, the Agreement will
become void and have no effect, except that certain provisions of the Agreement,
including those relating to the obligations to share certain expenses, maintain
the confidentiality of certain information obtained, and return all documents
obtained from the other party under the Agreement, will survive. In addition,
termination of the Agreement will not relieve any breaching party from liability
for any uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination. See "--Expenses and Fees" and
"--Option Agreement."
Dissenters' Rights
Under the provisions of Article 13 of the NCBCA, any shareholder of
First Community who (i) gives First Community notice of his intent to demand
payment for his shares if the Merger is effectuated, which notice is actually
received by First Community before the vote is taken at the Special Meeting and
(ii) does not vote his shares at the Special Meeting in favor of the proposal to
approve the Agreement and the Merger contemplated thereby, shall be entitled, if
the Agreement is approved and the Merger effectuated, to receive payment of the
fair value of his shares upon compliance with the the procedural requirements of
the Article. A stockholder of First Community who does not satisfy such
requirements is not entitled to payment for his shares under Article 13 of the
NCBCA.
Specifically, Section 55-13-22 of the NCBCA provides that if proposed
corporate action creating dissenters' rights is authorized at a stockholders'
meeting, a corporation shall mail by registered or certified mail, return
receipt requested, a written dissenters' notice to all stockholders who
satisfied the requirements set forth above. The dissenters' notice must be sent
no later than 10 days after the corporate action was taken, and must supply a
form for demanding payment, state where the payment demand must be sent and
where and when certificates for certificated shares must be deposited, and set a
date by which the corporation must receive the payment demand, which date may
not be fewer than 30 nor more than 60 days after the date the dissenters' notice
is mailed. Under Section 55-13-23 of the NCBCA, a stockholder sent a dissenters'
notice must demand payment and deposit his share certificates in accordance with
the terms of the notice. A stockholder who demands payment and deposits his
share certificates in accordance with the terms of the notice retains all other
rights of a stockholder until such rights are canceled or modified by the taking
of the proposed corporate action. A stockholder who does not demand payment or
deposit his share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for his shares.
As soon as the proposed corporate action is taken, or upon receipt of a
payment demand, the corporation shall offer to pay each dissenting stockholder
who complied with the requirements of Section 55-13-23 the amount the
corporation estimates to be the fair value of his shares, plus interest accrued
to the date of payment, and shall pay this amount to each dissenting stockholder
who agrees in writing to accept it in full satisfaction of his demand. However,
pursuant to Section 55-13-28 of the NCBCA, a dissenting stockholder may notify
the corporation in writing of his own estimate of the fair value of his shares
and amount of interest due, and demand payment of such estimate, or reject the
corporation's offer and demand payment of the fair value of his shares and
interest due, if:
(i) the dissenting stockholder believes that the amount offered by
the corporation is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(ii) the corporation fails to make payment to a dissenting
stockholder who accepts the corporation's offer within 30 days
after the dissenting stockholders' acceptance; or
(iii) the corporation, having failed to take the proposed action,
does not return the deposited certificates within 60 days
after the date set for demanding payment.
A dissenting stockholder waives his right to demand payment unless he
notifies the corporation of his demand in writing under subparagraph (i) above
within 30 days after the corporation offered payment for his shares or under
subparagraphs (ii) or (iii) above within 30 days after the corporation has
failed to perform its required actions in a timely fashion. A dissenting
stockholder who fails to notify the corporation of his demand under subparagraph
(i) above within such 30-day period shall be deemed to have withdrawn his
dissent and demand for payment.
If a demand for payment remains unsettled, the dissenting stockholder
may commence a proceeding within 60 days after the date of his payment demand
and petition the court to determine the fair value of the shares and accrued
interest. Upon service upon it of the petition filed with the court, the
corporation shall pay to the dissenting stockholder the amount previously
offered by the corporation. If the dissenting stockholder does not commence the
proceeding within the 60-day period, the dissenting stockholder shall have an
additional 30 days to either (i) accept in writing the amount offered by the
corporation, upon which acceptance the corporation shall pay such amount to the
dissenting stockholder in full satisfaction of his demand, or (ii) withdraw his
demand for payment and resume the status of a nondissenting stockholder. A
dissenting stockholder who takes no action within such 30-day period shall be
deemed to have withdrawn his dissent and demand for payment.
A record stockholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of such partial dissenting stockholder are determined as if
the shares as to which he dissents and his other shares were registered in the
names of different stockholders.
A beneficial stockholder may assert dissenters' rights as to shares
held on his behalf only if:
(i) he submits to the corporation the record stockholder's written
consent to dissent not later than the time the beneficial
stockholder asserts dissenters' rights; and
(ii) he does so with respect to all shares of which he is the
beneficial stockholder.
A failure to vote against approval of the Agreement will not constitute
a waiver of a stockholder's appraisal rights, provided that notice in writing of
the stockholder's intent to demand payment for his shares if the Merger is
effectuated is given to the corporation, which notice is actually received by
the corporation before the vote is taken at the Special Meeting. Voting against
approval of the Agreement will not entitled a stockholder to receive cash for
his shares unless such stockholder complies with all of the procedural
requirements discussed above. Any holder of First Community Common Stock who
returns a signed proxy but who fails to provide voting instructions with respect
to the proposal to approve the Agreement will be deemed to have voted in favor
of the Agreement and the Merger contemplated thereby and will not be entitled to
assert dissenters' rights of appraisal.
THE FOREGOING IS ONLY A SUMMARY OF THE RIGHTS OF DISSENTING HOLDERS OF
FIRST COMMUNITY COMMON STOCK. ANY HOLDER OF FIRST COMMUNITY COMMON STOCK WHO
INTENDS TO DISSENT SHOULD CAREFULLY REVIEW THE TEXT OF THE NORTH CAROLINA
STATUTORY LAW SET FORTH IN APPENDIX B TO THIS PROXY STATEMENT AND SHOULD ALSO
CONSULT WITH HIS OR HER ATTORNEY. THE FAILURE OF A FIRST COMMUNITY STOCKHOLDER
TO FOLLOW PRECISELY THE PROCEDURES SUMMARIZED ABOVE AND SET FORTH IN APPENDIX B
TO THIS PROXY STATEMENT MAY RESULT IN LOSS OF APPRAISAL RIGHTS. NO FURTHER
NOTICE OF THE EVENTS GIVING RISE TO APPRAISAL RIGHTS OR ANY STEPS ASSOCIATED
THEREWITH WILL BE FURNISHED TO HOLDERS OF FIRST COMMUNITY COMMON STOCK, EXCEPT
AS INDICATED ABOVE OR OTHERWISE REQUIRED BY
LAW.
In general, any dissenting stockholder who perfects such holder's right
to be paid the "fair value" of such holder's First Community Common Stock in
cash will recognize taxable gain or loss for federal income tax purposes upon
receipt of such cash. See "--Certain Federal Income Tax Consequences."
Conduct of Business Pending the Merger
Pursuant to the Agreement, First Community has agreed that unless the
prior written consent of Centura has been obtained, and except as otherwise
expressly contemplated in the Agreement, First Community will (i) preserve and
protect its present business organization, keep available its present officers
and employees, and preserve its relationships with customers, depositors,
creditors correspondents, suppliers, and others having business relationships
with it; (ii) maintain all its properties and equipment in customary repair,
order and condition, ordinary wear and tear excepted; (iii) maintain its books
of account and records in the usual, regular and ordinary manner in accordance
with sound business practices applied on a consistent basis; (iv) comply with
all laws, rules and regulations applicable to it, its properties and to the
conduct of its business; (v) continue to maintain in force insurance and to not
modify any bonds or policies of insurance in effect as of the date of the
Agreement unless the same, as modified, provides substantially equivalent
coverage, and to not cancel, allow to be terminated or, to the extent available,
fail to renew, any such bond or policy of insurance unless the same is replaced
with a bond or policy providing substantially equivalent coverage; and (vi)
promptly provide to Centura such information about First Community and its
financial condition, results of operations, prospects, businesses, assets, loan
portfolio, investments, properties or operations as Centura reasonably may
request.
In addition, First Community has agreed that, prior to the earlier of
the Effective Time or termination of the Agreement, First Community will not,
except with the prior written consent of the President of Centura or as
expressly contemplated or permitted by the Agreement, agree or commit to do, any
of the following: (i) amend its Articles of Incorporation or Bylaws; (ii) except
for the issuance of stock pursuant to First Community Options, not make any
change in its authorized capital stock, or create any other or additional
authorized capital stock or other securities, or issue, sell, purchase, redeem,
retire, reclassify, combine or split any shares of its capital stock or other
securities other than the issuance of shares upon the exercise of First
Community capital stock options; (iii) not issue any options, warrants, calls,
puts or other rights of any kind relating to the purchase of its capital stock
or any other securities; (iv) not declare or pay any dividends or make any other
distributions on its shares of capital stock or otherwise to its shareholders,
except in accordance with its current cash dividend policy at current dividend
levels and declaration and payment dates; (v) except as required by law and
except as allowed under the First Community Stock Plans, not enter into or
become bound by any contract, agreement or commitment for the employment or
compensation of any officer, employee or consultant which is not immediately
terminable by First Community without cost or other liability on no more than 30
days' notice, or adopt, enter into or become bound by any new or additional
profit-sharing, bonus, incentive, stock option, stock purchase, pension,
retirement, insurance or similar contract or agreement or plan with respect to
or which provides for benefits for any of its current or former directors,
officers, employees or consultants, or enter into or become bound by any
contract with or commitment to any labor or trade union or association or any
collective bargaining group; (vi) except for annual merit increases in the
salary of its employees, or other payments made to the employees or directors in
connection with existing compensation or benefit plans, and except for bonus
payments under First Community's Executive Bonus Plan and Executive Officer
Plan, not increase the compensation or benefits of, or pay any bonus or other
special or additional compensation to, any of First Community's directors,
officers, employees, or consultants; (vii) not make any changes in its
accounting methods, practices or procedures; (viii) not directly or indirectly
acquire or merge with or acquire any branch or all or any significant part of
the assets of any other entity, open any new branch or enter into or become
bound by any contract in furtherance thereof, provided that First Community
shall be allowed to open its proposed branch at 701 South Main Street, Mt.
Holly, North Carolina; (ix) except as may be required by the FDIC, the
Commissioner or any other governmental or other regulatory agency or as shall be
required by applicable law, regulation or the Agreement, First Community will
not change in any material respect the nature of its business or the manner in
which it conducts its business, discontinue any material portion or line of its
business, or change in any material respect its lending, investment, asset
liability management, or other material banking or business policies; (x) not
encourage, solicit or attempt to negotiate with any entity relating to a merger
or other acquisition of First Community or a significant part of its assets;
(xi) not sell or lease (as lessor) or enter into or become bound by any contract
or agreement relating to the sale, lease (as lessor) or other disposition of
real estate or other property, purchase or lease (as lessee) or enter into or
become bound by any contract relating to the purchase, lease (as lessee) or
other acquisition of any real property or other property, or sell or dispose of
or enter into a contract for the sale or disposal of any other asset of First
Community; (xii) except in the ordinary course of its business consistent with
past practices, incur any debt or assume, guarantee, or endorse or otherwise
become responsible or liable for any obligation of any other person or entity;
(xiii) mortgage, pledge or subject any of its assets to any lien or any other
encumbrance other than in the ordinary course of business consistent with its
past practice; (xiv) not waive, release or compromise any material rights in its
favor except in good faith for fair value; and (xv) not enter into or become
bound by any contracts or agreements or understandings with respect to
charitable contributions, any governmental or regulatory agency or authority, or
enter into any contract, agreement, commitment or understanding which would
obligate or commit First Community to make expenditures for more than $75,000
(other than in the ordinary course of First Community's lending operations).
The Agreement also provides that Centura may offer to acquire, enter
into agreements to acquire and acquire financial institution holding companies
and their subsidiaries, financial institutions and their subsidiaries, and the
assets and liabilities of such entities prior to the Effective Time, provided,
however, that in the event that any such acquisition should cause a condition
precedent to the consummation of the Merger as provided in the Agreement to fail
to be satisfied on or before December 31, 1996, any such failure shall be deemed
a termination of the Agreement by Centura and would be deemed to be a willful
breach of the Agreement by Centura.
Management and Operations After the Merger
Consummation of the Merger will not alter the present management team
or Board of Directors of Centura. Information concerning the management of
Centura is included in the documents incorporated herein by reference. See
"DOCUMENTS INCORPORATED BY REFERENCE." For additional information regarding the
interests of certain persons in the Merger, see "--Interests of Certain Persons
in the Merger."
Centura Bank will be the surviving corporation resulting from the
Merger and shall continue to be governed by the laws of the State of North
Carolina and operate in accordance with its Articles of Incorporation
("Articles") and Bylaws as in effect on the date of the Agreement until
otherwise amended or repealed after the Effective Time. First Community will
cease to be a separate entity.
Interests of Certain Persons in the Merger
General. Certain members of First Community management and of the First
Community Board of Directors have interests in the Merger that are in addition
to any interests they may have as stockholders of First Community generally.
These interests include, among other things, provisions in the Agreement
relating to indemnification of First Community directors and officers, and
certain severance and other employee benefits, as described below.
Indemnification and Insurance. The Agreement provides that Centura will
indemnify, defend and hold harmless the present and former directors, officers,
employees, and agents of First Community against all liabilities arising out of
actions or omissions occurring at or prior to the Effective Time (including the
transactions contemplated by the Agreement) to the fullest extent permitted
under law. The Agreement also provides that First Community will be allowed to
purchase at reasonable cost "tail" coverage for not less than three years under
and in the same amount of coverage as is provided by First Community's current
directors' and officers' liability insurance policy.
First Community Executive Arrangements. In connection with the Merger,
Centura has proposed to enter into employment agreements with Messrs. Donald R.
Lineberger, Chairman and Chief Executive Officer of First Community; Donald S.
Pearson, President of First Community; Will Weill III, Senior Vice President and
Secretary of First Community; David L. Lawing, Vice President of First
Community; and Holt D. Robinson, Senior Vice President of First Community (as
described below, the "Centura Employment Agreements").
The Centura Employment Agreements will generally provide for the
employment of Messrs. Lineberger, Pearson, Weill, Lawing and Robinson as
follows. Mr. Lineberger would serve as Senior Market Officer-Gaston County for a
term of five years at a base salary of $135,000 per year, plus a target bonus
for 1997 under Centura's executive incentive program of 15% of base salary, and
retirement income of $35,000 per year for the ten years following his completion
of the initial five year term. Mr. Lineberger would also receive comparable
benefits to other Centura executives, a car, club dues and assumption by Centura
of the obligation to fund existing split-dollar insurance policies with an
aggregate face value of $75,000. Mr. Pearson would serve as a Financial Services
Officer for a term of five years at a base salary of $100,000, plus inclusion in
Centura's sales tracking incentive program, subject to his right to terminate
his employment and receive compensation at the rate of $50,000 per year for the
remainder of the term of the agreement. Mr. Pearson would also receive
compensation and benefits similar to other similarly situated Centura
executives, and the assumption by Centura of the obligation to pay premiums on a
split-dollar insurance policy in the face amount of $100,000. Mr. Weill's
Centura Employment Agreement would be for a term of three years and would
provide that he would serve as Region Market Manager -- Gaston County at a base
salary of $75,000, with compensation under Centura's executive incentive program
comparable to other comparable Centura executives. Messrs. Lawing and Robinson
would each serve as a Financial Services Officer for a term of three years at
their current base compensation level plus inclusion in Centura's sales tracking
incentive program. The Centura Employment Agreements for Messrs. Weill, Lawing
and Robinson provide that each executive's compensation is subject to review and
increase in the same manner as comparable Centura executives and that each
executive would be eligible for the Centura benefits granted to comparably
situated executives. In addition, Centura agrees to assume the obligation to pay
premiums with respect to split-dollar insurance policies covering Messrs. Weill
and Robinson.
Director and Officer Stock Options. First Community has granted stock
options to Messrs. Lineberger and Pearson and certain other officers and
directors under the First Community Bank Stock Option Plan and First Community
Bank Omnibus Stock Option Plan of 1994 (collectively, the "First Community
Option Plans"). The following table sets forth with respect to Messrs.
Lineberger and Pearson, all officers as a group (collectively, the "Officer
Group") and all outside directors as a group: (i) the number of shares covered
by options held by such persons, (ii) the weighted average exercise price of all
such options held by such persons, and (iii) the aggregate value (i.e., stock
price less option exercise price) of all such options based upon the per share
equivalent price of First Community Common Stock as negotiated by the parties
($33.60). Of the First Community Options set forth below, 44,500 are currently
excercisable and 34,000 become excercisable at August 16, 1996.
<TABLE>
<CAPTION>
Weighted Average Exercise
Options Held Price Per Option Aggregate Value of Options (1)
<S> <C>
Donald R. Lineberger 12,600 $13.64 $251,496
Robert S. Pearson 10,400 13.66 207,376
Executive Officer Group 50,400 14.48 963,648
(6 persons)
Outside Directors (12 persons) 23,000 13.26 467,820
Total 96,400 $13.99 $1,890,404
</TABLE>
(1) Based on the closing sale price of Centura Stock ($36.75) as listed on the
NYSE on June 28, 1996, and assuming the Exchange Rate is 0.96, the aggregate
value of the options to Mr. Lineberger, Mr. Pearson, the six executive officers
as a group, the 12 outside directors as a group and all individuals as a group
would be $272,644, $224,840, $1,048,481, $506,515, and $2,052,626, respectively.
Other Matters Relating to First Community Employee Benefit Plans. The
Agreement also provides that, after the Effective Time, Centura will provide
generally to officers and employees of First Community who, at or after the
Effective Time, become officers or employees of a Centura company, employee
benefits under employee benefit plans (other than stock option or other plans
involving the potential issuance of Centura Common Stock, except as set forth in
the Agreement) on terms and conditions which, when taken as a whole, are
substantially similar to those currently provided by the Centura companies to
their similarly situated officers and employees. For purposes of participation
and vesting under such employee benefit plans, the service of the employees of
First Community prior to the Effective Time shall be treated as service with a
Centura company participating in such employee benefit plans. In addition, any
employee of First Community who, following the Merger and at Centura's
discretion, is terminated by Centura for reasons other than the employee's
misconduct within one year following the Effective Time shall be eligible for
salary continuation as a result of such termination. Salary continuation will
consist of an amount equal to two week's salary for each 12 months of active
service with First Community prior to the Merger.
Certain Federal Income Tax Consequences
The following is a summary of certain anticipated federal income tax
consequences of the Merger to First Community stockholders. This summary is
based on the federal income tax laws as now in effect and as currently
interpreted; it does not take into account possible changes to such laws or
interpretations, including amendments to applicable statutes or regulations or
changes in judicial or administrative rulings, some of which may have
retroactive effect. This summary does not purport to address all aspects of the
possible federal income tax consequences of the Merger and is not intended as
tax advice to any person. In particular, and without limiting the foregoing,
this summary does not address the federal income tax consequences of the Merger
to First Community stockholders in light of their particular circumstances or
status (for example, as foreign persons, tax-exempt entities, dealers in
securities, insurance companies, and corporations, among others). Nor does this
summary address any consequences of the Merger under any state, local, estate,
or foreign tax laws. FIRST COMMUNITY STOCKHOLDERS, THEREFORE, ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
The Merger is intended to constitute a "reorganization" within the
meaning of section 368(a) of the Internal Revenue Code of 1986, as amended ("the
Code"), with First Community, Centura, and Centura Banks each intended to
qualify as a "party to a reorganization" under section 368(b) the Code, in which
case the following tax consequences will generally result (subject to the
limitations and qualifications referred to herein):
(a) No gain or loss will be recognized by the First Community
stockholders upon the receipt of Centura Common Stock solely in exchange for
their shares of First Community Common Stock.
(b) The basis of the Centura Common Stock to be received by First
Community stockholders will be the same as the basis of the First Community
Common Stock surrendered in the exchange.
(c) The holding period of the Centura Common Stock to be received by
First Community stockholders will include the holding period of the First
Community Common Stock surrendered in exchange therefor, provided that the First
Community Common Stock was held as a capital asset on the date of the exchange.
(d) The payment of cash to First Community stockholders in lieu of
issuing fractional share interests in Centura will be treated for federal income
tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Centura. These cash payments will be treated
as having been received as a distributions in full payment in exchange for the
stock redeemed as provided in section 302(a) of the Code. If the redemption
meets on of the four tests set forth in section 302, any gain or loss recognized
will be a capital gain or loss. If none of the four tests provided in section
302 is met, the redemption will be treated as payment of a dividend.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service ("IRS"). Instead, Poyner & Spruill,
L.L.P., special counsel to Centura, will render an opinion to First Community
and Centura concerning certain federal income tax consequences of the proposed
Merger under federal income tax law. It is such firm's opinion that, based upon
the assumption the Merger is consummated in accordance with North Carolina law
and in conformity with the representations made by the management of First
Community and Centura, the transaction will constitute a "reorganization" within
the meaning of section 368(a) of the Code ("Tax Opinion"). The Tax Opinion
addresses the tax consequences of the Merger under North Carolina law, but does
not address any other state, local, or other tax consequences of the Merger. The
Tax Opinion does not bind the IRS nor preclude the IRS from adopting a contrary
position. In addition, the Tax Opinion will be subject to certain assumptions
and qualifications and will be based on the truth and accuracy of certain
representations made by the management of First Community and Centura, as to,
among other things, the fact that there is no plan or intention by any of the
stockholders of First Community who own one percent (1%) or more of the
outstanding First Community Common Stock, and to the best of the knowledge of
the management of First Community, the remaining First Community stockholders
have no plan or intention, to sell, exchange, or otherwise dispose of a number
of shares of Centura Common Stock that they will receive in the Merger that will
reduce on the part of the First Community stockholders such stockholders'
ownership of Centura Common Stock to a number of shares having an aggregate
value as of the date of the Merger of less than fifty percent (50%) of the
aggregate value of all of the stock of First Community outstanding immediately
prior to the Merger.
A successful IRS challenge to the "reorganization" status of the Merger
would result in a First Community stockholder recognizing gain or loss with
respect to each share of First Community Common Stock surrendered equal to the
difference between the stockholder's basis in such share and the fair market
value, as of the Effective Time of the Merger, of the Centura Common Stock
received in exchange therefor. In such event, a First Community stockholder's
aggregate basis in the Centura Common Stock received would equal its fair market
value and his or her holding period for such stock would begin the day after the
Merger.
Accounting Treatment
The Merger will be accounted for using the purchase method of
accounting. Under the purchase method of accounting, the purchase price paid by
Centura is allocated to the identifiable individual assets acquired and the
liabilities assumed based on their relative fair values at the date of the
acquisition. The difference between the purchase price and the sum of the fair
values of tangible and identifiable assets less liabilities assumed is recorded
as goodwill. The goodwill is amortized on a straight-line basis over the period
estimated to be benefited, which period may not exceed the estimated remaining
life of the long-term interest-earning assets acquired. The income of the
combined company includes the results of operations of the acquired company from
the date of acquisition.
Expenses and Fees
The Agreement provides, in general, that each of the parties will bear
and pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that each of
Centura and First Community will bear and pay one-half of the printing costs in
connection with the Registration Statement and this Proxy Statement.
Additionally, in the event either party willfully breaches the Agreement or
intentionally fails to perform or violates any of its obligations, agreements,
or covenants contained in the Agreement, the breaching party shall be obligated
to pay all expenses of the other party incurred in connection with the Merger,
together with other damages recoverable at law or in equity. Further, if the
Merger is not consummated on or before December 31, 1996, by reason of the
failure of Centura to receive any regulatory approval and such event is the
consequence of the failure of Centura or Centura Bank to satisfy their
respective obligations under the Community Reinvestment Act, the Home Mortgage
Disclosure Act, the Equal Credit Opportunity Act, the Fair Housing Act, and/ or
any regulations promulgated thereunder, Centura shall reimburse First Community
for one-half of First Community's costs and expenses up to a total reimbursement
amount of $125,000.
Resales of Centura Common Stock
Centura Common Stock to be issued to stockholders of First Community in
connection with the Merger will be registered under the Securities Act. All
shares of Centura Common Stock received by holders of First Community Common
Stock and all shares of Centura Common Stock issued and outstanding immediately
prior to the Effective Time, upon consummation of the Merger will be freely
transferable by those stockholders of First Community not deemed to be
"Affiliates" of First Community or Centura. "Affiliates" generally are defined
as persons or entities who control, are controlled by, or are under common
control with First Community or Centura at the time of the Special Meeting
(generally, executive officers and directors).
Rules 144 and 145 promulgated under the Securities Act restrict the
sale of Centura Common Stock received in the Merger by Affiliates and certain of
their family members and related interests. Generally speaking, during the two
years following the Effective Time, Affiliates of First Community or Centura may
resell publicly the Centura Common Stock received by them in the Merger within
certain limitations as to the amount of Centura Common Stock sold in any
three-month period and as to the manner of sale. After the two-year period, such
Affiliates of First Community who are not affiliates of Centura may resell their
shares without restriction. The ability of Affiliates to resell shares of
Centura Common Stock received in the Merger under Rule 144 or 145 as summarized
herein generally will be subject to Centura's having satisfied its Exchange Act
reporting requirements for specified periods prior to the time of sale.
Affiliates will receive additional information regarding the effect of Rules 144
and 145 on their ability to resell Centura Common Stock received in the Merger.
Affiliates also would be permitted to resell Centura Common Stock received in
the Merger pursuant to an effective registration statement under the Securities
Act or an available exemption from the Securities Act registration requirements.
This Proxy Statement does not cover any resales of Centura Common Stock received
by persons who may be deemed to be Affiliates of First Community or Centura.
First Community has agreed to use its reasonable efforts to cause each
person who may be deemed to be an Affiliate of First Community to execute and
deliver to Centura prior to the Effective Time, an agreement (each, an
"Affiliate Agreement") providing that such Affiliate will not sell, pledge,
transfer, or otherwise dispose of any Centura Common Stock obtained as a result
of the Merger except in compliance with the Securities Act and the rules and
regulations of the SEC thereunder. Certificates representing shares of First
Community Common Stock surrendered for exchange by any person who is an
Affiliate of First Community for purposes of Rule 145(c) under the Securities
Act shall not be exchanged for certificates representing shares of Centura
Common Stock until Centura has received such a written agreement from such
person. The stock certificates representing Centura Common Stock issued to
Affiliates in the Merger may bear a legend summarizing the foregoing
restrictions. See "--Conditions to Consummation of the Merger."
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of First Community Common Stock will
be exchanging their shares of First Community Common Stock for shares of Centura
Common Stock. Centura is a North Carolina corporation governed by the NCBCA and
Centura's Articles of Incorporation and Bylaws. Certain significant differences
exist between the rights of First Community stockholders and those of Centura
stockholders. The differences deemed material by First Community and Centura are
summarized below. In particular, Centura's Articles and Bylaws contain several
provisions that may be deemed to have an anti-takeover effect in that they could
impede or prevent an acquisition of Centura unless the potential acquirer has
obtained the approval of Centura's Board of Directors. The following discussion
is necessarily general; it is not intended to be a complete statement of all
differences affecting the rights of stockholders and their respective entities,
and it is qualified in its entirety by reference to the NCBCA as well as to
Centura's Articles and Bylaws and First Community's Articles of Incorporation
and Bylaws.
Anti-Takeover Provisions Generally
The provisions of Centura's Articles and Bylaws described below under
the headings "--Authorized Capital Stock," "--Amendment of Articles of
Incorporation and Bylaws," "--Classified Board of Directors and Absence of
Cumulative Voting," "--Removal of Directors," "--Director Exculpation,"
"--Special Meeting of Stockholders," "--Actions by Stockholders Without a
Meeting," "--Stockholder Nominations and Proposals," "--Fair Price Provisions"
and "--Business Combinations" are referred to herein as the "Protective
Provisions." In general, the Protective Provisions make it more likely that
Centura's Board of Directors will play a central role if any group or person
attempts to acquire control of Centura, so that the Board can further the
interests of Centura and its stockholders as appropriate under the
circumstances. For example, if the Board determines that a sale of control of
Centura is in the best interests of Centura and its shareholders, the Protective
Provisions enhance the Board's ability to maximize the value to be received by
the stockholders upon such a sale.
Although Centura's management believes the Protective Provisions are
beneficial to Centura's stockholders, the Protective Provisions also may tend to
discourage some takeover bids. As a result, Centura's stockholders may be
deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the Protective Provisions discourage undesirable
proposals, Centura may be able to avoid those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Centura
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Centura Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Centura through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Centura's stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believe such replacement is in the best
interests of Centura. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management of Centura.
Authorized Capital Stock
Centura. Centura's Articles authorize issuance of up to (i) 50,000,000
shares of Centura Common Stock, of which 22,875,050 shares were issued and
outstanding as of March 31, 1996, and (ii) 25,000,000 of no par value preferred
stock ("Centura Preferred Stock"), of which no shares are issued. Centura's
Board of Directors may authorize the issuance of additional shares of Centura
Common Stock without further action by Centura's stockholders, unless such
action is required in a particular case by applicable laws or regulations or by
any stock exchange upon which Centura's capital stock may be listed. Centura's
stockholders do not have the preemptive right to purchase or subscribe to any
unissued authorized shares of Centura Common Stock or any option or warrant for
the purchase thereof.
Similarly, Centura's Board of Directors may issue, without any further
action by the stockholders, shares of Centura Preferred Stock, in one or more
classes or series, with such voting, conversion, dividend, and liquidation
rights as the board may specify. In establishing and issuing shares of Centura
Preferred Stock, Centura's Board of Directors may designate that Centura
Preferred Stock will have voting rights in excess of one vote per share or will
vote as a separate class on any or all matters, thus diluting the voting power
of the Centura Common Stock. The board also may designate that Centura Preferred
Stock will have dividend rights that are cumulative and that receive
preferential treatment compared to Centura Common Stock, and that Centura
Preferred Stock will have liquidation rights with priority over Centura Common
Stock in the event of Centura's liquidation.
Subject to the rights of stockholders who perfect dissenters' rights of
appraisal and the payment of cash in lieu of fractional shares, Centura will
issue an estimated 838,553 shares of Centura Common Stock in connection with the
Merger, including shares to be subject to assumed options and grants. Based on
the number of shares of Centura Common Stock outstanding on March 31, 1996, it
is anticipated that, following the consummation of the Merger, a total of
approximately 23,713,603 shares of Centura Common Stock will be outstanding,
excluding the effect of any shares which may be repurchased by Centura after
March 31, 1996.
The authority to issue additional shares of Centura Common Stock
provides Centura with the flexibility necessary to meet its future needs without
the delay resulting from seeking stockholder approval. The authorized but
unissued shares of Centura Common Stock will be issuable 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 Centura.
In addition, the sale of a substantial number of shares of Centura Common Stock
to persons who have an understanding with Centura concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Centura
Common Stock (or the right to receive Centura Common Stock) to Centura
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Centura.
First Community. First Community's Articles authorize the issuance of
up to (i) 2,400,000 shares of First Community Common Stock, of which shares were
issued and outstanding as of the First Community Record Date. First Community's
Board of Directors may authorize the issuance of additional authorized shares of
First Community Common Stock without further action by First Community's
stockholders, unless such action is required in a particular case by applicable
laws or regulations or by any stock exchange upon which First Community's
capital stock may be listed. First Community's stockholders do not have
preemptive right to purchase or subscribe to any unissued unauthorized shares of
First Community Common Stock or any option ir warrant for the purchase thereof.
Subject to certain provisions of the NCBCA, First Community's Board of
Directors may issue, without any further action by the stockholders, shares of
First Community Preferred Stock, in one or more classes or series, with such
voting, conversion, dividend, and liquidation rights as the board may specify.
In establishing and issuing shares of First Community Preferred Stock, First
Community's Board of Directors may designate that First Community Preferred
Stock will have voting rights in excess of one vote per share or will vote as a
separate class on any or all matters, thus diluting the voting power of the
First Community Common Stock. The board also may designate that First Community
Preferred Stock will have dividend rights that are cumulative and that receive
preferential treatment compared to First Community Common Stock, and that such
First Community Preferred Stock will have liquidation rights with priority aver
First Community Common Stock in the event of First Community's liquidation.
Amendment of Articles of Incorporation and Bylaws
Centura. The Articles of Centura provide that amendments thereto may be
adopted only upon receiving the affirmative vote of the holders of at least two
thirds of all the shares of capital stock of Centura issued and outstanding and
entitled to vote thereon. However, if such amendment has received the prior
approval by an affirmative vote of a majority of "Disinterested Directors," as
defined therein, then the affirmative vote of the holders of at least a majority
of all the shares of capital stock of Centura issued and outstanding and
entitled to vote, or such greater percentage approval as is required by North
Carolina law, is sufficient to amend the Articles. A "Disinterested Director" is
defined in the Articles as any member of the Board of Directors who is
unaffiliated with, and not a nominee of, a Control Person, as defined therein,
and who was a member of the Board of Directors prior to the time a Control
Person became such, and any successor of a Disinterested Director who is
unaffiliated with, and not a nominee of, a Control Person who is recommended to
succeed a Disinterested Director by a majority of Disinterested Directors then
on the Board of Directors. A "Control Person" is defined in the Articles as any
corporation, person, group, or other entity, which together with its affiliates,
prior to a Business Combination (as defined herein) beneficially owns 10% or
more of the shares of any class of equity or convertible securities of Centura,
and any affiliate of any such corporation, person, group, or other entity.
Subject to certain restrictions set forth below, either the Board of
Directors or the stockholders of Centura may amend Centura's Bylaws. The Board
of Directors may amend the Bylaws and adopt new Bylaws except that: (i) a bylaw
adopted or amended by the stockholders may not be readopted, amended, or
repealed by the Board of Directors if neither the Articles nor a bylaw adopted
by the stockholders authorizes the Board of Directors to adopt, amend, or repeal
that particular bylaw; (ii) a bylaw that fixes a greater quorum or voting
requirement for the Board of Directors may not be adopted by the Board of
Directors by a vote of less than a majority of the directors then in office and
may not itself be amended by a quorum or vote of directors less than the quorum
or vote therein prescribed by a bylaw adopted or amended by the stockholders;
and (iii) if a bylaw fixing a greater quorum or voting requirement for the Board
of Directors is originally adopted by the stockholders, it may be amended or
repealed only by the stockholders, unless the Bylaws permit amendment or repeal
by the Board of Directors. The stockholders of Centura generally may adopt,
amend, or repeal the Bylaws upon the affirmative vote of two-thirds of the
stockholders entitled to vote thereon.
First Community. The Articles of First Community do not provide any
provisions governing amendments to the Articles. Under North Carolina law, the
Articles may be amended by action of the Board of Directors of First Community
and without shareholder action only for minor technical revisions. Any other
amendment must be approved by a majority of the shares voting except that if the
proposed amendment creates dissenters' rights, the vote required is a majority
of the total votes entitled to be cast.
The Board of Directors of First Community may amend First Community's
Bylaws and adopt new Bylaws, without shareholder approval, except as provided in
the Bylaws. The Bylaws provide that the shareholders of First Community must
approve amendments to the Bylaws (i) requiring more than a majority of the
voting shares for a quorum at a meeting of shareholders or more than a simple
majority of the votes cast to constitute action by the shareholders, except
where higher percentages are required by law, (ii) increasing or decreasing the
number of directors , (iii) classifying and staggering the election of
directors, and (iv) providing for the management of First Community otherwise
than by the Board of Directors or its executive committee. In addition, no bylaw
adopted or amended by the shareholders of First Community shall be altered or
repealed by the Board of Directors of First Community. Additionally, the
affirmative vote of two-thirds of the total number of shares of First Community
Common Stock outstanding are required to amend the provision in the Bylaws
providing for the removal of directors by shareholders or the provision of the
Bylaws requiring the Board of Directors of First Community, when evaluating any
offer of another party to acquire First Community, to give due consideration to
all relevant factors, including, without limitation the social and economic
effects on the employees, customers and other constituents of First Community
and the communities in which First Community operates and is located.
Classified Board of Directors and Absence of Cumulative Voting
Centura. The Articles of Centura provide that Centura's Board of
Directors is divided into three classes, with each class to be as nearly equal
in number as possible. The directors in each class serve three-year terms of
office. The effect of Centura's having a classified Board of Directors is that
only approximately one-third of the members of the Board are elected each year,
which effectively requires two annual meetings for Centura's stockholders to
change a majority of the members of the Board. The purpose of dividing Centura's
Board of Directors into classes is to facilitate continuity and stability of
leadership of Centura by ensuring that experienced personnel familiar with
Centura will be represented on Centura's Board at all times, and to permit
Centura's management to plan for the future for a reasonable time. However, by
potentially delaying the time within which an acquirer could obtain working
control of the Board, this provision may discourage some potential mergers,
tender offers, or takeover attempts.
Pursuant to the Bylaws, each stockholder generally is entitled to one
vote for each share of Centura Common Stock held and is not entitled to
cumulative voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number of
such holder's shares multiplied by the number of directors to be elected. The
stockholder has the right to distribute all of his votes in any manner among any
number of candidates or to accumulate such shares in favor of one candidate.
Directors are elected by a plurality of the total votes cast by all
stockholders. With cumulative voting, it may be possible for minority
stockholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of Centura Common
Stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining Centura Common Stock effectively may not be able to
elect any person to the Board of Directors. The absence of cumulative voting
thus could make it more difficult for a stockholder who acquires less than a
majority of the shares of Centura Common Stock to obtain representation on
Centura's Board of Directors.
First Community. The Bylaws of First Community provide that First
Community's Board of Directors shall consist of not less than five nor more than
25 individuals, the exact number of directors to be elected being determined at
each annual meeting of shareholders of First Community. Each director holds
office for one year. Pursuant to the Bylaws, each stockholder is entitled to one
vote for each share of First Community Common Stock held except in the election
of directors, for which shareholders have cumulative voting rights, as discussed
above.
Removal of Directors
Centura. Centura's Articles provide that (i) a director may be removed
by the stockholders only upon the affirmative vote of the holders of two-thirds
of the voting power of all shares of capital stock entitled to vote generally in
the election of directors and (ii) vacancies on the Board of Directors may be
filled only by the Board of Directors. The purpose of this provision is to
prevent a majority stockholder from circumventing the classified board system by
removing directors and filling the vacancies with new individuals selected by
that stockholder. Accordingly, the provision may have the effect of impeding
efforts to gain control of the Board of Directors by anyone who obtains a
controlling interest in Centura Common Stock. The term of a director appointed
to fill a vacancy expires at the next meeting of stockholders at which directors
are elected.
First Community. First Community's Bylaws provide that a director may
be removed at any time by a vote of the stockholders holding a majority of the
outstanding shares entitled to vote at an election of directors. However, unless
the entire Board is removed, an individual director shall not be removed when
the number of shares voting against the proposal for removal would be sufficient
to elect a director if such shares could be voted cumulatively at an annual
election. Consequently, it would be more difficult to remove directors
representing minority stockholders.
Limitations on Director Liability
Centura. Centura's Articles provide for the elimination of the personal
liability of each director arising out of an action by Centura or otherwise for
monetary damages for breach of his duty as a director, except for liability with
respect to (i) acts or omissions that the director at the time of such breach
knew or believed were clearly in conflict with the best interests of Centura,
(ii) any liability under Section 55-8-33 of the General Statutes of North
Carolina, or (iii) any transaction from which the director derived an improper
personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of his duties, if the action is among those as to
which liability is limited. This provision may reduce the likelihood of
stockholder derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duties, even though such action, if successful, might have benefited
Centura and its stockholders. The SEC has taken the position that similar
provisions added to other corporations' certificates of incorporation would not
protect those corporations' directors from liability for violations of the
federal securities laws.
First Community. Neither First Community's Articles nor its Bylaws
contain any provisions limiting director liability.
Indemnification
Centura. Under the NCBCA, subject to certain exceptions, a corporation
may indemnify an individual made a party to a proceeding, because he is or was a
director, against liability incurred in the proceeding if (i) he conducted
himself in good faith; (ii) he reasonably believed (a) in the case of conduct in
his official capacity with the corporation, that his conduct was in its best
interests, and (b) in all other cases, that his conduct was at least not opposed
to its best interests; and (iii) in the case of any criminal proceeding, he has
no reasonable cause to believe his conduct was unlawful. Moreover, unless
limited by its articles of incorporation, a corporation must indemnify a
director who was wholly successful, on the merits or otherwise, in the defense
of any proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding. Expenses incurred by a director in defending a proceeding may be
paid by the corporation in advance of the final disposition of such proceeding
as authorized by the board of directors in the specific case or as authorized or
required under any provision in the articles of incorporation or bylaws or by
any applicable resolution or contract upon receipt of an undertaking by or on
behalf of a director to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation against such
expenses. A director may also apply for court-ordered indemnification under
certain circumstances. Unless a corporation's articles of incorporation provide
otherwise, (i) 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, (ii) the corporation may indemnify and advance
expenses to an officer, employee, or agent of the corporation to the same extent
as to a director; and (iii) a corporation may also indemnify and advance
expenses to an officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract.
In addition and separate and apart from the indemnification rights
discussed above, the NCBCA further 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; provided, however, that a corporation may not indemnify or agree to
indemnify a person against liability or expenses he may incur on account of his
activities which were at 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 may also 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.
Centura'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 or officer of Centura, or, at the request of Centura, is or
was serving as a director, officer, agent, partner, trustee, administrator, or
employee of another entity in the event such person is made or is threatened to
be made, a party to any threatened, pending, or completed civil, criminal,
administrative, investigative, or arbitrative action, suit, or proceeding and
any appeal therein (and any inquiry or investigation that could lead to such
action, suit, or proceeding), whether or not brought by or on behalf of Centura,
seeking to hold such person liable by reason of the fact that such person is or
was acting in such capacity. The indemnification provision in the Centura Bylaws
covers reasonable expenses, including without limitation, all attorneys' fees
actually and necessarily incurred by such person in connection with any such
action, suit or proceeding, all reasonable payments made by such person in
satisfaction of any judgment, money decree, fine (including an excise tax
assessed with respect to an employee benefit plan), penalty, or settlement for
which such person may have become liable in such action, suit, or proceeding,
and all reasonable expenses incurred in enforcing the indemnification rights.
Furthermore, Centura may advance to such person his reasonable expenses incurred
in connection with any such action, suit or proceeding as authorized by the
Board of Directors in the specific case or as authorized or required under any
Bylaw upon receipt of an undertaking by or on behalf of such person to repay
such amount unless it is ultimately determined that such person is entitled to
be indemnified by Centura against such expenses.
Centura's Bylaws further provide that Centura may, but is not required
to, indemnify any agent, employee, or other person as the Board of Directors
deems appropriate. The Centura Board of Directors must take all such action as
may be necessary and appropriate to authorize Centura to pay the indemnification
required by the indemnification provision, 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling Centura
pursuant to the foregoing provisions, Centura has been informed that, in the
opinion of the , such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
First Community. First Community's Articles do not provide for
indemnification of directors and officers of First Community. Under the NCBCA,
directors and officers of First Community would have the same rights to
indemnification as directors and officers of Centura. Additionally, the Bylaws
of First Community provide that any person who serves as a director or officer
of First Community shall have the right to be indemnified by First Community to
the fullest extent permitted by law against expenses, including attorney's fees,
actually incurred in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether or not brought by or on behalf of First Community,
and payments made by such person in satisfaction of any judgment, money decree,
fine, penalty or settlement for which he may have become liable in any such
action, suit or proceeding. Furthermore, First Community may advance to such
person his reasonable expenses incurred in connection with any such action, suit
or proceeding as authorized by the Board of Directors of First Community in the
specific case upon the receipt of an undertaking from the person to repay such
expenses if it is ultimately determined that such person is not entitled to be
indemnified by First Community against such expenses. First Community's Bylaws
further provide that the Board of Directors of First Community must take all
such action as may be necessary and appropriate to authorize First Community to
pay the indemnification required by the indemnification provision, 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 amount of indemnity
due such claimant.
Special Meeting of Stockholders
Centura. Centura's Bylaws provide that special meetings of stockholders
may be called only by the Board of Directors, the Chairman of the Board, or the
President. Holders of Centura Common Stock do not have the right to call a
special meeting or to require that Centura's Board of Directors call such a
meeting. As a result, this provision taken together with the restriction on the
removal of directors, would prevent a substantial stockholder from compelling
stockholder consideration of any proposal (such as a proposal for a Business
Combination) over the opposition of Centura's Board of Directors by calling a
special meeting of stockholders at which such stockholder could replace the
entire Board of Directors with nominees who were in favor of such proposal.
First Community. First Community's Bylaws provide that special meetings
of stockholders may be called by the President, the Board of Directors, or at
the written request of the holders of not less than one-tenth of all shares
entitled to vote at the meeting.
Constituency and Stakeholder Provisions
Centura. Centura's Articles expressly authorize the Board of Directors
of Centura, any committee of the Board of Directors, or any individual director,
in determining what is in the best interest of Centura and its stockholders, to
consider, in addition to the long-term and short-term interests of the
stockholders, the social and economic effects of the matter to be considered on
Centura and its subsidiaries, their employees, depositors, customers, creditors,
and the communities in which Centura and its subsidiaries operate or are
located. When evaluating a Business Combination or a proposal by another person
to make a Business Combination or a tender offer or any other proposal relating
to a potential change in control of Centura, the Board of Directors may consider
such matters as the business and financial condition and earnings prospects of
the acquiring person, including, but not limited to, debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person, and the possible effect of such conditions upon Centura and
its subsidiaries and the communities in which Centura and its subsidiaries
operate or are located, the competence, experience, and integrity of the
acquiring person and its management, and the prospects for successful conclusion
of the Business Combination, offer, or proposal. The consideration of any of the
above factors is completely discretionary with the Centura Board of Directors
and does not give any constituency other than stockholders the right to be so
considered.
The constituency provision of the Articles of Centura may discourage or
make more difficult certain acquisition proposals or Business Combinations and,
therefore, may adversely affect the ability of stockholders to benefit from
certain transactions opposed by the Centura Board of Directors. The constituency
provision would allow the Centura Board of Directors to take into account the
effects of an acquisition proposal on a broad number of constituencies and to
consider any potential adverse effects in determining whether to accept or
reject such proposal.
First Community. First Community's Bylaws provide that the Board of
Directors of First Community, when evaluating any offer of another party to make
a tender or exchange offer for any equity securities of First Community, to
merge or consolidate First Community with another corporation, or to purchase or
otherwise acquire all or substantially all of the properties and assets of First
Community, shall, in connection with the exercise of its judgment in determining
what is in the best interests of First Community and its stockholders, give due
consideration to all relevant factors, including without limitation, the social
and economic effects on the employees, customers and other constituents of First
Community and on the communities in which First Community operates or is
located. This constituency provision of the Bylaws of First Community may
discourage or make more difficult certain acquisition proposals and, therefore,
may adversely affect the ability of stockholders to benefit from certain
transactions opposed by the First Community Board of Directors. The constituency
provision would allow the First Community Board of Directors to take into
account the effects of an acquisition proposal on a broad number of
constituencies and to consider any potential adverse effects in determining
whether to accept or reject such proposal.
Actions by Stockholders Without a Meeting
Centura. The Bylaws of Centura provide that any action required or
permitted to be taken by Centura stockholders at a duly called meeting of
stockholders may be effected by the unanimous written consent of the
stockholders entitled to vote on such action.
First Community. First Community's Bylaws provide that any action which
may be taken at a meeting of the stockholders of First Community may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the persons who would be entitled to vote upon such
action at a meeting.
Stockholder Nominations and Proposals
Centura. Centura's Articles and Bylaws provide that no stockholder may
nominate individuals for election to the Board of Directors.
First Community. First Community's Bylaws require stockholder
nominations to the Board of Directors to be submitted in writing to First
Community not less than seven nor more than 50 days prior to any meeting called
for the election of directors.
Fair Price Provision
Centura. The fair price provision of the Articles applies to Business
Combinations that have not received the approval of two-thirds of the full Board
of Directors and is available only to stockholders who vote against such
Business Combinations and who elect to sell their shares to Centura for cash at
the fair price of such shares. The fair price provisions requires that the
consideration for such shares be paid in cash by Centura and that the price per
share be at least equal to the of the following:
(a) the highest price per share paid for Centura Common Stock during
the four years immediately preceding the Business Combination vote by any
stockholder who beneficially owned 5.0% or more of Centura Common Stock
and who votes in favor of the Business Combination;
(b) the cash value of the highest price per share previously offered
pursuant to a tender offer to the stockholders of Centura within the four
years immediately preceding the Business Combination vote;
(c) the aggregate earnings per share of Centura Common Stock during
the four fiscal quarters immediately preceding the Business Combination
vote multiplied by the highest price/earnings ratio of Centura Common
Stock at any time during the four fiscal quarters or up to the date the
Business Combination vote occurs;
(d) the highest price per share, including commissions and fees, paid
by a Control Person in acquiring any of its holdings of Centura Common
Stock; or
(e) the fair value per share of Centura Common Stock as determined by
an investment banking or appraisal firm chosen by a majority of the
members of the Board of Directors voting against the Business Combination,
such fair value not taking into consideration the fact that the shares are
held by a majority of the Centura stockholders.
The fair price provision is designed primarily to discourage attempts
to acquire Centura in transactions utilizing two-tier pricing tactics, but the
provision may affect and potentially discourage other transactions that are not
two-tier structured. Transactions utilizing two-tier pricing tactics typically
involve the accumulation of a substantial block of a target corporation's stock
followed by a merger or other reorganization of the acquired corporation on
terms determined by the purchaser. In such two-tiered takeover attempts, the
purchaser generally pays cash to acquire a controlling interest in a corporation
and acquires the remaining interest by paying the remaining stockholders a price
lower than that paid to acquire the controlling interest. The Board of Directors
believes that the fair price provision may prevent some of the potential
inequities of two-tiered takeover attempts by encouraging persons interested in
acquiring Centura to negotiate in advance with the Board of Directors since, if
two thirds of the full Board of Directors approves certain Business
Combinations, the fair price provision would be avoided. The Board of Directors
believes that the interests of the stockholders of Centura would be best served
by such negotiation based on careful consideration of all relevant factors.
Despite this belief, however, some stockholders may find the fair price
provision disadvantageous to the extent it discourages changes in control in
which stockholders might receive, for at least some of their shares, a
substantial premium above the market price paid to stockholders who vote against
the Business Combination and then elect to sell their shares to Centura for
cash. Furthermore, the provision may encourage stockholders to vote against a
Business Combination, which has been approved by a majority of a quorum but less
than two-thirds of the full Board of Directors. In addition, assets of Centura
could be used to reacquire shares, possibly at a substantial premium, from
stockholders who voted against the transaction, which may be to the detriment of
stockholders who voted for the transaction. Finally, if the fair price provision
has the effect of giving management more bargaining power in negotiation with a
potential acquirer, it could result in management using the bargaining power not
only to try to negotiate a favorable price for an acquisition, but also more
favorable terms for management.
First Community. The Articles and Bylaws of First Community do not
contain any fair price provision.
Business Combinations
Centura. The Articles of Centura provide that, unless more
restrictively required by applicable law, any Business Combination, as defined
therein, must be approved by a majority of a quorum of the Board of Directors
and must receive one of the following levels of stockholder approval: (i) at a
special or annual meeting of stockholders by an affirmative vote of the
stockholders holding at least a majority of the shares of Centura Common Stock
issued and outstanding and entitled to vote thereon, provided that such Business
Combination has received the prior approval by a resolution adopted by an
affirmative vote of at least two-thirds of the full Board of Directors before
such Business Combination is submitted for approval to the stockholders; or (ii)
at a special or annual meeting of stockholders by an affirmative vote of the
stockholders holding at least two-thirds of the shares of Centura issued and
outstanding and entitled to vote thereon provided that such Business Combination
has received the prior approval by a resolution adopted by an affirmative vote
of at least a majority of a quorum of the Board of Directors (but less than
two-thirds of the Board of Directors). In addition, if the Business Combination
is approved by an affirmative vote of at least two thirds of the stockholders
entitled to vote and by a majority of a quorum of the Board of Directors but
less than two-thirds of the full Board of Directors, the Business Combination
must grant to stockholders not voting to approve the Business Combination
certain fair price rights.
The Articles of Centura define a "Business Combination" as (i) any
merger or consolidation of Centura into any other corporation, person, group, or
other entity where Centura is not the surviving or resulting entity; (ii) any
merger or consolidation of Centura with or into any "Control Person" (as defined
in the Articles) or with any corporation, person, group, or other entity where
the merger or consolidation is proposed by or on behalf of a Control Person;
(iii) any sale, lease, exchange, or other disposition of all or substantially
all of the assets of Centura; (iv) any sale, lease, exchange, or other
disposition of more than 10% of the total assets of Centura (determined as of
the end of the most recent fiscal year) to a Control Person; (v) the issuance of
any securities of Centura to a Control Person; (vi) the acquisition by Centura
of any securities of a Control Person unless such acquisition begins prior to
the person becoming a Control Person or is an attempt to prevent the Control
Person from obtaining greater control of Centura; (vii) the acquisition by
Centura of all or substantially all of the assets of any Control Person or any
entity where the acquisition is proposed by or on behalf of a Control Person;
(viii) the adoption of any plan or proposal for the liquidation or dissolution
of Centura which is proposed by or on behalf of a Control Person; (ix) any
reclassification of securities or recapitalization of Centura which has the
effect of increasing the proportionate share of the outstanding shares of any
class of equity or convertible securities of Centura which is beneficially owned
or controlled by a Control Person; (x) any of the above transactions which are
between Centura and any of its subsidiaries and which are proposed by or on
behalf of any Control Person; or (xi) any agreement, plan, contract, or other
arrangement providing for any of the above transactions.
The requirement of a supermajority vote of stockholders to approve
certain business transactions, as described above, may discourage a change in
control of Centura by allowing a minority of Centura's stockholders to prevent a
transaction favored by the majority of the stockholders. Also, in some
circumstances, the Board of Directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of Centura and their positions with Centura. The primary
purpose of the supermajority vote requirement, however, is to encourage
negotiations with Centura's management by groups or corporations interested in
acquiring control of Centura and to reduce the danger of a forced merger or sale
of assets.
The North Carolina Shareholder Protection Act requires, under certain
circumstances and subject to certain exceptions, the affirmative vote of at
least 95% of the voting shares of a corporation to adopt or authorize certain
business combinations with any other entity. The 95% vote requirement does not
apply if all of certain fair price and procedural requirements are satisfied.
The North Carolina Shareholder Protection Act applies to corporations that have
a class of shares registered under Section 12 of the Exchange Act (a "public
corporation") and that have not opted out of the provisions of the North
Carolina Shareholder Protection Act. Centura's Articles provide that Centura
will not be subject to the North Carolina Shareholder Protection Act.
The North Carolina Control Share Acquisition Act provides that in the
event any person or group acting in concert acquires certain designated
percentage interests of the total voting power of a corporation, the shares
acquired in the acquisition are not entitled to vote unless the right to vote
such shares is approved by a majority of all of the outstanding shares of the
corporation entitled to vote for the election of directors, excluding certain
interested shares, as that term is defined by the statute. If voting rights are
granted to the control shares, other stockholders may have their shares redeemed
by the corporation at their fair value. The North Carolina Control Share
Acquisition Act applies only to a North Carolina public corporation with certain
required contracts with North Carolina (a "covered corporation"), the bylaws or
articles of incorporation of which do not opt out of the North Carolina Control
Share Acquisition Act, and does not apply to acquisitions of stock pursuant to a
merger or tender offer approved by the Board of Directors. Centura's Articles
provide that Centura will not be subject to the North Carolina Control Share
Acquisition Act.
First Community. First Community is subject to the North Carolina
Shareholder Protection Act and the North Carolina Contnrol Share Acquisition
Act. The Merger, however, is not subject to the provisions of either Act.
Dissenters' Rights of Appraisal
Centura. Under the NCBCA, a stockholder is generally entitled to
dissent from, and obtain payment of the fair value of his shares in the event
of: (i) consummation of a plan of merger to which the corporation is a party,
unless either (a) stockholder approval is not required by the NCBCA or (b) such
shares are then redeemable by the corporation at a price not greater than the
cash to be received in exchange for such shares; (ii) consummation of a plan of
share exchange to which the corporation is a party as the corporation whose
shares will be acquired, unless such shares are then redeemable by the
corporation at a price not greater than the cash to be received in exchange for
such shares; (iii) consummation of a sale or exchange of substantially all of
the corporation's property other than in the usual and regular course of
business, including a sale in dissolution, but not including a sale pursuant to
court order or to a plan by which substantially all of the net proceeds of the
sale will be distributed in cash to the stockholders within one year after the
date of sale; (iv) an amendment of the articles of incorporation that materially
and adversely affects rights in respect of a dissenter's shares because it (a)
alters or abolishes a preferential right of the shares, (b) creates, alters, or
abolishes a right in respect of redemption of the shares, (c) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities, (d) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, (e) reduces the number of shares owned by the
stockholder to a fraction of a share if the fractional share so created is to be
acquired for cash under the NCBCA, or (f) changes the corporation into a
nonprofit corporation or cooperative organization; or (v) any corporate action
taken pursuant to a stockholder vote, to the extent the articles of
incorporation, bylaws, or a resolution of the board of directors provide that
voting or nonvoting stockholders are entitled to dissent and obtain payment for
their shares. Centura's Articles and Bylaws do not provide for any such
additional dissenters' rights.
First Community. Under the NCBCA, a First Community stockholder is
entitled to dissent from, and obtain fair payment of the value of his shares to
the same extent discussed above for Centura stockholders. First Community's
Articles and Bylaws do not provide for any additional dissenters' rights.
Stockholders' Rights to Examine Books and Records
Centura. The NCBCA provides that a stockholder may inspect books and
records upon written demand under oath stating the purpose of the inspection, if
such purpose is reasonably related to such person's interest as a stockholder.
First Community. First Community stockholders have the same rights as
Centura stockholders under the NCBCA to inspect the books and records of First
Community upon written demand under oath stating the purpose of the inspection,
if such purpose is reasonably related to such person's interest as a
stockholder.
Dividends
Centura. Section 53-87 of the North Carolina General Statutes generally
allows Centura to pay cash dividends to stockholders only out of Centura's
undivided profits and only if Centura's surplus is equal to at least 50% of its
paid-in capital stock. Substantially all of the funds available for the payment
of dividends by Centura are derived from its subsidiary depository institutions.
There are various statutory limitations on the ability of Centura's subsidiary
depository institutions to pay dividends to Centura. See "CERTAIN REGULATORY
CONSIDERATIONS --Payment of Dividends."
First Community. The ability of First Community to pay dividends is
subject to statutory and regulatory restrictions on the payment of cash
dividends, including the requirement under North Carolina banking laws that cash
dividends be paid only out of undivided profits and only if the bank has surplus
of a specified level. Federal bank regulatory authorities also have the general
authority to limit the dividends paid by insured banks if such payment may be
deemed to constitute an unsafe or unsound practice. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
INFORMATION ABOUT FIRST COMMUNITY
General
First Community is a North Carolina-chartered commercial bank
headquartered in Gastonia, North Carolina, with five banking offices bank
located in Gastonia, North Carolina and surrounding communities. As of March 31,
1996, First Community had total assets of approximately $125 million, total
deposits of approximately $12 million, and total stockholders' equity of
approximately $105 million. First Community offers a broad range of banking and
banking-related services.
First Community was organized under the laws of the state of North
Carolina and commenced operations in 1987. Additional information with respect
to First Community is included in documents incorporated by reference in this
Proxy Statement. See "AVAILABLE INFORMATION," "DOCUMENTS INCORPORATED BY
REFERENCE" and "CERTAIN REGULATORY CONSIDERATIONS."
Security Ownership of Management
The following table reflects the only shareholders known to management
to own more than 5% of First Community's voting securities as of March 31, 1996:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Amount and
Title of Class of Beneficial Owner Beneficial Ownership(1) Percent of Class (2)
-------------- ------------------- ----------------------- --------------------
<S> <C>
Common J. Bynum Carter 50,000 (3) 6.40 %
P.O. Box 518
Gastonia, NC 28053
Common Plato Pearson, Jr. 50,400 (4) 6.43
P.O. Box 2358
Gastonia, NC 28053
Common C. W. Smith 45,600 5.85
P.O. Box 932
Gastonia, NC 28053
Common T. Henry Wilson, Jr. 39,220 5.03
411 Tremont Circle
Lenoir, NC 28645
- -------------------------------
</TABLE>
(1) Except as otherwise noted, the outstanding shares of First
Community Common Stock shown as beneficially owned are, the best of
First Community management's knowledge, owned of record by the persons
named and such persons exercise sole voting and investment power with
respect to such shares.
(2) The calculation of the percentage of class beneficially owned is
based on 779,493 shares issued and outstanding at March 31, 1996, plus
the number of shares capable of being issued to an individual (if any)
and to the group, respectively, within 60 days upon the exercise of
stock options held by each of them.
(3) The shares of First Community Common Stock beneficially owned by J.
Bynum Carter include 12,000 shares held individually of record by Mr.
Carter, 12,000 shares held individually of record by his wife and
24,000 shares held by A.B. Carter, Inc., and 2,000 shares for which Mr.
Carter has been issued an option. Mr. Carter exercises sole investment
and voting power with respect to 36,000 shares but denies possession of
voting power with respect to 12,000 shares held of record by his wife.
(4) The shares of First Community Common Stock beneficially owned by
Plato Pearson, Jr. include 17,000 shares held individually of record by
Mr. Pearson, 2,400 shares held individually of record by his wife,
21,000 shares held of record by MRSJ Family Limited Partnership and
6,000 shares held by Pearson's, Inc., and 4,000 shares for which Mr.
Pearson has been issued an option. Mr. Pearson exercises sole voting
power with respect to 38,000 shares, and shared investment and voting
power with respect to 6,000 shares, but denies possession of voting
power with respect to 2,400 shares held of record by his wife.
As of March 31, 1996, the beneficial ownership of First Community's
voting securities by the directors individually, and by all directors and
executive officers as a group, was as follows:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Amount and
Title of Class of Beneficial Owner Beneficial Ownership(1) Percent of Class (2)
-------------- ------------------- ----------------------- --------------------
<S> <C>
Common Robert L. Adams, Jr. 4,140 (16) 0.53 %
Gastonia, NC
Common Robert H. Blalock, Jr. 3,821 (16) 0.49%
Gastonia, NC
Common J. C. Carothers, Jr. 14,280 (3) (16) 1.83%
Lake Wylie, SC
Common J. Bynum Carter 50,000 (4) (16) 6.40%
Gastonia, NC
Common Richard K. Craig 3,200 (16) 0.41%
Gastonia, NC
Common Katherine T. Currence 1,340 (17) 0.17%
Gastonia, NC
Common Titus W. Greene 4,900 (5) (16) 0.63%
Gastonia, NC
Common Donald R. Lineberger 15,695 (6) (7) 1.97%
Gastonia, NC
Common John K. Long 5,940 (8) (16) 0.76%
Gastonia, NC
Common Eugene R. Matthews, II 7,900 (9) (16) 1.01%
Gastonia, NC
Common Johan T. Newcombe 7,920 (10) (16) 0.10%
Gastonia, NC
Common Plato Pearson, Jr. 50,400 (11) (12) 6.43%
Gastonia, NC
Common Robert S. Pearson 23,510 (13) (14) 2.98%
Gastonia, NC
Common Edward D. Sadler, Jr. 3,680 (16) 0.47%
Gastonia, NC
Common Lonnie A. Waggoner, Jr. 7,700 (15) (16) 0.99%
Gastonia, NC
-------------- ----------
All Directors and Executive
Officers as a Group (15 persons) 201,386 24.28%
(1) Except as otherwise noted, the outstanding shares of First
Community Common Stock shown as beneficially owned are, the best of
First Community management's knowledge, owned of record by the persons
named and such persons exercise sole voting and investment power with
respect to such shares.
(2) The calculation of the percentage of class beneficially owned is
based on 779,493 shares issued and outstanding at March 31, 1996 plus
the number of shares capable of being issued to an individual (if any)
and to the group, respectively, within 60 days upon the exercise of
stock options held by each of them and by the group, respectively.
(3) The shares of First Community Common Stock beneficially owned by J.
C. Carothers, Jr. include 240 shares held individually of record by Mr.
Carothers, 4,800 shares held by Mr. Carothers and his wife as joint
tenants, 4,920 shares held in a retirement account for Mr. Carothers,
2,280 shares held in a retirement account for his wife and 240 shares
held by his wife as custodian for their grandchildren. Mr. Carothers
exercises sole investment and voting power with respect to 5,160 shares
and shared investment and voting power with respect to 4,800 shares but
denies possession of voting power with respect to 3,520 shares held of
record by his wife.
(4) The shares of First Community Common Stock beneficially owned by J.
Bynum Carter include 12,000 shares held individually of record by Mr.
Carter, 12,000 shares held individually of record by his wife and
24,000 shares held by A.B. Carter, Inc. Mr. Carter exercises sole
investment and voting power with respect to 36,000 shares but denies
possession of voting power with respect to 12,000 shares held of record
by his wife.
(5) The shares of First Community Common Stock beneficially owned by
Titus W. Greene include 100 shares held individually by Mr. Greene and
1,800 shares held by Mr. Greene and his wife as joint tenants. Mr.
Greene exercises sole investment and voting power with respect to 100
shares and shared voting and investment power with respect to 1,800
shares.
(6) The shares of First Community Common Stock beneficially owned by
Donald R. Lineberger include 2,495 shares held individually of record
by Mr. Lineberger and 600 shares held of record by his wife. Mr.
Lineberger exercises sole investment and voting power with respect to
2,945 shares but denies possession of voting power with respect to 600
shares held of record by his wife.
(7) Mr. Lineberger has been granted by the Board of Directors of First
Community options to purchase 3,600 shares of First Community Common
Stock at 11.46 per share, 3,000 shares of First Community Common Stock
at $12.29 per share and 6,000 shares at 15.63 per share. The option to
purchase 3,600 shares of First Community Common Stock became
exercisable on July 19, 1992 and the option to purchase 3,000 shares of
First Community Common Stock became exercisable on June 19, 1994. The
option to purchase 6,000 shares of First Community Common Stock becomes
exercisable on August 16, 1996.
(8) The shares of First Community Common Stock beneficially owned by
John K. Long include 2,240 shares held individually of record by Mr.
Matthews, 1,100 shares held individually of record by his wife and
1,300 shares held by Broad Street Bonded Warehouse, Inc. Mr. Long
exercises sold investment and voting power with respect to 3,450 shares
but denied possession of voting power with respect to 400 shares held
of record by his wife.
(9) The shares of First Community Common Stock beneficially owned by
Eugene R. Matthews, II include 2,400 shares held individually of record
by Mr. Matthews, 1,100 shares held individually of record by his wife,
1,800 shares held in a retirement account for Mr. Matthews, 240 shares
held in a retirement account for his wife and 360 shares held by Mr.
Matthews as custodian for his children. Mr. Matthews exercises sole
investment and voting power with respect to 4,560 shares but denies
possession of voting power with respect to 1,340 shares held of record
by his wife.
(10) The shares of First Community Common Stock beneficially owned by
Johan T. Newcombe include 3,720 shares held individually of record by
Mrs. Newcombe and 1,200 shares held individually of record by the
estate of her husband. Mrs. Newcombe exercises sole investment and
voting power with respect to 3,720 shares but denies possession of
investment and voting power with respect to 1,200 shares held of record
by the estate of her husband.
(11) The shares of First Community Common Stock beneficially owned by
Plato Pearson, Jr. include 17,000 shares held individually of record by
Mr. Pearson, 2,400 shares held individually of record by his wife,
21,000 shares held of record by MRSJ Family Limited Partnership and
6,000 shares held by Pearson's, Inc. Mr. Pearson exercises sole voting
power with respect to 38,000 shares, and shared investment and voting
power with respect to 6,000 shares, but denies possession of voting
power with respect to 2,400 shares held of record by his wife.
(12) Mr. Pearson has been granted by the Board of Directors of First
Community options to purchase 4,000 shares of First Community Common
Stock at $15.63. Such options become exercisable on August 16, 1996.
(13) The shares of First Community Common Stock beneficially owned by
Robert S. Pearson include 9,150 shares held individually of record by
Mr. Pearson, 1,200 shares held individually of record by his wife and
2,760 shares held by Mr. Pearson as custodian for his children. Mr.
Pearson has sole investment and voting power with respect to 11,910
shares but denies possession of investment and voting power with
respect to 1,200 shares held of record by his wife.
(14) Mr. Pearson has been granted by the Board of Directors of First
Community options to purchase 3,000 shares of First Community Common
Stock at $11.46 per share, 2,400 shares of First Community Common Stock
at $12.29 per share and 5,000 shares at $15.63 per share. The option to
purchase 3,000 shares of First Community Common Stock became
exercisable on July 19, 1992 and the option to purchase 2,400 shares
became exercisable on June 19, 1993. The option to purchase 5,000
shares of First Community Common Stock becomes exercisable on August
16, 1996.
(15) The shares of First Community Common Stock beneficially owned by
Lonnie A. Waggoner, Jr. include 3,500 shares held individually of
record by Dr. Waggoner and 1,200 shares held of record by his wife. Dr.
Waggoner exercises sole investment and voting power with respect to
3,500 shares bud denies possession of investment and voting power with
respect to 1,200 shares held by his wife.
(16) The respective director has been awarded an option to purchase
2,000 shares of First Community Common Stock at $13.28 per share
pursuant to the terms of the First Community Bank Omnibus Stock Plan of
1994.
(17) Ms. Currence has been awarded an option to purchase 1,000 shares
of First Community Common Stock at $12.75 per share pursuant to the
terms of the First Community Bank Stock Plan of 1994.
INFORMATION ABOUT CENTURA
General
Centura, a North Carolina corporation, is a bank holding company
registered with the Federal Reserve under the BHC Act. Centura owns all of the
outstanding shares of Centura Bank, a North Carolina bank corporation. Centura,
through Centura Bank and its subsidiaries, offers a full range of financial
services through 154 offices located in 94 communities throughout North Carolina
and through a variety of alternative delivery channels. As of March 31, 1996,
Centura had total consolidated assets of approximately $5.5 billion, total
consolidated deposits of approximately $4.2 billion, and total consolidated
stockholders' equity of approximately $410 million.
Centura Bank is a North Carolina bank with deposits insured by the Bank
Insurance Fund and the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation and is a Federal Reserve member bank. Centura Bank, either
directly or through its subsidiaries, provides a wide range of financial
services, including: full-service commercial and consumer banking services;
retail securities brokerage services; insurance brokerage services covering a
full line of personal and commercial lines; and mortgage banking services.
Centura Bank also offers services through alternative delivery channels that
include: 211 automated teller machines in 103 communities throughout North
Carolina, including 37 communities not otherwise served by the Centura branch
network; a centralized telephone operation offering a full line of financial
services; and home banking through a telephone network operated by a third party
and connected to the personal computers of customers. In addition, through its
Trust Department, Centura Bank acts as trustee, executor, administrator,
custodian, guardian and depository for individual estates, and serves as
administrator or trustee for various types of employee benefit plans of
corporations and other organizations.
The principal executive offices of Centura and Centura Bank are located
at 134 North Church Street, Rocky Mount, North Carolina 27804, and its telephone
number at such address is (919) 977-4400. Additional information with respect to
Centura and its subsidiaries is included in documents incorporated by reference
in this Proxy Statement. See "AVAILABLE INFORMATION," "DOCUMENTS INCORPORATED BY
REFERENCE," and "CERTAIN REGULATORY CONSIDERATlONS."
Recent Developments
On February 27, 1996, Centura consummated its merger with First
Commercial Holding Corporation, a Delaware bank holding company with its
principal offices in Asheville, North Carolina ("FCHC"). In addition, First
Commercial Bank, FCHC's wholly-owned North Carolina state bank subsidiary, was
merged with and into Centura Bank. The merger was consummated through the
issuance of 0.63 share of Centura's common stock for each share of outstanding
common stock of FCHC or 1,607,564 shares. Centura's board of directors has
approved the repurchase of up to 9.9 percent of the shares issued. The
transaction was accounted for as a pooling-of-interests.
On April 11, 1996, Centura and Essex Savings Bank, FSB, executed an
agreement pursuant to which Centura will purchase approximately $77 million in
deposits and certain deposit related loans of the branch offices operated by
Essex in Greensboro, Raleigh, and Wilmington, North Carolina. Centura will pay a
1% deposit premium for the assumed deposits and is expected to close the
transaction during the second quarter of 1996.
On April 18, 1996 Centura Bank and FirstSouth Bank, headquartered in
Burlington, North Carolina, announced an agreement to merge. All of the capital
stock of FirstSouth Bank will be exchanged for Centura Common Stock at an
exchange ratio of 0.56 share of its common stock for each issued and outstanding
share of stock of FirstSouth Bank, subject to adjustments in certain
circumstances. The transaction will be accounted for as a pooling-of-interests.
Centura's board of directors has approved the repurchase of up to 9.9 percent of
the shares issued. It is anticipated that this merger will occur during the
third or fourth quarter of 1996.
For additional information with respect to these acquisitions, see
information contained in documents referenced under "DOCUMENTS INCORPORATED BY
REFERENCE."
Centura continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations, frequently take place, and future business
combinations involving cash, debt, or equity securities can be expected. Any
future business combination or series of business combinations that Centura
might undertake may be material, in terms of assets acquired or liabilities
assumed, to Centura's financial condition. Recent business combinations in the
banking industry have typically involved the payment of a premium over book and
market values. This practice could result in dilution of book value and net
income per share for the acquirer.
Stock Ownership of Management
Information regarding the ownership of Cenrtura Common Stock by
management of Centura is incorporated herein by reference to Centura's Annual
Report on form 10-K for the year ended December 31, 1995.
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to Centura and First Community.
General
Centura is a bank holding company registered with the Federal Reserve
under the BHC Act. As such, Centura and its non-bank subsidiaries are subject to
the supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy which is discussed below.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate
Banking Act), which became effective on September 29, 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that Centura, First Community and any other bank holding company
located in North Carolina may now acquire a bank located in any other state, and
any bank holding company located outside North Carolina may lawfully acquire any
North Carolina-based bank, regardless of state law to the contrary, in either
case subject to certain deposit-percentage limitations, aging requirements, and
other restrictions. The Interstate Banking Act also generally provides that,
after June 1, 1997, national and state-chartered banks may branch interstate
through acquisitions of banks in other states. By adopting legislation prior to
that date, a state has the ability either to "opt in" and accelerate the date
after which interstate branching is permissible or "opt out" and prohibit
interstate branching altogether. North Carolina has enacted "opt in" legislation
that permits interstate branching in North Carolina on a reciprocal basis
through June 1, 1997, and on an unlimited basis thereafter. Accordingly, the
banking subsidiaries of Centura and First Community are currently able to
establish and operate branches in other states that have also enacted "opt in"
legislation.
The BHC Act generally prohibits Centura from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. Despite prior
approval, the Federal Reserve has the power to order a holding company or its
subsidiaries to terminate any activity or to terminate its ownership or control
of any subsidiary when it has reasonable cause to believe that continuation of
such activity or such ownership or control constitutes a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company.
Centura Bank and First Community are both members of the Federal
Deposit Insurance Corporation (the "FDIC"), and as such, their deposits are
insured by the FDIC to the maximum extent provided by law. Centura Bank and
First Community are both subject to numerous state and federal statutes and
regulations that affect their business, activities, and operations. As a North
Carolina-chartered bank that is a member of the Federal Reserve System, Centura
Bank is supervised and examined by the Federal Reserve and the Commissioner.
First Community, a North Carolina-chartered bank that is not a member of the
Federal Reserve System, is supervised and examined by the FDIC and the
Commissioner. The federal banking agencies and the Commissioner regularly
examine the operations of Centura Bank and First Community and are given
authority to approve or disapprove mergers, consolidations, the establishment of
branches, and similar corporate actions, and to prevent the commencement or
continuation of unsafe or unsound banking practices or other violations of law.
The federal banking agencies and the Commissioner regulate and monitor all areas
of the operations of Centura Bank and its subsidiaries and First Community,
including loans, mortgages, issuances of securities, capital adequacy, loss
reserves, and compliance with the Community Reinvestment Act of 1977, as amended
(the "CRA") and other laws and regulations. Interest and certain other charges
collected and contracted for by Centura Bank and First Community are also
subject to state usury laws and certain federal laws concerning interest rates.
Community Reinvestment
First Community and Centura are subject to the provisions of the CRA
and the federal banking agencies' implementing regulations. Under the CRA, all
financial institutions have a continuing and affirmative obligation consistent
with its safe and sound operation to help meet the credit needs for their entire
communities, including low- and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for financial institutions,
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with the CRA. The CRA requires a depository institution's federal
regulator, in connection with its examination of the institution, to assess the
institution's record in assessing and meeting the credit needs of the community
served by that institution, including low- and moderate-income neighborhoods.
The regulatory agency's assessment of the institution's record is made available
to the public. Further, such assessment is required of any institution which has
applied to: (i) charter a national bank; (ii) obtain deposit insurance coverage
for a newly chartered institution; (iii) establish a new branch office that will
accept deposits; (iv) relocate an office; or (v) merge or consolidate with, or
acquire the assets or assume the liabilities of, a federally regulated financial
institution. In the case of a bank holding company applying for approval to
acquire a bank or other bank holding company, the Federal Reserve will assess
the records of each subsidiary depository institution of the applicant bank
holding company, and such records may be the basis for denying the application.
Following their most recent CRA compliance examinations, Centura Bank and First
Community each received a "Satisfactory" CRA rating.
In April 1995, the federal banking agencies adopted revised CRA
regulations in order to provide clearer guidance to depository institutions on
the nature and extent of their CRA obligations and the methods by which those
obligations would be assessed and enforced. Under the new CRA regulations, which
went into effect on January 1, 1996, the evaluation system used to judge an
institution's CRA performance consists of three tests: a lending test; an
investment test; and a service test. Each of these tests will be applied by the
institution's federal regulator in an assessment context that would take into
account such factors as: (i) demographic data about the community; (ii) the
institution's capacity and constraints; (iii) the institution's product
offerings and business strategy; and (iv) data on the prior performance of the
institution and similarly-situated lenders. The new lending test -- the most
important of the three tests for all institutions other than wholesale and
limited purpose (e.g., credit card) banks -- will evaluate an institution's
lending activities as measured by its home mortgage loans, small business and
farm loans, community development loans, and, at the option of the institution,
its consumer loans. The institution's regulator will weigh each of these lending
categories to reflect its relative importance to the institution's overall
business and, in the case of community development loans, the characteristics
and needs of the institution's service area and the opportunities available for
this type of lending. Assessment criteria for the lending test will include: (i)
geographic distribution of the institution's lending; (ii) distribution of the
institution's home mortgage and consumer loans among different economic segments
of the community; (iii) the number and amount of small business and small farm
loans made by the institution; (iv) the number and amount of community
development loans outstanding, and (v) the institution's use of innovative or
flexible lending practices to meet the needs of low-to-moderate income
individuals and neighborhoods. At the election of an institution, or if
particular circumstances so warrant, the banking agencies will take into account
in making their assessments lending by the institution's affiliates as well as
community development loans made by the lending consortia and other lenders in
which the institution has invested. As part of the new regulation, all financial
institutions will be required to report data on their small business and small
farm loans as well as their home mortgage loans, which are currently required to
be reported under the Home Mortgage Disclosure Act.
The focus of the investment test will be the degree to which the
institution is helping to meet the needs of its service area through qualified
investments that (i) benefit low-to-moderate income individuals and small
businesses or farms, (ii) address affordable housing needs, or (iii) involve
donations of branch offices to minority or women's depository institutions.
Assessment of an institution's performance under the investment test will be
based upon the dollar amount of the institution's qualified investments, its use
of innovative or complex techniques to support community development
initiatives, and its responsiveness to credit and community development needs.
The service test will evaluate an institution's systems for delivering retail
banking services, taking into account such factors as (i) the geographic
distribution of the institution's branch offices and ATMs, (ii) the
institution's record of opening and closing branch offices and ATMs, and (iii)
the availability of alternative product delivery systems such as home banking
and loan production offices in low-to-moderate income areas. The federal
regulators also will consider an institution's community development service as
part of the service test. A separate community development test will be applied
to wholesale or limited purpose financial institutions.
Smaller institutions, those having total assets of less than $250
million, will be evaluated under more streamlined criteria. In addition, a
financial institution will have the option of having its CRA performance
evaluated based on a strategic plan of up to five years in length that it had
developed in cooperation with local community groups. In order to be rated under
a strategic plan, the institution will be required to obtain the prior approval
of its federal regulator.
The joint agency CRA regulations provide that an institution evaluated
under a given test will receive one of five ratings for that test: outstanding,
high satisfactory, low satisfactory, needs to improve, or substantial
noncompliance. An institution will then receive a certain number of points for
its rating on each test, and the points will be combined to produce an overall
composite rating of either outstanding, satisfactory, needs to improve, or
substantial noncompliance. Under the agencies' rating guidelines, an institution
that receives an "outstanding" rating on the lending test will receive an
overall rating of at least "satisfactory", and no institution can receive an
overall rating of "satisfactory" unless it receives a rating of at least "low
satisfactory" on its lending test. In addition, evidence of discriminatory or
other illegal credit practices would adversely affect an institution's overall
rating. Under the new regulations, an institution's CRA rating would continue to
be taken into account by its regulator in considering various types of
applications.
Payment of Dividends
Centura is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of cash flow of Centura, including cash
flow to pay dividends to its stockholders, is dividends from Centura Bank. There
are statutory and regulatory limitations on the payment of such dividends to
Centura, as well as by Centura and First Community to their stockholders.
Centura is not subject to any direct legal or regulatory restrictions
on dividends (other than the requirements under the NCBCA that distributions may
not be made if, after giving them effect, the corporation would not be able to
pay its debts as they become due in the usual course of business or the
corporation's total assets would be less than its liabilities). Centura Bank and
First Community, as North Carolina-chartered banks, are subject to North
Carolina statutory and regulatory restrictions on the payment of cash dividends,
including the requirement that cash dividends be paid only out of undivided
profits and only if the bank has surplus of a specified level. If a bank having
capital stock of $15,000 or more has surplus of less than 50% of its paid-in
capital stock, no cash dividend may be declared until the bank has transferred
from undivided profits to surplus 25% of its undivided profits or any lesser
percentage sufficient to raise the bank's surplus to an amount equal to 50% of
its paid-in capital stock.
If, in the opinion of the federal banking regulator, a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "--Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At March 31, 1996, under dividend restrictions imposed under federal
and state laws, Centura Bank and First Community, without obtaining governmental
approvals, could declare aggregate dividends of approximately $96 million and
$2.25 million, respectively.
The payment of dividends by Centura and First Community may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
Capital Adequacy
Centura, Centura Bank and First Community are required to comply with
the capital adequacy standards established by the Federal Reserve in the case of
Centura and Centura Bank and the FDIC in the case of First Community. There are
two basic measures of capital adequacy for bank holding companies and their
banking subsidiaries that have been promulgated by the Federal Reserve and the
FDIC: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company or a bank to be
considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio ("Risk-Based Capital Ratio") of
total capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must comprise common stock, minority interests in the
equity accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock, and a limited amount of cumulative perpetual preferred stock, less
goodwill and certain other intangible assets ("Tier 1 Capital"). The remainder
may consist of subordinated debt, other preferred stock, and a limited amount of
loan loss reserves ("Tier 2 Capital"). At March 31, 1996, Centura's consolidated
Risk-Based Capital Ratio and its Tier 1 Risk-Based Capital Ratio (i.e., the
ratio of Tier 1 Capital to risk-weighted assets) were 10.92% and 9.67%,
respectively, and First Community's Risk-Based Capital and Tier 1 Risk-Based
Capital Ratios were 14.36% and 13.11%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis points.
Centura's and First Community's respective Leverage Ratios at March 31, 1996,
were 6.61 % and 10.22 %. The guidelines also provide that bank holding companies
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above the minimum supervisory levels
without significant reliance on intangible assets. Furthermore, the Federal
Reserve has indicated that it will consider a "tangible Tier 1 Capital Leverage
Ratio" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.
The risk-based and leverage capital requirements adopted by the Federal
Reserve and the FDIC for Centura Bank and First Community, respectively, are
substantially similar to those adopted by the Federal Reserve for bank holding
companies. Both Centura Bank and First Community were in compliance with
applicable minimum capital requirements as of March 31, 1996. Neither Centura,
Centura Bank, nor First Community has been advised by any federal banking agency
of any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the termination
of deposit insurance by the FDIC, a prohibition on the taking of brokered
deposits, and certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed upon FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "--Prompt
Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the federal banking agencies have, pursuant to FDICIA,
proposed an amendment to the risk-based capital standards that would calculate
the change in an institution's net economic value attributable to increases and
decreases in market interest rates and would require banks with excessive
interest rate risk exposure to hold additional amounts of capital against such
exposures.
Support of Subsidiary Banks
Under Federal Reserve policy, Centura is expected to act as sources of
financial strength for, and to commit resources to support, Centura Bank. This
support may be required at times when, absent such Federal Reserve policy,
Centura may not be inclined to provide it. In addition, any capital loans by a
bank holding company to any of its banking subsidiaries are subordinate in right
of payment to deposits and to certain other indebtedness of such banks. In the
event of a bank holding company's bankruptcy, any commitment by the bank holding
company to a federal bank regulatory agency to maintain the capital of a banking
subsidiary will be assumed by the bankruptcy trustee and entitled to a priority
of payment.
Prompt Corrective Action
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system the federal banking
regulators are required to establish five capital categories (well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized) and to take certain mandatory supervisory actions,
and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, FDICIA requires the banking regulator
to appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation the
relevant capital level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Risk-Based Capital Ratio of 10% or
greater, a Tier 1 Risk-Based Capital Ratio of 6.0% or greater, and a Leverage
Ratio of 5.0% or greater and (ii) is not subject to any written agreement,
order, capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency is deemed to be well capitalized. An
institution with a Risk-Based Capital Ratio of 8.0% or greater, a Tier 1
Risk-Based Capital Ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or
greater is considered to be adequately capitalized. A depository institution
that has a Risk-Based Capital Ratio of less than 8.0%, a Tier 1 Risk-Based
Capital Ratio of less than 4.0%, or a Leverage Ratio of less than 4.0% is
considered to be undercapitalized. A depository institution that has a
Risk-Based Capital Ratio of less than 6.0%, a Tier 1 Risk-Based Capital Ratio of
less than 3.0%, or a Leverage Ratio of less than 3.0%. is considered to be
significantly undercapitalized, and an institution that has a tangible equity
capital to assets ratio equal to or less than 2.0% is deemed to be critically
undercapitalized. For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be in
a capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution become undercapitalized, provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain non-depository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
At March 31, 1996, both Centura Bank and First Community had the
requisite capital levels to qualify as well capitalized under the regulations
implementing the prompt corrective action provisions of FDICIA.
FDIC Insurance Assessments
FDIC insurance premiums are based on an assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The system
assigns an institution to one of three capital categories: (i) well capitalized;
(ii) adequately capitalized; and (iii) undercapitalized. These three categories
are substantially similar to the prompt corrective action categories described
above, with the undercapitalized category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the risk-based assessment systemthere are nine assessment
risk classifications (i.e., combinations of capital groups and supervisory
subgroups) to which different assessment rates are applied. Assessment rates for
members of both the Bank Insurance Fund ("BIF") and the Savings Association
Insurance Fund ("SAIF") for the first half of 1995, as they had been during
1994, ranged from 23 basis points (0.23% of deposits) for an institution in the
highest category (i.e., "well capitalized" and "healthy") to 31 basis points
(0.31% of deposits) for an institution in the lowest category (i.e.,
"undercapitalized" and "substantial supervisory concern"). These rates were
established for both funds to achieve a designated ratio of reserves to insured
deposits (i.e., 1.25%) within a specified period of time.
Once the designated ratio for the BIF was reached during May 1995, the
FDIC was authorized to reduce the minimum assessment rate below 23 basis points
and to set future assessment rates at such levels that would maintain the BIF's
reserve ratio at the designated level. In August 1995, the FDIC adopted final
regulations reducing the assessment rates for BIF-member banks. Under the
revised schedule, BIF-insured banks, starting with the second half of 1995, paid
assessments ranging from 4.0 basis points to 31 basis points, with an average
assessment rate of 4.5 basis points. At the same time, the FDIC elected to
retain the pre-existing assessment rate of 23 to 31 basis points for SAIF
members for the foreseeable future given the undercapitalized nature of that
insurance fund. More recently, on November 14, 1995, the FDIC announced that,
beginning in 1996, it would further reduce the deposit insurance premiums for
BIF members in the highest capital and supervisory categories to $2,000 per
year, regardless of deposit size.
On July 28, 1995 the FDIC, the Treasury Department and the OTS released
statements outlining a proposed plan ("Proposed Plan") to recapitalize the SAIF,
certain features of which were subsequently agreed upon by members of the
Banking Committees of the U.S. House of Representatives and the Senate on
November 7, 1995 in negotiations to reconcile differences in bills on the issue
that had been introduced or partially adopted by each body. Under the agreement,
all SAIF-member institutions will pay a special assessment to the SAIF of
approximately 80 basis points (0.80%), the amount that would enable the SAIF to
attain its designated reserve ratio of 1.25%. The special assessment would be
payable on January 1, 1996, based on the amount of SAIF-insured deposits held as
of March 31, 1995. Most BIF-insured institutions holding SAIF-assessed deposits
would receive a 20% reduction in the assessment rate and would pay a one-time
assessment of approximately 64 basis points on their SAIF-assessed deposits. The
agreement also provides that the assessment base for the bonds issued in the
late 1980s to recapitalize the now defunct Federal Savings and Loan Insurance
Corporation would be expanded to include the deposits of both BIF- and
SAIF-insured institutions, with BIF members paying approximately 75% of the
interest on such obligations. The committee members further agreed that the BIF
and SAIF should be merged on January 1, 1998, with such merger being conditioned
upon the prior elimination of the federal thrift charter. At this time, Centura
is not able to predict the timing or exact amount of any SAIF special assessment
that might be required. However, if a 64 basis point assessment were levied
against the existing SAIF-assessed deposits of Centura Bank as of March 31,
1996, the SAIF special assessment paid by the bank (on a pre-tax basis) would be
approximately $8.8 million.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
Safety and Soundness Standards
The FDIA requires the federal bank regulatory agencies to prescribe
standards, by regulations or guidelines, relating to internal controls,
information systems and internal audit systems, loan documentation, credit
underwriting, interest rate risk exposure, asset growth, asset quality,
earnings, stock valuation and compensation, fees and benefits and such other
operational and managerial standards as the agencies deem appropriate. The
federal bank regulatory agencies have adopted a set of guidelines prescribing
safety and soundness standards pursuant to FDICIA, as amended. The guidelines
establish general standards relating to internal controls and information
systems, internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation, fees, and benefits. In
general, the guidelines require, among other things, appropriate systems and
practices to identify and manage the risks and exposures specified in the
guidelines. The guidelines prohibit excessive compensation as an unsafe and
unsound practice and describe compensation as excessive when the amounts paid
are unreasonable or disproportionate to the services performed by an executive
officer, employee, director, or principal stockholders. The federal banking
agencies determined that stock valuation standards were not appropriate. In
addition, the agencies adopted regulations that authorize, but do not require,
an agency to order an institution that has been given notice by an agency that
it is not satisfying any of such safety and soundness standards to submit a
compliance plan. If, after being so notified, an institution fails to submit an
acceptable compliance plan, the agency must issue an order directing action to
correct the deficiency and may issue an order directing other actions of the
types to which an undercapitalized association is subject under the prompt
correction action provisions of FDICIA. See "--Prompt Corrective Action." If an
institution fails to comply with such an order, the agency may seek to enforce
such order in judicial proceedings and to impose civil money penalties. The
federal bank regulatory agencies also proposed guidelines for asset quality and
earnings standards.
Depositor Preference
The Omnibus Budget Reconciliation Act of 1993 provides that deposits
and certain claims for administrative expenses and employee compensation against
an insured depository institution would be afforded a priority over other
general unsecured claims against such an institution in the "liquidation or
other resolution" of such an institution by any receiver.
DESCRIPTION OF CENTURA CAPITAL STOCK
Centura is authorized to issue 50,000,000 shares of Centura Common
Stock, of which 22,875,050 shares were issued and outstanding as of March 31,
1996. Centura is also authorized to issue 25,000,000 shares of Centura no par
value preferred stock, none of which is issued and outstanding.
Holders of Centura Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors out of funds legally available
therefore. The ability of Centura to pay dividends is affected by the ability of
its subsidiary depository institution to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At March 31, 1996,
under such requirements and guidelines, Centura's subsidiary depository
institution had $96 million of undivided profits legally available for the
payment of dividends. See "CERTAIN REGULATORY CONSIDERATIONS --Payment of
Dividends."
For a further description of Centura Common Stock, See "EFFECT OF THE
MERGER ON RIGHTS OF STOCKHOLDERS."
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of First
Community knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Proxy Statement. However, if any
other matters shall properly come before the Special Meeting or any adjournment
thereof and be voted upon, the enclosed proxy shall be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters.
EXPERTS
The consolidated financial statements of Centura Banks, Inc. and
subsidiary as of December 31, 1995 and 1994, and for each of the years in the
three-year period ended December 31, 1995, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP covering the consolidated
financial statements as of December 31, 1995 and 1994, and for each of the years
in the three-year period ended December 31, 1995, refers to the fact that on
December 31, 1993, Centura Banks, Inc. adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
The financial statements of First Community as of December 31, 1995 and
1994, and for each of the years in the three-year period ended December 31,
1995, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of KPMG
Peat Marwick LLP covering the financial statements as of December 31, 1995 and
1994, and for each of the years in the three-year period ended December 31,
1995, refers to the fact that on January 1, 1994, First Community adopted the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
OPINIONS
The legality of the shares of Centura Common Stock to be issued in the
Merger will be passed upon by Joseph A. Smith, Jr., Rocky Mount, North Carolina.
Mr. Smith is General Counsel and Secretary of Centura. As of March 31, 1996, Mr.
Smith beneficially owned an aggregate of 1,036 shares of Centura Common Stock
and was the holder of options to purchase 4,415 shares of Centura Common Stock.
Certain tax consequences of the transaction have been passed upon by
Poyner & Spruill, L.L.P., Raleigh, North Carolina.
Certain legal matters will be passed upon for First Community by Moore
& Van Allen, PLLC, Raleigh, North Carolina.
Charles T. Lane, a partner of Poyner & Spruill, is a director of
Centura and Centura Bank. As of March 31, 1996, Mr. Lane owned beneficially
26,082 shares of Centura Common Stock, and other members of Poyner & Spruill
beneficially owned 65,132 shares of Centura Common Stock. No other expert or
counsel employed by Centura or First Community had, or is to receive in
connection with the Merger, a substantial interest, direct or indirect, in
Centura or First Community or is otherwise connected with Centura or First
Community.
APPENDIX A
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
By and Among
FIRST COMMUNITY BANK
and
CENTURA BANK
and
CENTURA BANKS, INC.
April 4, 1996
</TABLE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I. AGREEMENT TO MERGE 2
1.01. Names of Merging Corporations
1.02. Nature of Transaction
1.03. Effect of Merger; Surviving Corporation
1.04. Assets and Liabilities of First Community
1.05. Conversion and Exchange of Stock
a. Conversion of First Community Stock
b. Exchange Procedures
c. Treatment of Fractional Shares
d. Surrender of Certificates
e. Antidilutive Adjustments
f. Dissenters
g. Lost Certificates
h. Treatment of First Community's Stock Options
i. Outstanding Centura Stock and Bank Stock
1.06. Articles, By-Laws and Management
1.07. Closing; Plan of Merger; Effective Time
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF FIRST COMMUNITY 8
2.01. Organization; Standing; Power
2.02. Capital Stock
2.03. Principal Shareholders
2.04. Subsidiaries
2.05. Convertible Securities, Options, Etc.
2.06. Authorization and Validity of Agreement
2.07. Validity of Transactions; Absence of Required Consents or Waivers
2.08. First Community Books and Records
2.09. First Community Reports
2.10. First Community Financial Statements
2.11. Tax Returns and Other Tax Matters
2.12. Absence of Material Adverse Changes or Certain Other Events
2.13. Absence of Undisclosed Liabilities
2.14. Compliance with Existing Obligations
2.15. Litigation and Compliance with Law
2.16. Real Properties
2.17. Loans, Accounts, Notes and Other Receivables
2.18. Securities Portfolio and Investments
2.19. Personal Property and Other Assets
2.20. Patents and Trademarks
2.21. Environmental Matters
2.22. Absence of Brokerage or Finders Commissions
2.23. Material Contracts
2.24. Employment Matters; Employee Relations
2.25. Employee Agreements; Employee Benefit Plans
2.26. Insurance
2.27. Insurance of Deposits
2.28. Affiliates
2.29. Obstacles to Regulatory Approval, Accounting Treatment or Tax Treatment
2.30. Disclosure
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CENTURA AND THE HOLDING COMPANY
3.01. Organization; Standing; Power
3.02. Capital Stock
3.03. Authorization and Validity of Agreement
3.04. Validity of Transactions; Absence of Required Consents or Waivers
3.05 Holding Company Books and Records
3.06. Holding Company Reports
3.07. Holding Company Financial Statements
3.08. Absence of Material Adverse Changes
3.09. Litigation and Compliance with Law
3.10 Absence of Brokerage or Finders Commissions
3.11. Obstacles to Regulatory Approval, Accounting
Treatment or Tax Treatment
3.12. Disclosure
ARTICLE IV. COVENANTS OF FIRST COMMUNITY
4.01. Affirmative Covenants of First Community
a. "Affiliates" of First Community
b. Conduct of Business Prior to Effective Time
c. Periodic Information Regarding Loans
d. Notice of Certain Changes or Events
e. Consents to Assignment of Leases
f. Further Action; Instruments of Transfer, etc
4.02. Negative Covenants of First Community
a. Amendments to Articles of Incorporation or Bylaws.
b. Change in Capital Stock
c. Options, Warrants and Rights
d. Dividends
e. Employment, Benefit or Retirement Agreements or Plans
f. Increase in Compensation;
Additional Compensation
g. Accounting Practices
h. Acquisitions; Additional Branch Offices
i. Changes in Business Practices
j. Exclusive Merger Agreement
k. Acquisition or Disposition of Assets
l. Debt; Liabilities
m. Liens; Encumbrances
n. Waiver of Rights
o. Other Contracts
ARTICLE V. COVENANTS OF CENTURA AND THE HOLDING COMPANY
5.01. Local Advisory Board
5.02. New York Stock Exchange Notification of Listing
of Additional Shares of Centura Stock
ARTICLE VI. MUTUAL AGREEMENTS
6.01. Shareholders' Meeting; Registration Statement; Proxy Statement/Prospectus
a. Meeting of Shareholders
b. Preparation and Distribution of Proxy Statement/Prospectus
c. Registration Statement and "Blue Sky" Approvals
d. Recommendation of First Community's Board of Directors
e. Information for Proxy Statement/Prospectus and Registration Statement
6.02. Regulatory Approvals
6.03. Access
6.04. Costs
6.05. Announcements
6.06. Environmental Studies
6.07. Employees; Severance Payments; Employee Benefits
a. Employment Agreements
b. Employment of Other First Community Employees
c. Severance Compensation
d. Employee Benefits
e. Other Agreements
6.08. Confidentiality
6.09. Reorganization for Tax Purposes
6.10. Directors' and Officers' Liability Insurance
6.11. Other Permissible Transactions
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER
7.01. Conditions to all Parties' Obligations
a. Approval by Governmental or Regulatory Authorities; No Disadvantageous Conditions
b. Adverse Proceedings, Injunction, Etc.
c. Approval by Boards of Directors and Shareholders
d. Fairness Opinion
e. Tax Opinion
f. No Termination or Abandonment
g. New York Stock Exchange Listing
7.02. Additional Conditions to First Community's
Obligations
a. Material Adverse Change
b. Compliance with Laws
c. The Holding Company's and Centura's Representations and Warranties and
Performance of Agreements; Officers' Certificate
d. Legal Opinion of the Holding Company and Centura Counsel
e. Other Documents and Information from the Holding Company and Centura
f. Articles of Merger; Other Actions
g. Acceptance by First Community's Counsel
7.03. Additional Conditions to the Holding Company's and Centura's Obligations
a. Material Adverse Change
b. Compliance with Laws; Adverse Proceedings, Injunction, Etc.
c. First Community's Representations and Warranties and Performance of
Agreements; Officers' Certificate
d. Effectiveness of Registration Statement; Compliance with Securities
and Other "Blue Sky" Requirements
e. Agreements from First Community Affiliates
f. Legal Opinion of First Community Counsel
g. Other Documents and Information from First Community
h. Consents to Assignment of Real Property Leases
i. Acceptance by the Holding Company's and Centura's Counsel
ARTICLE VIII. TERMINATION; BREACH; REMEDIES
8.01. Mutual Termination
8.02. Unilateral Termination
a. Termination by the Holding Company or Centura
b. Termination by First Community
c. Extension of Expiration Date
8.03. Breach; Remedies
ARTICLE IX. INDEMNIFICATION
9.01. Indemnification Following Effective Time
9.02 Procedure for Claiming Indemnification
ARTICLE X. MISCELLANEOUS PROVISIONS
10.01 Previously Disclosed Information
10.02. Survival of Representations, Warranties, Indemnification and Other Agreements
a. Representations, Warranties and Other Agreements
b. Indemnification
10.03. Waiver
10.04. Amendment
10.05. Notices
10.06. Further Assurance
10.07. Headings and Captions
10.08. Entire Agreement
10.09. Severability of Provisions
10.10. Assignment
10.11. Counterparts
10.12. Governing Law
10.13. Inspection
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
By and Among
FIRST COMMUNITY BANK
and
CENTURA BANK
and
CENTURA BANKS, INC.
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
(hereinafter called "Agreement") entered into as of the 4th day of April, 1996,
by and among FIRST COMMUNITY BANK ("First Community"), CENTURA BANK ("Centura")
and CENTURA BANKS, INC. (the "Holding Company").
WHEREAS, First Community is a North Carolina banking
corporation with its principal office and place of business located in Gastonia,
North Carolina; and,
WHEREAS, Centura is a North Carolina banking corporation with
its principal office and place of business located in Rocky Mount, North
Carolina; and,
WHEREAS, the Holding Company is a North Carolina business
corporation with its principal office and place of business located in Rocky
Mount, North Carolina, and is the parent company of Centura; and,
WHEREAS, the Holding Company, Centura and First Community have
agreed that it is in their mutual best interests and in the best interests of
their respective shareholders for First Community to be merged into Centura with
the effect that each of the outstanding shares of First Community's common stock
will be converted into newly issued shares of the Holding Company' common stock,
all in the manner and upon the terms and conditions contained in this Agreement;
and,
WHEREAS, to effectuate the foregoing, the Holding Company,
Centura and First Community desire to adopt this Agreement as a plan of
reorganization in accordance with the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended; and,
WHEREAS, while First Community's Board of Directors has
approved this Agreement, First Community has executed this Agreement subject to
the approval of its shareholders and has agreed to call a special meeting of its
shareholders for the purpose of voting on the Agreement and will recommend to
its shareholders that they approve the Agreement and the transactions described
herein; and,
WHEREAS, the Holding Company's and Centura's Boards of
Directors have approved this Agreement and the transactions described herein,
including the issuance by the Holding Company of shares of its common stock to
First Community's shareholders to effectuate such transactions.
NOW, THEREFORE, in consideration of the premises, the mutual
benefits to be derived from this Agreement, and of the representations,
warranties, conditions, covenants and promises herein contained, and subject to
the terms and conditions hereof, the Holding Company, Centura and First
Community hereby adopt and make this Agreement and mutually agree as follows:
ARTICLE I. AGREEMENT TO MERGE
1.01. Names of Merging Corporations. The names of the corporations
proposed to be merged are FIRST COMMUNITY BANK ("First Community") and CENTURA
BANK ("Centura").
1.02. Nature of Transaction. Subject to the provisions of this
Agreement, at the "Effective Time" (as defined in Paragraph 1.07. below), First
Community shall be merged into and with Centura pursuant to N.C. GEN. STAT. ss.
53-12 (the "Merger").
1.03. Effect of Merger; Surviving Corporation. At the Effective Time
and as provided in N.C. GEN. STAT. ss. 53-13, by reason of the Merger the
separate corporate existence of First Community shall cease while the corporate
existence of Centura as the surviving corporation in the Merger shall continue
with all of its purposes, objects, rights, privileges, powers and franchises,
all of which shall be unaffected and unimpaired by the Merger. Following the
Merger, Centura shall continue to operate as the wholly-owned banking subsidiary
of the Holding Company and, as a North Carolina banking corporation, will
continue to conduct its business at the then legally established branches and
main offices of Centura and First Community. The duration of the corporate
existence of Centura, as the surviving corporation, shall be perpetual and
unlimited.
1.04. Assets and Liabilities of First Community. At the Effective Time
and by reason of the Merger, and in accordance with N.C. GEN. STAT. ss.ss.
53-13, 53-17 and 55-11-06, all of First Community's property, assets and rights
of every kind and character (including without limitation all real, personal or
mixed property, all debts due on whatever account, all other choses in action
and all and every other interest of or belonging to or due to First Community,
whether tangible or intangible) shall be transferred to and vest in Centura, and
Centura shall succeed to all the rights, privileges, immunities, powers,
purposes and franchises of a public or private nature (including all trust and
fiduciary properties, powers and rights) of First Community, all without any
conveyance, assignment or further act or deed; and, Centura shall become
responsible for all of the liabilities, duties and obligations of every kind,
nature and description (including duties as trustee or fiduciary) of First
Community as of the Effective Time.
1.05. Conversion and Exchange of Stock.
a. Conversion of First Community Stock. At the Effective Time,
all rights of First Community's shareholders with respect to all then
outstanding shares of First Community's common stock ($4.16 2/3 par value)
("First Community Stock") shall cease to exist, and, as consideration for and to
effectuate the Merger (and except as otherwise provided below) each such
outstanding share of First Community Stock (other than any shares held by First
Community as treasury shares or shares held by the Holding Company or as to
which rights of dissent and appraisal are properly exercised as provided below)
shall be converted, without any action on the part of the holder of such share,
the Holding Company, Centura or First Community, into 0.96 (the "Exchange Rate")
newly issued shares of the Holding Company's no par value common stock ("the
Centura Stock"). Notwithstanding anything contained herein to the contrary, the
Exchange Rate is subject to adjustment in the following circumstances:
(i) If the Average Closing Price is less than $31.50 per
share, calculate (A) the quotient derived by dividing the Average
Closing Price by the Centura Commencement Price (the "Centura Ratio")
and (B) the quotient derived by dividing the average of the Index
Price for the ten (10) full trading days immediately preceding the
Determination Date by the Index Price at the Commencement Date (the
"Index Ratio"). If the Index Ratio is greater than the Centura Ratio,
then the Exchange Rate shall be the quotient derived by dividing the
product of $33.60 multiplied by the Index Ratio by the Average Closing
Price (rounded up to two (2) decimal places). If the Index Ratio is
less than the Centura Ratio, then the Exchange Rate shall be 0.96;
(ii) If the Average Closing Price is greater than $38.50, then
the Exchange Rate shall be the quotient derived by dividing the
product of $33.60 multiplied by the Index Ratio by the Average Closing
Price (rounded up to two (2) decimal places).
For purposes of this Paragraph 1.05.a., the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily closing
sales prices of Centura Common Stock as reported on the New York Stock
Exchange-Composite Transactions List (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source as
chosen by Centura) for the ten (10) consecutive full trading days in
which such shares are traded on the New York Stock Exchange ("NYSE")
ending at the close of trading on the trading day immediately
preceeding the Determination Date.
"Commencement Date" shall mean March 20, 1996.
"Centura Commencement Price" shall mean $35.00 per share.
"Determination Date" shall mean the date on which the shareholders of
First Community shall have adopted this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the extent
required by law or by the provisions of any governing instruments.
"Index Price" on a given date shall mean the weighted average of the
closing prices of the companies composing the NYSE Bank Stock Index compiled by
SNL Securities.
At the Effective Time, and without any action by First Community,
Centura, the Holding Company or any holder thereof, First Community's stock
transfer books shall be closed as to holders of First Community Stock
immediately prior to the Effective Time and, thereafter, no transfer of First
Community Stock by any such holder may be made or registered; and the holders of
shares of First Community Stock shall cease to be, and shall have no further
rights as, stockholders of First Community other than as provided herein.
Following the Effective Time, certificates representing shares of First
Community Stock outstanding at the Effective Time (herein sometimes referred to
as "Old Certificates") shall evidence only the right of the registered holder
thereof to receive, and may be exchanged for, (i) certificates for the number of
whole shares of the Centura Stock to which such holders shall have become
entitled on the basis set forth above, plus cash for any fractional share
interests as provided herein, (ii) in the case of shares as to which rights of
dissent and appraisal are properly exercised (as provided below), cash as
provided in Article 13 of the North Carolina Business Corporation Act.
b. Exchange Procedures. As promptly as practicable following
the Effective Time, the Holding Company shall cause the exchange agent selected
by the Holding Company (the "Exchange Agent") to mail to each former shareholder
of First Community of record immediately prior to the Effective Time written
instructions and transmittal materials (a "Transmittal Letter") for use in
surrendering Old Certificates to the Exchange Agent. Upon the proper delivery to
the Exchange Agent (in accordance with the above instructions, and accompanied
by a properly completed Transmittal Letter) by a former shareholder of First
Community of his or her Old Certificates, the Exchange Agent shall register in
the name of such shareholder the shares of the Centura Stock and deliver said
New Certificates to the individual shareholder entitled thereto upon and in
exchange for the surrender and delivery to the Exchange Agent by said individual
shareholder of his or her Old Certificates.
c. Treatment of Fractional Shares. No scrip or certificates
representing fractional shares of the Centura Stock will be issued to any former
shareholder of First Community, and, except as provided below, no such
shareholder will have any right to vote or receive any dividend or other
distribution on, or any other right with respect to, any fraction of a share of
the Centura Stock resulting from the above exchange. In the event the exchange
of shares would result in the creation of fractional shares, then, in lieu of
the issuance of fractional shares of the Centura Stock, the Holding Company
shall deliver cash to the Exchange Agent in an amount equal to the aggregate
market value of all such fractional shares, and the Exchange Agent shall divide
such cash among and remit it (without interest) to the former shareholders of
First Community in accordance with their respective interests. For purposes of
this Paragraph 1.05.c., the "aggregate market value" of all fractional shares of
the Centura Stock shall be equal to the total of such fractional shares
multiplied by the Average Closing Price.
d. Surrender of Certificates. Subject to Paragraph 1.05.f.
below, no certificate for any shares, or cash for any fractional share, of the
Centura Stock shall be delivered to any former shareholder of First Community
unless and until such shareholder shall have properly surrendered to the
Exchange Agent the Old Certificate(s) formerly representing his or her shares of
First Community Stock, together with a properly completed Transmittal Letter in
such form as shall be provided to the shareholder by the Holding Company for
that purpose. Further, until such Old Certificate(s) are so surrendered, no
dividend or other distribution payable to holders of record of the Centura Stock
as of any date subsequent to the Effective Time shall be delivered to the holder
of such Old Certificate(s). However, upon the proper surrender of such Old
Certificate(s) the Exchange Agent shall pay to the registered holder of the
shares of the Centura Stock represented by such Old Certificate(s) the amount of
any such cash, dividends or distributions which have accrued but remain unpaid
with respect to such shares. Neither the Holding Company, Centura, First
Community, nor the Exchange Agent, shall have any obligation to pay any interest
on any such cash, dividends or distributions for any period prior to such
payment. Further, and notwithstanding any other provision of this Agreement,
neither the Holding Company, Centura, First Community, nor the Exchange Agent
shall be liable to a former holder of First Community Stock for any amount paid
or property delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat, or similar law.
e. Antidilutive Adjustments. If, following the date of this
Agreement, the Holding Company shall change the number of outstanding shares of
the Centura Stock as a result of a dividend payable in shares of the Centura
Stock, a stock split, a reclassification or other subdivision or combination of
outstanding shares, and if the record date of such event occurs prior to the
Effective Time, then an appropriate and proportionate adjustment will be made to
increase or decrease the number of shares of the Centura Stock to be issued in
exchange for each of the shares of First Community Stock.
f. Dissenters. Any shareholder of First Community who has and
properly exercises the right of dissent and appraisal with respect to the Merger
as provided in Article 13 of the North Carolina Business Corporation Act
("Dissenters Rights") shall be entitled to receive payment of the fair value of
his or her shares of First Community Stock in the manner and pursuant to the
procedures provided therein. Shares of First Community Stock held by persons who
exercise Dissenters Rights shall not be converted into Centura Stock as provided
in Paragraph 1.05.a. above. However, if any shareholder of First Community who
exercises Dissenters Rights shall fail to perfect his or her right to receive
cash as provided above, or effectively shall waive or lose such right, then each
of his or her shares of First Community Stock, at the Holding Company' sole
option, shall be deemed to have been converted into the right to receive Centura
Stock as of the Effective Time as provided in Paragraph 1.05.a. above.
g. Lost Certificates. Any shareholder of First Community whose
certificate evidencing shares of First Community Stock has been lost, destroyed,
stolen or otherwise is missing shall be entitled to receive a certificate
representing the shares of Centura Stock to which he or she is entitled in
accordance with and upon compliance with conditions imposed by the Exchange
Agent or the Holding Company pursuant to the provisions of N.C. GEN. STAT. ss.
25-8-405 and N.C. GEN. STAT. ss. 25-8-104 (including without limitation a
requirement that the shareholder provide a lost instruments indemnity or surety
bond in form, substance and amount satisfactory to the Exchange Agent and the
Holding Company).
h. Treatment of First Community's Stock Options. (i) At the
Effective Time, each option or other right to purchase shares of First Community
Stock pursuant to stock options ("First Community Options") granted by First
Community under the First Community Bank Stock Option Plan and the First
Community Bank Omnibus Stock Option Plan of 1994 (collectively, the "First
Community Stock Plans"), which are outstanding at the Effective Time, whether or
not exercisable, shall be converted into and become rights with respect to
Centura Common Stock, and Centura shall assume each First Community Option, in
accordance with the terms of the First Community Stock Plans and stock option
agreement by which it is evidenced, except that from after the Effective Time,
(A) Centura and its Compensation Committee shall be substituted for First
Community and the Committee of First Community's Board of Directors (including,
if applicable, the entire Board of Directors of First Community) administering
such First Community Stock Plans, (B) each First Community Option assumed by
Centura may be exercised solely for shares of Centura Common Stock, (C) the
number of shares of Centura Common Stock subject to such First Community Option
shall be equal to the number of shares of First Community Common Stock subject
to such First Community Option immediately prior to the Effective Time
multiplied by the Exchange Rate, and (D) the per share exercise price under each
such First Community Option shall be adjusted by dividing the per share exercise
price under each such First Community Option by the Exchange Rate and rounding
up to the nearest cent. Notwithstanding the provisions of clause (C) of the
preceding sentence, Centura shall not be obligated to issue any fraction of a
share of Centura Common Stock upon exercise of First Community Options and any
fraction of a share of Centura Common Stock that otherwise would be subject to a
converted First Community Option shall represent the right to receive a cash
payment upon exercise of such converted First Community Option equal to the
product of such fraction and the difference between the market value of one
share of Centura Common Stock at the time of exercise of such Option and the per
share exercise price of such Option. The market value of one share of Centura
Common Stock at the time of exercise of an Option shall be the closing price of
Centura Common Stock on the NYSE-Composite Transactions List (as reported by The
Wall Street Journal or, if not reported thereby, any other authoritative source)
on the last trading day preceding the date of exercise.
(ii) As soon as practicable after the Effective Time, Centura shall
deliver to the participants in each First Community Stock Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
pursuant to such First Community Stock Plan shall continue in effect on the same
terms and conditions (subject to the adjustments required by Paragraph 1.05.a.
after giving effect to the Merger. At or prior to the Effective Time, Centura
shall take all corporate action necessary to reserve for issuance sufficient
shares of Centura Common Stock for delivery upon exercise of First Community
Options assumed by it in accordance with this Paragraph 1.05.h. As soon as
practicable after the Effective Time, Centura shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of Centura Common Stock subject
to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such options
remain outstanding.
(iii) All restrictions or limitations on transfer with respect to First
Community Common Stock awarded under the First Community Stock Plans or any
other plan, program, or arrangement of First Community, to the extent that such
restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall remain
in full force and effect with respect to shares of Centura Common Stock into
which such restricted stock is converted pursuant to this Agreement.
(iv) Notwithstanding the foregoing provisions of this Paragraph
1.05.h.: (A) in no event shall options to purchase more than 94,000 shares of
First Community Stock be converted into options to purchase Centura Stock in
connection with the transactions contemplated by this Agreement; and (B) at or
prior to the Effective Date, the First Community Bank Stock Option Plan and
agreements thereunder shall be amended to insure that the payments of taxes
thereunder shall not exceed the amount owed in respect of option exercises
thereunder in respect of all outstanding options as of the Effective Date, in
consideration of which Centura shall pay to the holders of such options the
amount of such tax payment promptly after the Effective Date. First Community
agrees to cooperate with Centura to insure the implementation of this Paragraph
1.05.h., including particularly this clause (iv).
i. Outstanding Centura Stock and Bank Stock. The status of the
shares of Centura Stock and the shares of the capital stock of Centura which are
outstanding immediately prior to the Effective Time shall not be affected by the
Merger.
1.06. Articles, By-Laws and Management. The Articles of Incorporation
and By-Laws of Centura in effect at the Effective Time shall be the Articles of
Incorporation and By-Laws of Centura as the surviving corporation. The officers
and directors of Centura in office at the Effective Time shall continue to hold
such offices until removed as provided by law or until the election or
appointment of their respective successors.
1.07. Closing; Articles of Merger; Effective Time. The closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Ward and Smith, P.A. in Raleigh, North Carolina, or at such other
place as the Holding Company shall designate, on a date specified by the Holding
Company (the "Closing Date") after the expiration of any and all required
waiting periods following the effective date of required approvals of the Merger
by governmental or regulatory authorities (but in no event more than thirty (30)
days following the expiration of all such required waiting periods). At the
Closing, the Holding Company, Centura and First Community shall take such
actions (including without limitation the delivery of certain closing documents)
as are required herein and as shall otherwise be required by law to consummate
the Merger and cause it to become effective, and shall execute Articles of
Merger under North Carolina law which shall contain a "Plan of Merger"
substantially in the form attached as Schedule A hereto.
Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of government and regulatory
authorities), the Merger shall be effective on the date and at the time (the
"Effective Time") designated in the Articles of Merger executed at the Closing
and filed with the North Carolina Secretary of State in accordance with law;
provided, however, that the date and time so specified as the Effective Time
shall in no event be more than ten (10) days following the Closing Date. If the
Articles of Merger do not designate a date or specific time as the Effective
Time, then the Effective Time shall be that date and time when the Articles of
Merger are properly filed with the North Carolina Secretary of State.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF FIRST COMMUNITY
Except as otherwise specifically provided herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to Centura, First Community
hereby makes the following representations and warranties to Centura and the
Holding Company:
2.01. Organization; Standing; Power. First Community (i) is duly
organized and incorporated, validly existing and in good standing as a banking
corporation under the laws of North Carolina; (ii) has all requisite power and
authority (corporate and other) to own, lease and operate its properties and to
carry on its business as now being conducted; (iii) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or in which
the transaction of its business makes such qualification necessary, except where
failure so to qualify would not have a material adverse effect on First
Community; and, (iv) is not transacting business or operating any properties
owned or leased by it in violation of any provision of federal or state law or
any rule or regulation promulgated thereunder, which violation would have a
material adverse effect on First Community.
2.02. Capital Stock. First Community's authorized capital stock
consists of 2,400,000 shares of common stock, $4.16 2/3 par value per share. As
of the date of this Agreement, 779,493 shares of First Community Stock are
issued and outstanding, which constitute First Community's only issued and
outstanding securities. First Community has reserved 191,000 shares of First
Community Stock for issuance under the First Community Stock Plans, pursuant to
which options to purchase not more than 94,000 shares of First Community Stock
are outstanding.
Each outstanding share of First Community Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent assessable under applicable North Carolina
banking law), (ii) has not been issued in violation of the preemptive rights of
any shareholder, and (iii) has been issued pursuant to and in compliance with
the requirement of an applicable exemption from registration requirements under
the Securities Act of 1933, as amended (the "1933 Act").
2.03. Principal Shareholders. No person or entity is known to First
Community to beneficially own, directly or indirectly, more than 5% of the
outstanding shares of First Community Stock.
2.04. Subsidiaries. First Community does not have any subsidiary
(direct or indirect), and does not own any stock or other equity interest in any
corporation, service corporation, joint venture, partnership or other entity.
2.05. Convertible Securities, Options, Etc.. With the exception of
options to purchase an aggregate of 94,000 shares of First Community Stock which
have been issued and are outstanding under the First Community Stock Plans,
First Community does not have any outstanding (i) securities or other
obligations (including debentures or other debt instruments) which are
convertible into shares of First Community Stock or any other securities of
First Community, (ii) options, warrants, rights, calls or other commitments of
any nature which entitle any person to receive or acquire any shares of First
Community Stock or any other securities of First Community, or (iii) plan,
agreement or other arrangement pursuant to which shares of First Community Stock
or any other securities of First Community, or options, warrants, rights, calls
or other commitments of any nature pertaining thereto, have been or may be
issued.
2.06. Authorization and Validity of Agreement. This Agreement has been
duly and validly approved by First Community's Board of Directors and executed
and delivered on First Community's behalf. Subject only to approval of this
Agreement by the shareholders of First Community in the manner required by law
(as contemplated by Paragraph 6.01.a. below), (i) First Community has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations and agreements and carry out the transactions described
herein, (ii) all corporate proceedings and approvals required to authorize First
Community to enter into this Agreement and to perform its obligations and
agreements and carry out the transactions described herein have been duly and
properly completed or obtained, and (iii) this Agreement has been executed on
behalf of First Community and constitutes a valid and binding agreement of First
Community enforceable in accordance with its terms (except to the extent
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect which
affect creditors' rights generally, (B) by legal and equitable limitations on
the availability of injunctive relief, specific performance and other equitable
remedies, and (C) general principles of equity and applicable laws or court
decisions limiting the enforceability of indemnification provisions).
2.07. Validity of Transactions; Absence of Required Consents or
Waivers. Except where the same would not have a material adverse effect on First
Community, neither the execution and delivery of this Agreement, nor the
consummation of the transactions described herein, nor compliance by First
Community with any of its obligations or agreements contained herein, will: (i)
conflict with or result in a breach of the terms and conditions of, or
constitute a default or violation under any provision of, First Community's
Articles of Incorporation or Bylaws, or any contract, agreement, lease,
mortgage, note, bond, indenture, license, or obligation or understanding (oral
or written) to which First Community is bound or by which it, its business,
capital stock or any of its properties or assets may be affected; (ii) result in
the creation or imposition of any lien, claim, interest, charge, restriction or
encumbrance upon any of First Community's properties or assets; (iii) violate
any applicable federal or state statute, law, rule or regulation, or any
judgment, order, writ, injunction or decree of any court, administrative or
regulatory agency or governmental body; (iv) result in the acceleration of any
obligation or indebtedness of First Community; or (v) interfere with or
otherwise adversely affect First Community's ability to carry on its business as
presently conducted.
No consents, approvals or waivers are required to be obtained from any
person or entity in connection with First Community's execution and delivery of
this Agreement, or the performance of its obligations or agreements or the
consummation of the transactions described herein, except for required approvals
of First Community's shareholders as described in Paragraph 7.01.c. below and of
governmental or regulatory authorities as described in Paragraph 7.01.a. below.
2.08. First Community Books and Records. First Community's books of
account and business records have been maintained in substantial compliance with
all applicable legal and accounting requirements and in accordance with good
business practices, and such books and records are complete and reflect
accurately in all material respects First Community's items of income and
expense and all of its assets, liabilities and stockholders' equity. The minute
books of First Community accurately reflect in all material respects the
corporate actions which its shareholders and board of directors, and all
committees thereof, have taken during the time periods covered by such minute
books. All such minute books have been or will be made available to Centura and
its representatives.
2.09. First Community Reports. Since January 1, 1991, and where the
failure to file has had or could have a material and adverse effect on First
Community, First Community has filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed with (i) the Federal Deposit Insurance Corporation (the
"FDIC"), (ii) the North Carolina Commissioner of Banks (the "Commissioner"), or
(iii) any other governmental or regulatory authorities having jurisdiction over
First Community. All such reports, registrations and statements filed by First
Community with the FDIC, the Commissioner or other such regulatory authority are
collectively referred to herein as the "First Community Reports." As of their
respective dates, each First Community Report complied in all material respects
with all the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which it was filed and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and First Community
has not been notified that any such First Community Report was deficient in any
material respect as to form or content. Following the date of this Agreement,
First Community shall deliver to the Holding Company, simultaneous with the
filing thereof, a copy of each report, registration, statement or other
regulatory filing made by it with the FDIC, the Commissioner or any other such
regulatory authority. The First Community Stock is registered under the
Securities Exchange Act of 1934 (the "Exchange Act"); First Community is subject
to the periodic reporting requirements of the Exchange Act.
2.10. First Community Financial Statements. First Community has
delivered to Centura a copy of its balance sheets as of December 31, 1994 and
December 31, 1995, and its statements of operations, changes in stockholders'
equity and cash flows for the years ended December 31, 1993, December 31, 1994
and December 31, 1995, together with notes thereto (the "First Community
Financial Statements"); and, following the date of this Agreement, First
Community promptly will deliver to Centura all other annual or interim financial
statements prepared by or for First Community. The First Community Financial
Statements (including any related notes and schedules thereto) (i) are in
accordance with First Community's books and records, and (ii) were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and present fairly in all
material respects First Community's financial condition, assets and liabilities,
results of operations, changes in stockholders' equity and changes in cash flows
as of the dates indicated and for the periods specified therein. The First
Community Financial Statements have been audited and certified by First
Community's independent certified public accountants, KPMG Peat Marwick LLP.
2.11. Tax Returns and Other Tax Matters. (i) First Community has timely
filed or caused to be filed all federal, state and local tax returns and reports
which are required by law to have been filed, and, to the best knowledge and
belief of management of First Community, all such returns and reports were true,
correct and complete and contained all material information required to be
contained therein; (ii) all federal, state and local income, profits, franchise,
sales, use, occupation, property, excise and other taxes (including interest and
penalties), charges and assessments which have become due from or been assessed
or levied against First Community or its property have been become fully paid,
and, with respect to any such taxes to become due from First Community for any
period or periods through and including December 31, 1995, adequate provision
has been made for the payment of all such taxes and such provision is reflected
in the First Community Financial Statements; (iii) First Community's tax returns
and reports have been examined or closed by applicable statutes of limitations
through the tax year ended December 31, 1991, and First Community has not
received any indication of the pendency of any audit or examination in
connection with any tax return or report and has no knowledge that any such
return or report is subject to adjustment; and (iv) First Community has not
executed any waiver or extended the statute of limitations (or been asked to
execute a waiver or extend a statute of limitation) with respect to any tax
year, the audit of any tax return or report or the assessment or collection of
any tax. Any deferred taxes of First Community have been provided for in the
First Community Financial Statements in all material respects.
2.12. Absence of Material Adverse Changes or Certain Other Events.
(i) Since December 31, 1995, First Community has conducted its
business only in the ordinary course, and there has been no material adverse
change, and there has occurred no event or development and, to the best
knowledge of management of First Community, there currently exists no condition
or circumstance which, with the lapse of time or otherwise, may or could cause,
create or result in a material adverse change, in or affecting the financial
condition of First Community or in its results of operations, prospects,
business, assets, loan portfolio, investments, properties or operations.
(ii) Since December 31, 1995, and other than in the ordinary
course of its business, including its normal salary review as of January 1,
1996, First Community has not incurred any material liability or engaged in any
material transaction or entered into any material agreement, increased the
salaries, compensation or general benefits payable to its employees, suffered
any loss, destruction or damage to any of its properties or assets, or made a
material acquisition or disposition of any assets or entered into any material
contract or lease.
2.13. Absence of Undisclosed Liabilities. First Community has no
liabilities or obligations, whether known or unknown, matured or unmatured,
accrued, absolute, contingent or otherwise, whether due or to become due
(including without limitation tax liabilities or unfunded liabilities under
employee benefit plans or arrangements), other than (i) those reflected in First
Community Financial Statements, or (ii) obligations or liabilities incurred in
the ordinary course of its business since December 31, 1995 and which are not,
individually or in the aggregate, material to First Community.
2.14. Compliance with Existing Obligations. First Community has
performed in all material respects all obligations required to be performed by
it under, and it is not in default in any respect under, or in violation in any
respect of, the terms and conditions of its Articles of Incorporation or Bylaws,
and/or any contract, agreement, lease, mortgage, note, bond, indenture, license,
obligation, understanding or other undertaking (whether oral or written) to
which First Community is bound or by which it, its business, capital stock or
any of its properties or assets may be affected.
2.15. Litigation and Compliance with Law.
(i) There are no actions, suits, arbitrations, controversies
or other proceedings or investigations (or, to the best knowledge and belief of
management of First Community, any facts or circumstances which reasonably could
result in such), including without limitation any such action by any
governmental or regulatory authority, which currently exists or is ongoing,
pending or, to the best knowledge and belief of management of First Community
threatened, contemplated or probable of assertion, against, relating to or
otherwise affecting First Community or any of its properties or assets which, if
determined adversely, could result in liability on the part of First Community
for, or subject it to, monetary damages, fines or penalties, or an injunction,
and which could have a material adverse effect on First Community's financial
condition, results of operations, prospects, business, assets, loan portfolio,
investments, properties or operations or on the ability of First Community to
consummate the Merger;
(ii) First Community has all licenses, permits, orders,
authorizations or approvals ("Permits") of any federal, state, local or foreign
governmental or regulatory body that are material to or necessary for the
conduct of its business or to own, lease and operate its properties; all such
Permits are in full force and effect; no violations are or have been recorded in
respect of any such Permits; and no proceeding is pending or, to the best
knowledge of management of First Community, threatened or probable of assertion
to suspend, cancel, revoke or limit any Permit;
(iii) First Community is not subject to any supervisory
agreement, enforcement order, writ, injunction, capital directive, supervisory
directive, memorandum of understanding or other similar agreement, order,
directive, memorandum or consent of, with or issued by any regulatory or other
governmental authority (including without limitation the FDIC or the
Commissioner) relating to its financial condition, directors or officers,
operations, capital, regulatory compliance or otherwise; there are no judgments,
orders, stipulations, injunctions, decrees or awards against First Community
which in any manner limit, restrict, regulate, enjoin or prohibit any present or
past business or practice of First Community; and First Community has not been
advised and has no reason to believe that any regulatory or other governmental
authority or any court is contemplating, threatening or requesting the issuance
of any such agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award; and,
(iv) First Community is not in violation or default in any
material respect under, and each has complied in all material respects with, all
laws, statutes, ordinances, rules, regulations, orders, writs, injunctions or
decrees of any court or federal, state, municipal or other governmental or
regulatory authority having jurisdiction or authority over it or its business
operations, properties or assets (including without limitation all provisions of
North Carolina law relating to usury, the Consumer Credit Protection Act, and
all other laws and regulations applicable to extensions of credit by First
Community) and there is no basis for any claim by any person or authority for
compensation, reimbursement or damages or otherwise for any violation of any of
the foregoing that would have any material adverse effect on the financial
condition of First Community.
2.16. Real Properties. First Community has Previously Disclosed to
Centura a listing of all real property owned or leased by First Community
(including First Community's banking facilities and all other real estate or
foreclosed properties owned by First Community) (the "Real Property") and all
leases, if any, pertaining to any such Real Property to which First Community is
a party (the "Real Property Leases"). With respect to all Real Property owned by
First Community, First Community has good and marketable fee simple title to
such Real Property and owns the same free and clear of all mortgages, liens,
leases, encumbrances, title defects and exceptions to title other than (i) the
lien of current taxes not yet due and payable, and (ii) such imperfections of
title and restrictions, covenants and easements (including utility easements)
which do not affect materially the value of the Real Property and which do not
and will not materially detract from, interfere with or restrict the present or
future use of the properties subject thereto or affected thereby. With respect
to each Real Property Lease (i) such lease is valid and enforceable in
accordance with its terms, (ii) there currently exists no circumstance or
condition which constitutes an event of default by First Community or its lessor
or which, with the passage of time or the giving of required notices will or
could constitute such an event of default, and (iii) subject to any required
consent of First Community's lessor, each such Real Property Lease may be
assigned to Centura and the execution and delivery of this Agreement does not
constitute an event of default thereunder.
To the best of the knowledge and belief of management of First
Community, the Real Property complies in all material respects with all
applicable federal, state and local laws, regulations, ordinances or orders of
any governmental authority, including those relating to zoning, building and use
permits, and the Real Property may be used under applicable zoning ordinances
for commercial banking facilities as a matter of right rather than as a
conditional or nonconforming use.
All improvements and fixtures included in or on the Real Property are
in good condition and repair, ordinary wear and tear excepted, and, except as
may have been Previously Disclosed under Paragraph 2.21 hereof, there does not
exist any condition which interferes with First Community's use or affects the
economic value thereof.
2.17. Loans, Accounts, Notes and Other Receivables.
(i) All loans, accounts, notes and other receivables reflected
as assets on First Community's books and records (A) have resulted from bona
fide business transactions in the ordinary course of First Community's
operations, (B) in all material respects were made in accordance with First
Community's standard loan policies and procedures, and (C) are owned by First
Community free and clear of all liens, encumbrances, assignments, participation
or repurchase agreements or other exceptions to title or to the ownership or
collection rights of any other person or entity.
(ii) All records of First Community regarding all outstanding
loans, accounts, notes and other receivables, and all other real estate owned,
are accurate in all material respects, and, with respect to each loan which
First Community's loan documentation indicates is secured by any real or
personal property or property rights ("Loan Collateral"), such loan is secured
by valid, perfected and enforceable liens on all such Loan Collateral having the
priority described in First Community's records of such loan.
(iii) To the best knowledge of management of First Community,
each loan reflected as an asset on First Community's books, and each guaranty
therefor, is the legal, valid and binding obligation of the obligor or guarantor
thereon, and no defense, offset or counterclaim has been asserted with respect
to any such loan or guaranty.
(iv) First Community has Previously Disclosed to Centura a
listing of (A) each loan, extension of credit or other asset of First Community
which, as of December 31, 1995, is classified by the FDIC, the Commissioner or
by First Community as "Loss", "Doubtful", "Substandard" or "Special Mention" (or
otherwise by words of similar import), or which First Community has designated
as a special asset or for special handling or placed on any "watch list" because
of concerns regarding the ultimate collectibility or deteriorating condition of
such asset or any obligor or Loan Collateral therefor, and (B) each loan or
extension of credit of First Community which, as of December 31, 1995, was past
due thirty (30) days or more as to the payment of principal and/or interest, or
as to which any obligor thereon (including the borrower or any guarantor)
otherwise was in default, is the subject of a proceeding in bankruptcy or
otherwise has indicated any inability or intention not to repay such loan or
extension of credit. Each such listing is accurate and complete as of the date
indicated.
(v) To the best knowledge and belief of First Community's
management, each of First Community's loans and other extensions of credit (with
the exception of those loans and extensions of credit specified in the written
listings described in Subparagraph (iv) above) is collectible in the ordinary
course of First Community's business in an amount which is not less than the
amount at which it is carried on First Community's books and records.
(vi) First Community's reserve for possible loan losses (the
"Loan Loss Reserve") shown in the First Community Interim Financial Statements
has been established in conformity with GAAP, sound banking practices and all
applicable requirements of the FDIC and rules and policies of the Commissioner
and, in the best judgment of First Community's management, is reasonable in view
of the size and character of First Community's loan portfolio, current economic
conditions and other relevant factors, and is adequate to provide for losses
relating to or the risk of loss inherent in First Community's loan portfolio and
other real estate owned.
2.18. Securities Portfolio and Investments. All securities owned by
First Community (whether owned of record or beneficially) are held free and
clear of all mortgages, liens, pledges, encumbrances or any other restriction or
rights of any other person or entity, whether contractual or statutory, which
would materially impair the ability of First Community to dispose freely of any
such security and/or otherwise to realize the benefits of ownership thereof at
any time (other than pledges of securities in the ordinary course of First
Community's business to secure public funds deposits and in connection with
repurchase agreements with customers). There are no voting trusts or other
agreements or undertakings to which First Community is a party with respect to
the voting of any such securities. With respect to all "repurchase agreements"
to which First Community has "purchased" securities under agreement to resell
(if any), First Community has a valid, perfected first lien or security interest
in the government securities or other collateral securing the repurchase
agreement, and the value of the collateral securing each such repurchase
agreement equals or exceeds the amount of the debt owed to First Community which
is secured by such collateral.
Except for fluctuations in the market values of United States Treasury
and agency or municipal securities, since December 31, 1995, there has been no
significant deterioration or material adverse change in the quality, or any
material decrease in the value, of First Community's securities portfolio.
2.19. Personal Property and Other Assets. All assets of First Community
(including without limitation all banking equipment, data processing equipment,
vehicles, and all other personal property located in or used in the operation of
each office of First Community or otherwise used by First Community in the
operation of its business) are owned by First Community free and clear of all
liens, leases, encumbrances, title defects or exceptions to title. All of First
Community's banking equipment is in good operating condition and repair,
ordinary wear and tear excepted.
2.20. Patents and Trademarks. First Community owns, possesses or has
the right to use any and all patents, licenses, trademarks, trade names,
copyrights, trade secrets and proprietary and other confidential information
necessary to conduct its business as now conducted; and First Community has not
violated, and is not currently in conflict with, any patent, license, trademark,
trade name, copyright or proprietary right of any other person or entity.
2.21. Environmental Matters. First Community has Previously Disclosed
and provided to Centura copies of all written reports, correspondence, notices
or other materials, if any, in its possession pertaining to environmental
reports, surveys, assessments, notices of violation, notices of regulatory
requirements, penalty assessments, claims, actions or proceedings, past or
pending, of the Real Property or any of its Loan Collateral and any improvements
thereon, or to any violation of Environmental Laws (as defined below) on,
affecting or otherwise involving the Real Property, any Loan Collateral or
otherwise involving First Community.
To the best of the knowledge and belief of management of First
Community:
(i) there has been no presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
reporting, testing, processing, emission, discharge, release, threatened
release, control or clean-up, in a reportable or regulated quantity, of any
hazardous, toxic or otherwise regulated materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, oil or other petroleum products or byproducts, asbestos or materials
containing (or presumed to contain) asbestos, polychlorinated biphenyls, or
radioactive materials, and/or any hazardous, toxic, regulated or dangerous
waste, substance or material defined as such by the United States Environmental
Protection Agency or any other federal, state or local government or agency or
political subdivision thereof, or for the purpose of any Environmental Laws (as
defined herein), as may now or hereafter (through the Effective Time) be defined
or in effect ("Hazardous Substances") by any person on, from or relating to any
parcel of the Real Property;
(ii) First Community has not violated any federal, state or
local law, rule, regulation, order, permit or other requirement relating to
health, safety or the environment or imposing liability, responsibility or
standards of conduct applicable to environmental conditions (all such laws,
rules, regulations, orders and other requirements being herein collectively
referred to as "Environmental Laws"), and, there has been no violation of any
Environmental Laws (including any violation with respect to or relating to any
Loan Collateral) by any other person or entity for whose liability or obligation
with respect to any particular matter or violation First Community is or may be
responsible or liable;
(iii) First Community is not subject to any claims, demands,
causes of action, suits, proceedings, losses, damages, penalties, liabilities,
obligations, costs or expenses of any kind and nature which arise out of, under
or in connection with, or which result from or are based upon the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, reporting, testing, processing, emission, discharge,
release, threatened release, control or clean-up of any Hazardous Substances on,
from or relating to the Real Property or any Loan Collateral, by First Community
or any other person or entity; and,
(iv) no facts, events or conditions relating to the Real
Property or any Loan Collateral, or the operations of First Community at any of
its office locations, will prevent, hinder or limit continued compliance with
Environmental Laws, or give rise to any investigatory, remedial or corrective
actions, obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental Laws.
For purposes of this Agreement, "Environmental Laws" shall
include:
(i) all federal, state and local statutes, regulations,
ordinances, orders, decrees, and similar provisions having the force or effect
of law,
(ii) all contractual agreements, and
(iii) all common law, concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all standards of conduct and bases of obligations
relating to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, reporting, testing,
processing, discharge, release, threatened release, control or clean-up of any
Hazardous Substances (including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Superfund Amendment
and Reauthorization Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Hazardous Materials Transportation Act, the Resource Conservation and
Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic Substances
Control Act, the Oil Pollutant Act, the Coastal Zone Management Act, any
"Superfund" or "Superlien" law, the North Carolina Oil Pollution and Hazardous
Substances Control Act, the North Carolina Water and Air Resources Act and the
North Carolina Occupational Safety and Health Act, including any amendments
thereto from time to time) as such may now or hereafter (through the Effective
Time) be defined or in effect.
2.22. Absence of Brokerage or Finders Commissions. (i) All negotiations
relative to this Agreement and the transactions described herein have been
carried on by First Community directly with Centura and the Holding Company;
(ii) no person or firm has been retained by or has acted on behalf of, pursuant
to any agreement, arrangement or understanding with, or under the authority of,
First Community or its Board of Directors, as a broker, finder or agent or has
performed similar functions or otherwise is or may be entitled to receive or
claim a brokerage fee or other commission in connection with the transactions
described herein; and, (iii) First Community has not agreed to pay any brokerage
fee or other commission to any person or entity in connection with the
transactions described herein.
2.23. Material Contracts. Except for leases on First Community's branch
offices, First Community is not a party to or bound by any agreement involving
money or other property in an amount or with a value in excess of $50,000 (i)
which is not to be performed in full prior to December 31, 1996, (ii) which
calls for the provision of goods or services to First Community and cannot be
terminated without material penalty upon written notice to the other party
thereto, (iii) which is material to First Community and has not entered into in
the ordinary course of business, (iv) which involves hedging, options or any
similar trading activity, or interest rate exchanges or swaps, (v) which commits
First Community to extend any loan or credit (with the exception of letters of
credit, lines of credit and loan commitments extended in the ordinary course of
First Community's business), (vi) which involves the purchase or sale of any
assets of First Community, or the purchase, sale, issuance, redemption or
transfer of any capital stock or other securities of First Community, or (vii)
with any director, officer or principal shareholder of First Community
(including without limitation any employment or consulting agreement, but not
including any agreement relating to loans or other banking services which were
made in the ordinary course of First Community's business and on substantially
the same terms and conditions as were prevailing at that time for similar
agreements with unrelated persons).
First Community is not in default in any material respect, and there
has not occurred any event which with the lapse of time or giving of notice or
both would constitute such a default, under any contract, lease, insurance
policy, commitment or arrangement to which it is a party or by which it or its
property is or may be bound or affected or under which it or its property
receives benefits, where the consequences of such default would have a material
adverse effect on the financial condition, results of operations, prospects,
business, assets, loan portfolio, investments, properties or operations of First
Community.
2.24. Employment Matters; Employee Relations. First Community (i) has
paid in full to or accrued on behalf of all its directors, officers and
employees all wages, salaries, commissions, bonuses, fees, sick pay, severance
pay, all other amounts promised to the extent required by law or when First
Community has a policy of making such payments and other direct compensation for
all services performed by them to the date of this Agreement and (ii) is in
compliance with all federal, state and local laws, statutes, rules and
regulations with regard to employment and employment practices, terms and
conditions, and wages and hours and other compensation matters; and, no person
has, to the knowledge of management of First Community, asserted that First
Community is liable in any amount for any arrearages in wages or employment
taxes or for any penalties for failure to comply with any of the foregoing.
There is no action, suit or proceeding by any person pending or, to the
best knowledge of management of First Community, threatened, against First
Community (or any of its employees), involving employment discrimination, sexual
harassment, wrongful discharge or similar claims.
First Community is not a party to or bound by any collective bargaining
agreement with any of its employees, any labor union or any other collective
bargaining unit or organization. There is no pending or threatened labor
dispute, work stoppage or strike involving First Community and any of its
employees, or any pending or threatened proceeding in which it is asserted that
First Community has committed an unfair labor practice; and First Community is
not aware of any activity involving it or any of its employees seeking to
certify a collective bargaining unit or engaging in any other labor organization
activity.
2.25. Employment Agreements; Employee Benefit Plans.
(i) First Community is not a party to or bound by any
employment agreements with any of its directors, officers or employees.
(ii) First Community has Previously Disclosed and has
delivered or made available to Centura prior to the execution of this Agreement
copies, in each case, of all pension, stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs,
arrangements, 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 "employee benefit plans" as that term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently adopted, maintained by, sponsored in whole or in part by,
or contributed to by First Community for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "First Community Benefit Plans"). Any of the First Community Benefit Plans
which is an "employee pension benefit plan," as that term is defined in Section
3(2) of ERISA, is referred to herein as a "First Community ERISA Plan." No First
Community ERISA Plan is also a "defined benefit plan" (as defined in Section
414(j) of the Internal Revenue Code) or is or has been a multi-employer plan
within the meaning of Section 3(37) of ERISA. Neither First Community nor any
affiliate of First Community has ever been required to contribute to a
multi-employer plan, as defined in Section 3(37) of ERISA.
(iii) All First Community Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable laws, rules or regulations, the breach or violation of which are
reasonably likely to have, individually or in the aggregate, a material adverse
effect on First Community. Each First Community ERISA Plan which 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 First
Community is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. To the knowledge of First Community,
First Community has not engaged in a transaction with respect to any First
Community Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject First Community to a tax imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the aggregate, a
material adverse effect on First Community.
(iv) First Community has no liability for retiree health and
life benefits under any of the First Community Benefit Plans and there are no
restrictions on the rights of First Community to amend or terminate any such
Plan without incurring any liability thereunder, which liability is reasonably
likely to have a material adverse effect on First Community.
(v) Except as Previously Disclosed, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any payment (including severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any director or
any employee of First Community from First Community under any First Community
Benefit Plan or otherwise, (B) increase any benefits otherwise payable under any
First Community Benefit Plan or otherwise, or (C) result in any acceleration of
the time of payment or vesting of any such benefit, where such payment,
increase, or acceleration is reasonably likely to have, individually or in the
aggregate, a material adverse effect on First Community.
(vi) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of First Community and their respective beneficiaries have been
fully reflected on the First Community Financial Statements to the extent
required by and in accordance with GAAP.
2.26. Insurance. First Community has in effect a "banker's blanket
bond" and such other policies of general liability, casualty, directors and
officers liability, employee fidelity, errors and omissions and other property
and liability insurance as have been Previously Disclosed to Centura (the
"Policies"). The Policies provide coverage in such amounts and against such
liabilities, casualties, losses or risks as is customary or reasonable for
entities engaged in First Community's business or as is required by applicable
law or regulation; and, in the reasonable opinion of management of First
Community, the insurance coverage provided under the Policies is considered
reasonable and adequate in all respects for First Community. Each of the
Policies is in full force and effect and is valid and enforceable in accordance
with its terms, and is underwritten by an insurer of recognized financial
responsibility and which is qualified to transact business in North Carolina;
and First Community has taken all requisite actions (including the giving of
required notices) under each such Policy in order to preserve all rights
thereunder with respect to all matters. First Community is not in default under
the provisions of, has not received notice of cancellation or nonrenewal of or
any premium increase on, or has any knowledge of any failure to pay any premium
on or any inaccuracy in any application for any Policy. There are no pending
claims with respect to any Policy (and First Community is not aware of any facts
which would form the basis of any such claim), and First Community has no
knowledge of any state of facts or of the occurrence of any event that is
reasonably likely to form the basis for any such claim.
2.27. Insurance of Deposits. All deposits of First Community are
insured by the Bank Insurance Fund of the FDIC to the maximum extent permitted
by law, all deposit insurance premiums due from First Community to the FDIC have
been paid in full in a timely fashion, and, to the best of the knowledge and
belief of First Community's executive officers, no proceedings have been
commenced or are contemplated by the FDIC or otherwise to terminate such
insurance.
2.28. Affiliates. First Community has Previously Disclosed to Centura a
listing of those persons deemed by First Community and its counsel as of the
date of this Agreement to be "Affiliates" of First Community (as that term is
defined in Rule 405 promulgated under the Securities Act of 1933), including
persons, trusts, estates, corporations or other entities related to persons
deemed to be Affiliates of First Community.
2.29. Obstacles to Regulatory Approval, Accounting Treatment or Tax
Treatment. To the best of the knowledge and belief of management of First
Community, there exists no fact or condition (including First Community's record
of compliance with the Community Reinvestment Act) relating to First Community
that may reasonably be expected to (i) prevent or materially impede or delay the
Holding Company, Centura or First Community from obtaining the regulatory
approvals required in order to consummate transactions described herein, or (ii)
prevent the Merger from qualifying to be a reorganization under Section
368(a)(1)(A) of the Code; and, if any such fact or condition becomes known to
First Community, First Community shall promptly (and in any event within three
days after obtaining such knowledge) communicate such fact or condition to the
President of the Holding Company.
2.30. Disclosure. To the best of the knowledge and belief of First
Community, no written statement, certificate, schedule, list or other written
information furnished by or on behalf of First Community at any time to the
Holding Company or Centura in connection with this Agreement (including without
limitation information "Previously Disclosed" by First Community), when
considered as a whole, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading. Each document delivered or to be delivered
by First Community to the Holding Company or Centura is or will be a true and
complete copy of such document, unmodified except by another document delivered
by First Community.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CENTURA AND THE HOLDING COMPANY
Except as otherwise specifically described herein or as "Previously
Disclosed" (as defined in Paragraph 10.01. below) to First Community, Centura
and the Holding Company each hereby makes the following representations and
warranties to First Community.
3.01. Organization; Standing; Power. Centura and the Holding Company
each (i) is duly organized and incorporated, validly existing and in good
standing (as a banking corporation and a business corporation, respectively)
under the laws of North Carolina, (ii) has all requisite power and authority
(corporate and other) to own its respective properties and conduct its
respective businesses as now being conducted, (iii) is duly qualified to do
business and is in good standing in each other jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its respective businesses makes such qualification necessary,
except where failure so to qualify would not have a material adverse effect on
the Holding Company and its subsidiaries considered as one enterprise, and (iv)
is not transacting business, or operating any properties owned or leased by it,
in violation of any provision of federal or state law or any rule or regulation
promulgated thereunder, which violation would have a material adverse effect on
the Holding Company and its subsidiaries considered as one enterprise.
3.02. Capital Stock. the Holding Company' authorized capital stock
consists of 50,000,000 shares of Centura Stock and 25,000,000 shares of no par
Preferred Stock. As of December 31, 1995, an aggregate of 22,015,916 shares of
Centura Stock were issued and outstanding, and no shares of Preferred Stock were
issued or outstanding. The Holding Company's outstanding capital stock has been
duly authorized and validly issued, and is fully paid and nonassessable, and the
shares of Centura Stock issued to First Community's shareholders pursuant to
this Agreement, when issued as described herein, will be duly authorized,
validly issued, fully paid and nonassessable.
All outstanding shares of Centura's common stock ("Bank Stock") have
been validly issued and are owned by the Holding Company.
3.03. Authorization and Validity of Agreement. This Agreement has been
duly and validly approved by the Holding Company's and Centura's Boards of
Directors and executed and delivered on the Holding Company's and Centura's
behalf. (i) the Holding Company and Centura each has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
and agreements and carry out the transactions described herein, (ii) all
corporate proceedings required to be taken to authorize the Holding Company and
Centura to enter into this Agreement and to perform its obligations and
agreements and carry out the transactions described herein have been duly and
properly taken, and (iii) this Agreement constitutes the valid and binding
agreement of the Holding Company and Centura enforceable in accordance with its
terms (except to the extent enforceability may be limited by (A) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect which affect creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive relief, specific
performance and other equitable remedies, and (C) general principles of equity
and applicable laws or court decisions limiting the enforceability of
indemnification provisions).
3.04. Validity of Transactions; Absence of Required Consents or
Waivers. Except where the same would not have a material adverse effect on the
Holding Company and its subsidiaries considered as one enterprise, neither the
execution and delivery of this Agreement, nor the consummation of the
transactions described herein, nor compliance by the Holding Company or Centura
with any of its obligations or agreements contained herein, will: (i) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, the Holding Company's or Centura's
Articles of Incorporation or Bylaws, or any contract, agreement, lease,
mortgage, note, bond, indenture, license, or obligation or understanding (oral
or written) to which the Holding Company or Centura is bound or by which it, its
business, capital stock or any of its properties or assets may be affected; (ii)
result in the creation or imposition of any lien, claim, interest, charge,
restriction or encumbrance upon any of the Holding Company's or Centura's
properties or assets; (iii) violate any applicable federal or state statute,
law, rule or regulation, or any order, writ, injunction or decree of any court,
administrative or regulatory agency or governmental body; (iv) result in the
acceleration of any obligation or indebtedness of the Holding Company or
Centura; or (v) interfere with or otherwise adversely affect the Holding
Company's or Centura's ability to carry on its business as presently conducted.
No consents, approvals or waivers are required to be obtained from any
person or entity in connection with the Holding Company's or Centura's execution
and delivery of this Agreement, or the performance of its obligations or
agreements or the consummation of the transactions described herein, except for
the approval of the respective Boards of Directors of the Holding Company and
Centura as described in Paragraph 7.01.c. below and required approvals of
governmental or regulatory authorities described in Paragraph 7.01.a. below.
3.05. Holding Company Books and Records. The Holding Company's and
Centura's books of account and business records have been maintained in
substantial compliance with all applicable legal and accounting requirements and
in accordance with good business practices, and such books and records are
complete and reflect accurately in all material respects the Holding Company's
and Centura's respective items of income and expense and all of their respective
assets, liabilities and stockholders' equity. The minute books of the Holding
Company and Centura accurately reflect in all material respects the corporate
actions which their respective shareholders and board of directors, and all
committees thereof, have taken during the time periods covered by such minute
books. All such minute books have been or will be made available to First
Community and its representatives.
3.06. Holding Company Reports. Since January 1, 1991, and where the
failure to file has had or could have a material and adverse effect on the
Holding Company and its subsidiaries considered as one enterprise, the Holding
Company and its consolidated subsidiaries have filed all reports, registrations
and statements, together with any amendments that were required to be made with
respect thereto, that were required to be filed with (i) the Securities and
Exchange Commission (the "SEC"), (ii) the Board of Governors of the Federal
Reserve System (the "FRB"), (iii) the FDIC, (iv) the Commissioner, and (v) any
other governmental or regulatory authorities having jurisdiction over the
Holding Company or its subsidiaries. All such reports and statements filed with
the SEC, the FRB, the FDIC, the Commissioner or other such regulatory authority
are collectively referred to herein as the "Holding Company Reports." As of
their respective dates, the Holding Company Reports complied in all material
respects with all the statutes, rules and regulations enforced or promulgated by
the regulatory authority with which they were filed and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; and the Holding
Company has not been notified that any such the Holding Company Reports were
deficient in any material respect as to form or content. Following the date of
this Agreement, the Holding Company shall deliver to First Community upon its
request a copy of any report, registration, statement or other regulatory filing
made by the Holding Company or Centura with the SEC, the FRB, the FDIC, the
Commissioner or any other such regulatory authority.
3.07. Holding Company Financial Statements. The Holding Company has
delivered to First Community a copy of the Holding Company's consolidated
balance sheets as of December 31, 1994 and December 31, 1995, and its
consolidated statements of income, changes in shareholders' equity, and cash
flows for the years ended December 31, 1993, December 31, 1994 and December 31,
1995 (the "Holding Company Financial Statements"). The Holding Company Financial
Statements were prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated and have been audited and certified by the
Holding Company' independent accountants, KPMG Peat Marwick LLP, and the Holding
Company Financial Statements present fairly in all material respects the Holding
Company's consolidated financial condition, assets and liabilities, results of
operations, changes in stockholders' equity and changes in cash flows as of the
dates and for the periods specified therein.
3.08. Absence of Material Adverse Changes. Since December 31, 1995,
there has been no material adverse change, and there has occurred no event or
development and, to the best knowledge of management of the Holding Company or
Centura, there currently exists no condition or circumstance which, with the
lapse of time or otherwise, may or could cause, create or result in a material
adverse change, in or affecting the Holding Company's consolidated financial
condition or results of operations, or in its prospects, business, assets, loan
portfolio, investments, properties or operations.
3.09. Litigation and Compliance with Law.
(i) There are no actions, suits, arbitrations, controversies
or other proceedings or investigations (or, to the best knowledge and belief of
management of the Holding Company or Centura, any facts or circumstances which
reasonably could result in such), including without limitation any such action
by any governmental or regulatory authority, which currently exists or is
ongoing, pending or, to the best knowledge and belief of management of the
Holding Company or Centura, threatened, contemplated or probable of assertion,
against, relating to or otherwise affecting the Holding Company or Centura or
any of their properties or assets which, if determined adversely, could result
in liability on the part of the Holding Company or Centura for, or subject it
to, monetary damages, fines or penalties, an injunction, and which could have a
material adverse change, in or affecting the Holding Company's consolidated
financial condition or results of operations, or in its prospects, business,
assets, loan portfolio, investments, properties or operations or on the ability
of the Holding Company or Centura to consummate the Merger;
(ii) the Holding Company and Centura each has all licenses,
permits, orders, authorizations or approvals ("Permits") of any federal, state,
local or foreign governmental or regulatory body that are material to or
necessary for the conduct of its business or to own, lease and operate its
properties; all such Permits are in full force and effect; no violations are or
have been recorded in respect of any such Permits; and no proceeding is pending
or, to the best knowledge of management of the Holding Company or Centura,
threatened or probable of assertion to suspend, cancel, revoke or limit any
Permit;
(iii) neither the Holding Company nor Centura is subject to
any supervisory agreement, enforcement order, writ, injunction, capital
directive, supervisory directive, memorandum of understanding or other similar
agreement, order, directive, memorandum or consent of, with or issued by any
regulatory or other governmental authority (including without limitation the
FDIC, the FRB or the Commissioner) relating to its financial condition,
directors or officers, operations, capital, regulatory compliance or otherwise;
there are no judgments, orders, stipulations, injunctions, decrees or awards
against the Holding Company or Centura which in any manner limit, restrict,
regulate, enjoin or prohibit any present or past business or practice of the
Holding Company or Centura; and, neither the Holding Company nor Centura has
been advised or has any reason to believe that any regulatory or other
governmental authority or any court is contemplating, threatening or requesting
the issuance of any such agreement, order, injunction, directive, memorandum,
judgment, stipulation, decree or award; and,
(iv) Neither the Holding Company nor Centura is in violation
or default in any material respect under, and each has complied in all material
respects with, all laws, statutes, ordinances, rules, regulations, orders,
writs, injunctions or decrees of any court or federal, state, municipal or other
governmental or regulatory authority having jurisdiction or authority over it or
its business operations, properties or assets (including without limitation all
provisions of North Carolina law relating to usury, the Consumer Credit
Protection Act, and all other laws and regulations applicable to extensions of
credit by Centura) and there is no basis for any claim by any person or
authority for compensation, reimbursement or damages or otherwise for any
violation of any of the foregoing that would have any material effect on the
consolidated financial condition of the Holding Company.
3.10. Absence of Brokerage or Finders Commissions.
(i) All negotiations relative to this Agreement and the transactions described
herein have been carried on by the Holding Company and Centura directly with
First Community; (ii) no person or firm has been retained by or has acted on
behalf of, pursuant to any agreement, arrangement or understanding with, or
under the authority of, the Holding Company or Centura or their respective
Boards of Directors, as a broker, finder or agent or has performed similar
functions or otherwise is or may be entitled to receive or claim a brokerage fee
or other commission in connection with the transactions described herein; and,
(iii) neither the Holding Company nor Centura has agreed to pay any brokerage
fee or other commission to any person or entity in connection with the
transactions described herein.
3.11. Obstacles to Regulatory Approval, Accounting Treatment or Tax
Treatment. To the best of the knowledge and belief of the executive officers of
the Holding Company and Centura, no fact or condition (including Centura's
record of compliance with the Community Reinvestment Act) relating to the
Holding Company or Centura exists that may reasonably be expected to (i) prevent
or materially impede or delay the Holding Company, Centura or First Community
from obtaining the regulatory approvals required in order to consummate the
transactions described herein, or (ii) prevent the Merger from qualifying to be
a reorganization under Section 368(a)(1)(A) of the Code; and, if any such fact
or condition becomes known to the executive officers of the Holding Company or
Centura, it promptly (and in any event within three days after obtaining such
knowledge) shall communicate such fact or condition to the Chairman of First
Community.
3.12. Disclosure. To the best of the knowledge and belief of the
Holding Company and Centura, no written statement, certificate, schedule, list
or other written information furnished by or on behalf of the Holding Company or
Centura at any time to First Community in connection with this Agreement
(including without limitation information "Previously Disclosed" by the Holding
Company and Centura), when considered as a whole, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading. Each document
delivered or to be delivered by the Holding Company or Centura to First
Community is or will be a true and complete copy of such document, unmodified
except by another document delivered by the Holding Company or Centura.
ARTICLE IV. COVENANTS OF FIRST COMMUNITY
4.01. Affirmative Covenants of First Community. First Community hereby
covenants and agrees as follows with the Holding Company and Centura.
a. "Affiliates" of First Community. First Community will use
its best efforts to cause each person who shall be deemed by the Holding Company
or its counsel, in their sole discretion, to be an Affiliate of First Community
(as defined in Paragraph 2.28 above), to execute and deliver to the Holding
Company prior to the Closing a written agreement (the "Affiliates' Agreement")
relating to restrictions on shares of Centura Stock to be received by such
Affiliates pursuant to this Agreement and which Affiliates' Agreement shall be
in form and content reasonably satisfactory to the Holding Company and
substantially in the form attached as Schedule B to this Agreement. Certificates
for the shares of Centura Stock issued to Affiliates of First Community shall
bear a restrictive legend (substantially in the form as shall be set forth in
the Affiliates' Agreement) with respect to the restrictions applicable to such
shares.
b. Conduct of Business Prior to Effective Time. While the
parties recognize that the operation of First Community until the Effective Time
is the responsibility of First Community and its Board of Directors and
officers, First Community agrees that, between the date of this Agreement and
the Effective Time, First Community will carry on its business, in and only in
the regular and usual course in substantially the same manner as such business
heretofore was conducted, and, to the extent consistent with such business and
within its ability to do so, First Community agrees that it will:
(i) preserve intact its present business
organization, keep available its present officers and employees, and preserve
its relationships with customers, depositors, creditors, correspondents,
suppliers, and others having business relationships with it;
(ii) maintain all its properties and equipment in
customary repair, order and condition, ordinary wear and tear excepted;
(iii) maintain its books of account and records in
the usual, regular and ordinary manner in accordance with sound business
practices applied on a consistent basis;
(iv) comply with all laws, rules and regulations
applicable to it, its properties and to the conduct of its business;
(v) continue to maintain in force insurance such as
is described in Paragraph 2.26. above; will not modify any bonds or policies of
insurance in effect as of the date hereof unless the same, as modified, provides
substantially equivalent coverage; and, will not cancel, allow to be terminated
or, to the extent available, fail to renew, any such bond or policy of insurance
unless the same is replaced with a bond or policy providing substantially
equivalent coverage; and,
(vi) promptly provide to the Holding Company and
Centura such information about First Community and its financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations, as they reasonably shall request.
c. Periodic Information Regarding Loans. All new extensions of
credit in excess of $750,000 will be submitted by First Community to Centura on
an after-the-fact basis for Centura's review within 10 business days of the date
of the extension of credit.
Additionally, First Community agrees to make available and
provide to the Holding Company and Centura the following information with
respect to First Community's loans and other extensions of credit (such assets
herein referred to as "Loans") as of December 31, 1995 and each month thereafter
until the Effective Time, such information for each month to be in form and
substance as is usual and customary in the conduct of First Community's business
and to be furnished within twenty (20) days of the end of each month ending
after the date hereof:
(i) a list of Loans past due for
sixty (60) days or more as to principal or
interest;
(ii) an analysis of the Loan Loss
Reserve and management's assessment of the
adequacy of the Loan Loss Reserve, which
analysis and assessment shall include a
list of all classified or "watch list"
Loans, along with the outstanding balance
and amount specifically allocated to the
Loan Loss Reserve for each such classified
or "watch list" Loan;
(iii) a list of Loans in nonaccrual
status;
(iv) a list of all Loans over
$50,000 without principal reduction for a
period of longer than one year;
(v) a list of all foreclosed real
property or other real estate owned and all
repossessed personal property;
(vi) a list of reworked or
restructured Loans over $50,000 and still
outstanding, including original terms,
restructured terms and status; and
(vii) a list of any actual or
threatened litigation by or against First
Community pertaining to any Loans or
credits, which list shall contain a
description of circumstances surrounding
such litigation, its present status and
management's evaluation of such litigation.
d. Notice of Certain Changes or Events. Following the
execution of this Agreement and up to the Effective Time, First Community
promptly will notify Centura in writing of and provide to it such information as
it shall request regarding (i) any material adverse change in its financial
condition, results of operations, prospects, business, assets, loan portfolio,
investments, properties or operations, or of the actual or prospective
occurrence of any condition or event which, with the lapse of time or otherwise,
may or could cause, create or result in any such material adverse change, or of
(ii) the actual or prospective existence or occurrence of any condition or event
which, with the lapse of time or otherwise, has caused or may or could cause any
statement, representation or warranty of First Community herein, or any
information that has been Previously Disclosed by First Community to Centura, to
be or become materially inaccurate, misleading or incomplete, or which has
resulted or may or could cause, create or result in the material breach or
violation of any of First Community's covenants or agreements contained herein
or in the failure of any of the conditions described in Paragraphs 7.01. or
7.03. below.
e. Consents to Assignment of Leases. First Community will use
its best efforts to obtain all required consents of its landlords to the
assignment to Centura of First Community's rights and obligations under the Real
Property Leases, each of which consents shall be in such form as shall be
specified by Centura.
f. Further Action; Instruments of Transfer, etc. First
Community covenants and agrees with the Holding Company and Centura that it (i)
will use its best efforts in good faith to take or cause to be taken all action
required of it hereunder as promptly as practicable so as to permit the
consummation of the transactions described herein at the earliest possible date,
(ii) shall perform all acts and execute and deliver to the Holding Company and
Centura all documents or instruments required herein or as otherwise shall be
reasonably necessary or useful to or requested by either of them in consummating
such transactions, and, (iii) will cooperate with the Holding Company and
Centura in every way in carrying out, and will pursue diligently the expeditious
completion of, such transactions.
4.02. Negative Covenants of First Community. First Community hereby
covenants and agrees that, between the date hereof and the Effective Time, First
Community will not do any of the following things or take any of the following
actions without the prior written consent and authorization of the President of
the Holding Company.
a. Amendments to Articles of Incorporation or Bylaws. First
Community will not amend its Articles of Incorporation or Bylaws.
b. Change in Capital Stock. Except for First Community Stock
to be issued under the First Community Option Plans, First Community will not
(i) make any change in its authorized capital stock, or create any other or
additional authorized capital stock or other securities, or (ii) issue, sell,
purchase, redeem, retire, reclassify, combine or split any shares of its capital
stock or other securities, other than the issuance of shares upon the exercise
of stock options which are outstanding as of the date of this Agreement
(including securities convertible into capital stock), or enter into any
agreement or understanding with respect to any such action.
c. Options, Warrants and Rights. First Community will not
grant or issue any options, warrants, calls, puts or other rights of any kind
relating to the purchase, redemption or conversion of shares of its capital
stock or any other securities (including securities convertible into capital
stock) or enter into any agreement or understanding with respect to any such
action.
d. Dividends. First Community will not declare or pay any
dividends or make any other distributions on or in respect of any shares of its
capital stock or otherwise to its shareholders, except in accordance with its
current cash policy, cash dividend level and cash dividend declaration and
payment dates.
e. Employment, Benefit or Retirement Agreements or Plans.
Except as required by law and except as may occur under the First Community
Stock Plans (which provide for the immediate exercisability of options if an
employee is terminated for other than cause), First Community will not (i) enter
into or become bound by any contract, agreement or commitment for the employment
or compensation of any officer, employee or consultant which is not immediately
terminable by First Community without cost or other liability on no more than
thirty (30) days notice; (ii) adopt, enter into or become bound by any new or
additional profit-sharing, bonus, incentive, change in control or "golden
parachute", stock option, stock purchase, pension, retirement, insurance
(hospitalization, life or other) or similar contract, agreement, commitment,
understanding, plan or arrangement (whether formal or informal) with respect to
or which provides for benefits for any of its current or former directors,
officers, employees or consultants; or (iii) enter into or become bound by any
contract with or commitment to any labor or trade union or association or any
collective bargaining group.
f. Increase in Compensation; Additional Compensation. Except
as otherwise provided herein, First Community will not increase the compensation
or benefits of, or pay any bonus or other special or additional compensation to,
any of its directors, officers, employees or consultants. Notwithstanding
anything contained herein to the contrary, this Paragraph 4.02.f. shall not
prohibit annual merit increases in the salaries of its employees or other
payments made to employees or directors in connection with existing compensation
or benefit plans, so long as such increases or payments are effected at such
times and in such manner and amounts as shall be consistent with First
Community's past compensation policies and practices and, in the case of
payments made pursuant to compensation or benefit plans, consistent with the
terms of those plans and provided that if the Merger occurs prior to such
compensation or benefit plans' normal anniversary date, payments made pursuant
to those compensation or benefit plans shall be made on a pro rata basis for the
appropriate portion of the fiscal year prior to the Merger; and provided that
First Community shall be allowed to make bonus payments under its Executive
Bonus Plan and Executive Officer Bonus Plan without regard to the specific terms
of such plans up to the aggregate amount accrued by First Community for such
plans immediately prior to the Effective Time (such accruals not to exceed
$7,000 per month).
g. Accounting Practices. First Community will not make any
changes in its accounting methods, practices or procedures or in depreciation or
amortization policies, schedules or rates heretofore applied (except as required
by generally accepted accounting principles or governmental regulations).
h. Acquisitions; Additional Branch Offices. First Community
will not directly or indirectly (i) acquire or merge with, or acquire any branch
or all or any significant part of the assets of, any other person or entity,
(ii) open any new branch office, or (iii) enter into or become bound by any
contract, agreement, commitment or letter of intent relating to, or otherwise
take or agree to take any action in furtherance of, any such transaction or the
opening of a new branch office; provided that First Community shall be allowed
to open a branch at 701 South Main Street, Mount Holly, North Carolina.
i. Changes in Business Practices. Except as may be required by
the FDIC, the Commissioner or any other governmental or other regulatory agency
or as shall be required by applicable law, regulation or this Agreement, First
Community will not (i) change in any material respect the nature of its business
or the manner in which it conducts its business, (ii) discontinue any material
portion or line of its business, or (iii) change in any material respect its
lending, investment, asset-liability management or other material banking or
business policies (except to the extent required by Paragraph 4.01.b. above).
j. Exclusive Merger Agreement. First Community will not,
directly nor indirectly, through any person (i) encourage, solicit or attempt to
initiate or procure discussions, negotiations or offers with or from any person
or entity (other than the Holding Company or Centura) relating to a merger or
other acquisition of First Community, or the purchase or acquisition of any
First Community Stock, any branch office of First Community or all or any
significant part of First Community's assets; or provide assistance to any
person in connection with any such offer; (ii) disclose to any person or entity
any information not customarily disclosed to the public concerning First
Community or its business, or afford to any other person or entity access to its
properties, facilities, books or records; (iii) sell or transfer any branch
office of First Community or all or any significant part of its assets to any
other person or entity, or (iv) enter into or become bound by any contract,
agreement, commitment or letter of intent relating to, or otherwise take or
agree to take any action in furtherance of, any such transaction.
k. Acquisition or Disposition of Assets. First Community will
not, without the prior written consent of Centura, which consent shall not be
unreasonably withheld:
(i) sell or lease (as lessor), or enter into or
become bound by any contract, agreement, option or commitment relating to the
sale, lease (as lessor) or other disposition of any real estate; or sell or
lease (as lessor), or enter into or become bound by any contract, agreement,
option or commitment relating to the sale, lease (as lessor) or other
disposition of any equipment or any other fixed or capital asset (other than
real estate) having a value on First Community's books or a fair market value,
whichever is greater, of more than $75,000 for any individual item or asset, or
more than $150,000 in the aggregate for all such items or assets;
(ii) purchase or lease (as lessee), or enter into or
become bound by any contract, agreement, option or commitment relating to the
purchase, lease (as lessee) or other acquisition of any real property; or
purchase or lease (as lessee), or enter into or become bound by any contract,
agreement, option or commitment relating to the purchase, lease (as lessee) or
other acquisition of any equipment or any other fixed assets (other than real
estate) having a purchase price, or involving aggregate lease payments, in
excess of $75,000 for any individual item or asset, or more than $150,000 in the
aggregate for all such items or assets;
(iii) enter into any purchase commitment for supplies
or services which calls for prices of goods or fees for services materially
higher than current market prices or fees or which obligates First Community for
a period longer than 12 months;
(iv) sell, purchase or repurchase, or enter into or
become bound by any contract, agreement, option or commitment to sell, purchase
or repurchase, any loan or other receivable or any participation in any loan or
other receivable (with the exception of investment securities and residential
mortgage loans sold in the ordinary course of First Community's business); or
(v) sell or dispose of, or enter into or become bound
by any contract, agreement, option or commitment relating to the sale or other
disposition of, any other asset of First Community (whether tangible or
intangible, and including without limitation any trade name, copyright, service
mark or intellectual property right or license); or assign its right to or
otherwise give any other person its permission or consent to use or do business
under First Community's corporate name or any name similar thereto; or release,
transfer or waive any license or right granted to it by any other person to use
any trademark, trade name, copyright or intellectual property right.
l. Debt; Liabilities. Except in the ordinary course of its
business consistent with its past practices (including routine borrowings for
liquidity purposes from the Federal Home Loan Bank of Atlanta and other
correspondent banks), First Community will not (i) enter into or become bound by
any promissory note, loan agreement or other agreement or arrangement pertaining
to its borrowing of money, (ii) assume, guarantee, endorse or otherwise become
responsible or liable for any obligation of any other person or entity, or (iii)
incur any other liability or obligation (absolute or contingent).
m. Liens; Encumbrances. First Community will not mortgage,
pledge or subject any of its assets to, or permit any of its assets to become or
(except as Previously Disclosed) remain subject to, any lien or any other
encumbrance (other than in the ordinary course of business consistent with its
past practices in connection with securing of public funds deposits, securities
repurchase agreements or other similar operating matters).
n. Waiver of Rights. First Community will not waive, release
or compromise any material rights in its favor (except in the ordinary course of
business) except in good faith for fair value in money or money's worth, nor
waive, release or compromise any rights against or with respect to any of its
officers, directors or shareholders or members of families of officers,
directors or shareholders.
o. Other Contracts. First Community will not enter into or
become bound by any contracts, agreements, commitments or understandings (other
than those described elsewhere in this Paragraph 4.02.) (i) for or with respect
to any charitable contributions; (ii) with any governmental or regulatory agency
or authority; (iii) pursuant to which First Community would assume, guarantee,
endorse or otherwise become liable for the debt, liability or obligation of any
other person; (iv) which is entered into other than in the ordinary course of
its business; and (v) which, in the case of any one contract, agreement,
commitment or understanding and whether or not in the ordinary course of its
business, would obligate or commit First Community to make expenditures of more
than $75,000 (other than contracts, agreements, commitments or understandings
entered into in the ordinary course of First Community's lending operations).
ARTICLE V. COVENANTS OF CENTURA AND THE HOLDING COMPANY
Centura and the Holding Company each hereby covenants and agrees as
follows with First Community.
5.01. Local Advisory Board. Each of the members of First Community's
Board of Directors at the Effective Time (other than directors who also are
employees of First Community or who do not desire to serve as such) shall be
appointed to serve at Centura's pleasure as members of Centura's Gaston County
advisory board. Each such director's service as an advisory director shall be at
the pleasure of Centura and shall be subject to Centura's corporate policies
relating to the appointment, compensation and service of such directors.
Notwithstanding the foregoing, First Community directors who accept appointment
as Centura advisory directors (i) shall receive directors' fees through December
31, 1996, at the rate previously paid by First Community and shall receive fees
at Centura's customary rate thereafter; and (ii) for one year following the
Effective Date, such directors will be exempt from Centura's mandatory
retirement policy for directors.
5.02. New York Stock Exchange Notification of Listing of Additional
Shares of Centura Stock. On or before the fifteenth day prior to the Effective
Time, the Holding Company shall file with the New York Stock Exchange such
notifications and other materials (and shall pay such fees) as shall be required
for the listing on the New York Stock Exchange of the shares of Centura Stock to
be issued to First Community's shareholders at the Effective Time.
ARTICLE VI. MUTUAL AGREEMENTS
6.01. Shareholders' Meeting; Registration Statement; Proxy
Statement/Prospectus.
a. Meeting of Shareholders. First Community shall cause a
meeting of its shareholders (the "Shareholder Meeting", which may be a regular
annual meeting or a specially called meeting) to be held as soon as reasonably
possible (but in no event less than 20 days following the mailing to First
Community's shareholders of the "Proxy Statement/Prospectus" described below)
for the purpose of First Community's shareholders voting on the approval of the
Agreement and the Merger. In connection with the call and conduct of and all
other matters relating to the Shareholder Meeting (including the solicitation of
proxies), First Community shall fully comply with all provisions of applicable
law and regulations and with First Community's Articles of Incorporation and
By-laws.
b. Preparation and Distribution of Proxy Statement/Prospectus.
The Holding Company and First Community jointly will prepare a "Proxy
Statement/Prospectus" for distribution to First Community's shareholders as
First Community's proxy statement relating to First Community's solicitation of
proxies for use at the Shareholder Meeting and as the Holding Company's
prospectus relating to the offer and distribution of Centura Stock as described
herein. The Proxy Statement/ Prospectus shall be in such form and shall contain
or be accompanied by such information regarding the Shareholder Meeting, this
Agreement, the parties hereto, the Merger and other transactions described
herein as is required by applicable law and regulations and otherwise as shall
be agreed upon by the Holding Company and First Community. The Holding Company
shall include the Proxy Statement/Prospectus as the prospectus in its
"Registration Statement" described below; and, each party hereto will cooperate
with the other in good faith and will use their best efforts to cause the Proxy
Statement/Prospectus to comply with any comments of the SEC thereon.
The Holding Company and First Community will mail the Proxy
Statement/Prospectus to First Community's shareholders not less than 20 days
prior to the scheduled date of the Shareholder Meeting; provided, however, that
no such materials shall be mailed to First Community's shareholders unless and
until the Holding Company shall have determined to its own satisfaction that the
conditions specified in Paragraph 7.03.d. below have been satisfied and shall
have approved such mailing.
c. Registration Statement and "Blue Sky" Approvals. As soon as
practicable following the execution of this Agreement, the Holding Company will
prepare and file with the SEC a registration statement on Form S-4 (or on such
other form as the Holding Company shall determine to be appropriate) (the
"Registration Statement") covering the Centura Stock to be issued to
shareholders of First Community pursuant to this Agreement. Additionally, the
Holding Company shall take all such other actions, if any, as shall be required
by applicable state securities or "blue sky" laws (i) to cause the Centura Stock
to be issued upon consummation of the Merger, at the time of the issuance
thereof, to be duly qualified or registered (unless exempt) under such laws,
(ii) to cause all conditions to any exemptions from qualification or
registration under such laws to have been satisfied, and (iii) to obtain any and
all required approvals or consents to the issuance of such stock.
d. Recommendation of First Community's Board of Directors.
Unless, due to a material change in circumstances or for any other reason First
Community's Board of Directors reasonably believes that such a recommendation
would violate the directors' duties or obligations as such to First Community or
to its shareholders, First Community's Board of Directors will recommend to and
actively encourage First Community's shareholders that they vote their shares of
First Community Stock at the Shareholder Meeting to ratify and approve this
Agreement and the Merger, and the Proxy Statement/Prospectus mailed to First
Community's shareholders will so indicate and state that First Community's Board
of Directors considers the Merger to be advisable and in the best interests of
First Community and its shareholders.
e. Information for Proxy Statement/Prospectus and Registration
Statement. The Holding Company, Centura and First Community each agrees to
respond promptly, and to use its best efforts to cause its directors, officers,
accountants and affiliates to respond promptly, to requests by any other such
party and its counsel for information for inclusion in the various applications
for regulatory approvals and in the Proxy Statement/Prospectus. The Holding
Company, Centura and First Community each hereby covenants with the others that
none of the information provided by it for inclusion in the Proxy
Statement/Prospectus will, at the time of its mailing to First Community's
shareholders, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not false or misleading; and, at all times following such mailing up
to and including the Effective Time, none of such information contained in the
Proxy Statement/Prospectus, as it may be amended or supplemented, will contain
an untrue statement of a material fact or omit any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they were made, not false or
misleading.
6.02. Regulatory Approvals. Promptly following the date of this
Agreement, Centura, the Holding Company and First Community each shall use their
respective best efforts in good faith to (i) prepare and file, or cause to be
prepared and filed, all applications for regulatory approvals and actions as may
be required of them, respectively, by applicable law and regulations with
respect to the transactions described herein (including applications to the FRB,
the Commissioner and the North Carolina State Banking Commission, and to any
other applicable federal or state banking, securities or other regulatory
authority), and (ii) obtain all necessary regulatory approvals required for
consummation of the transactions described herein. Each such party shall
cooperate with each other party in the preparation of all applications to
regulatory authorities and, upon request, promptly shall furnish all documents,
information, financial statements or other material that may be required by any
other party to complete any such application; and, before the filing therefore,
each party to this Agreement shall have the right to review and comment on the
form and content of any such application to be filed by any other party. Should
the appearance of any of the officers, directors, employees or counsel of any of
the parties hereto be requested by any other party or by any governmental agency
at any hearing in connection with any such application, such party shall
promptly use its best efforts to arrange for such appearance.
6.03. Access. Following the date of this Agreement and to and including
the Effective Time, First Community shall provide the Holding Company and
Centura and their employees, accountants and counsel, access to all its books,
records, files and other information (whether maintained electronically or
otherwise), to all its properties and facilities, and to all its employees,
accountants, counsel and consultants, for purposes of the conduct of such
reasonable investigation and review as they shall, in their sole discretion,
consider to be necessary or appropriate; provided, however, that any such review
conducted by the Holding Company and Centura shall be performed in such a manner
as will not interfere unreasonably with First Community's normal operations, or
with First Community's relationship with its customers or employees, and shall
be conducted in accordance with procedures established by the parties having due
regard for the foregoing.
6.04. Costs. Subject to the provisions of Paragraph 8.03. below, and
whether or not this Agreement shall be terminated or the Merger shall be
consummated, First Community, the Holding Company and Centura each shall pay its
own legal, accounting and financial advisory fees and all its other costs and
expenses incurred or to be incurred in connection with the execution and
performance of its obligations under this Agreement or otherwise in connection
with this Agreement and the transactions described herein (including without
limitation all accounting fees, legal fees, filing fees, printing costs, travel
expenses, and, in the case of First Community, all fees owed to Scott &
Stringfellow & Company ("Scott & Stringfellow") and the cost of First
Community's "Fairness Opinion" described in Paragraph 7.01.d. below, and, in the
case of the Holding Company and Centura, the cost of the "Environmental Survey"
described in Paragraph 6.06. below). However, subject to the provisions of
Paragraph 8.03. below, all costs incurred in connection with the printing and
mailing of the Proxy Statement/Prospectus shall be deemed to be incurred and
shall be paid fifty percent (50%) by First Community and fifty percent (50%) by
the Holding Company; provided, however, that if the Merger is not consummated on
or before December 31, 1996 by reason of the failure of the Holding Company or
Centura to receive any regulatory approval as described in Paragraph 7.01.a.
hereof and such event is a consequence of the failure of the Holding Company or
any the Holding Company subsidiary to satisfy its obligations under the
Community Reinvestment Act, the Home Mortgage Disclosure Act, the Equal Credit
Opportunity Act, the Fair Housing Act and/or the regulations promulgated
thereunder, the Holding Company and Centura shall reimburse First Community for
one-half of First Community's costs and expenses up to a total reimbursement
amount of $125,000.
6.05. Announcements. First Community, the Holding Company and Centura
each agrees that no person other than the parties to this Agreement is
authorized to make any public announcements or statements about this Agreement
or any of the transactions described herein, and that, without the prior review
and consent of the others (which consent shall not unreasonably be denied or
delayed), no party hereto may make any public announcement, statement or
disclosure as to the terms and conditions of this Agreement or the transactions
described herein, except for such disclosures as may be required incidental to
obtaining the prior approval of any regulatory agency or official to the
consummation of the transactions described herein. However, notwithstanding
anything contained herein to the contrary, prior review and consent shall not be
required if in the good faith opinion of counsel to the Holding Company any such
disclosure by the Holding Company or Centura is required by law or otherwise is
prudent.
6.06. Environmental Studies. At its option Centura may cause to be
conducted Phase I environmental assessments of the Real Property, the real
estate subject to any Real Property Lease, or the Loan Collateral, or any
portion thereof, together with such other studies, testing and intrusive
sampling and analyses as the Holding Company or Centura shall deem necessary or
desirable (collectively, the "Environmental Survey"). Centura shall complete all
such Phase I environmental assessments within thirty (30) days following the
date of this Agreement and thereafter to conduct and complete any such
additional studies, testing, sampling and analyses within thirty (30) days
following completion of all Phase I environmental assessments. Subject to the
provisions of Paragraph 8.03. below, the costs of the Environmental Survey shall
be paid by the Holding Company and Centura. If (i) the final results of any
Environmental Survey (or any related analytical data) reflect that there likely
has been any discharge, disposal, release or emission by any person of any
Hazardous Substance on, from or relating to any of the Real Property, real
estate subject to a Real Property Lease or Loan Collateral at any time prior to
the Effective Time, or that any action has been taken or not taken, or a
condition or event likely has occurred or exists, with respect to any of the
Real Property, real estate subject to a Real Property Lease or Loan Collateral
which constitutes or would or may constitute a violation of any Environmental
Laws, and if, (ii) based on the advice of their legal counsel or other
consultants, the Holding Company or Centura believes that First Community could
become responsible for the remediation of such discharge, disposal, release or
emission or for other corrective action with respect to any such violation, or
that First Community could become liable for monetary damages (including without
limitation any civil or criminal penalties or assessments) resulting therefrom
(or that, in the case of any of the Loan Collateral, First Community could incur
any such liability if it acquired title to such Loan Collateral), and if, (iii)
based on the advice of their legal counsel or other consultants, the Holding
Company or Centura believes the amount of expenses or liability which First
Community could incur or for which First Community could become responsible or
liable on account of any and all such remediation, corrective action or monetary
damages at any time or over any period of time could equal or exceed an
aggregate of $750,000, then the Holding Company or Centura shall give First
Community prompt written notice thereof (together with all information in its
possession relating thereto) and, at the Holding Company's or Centura's sole
option and discretion, at any time thereafter and up to the Effective Time, the
Holding Company or Centura may terminate this Agreement without further
obligation or liability to First Community or its shareholders.
6.07. Employees; Severance Payments; Employee Benefits.
a. Employment Agreements. Provided he remains employed by
First Community at the Effective Time in his current position, then Centura
shall enter into an employment agreement with Donald R. Lineberger as of the
Effective Time which shall contain substantially the same terms and conditions
and be in substantially the same form as is attached as Schedule C to this
Agreement.
Provided he remains employed by First Community at the
Effective Time in his current position, then Centura shall enter into an
employment agreement with Robert S. Pearson as of the Effective Time which shall
contain substantially the same terms and conditions and be in substantially the
same form as is attached as Schedule D to this Agreement.
Provided they remain employed by First Community at the
Effective Time in their current positions, then Centura shall enter into an
employment agreement with each of Will Weill, III, David L. Lawing and Holt D.
Robinson as of the Effective Time which shall contain substantially the same
terms and conditions and be in substantially the same form as is attached as
Schedule E to this Agreement and shall provide for compensation at least equal
to their respective salaries as of the date of this Agreement.
b. Employment of Other First Community Employees. Provided
they remain employed by First Community at the Effective Time, Centura will
attempt in good faith, but shall have no obligation, to locate suitable
positions for and to offer employment (at an office of Centura located within a
reasonable commuting distance from their respective job locations at the
Effective Time) to, all other employees of First Community. Any employment so
offered by Centura to an employee of First Community shall be in such a
position, at such location within Centura's state-wide branch system, and for
such rate of compensation as Centura shall determine in its sole discretion.
Each such person's employment with Centura shall be on an "at-will" basis, and
nothing in this Agreement shall be deemed to constitute an employment agreement
with any such person or to obligate Centura to employ any such person for any
specific period of time or in any specific position or to restrict Centura's
right to terminate the employment of any such person at any time and for any
reason satisfactory to it.
c. Severance Compensation. An employee of First Community as
of the Effective Time who, following the Merger and at Centura's sole
discretion, is terminated by Centura for reasons other than the employee's own
Misconduct within one (1) year following the Effective Time (a "Terminated
Employee") shall be eligible for Salary Continuation as a result of such
termination. Any employee of First Community who, following the Merger and at
Centura's sole discretion, is employed by Centura (a "New Employee") and who is
terminated after such one-year period shall be eligible to receive Salary
Continuation and other benefits to the same extent as other similarly situated
employees of Centura and, in computing the Salary Continuation and other
benefits to be so provided, such persons shall be credited with twelve (12)
months of credited service to Centura for each twelve (12) months of Active
Service to First Community prior to the Merger. For purposes of this Paragraph
6.07.c., "Salary Continuation" shall be defined to mean a payment to such
Terminated Employee in the amount of two (2) weeks (ten (10) working days)
Salary for each twelve (12) months of Active Service with First Community prior
to the Merger and with Centura following the Merger and prior to such
termination. For purposes of this Paragraph 6.07.c., "Misconduct," "Salary," and
"Active Service" shall have the same meaning as such terms have in the Centura
Banks, Inc. Salary Continuation Policy in effect as of the date of this
Agreement, unless and except as otherwise modified herein. To the extent First
Community maintains any plan or arrangement for the payment of severance or
salary continuation benefits to employees, such plan or arrangement (unless
specifically provided to the contrary hereunder) shall be terminated at the
Effective Time.
Centura shall consult with First Community and then
shall determine which of First Community's employees
will and will not be offered employment with Centura following the Effective
Time and, within ninety (90) days following the date of this Agreement, to
notify each of First Community's employees of its determination with respect to
that employee and to issue the written requests described above to certain of
First Community's employees. Notwithstanding anything contained herein to the
contrary, no payment of severance compensation shall be made to any person who
does not remain an employee of First Community at the Effective Time.
d. Employee Benefits. Except as otherwise provided herein, any
New Employee shall become entitled to receive all employee benefits and to
participate in all benefit plans provided by Centura on the same basis
(including costs) and subject to the same eligibility and vesting requirements,
and to the same conditions, restrictions and limitations, as generally are in
effect and applicable to other newly hired employees of Centura. Prior to the
Effective Time, First Community shall discontinue contributions under and
terminate any employee defined contribution plan maintained by First Community.
As of the Effective Time, in Holding Company's sole discretion, First Community
shall appoint the Holding Company as plan administrator and Centura as trustee
of any such plans for the purpose of winding down and liquidating such plans
following termination. First Community agrees that it will not cause such plans
to make distributions on account of plan termination until it or the Holding
Company has received a favorable Internal Revenue Service determination letter
with respect to the termination of such plans.
All New Employees will be eligible to participate in the pension and
401(k) plans of the Holding Company and Centura, as applicable, in accordance
with the terms of such plans and will be credited for purposes of vesting and
eligibility (but not for purposes of benefit accruals) under such plans with one
year of service to Centura for each year of service to First Community prior to
the Effective Time.
The number of days of vacation and sick leave, respectively, which
shall be available to any New Employee during 1996 as an employee of Centura
shall be reduced by the number of days of vacation or sick leave used by such
New Employee during 1996 prior to the Effective Time as an employee of First
Community, and, except as provided below, the New Employee shall not be entitled
to any credit with Centura for unused vacation leave, sick leave or other paid
leave from First Community for 1996 or years prior thereto; provided, however,
that no New Employee shall receive in any year less vacation than he or she was
receiving from First Community at the Effective Time.
e. Other Agreements.At the Effective Time, Centura will assume
First Community's obligations under those existing key-man life insurance and
split-dollar life insurance policies for Donald R. Lineberger and those existing
split-dollar life insurance policies for Robert S. Pearson, Will Weill, III and
Holt D. Robinson maintained by First Community. In addition, Centura hereby
agrees that, immediately prior to the Effective Time, First Community shall
transfer to Robert S. Pearson title to the automobile owned by First Community
on the date of this Agreement and being used by Mr. Pearson.
6.08. Confidentiality. The Holding Company, Centura and First Community
each agrees that it will treat as confidential and not disclose to any
unauthorized person any documents or other information obtained from or learned
about the others during the course of the negotiation of this Agreement and the
carrying out of the events and transactions described herein (including any
information obtained during the course of any due diligence investigation or
review provided for herein or otherwise) and which documents or other
information relates in any way to the business, operations, personnel, customers
or financial condition of such other parties; and, that it will not use any such
documents or other information for any purpose except for the purposes for which
such documents and information were provided to it and in furtherance of the
transactions described herein. However, the above obligations of confidentiality
shall not prohibit the disclosure of any such document or information by any
party to this Agreement to the extent (i) such document or information is then
available generally to the public is already known to the person or entity to
whom disclosure is proposed to be made (other than through the previous actions
of such party in violation of this Paragraph 6.08), (ii) such document or
information was available to the disclosing party on a nonconfidential basis
prior to the same being obtained pursuant to this Agreement, (iii) disclosure is
required by subpoena or order of a court or regulatory authority of competent
jurisdiction, or by the SEC or regulatory authorities in connection with the
transactions described herein, or (iv) to the extent that, in the reasonable
opinion of legal counsel to such party, disclosure otherwise is required by law.
In the event this Agreement is terminated for any reason, then
each of the parties hereto immediately shall return to the other parties all
copies of any and all documents or other written materials or information of or
relating to such other parties which were obtained from them during the course
of the negotiation of this Agreement and the carrying out of the events and
transactions described herein (whether during the course of any due diligence
investigation or review provided for herein or otherwise) and which documents or
other information relates in any way to the business, operations, personnel,
customers or financial condition of such other parties.
The parties' obligations of confidentiality under this
Paragraph 6.08 shall survive and remain in effect following any termination of
this Agreement
6.09. Reorganization for Tax Purposes. The Holding Company, Centura and
First Community each undertakes and agrees to use its best efforts to cause the
Merger to qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) of the Code, and that it will not intentionally take any action
that would cause the Merger to fail to so qualify.
6.10. Directors' and Officers' Liability Insurance. The Holding
Company, Centura and First Community agree that, to the extent the same can be
purchased at a reasonable cost, then immediately prior to the Closing Date First
Community shall purchase "tail" coverage (for not less than three (3) years)
under and in the same amount of coverage as is provided by its then current
directors' and officers' liability insurance policy, effective as of the
Effective Time.
6.11. Other Permissible Transactions. The Holding Company, Centura and
First Community agree that the Holding Company and Centura may offer to acquire,
enter into agreements to acquire and acquire financial institution holding
companies and their subsidiaries, financial institutions and their subsidiaries,
and/or the assets and liabilities of such entities (each a "Proposed
Acquisition") prior to the Effective Time; provided, however, that in the event
a Proposed Acquisition shall cause a condition set forth in Article VII hereof
to fail to be satisfied on or before December 31, 1996, any such failure shall
be deemed a termination of this Agreement by the Holding Company and Centura as
described and with the effects set forth in Section 8.03.b hereof.
ARTICLE VII. CONDITIONS PRECEDENT TO MERGER
7.01. Conditions to all Parties' Obligations. Notwithstanding any other
provision of this Agreement to the contrary, the obligations of each of the
parties to this Agreement to consummate the transactions described herein shall
be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
a. Approval by Governmental or Regulatory Authorities; No
Disadvantageous Conditions. (i) The Merger and other transactions described
herein shall have been approved, to the extent required by law, by the FRB, the
Commissioner and the North Carolina State Banking Commission, and by all other
governmental or regulatory agencies or authorities having jurisdiction over such
transactions, (ii) no governmental or regulatory agency or authority shall have
withdrawn its approval of such transactions or imposed any condition on such
transactions or conditioned its approval thereof, which condition is reasonably
deemed by the Holding Company or Centura to be materially disadvantageous or
burdensome or to impact so adversely the economic or business benefits of this
Agreement to the Holding Company and Centura as to render it inadvisable for
them to consummate the Merger; (iii) all waiting periods required following
necessary approvals by governmental or regulatory agencies or authorities shall
have expired, and, in the case of the waiting period following approval by the
FRB, no unwithdrawn objection to the Merger shall have been raised by the U.S.
Department of Justice; and (iv) all other consents, approvals and permissions,
and the satisfaction of all of the requirements prescribed by law or regulation,
necessary to the carrying out of the transactions contemplated herein shall have
been procured.
b. Adverse Proceedings, Injunction, Etc. There shall not be
(i) any order, decree or injunction of any court or agency of competent
jurisdiction which enjoins or prohibits the Merger or any of the other
transactions described herein or any of the parties hereto from consummating any
such transaction, (ii) any pending or threatened investigation of the Merger or
any of such other transactions by the U.S. Department of Justice, or any actual
or threatened litigation under federal antitrust laws relating to the Merger or
any other such transaction; or (iii) any suit, action or proceeding by any
person (including any governmental, administrative or regulatory agency),
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit First Community, the Holding Company or Centura
from consummating the Merger or carrying out any of the terms or provisions of
this Agreement, or (iv) any other suit, claim, action or proceeding pending or
threatened against First Community, the Holding Company or Centura or any of
their officers or directors which shall reasonably be considered by First
Community, the Holding Company or Centura to be materially burdensome in
relation to the proposed Merger or materially adverse in relation to the
financial condition of either such corporation, and which has not been
dismissed, terminated or resolved to the satisfaction of all parties hereto
within ninety (90) days of the institution or threat thereof.
c. Approval by Boards of Directors and Shareholders. The
Boards of Directors of First Community, the Holding Company and Centura shall
have duly approved and adopted this Agreement by appropriate resolutions, and
the shareholders of First Community and Centura shall have duly approved,
ratified and confirmed this Agreement, all to the extent required by and in
accordance with the provisions of this Agreement, applicable law, and applicable
provisions of their respective Articles of Incorporation and By-Laws.
d. Fairness Opinion. First Community shall have received from
Scott & Stringfellow a written opinion (the "Fairness Opinion"), dated as of a
date preceding the mailing of the Proxy Statement/Prospectus to First
Community's shareholders in connection with the Shareholder Meeting, to the
effect that the terms of the Merger are fair, from a financial point of view, to
First Community and its shareholders; and Scott & Stringfellow shall have
delivered a letter to First Community, dated as of a date within five days
preceding the Closing Date, to the effect that it remains its opinion that the
terms of the Merger are fair, from a financial point of view, to First Community
and its shareholders.
e. Tax Opinion. The Holding Company and First Community shall
have received, in form and substance satisfactory to them, an opinion of Poyner
& Spruill, L.L.P. substantially to the effect that: (i) for federal income tax
purposes, consummation of the Merger will constitute a "reorganization" as
defined in ss. 368(a)(1)(A) of the Code; (ii) that no taxable gain will be
recognized by a shareholder of First Community upon such shareholder's receipt
of Centura Stock in exchange for his or her First Community Stock; (iii) that
the basis of the Centura Stock received by the shareholder in the Merger will be
the same as his or her First Community Stock surrendered in exchange therefor;
(iv) that, if First Community Stock is a capital asset in the hands of the
shareholder at the Effective Time, then the holding period of the Centura Stock
received by the shareholder in the Merger will include the holding period of
First Community Stock surrendered in exchange therefor; and (v) a shareholder
who receives cash in lieu of a fractional share of Centura Stock will recognize
gain or loss equal to any difference between the amount of cash received and the
shareholder's basis in the fractional share interest. In rendering its opinion,
Poyner & Spruill, L.L.P. may rely on representations contained in certificates
of officers of the Holding Company, Centura and First Community.
f. No Termination or Abandonment. This Agreement shall not
have been terminated by any party hereto.
g. New York Stock Exchange Listing. The Holding Company shall
have satisfied all requirements for the shares of Centura Stock to be issued to
the shareholders of First Community in connection with the Merger to be listed
on the New York Stock Exchange as of the Effective Time.
7.02. Additional Conditions to First Community's Obligations.
Notwithstanding any other provision of this Agreement to the contrary, First
Community's separate obligation to consummate the transactions described herein
shall be conditioned upon the satisfaction of each of the following conditions
precedent on or prior to the Closing Date.
a. Material Adverse Change. There shall not have been any
material adverse change in the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of the Holding Company and its consolidated subsidiaries considered
as one enterprise, and there shall not have occurred any event or development
and there shall not exist any condition or circumstance which, with the lapse of
time or otherwise, may or could cause, create or result in any such material
adverse change.
b. Compliance with Laws. The Holding Company and Centura shall
have complied in all material respects with all federal and state laws and
regulations applicable to the transactions described herein and where the
violation of or failure to comply with any such law or regulation could or may
have a material adverse effect on the financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of the Holding Company and its consolidated
subsidiaries considered as one enterprise.
c. The Holding Company's and Centura's Representations and
Warranties and Performance of Agreements; Officers' Certificate. Unless waived
in writing by First Community as provided in Paragraph 10.03. below, each of the
respective representations and warranties of the Holding Company and Centura
contained in this Agreement shall have been true and correct as of the date
hereof and shall remain true and correct on and as of the Effective Time with
the same force and effect as though made on and as of such date, except (i) for
changes which are not, in the aggregate, material and adverse to the financial
condition, results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations of the Holding Company and its
consolidated subsidiaries considered as one enterprise, and (ii) as otherwise
contemplated by this Agreement; and the Holding Company and Centura each shall
have performed in all material respects all its respective obligations,
covenants and agreements hereunder to be performed by it on or before the
Closing Date.
First Community shall have received a certificate dated as of
the Closing Date and executed by the Holding Company and Centura and their
respective Presidents and Chief Financial Officers to the foregoing effect.
d. Legal Opinion of the Holding Company and Centura Counsel.
First Community shall have received from Joseph A. Smith, Jr., Esq., General
Counsel of the Holding Company and Centura, a written opinion dated as of the
Closing Date and substantially in the form of Schedule F attached hereto or
otherwise in form and substance reasonably satisfactory to First Community.
e. Other Documents and Information from the Holding Company
and Centura. The Holding Company and Centura shall have provided to First
Community correct and complete copies of their respective Bylaws, Articles of
Incorporation and board resolutions (all certified by their respective
Secretaries), together with certificates of the incumbency of their respective
officers and such other closing documents and information as may be reasonably
requested by First Community or its counsel.
f. Articles of Merger; Other Actions. Articles of Merger in
the form described in Paragraph 1.07. above shall have been duly executed and
delivered by Centura as provided in that Paragraph.
g. Acceptance by First Community's Counsel. The form and
substance of all legal matters described herein or related to the transactions
contemplated herein shall be reasonably acceptable to First Community's legal
counsel.
7.03. Additional Conditions to the Holding Company's and Centura's
Obligations. Notwithstanding any other provision of this Agreement to the
contrary, the Holding Company's and Centura's separate obligations to consummate
the transactions described herein shall be conditioned upon the satisfaction of
each of the following conditions precedent on or prior to the Closing Date.
a. Material Adverse Change. There shall not have occurred any
material adverse change in the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations of First Community, and there shall not have occurred any event or
development and there shall not exist any condition or circumstance which, with
the lapse of time or otherwise, may or could cause, create or result in any such
material adverse change.
b. Compliance with Laws; Adverse Proceedings, Injunction, Etc.
First Community shall have complied in all material respects with all federal
and state laws and regulations applicable to the transactions described herein
and where the violation of or failure to comply with any such law or regulation
could or may have a material adverse effect on the financial condition, results
of operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of First Community.
c. First Community's Representations and Warranties and
Performance of Agreements; Officers' Certificate. Unless waived in writing by
the Holding Company or Centura as provided in Paragraph 10.03. below, each of
the representations and warranties of First Community contained in this
Agreement shall have been true and correct as of the date hereof and shall
remain true and correct on and as of the Effective Time with the same force and
effect as though made on and as of such date, except (i) for changes which are
not, in the aggregate, material and adverse to the financial condition, results
of operations, prospects, businesses, assets, loan portfolio, investments,
properties or operations of First Community, and (ii) as otherwise contemplated
by this Agreement; and First Community shall have performed in all material
respects all its obligations, covenants and agreements hereunder to be performed
by it on or before the Closing Date.
The Holding Company and Centura shall have received a
certificate dated as of the Closing Date and executed
by First Community and its Chairman and Chief Financial Officer to the foregoing
effect and as to such other matters as may be reasonably requested by the
Holding Company and Centura.
d. Effectiveness of Registration Statement; Compliance with
Securities and Other "Blue Sky" Requirements. The Registration Statement shall
be effective under the 1933 Act and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC. The Holding Company
shall have taken all such other actions, if any, as it shall consider to be
required by applicable state securities laws (i) to cause the Centura Stock to
be issued upon consummation of the Merger, at the time of the issuance thereof,
to be duly qualified or registered (unless exempt) under such laws, (ii) to
cause all conditions to any exemptions from qualification or registration under
such laws to have been satisfied, and (iii) to obtain any and all required
approvals or consents with respect to the issuance of such stock, and any such
required approvals or consents shall have been obtained and shall remain in
effect.
e. Agreements from First Community Affiliates. The Holding
Company shall have received the written Affiliates' Agreements in form and
content satisfactory to the Holding Company and signed by all persons who are
deemed by the Holding Company or its counsel to be Affiliates of First Community
as provided in Paragraph 4.01.a. above.
f. Legal Opinion of First Community Counsel. The Holding
Company and Centura shall have received from First Community's special counsel,
Ward and Smith, P.A., a written opinion, dated as of the Closing Date and
substantially in the form of Schedule G attached hereto or otherwise in form and
substance reasonably satisfactory to the Holding Company and Centura. In
rendering such opinion, Ward and Smith, P.A. may rely upon or provide instead
the opinion of local counsel for First Community as to certain matters more
appropriately opined on by local counsel.
g. Other Documents and Information from First Community. First
Community shall have provided to the Holding Company and Centura correct and
complete copies of First Community's Articles of Incorporation, Bylaws and board
and shareholder resolutions (all certified by First Community's Secretary),
together with certificates of the incumbency of First Community's officers and
such other closing documents and information as may be reasonably requested by
the Holding Company or Centura or its counsel.
h. Consents to Assignment of Real Property Leases. First
Community shall have obtained all required consents to the assignment to Centura
of its rights and obligations under the Real Property Leases, under the terms,
rates and conditions of such Real Property Leases in effect as of the date of
this Agreement, and such consents shall be in such form and substance as shall
be satisfactory to the Holding Company and Centura; and, each of First
Community's lessors shall have confirmed in writing that First Community is not
in default under the terms and conditions of the Real Property Lease between
such lessor and First Community.
i. Acceptance by the Holding Company's and Centura's Counsel.
The form and substance of all legal matters described herein or related to the
transactions contemplated herein shall be reasonably acceptable to the Holding
Company's and Centura's legal counsel.
ARTICLE VIII. TERMINATION; BREACH; REMEDIES
8.01. Mutual Termination. At any time prior to the Effective Time (and
whether before or after approval hereof by the shareholders of First Community),
this Agreement may be terminated by the mutual agreement of the Holding Company,
Centura and First Community. Upon any such mutual termination, all obligations
of First Community, the Holding Company and Centura hereunder shall terminate
and each party shall pay costs and expenses as provided in Paragraph 6.04.
above.
8.02. Unilateral Termination. This Agreement may be terminated by
either the Holding Company, Centura or First Community (whether before or after
approval hereof by First Community's shareholders) upon written notice to the
other parties and under the circumstances described below.
a. Termination by the Holding Company or Centura. This
Agreement may be terminated by the Holding Company or Centura by action of its
respective Board of Directors or Executive Committee:
(i) if First Community shall have violated or failed
to fully perform any of its obligations, covenants or agreements contained in
Article IV or Article VI herein in any material respect;
(ii) if the Holding Company or Centura determines at
any time that any of First Community's representations or warranties contained
in Article II or in any other certificate or writing delivered pursuant to this
Agreement shall have been false or misleading in any material respect when made,
or that there has occurred any event or development or that there exists any
condition or circumstance which has caused or, with the lapse of time or
otherwise, may or could cause any such representations or warranties to become
false or misleading in any material respect;
(iii) if, notwithstanding the Holding Company's
satisfaction of its obligations under Paragraphs 6.01.b., 6.01.c. and 6.01.e.
above, First Community's shareholders do not ratify and approve this Agreement
and approve the Merger at the Shareholder Meeting;
(iv) under the circumstances described in Paragraph
6.06. above; or,
(v) if any of the conditions of the obligations of
the Holding Company or Centura (as set forth in Paragraph 7.01. or 7.03. above)
shall not have been satisfied or effectively waived in writing by the Holding
Company and Centura, or if the Merger shall not have become effective, on or
before December 31, 1996, unless such date is extended as evidenced by the
written mutual agreement of the parties hereto.
However, before the Holding Company or Centura may terminate this
Agreement for any of the reasons specified above in (i) or (ii) of this
Paragraph 8.02.a., it shall give written notice to First Community as provided
herein stating its intent to terminate and a description of the specific breach,
default, violation or other condition giving rise to its right to so terminate,
and, such termination by the Holding Company or Centura shall not become
effective if, within thirty (30) days following the giving of such notice, First
Community shall cure such breach, default or violation or satisfy such condition
to the reasonable satisfaction of the Holding Company and Centura.
b. Termination by First Community. This Agreement may be
terminated by First Community by action of its Board of Directors:
(i) if the Holding Company or Centura shall have
violated or failed to fully perform any of their respective obligations,
covenants or agreements contained in Article V or VI herein in any material
respect;
(ii) if First Community determines that any of the
Holding Company's or Centura's respective representations and warranties
contained in Article III herein or in any other certificate or writing delivered
pursuant to this Agreement shall have been false or misleading in any material
respect when made, or that there has occurred any event or development or that
there exists any condition or circumstance which has caused or, with the lapse
of time or otherwise, may or could cause any such representations or warranties
to become false or misleading in any material respect;
(iii) if, subject to First Community's satisfaction
of its obligations contained in Paragraphs 6.01.a., 6.01.b., 6.01.d. and 6.01.e
above, its shareholders do not ratify and approve this Agreement and approve the
Merger at the Shareholder Meeting; or,
(iv) if any of the conditions of the obligations of
First Community (as set forth in Paragraph 7.01. or 7.02. above) shall not have
been satisfied or effectively waived in writing by First Community, or if the
Merger shall not have become effective, on or before December 31, 1996, unless
such date is extended as evidenced by the written mutual agreement of the
parties hereto.
However, before First Community may terminate this Agreement for any of
the reasons specified above in clause (i) or (ii) of this Paragraph 8.02.b., it
shall give written notice to the Holding Company and Centura as provided herein
stating its intent to terminate and a description of the specific breach,
default, violation or other condition giving rise to its right to so terminate,
and, such termination by First Community shall not become effective if, within
thirty (30) days following the giving of such notice, the Holding Company or
Centura shall cure such breach, default or violation or satisfy such condition
the reasonable satisfaction of First Community.
c. Extension of Expiration Date. Except as otherwise shall be
agreed among the parties, in the event the Holding Company, Centura and First
Community mutually shall agree to extend the December 31, 1996 expiration date
described in Paragraphs 8.02.a.v and 8.02.b.iv above, then, notwithstanding
anything contained in this Agreement to the contrary and to the extent permitted
by applicable law and regulations, during the period beginning December 31,
1996, and ending at the Effective Time, in the event the Holding Company
declares and pays a quarterly dividend, the Exchange Rate will be increased to
include the cash dividend declared and paid by the Holding Company multiplied by
the Exchange Rate.
8.03. Breach; Remedies.
a. In the event of a breach by First Community of any of its
representations or warranties contained in Article II of this Agreement, or in
the event of its failure to perform or violation of any of its obligations,
agreements or covenants contained in Articles IV or VI of this Agreement, then
the Holding Company's and Centura's sole right and remedy shall be to terminate
this Agreement prior to the Effective Time as provided in Paragraph 8.02. above,
or, in the case of a failure to perform or violation of any obligations,
agreements or covenants, to seek specific performance thereof.
Likewise, in the event of a breach by the Holding Company or
Centura of any of its representations or warranties contained in Article III of
this Agreement, or in the event of its failure to perform or violation of any of
its obligations, agreements or covenants contained in Articles V or VI of this
Agreement, then First Community's sole right and remedy shall be to terminate
this Agreement prior to the Effective Time as provided in Paragraph 8.02. above,
or, in the case of a failure to perform or violation of any obligations,
agreements or covenants, to seek specific performance thereof.
b. Notwithstanding anything contained herein to the contrary,
if any party to this Agreement breaches this Agreement by wilfully or
intentionally failing to perform or violating any of its obligations, agreements
or covenants contained in Articles IV, V or VI of this Agreement, such party
shall be obligated to pay all expenses of the other party(ies) described in
Paragraph 6.04., together with other damages recoverable at law or in equity.
ARTICLE IX. INDEMNIFICATION
9.01. Indemnification Following Effective Time. Following the Effective
Time, Centura agrees that it will indemnify First Community's former officers
and directors to the fullest extent of the law against liabilities arising from
actions in their official capacities as officers and directors of First
Community.
9.02. Procedure for Claiming Indemnification. Any party seeking to be
indemnified hereunder promptly shall give written notice and furnish adequate
documentation to the other party of any claims in respect of which indemnity is
sought. The indemnifying party, through its own counsel and at its own expense,
shall defend any such claim and shall have exclusive control over the
investigation, preparation, and defense of such claim and all negotiations
relating to its settlement or compromise. The obligations of either party to
indemnify the other hereunder apply only if the party seeking to be indemnified
cooperates with and assists the indemnifying party in all reasonably necessary
respects in the conduct of the suit.
ARTICLE X. MISCELLANEOUS PROVISIONS
10.01. "Previously Disclosed" Information."Previously Disclosed" shall
mean, as to First Community or as to the Holding Company and Centura, the
disclosure of information in a letter delivered by such party to the other prior
to the date of this Agreement and which specifically refers to this Agreement
and is arranged in paragraphs corresponding to the Paragraphs, subparagraphs and
items of this Agreement applicable thereto, all of which documents are
incorporated herein by reference.
Information disclosed in either party's letter described above shall be
deemed to have been Previously Disclosed by such party for the purpose of any
given Paragraph, subparagraph or item of this Agreement only to the extent that
information is expressly set forth in such party's letter described above and
that, in connection with such disclosure, a specific reference is made in the
letter to that Paragraph, subparagraph or item.
10.02. Survival of Representations, Warranties, Indemnification and
Other Agreements.
a. Representations, Warranties and Other Agreements. None of
the representations, warranties or agreements herein shall survive the
effectiveness of the Merger, and no party shall have any right after the
Effective Time to recover damages or any other relief from any other party to
this Agreement by reason of any breach of representation or warranty, any
nonfulfillment or nonperformance of any agreement contained herein, or
otherwise; provided, however, that the parties agreements contained in
Paragraphs 6.07. and 6.08. and Articles VIII and IX above, and the Holding
Company's representations and warranties contained in Paragraph 3.02. above,
shall survive the effectiveness of the Merger.
b. Indemnification. Centura's indemnification agreements and
obligations pursuant to Paragraph 9.1. above shall become effective only at the
Effective Time, and Centura shall not have any obligation under that Paragraph
prior to the Effective Time or in the event of or following termination of this
Agreement prior to the Effective Time.
10.03. Waiver. Any term or condition of this Agreement may be waived
(except as to matters of regulatory approvals and approvals required by law),
either in whole or in part, at any time by the party which is, and whose
shareholders are, entitled to the benefits thereof; provided, however, that any
such waiver shall be effective only upon a determination by the waiving party
(through action of its Board of Directors) that such waiver would not adversely
affect the interests of the waiving party or its shareholders; and, provided
further, that no waiver of any term or condition of this Agreement by any party
shall be effective unless such waiver is in writing and signed by the waiving
party, or be construed to be a waiver of any succeeding breach of the same term
or condition. No failure or delay of any party to exercise any power, or to
insist upon a strict compliance by any other party of any obligation, and no
custom or practice at variance with any terms hereof, shall constitute a waiver
of the right of any party to demand a full and complete compliance with such
terms.
10.04. Amendment. This Agreement may be amended, modified or
supplemented at any time or from time to time prior to the Effective Time, and
either before or after its approval by the shareholders of First Community, by
an agreement in writing approved by a majority of the Board of Directors of the
Holding Company, Centura and First Community executed in the same manner as this
Agreement; provided however, that, except with the further approval of First
Community's shareholders of that change or as otherwise provided herein,
following approval of this Agreement by the shareholders of First Community no
change may be made in the number of shares of Centura Stock into which each
share of First Community Stock will be converted.
10.05. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally
or by courier, or mailed by certified mail, postage prepaid, as follows:
a. If to First Community, to:
First Community Bank
710 South Marietta Street
Gastonia, North Carolina 28052
Attention: Donald R. Lineberger, Chairman
With copy to: Alexander M. Donaldson, Esq.
Ward and Smith, P.A.
Two Hannover Square, Suite 2400
Raleigh, NC 27601
b. If to either the Holding Company or Centura, to:
Centura Banks, Inc.
134 North Church Street
Post Office Box 1220
Rocky Mount, North Carolina 27802
Attention: Joseph A. Smith, Jr., General Counsel
10.06. Further Assurance. First Community, the Holding Company and
Centura each agree to furnish to the others such further assurances with respect
to the matters contemplated herein and their respective agreements, covenants,
representations and warranties contained herein, including the opinion of legal
counsel, as such other parties may reasonably request.
10.07. Headings and Captions. Headings and captions of the sections and
paragraphs of this Agreement have been inserted for convenience of reference
only and do not constitute a part hereof.
10.08. Entire Agreement. This Agreement (including all schedules and
exhibits attached hereto and all documents incorporated herein by reference)
contains the entire agreement of the parties with respect to the transactions
described herein and supersedes any and all other oral or written agreement(s)
heretofore made, and there are no representations or inducements by or to, or
and agreements between, any of the parties hereto other than those contained
herein in writing.
10.09. Severability of Provisions. The invalidity or unenforceability
of any term, phrase, clause, paragraph, restriction, covenant, agreement or
other provision hereof shall in no way affect the validity or enforceability of
any other provision or part hereof.
10.10. Assignment. This Agreement may not be assigned by any party
hereto except with the prior written consent of the other parties hereto.
10.11. Counterparts. Any number of counterparts of this Agreement may
be signed and delivered, each of which shall be considered an original and which
together shall constitute one agreement.
10.12. Governing Law. This Agreement is made in and shall be construed
and enforced in accordance with the laws of North Carolina.
10.13. Inspection. Any right of the Holding Company, Centura or First
Community hereunder to investigate or inspect the assets, books, records, files
and other information of the other in no way shall establish any presumption
that the Holding Company, Centura or First Community should have conducted any
investigation or that such right has been exercised by the Holding Company,
Centura, First Community, their respective agents, representatives or others.
Any investigations or inspections that have been made by the Holding Company,
Centura or First Community or their respective agents, representatives or others
prior to the Closing Date shall not be deemed in any way in derogation or
limitation of the covenants, representations and warranties made by or on behalf
of the Holding Company, Centura or First Community in this Agreement.
IN WITNESS WHEREOF, First Community, the Holding Company and Centura
each has caused this Agreement to be executed in its name by its duly authorized
officers as of the date first above written.
CENTURA BANK
By:
Robert R. Mauldin
Chairman and Chief Executive Officer
ATTEST:
Secretary
CENTURA BANKS, INC.
By:
Robert R. Mauldin
Chairman and Chief Executive Officer
ATTEST:
Secretary
FIRST COMMUNITY BANK
By:
Donald R. Lineberger
Chairman and Chief Executive Officer
ATTEST:
Secretary
SCHEDULE A
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Plan of Merger
PLAN OF MERGER
OF
FIRST COMMUNITY BANK
WITH AND INTO
CENTURA BANK
A. Names of Merging Corporations. The names of the corporations
proposed to be merged are FIRST COMMUNITY BANK, a North Carolina banking
corporation ("First Community") and CENTURA BANK, a North Carolina banking
corporation ("Centura").
B. Nature of Transaction. Subject to the provisions of this Plan of
Merger, First Community shall be merged into and with Centura pursuant to N.C.
GEN. STAT. ss. 53-12 (the "Merger") and with the effect provided under N.C. GEN.
STAT. ss.ss. 55-11-06 and 53-13.
C. Name of Surviving Corporation. Centura shall be the surviving
corporation in the Merger and shall exist under the name "Centura Bank."
D. Terms and Conditions of the Merger.
1. The Merger shall be effected pursuant to the terms and
conditions of this Plan of Merger and of the Agreement and Plan of
Reorganization and Merger dated as of April 4, 1996, by and among Centura Banks,
Inc. (the "Holding Company"), First Community and Centura (the "Agreement"). As
provided herein and in the Agreement, except insofar as the same may be
continued by law and except as continued in and merged into Centura, at the
effective time of the Merger (the "Effective Time") the separate corporate
existence of First Community shall cease and the corporate existence of Centura
shall continue with all of its purposes, objects, rights, privileges, powers and
franchises, all of which shall be unaffected and unimpaired by the Merger.
2. At the Effective Time and by reason of the Merger, all of
First Community's property, assets and rights of every kind and character
(including without limitation all real, personal or mixed property, all debts
due on whatever account, all other choses in action and all and every other
interest of or belonging to or due to First Community, whether tangible or
intangible) shall be transferred to and vest in Centura, and Centura shall
succeed to all the rights, privileges, immunities, powers, purposes and
franchises of a public or private nature (including all trust and fiduciary
properties, powers and rights) of First Community, all without any conveyance,
assignment or further act or deed; and, Centura shall become responsible for all
of the liabilities, duties and obligations of every kind, nature and description
(including duties as trustee or fiduciary) of First Community as of the
Effective Time.
3. The Articles of Incorporation and Bylaws of Centura in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of Centura as the surviving corporation in the Merger
and shall continue in full force and effect following the Effective Time until
amended in accordance with applicable laws. The officers and directors of
Centura in office at the Effective Time shall continue to hold such offices as
the officers and directors of Centura as the surviving corporation until removed
as provided by law or until their respective successors have been elected or
appointed.
E. Conversion and Exchange of Shares.
1. At the Effective Time, all rights of First Community's
shareholders with respect to all then outstanding shares of First Community's
common stock ($4.16 2/3 par value) ("First Community Stock") shall cease to
exist, and, as consideration for and to effectuate the Merger (and except as
otherwise provided below), each such outstanding share of First Community Stock
(other than any shares held by First Community as treasury shares or shares held
by the Holding Company or as to which rights of dissent and appraisal are
properly exercised as provided below) shall be converted, without any action on
the part of the holder of such share, the Holding Company, Centura or First
Community, into (the "Exchange Rate") of a newly issued share of the Holding
Company's no par value common stock ("Centura Stock").
2. At the Effective Time, and without any action by First
Community, Centura, the Holding Company or any holder thereof, First Community's
stock transfer books shall be closed as to holders of First Community Stock
immediately prior to the Effective Time and, thereafter, no transfer of First
Community Stock by any such holder may be made or registered; and the holders of
shares of First Community Stock shall cease to be, and shall have no further
rights as, stockholders of First Community other than as provided herein.
Following the Effective Time, certificates representing shares of First
Community Stock outstanding at the Effective Time (herein sometimes referred to
as "Old Certificates") shall evidence only the right of the registered holder
thereof to receive, and may be exchanged for, (a) certificates for the number of
whole shares of Centura Stock to which such holders shall have become entitled
on the basis set forth above, plus cash for any fractional share interests as
provided herein, (b) in the case of shares as to which rights of dissent and
appraisal are properly exercised (as provided below), cash as provided in
Article 13 of the North Carolina Business Corporation Act.
3. As promptly as practicable following the Effective Time,
the Holding Company shall cause the exchange agent selected by the Holding
Company (the "Exchange Agent") to mail to each former shareholder of First
Community of record immediately prior to the Effective Time written instructions
and transmittal materials (a "Transmittal Letter") for use in surrendering Old
Certificates to the Exchange Agent. Upon the proper delivery to the Exchange
Agent (in accordance with the above instructions, and accompanied by a properly
completed Transmittal Letter) by a former shareholder of First Community of his
or her Old Certificates, the Exchange Agent shall register in the name of such
shareholder the shares of Centura Stock and deliver said New Certificates to the
individual shareholder entitled thereto upon and in exchange for the surrender
and delivery to the Exchange Agent by said individual shareholder of his or her
Old Certificates.
4. (i) At the Effective Time, each option or other right to
purchase shares of First Community Stock pursuant to stock options ("First
Community Options") granted by First Community under the First Community Bank
Stock Option Plan and the First Community Bank Employees' Omnibus Stock Option
Plan of 1994 (collectively, the "First Community Stock Plans"), which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Centura Common Stock, and
Centura shall assume each First Community Option, in accordance with the terms
of the First Community Stock Plans and stock option agreement by which it is
evidenced, except that from after the Effective Time, (A) Centura and its
Compensation Committee shall be substituted for First Community and the
Committee of First Community's Board of Directors (including, if applicable, the
entire Board of Directors of First Community) administering such First Community
Stock Plans, (B) each First Community Option assumed by Centura may be exercised
solely for shares of Centura Common Stock, (C) the number of shares of Centura
Common Stock subject to such First Community Option shall be equal to the number
of shares of First Community Common Stock subject to such First Community Option
immediately prior to the Effective Time multiplied by the Exchange Rate, and (D)
the per share exercise price under each such First Community Option shall be
adjusted by dividing the per share exercise price under each such First
Community Option by the Exchange Rate and rounding up to the nearest cent.
Notwithstanding the provisions of clause (C) of the preceding sentence, Centura
shall not be obligated to issue any fraction of a share of Centura Common Stock
upon exercise of First Community Options and any fraction of a share of Centura
Common Stock that otherwise would be subject to a converted First Community
Option shall represent the right to receive a cash payment upon exercise of such
converted First Community Option equal to the product of such fraction and the
difference between the market value of one share of Centura Common Stock at the
time of exercise of such Option and the per share exercise price of such Option.
The market value of one share of Centura Common Stock at the time of exercise of
an Option shall be the closing price of Centura Common Stock on the
NYSE-Composite Transactions List (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source) on the last trading day
preceding the date of exercise.
(ii) All restrictions or limitations on transfer with respect to First
Community Common Stock awarded under the First Community Stock Plans or any
other plan, program, or arrangement of any First Community Company, to the
extent that such restrictions or limitations shall not have already lapsed, and
except as otherwise expressly provided in such plan, program, or arrangement,
shall remain in full force and effect with respect to shares of Centura Common
Stock into which such restricted stock is converted pursuant to this Agreement.
(iii) Notwithstanding the foregoing provisions of this Paragraph E.4:
(A) in no event shall options to purchase more than 94,000 shares of First
Community Stock be converted into options to purchase Centura Stock in
connection with the transactions contemplated by this Agreement; and (B) at or
prior to the Effective Date, the First Community Bank Option Plan and agreements
thereunder shall be amended to insure that the payments of taxes thereunder
shall not exceed the amount owed in respect of option exercises thereunder in
respect of all outstanding options as of the Effective Date, in consideration of
which Centura shall pay to the holders of such options the amount of such tax
payment promptly after the Effective Date.
5. No scrip or certificates representing fractional shares of
Centura Stock will be issued to any former shareholder of First Community, and,
except as provided herein, no such shareholder will have any right to vote or
receive any dividend or other distribution on, or any other right with respect
to, any fraction of a share of Centura Stock resulting from the above exchange.
In lieu of the issuance of fractional shares of Centura Stock, at the Effective
Time the Holding Company shall deliver cash to the Exchange Agent in an amount
equal to the aggregate market value of all such fractional shares, and,
following the Effective Time, the Exchange Agent shall divide such cash among
and remit it (without interest) to the former shareholders of First Community in
accordance with their respective interests therein. The "aggregate market value"
of all fractional shares of Centura Stock shall be equal to the total of such
fractional shares multiplied by $ .
6. No certificate for any shares, or cash for any fractional
share, of Centura Stock shall be delivered to any former shareholder of First
Community unless and until such shareholder shall have properly surrendered to
the Exchange Agent the Old Certificate(s) formerly representing his or her
shares of First Community Stock, together with properly completed transmittal
materials in such form as shall be provided to the shareholder by the Holding
Company for that purpose. Further, until such Old Certificate(s) are so
surrendered, no dividend or other distribution payable to holders of record of
Centura Stock as of any date subsequent to the Effective Time shall be delivered
to the holder of such Old Certificate(s). However, upon the proper surrender of
such Old Certificate(s), the Exchange Agent shall pay to the registered holder
of the shares of Centura Stock represented by such Old Certificate(s) the amount
of any such cash, dividends or distributions which have accrued but remain
unpaid with respect to such shares. Neither the Holding Company, Centura, First
Community, nor the Exchange Agent, shall have any obligation to pay any interest
on any such cash, dividends or distributions for any period prior to such
payment.
7. Any shareholder of First Community who properly exercises
the right of dissent and appraisal with respect to the merger as provided in
Article 13 of the North Carolina Business Corporation Act ("Dissenters Rights")
shall be entitled to receive payment of the fair value of his or her shares of
First Community Stock in the manner and pursuant to the procedures provided
therein. Shares of First Community Stock held by persons who exercise Dissenters
Rights shall not be converted into Centura Stock. However, if any shareholder of
First Community who exercises Dissenters Rights shall fail to perfect his or her
right to receive cash as provided above, or effectively shall waive or lose such
right, then each of his or her shares of First Community Stock, at the Holding
Company's sole option, shall be deemed to have been converted into the right to
receive Centura Stock as of the Effective Time as provided above.
8. Any shareholder of First Community whose certificate
evidencing shares of First Community Stock has been lost, destroyed, stolen or
otherwise is missing shall be entitled to receive a certificate representing the
shares of Centura Stock to which he or she is entitled in accordance with and
upon compliance with conditions imposed by the Exchange Agent or the Holding
Company pursuant to the provisions of N.C. GEN. STAT. ss. 25-8-405 and N.C. GEN.
STAT. ss. 25-8-104.
9. The status of the shares of Centura Stock and the shares of
the capital stock of Centura which are outstanding immediately prior to the
Effective Time shall not be affected by the Merger.
F. Abandonment. This Plan of Merger may be terminated and the Merger
may be abandoned at any time prior to the Effective Time upon termination of the
Agreement as provided therein.
SCHEDULE B
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Affiliate's Letter
_________________, 1996
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27802
Dear Sirs:
Pursuant to the terms of that certain Agreement and Plan of Reorganization and
Merger dated April 4, 1996 (the "Agreement") by and among Centura Banks, Inc.
(the "Holding Company"), Centura Bank ("Centura") and First Community Bank
("First Community"), (i) First Community will be merged into and with Centura
(the "Merger"), and (ii) each outstanding share of First Community's common
stock ("Bank Stock") (other than shares held by shareholders who exercise their
right of dissent and appraisal under North Carolina law) will be converted into
and exchanged for a fraction (determined as provided in the Agreement) of a
newly issued share of the Holding Company's no par value common stock ("Centura
Stock").
Based upon the list of persons submitted by First Community and approved by the
Holding Company, the undersigned "Affiliate" is considered an "affiliate" of
First Community as that term is defined and used for purposes of Rule 145
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). As required by the
Agreement, this Affiliates' Agreement is being delivered to the Holding Company
in connection with and as a condition of its execution and delivery of the
Agreement.
The undersigned (jointly and severally if more than one) hereby represents and
warrants to the Holding Company as follows:
A. The names of all "Persons", if any, having a relationship
to the Affiliate as described under the definition of "Person"
attached as Exhibit A hereto and who may receive shares of the
Centura Stock in connection with the Merger (the Affiliate's
"Related Persons") are listed on the signature page hereto and
also have signed this letter agreement;
B. The Affiliate and each of the Related Persons, if any, have
carefully read this letter and have discussed its requirements
and other applicable limitations upon the sale, transfer or
other disposition of Centura Stock to be received by them in
connection with the Merger, to the extent they deem necessary,
with their own legal counsel;
As an inducement for Centura and the Holding Company to enter into the Agreement
and to consummate the Merger and for the Holding Company to issue the Centura
Stock as provided in the Agreement, the undersigned (jointly and severally if
more than one) hereby covenants and agrees with Centura and the Holding Company
as follows:
A. The Affiliate and each of the Related Persons, if any, has
been informed that, since at the time the Merger is to be
submitted to a vote of First Community's shareholders the
Affiliate and each such Related Person will be considered to
be an "affiliate" of First Community, any resale by the
Affiliate or a Related Person of any such Centura Stock would
require either (i) the registration under the Act of the
Centura Stock to be sold, (ii) compliance by the Affiliate or
such Related Person with the requirements of Rule 145(d)
promulgated under the Act, or (iii) the availability of
another exemption from the registration requirements of the
Act;
B. Neither the Affiliate nor any of the Related Persons, if
any, (i) will make any sale, transfer or other disposition of
Centura Stock during the 30 days prior to the date of the
Merger, or, (ii) following the date of the Merger, will make
any sale, transfer or other disposition of Centura Stock
acquired by them in connection with the Merger except in
compliance with the requirements of the Act and the rules and
regulations of the Commission (including Rule 145) promulgated
thereunder;
C. The Affiliate and each of the Related Persons, if any,
understands and agrees that the Holding Company is under no
obligation to register the sale, transfer or other disposition
of the Centura Stock for them or on their behalf or to take
any other action necessary in order to render available an
exemption from the registration requirements of the Act.
Therefore, they may be compelled to hold such shares for a
period of at least three years after which such shares may be
sold, transferred, or otherwise disposed of without
restriction, provided that at the time of any such sale,
transfer or other disposition they are not considered to be
"affiliates" of the Holding Company. However, for the period
that the sale, transfer or other disposition of such shares is
so restricted, it is understood and agreed that the Holding
Company will file on a timely basis with the Commission all
reports required to be filed by it pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Commission thereunder; and,
D. The Holding Company may place stock transfer restrictions
on the shares of Centura Stock held by the Affiliate and each
of the Related Persons, if any, which are subject to this
Agreement, and there will be placed on the certificates
evidencing such shares, and any substitutions therefor, a
legend stating in substance as follows:
"The shares represented by this
certificate may not be sold, transferred, or
otherwise disposed of except or unless (1) covered by
an effective registration statement under the
Securities Act of 1933, as amended, (2) in accordance
with (i) Rule 145(d) (in the case of shares issued to
an individual who is not an affiliate of Centura) or
(ii) Rule 144 (in the case of shares issued to an
individual who is an affiliate of Centura) of the
Rules and Regulations of such Act, or (3) in
accordance with a legal opinion satisfactory to
counsel for Centura that such sale or transfer is
otherwise exempt from the registration requirements
of such Act."
The legend may be removed from the certificates
evidencing the Centura Stock to which this letter agreement
applies by the delivery of new certificates without such
legend in substitution therefor if the holder thereof delivers
to the Holding Company an opinion of legal counsel acceptable
to the Holding Company, and in form and substance acceptable
to the Holding Company, to the effect that the restrictions
described above are no longer applicable to such person and
that such legend is not or is no longer required for purposes
of the Act.
Yours very truly,
By:
"Related Persons", if any:
(Seal)
(Seal)
(Seal)
(Seal)
EXHIBIT A
Rule 145 of the Securities Act of 1933, as amended, incorporates by reference
the definition of "person" set forth under Paragraph (a)(2) of Rule 144, as
follows:
"(2) The term "person" when used with reference to a person for whose
account securities are to be sold in reliance upon this rule includes,
in addition to such person, all of the following persons:
(A) Any relative or spouse of such person, or any
relative of such spouse, any of whom has the same
home as such person;
(B) Any trust or estate in which such person or any
of the persons specified in (A) collectively own ten
percent (10%) or more of the total beneficial
interest or of which any of such persons serve as
trustee, executor or in any similar capacity; and,
(C) Any corporation or other organization (other than
the issuer) in which such person or any of the
persons specified in (A) are the beneficial owners
collectively of ten percent (10%) or more of any
class of equity securities or ten percent (10%) or
more of the equity interest."
SCHEDULE C
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Form of Employment Agreement with Donald R. Lineberger
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into and
made effective as of the ____ day of ________, 1996, among between DONALD R.
LINEBERGER ("Executive") and CENTURA BANKS, INC. (the "Company") and CENTURA
BANK, a wholly owned bank subsidiary of the Company (the "Bank").
WHEREAS, the Bank desires to provide for Executive's employment with the
Bank and to enter into this Agreement with Executive to set forth the terms of
his employment; and
WHEREAS, Executive has accepted employment with the Bank on the terms
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
During the Employment Term (defined in Section 2), the Bank shall
employ Executive as Senior Market Officer - Gaston County, with the duties,
responsibilities, and powers of such office as assigned to him as of the date
hereinabove set forth and as customarily associated with such office, and
Executive shall serve the Bank in such capacity. During the Employment tTerm,
Executive shall faithfully and diligently discharge his duties under this
Agreement. Notwithstanding the foregoing, it is expressly understood and agreed
that on and after May 1, 1998, Executive's daily operating responsibilities
under this Agreement shall cease and Executive's responsibilities for the
remainder of this Agreement shall thereafter be to serve as a consultant to the
Company on matters pertaining to its operations in Gaston County and such other
matters as may be mutually agreed.
During the Additional Term (defined in Section 2), Executive shall no
longer be an officer, agent or employee of either the Company or the Bank and
shall have no duties hereunder to either corporation, the payments received
during the Additional Term being made in consideration of Executive's service
during the Employment Term.
2. TERM
Unless sooner terminated as set forth herein, Tthe term of this
Agreement shall be five (5) years, commencing on the date hereof as regards
Executive's employment by the Bank (the "Employment Term"); thereafter, the term
of this Agreement shall extend another ten (10) years (the "Additional Term") as
regards the payment to the Executive of Retirement Income (as defined in Section
3) pursuant to Paragraph 3(b) of this Agreement.
3. COMPENSATION AND BENEFITS
(a) Employment Compensation. During the Employment Term, the
Company shall pay or shall cause the Bank to pay or provide to Executive
the following items as compensation for his services:
(i) A base salary of $135,000 per year, payable in equal (or
nearly equal) monthly installments; and
(ii) Inclusion in the Company's Economic Value Added Incentive Program
during calendar year 1997 with a target bonus of 15% of base salary for
achievement of the Company's EVA target for such year.
The above-stated items of compensation shall not be deemed exclusive
nor prevent Executive from receiving any other compensation or benefits provided
by the Bank to comparably situated executives. Executive shall be eligible for
vacation leave, sick leave, and other leave and participation in any
profit-sharing, pension, disability insurance, hospitalization insurance, major
medical insurance, medical reimbursement or life insurance plan provided by the
Company or the Bank to similarly situated executives, subject to the rules
prevailing on the effective date of this Agreement or at the time of
commencement of the applicable leave policy or plan, as the case may be, and he
shall be entitled in any event (either directly or through salary adjustment)
to: (i) four weeks paid vacation per year; (ii) monthly club dues for the Gaston
Country Club and The City Club of Gastonia (to be paid by salary adjustment,
including a one-time adjustment to defer income taxes in respect of such
adjustment); (iii) payment of membership dues in the Community Bankers
Association and of expenses of attendance by Executive and his spouse at the
annual meeting of such association through and including the 1998 annual
meeting; and (iv) assumption by Centura of the obligation to pay the premiums on
a $25,000 split-dollar life insurance policy issued by New England Mutual Life
Insurance Company (Policy No. 8531537) and a $50,000 split-dollar life insurance
policy issued by Metropolitan Life Insurance Company (Policy No. 923 206 564
E2), in each case covering Executive; and (v) participate in the Centura Banks,
Inc. Deferred Compensation Plan (including the stock option feature thereof). In
addition, promptly after the commencement of the term of this Agreement, the
Bank shall provide to the Executive (with title in Executive's name) a 1997 Ford
Crown Victoria, fully loaded to include cellular telephone, and, during the
Employment Term, will reimburse Executive for business related mileage at the
maximum amount allowed under then-applicable I.R.S. regulations.
(b) Retirement Income. During the Additional Term, the Company shall pay or
cause the Bank to pay to the Executive Thirty Five Thousand Dollars ($35,000)
per year in 120 equal (or nearly equal) monthly installments ("Retirement
Income").
4. TERMINATION
Executive's employment under this Agreement shall terminate:
(a) Death. Upon the death of Executive; or
(b) Disability. Upon notice from the Company to Executive in the event
Executive becomes "permanently disabled." For purposes of this Agreement,
Executive shall be deemed "permanently disabled" as of such time as he
terminates his employment on account of "Disability," as defined in the Centura
Banks, Inc. 401(k) Plan; or
(c) Cause. Upon notice from the Company to Executive for cause. For
the purpose of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Executive to perform his duties pursuant to the reasonable
directions of the senior executive management and Board of Directors of the Bank
(other than due to a disability), or (ii) a material breach by Executive of his
duties of loyalty or care to the Company, or (iii) a willful violation by
Executive of any provision of this Agreement, or (iv) a conviction of or the
entering of a plea of nolo contendere by Executive for any felony or any crime
involving fraud or dishonesty, or (v) a willful violation of any federal or
state banking law or other laws or regulations applicable to the Company or the
Bank. In addition, if Executive shall terminate his employment for a breach of
this Agreement by the Company or the Bank in accordance with Section 4(d), and
it is ultimately determined that no reasonable basis existed for Executive's
termination on account of the alleged default of the Company, such event shall
be deemed cause for termination by the Company or the Bank.
Any notice of termination of Executive's employment with the Bank
Company for cause shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination of his employment
under the provisions contained herein and the date of termination ("Termination
Date"). If the cause alleged by the Company shall be (i), (ii) or (iii) set
forth above, Executive shall be given the opportunity to cure the breach within
a reasonable period of time upon receipt of notice but in no event to exceed
thirty (30) days; or
(d) Breach. Upon notice from Executive to the Company of the Company's
or the Bank's failure to comply with any material provision of this Agreement,
provided that the Company and/or the Bank, as applicable, shall have thirty (30)
days from the receipt of such notice to cure any default under this Agreement.
If such default shall be cured or if Company shall have taken steps to cure the
default within the thirty (30) day period, Executive shall have no right to
terminate his employment under the provisions of this Section 4(d); or
(e) Improper Termination by the Company. Upon notice from
Executive to the Company upon a purported termination of Executive's
employment by the Company for cause if it shall be ultimately determined
that cause did not exist; or
(f) Expiration of Term. Upon expiration of the term of this
Agreement, as set forth in Section 2 above.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Executive's death, the Company shall provide such death or
insurance benefits as are in effect for Executive in accordance with the regular
policy of the Company and pursuant to the terms of any benefit plans or
arrangements maintained by the Company which provide death benefits and in which
Executive participates at such time. In addition, the Company shall pay or shall
cause the Bank to pay to the Executive's spouse or (should Executive's spouse
have predeceased him) Executive's estate Executive's base salary through the
completion of the Employment Term of this Agreement and the Retirement Income
payments for the Additional Term. The Company shall also pay or cause the Bank
to pay as aforesaid any bonus owed to the Executive for the year of his death.
(b) In the event Executive becomes permanently disabled and is
terminated as set forth in Section 4(b) above, the Company shall pay to
Executive compensation and benefits as set forth in Section 5(c) below, provided
that Executive's compensationbase salary shall be reduced by any amounts
received by Executive under the Company's long-term disability plan or from any
other collateral source payable due to disability, including social security
benefits. If Executive shall remain permanently disabled beyond the Employment
Term, Executive shall receive during the Additional Term, (i) the Retirement
Income payments; and (ii) such amounts, if any, as are payable under the
Company's long-term disability plan.
(c) If Executive's employment shall be terminated by Executive
pursuant to Sections 4(d) or (e), or by the Company for any reason other than
for cause as set forth in section 4(c), the Company shall continue to pay, or
shall cause the Bank to pay, to Executive or his estate or beneficiaries: (i)
his full base salary and benefits in effect as of the Termination Date for the
remainder of the Employment Term; (ii) the bonus, if any, otherwise owed to him
for the year of his termination; and (iii) the Retirement Income payments for
the Additional Term.
(d) In the event termination is for cause as described in Section 4(c)
or is due to the expiration of the term of this Agreement, the Company shall pay
Executive his full base salary and other compensation through the Termination
Date and no other compensation or benefits shall be paid to Executive hereunder;
provided, however, that nothing herein shall be deemed to limit his vested
rights under any other benefit, retirement, or pension plan of the Company, and
the terms of those plans, programs, or arrangements shall govern.
6. CONFIDENTIALITY
(a) Executive agrees that, during the term of this Agreement and for a
term of two (2) years thereafter, Executive will hold in a fiduciary capacity
for the benefit of the Company, and shall not directly or indirectly use or
disclose, except as required in Executive's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by the Company or Bank, any "Company Information"
(as defined below) that Executive may have or acquire (whether or not developed
or compiled by Executive) during the term of this Agreement. The term "Company
Information" as used in this Agreement shall mean confidential or proprietary
information including technical and financial information and customer or client
lists, relating to the Company or its programs or procedures, including without
limitation, information received by the Company from third parties under
confidential conditions. The term "Company Information" shall also include,
without limitation, the Company's computer database, forms and form letters,
form contracts, information regarding specific transactions, financial
information and estimates and long-term planning and goals. The term "Company
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the Company.
(b) In addition to the foregoing and not in limitation thereof,
Executive agrees that, during the term of this Agreement and for a period of two
(2) years thereafter, Executive will hold in a fiduciary capacity for the
benefit of the Company and shall not directly or indirectly use or disclose,
except as required in Executive's judgment in connection with the performance of
his duties as required by law or judicial or regulatory proceedings or as
authorized by the Company or the Bank, any "Customer Information" (as defined
below) that Executive may have or acquire (whether or not developed or compiled
by Executive and whether or not Executive has been authorized to have access to
such Customer Information) during the term of this Agreement. The term "Customer
Information" as used in this Agreement shall mean secret, confidential or
proprietary information, including technical and financial information and
customer lists received by the Company or Executive from any customer or
potential customer of the Company, and shall include any information subject to
the provisions of the Federal Right to Financial Privacy Act. The term "Customer
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the customer to which such information pertains.
(c) Executive agrees and acknowledges that, if a violation of any
covenant contained in this Section 6 occurs or is threatened, such violation or
threatened violation will cause irreparable injury to the cCompany, that the
remedy at law for any such violation or threatened violation will be inadequate
and that the Company shall be entitled to appropriate equitable relief.
(d) The covenants contained in this Section 6 shall inure to the
benefit of the Company, any successor of it and every subsidiary of it.
(e) The restrictions containented in this Section 6 are considered by
the parties hereto to be fair and reasonable and necessary for the protection of
the legitimate business interests of the Company and the Bank. For purposes of
this Section 6, the term "Company" shall include its wholly-owned subsidiary,
the Bank.
7. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and/or the Bank
regardless of whether such occurrence constitutes a Change in Control and the
Company and the Bank shall require any such successor to assume expressly and
agree to perform this Agreement. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executives, administrators,
successors, heirs, distributes, divisees and legatees. If Executive should die
while any amount would still be payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legattee or other designee or, if there is not
such designee, to Executive's estate.
8. MISCELLANEOUS
(a) All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified Mail (postage prepaid)
at the following addresses or at such other places as shall be designated in
writing:
Executive: Donald R. Lineberger
2536 Pinewood Road
Gastonia, NC 28054
Company: Centura Banks, Inc.
P.O. Box 1220
Rocky Mount, NC 27802
Attn: President
(b) If any provision of this Agreement shall be determined to be void
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, all of which shall remain in full force
and effect.
(c) The failure of the parties to complain of any act or omission on
the part of either party, no matter how long the same may continue, shall not be
deemed to be a waiver of any of its rights hereunder.
(d) The Company shall withhold, or cause the Bank to withhold, from
each payment to Executive hereunder appropriate amounts for social security and
withholding taxes, as well as State income taxes, if applicable.
(e) (i) The Company and the Executive agree that this Agreement
supersedes any and all prior employment agreements. This Agreement contains the
entire agreement of the parties. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. It may be changed or
terminated only by a writing signed by the party against whom enforcement of any
waiver, change, modification, extension, discharge or termination is sought.
(ii) By his execution hereof, Executive hereby represents and
warrants to the Company and the Bank that he does not now have any existing
employment agreement with First Community Bank and that this Agreement is the
only such agreement to which he is a party.
(f) The recitals contained in this Agreement are expressly made
a part hereof.
IN WITNESS WHEREOF, the undersigned individual has executed this
Agreement under seal by adopting the word "SEAL" beside his name and the
undersigned corporations have executed this Agreement under seal through their
duly authorized officers as of the day and year first above written.
______________________________(SEAL)
Donald R. Lineberger
CENTURA BANKS, INC.
By: _____________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
The undersigned hereby executes this Agreement for the purpose of
consenting to the terms contained herein, and accepting and acknowledging its
obligations hereunder.
CENTURA BANK
By: ______________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
SCHEDULE D
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Form of Employment Agreement with Robert S. Pearson
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into and
made effective as of the ____ day of ________, 1996, amongbetween ROBERT S.
PEARSON ("Executive") and CENTURA BANKS, INC. (the "Company") and CENTURA BANK,
a wholly owned bank subsidiary of the Company (the "Bank").
WHEREAS, the Bank desires to provide for Executive's employment with the
Bank and to enter into this Agreement with Executive to set forth the terms of
his employment; and
WHEREAS, Executive has accepted employment with the Bank on the terms
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
The Bank shall employ Executive as a Financial Services Officer, with
the duties, responsibilities, and powers of such office as assigned to him as of
the date hereinabove set forth and as customarily associated with such office,
and Executive shall serve the Bank in such capacity during the term of this
Agreement. Executive shall faithfully and diligently discharge his duties under
this Agreement.
2. TERM
The term of this Agreement shall be five (5) years, commencing on the
date hereof, subject to earlier termination as set forth herein.
3. COMPENSATION AND BENEFITS
The Company shall pay or shall cause the Bank to pay or provide to
Executive the following items as compensation for his services:
(i) A base salary of $100,000 per year, payable in equal (or
nearly equal) monthly installments; and
(ii) Inclusion in the Company's sales tracking incentive program.
The above-stated items of compensation shall not be deemed exclusive
nor prevent Executive from receiving any other compensation or benefits provided
by the Bank to comparably situated executives. Executive shall be eligible for
vacation leave, sick leave, and other leave and participation in any
profit-sharing, pension, disability insurance, hospitalization insurance, major
medical insurance, medical reimbursement or life insurance plan provided by the
Company or the Bank to similarly situated executives, subject to the rules
prevailing on the effective date of this Agreement or at the time of
commencement of the applicable leave policy or plan, as the case may be. In
addition, the Company and the Bank agree that the Company or the Bank will
assume the split dollar insurance arrangement currently in place between First
Community Bank and youExecutive.
4. TERMINATION
Executive's employment under this Agreement shall terminate:
(a) Death. Upon the death of Executive; or
(b) Disability. Upon notice from the Company to Executive in the event
Executive becomes "permanently disabled." For purposes of this Agreement,
Executive shall be deemed "permanently disabled" as of such time as he
terminates his employment on account of "Disability," as defined in the Centura
Banks, Inc. 401(k) Plan; or
(c) Cause. Upon notice from the Company to Executive for cause. For
the purpose of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Executive to perform his duties pursuant to the reasonable
directions of the senior executive management and Board of Directors of Centura
Bank (other than due to a disability), or (ii) a material breach by Executive of
his duties of loyalty or care to the Company, or (iii) a willful violation by
Executive of any provision of this Agreement, or (iv) a conviction of or the
entering of a plea of nolo contendere by Executive for any felony or any crime
involving fraud or dishonesty, or (v) a willful violation of any federal or
state banking law or other laws or regulations applicable to the Company or the
Bank. In addition, if Executive shall terminate his employment for a breach of
this Agreement by the Company or the Bank in accordance with Section 4(d), and
it is ultimately determined that no reasonable basis existed for Executive's
termination on account of the alleged default of the Company or the Bank, such
event shall be deemed cause for termination by the Company.
Any notice of termination of Executive's employment with the Bank
Company for cause shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination of his employment
under the provisions contained herein and the date of termination ("Termination
Date"). If the cause alleged by the Company shall be (i), (ii) or (iii) set
forth above, Executive shall be given the opportunity to cure the breach within
a reasonable period of time upon receipt of notice but in no event to exceed
thirty (30) days; or
(d) Breach. Upon notice from Executive to the Company of the Company's
or the Bank's failure to comply with any material provision of this Agreement,
provided that Company and/or the Bank, as applicable, shall have thirty (30)
days from the receipt of such notice to cure any default under this Agreement.
If such default shall be cured or if Company shall have taken steps to cure the
default within the thirty (30) day period, Executive shall have no right to
terminate his employment under the provisions of this Section 4(d); or
(e) Improper Termination by the Company. Upon notice from
Executive to the Company upon a purported termination of Executive's
employment by the Company for cause if it shall be ultimately determined
that cause did not exist; or
(f) Discretionary Termination at Executive's Option. At any
time during the term of this Agreement, at the sole discretion of the
Executive, on thirty (30) days written notice of termination to the
Company; or
(g) Expiration of Term. Upon expiration of the term of this
Agreement, as set forth in Section 2 above.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Executive's death, the Company shall provide such death or
insurance benefits as are in effect for Executive in accordance with the regular
policy of the Company and pursuant to the terms of any benefit plans or
arrangements maintained by the Company which provide death benefits and in which
Executive participates at such time. The Company shall pay or shall cause the
Bank to pay Executive's estate his base salary through date of death and his
bonus for the period including the date of death, pro rated to reflect the
portion of such period prior to Executive's death.
(b) In the event Executive becomes permanently disabled and is
terminated as set forth in Section 4(b) above, the Company shall pay to
Executive compensation and benefits as set forth in Section 5(c) below, provided
that Executive's compensationbase salary shall be reduced by any amounts
received by Executive under the Company's long-term disability plan or from any
other collateral source payable due to disability, including social security
benefits. If Executive shall remain permanently disabled beyond the term of this
Agreementperiod set forth in Section 5(c) below, Executive thereafter shall
receive only such amounts, if any, as are payable under the Company's long-term
disability plan.
(c) If Executive's employment shall be terminated by Executive
pursuant to Sections 4(d) or (e), or by the Company for any reason other than
for cause as set forth in Section 4(c), the Company shall continue to pay, or
shall cause the Bank to pay, to Executive or his estate or beneficiaries his
full base salary, bonus based on his most recent bonus prior to termination, and
benefits in effect as of the Termination Date for the remainder of the term of
this Agreement.
(d) In the event termination is for cause as described in Section
4(c), the Company shall pay Executive his full base salary and other
compensation through the Termination Date and no other compensation or benefits
shall be paid to Executive hereunder; provided, however, that nothing herein
shall be deemed to limit his vested rights under any other benefit, retirement,
or pension plan of the Company, and the terms of those plans, programs, or
arrangements shall govern.
(e) In the event of termination at the discretion of the Executive
under Section 4(f), Executive shall receive for the remainder of the term of
this Agreement the sum of $4,6166.66 per month plus an amount equal to the
monthly amount paid prior to such termination by the Company or the Bank for
Executive's medical insurance (or if such amount is not paid monthly, the pro
rata portion of the amount paid annually).
6. CONFIDENTIALITY
(a) Executive agrees that, during the term of this Agreement and for a
term of two (2) years thereafter, Executive will hold in a fiduciary capacity
for the benefit of the Company, and shall not directly or indirectly use or
disclose, except as required in Executive's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by the Company or the Bank, any "Company
Information" (as defined below) that Executive may have or acquire (whether or
not developed or compiled by Executive) during the term of this Agreement. The
term "Company Information" as used in this Agreement shall mean confidential or
proprietary information including technical and financial information and
customer or client lists, relating to the Company or its programs or procedures,
including without limitation, information received by the Company from third
parties under confidential conditions. The term "Company Information" shall also
include, without limitation, the Company's computer database, forms and form
letters, form contracts, information regarding specific transactions, financial
information and estimates and long-term planning and goals. The term "Company
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the Company.
(b) In addition to the foregoing and not in limitation thereof,
Executive agrees that, during the term of this Agreement and for a period of two
(2) years thereafter, Executive will hold in a fiduciary capacity for the
benefit of the Company and shall not directly or indirectly use or disclose,
except as required in Executive's judgment in connection with the performance of
his duties as required by law or judicial or regulatory proceedings or as
authorized by the Company or the Bank, any "Customer Information" (as defined
below) that Executive may have or acquire (whether or not developed or compiled
by Executive and whether or not Executive has been authorized to have access to
such Customer Information) during the term of this Agreement. The term "Customer
Information" as used in this Agreement shall mean secret, confidential or
proprietary information, including technical and financial information and
customer lists received by the Company or Executive from any customer or
potential customer of the Company, and shall include any information subject to
the provisions of the Federal Right to Financial Privacy Act. The term "Customer
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the customer to which such information pertains.
(c) Executive agrees and acknowledges that, if a violation of any
covenant contained in this Section 6 occurs or is threatened, such violation or
threatened violation will cause irreparable injury to the cCompany, that the
remedy at law for any such violation or threatened violation will be inadequate
and that the Company shall be entitled to appropriate equitable relief.
(d) The covenants contained in this Section 6 shall inure to the
benefit of the Company, any successor of it and every subsidiary of it.
(e) The restrictions containedcontented in this Section 6 are
considered by the parties hereto to be fair and reasonable and necessary for the
protection of the legitimate business interests of the Company. For purposes of
this Section 6, the term "Company" shall include its wholly-owned subsidiary,
the Bank.
7. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and/or the Bank
regardless of whether such occurrence constitutes a Change in Control and the
Company and the Bank shall require any such successor to assume expressly and
agree to perform this Agreement. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executives, administrators,
successors, heirs, distributes, divisees and legatees. If Executive should die
while any amount would still be payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legattee or other designee or, if there is not
such designee, to Executive's estate.
8. MISCELLANEOUS
(a) All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified Mail (postage prepaid)
at the following addresses or at such other places as shall be designated in
writing:
Executive: Robert S. Pearson
1308 Dumbarton Road
Gastonia, NC 28054
Company: Centura Banks, Inc.
P.O. Box 1220
Rocky Mount, NC 27802
Attn: President
(b) If any provision of this Agreement shall be determined to be void
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, all of which shall remain in full force
and effect.
(c) The failure of the parties to complain of any act or omission on
the part of either party, no matter how long the same may continue, shall not be
deemed to be a waiver of any of its rights hereunder.
(d) The Company shall withhold, or cause the Bank to withhold, from
each payment to Executive hereunder appropriate amounts for social security and
withholding taxes, as well as State income taxes, if applicable.
(e) (i) The Company and the Executive agree that this Agreement
supersedes any and all prior employment agreements. This Agreement contains the
entire agreement of the parties. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. It may be changed or
terminated only by a writing signed by the party against whom enforcement of any
waiver, change, modification, extension, discharge or termination is sought.
(ii) By his execution hereof, Executive hereby represents and
warrants to the Company and the Bank that he does not now have any existing
employment agreement with First Community Bank and that this Agreement is the
only such agreement to which he is a party.
(f) The recitals contained in this Agreement are expressly made a
part hereof.
IN WITNESS WHEREOF, the undersigned individual has executed this
Agreement under seal by adopting the word "SEAL" beside his name and the
undersigned corporations have executed this Agreement under seal through their
duly authorized officers as of the day and year first above written.
______________________________(SEAL)
Robert S. Pearson
CENTURA BANKS, INC.
By: _____________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
The undersigned hereby executes this Agreement for the purpose of
consenting to the terms contained herein, and accepting and acknowledging its
obligations hereunder.
CENTURA BANK
By: ______________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
SCHEDULE E
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Form of Employment Agreement with
Will Weill, III, David L. Lawing and Holt D. Robinson
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into and
made effective as of the ____ day of ________, 1996, among WILL WEILL III
("Executive") and CENTURA BANKS, INC. (the "Company") and CENTURA BANK, a wholly
owned bank subsidiary of the Company (the "Bank").
WHEREAS, the Bank desires to provide for Executive's employment with the
Bank and to enter into this Agreement with Executive to set forth the terms of
his employment; and
WHEREAS, Executive has accepted employment with the Bank on the terms
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
The Bank shall employ Executive as a Region Market Manager Gaston
County, with the duties, responsibilities, and powers of such office as assigned
to him as of the date hereinabove set forth and as customarily associated with
such office, and Executive shall serve the Bank in such capacity during the term
of this Agreement. Executive shall faithfully and diligently discharge his
duties under this Agreement.
2. TERM
The term of this Agreement shall be three (3) years, commencing on the
date hereof.
3. COMPENSATION AND BENEFITS
The Company shall pay or shall cause the Bank to pay or provide to
Executive the following items as compensation for his services:
(i) A base salary of $ _________ per year, payable in equal (or nearly
equal) monthly installments in arrears, which amount shall be subject to
annual review and increase in the same manner and subject to the same
criteria as the base salary of other similarly situated executives of the
Bank; and
(ii) Inclusion in the Company's EVA incentive program, with
performance targets similar to other similarly situated executives.
The above-stated items of compensation shall not be deemed exclusive
nor prevent Executive from receiving any other compensation or benefits provided
by the Bank to comparably situated executives. Executive shall be eligible for
vacation leave, sick leave, and other leave and participation in any
profit-sharing, pension, disability insurance, hospitalization insurance, major
medical insurance, medical reimbursement or life insurance plan provided by the
Company or the Bank to similarly situated executives, subject to the rules
prevailing on the effective date of this Agreement or at the time of
commencement of the applicable leave policy or plan, as the case may be. In
addition, the Company and the Bank agree that the Company or the Bank will
assume the split-dollar insurance agreement currently in place between First
Community Bank and Executive.
4. TERMINATION
Executive's employment under this Agreement shall terminate:
(a) Death. Upon the death of Executive; or
(b) Disability. Upon notice from the Company to Executive in the event
Executive becomes "permanently disabled." For purposes of this Agreement,
Executive shall be deemed "permanently disabled" as of such time as he
terminates his employment on account of "Disability," as defined in the Centura
Banks, Inc. 401(k) Plan; or
(c) Cause. Upon notice from the Company to Executive for cause. For
the purpose of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Executive to perform his duties pursuant to the reasonable
directions of the senior executive management and Board of Directors of Centura
Bank (other than due to a disability), or (ii) a material breach by Executive of
his duties of loyalty or care to the Company, or (iii) a willful violation by
Executive of any provision of this Agreement, or (iv) a conviction of or the
entering of a plea of nolo contendere by Executive for any felony or any crime
involving fraud or dishonesty, or (v) a willful violation of any federal or
state banking law or other laws or regulations applicable to the Company or the
Bank. In addition, if Executive shall terminate his employment for a breach of
this Agreement by the Company or the Bank in accordance with Section 4(d), and
it is ultimately determined that no reasonable basis existed for Executive's
termination on account of the alleged default of the Company or the Bank, such
event shall be deemed cause for termination by the Company.
Any notice of termination of Executive's employment with the
BankCompany for cause shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination of his employment
under the provisions contained herein and the date of termination ("Termination
Date"). If the cause alleged by the Company shall be (i), (ii) or (iii) set
forth above, Executive shall be given the opportunity to cure the breach within
a reasonable period of time upon receipt of notice but in no event to exceed
thirty (30) days; or
(d) Breach. Upon notice from Executive to the Company of the Company's
or the Bank's failure to comply with any material provision of this Agreement,
provided that Company and/or the Bank, as applicable shall have thirty (30) days
from the receipt of such notice to cure any default under this Agreement. If
such default shall be cured or if Company shall have taken steps to cure the
default within the thirty (30) day period, Executive shall have no right to
terminate his employment under the provisions of this Section 4(d); or
(e) Improper Termination by the Company. Upon notice from
Executive to the Company upon a purported termination of Executive's
employment by the Company for cause if it shall be ultimately determined
that cause did not exist; or
(f) Expiration of Term. Upon expiration of the term of this
Agreement, as set forth in Section 2 above.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Executive's death, the Company shall provide such death or
insurance benefits as are in effect for Executive in accordance with the regular
policy of the Company and pursuant to the terms of any benefit plans or
arrangements maintained by the Company which provide death benefits and in which
Executive participates at such time. The Company shall pay or shall cause the
Bank to pay Executive's estate his base salary through date of death and his
bonus for the period including the date of death, pro rated to reflect the
portion of such period prior to Executive's death.
(b) In the event Executive becomes permanently disabled and is
terminated as set forth in Section 4(b) above, the Company shall pay to
Executive compensation and benefits as set forth in Section 5(c) below, provided
that Executive's compensationbase salary shall be reduced by any amounts
received by Executive under the Company's long-term disability plan or from any
other collateral source payable due to disability, including social security
benefits. If Executive shall remain permanently disabled beyond the term of this
Agreementperiod set forth in Section 5(c) below, Executive shall thereafter
receive only such amounts, if any, as are payable under the Company's long-term
disability plan.
(c) If Executive's employment shall be terminated by Executive
pursuant to Sections 4(d) or (e), or by the Company for any reason other than
for cause as set forth in section 4(c), the Company shall continue to pay, or
shall cause the Bank to pay, to Executive or his estate or beneficiaries his
full base salary, bonus based on his most recent bonus prior to termination, and
benefits in effect as of the Termination Date for the remainder of the term of
this Agreement.
(d) In the event termination is for cause as described in Section
4(c), the Company shall pay Executive his full base salary and other
compensation through the Termination Date and no other compensation or benefits
shall be paid to Executive hereunder; provided, however, that nothing herein
shall be deemed to limit his vested rights under any other benefit, retirement,
or pension plan of the Company, and the terms of those plans, programs, or
arrangements shall govern.
6. CONFIDENTIALITY
(a) Executive agrees that, during the term of this Agreement and for a
term of two (2) years thereafter, Executive will hold in a fiduciary capacity
for the benefit of the Company, and shall not directly or indirectly use or
disclose, except as required in Executive's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by the Company or the Bank, any "Company
Information" (as defined below) that Executive may have or acquire (whether or
not developed or compiled by Executive) during the term of this Agreement. The
term "Company Information" as used in this Agreement shall mean confidential or
proprietary information including technical and financial information and
customer or client lists, relating to the Company or its programs or procedures,
including without limitation, information received by the Company from third
parties under confidential conditions. The term "Company Information" shall also
include, without limitation, the Company's computer database, forms and form
letters, form contracts, information regarding specific transactions, financial
information and estimates and long-term planning and goals. The term "Company
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the Company.
(b) In addition to the foregoing and not in limitation thereof,
Executive agrees that, during the term of this Agreement and for a period of two
(2) years thereafter, Executive will hold in a fiduciary capacity for the
benefit of the Company and shall not directly or indirectly use or disclose,
except as required in Executive's judgment in connection with the performance of
his duties as required by law or judicial or regulatory proceedings or as
authorized by the Company or the Bank, any "Customer Information" (as defined
below) that Executive may have or acquire (whether or not developed or compiled
by Executive and whether or not Executive has been authorized to have access to
such Customer Information) during the term of this Agreement. The term "Customer
Information" as used in this Agreement shall mean secret, confidential or
proprietary information, including technical and financial information and
customer lists received by the Company or Executive from any customer or
potential customer of the Company, and shall include any information subject to
the provisions of the Federal Right to Financial Privacy Act. The term "Customer
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the customer to which such information pertains.
(c) Executive agrees and acknowledges that, if a violation of any
covenant contained in this Section 6 occurs or is threatened, such violation or
threatened violation will cause irreparable injury to the cCompany, that the
remedy at law for any such violation or threatened violation will be inadequate
and that the Company shall be entitled to appropriate equitable relief.
(d) The covenants contained in this Section 6 shall inure to the
benefit of the Company, any successor of it and every subsidiary of it.
(e) The restrictions containedcontented in this Section 6 are
considered by the parties hereto to be fair and reasonable and necessary for the
protection of the legitimate business interests of the Company. For purposes of
this Section 6, the term "Company" shall include the Company's wholly-owned
subsidiary, the Bank.
7. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and or the Bank
regardless of whether such occurrence constitutes a Change in Control and the
Company and the Bank shall require any such successor to assume expressly and
agree to perform this Agreement. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executives, administrators,
successors, heirs, distributes, divisees and legatees. If Executive should die
while any amount would still be payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legattee or other designee or, if there is not
such designee, to Executive's estate.
8. MISCELLANEOUS
(a) All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified Mail (postage prepaid)
at the following addresses or at such other places as shall be designated in
writing:
Executive: Will Weill III
109 Lichenhearth Place
Gastonia, NC 28056
Company: Centura Banks, Inc.
P.O. Box 1220
Rocky Mount, NC 27802
Attn: President
(b) If any provision of this Agreement shall be determined to be void
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, all of which shall remain in full force
and effect.
(c) The failure of the parties to complain of any act or omission on
the part of either party, no matter how long the same may continue, shall not be
deemed to be a waiver of any of its rights hereunder.
(d) The Company shall withhold, or cause the Bank to withhold, from
each payment to Executive hereunder appropriate amounts for social security and
withholding taxes, as well as State income taxes, if applicable.
(e) (i) The Company and the Executive agree that this Agreement
supersedes any and all prior employment agreements. This Agreement contains the
entire agreement of the parties. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. It may be changed or
terminated only by a writing signed by the party against whom enforcement of any
waiver, change, modification, extension, discharge or termination is sought.
(ii) By his execution hereof, Executive hereby represents and
warrants to the Company and the Bank that he does not now have any existing
employment agreement with First Community Bank and that this Agreement is the
only such agreement to which he is a party.
(f) The recitals contained in this Agreement are expressly made a
part hereof.
IN WITNESS WHEREOF, the undersigned individual has executed this
Agreement under seal by adopting the word "SEAL" beside his name and the
undersigned corporations have executed this Agreement under seal through their
duly authorized officers as of the day and year first above written.
______________________________(SEAL)
Will Weill III
CENTURA BANKS, INC.
By: _____________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
The undersigned hereby executes this Agreement for the purpose of
consenting to the terms contained herein, and accepting and acknowledging its
obligations hereunder.
CENTURA BANK
By: ______________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into and
made effective as of the ____ day of ________, 1996, among DAVID L. LAWING
("Executive") and CENTURA BANKS, INC. (the "Company") and CENTURA BANK, a wholly
owned bank subsidiary of the Company (the "Bank").
WHEREAS, the Bank desires to provide for Executive's employment with the
Bank and to enter into this Agreement with Executive to set forth the terms of
his employment; and
WHEREAS, Executive has accepted employment with the Bank on the terms
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
The Bank shall employ Executive as a Financial Services Officer, with
the duties, responsibilities, and powers of such office as assigned to him as of
the date hereinabove set forth and as customarily associated with such office,
and Executive shall serve the Bank in such capacity during the term of this
Agreement. Executive shall faithfully and diligently discharge his duties under
this Agreement.
2. TERM
The term of this Agreement shall be three (3) years, commencing on the
date hereof.
3. COMPENSATION AND BENEFITS
The Company shall pay or shall cause the Bank to pay or provide to
Executive the following items as compensation for his services:
(i) A base salary of $ _________ per year, payable in equal (or nearly
equal) monthly installments in arrears, which amount shall be subject to
annual review and increase in the same manner and subject to the same
criteria as the base salary of other similarly situated executives of the
Bank; and
(ii) Inclusion in the Company's sales tracking incentive program.
The above-stated items of compensation shall not be deemed exclusive
nor prevent Executive from receiving any other compensation or benefits provided
by the Bank to comparably situated executives. Executive shall be eligible for
vacation leave, sick leave, and other leave and participation in any
profit-sharing, pension, disability insurance, hospitalization insurance, major
medical insurance, medical reimbursement or life insurance plan provided by the
Company or the Bank to similarly situated executives, subject to the rules
prevailing on the effective date of this Agreement or at the time of
commencement of the applicable leave policy or plan, as the case may be.
4. TERMINATION
Executive's employment under this Agreement shall terminate:
(a) Death. Upon the death of Executive; or
(b) Disability. Upon notice from the Company to Executive in the event
Executive becomes "permanently disabled." For purposes of this Agreement,
Executive shall be deemed "permanently disabled" as of such time as he
terminates his employment on account of "Disability," as defined in the Centura
Banks, Inc. 401(k) Plan; or
(c) Cause. Upon notice from the Company to Executive for cause. For
the purpose of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Executive to perform his duties pursuant to the reasonable
directions of the senior executive management and Board of Directors of Centura
Bank (other than due to a disability), or (ii) a material breach by Executive of
his duties of loyalty or care to the Company, or (iii) a willful violation by
Executive of any provision of this Agreement, or (iv) a conviction of or the
entering of a plea of nolo contendere by Executive for any felony or any crime
involving fraud or dishonesty, or (v) a willful violation of any federal or
state banking law or other laws or regulations applicable to the Company or the
Bank. In addition, if Executive shall terminate his employment for a breach of
this Agreement by the Company or the Bank in accordance with Section 4(d), and
it is ultimately determined that no reasonable basis existed for Executive's
termination on account of the alleged default of the Company or the Bank, such
event shall be deemed cause for termination by the Company.
Any notice of termination of Executive's employment with the
BankCompany for cause shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination of his employment
under the provisions contained herein and the date of termination ("Termination
Date"). If the cause alleged by the Company shall be (i), (ii) or (iii) set
forth above, Executive shall be given the opportunity to cure the breach within
a reasonable period of time upon receipt of notice but in no event to exceed
thirty (30) days; or
(d) Breach. Upon notice from Executive to the Company of the Company's
or the Bank's failure to comply with any material provision of this Agreement,
provided that Company and/or the Bank, as applicable shall have thirty (30) days
from the receipt of such notice to cure any default under this Agreement. If
such default shall be cured or if Company shall have taken steps to cure the
default within the thirty (30) day period, Executive shall have no right to
terminate his employment under the provisions of this Section 4(d); or
(e) Improper Termination by the Company. Upon notice from
Executive to the Company upon a purported termination of Executive's
employment by the Company for cause if it shall be ultimately determined
that cause did not exist; or
(f) Expiration of Term. Upon expiration of the term of this
Agreement, as set forth in Section 2 above.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Executive's death, the Company shall provide such death or
insurance benefits as are in effect for Executive in accordance with the regular
policy of the Company and pursuant to the terms of any benefit plans or
arrangements maintained by the Company which provide death benefits and in which
Executive participates at such time. The Company shall pay or shall cause the
Bank to pay Executive's estate his base salary through date of death and his
bonus for the period including the date of death, pro rated to reflect the
portion of such period prior to Executive's death.
(b) In the event Executive becomes permanently disabled and is
terminated as set forth in Section 4(b) above, the Company shall pay to
Executive compensation and benefits as set forth in Section 5(c) below, provided
that Executive's compensationbase salary shall be reduced by any amounts
received by Executive under the Company's long-term disability plan or from any
other collateral source payable due to disability, including social security
benefits. If Executive shall remain permanently disabled beyond the term of this
Agreementperiod set forth in Section 5(c) below, Executive shall thereafter
receive only such amounts, if any, as are payable under the Company's long-term
disability plan.
(c) If Executive's employment shall be terminated by Executive
pursuant to Sections 4(d) or (e), or by the Company for any reason other than
for cause as set forth in section 4(c), the Company shall continue to pay, or
shall cause the Bank to pay, to Executive or his estate or beneficiaries his
full base salary, bonus based on his most recent bonus prior to termination, and
benefits in effect as of the Termination Date for the remainder of the term of
this Agreement.
(d) In the event termination is for cause as described in Section
4(c), the Company shall pay Executive his full base salary and other
compensation through the Termination Date and no other compensation or benefits
shall be paid to Executive hereunder; provided, however, that nothing herein
shall be deemed to limit his vested rights under any other benefit, retirement,
or pension plan of the Company, and the terms of those plans, programs, or
arrangements shall govern.
6. CONFIDENTIALITY
(a) Executive agrees that, during the term of this Agreement and for a
term of two (2) years thereafter, Executive will hold in a fiduciary capacity
for the benefit of the Company, and shall not directly or indirectly use or
disclose, except as required in Executive's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by the Company or the Bank, any "Company
Information" (as defined below) that Executive may have or acquire (whether or
not developed or compiled by Executive) during the term of this Agreement. The
term "Company Information" as used in this Agreement shall mean confidential or
proprietary information including technical and financial information and
customer or client lists, relating to the Company or its programs or procedures,
including without limitation, information received by the Company from third
parties under confidential conditions. The term "Company Information" shall also
include, without limitation, the Company's computer database, forms and form
letters, form contracts, information regarding specific transactions, financial
information and estimates and long-term planning and goals. The term "Company
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the Company.
(b) In addition to the foregoing and not in limitation thereof,
Executive agrees that, during the term of this Agreement and for a period of two
(2) years thereafter, Executive will hold in a fiduciary capacity for the
benefit of the Company and shall not directly or indirectly use or disclose,
except as required in Executive's judgment in connection with the performance of
his duties as required by law or judicial or regulatory proceedings or as
authorized by the Company or the Bank, any "Customer Information" (as defined
below) that Executive may have or acquire (whether or not developed or compiled
by Executive and whether or not Executive has been authorized to have access to
such Customer Information) during the term of this Agreement. The term "Customer
Information" as used in this Agreement shall mean secret, confidential or
proprietary information, including technical and financial information and
customer lists received by the Company or Executive from any customer or
potential customer of the Company, and shall include any information subject to
the provisions of the Federal Right to Financial Privacy Act. The term "Customer
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the customer to which such information pertains.
(c) Executive agrees and acknowledges that, if a violation of any
covenant contained in this Section 6 occurs or is threatened, such violation or
threatened violation will cause irreparable injury to the cCompany, that the
remedy at law for any such violation or threatened violation will be inadequate
and that the Company shall be entitled to appropriate equitable relief.
(d) The covenants contained in this Section 6 shall inure to the
benefit of the Company, any successor of it and every subsidiary of it.
(e) The restrictions containedcontented in this Section 6 are
considered by the parties hereto to be fair and reasonable and necessary for the
protection of the legitimate business interests of the Company. For purposes of
this Section 6, the term "Company" shall include the Company's wholly-owned
subsidiary, the Bank.
7. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and or the Bank
regardless of whether such occurrence constitutes a Change in Control and the
Company and the Bank shall require any such successor to assume expressly and
agree to perform this Agreement. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executives, administrators,
successors, heirs, distributes, divisees and legatees. If Executive should die
while any amount would still be payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legattee or other designee or, if there is not
such designee, to Executive's estate.
8. MISCELLANEOUS
(a) All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified Mail (postage prepaid)
at the following addresses or at such other places as shall be designated in
writing:
Executive: David L. Lawing
1210 Oakwood Avenue
Gastonia, NC 28052
Company: Centura Banks, Inc.
P.O. Box 1220
Rocky Mount, NC 27802
Attn: President
(b) If any provision of this Agreement shall be determined to be void
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, all of which shall remain in full force
and effect.
(c) The failure of the parties to complain of any act or omission on
the part of either party, no matter how long the same may continue, shall not be
deemed to be a waiver of any of its rights hereunder.
(d) The Company shall withhold, or cause the Bank to withhold, from
each payment to Executive hereunder appropriate amounts for social security and
withholding taxes, as well as State income taxes, if applicable.
(e) (i) The Company and the Executive agree that this Agreement
supersedes any and all prior employment agreements. This Agreement contains the
entire agreement of the parties. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. It may be changed or
terminated only by a writing signed by the party against whom enforcement of any
waiver, change, modification, extension, discharge or termination is sought.
(ii) By his execution hereof, Executive hereby represents and
warrants to the Company and the Bank that he does not now have any existing
employment agreement with First Community Bank and that this Agreement is the
only such agreement to which he is a party.
(f) The recitals contained in this Agreement are expressly made a
part hereof.
IN WITNESS WHEREOF, the undersigned individual has executed this
Agreement under seal by adopting the word "SEAL" beside his name and the
undersigned corporations have executed this Agreement under seal through their
duly authorized officers as of the day and year first above written.
______________________________(SEAL)
David L. Lawing
CENTURA BANKS, INC.
By: _____________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
The undersigned hereby executes this Agreement for the purpose of
consenting to the terms contained herein, and accepting and acknowledging its
obligations hereunder.
CENTURA BANK
By: ______________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is entered into and
made effective as of the ____ day of ________, 1996, among HOLT D. ROBINSON
("Executive") and CENTURA BANKS, INC. (the "Company") and CENTURA BANK, a wholly
owned bank subsidiary of the Company (the "Bank").
WHEREAS, the Bank desires to provide for Executive's employment with the
Bank and to enter into this Agreement with Executive to set forth the terms of
his employment; and
WHEREAS, Executive has accepted employment with the Bank on the terms
set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and conditions hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT.
The Bank shall employ Executive as a Financial Services Officer, with
the duties, responsibilities, and powers of such office as assigned to him as of
the date hereinabove set forth and as customarily associated with such office,
and Executive shall serve the Bank in such capacity during the term of this
Agreement. Executive shall faithfully and diligently discharge his duties under
this Agreement.
2. TERM
The term of this Agreement shall be three (3) years, commencing on the
date hereof.
3. COMPENSATION AND BENEFITS
The Company shall pay or shall cause the Bank to pay or provide to
Executive the following items as compensation for his services:
(i) A base salary of $ _________ per year, payable in equal (or nearly
equal) monthly installments in arrears, which amount shall be subject to
annual review and increase in the same manner and subject to the same
criteria as the base salary of other similarly situated executives of the
Bank; and
(ii) Inclusion in the Company's sales tracking incentive program.
The above-stated items of compensation shall not be deemed exclusive
nor prevent Executive from receiving any other compensation or benefits provided
by the Bank to comparably situated executives. Executive shall be eligible for
vacation leave, sick leave, and other leave and participation in any
profit-sharing, pension, disability insurance, hospitalization insurance, major
medical insurance, medical reimbursement or life insurance plan provided by the
Company or the Bank to similarly situated executives, subject to the rules
prevailing on the effective date of this Agreement or at the time of
commencement of the applicable leave policy or plan, as the case may be. In
addition, the Company and the Bank agree that the Company or the Bank will
assume the split-dollar insurance agreement currently in place between First
Community Bank and Executive.
4. TERMINATION
Executive's employment under this Agreement shall terminate:
(a) Death. Upon the death of Executive; or
(b) Disability. Upon notice from the Company to Executive in the event
Executive becomes "permanently disabled." For purposes of this Agreement,
Executive shall be deemed "permanently disabled" as of such time as he
terminates his employment on account of "Disability," as defined in the Centura
Banks, Inc. 401(k) Plan; or
(c) Cause. Upon notice from the Company to Executive for cause. For
the purpose of this Agreement, "cause" shall be defined as (i) a willful and
continued failure by Executive to perform his duties pursuant to the reasonable
directions of the senior executive management and Board of Directors of Centura
Bank (other than due to a disability), or (ii) a material breach by Executive of
his duties of loyalty or care to the Company, or (iii) a willful violation by
Executive of any provision of this Agreement, or (iv) a conviction of or the
entering of a plea of nolo contendere by Executive for any felony or any crime
involving fraud or dishonesty, or (v) a willful violation of any federal or
state banking law or other laws or regulations applicable to the Company or the
Bank. In addition, if Executive shall terminate his employment for a breach of
this Agreement by the Company or the Bank in accordance with Section 4(d), and
it is ultimately determined that no reasonable basis existed for Executive's
termination on account of the alleged default of the Company or the Bank, such
event shall be deemed cause for termination by the Company.
Any notice of termination of Executive's employment with the
BankCompany for cause shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination of his employment
under the provisions contained herein and the date of termination ("Termination
Date"). If the cause alleged by the Company shall be (i), (ii) or (iii) set
forth above, Executive shall be given the opportunity to cure the breach within
a reasonable period of time upon receipt of notice but in no event to exceed
thirty (30) days; or
(d) Breach. Upon notice from Executive to the Company of the Company's
or the Bank's failure to comply with any material provision of this Agreement,
provided that Company and/or the Bank, as applicable shall have thirty (30) days
from the receipt of such notice to cure any default under this Agreement. If
such default shall be cured or if Company shall have taken steps to cure the
default within the thirty (30) day period, Executive shall have no right to
terminate his employment under the provisions of this Section 4(d); or
(e) Improper Termination by the Company. Upon notice from
Executive to the Company upon a purported termination of Executive's
employment by the Company for cause if it shall be ultimately determined
that cause did not exist; or
(f) Expiration of Term. Upon expiration of the term of this
Agreement, as set forth in Section 2 above.
5. COMPENSATION AND BENEFITS PAYABLE UPON TERMINATION.
(a) Upon Executive's death, the Company shall provide such death or
insurance benefits as are in effect for Executive in accordance with the regular
policy of the Company and pursuant to the terms of any benefit plans or
arrangements maintained by the Company which provide death benefits and in which
Executive participates at such time. The Company shall pay or shall cause the
Bank to pay Executive's estate his base salary through date of death and his
bonus for the period including the date of death, pro rated to reflect the
portion of such period prior to Executive's death.
(b) In the event Executive becomes permanently disabled and is
terminated as set forth in Section 4(b) above, the Company shall pay to
Executive compensation and benefits as set forth in Section 5(c) below, provided
that Executive's compensationbase salary shall be reduced by any amounts
received by Executive under the Company's long-term disability plan or from any
other collateral source payable due to disability, including social security
benefits. If Executive shall remain permanently disabled beyond the term of this
Agreementperiod set forth in Section 5(c) below, Executive shall thereafter
receive only such amounts, if any, as are payable under the Company's long-term
disability plan.
(c) If Executive's employment shall be terminated by Executive
pursuant to Sections 4(d) or (e), or by the Company for any reason other than
for cause as set forth in section 4(c), the Company shall continue to pay, or
shall cause the Bank to pay, to Executive or his estate or beneficiaries his
full base salary, bonus based on his most recent bonus prior to termination, and
benefits in effect as of the Termination Date for the remainder of the term of
this Agreement.
(d) In the event termination is for cause as described in Section
4(c), the Company shall pay Executive his full base salary and other
compensation through the Termination Date and no other compensation or benefits
shall be paid to Executive hereunder; provided, however, that nothing herein
shall be deemed to limit his vested rights under any other benefit, retirement,
or pension plan of the Company, and the terms of those plans, programs, or
arrangements shall govern.
6. CONFIDENTIALITY
(a) Executive agrees that, during the term of this Agreement and for a
term of two (2) years thereafter, Executive will hold in a fiduciary capacity
for the benefit of the Company, and shall not directly or indirectly use or
disclose, except as required in Executive's judgment in connection with the
performance of his duties, as required by law or judicial or regulatory
proceedings or as authorized by the Company or the Bank, any "Company
Information" (as defined below) that Executive may have or acquire (whether or
not developed or compiled by Executive) during the term of this Agreement. The
term "Company Information" as used in this Agreement shall mean confidential or
proprietary information including technical and financial information and
customer or client lists, relating to the Company or its programs or procedures,
including without limitation, information received by the Company from third
parties under confidential conditions. The term "Company Information" shall also
include, without limitation, the Company's computer database, forms and form
letters, form contracts, information regarding specific transactions, financial
information and estimates and long-term planning and goals. The term "Company
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the Company.
(b) In addition to the foregoing and not in limitation thereof,
Executive agrees that, during the term of this Agreement and for a period of two
(2) years thereafter, Executive will hold in a fiduciary capacity for the
benefit of the Company and shall not directly or indirectly use or disclose,
except as required in Executive's judgment in connection with the performance of
his duties as required by law or judicial or regulatory proceedings or as
authorized by the Company or the Bank, any "Customer Information" (as defined
below) that Executive may have or acquire (whether or not developed or compiled
by Executive and whether or not Executive has been authorized to have access to
such Customer Information) during the term of this Agreement. The term "Customer
Information" as used in this Agreement shall mean secret, confidential or
proprietary information, including technical and financial information and
customer lists received by the Company or Executive from any customer or
potential customer of the Company, and shall include any information subject to
the provisions of the Federal Right to Financial Privacy Act. The term "Customer
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right of the customer to which such information pertains.
(c) Executive agrees and acknowledges that, if a violation of any
covenant contained in this Section 6 occurs or is threatened, such violation or
threatened violation will cause irreparable injury to the cCompany, that the
remedy at law for any such violation or threatened violation will be inadequate
and that the Company shall be entitled to appropriate equitable relief.
(d) The covenants contained in this Section 6 shall inure to the
benefit of the Company, any successor of it and every subsidiary of it.
(e) The restrictions containedcontented in this Section 6 are
considered by the parties hereto to be fair and reasonable and necessary for the
protection of the legitimate business interests of the Company. For purposes of
this Section 6, the term "Company" shall include the Company's wholly-owned
subsidiary, the Bank.
7. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and or the Bank
regardless of whether such occurrence constitutes a Change in Control and the
Company and the Bank shall require any such successor to assume expressly and
agree to perform this Agreement. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executives, administrators,
successors, heirs, distributes, divisees and legatees. If Executive should die
while any amount would still be payable hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legattee or other designee or, if there is not
such designee, to Executive's estate.
8. MISCELLANEOUS
(a) All notices required or permitted hereunder shall be given in
writing by actual delivery or by Registered or Certified Mail (postage prepaid)
at the following addresses or at such other places as shall be designated in
writing:
Executive: Holt D. Robinson
1552 Prancer Lane
Gastonia, NC 28056
Company: Centura Banks, Inc.
P.O. Box 1220
Rocky Mount, NC 27802
Attn: President
(b) If any provision of this Agreement shall be determined to be void
by any court of competent jurisdiction, then such determination shall not affect
any other provision of this Agreement, all of which shall remain in full force
and effect.
(c) The failure of the parties to complain of any act or omission on
the part of either party, no matter how long the same may continue, shall not be
deemed to be a waiver of any of its rights hereunder.
(d) The Company shall withhold, or cause the Bank to withhold, from
each payment to Executive hereunder appropriate amounts for social security and
withholding taxes, as well as State income taxes, if applicable.
(e) (i) The Company and the Executive agree that this Agreement
supersedes any and all prior employment agreements. This Agreement contains the
entire agreement of the parties. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. It may be changed or
terminated only by a writing signed by the party against whom enforcement of any
waiver, change, modification, extension, discharge or termination is sought.
(ii) By his execution hereof, Executive hereby represents and
warrants to the Company and the Bank that he does not now have any existing
employment agreement with First Community Bank and that this Agreement is the
only such agreement to which he is a party.
(f) The recitals contained in this Agreement are expressly made a
part hereof.
IN WITNESS WHEREOF, the undersigned individual has executed this
Agreement under seal by adopting the word "SEAL" beside his name and the
undersigned corporations have executed this Agreement under seal through their
duly authorized officers as of the day and year first above written.
______________________________(SEAL)
Holt D. Robinson
CENTURA BANKS, INC.
By: _____________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
The undersigned hereby executes this Agreement for the purpose of
consenting to the terms contained herein, and accepting and acknowledging its
obligations hereunder.
CENTURA BANK
By: ______________________________
President
ATTEST:
- ------------------------
Secretary
(CORPORATE SEAL)
SCHEDULE F
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Form of Legal Opinion of Counsel for the
Holding Company and Centura
, 1996
First Community Bank
710 South Marietta Street
Gastonia, North Carolina 28052
Gentlemen:
I am General Counsel of Centura Banks, Inc. (the "Holding Company") and
its bank subsidiary, Centura Bank ("Centura") and, in such capacity, I have
reviewed that certain Agreement and Plan of Reorganization and Merger dated
April 4, 1996, by and among First Community Bank ("First Community"), Centura
and the Holding Company (the "Agreement", including the Plan of Merger
referenced therein). Pursuant to and in accordance with the terms and conditions
of the Agreement, First Community is proposed to be merged into and with Centura
(the "Merger") and the outstanding shares of First Community's common stock will
be converted into shares of the Holding Company's common stock. This letter is
delivered in connection with the consummation and closing of the Merger and
other transactions described in the Agreement (the "Closing"). Capitalized terms
appearing herein and not otherwise defined are used as defined in the Agreement.
As counsel to Centura and the Holding Company, I have examined originals or
copies of their Articles of Incorporation, By-Laws and corporate minute books,
the Agreement, the Registration Statement (No. ) on Form S-4 (the "Registration
Statement") filed by the Holding Company with the Securities and Exchange
Commission (the "Commission") and containing the Prospectus/Proxy Statement,
dated
, 1996, the corporate minute books of the Holding Company and
Centura, certificates and written statements of officers and agents of Centura
and the Holding Company, certificates of public officials, and such other
documents and records of the Holding Company and Centura as I have deemed
necessary for the purpose of giving the opinions hereinafter expressed.
In giving certain of the opinions set forth below, I have relied solely upon
certifications and letters provided to me by public officials. As to matters of
fact set forth below, and matters of fact which form the basis for any opinion
set forth below, I have relied solely upon (i) certificates and statements of
officers, employees and accountants of the Holding Company and Centura, (ii) the
representations and warranties of the Holding Company and Centura set forth in
the Agreement, and (iii) a letter dated
, 1996, from The New York Stock Exchange ("NYSE") with respect to
approval of the Holding Company's Notification to the NYSE with respect to the
listing of shares of Centura Stock to be issued in connection with the Merger.
Except as expressly stated herein, I have not independently verified any factual
matters in connection with the giving of the opinions set forth below.
Based upon and subject to the foregoing and the qualifications set forth below,
it is my opinion that, except as described in the Registration Statement or the
Agreement or as Previously Disclosed by the Holding Company or Centura to First
Community:
1. Centura and the Holding Company each (i) is duly organized
and incorporated and validly existing (as a banking corporation and a business
corporation, respectively) under the laws of North Carolina, (ii) has all
requisite power and authority (corporate and other) to own its respective
properties and conduct its respective businesses as now being conducted, (iii)
is duly qualified to do business and is in good standing in each other
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its respective businesses makes such
qualification necessary, except where failure so to qualify would not have a
material adverse effect on the Holding Company and its subsidiaries considered
as one enterprise, and (iv) to my Actual Knowledge, is not transacting business,
or operating any properties owned or leased by it, in violation of any provision
of federal or state law or any rule or regulation promulgated thereunder, which
violation would have a material adverse effect on the Holding Company and its
subsidiaries considered as one enterprise.
2. The Holding Company's authorized capital stock consists of
____________ shares of Centura Stock and ____________ shares of no par preferred
stock. The Holding Company's Board of Directors has reserved and authorized the
issuance of the shares of Centura Stock into which the outstanding shares of
First Community Stock will be converted in connection with the Merger and which
may be purchased upon the exercise of outstanding options which are converted
into rights to purchase Centura Stock as provided in the Agreement, and such
shares (i) have been approved for listing on the NYSE and, (ii) when issued as
described in the Agreement, will be duly authorized, validly issued, fully paid
and nonassessable.
3. (i) The Holding Company and Centura each has the corporate
power and authority to execute and deliver the Agreement and to perform its
obligations and agreements and carry out the transactions described therein,
(ii) all corporate proceedings required to be taken to authorize the Holding
Company and Centura to enter into the Agreement and to perform its obligations
and agreements and carry out the transactions described therein have been duly
and properly taken, and (iii) the Agreement constitutes the valid and binding
agreement of the Holding Company and Centura enforceable in accordance with its
terms.
4. Except where the same would not have a material adverse
effect on the Holding Company and its subsidiaries considered as one enterprise,
neither the execution and delivery of the Agreement, nor the consummation of the
transactions described therein, nor compliance by the Holding Company or Centura
with any of its obligations or agreements contained therein, will: (i) conflict
with or result in a breach of the terms and conditions of, or constitute a
default or violation under any provision of, the Holding Company's or Centura's
Articles of Incorporation or Bylaws, or, to my Actual Knowledge, any contract,
agreement, lease, mortgage, note, bond, indenture, license, or obligation or
understanding (oral or written) to which the Holding Company or Centura is bound
or by which it, its business, capital stock or any of its properties or assets
may be affected; (ii) to my Actual Knowledge, result in the creation or
imposition of any lien, claim, interest, charge, restriction or encumbrance upon
any of the Holding Company's or Centura's properties or assets; (iii) violate
any applicable federal or state statute, law, rule or regulation, or any
judgment order, writ, injunction or decree of any court, administrative or
regulatory agency or governmental body; or (iv) to my Actual Knowledge, result
in the acceleration of any obligation or indebtedness of the Holding Company or
Centura.
5. No consents, approvals or waivers are required to be
obtained from any person or entity in connection with the Holding Company's or
Centura's execution and delivery of the Agreement, or the performance of their
respective obligations or agreements or the consummation of the transactions
described therein, except for required approvals of governmental or regulatory
authorities ("Regulatory Approvals").
6. All Regulatory Approvals required to be obtained by the
Holding Company or Centura for the consummation of the transactions contemplated
by the Agreement (other than the filing of Articles of Merger) have been
obtained, all conditions imposed on the Holding Company or Centura in connection
therewith that are required to be satisfied prior to consummation of such
transactions have been satisfied or waived, and, to my Actual Knowledge, all
such regulatory approvals are in full force and effect; and, no other consents,
approvals, authorizations or other orders of any court or any governmental
agency are required to be obtained by the Holding Company or Centura for the
consummation of the transactions contemplated by the Agreement (other than the
filing of Articles of Merger with respect to the Merger);
7. (i) There are no actions, suits, arbitrations,
controversies or other proceedings or investigations (or, to my Actual
Knowledge, any facts or circumstances which reasonably could result in such),
including without limitation any such action by any governmental or regulatory
authority, which currently exists or is ongoing, pending or, to my Actual
Knowledge, threatened, contemplated or probable of assertion, against, relating
to or otherwise affecting the Holding Company or Centura or any of their
properties or assets which, if determined adversely, could result in liability
on the part of the Holding Company or Centura for, or subject it to, monetary
damages, fines or penalties, an injunction, or which could have a material
adverse effect on the Holding Company's or Centura's financial condition,
results of operations, prospects, businesses, assets, loan portfolio,
investments, properties or operations or on the ability of the Holding Company
or Centura to consummate the Merger; and
(ii) neither the Holding Company nor Centura is subject
to any supervisory agreement, enforcement order, writ, injunction, capital
directive, supervisory directive, memorandum of understanding or other similar
agreement, order, directive, memorandum or consent of, with or issued by any
regulatory or other governmental authority (including without limitation the
FDIC or the Administrator) relating to its financial condition, directors or
officers, operations, capital, regulatory compliance or otherwise; there are no
judgments, orders, stipulations, injunctions, decrees or awards against the
Holding Company or Centura which in any manner limit, restrict, regulate, enjoin
or prohibit any present or past business or practice of the Holding Company or
Centura; and, to my Actual Knowledge, neither the Holding Company nor Centura
has been advised or has any reason to believe that any regulatory or other
governmental authority or any court is contemplating, threatening or requesting
the issuance of any such agreement, order, injunction, directive, memorandum,
judgment, stipulation, decree or award.
8. When Articles of Merger have been duly executed by First
Community and Centura and have been filed with the Secretary of State of North
Carolina in accordance with law, the Merger will become effective at the time of
such filing or, if later, at the time specified in such Articles of Merger.
Additionally, I have reviewed the Registration Statement and the Proxy Statement
and have considered the matters required to be stated therein and the statements
contained therein and, based on the foregoing (and, in certain circumstances
relying as to materiality on the opinions of officers and representatives of the
Holding Company and Centura) nothing has come to my attention which would lead
me to believe that the Registration Statement at the time it became effective,
or the Proxy Statement at the time it was distributed to First Community's
shareholders, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except that I make no statement regarding any
information included in the Registration Statement regarding First Community or
regarding any of the Holding Company's or Centura's financial statements or
other financial, accounting or statistical data).
In giving the opinions set forth above, I have assumed, without independent
verification, that:
I. First Community is duly organized, validly existing and in
good standing as a commercial bank under the laws of North Carolina and
all other applicable laws to which it is subject. First Community has
the full power and authority (corporate and otherwise) to enter into
and perform its obligations under the Agreement and to consummate the
transactions described therein. The Agreement and all other documents
and instruments executed by First Community in connection therewith
have been duly and validly executed and delivered on behalf of and are
enforceable in accordance with their terms against First Community;
A. Other than persons executing documents on behalf of the Holding
Company or Centura, the signatures of all persons signing any
document or instrument delivered in connection with the
Agreement or the consummation of the transactions described
therein are genuine, and all such persons executing such
documents have been duly authorized to execute and deliver such
documents and instruments;
A. All natural persons executing any document or instrument
delivered in connection with the Agreement or the consummation
of the transactions described therein, or on whose behalf any
such documents were executed, had and continue to have legal
competency to do so and to become legally bound thereby;
d. All documents submitted to us as originals are authentic,
and all documents submitted to us as certified or photostatic
copies conform to the original documents, which are themselves
authentic;
e. No event will take place subsequent to the date hereof that
would cause any action taken in connection with the Agreement
or the transactions described therein to fail to comply with
any law, rule, regulation, order, judgment, decree or duty, or
that would permit any party to cancel, rescind or otherwise
avoid any act;
f. First Community has complied or will comply with all
conditions of all required approvals of regulatory authorities
having jurisdiction over First Community, the Holding Company,
Centura and the transactions described in the Agreement.
g. All certificates of public officials have been properly
given and are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or
undue influence in connection with the Agreement or the
transactions described therein, and the conduct of the parties
to the Agreement has complied with any requirement of good
faith, fair dealing and conscionability. Each party to the
Agreement has acted without notice of any defense against the
enforcement of any rights created thereby; and there are no
agreements or understandings, or any usage of trade or course
of dealing, among the parties that, in either case, would
define, supplement or qualify the terms of the Agreement.
In addition, all opinions and statements set forth in this letter are expressly
limited and qualified as follows:
I. The opinions expressed herein are limited to matters of
North Carolina law and the federal laws of the United States of
America, and no opinion is expressed as to any matter that is governed
by the laws of any other jurisdiction or to the effect of any such laws
on the matters dealt with herein.
A. As used in any paragraph of this letter, the phrase "Actual
Knowledge" means that, in giving the opinion contain in such
paragraph, I have relied with your consent exclusively on
certificates of officers of Centura and the Holding Company,
certificates of others as to the existence or non-existence of
the circumstances upon which this opinion is predicated, or
various representations and warranties contained in the
Agreement (and I have not conducted any independent
investigation in this regard), and that I have no actual
conscious awareness of any information to the contrary.
A. My opinions are limited to the matters expressly stated herein,
and no opinion may be inferred or implied beyond the matters
expressly stated.
A. The enforceability of all or various provisions of the
Agreement may be limited by (A) the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect relating to or limiting the
enforcement of creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive relief,
specific performance and other equitable remedies, (C) general
principles of equity and applicable laws or court decisions
limiting the availability of specific performance, injunctive
relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and (D) federal and/or state bank holding
company, commercial bank, savings bank and deposit insurance
laws and regulations and the application of principles of
public policy underlying such laws and regulation
A. I express no opinion with respect to compliance by the Holding
Company or Centura with any federal, state or local law, rule,
regulation, ordinance, order or decree relating to hazardous
substances, hazardous wastes, hazardous materials or the
protection of the environment, or with respect to any
Environmental Law.
A. These opinions are delivered to you pursuant to Section 7.02.d.
of the Agreement and in connection with consummation of the
transactions described therein and are solely for your benefit.
No other person shall be entitled to rely on my opinions
herein, and you are not entitled to rely on such opinions in
any other context or for any other purpose. No copy of this
letter or any portion thereof may be delivered to any other
person, or quoted, published or otherwise disseminated, without
my prior written consent.
g. Except as otherwise expressly specified herein, the opinions
herein are limited to matters in existence as of the date
hereof, and I undertake no responsibility to revise or
supplement this letter or the opinions herein to reflect any
change in the law or facts.
Yours truly,
Joseph A. Smith, Jr.
General Counsel
SCHEDULE G
to Agreement and Plan of Reorganization and Merger
dated April 4, 1996
Form of Legal Opinion of Counsel for First Community
, 1996
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27802
Gentlemen:
We have acted as special counsel to First Community Bank ("First
Community"), a North Carolina banking corporation, in connection with the
transactions described in that certain Agreement and Plan of Reorganization and
Merger dated April 4, 1996, by and among First Community, Centura Bank
("Centura") and Centura Banks, Inc. (the "Holding Company") (the "Agreement",
including the Plan of Merger referenced therein). Pursuant to and in accordance
with the terms and conditions of the Agreement, First Community is proposed to
be merged into and with Centura (the "Merger") and the outstanding shares of
First Community's common stock will be converted into shares of the Holding
Company's common stock. This letter is delivered in connection with the
consummation and closing of the Merger and other transactions described in the
Agreement (the "Closing"). Capitalized terms appearing herein and not otherwise
defined are used as defined in the Agreement.
As counsel to First Community, we have examined originals or copies of
First Community's Articles of Incorporation, By-Laws and corporate minute books,
the Agreement, the Registration Statement (No. ) on Form S-4 (the "Registration
Statement") filed by the Holding Company with the Securities and Exchange
Commission (the "Commission") and containing the Prospectus/Proxy Statement,
dated , 1996, certificates and written statements of officers and agents of
First Community, certificates of public officials, and such other documents and
records of First Community as we have deemed necessary for the purpose of giving
the opinions hereinafter expressed.
In giving certain of the opinions set forth below, we have relied
solely upon certifications and letters provided to us by public officials. As to
matters of fact set forth below, and matters of fact which form the basis for
any opinion set forth below, we have relied solely upon (i) certificates and
statements of officers, employees and accountants of First Community, and (ii)
the representations and warranties of First Community set forth in the
Agreement. Except as expressly stated herein, we have not independently verified
any factual matters in connection with the giving of the opinions set forth
below.
Subject to the qualifications and limitations set forth herein, and
except as set forth in the Registration Statement or the Agreement or as
Previously Disclosed by First Community to Centura and the Holding Company in
connection therewith, we are of the opinion that:
1. First Community (i) is duly organized and incorporated and
validly existing as a commercial bank under the laws of North Carolina; (ii) has
all requisite power and authority (corporate and other) to own, lease and
operate its properties and to conduct its business as now being conducted; (iii)
is duly qualified to do business and is in good standing in each other
jurisdiction in which the character of the properties owned, leased or operated
by it therein or in which the transaction of its respective businesses makes
such qualification necessary, except where failure so to qualify would not have
a material adverse effect on First Community; and (iv) to our Actual Knowledge,
is not transacting business or operating any properties owned or leased by it in
violation of any provision of federal or state law or any rule or regulation
promulgated thereunder, which violation would have a material adverse effect on
First Community.
2. First Community's authorized capital stock consists of
2,400,000 shares of common stock, $4.16 2/3 par value per share ("First
Community Stock").
Each outstanding share of First Community Stock (i) has been
duly authorized and is validly issued and outstanding, and is fully paid and
nonassessable (except to the extent First Community's stock is assessable under
North Carolina banking law), (ii) has not been issued in violation of the
preemptive rights of any shareholder, and (iii) has been issued pursuant to and
in compliance with the requirement of an applicable exemption from registration
requirements under the Securities Act of 1933, as amended (the "1933 Act").
3. To our Actual Knowledge, First Community has no subsidiary
(direct or indirect).
4. Except for options to purchase shares of First Community
Stock issued and outstanding under the First Community Stock Plans, First
Community has no outstanding (i) securities or other obligations (including
debentures or other debt instruments) which are convertible into shares of First
Community Stock or any other securities of First Community, (ii) options,
warrants, rights, calls or other commitments of any nature which entitle any
person to receive or acquire any shares of First Community Stock or any other
securities of First Community, or (iii) plan, agreement or other arrangement
pursuant to which shares of First Community Stock or any other securities of
First Community, or options, warrants, rights, calls or other commitments of any
nature pertaining thereto, have been or may be issued.
5. (i) First Community has the corporate power and authority
to execute and deliver the Agreement and to perform its obligations and
agreements and carry out the transactions described therein, (ii) all corporate
proceedings and approvals required to authorize First Community to enter into
the Agreement and to perform its obligations and agreements and carry out the
transactions described therein have been duly and properly completed or
obtained, and (iii) the Agreement constitutes the valid and binding agreement of
First Community enforceable in accordance with its terms.
6. Except where the same would not have a material adverse
effect on First Community, neither the execution and delivery of the Agreement,
nor the consummation of the transactions described therein, nor compliance by
First Community with any of its obligations or agreements contained therein,
will: (i) conflict with or result in a breach of the terms and conditions of, or
constitute a default or violation under any provision of, First Community's
Articles of Incorporation or Bylaws, or, to our Actual Knowledge, any contract,
agreement, lease, mortgage, note, bond, indenture, license, or obligation or
understanding (oral or written) to which First Community is bound or by which
it, its business, capital stock or any of its properties or assets may be
affected; (ii) to our Actual Knowledge, result in the creation or imposition of
any lien, claim, interest, charge, restriction or encumbrance upon any of First
Community's properties or assets; (iii) violate any applicable federal or state
statute, law, rule or regulation, or any judgment, order, writ, injunction or
decree of any court, administrative or regulatory agency or governmental body;
or (iv) to our Actual Knowledge, result in the acceleration of any obligation or
indebtedness of First Community.
7. No consents, approvals or waivers are required to be
obtained from any person or entity in connection with First Community's
execution and delivery of the Agreement, or the performance of its obligations
or agreements or the consummation of the transactions described therein, except
for approvals of First Community's Board of Directors and shareholders and
required approvals of governmental or regulatory authorities ("Regulatory
Approvals").
8. The Agreement has been duly and validly approved by First
Community's Board of Directors and shareholders to the extent and in the manner
required by applicable law, and the Agreement has been executed and delivered on
First Community's behalf.
9. All Regulatory Approvals required to be obtained by First
Community for the consummation of the transactions contemplated by the Agreement
(other than the filing of Articles of Merger) have been obtained, all conditions
imposed on First Community in connection therewith that are required to be
satisfied prior to consummation of such transactions have been satisfied or
waived, and, to our Actual Knowledge, all such regulatory approvals are in full
force and effect; and, no other consents, approvals, authorizations or other
orders of any court or any governmental agency are required to be obtained by
First Community for the consummation of the transactions contemplated by the
Agreement (other than the filing of Articles of Merger with respect to the
Merger);
10. (i) To our Actual Knowledge, there are no actions, suits,
arbitrations, controversies or other proceedings or investigations (or any facts
or circumstances which reasonably could result in such), including without
limitation any such action by any governmental or regulatory authority, which
currently exists or is ongoing, pending or threatened, contemplated or probable
of assertion, against, relating to or otherwise affecting First Community or any
of its properties or assets which, if determined adversely, could result in
liability on the part of First Community for, or subject it to, monetary
damages, fines or penalties, an injunction, or which could have a material
adverse effect on First Community's financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties or
operations or on the ability of First Community to consummate the Merger; and
(ii) First Community is not subject to any
supervisory agreement, enforcement order, writ, injunction, capital directive,
supervisory directive, memorandum of understanding or other similar agreement,
order, directive, memorandum or consent of, with or issued by any regulatory or
other governmental authority (including without limitation the FDIC or the
Commissioner) relating to its financial condition, directors or officers,
operations, capital, regulatory compliance or otherwise; there are no judgments,
orders, stipulations, injunctions, decrees or awards against First Community
which in any manner limit, restrict, regulate, enjoin or prohibit any present or
past business or practice of First Community; and, to our Actual Knowledge,
First Community has not been advised or has any reason to believe that any
regulatory or other governmental authority or any court is contemplating,
threatening or requesting the issuance of any such agreement, order, injunction,
directive, memorandum, judgment, stipulation, decree or award.
Additionally, we have reviewed the Registration Statement and the Proxy
Statement and have considered the matters required to be stated therein and the
statements contained therein and, based on the foregoing (and, in certain
circumstances relying as to materiality on the opinions of officers and
representatives of First Community) nothing has come to our attention which
would lead us to believe that the Registration Statement at the time it became
effective, or the Proxy Statement at the time it was distributed to First
Community's shareholders, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (except that we make no statement
regarding any information included in the Registration Statement regarding the
Holding Company or Centura or regarding any of First Community's financial
statements or other financial, accounting or statistical data).
In giving the opinions set forth above, we have assumed, without
independent verification, that the following is true:
I. Centura and the Holding Company each is duly organized,
validly existing and in good standing as a corporation under the laws
of North Carolina and all other applicable laws to which it is subject.
Centura and the Holding Company each has the full power and authority
to enter into and perform its obligations under the Agreement and to
consummate the transactions described therein. The Agreement and all
other documents and instruments executed by Centura and the Holding
Company in connection therewith have been duly and validly executed and
delivered on behalf of and are enforceable in accordance with their
terms against Centura and the Holding Company;
A. Other than persons executing documents on behalf
of First Community, the signatures of all persons signing any
document or instrument delivered in connection with the
Agreement or the consummation of the transactions described
therein are genuine, and all such persons executing such
documents have been duly authorized to execute and deliver
such documents and instruments;
A. All natural persons executing any document or
instrument delivered in connection with the Agreement or the
consummation of the transactions described therein, or on
whose behalf any such documents were executed, had and
continue to have legal competency to do so and to become
legally bound thereby;
d. All documents submitted to us as originals are authentic,
and all documents submitted to us as certified or photostatic
copies conform to the original documents, which are themselves
authentic;
e. No event will take place subsequent to the date hereof that
would cause any action taken in connection with the Agreement
or the transactions described therein to fail to comply with
any law, rule, regulation, order, judgment, decree or duty, or
that would permit any party to cancel, rescind or otherwise
avoid any act;
f. The Holding Company and Centura have complied or will
comply with all conditions of all required approvals of
regulatory authorities having jurisdiction over First
Community, the Holding Company, Centura and the transactions
described in the Agreement;
g. All certificates of public officials have been properly
given and are accurate and complete; and
h. There has been no mutual mistake of fact, fraud, duress or
undue influence in connection with the Agreement or the
transactions described therein, and the conduct of the parties
to the Agreement has complied with any requirement of good
faith, fair dealing and conscionability. Each party to the
Agreement has acted without notice of any defense against the
enforcement of any rights created thereby; and there are no
agreements or understandings, or any usage of trade or course
of dealing, among the parties that, in either case, would
define, supplement or qualify the terms of the Agreement.
In addition, all opinions and statements set forth in this letter are
expressly limited and qualified as follows:
I. The opinions expressed herein are limited to matters of
North Carolina law and the federal laws of the United States of
America, and no opinion is expressed as to any matter that is governed
by the laws of any other jurisdiction or to the effect of any such laws
on the matters dealt with herein.
A. As used in any paragraph of this letter, the
phrase "Actual Knowledge" means that, in giving the opinion
contain in such paragraph, we have relied with your consent
exclusively on certificates of officers of First Community as
to the existence or non-existence of the circumstances upon
which this opinion is predicated, or various representations
and warranties contained in the Agreement (and we have not
conducted any independent investigation in this regard), and
that we have no actual conscious awareness of any information
to the contrary.
B. Our opinions are limited to the matters expressly
stated herein, and no opinion may be inferred or implied
beyond the matters expressly stated.
C. The enforceability of all or various provisions of
the Agreement may be limited by (A) the effect of applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect relating to or limiting the
enforcement of creditors' rights generally, (B) by legal and
equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, (C)
general principles of equity and applicable laws or court
decisions limiting the availability of specific performance,
injunctive relief and other equitable remedies (including the
enforceability of indemnification provisions, regardless of
whether such enforceability is considered in a proceeding in
equity or at law), and (D) federal and/or state bank holding
company, commercial bank, savings bank and deposit insurance
laws and regulations and the application of principles of
public policy underlying such laws and regulation
A. We express no opinion with respect to compliance
by First Community with any federal, state or local law, rule,
regulation, ordinance, order or decree relating to hazardous
substances, hazardous wastes, hazardous materials or the
protection of the environment, or with respect to any
Environmental Law.
A. These opinions are delivered to you pursuant to Section
7.03.f. of the Agreement and in connection with consummation
of the transactions described therein and are solely for your
benefit. No other person shall be entitled to rely on my
opinions herein, and you are not entitled to rely on such
opinions in any other context or for any other purpose. No
copy of this letter or any portion thereof may be delivered to
any other person, or quoted, published or otherwise
disseminated, without our prior written consent.
h. Except as otherwise expressly specified herein, the opinions
herein are limited to matters in existence as of the date
hereof, and we undertake no responsibility to revise or
supplement this letter or the opinions herein to reflect any
change in the law or facts.
Yours truly,
WARD AND SMITH, P.A.
APPENDIX B
PROVISIONS OF NORTH CAROLINA BUSINESS CORPORATION
ACT RELATING TO DISSENTERS' RIGHTS
ARTICLE 13.
Dissenters' Rights.
Part l. Right to Dissent and Obtain Payment for Shares.
Section 55-13-01. Definitions.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and in
the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable under all
the circumstances, giving due consideration to the rate currently paid by the
corporation on its principal bank loans, if any, but not less than the rate
provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
Section 55-13-02. Right to Dissent.
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporation actions:
(1) Consummation of a plan of merger to which the corporation
(other than a parent corporation in a merger under G.S. 55-11-04) is a
party unless (i) approval by the shareholders of that corporation is
not required under G.S. 55-11-03(g) or (ii) such shares are then
redeemable by the corporation at a price not greater than the cash to
be received in exchange for such shares;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired, unless such shares are then redeemable by the corporation at
a price not greater than the cash to be received in exchange for such
shares;
(3) Consummation of a sale or exchange of all, or substantially
all, of the property of the corporation other than as permitted by G.S.
55-12-01, including a sale in dissolution, but not including a sale
pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed
in cash to the shareholders within one year after the date of sale:
(4) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a dissenter's
shares because it (i) alters or abolishes a preferential right of the
shares; (ii) creates, alters, or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares; (iii) alters or abolishes a
preemptive right of the holder of the shares to acquire shares or other
securities; (iv) excludes or limits the right of the shares to vote on
any matter, or to cumulate votes; (v) reduces the number of shares
owned by the shareholder to a fraction of a share if the fractional
share so created is to be acquired for cash under G.S. 55-6-04; or (vi)
changes the corporation into a nonprofit corporation or cooperative
organization;
(5) Any corporate action taken pursuant to a shareholder vote
to the extent the articles of incorporation, bylaws, or a resolution of
the board of directors provides that voting or nonvoting shareholders
are entitled to dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
Section 55-13-03. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any other person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder.
Section 55-13-04 to 55-13-19: Reserved for future codification purposes.
Part 2. Procedures for Exercise of Dissenters' Rights.
Section 55-13-20. Notices of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02
is taken without a vote of shareholders, the corporation shall no later than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G. S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this
section, such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
Section 55-13-21. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must
actually receive, before the vote is taken written notice of his intent
to demand payment for his shares if the proposed action is effectuated;
and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection
(a) is not entitled to payment for his shares under this Article.
Section 55-13-22. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirements of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after the
corporate action was taken, and must:
(1) State where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than 60
days after the date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
Section 55-13-23. Duty to demand payment.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22
must demand payment and deposit his share certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his share
certificates under subsection (a) retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this Article.
Section 55-13-24. Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
Section 55-13-25. Offer of payment.
(a) As soon as the proposed corporate action is taken, or upon receipt
of a payment demand, the corporation shall offer to pay each dissenter who
complied with G.S. 55-13-23 the amount the corporation estimates to be the fair
value of his shares, plus interest accrued to the date of payment, and shall pay
this amount to each dissenter who agrees in writing to accept it in full
satisfaction of his demand.
(b) The offer of payment must be accompanied by:
(1) The corporation's most recent available balance sheet as of
the end of a fiscal year ending not more than 16 months before the date
of offer of payment, an income statement for that year, a statement of
cash flows for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of the fair value
of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment
under G.S. 55-13-28; and
(5) A copy of this Article.
Section 55-13-26. Failure to take action.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
Section 55-13-27: Reserved for future codification purposes.
Section 55-13-28. Procedure if shareholder dissatisfied with corporation's
offer or failure to perform.
(a) A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand
payment of his estimate or reject the corporation's offer under G.S. 55-13-25
and demand payment of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under G.S.
55-13-25 is less than the fair value of his shares or that the interest due is
incorrectly calculated;
(2) The corporation fails to make payment to a dissenter who
accepts the corporation's offer under G.S. 55-13-25 within 30 days
after the dissenter's acceptance; or
(3) The corporation, having failed to take the proposed action,
does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the
date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation offered payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
Section 55-13-29: Reserved for future codification purposes.
Part 3. Judicial Appraisal of Shares.
Section 55-13-30. Court action.
(a) If a demand for payment under G.S. 55-13-28 remains
unsettled, the dissenter may commence a proceeding within 60 days after
the date of his payment demand under G.S. 55-13-28 and petition the
court to determine the fair value of the shares and accrued interest.
Upon service upon it of the petition filed with the court, the
corporation shall pay to the dissenter the amount offered by the
corporation under G.S. 55-13-25.
(a1) If the dissenter does not commence the proceeding within
60-day period, the dissenter shall have an additional 30 days to either
(i) accept in writing the amount offered by the corporation under G.S.
55-13-25, upon which the corporation shall pay such amount to the
dissenter in full satisfaction of his demand, or (ii) withdraw his
demand for payment and resume the status of a nondissenting
shareholder. A dissenter who takes no action within such 30-day period
shall be deemed to have withdrawn his dissent and demand for payment.
(b) Reserved for future codification purposes.
(c) the court shall have the discretion to make all dissenters
(whether or not residents of this State) whose demands remain unsettled
parties to the proceeding as in an action against their shares and all
parties must be served with a copy of the petition. Nonresidents may be
served by registered or certified mail or by publication as provided by
law.
(d) the jurisdiction of the court in which the proceeding is
commenced under subsection (b) is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and
recommend decision on the question of fair value. The appraisers have
the powers described in the order appointing them, or in any amendment
to it. The parties are entitled to the same discovery rights as parties
in other civil proceedings. However, in a proceeding by a dissenter in
a public corporation, there is no right to trial by jury.
(e) Each dissenter made a party to the proceeding is entitled
to judgment for the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the
corporation.
Section 55-13-31. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under G.S.
55-13-30 shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the
court, and shall assess the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the court finds
equitable:
(1) Against the corporation and in favor of any or all
dissenters if the court finds the corporation did not
substantially comply with the requirements of G.S. 55-13-20
through 55-13-28; or
(2) Against either the corporation or a dissenter, in
favor of either or any other party, if the court finds that the
party against whom the fees and expenses are assessed act
arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this Article.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the corporation, the court may award to these counsel
reasonable fees to be paid out of the amounts awarded the dissenters
who were benefited.
APPENDIX C
Letterhead of Scott & Stringfellow, Inc.
May 31, 1996
Board of Directors
First Community Bank
Gastonia, NC 28053
Gentlemen:
You have asked us to render our opinion relating to the fairness, from a
financial point of view, to the shareholders of First Community Bank (AFirst
Community@) of the terms of an Agreement and Plan of Reorganization and Merger
by and among Centura Banks, Inc. (AHolding Company@), Centura Bank (ACentura@)
and First Community dated April 4, 1996 (the AMerger Agreement@). The Merger
Agreement provides for the merger of First Community with and into Centura (the
AMerger@) and further provides that each share of Common Stock of First
Community which is issued and outstanding immediately prior to the Effective
Date of the Merger shall be exchanged for 0.96 shares of Holding Company Common
Stock (the AExchange Ratio@). The Exchange Ratio is subject to adjustment in
certain events.
In developing our opinion, we have, among other things, reviewed and
analyzed: (1) the Merger Agreement; (2) First Community's financial statements
for the three years ended December 31, 1995; (3) First Community's unaudited
financial statements for the three months ended March 31, 1995 and 1996, and
other internal information relating to First Community prepared by First
Community's management; (4) information regarding the trading market for the
common stocks of First Community and Holding Company and the price ranges within
which the respective stocks have traded; (5) the relationship of prices paid to
relevant financial data such as net worth, assets, deposits and earnings in
certain bank and bank holding company mergers and acquisitions in North Carolina
in recent years; (6) Holding Company's annual reports to shareholders and its
financial statements for the three years ended December 31, 1995; and (7)
Holding Company's and Centura=s unaudited financial statements for the three
months ended March 31, 1995 and 1996, and other internal information relating to
Holding Company and Centura prepared by Holding Company's management. We have
discussed with members of management of First Community and Holding Company the
background to the Merger, reasons and basis for the Merger and the business and
future prospects of First Community and Holding Company individually and as a
combined entity. Finally, we have conducted such other studies, analyses and
investigations, particularly of the banking industry, and considered such other
information as we deemed appropriate.
Board of Directors
First Community Bank
May 31, 1996
Page 2
In conducting our review and arriving at our opinion, we have relied
upon and assumed the accuracy and completeness of the information furnished to
us by or on behalf of First Community, Centura and Holding Company. We have not
attempted independently to verify such information, nor have we made any
independent appraisal of the assets of First Community, Centura or Holding
Company. We have taken into account our assessment of general economic,
financial market and industry conditions as they exist and can be evaluated at
the date hereof, as well as our experience in business valuation in general.
On the basis of our analyses and review and in reliance on the accuracy
and completeness of the information furnished to us and subject to the
conditions noted above, it is our opinion that, as of the date hereof the terms
of the Merger Agreement are fair from a financial point of view to the
shareholders of First Community Common Stock.
Very truly yours,
SCOTT & STRINGFELLOW, INC.
By: /s/ Gary S. Penrose
Gary S. Penrose
Managing Director, Financial Institutions Group
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 55-8-50 through 55-8-58 of the General States of North
Carolina provide for indemnification of directors, officers, employees, and
agents of a North Carolina corporation. Subject to certain exceptions, a
corporation may indemnify an individual made a party to a proceeding because he
is or was a director against liability incurred in the proceeding if (i) he
conducted himself in good faith; and (ii) he reasonably believed (a) in the case
of conduct in his official capacity with the corporation, that his conduct was
in its best interests, and (b) in all other cases, that his conduct was at least
not opposed to its best interests; and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful.
Moreover, unless limited by its articles of incorporation, a corporation must
indemnify a director who was wholly successful, on the merits or otherwise, in
the defense of any proceeding to which he was a party because he is or was a
director of the corporation against reasonable expenses incurred by him in
connection with the proceeding. Expenses incurred by a director in defending a
proceeding may be paid by the corporation in advance of the final disposition of
such proceeding as authorized by the board of directors in the specific case or
as authorized or required under any provision in the articles of incorporation
or bylaws or by any applicable resolution or contract upon receipt of an
undertaking by or on behalf of a director to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation against such expenses. A director may also apply for court-ordered
indemnification under certain circumstances.
Unless a corporation's articles of incorporation provide otherwise, (i)
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, (ii) the corporation may indemnify or advance expenses to an officer,
employee, or agent of a corporation to the same extent as to a director, and
(iii) a corporation may also indemnify or advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with public
policy, that may be provided by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract.
In addition, and separate and apart from the indemnification rights
discussed above, the above-cited statutes further provide that a corporation
may, in its articles of incorporation or bylaws, or by contract or resolution,
indemnify or agree to indemnify any one 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; provided, however, that a corporation may not indemnify or agree to
indemnify a person against liability or expenses he may incur on account of his
activities which were at 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 may also 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.
As permitted by the North Carolina statutory provisions explained
above, Article IX, Section 4 of the Bylaws of the Registrant provides as
follows:
Any person who at any time serves or has served as a director
or officer of the Corporation, or at the request of the Corporation is
or was serving as an officer, director, agent, partner, trustee, or
employee for any other foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise,
shall be indemnified by the Corporation to the fullest extent from
time to time permitted by law in the event he is made, or is
threatened to be made, a party to any threatened pending or completed
civil, criminal, administrative, investigative or arbitrative action,
suit, or proceeding and any appeal therein (and any inquiry or
investigation that could lead to such action, suit or proceeding),
whether or not brought by or on behalf of the Corporation, seeking to
hold him liable by reason of the fact that he is or was acting in such
capacity. In addition, the board may provide such indemnification for
other employees and agents of the Corporation as it deems appropriate.
The rights of those receiving indemnification hereunder shall,
to the fullest extent from time to time permitted by law, cover (i)
reasonable expenses, including without limitation all attorney's fee's
actually and necessarily incurred by him in connection with any such
action, suit or proceeding, (ii) all reasonable payments made by him
in satisfaction of any judgment, money decree, fine (including an
excise tax assessed with respect to an employee benefit plan),
penalty, or settlement for which he may have become liable in such
action, suit, or proceeding; and (iii) all reasonable expenses
incurred in enforcing the indemnification rights provided herein.
Expenses incurred by anyone entitled to receive
indemnification under this section in defending a proceeding may be
paid by the Corporation in advance of the final disposition of such
proceeding as authorized by the board of directors in the specific
case or as authorized or required under any provision in the bylaws or
by any applicable resolution or contracts upon receipt of an
undertaking by or on behalf of the director to repay such amount
unless it shall ultimately be determined that be is entitled to be
indemnified by the Corporation against such expenses.
The board of directors of the Corporation shall take all such
action as may be necessary and appropriate to authorize the
Corporation to pay the indemnification required by this bylaw,
including without limitation, to the extent needed, making a good
faith evaluation of the manner in which the claimant for indemnify
acted and of the reasonable amount of indemnity due him.
Any person who at any time serves or has served in any of the
aforesaid capacities for or on behalf of the Corporation shall be
deemed to be doing or to have done so in reliance upon, and as
consideration for, the right of indemnification provided herein. Any
repeal or modification of these indemnification provisions shall not
affect any rights or obligations existing at the time of such repeal
or modification. The rights provided for herein shall inure to the
benefit of the legal representatives of any such person and shall not
be exclusive of any other rights to which such person may be entitled
apart from the provisions of this bylaw.
The rights granted herein shall not be limited by the
provisions contained in N.C. Gen. Stat. 55-8-51 (or its successor).
As permitted by applicable statutes, the Registrant has purchased a
standard directors' and officers' liability policy that will, subject to certain
limitations, indemnify the Registrant and its officers and directors for damages
they become legally obligated to pay as a result of any negligent act, error, or
omission committed by directors or officers while acting in their capacities as
such.
The indemnification provisions in the Bylaws may be sufficiently broad
to permit indemnification of the Registrant's officers and directors for
liabilities arising under the 1933 Act.
ITEM 21. EXHIBITS
The following exhibits are filed herein or have been, as noted, previously
filed:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.1 Agreement and Plan of Reorganization and Merger, dated as of April 4, 1996, by and among First Community
Bank and Centura Bank and Centura Banks, Inc. (included as Appendix A to Prospectus/Proxy
Statement contained in Part I)
5.1 Opinion of Joseph A. Smith, Jr. as to the validity of the shares of Centura Common Stock.*
8.1 Opinion of Poyner & Spruill, L.L.P. as to federal income tax consequences.*
13.1 First Community Bank Annual Report on Form F-2 for the fiscal year ended December 31, 1995.*
13.2 First Community Bank Quarterly Report on Form F-4 for the quarterly period ended March 31, 1996.*
13.3 First Community Bank Current Report on Form F-3, dated March 26 1996.*
23.1 Consent of KPMG Peat Marwick LLP, independent certified public accountants for Centura Banks, Inc.*
23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants for First Community Bank.*
23.3 Consent of Joseph A. Smith, Jr. (Contained in Exhibit 5.1)
23.4 Consent of Poyner & Spruill, L.L.P.*
23.5 Consent of Scott & Stringfellow, Inc.*
24.1 Power of Attorney.*
99.1 Form of proxy of First Community Bank.
</TABLE>
* Previously filed.
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the 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.
(3) To remove from registration by means of a post effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
D. (l) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoccurring 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 prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that
is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Act 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.
E. The undersigned Registrant hereby undertakes to respond to requests
for information that are incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form within one business day of receipt of
such request and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
F. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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 Rocky Mount,
State of North Carolina on this the 1st day of July, 1996.
REGISTRANT
CENTURA BANKS, INC.
By: /s/ Robert R. Mauldin
Robert R. Mauldin
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on July 1, 1996.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/ Robert R. Mauldin Chairman of the Board, Director
Robert R. Mauldin and Chief Executive Officer
* Director, President, and Chief
Cecil W. Sewell, Jr. Operating Officer
* Director, Group Executive Officer
Frank L. Pattillo and Chief Financial Officer
* Director and Group Executive Officer
William H. Wilkerson
</TABLE>
<TABLE>
<CAPTION>
Signature Title
<S> <C>
* Treasurer/Controller
Michael R Hilton
* Director
Richard H. Barnhardt
* Director
C. Wood Beasley
* Director
Thomas A. Betts, Jr.
* Director
H. Tate Bowers
* Director
Ernest L. Evans
* Director
J. Richard Futrell, Jr.
* Director
John H. High
* Director
William D. Hoover
* Director
Robert L. Hubbard
* Director
William H. Kincheloe
* Director
Charles T. Lane
</TABLE>
Signature Title
* Director
Jack A. Moody
* Director
Clifton H. Moore
* Director
Joseph H. Nelson
* Director
O. Tracy Parks III
* Director
William H. Redding, Jr.
* Director
Charles M. Reeves III
* Director
George T. Stronach III
* Director
Alexander P. Thorpe III
* Director
Joseph L. Wallace, Jr.
* Director
Charles P. Wilkins
By: /s/ Joseph A. Smith, Jr.
Joseph A. Smith, Jr., as attonery-in-fact
pursuant to power of attorneys
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
<S> <C>
5.l Opinion of Joseph A. Smith, Jr. as to the validity of the shares of Centura Common Stock*
8.1 Opinion of Poyner & Spruill, L.L.P. as to federal income tax consequences*
13.1 First Community Bank Annual Report on Form F-2 for the fiscal year ended December 31, 1995.*
13.2 First Community Bank Quarterly Report on Form F-4 for the quarterly period ended March 31, 1996.*
13.3 First Community Bank Current Report on Form F-3, dated March 26 1996.*
23.1 Consent of KPMG Peat Marwick LLP, independent certified public accountants for Centura
Banks, Inc.*
23.2 Consent of KPMG Peat Marwick, LLP independent certified public accountants for First
Community Bank*
23.4 Consent of Poyner & Spruill*
23.5 Consent of Scott & Stringfellow, Inc.*
99.1 Form of proxy of First Community Bank
</TABLE>
* Previously filed.
Exhibit 99
REVOCABLE PROXY
FIRST COMMUNITY BANK
The undersigned hereby constitutes and appoints Robert S. Pearson and
Will Weill, III, or either of them, as proxies, each with full power of
substitution, to vote the number of shares of common stock of First Community
Bank ("First Community") which the undersigned would be entitled to vote if
personally present at the Special Meeting of First Community Shareholders to be
held at the Gaston County Public Library, 1555 East Garrison Boulevard,
Gastonia, North Carolina 28045, at 11:00 A.M., local time, on Wednesday,
August 7, 1996, and at any adjournment or postponement thereof (the "Special
Meeting") upon the proposals described in the Proxy Statement/Prospectus and the
Notice of Special Meeting of Shareholders, both dated July 8, 1996, the receipt
of which is acknowledged in the manner specified below.
1. Merger. To consider and vote upon a proposal to approve an Agreement and
Plan of Reorganization and Merger, dated as of April 4, 1996 (the
"Agreement"), by and between First Community, Centura Bank and Centura
Banks, Inc., a North Carolina corporation ("Centura"), pursuant to which
(i) First Community will merge (the "Merger") with and into Centura Bank,
(ii) each share of the $4.16 2/3 par value common stock of First Community
("First Community Common Stock") issued and outstanding at the effective
time of the Merger will be exchanged for 0.96 of a share of the no par
value common stock of Centura, subject to possible adjustment, and cash in
lieu of any fractional share, and (iii) Centura will assume the obligations
of First Community under various stock plans and programs and adopt
substitute plans where appropriate, all as more fully described in the
accompanying Proxy Statement/Prospectus.
FOR ___ AGAINST ___ ABSTAIN ___
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held jointly, both
should sign. When signing as attorney, 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: , 1996
--------------------------
Signature
--------------------------
Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
FIRST COMMUNITY BANK,
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
